Assistant Commissioner of Income-tax, V. M/s. Jailaxmi Casting & Alloys Pvt. Ltd., Aurangabad

ITA 1605/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2002 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHEERAJ KUMAR JAIN
• Keywords: Audit objection; Assessment record

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1605/PN/2015 '% % / ASSESSMENT YEAR : 2011-12 ACIT, CIRCLE-1, AURANGABAD . / APPELLANT V/S M/S. JAYLAXMI CASTING & ALLOYS PVT. LTD., GUT NO.75, FAROLA VILLAGE, PAITHAN ROAD, AURANGABAD PAN NO. AABCJ4567F . / RESPONDENT / APPELLANT BY : SHRI DHEERAJ KUMAR JAIN / RESPONDENT BY : NONE JAIN & B / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25-09-2015 OF THE CIT(A)-I, AURANGABAD RELATING TO ASSESSMENT YEAR 2011-12. / DATE OF HEARING :07.04.2016 / DATE OF PRONOUNCEMENT:13 .04.2016 2 ITA NO.1605/PN/2015 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE SERV ICE OF NOTICE. THEREFORE, THIS APPEAL IS BEING DECIDED ON THE B ASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MS BILLETS AND ROLLED PRODUCTS. THE ASSESSEE FILED RETURN OF INCOME ON 30-09-2011 DECLARING TOTAL INCOME OF RS.11,29,97,240/-. THE AO COMPLETED THE ASSESSMENT ON 10 - 02-2014 AT A TOTAL INCOME OF RS.12,42,22,570/-. IN THE ASSESSMENT ORDER CREDIT OF MAT OF RS.40,66,036/- WAS ALLOWED. SUBSEQUENTLY, THE AO ON VERIFICATION OF RECORDS FOUND THAT EXCESS MAT CREDIT OF RS.14,87,038/- WAS ALLOWED. HE THEREFORE PROPOSED TO RECTIFY THE SAME U/S.154 OF TH E I.T. ACT. IN RESPONSE TO THE NOTICE U/S.154 OF THE I.T. ACT, 1961 THE ASSESSEE FURNISHED A LETTER ON 26-06-2014 AND ACCE PTED THAT EXCESS CREDIT OF RS.10,57,912/- WAS AVAILED. HOWEVER , THE AO ON VERIFICATION OF THE RECORDS FOUND THAT EXCESS M AT CREDIT OF RS.14,87,038/- WAS GIVEN. HE ACCORDINGLY IN THE ORDER PASSED U/S.154 ON 27-06-2014 WITHDREW EXCESS CR EDIT OF MAT AMOUNTING TO RS.14,87,038/-. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE AMOUNT CLAIMED AS MAT CREDIT FOR THE A.Y. 2009-10 OF RS.35,39,989/- WAS EXCLUSIVE OF SURCHARGE AND EDUCATION CESS WHILE THE AMOUN T OF CREDIT GIVEN BY THE DEPARTMENT OF RS.40,66,036/- WAS INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THUS, IT WAS DU E TO THE DIFFERENCE IN THE METHOD OF ALLOWANCE OF CREDIT BY TH E DEPARTMENT AND THAT FOLLOWED BY THE ASSESSEE AS PER TH E ITR 3 ITA NO.1605/PN/2015 SUBMITTED. THE FIGURES OF MAT CREDIT AVAILED BY THE ASSESS EE KEPT REVISING AFTER GIVING EFFECT TO THE ORDER OF APPELLATE AUTHORITIES. AFTER TAKING INTO ACCOUNT THE APPELLATE ORDER OF THE TRIBUNAL FOR A.Y. 2009-10 WHICH HAD DELETED THE ENT IRE ADDITION OF RS.36,41,578/- SUSTAINED BY CIT(A), THE EXCESS MAT CREDIT CLAIMED WOULD BE AS FOLLOWS : YEAR MAT CREDIT INCOME AS PER MAT 3,95,52,401 TAX AS PER I.T NIL TAX AS PER MAT 44,81,287 44,81,287 