M/s. Gujarat State Fertilisers & Chemicals Ltd., Baroda V. The Addl.CIT.,Range-1, Baroda

ITA 1770/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0918 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Keywords: Gift; Opportunity of being heard; Bonafide belief; Revised return

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA NOS.934 & 1770/AHD/2011 / ASSESSMENT YEAR: 2006-07 & 2007-08 RESPECTIVELY GUJARAT STATE FERTILIZERS & CHEMICALS LTD., P.O. FERTILIZERNAGAR, VADODARA PAN : AAACG 7996 C VS ACIT, RANGE-1, BARODA / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SANJAY R. SHAH, AR REVENUE BY : SHRI R.I. PATEL, CIT-DR / DATE OF HEARING : 03/08/2016 / DATE OF PRONOUNCEMENT: 05/08/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THESE ARE TWO APPEALS UNDER FBT ACT, FILED BY THE A SSESSEE AGAINST SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCO ME-TAX (APPEALS)-I, BARODA, DATED 17.01.2011 AND 13.05.301, PASSED FOR ASSESSMENT YEARS 2006- 07 AND 2007-08 RESPECTIVELY. 2. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE RETURNS UNDER FBT ACT WERE FILED BY THE ASSESSEE UNDER PROTEST TO AVO ID ANY CONSEQUENCES. THE LD. COUNSEL FOR THE ASSESSEE ALSO CONTENDS THAT AT THE RELEVANT TIME, FBT ACT WAS NEW AND THERE WERE VARIOUS OPINIONS ON THE SCOPE AND TAXABILITY OF THE ITEMS. SINCE THE AUDITORS HAD GIVEN A QUALIFIC ATION ABOUT SOME OF THE ITEMS MAY BE COVERED UNDER FBT, THE ASSESSEE, TO BE ON A SAFER SIDE, FILED THE FBT RETURNS FOR THESE TWO YEARS TO AVOID ANY PENAL CONSEQUENCES. 2.1 BEFORE THE ASSESSING OFFICER AND CIT(A), IT WAS CONTENDED THAT THERE WAS NO FBT TAXABILITY AND THE RELEVANT RETURNS WERE FILED UNDER PROTEST TO ITA NOS. 934 & 1770/AHD/2011 GUJARAT STATE FERTILIZERS & CHEMICALS LTD VS. ACIT AY : 2006-07 2 AVOID ANY PENAL CONSEQUENCES WHICH CAN BE VERIFIED FROM THE RECORD. BOTH THE AUTHORITIES, HOWEVER, DID NOT CONSIDER ASSESSEE S OBJECTIONS AND MERELY BECAUSE THE FBT RETURNS WERE FILED, THE FBT TAX LIA BILITY WAS FIXED. BY NOW, VARIOUS JUDICIAL PRECEDENTS ARE AVAILABLE TO SUPPOR T ASSESSEES CONTENTIONS THAT VARIOUS ISSUES ARE NOT COVERED BY FBT AS UNDER :- I) EXPENSES NOT PROVIDING BENEFIT TO EMPLOYEES OR BUSI NESS EXPENSES ARE OUTSIDE PURVIEW OF FBT (A) BANGALORE ITAT IN TOYOTA KIRLOSKAR MOTOR (P) LTD, 2 4 TAXMAN.COM 149 (B) PUNE BENCH IN INTERVALVE (I) LTD, 33 TAXMAN.COM 690 (C) MUMBAI ITAT IN KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD, 16 TAXMAN.COM 395 (D) MUMBAI ITAT IN JET AIRWAYS LTD, 36 TAXMAN.COM 128 II) SALES PROMOTION EXPENSE, GIFTS & PRESENTATION EXPEN SE HOSPITALITY EXPENSE (A) TOYOTA KIRLOSKAR MOTOR (P) LTD (SUPRA) (B) GLAXO SMITHKLINE CONSUMERS, CHANDIGARH ITAT (C) MAHINDRA HOLIDAYS & RESORTS, CHENNAI ITAT (D) GODREJ PROPERTIES, MUMBAI ITAT III) CONVEYANCE, TOUR & TRAVEL EXPENSE, REPAIRS & MAINTE NANCE OF CARS, TELEPHONE EXPENSE, GUEST HOUSE EXPENSES, FESTIVAL C ELEBRATIONS (A) TOYOTA KIRLOSKAR MOTOR (P) LTD (SUPRA) (B) KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE (SUPRA) (C) DESAI BROTHERS, PUNE ITAT (D) JET AIRWAYS, MUMBAI ITAT IV) MEDICAL REIMBURSEMENT (A) INTERVALVE INDIA, PUNE ITAT (B) GODREJ PROPERTIES (SUPRA) V) MEDICAL CENTRE EXPENSE (A) BOSCH LTD, BANGALORE ITAT 2.2 THE LD. CIT(A), WHILE DECIDING THE APPEAL ON ME RITS, HAS NOT CONSIDERED THESE DECISIONS. THE ASSESSEE HAVING AC TED UNDER BONAFIDE BELIEF TO BE ON THE RIGHT SIDE OF THE LAW; THEREFORE, MERE FILING OF THE RETURNS TO AVOID ANY PENAL CONSEQUENCES CANNOT BE USED AS A TO OL TO TAX THE ASSESSEE WHERE THE SAME IS NOT TAXABLE. THEREFORE, THE