2010 - 11 MAT CREDIT UTILIZED 6,54,804 2011 - 12 MAT CREDIT AVAILABLE 38,26,483 MAT CREDIT UTILIZED 39,19,653 MAT UTILIZED IN EXCESS (93,170) 5. IT WAS SUBMITTED THAT ALL THE ABOVE FIGURES WERE INCLUSIVE OF SURCHARGE AND EDUCATION CESS AS FOLLOWED BY TH E DEPARTMENT. THUS THE AMOUNT PAYABLE WAS ONLY RS.93,170 /- AS PER THE ABOVE CALCULATION AND NOT RS.20,07,502/-. ACCORDINGLY IT WAS REQUESTED TO DIRECT THE AO TO RE-CA LCULATE THE WORKING OF MAT CREDIT TAKING INTO ACCOUNT THE ORDER O F ITAT DATED 15-07-2015. 6. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE T HE LD.CIT(A) DIRECTED THE AO TO DISALLOW EXCESS MAT CREDIT OF RS.93,170/- IN A.Y. 2011-12 INSTEAD OF RS.14,87,048/- SUBJECT TO VERIFICATION OF THE ASSESSMENT RECORDS FOR A.YR S. 2009-10 TO 2011-12. THE RELEVANT OBSERVATION OF THE CI T(A) READS AS UNDER : 5. I HAVE DULY CONSIDERED THE SUBMISSIONS OF THE APPELL ANT. IN THE ASSESSMENT ORD E R DATED 10.02.2014, THE AO HAD ALLOWED CREDIT OF RS . 40,66,036/- TO THE ASSESSEE. SUBSEQUENTLY THERE WAS REVENUE AUDIT OBJECTION IN THIS C A SE WHEREBY IT WAS POINTED OUT THAT THE AO HAD ALLOWED MAT CREDIT OF RS . 40,66,036/- TO THE ASSESSE E AS AGAINST RS . 25,78,998/- ACTUALLY AVAILABLE TO THE ASSESSEE R ESULTING INTO EXCESS MAT CREDIT OF RS.14,87,038/-. IT WAS FURTHER POINTED OUT THAT IN AY 2009-10, TH E ASSESSMENT 4 ITA NO.1605/PN/2015 ORDER HAD RESULTED INTO SUBSTANTIAL DEMAND. SINCE TAX WAS LEVIED ON THE INCOME ASSESSED UNDER NORMAL PROVISIONS OF ACT; THEREFORE QUESTION OF CARR Y FORWARD OF MAT CREDIT TO BE SET OFF IN AY 2011-12 DID NOT ARISE. HOWEVER WHIL E GIVING EFFECT TO THE ORDER OF CIT(APPEALS), THE TOTAL INCOME OF THE ASSESSEE STOOD REVISED TO RS.24,29,110/-. THUS THE ASSESSEE WAS ELIGIBLE F OR MAT CREDIT OF RS.32,26,507/- U/S. 115JAA I . E. (RS . 40,66,036- RS.8,39,529). OUT OF ABOVE, CREDIT OF MAT OF RS . 6 , 47 , 509/- WAS ALLOWED IN AY 2010-11 . ACCORDINGLY BALANCE OF MAT CREDIT OF RS.25,78,998/- WAS AVAILABLE TO THE ASSESSEE. IT WAS POINT ED OUT THAT THERE WAS A MISTAKE APPARENT FROM THE RECORD AS E XCESS MAT CREDIT OF RS.14,87,038 / - WAS ALLOWED TO THE ASSESSEE. THE AO ACCORDINGLY ISSUED SHOW CAUSE NOTICE FOR RECTIFICATI ON OF ABOVE MISTAKE AND IGNORING THE CONTENTION OF THE ASSES SEE , DISALLOWED EXCESS MAT CREDIT OF RS.14,87,038/-. THE AR CONTENDED BEFORE THE AO THAT AFTER GIVING EFFECT TO THE ORDER OF CIT(APPEALS), ITS TOTAL INCOME WAS REDUCED TO RS.24,29, 110/- ON WHICH TAX OF RS.8,25,654/- WAS PAYABLE. AS AGAINST THIS, IT HAD PAID TAX OF RS . 44,81,287/- UNDER MAT ON BOOK PROFIT OF RS.3,9~,52 , 4011 - . THE MAT CREDIT OF RS . 44,81,287/- WAS INCLUSIVE OF SURCHARGE AND EDUCATION CESS. THUS NET MAT CREDIT OF RS.36,55,633/- WAS AVAILABLE TO IT. OUT OF IT, MAT CREDIT OF RS.6 , 47,509/- WAS UTILIZED IN AY 2010-11 . THE REMAINING MAT CREDIT OF RS.30,08,124/- COULD HAVE BEEN UTILIZED IN AY 2011-12 WHEREAS THE APPELLANT HAD CLAIMED MAT CREDIT OF RS . 40,66,036/- IN AY 2011-12 RESULTING I N EXCESS MAT CREDIT OF RS.I0,57,912/- INSTEAD OF RS.14,87,038/ - DISALLOWED BY THE AO. DURING THE COURSE OF PRESENT APPELLATE PROCEEDINGS, TH E COUNSEL OF THE APPELLANT HAS BROUGHT TO MY NOTICE THAT HONB LE PUNE TRIBUNAL VIDE ITS ORDER ITA NO.1525/PN/2012 DATED 15.07 . 2015 HAD DELETED TH E E NTIR E A DDITION W HICH W AS SUSTAINED B Y T HE CIT (A PP EA LS ) ON A CC OUNT OF GP E STIMATION ON S UPPRESS E D PRODUCTION. A S A RESUL T THE INCOM E A SSE SSED UNDER THE NO R M A L P RO V ISIONS HA S B E EN R E DUC E D TO NIL AN D THEREFOR E TA X OF R S . 44,81,287 / - UND E R MAT W A S FULL Y LIABL E T O BE CARRIED FOR WA R D I N S TEAD O F R S.36,55,633 / - AS C LAIM E D V IDE ITS L E TTER DATED 0 5 . 0 6 1 2 01 5 . THE FIGURES OF MA T C REDIT AVA IL E D B Y THE ASSES SEE KEPT R EV ISING AFTER GI V ING EFFECT TO THE ORDER OF APPELLATE AUTHORITIES. OUT O F ABO VE FIGURE OF RS.44,81,28 7 /- (GROSS FIGURE INCLUSI VE OF 10 % SURCHARGE AND 3 % EDUCATION CESS), MAT CREDIT OF RS.6, 5 4,804 / -(GROSS FIGUR E INCLUSI VE O F 10 % SURCHARGE AND 3 % EDUCATION CESS) WAS UTILIZE D IN THE AY 2010-11 . THE REMAININ G MAT C RED I T OF RS .3 8 , 26 , 48 3/- WAS AVAILABL E IN A.Y. 2011-12 WHEREA S THE APP E LLANT HAD C LAIMED MAT CREDIT OF RS.39,19,6 5 3 / - I N THE AY 2011-1 2 RESULTING IN EXCESS MAT CREDIT OF RS . 93,170 / - . FOR AY 2011-12, THE RATE O F SURCHARG E HAD BEEN REDUCED FROM 10 % TO 7.5 % . THUS THE APPEN 1 NT WAS LIABLE TO PA Y R S . 93 ,1 70 / - AS PER TH E ABO VE CALCULATION AND NOT RS . 20,O7, 5 02 / - AS PER TH E R E CTIFIC A T I ON O R DE R DAT E D 27 .0 6.2 01 4 . ON C A REFUL EXAMINATION OF THE DETAILS , TH E C ONTENTION O F T H E APP E LLANT IS FOUND TO BE CORRECT . A S R E GARDS THE IN C L US ION OF S URCHARG E A ND E DUCAT I ON CESS , THE HON'BL E ALLAHABAD HIGH COU RT IN TH E C ASE OF CIT VS. VACMENT INDIA (349 ITR 304) HA S H E LD THAT A S PER FORM I T R -6 , THE M AT CRED IT H AS TO B E G I VE N AGAI N S T TH E GRO SS T AX PA Y ABL E EXCLUSI V E OF SUR CH AR G E AND CESS AN D ON L Y AFT ER TH E MAT C RE DIT TA X HA S B EE N A LLO WE D, THE SUR C HARG E \ AND CESS HAS TO B E C A LCULATED FOR THE PURPOSE OF WORKING OUT THE GRAND TAX LI A BILIT Y. ALTERNATIVELY TH E AMOUNT OF M A T CREDIT SHOULD ALSO 5 ITA NO.1605/PN/2015 INCLUDE SURCHARGE AND ED U CATION CESS FOR TH E PURPOSE OF A LLO W ING THE CREDIT AG A INST TH E TAX LIABILITY IN C LU S I VE OF SURCHARGE AND EDU C AT I ON CESS. T HI S D EC ISION WAS A LSO FOLLO W ED BY HON'BL E MUM BAI TRIBUNAL IN TH E C A S E OF GODR E J OIL PALM LTD. IN ITA NO .5 098 / MUM /2 01 3 D A T E D 1 4 .01 . 201 5 . ACCORDINGLY M A T CREDIT AVAILABLE TO THE APPELLANT WOULD BE RS . 44,81,287 / - (RS.39,55 ,2 4 0 PLUS 10 % S URCHARGE AND 3% EDUCATION CESS . AFTER UTILIZING MAT CREDIT OF RS . 6,5 4 ,804 /- IN A Y 2 010-11, THE REMAINING MAT CREDIT S TOO D AT RS.38,26 , 48 3 / - F OR AY 20 11 -12 . T HU S THE A O SHOULD HA VE DISALLO WE D EXCES S M A T CREDIT O F RS . 93, 1 70 / - IN S T EA D O F RS . 14 ,87 ,0 38 / -. I ACC ORDIN G L Y DIR E CT TH E A O TO DISALLO W EXC ESS MA T CR E DIT O F RS.9 3 ,170 / - IN AY 2 011-12 IN S T EA D O F RS.1 4 ,87 , 038 / - DI SA LLOW E D B Y H I M SUBJECT TO VERIFICATION OF ASSESSMENT RECORDS FOR AY 2009-10, 2010- 11 AND 2011-12 TO CHECK THE MAT CREDIT AVAILABLE A N D ALLOWED TO THE ASSESSEE. T HI S G ROUND OF APP E AL I S AC C ORDIN G L Y PARTL Y A LLO WE D. 7. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E LD.CIT(A) AURANGABAD HAS ERRED IN ALLOWING EXCESS MAT CREDIT OF RS.14,87,038/- EVEN THOUGH THE SAME HAS BEEN DISALLO WED BY THE AO AFTER VERIFICATION. 2. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE, TH E ORDER OF THE LD.CIT(A) AURANGABAD BE QUASHED AND TH AT THE ORDER OF THE AO BE RESTORED. 3. THE APPELLANT PRAYS LEAVE TO ADDUCE SUCH FURTHER EVIDENCE TO SUBSTANTIATE ITS CASE AS THE OCCASION MAY DEM AND. 8. AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND ON PERUSAL OF THE ORDERS OF THE AO AND THE CIT(A) WE FIND THE AO IN THE ORDER PASSED U/S.154 WITHDREW THE EXCESS CRE DIT OF RS.14,87,038/- AS AGAINST THE EXCESS CREDIT OF RS.10,57,912/ - ACCEPTED BY THE ASSESSEE. WE FIND BEFORE THE CIT(A) THE ASSESSEE MADE ELABORATE SUBMISSIONS GIVING THE DETAILS OF EXCESS MAT CREDIT AFTER CONSIDERING THE ORDER OF THE TRIB UNAL FOR A.Y. 2009-10 ACCORDING TO WHICH THE EXCESS MAT CREDI T WAS ONLY RS.93,170/-. BASED ON THE SUBMISSIONS FILED BY T HE ASSESSEE THE CIT(A) DIRECTED THE AO TO DISALLOW THE EXCES S MAT CREDIT OF RS.93,170/- IN A.Y. 2011-12 SUBJECT TO VERIFICATION OF ASSESSMENT RECORDS OF A.YRS. 2009-10, 2010-1 1 6 ITA NO.1605/PN/2015 AND 2011-12 TO CHECK THE MAT CREDIT AVAILABLE AND ALLOWE D TO THE ASSESSEE. THIS REASONABLE FINDING OF THE CIT(A) IN OUR OPINION DOES NOT CALL FOR ANY INTERFERENCE ESPECIALLY WHEN H E HAS GIVEN AN OPPORTUNITY TO THE AO TO VERIFY THE ASSES SMENT RECORDS TO FIND OUT THE EXCESS MAT CREDIT GIVEN TO THE ASSESSEE. THE GROUNDS RAISED BY THE REVENUE ARE ACCO RDINGLY DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-04-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; ' DATED : 13 TH APRIL 2016 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. % ( ) , / THE CIT(A)-I, AURANGABAD 4. % / THE CIT-I, AURANGABAD 5 . 6. ( ++,, ,, / DR, ITAT, A PUNE; 1 / GUARD FILE. / BY ORDER , ( + //TRUE COPY // ( + //TRUE COPY// 34 + , / SR. PRIVATE SECRETARY ,, / ITAT, PUNE