ORDE R OF THE LD. CIT(A) MAY BE ITA NOS. 934 & 1770/AHD/2011 GUJARAT STATE FERTILIZERS & CHEMICALS LTD VS. ACIT AY : 2006-07 3 REVERSED AND THE FBT LIABILITY MAY BE DELETED. IN ALTERNATIVE, THE APPEALS MAY BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE SAME AFRESH AFTER CONSIDERING THE JUDGMENTS BY WAY OF A SPEAKIN G ORDER, AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 3. LD. DR, ON THE OTHER HAND, VEHEMENTLY CONTENDS T HAT:- (I) THE ASSESSING OFFICER DID NOT MAKE ANY ADDITION OR DISALLOWANCE. HE ONLY ACCEPTED RETURN OF FBI AS FILED BY THE ASSE SSEE AND, THEREFORE ASSESSEE CANNOT BE CONSIDERED AS AN AGGRI EVED ASSESSEE. (II) ASSESSEE HAS NOT FILED ANY REVISED RETURN IN THE IN STANT CASE. IT WOULD DEFEAT THE VERY PURPOSE AND OBJECT OF FILING REVISED RETURN AND RENDER IT NUGATORY. (III) HAD THE CASE NOT BEEN SELECTED FOR SCRUTINY ASSESSM ENT, THE FBI VALUE DECLARED BY THE ASSESSEE WOULD REMAIN THE SAM E AND IT WOULD HAVE BEEN REACHED TO FINALITY. (IV) RELIANCE IS PLACED ON FOLLOWING JUDGMENTS WHICH DID NOT ALLOW THE ASSESSEE TO MAKE CLAIM FOR DEDUCTION OTHER THAN FIL ING REVISED RETURN:- A) GOETZE INDIA LTD VS. CIT, 284 ITR 323 (SC) B) ORISSA RURAL HOUSING DEVELOPMENT CO. LTD VS. ACIT, 343 ITR 316 C) LEVEL UP NETWORK (INDIA) (P) LTD VS. ACIT, ITAT MUM BAI IN ITA NO.525/MUM/2011 ON MERITS:- (A) THE DECISION OF MUMBAI ITAT BENCH IN THE CASE OF IC ICI PRUDENTIAL LIFE INSURANCE CO. LTD VS. ACIT, 36 TAXMANN.COM 222 (B) CBDT CIRCULAR NO.8 OF 2005 DATED 29.08.2005 CLEARLY SUPPORTS THE INTERPRETATION OF THE AO AS WELL AS CI T(A) AND ALSO RETURN FILED BY THE ASSESSEE. (C) THE HONBLE SUPREME COURT HAD UPHELD THE VALIDITY O F CBDT CIRCULAR IN THE CASE OF R&B FALCON (A) PTY LTD VS. CIT, 301 ITR 309 (SC) UPHOLDING POWERS OF CBDT IN R ESPECT OF EXECUTIVE LEGISLATION. ITA NOS. 934 & 1770/AHD/2011 GUJARAT STATE FERTILIZERS & CHEMICALS LTD VS. ACIT AY : 2006-07 4 4. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. IN OUR CONSIDERED VIEW, AS ASSESSEE RAISED THE SPECIFIC PL EAS THAT THE FBT RETURNS WERE FILED UNDER THE PROTEST TO AVOID ANY CONSEQUEN CES; DEFINITE FINDINGS ABOUT FBT LEVY ON THE RELEVANT EXPENDITURE SHOULD H AVE BEEN RENDERED BY THEM. THE LD. CIT(A) HAS ALREADY ADMITTED AND ADJU DICATED THE ASSESSEES APPEALS. IN THESE CIRCUMSTANCES, WE CANNOT DISMISS THE SAME ON THE LD. DRS PLEA THAT HOW THE ASSESSEE IS AGGRIEVED ON THE ORDE R OF ASSESSING OFFICER. IT WILL RESULT IN MANIFEST INJUSTICE. 4.1 BOTH THE SIDES HAVE RELIED ON VARIOUS JUDGMENTS WHICH ARE RENDERED AFTER THE ORDER OF LD. CIT(A). THERE IS MERIT IN T HE CONTENTIONS OF LD. COUNSEL FOR THE ASSESSEE THAT AT THE RELEVANT TIME THE FBT PROVISIONS WERE AT NASCENT STAGE AND SUBJECT TO DIVERSE INTERPRETATIONS. LOT OF CASE LAW HAS DEVELOPED LATER ON FOR STREAMLINING CORRECT INTERPRETATION OF BFT ISSUES. THEREFORE, IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES, WE ARE INC LINED TO SET ASIDE THESE APPEALS BACK TO THE FILE OF LD. CIT(A) TO DECIDE TH E SAME AFRESH AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD, C ONSIDERING THE AVAILABLE CASE LAWS AND PASSING THE APPELLATE ORDER IN ACCORD ANCE WITH LAW. ACCORDINGLY, ASSESSEES APPEALS ARE ALLOWED FOR STA TISTICAL PURPOSES. 5. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 5 TH AUGUST, 2016 AT AHMEDABAD. SD/- SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 05/08/2016 *BIJU T. ITA NOS. 934 & 1770/AHD/2011 GUJARAT STATE FERTILIZERS & CHEMICALS LTD VS. ACIT AY : 2006-07 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD