Jacob C.Luke, Kottarakkara V. DCIT, Kollam

ITA 178/COCH/2007

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58332 (ITAT-COCHIN)
• Duration Of Justice: 4 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 27-02-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 01-03-2007
• Court: TRIBUNAL
• Department Lawyers: VIJAYAPRABHA
• Assessee Lawyers: T V HARIHARAN
• Keywords: Opportunity of being heard
• Section: 43B; 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE: SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO. 178/COCH/2007 ASSESSMENT YEAR : 2003-04 JACOB C. LUKE, PROP: NOBLE CASHEW INDUSTRIES, KOTTARAKKARA, KOLLAM [PAN: AAVPL 1038J] THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, KOLLAM. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI T.V.HARIHARAN, FCA RESPONDENT BY: SMT. VIJAYAPRABHA, JR. DR DATE OF HEARING: 27/02/2012 DATE OF PRONOUNCEMENT: 29/02/2012 ORDER PER SHRI B.R.BASKARAN, ACCOUNTANT MEMBER:- THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 16-11-2006 PASSED BY LD CIT(A)-III, TRIVANDRUM AND IT RELATES TO THE ASSESSMENT YEAR 2003-04. 2. THE GROUND NO.1 IS GENERAL IN NATURE. THE L D COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO.2 AND IN SUPPORT OF THE SAID SUBMIS SION, THE LD A.R HAS MADE NECESSARY ENDORSEMENT IN THE GROUNDS OF APPEAL BY A FFIXING HIS SIGNATURE. ACCORDINGLY, THE SAID GROUND IS DISMISSED AS WITHDRAWN. 3. THE GROUND NO.3 RELATES TO THE DISALLOWANCE OF SALES TAX LIABILITY MADE U/S 43B OF THE ACT. THE AO DISALLOWED OUTSTANDING SALES TAX L IABILITY OF RS.2.00 LAKHS BY INVOKING THE PROVISIONS OF SEC.43B OF THE ACT. HOWEVER, DUR ING THE COURSE OF ASSESSMENT PROCEEDING, THE ASSESSEE CONTENDED THAT A SUM OF RS .60,888/- WAS PAID BY HIM BEFORE I.T.A. NO.178 /COCH/2007 2 THE DUE DATE FOR FILING THE RETURN OF INCOME AND IN SUPPORT OF THE SAME, HE FILED A CERTIFICATE FROM A CHARTERED ACCOUNTANT. ACCORDING LY HE PRAYED FOR ALLOWING DEDUCTION OF RS.60,888/-. HOWEVER, THE AO DID NOT ACCEPT THE SAID CERTIFICATE WITH THE OBSERVATION THAT THE CERTIFICATE OF CHARTERED ACCOU NTANT IS ACCEPTABLE ONLY IF IT WAS FILED ALONG WITH THE AUDIT REPORT. THE LD CIT(A) CONFIRM ED THE ADDITION FOR THE REASON THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT THE IMPUGN ED PAYMENT OF RS.60,888/- WAS TOWARDS OUTSTANDING LIABILITY OF RS.2.00 LAKHS. 3.1 BEFORE US, THE LD A.R CONTENDED THAT THE AO SHOULD NOT HAVE MADE DISALLOWANCE ONLY FOR THE REASON THAT THE CERTIFICATE FROM THE C HARTERED ACCOUNTANT WAS FILED BELATEDLY. THE LD A.R FURTHER SUBMITTED THAT THE A SSESSEE IS SEEKING A DEDUCTION OF RS.60,888/- ONLY, OUT OF THE TOTAL DISALLOWANCE OF RS.2.00 LAKHS. ON THE OTHER HAND, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS FAILED TO SU BSTANTIATE THE CLAIM OF PAYMENT OF OUTSTANDING SALES TAX LIABILITY AND HENCE THE LD CI T(A) WAS RIGHT IN SUSTAINING THE DISALLOWANCE. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS. WE NO TICE THAT THE LD CIT(A) HAS CONFIRMED THE IMPUGNED DISALLOWANCE ONLY FOR THE RE ASON THAT THE ASSESSEE COULD NOT CORRELATE THE IMPUGNED PAYMENT OF RS.60,888/- WITH THE OUTSTANDING SALES TAX LIABILITY OF RS.2.00 LAKHS. THOUGH THE CERTIFICATE OF THE C HARTERED ACCOUNTANT STATES THAT THE IMPUGNED AMOUNT OF RS.60,888/- WAS PAID OUT OF THE OUTSTANDING BALANCE OF RS.2.00 LAKHS, YET IT DOES NOT STATE THE ACTUAL DATE OF PAY MENT. FURTHER THE AO HAS OBSERVED THAT THE LEDGER ACCOUNT COPY DOES NOT REFLECT THE I MPUGNED PAYMENT OF RS.60,888/-. THUS, WE NOTICE THAT THE CLAIM OF THE ASSESSEE IS C ONTRADICTORY TO THE OBSERVATIONS OF THE TAX AUTHORITIES. AT THE SAME, THE TRIBUNAL IS OF THE VIEW THAT THE ASSESSEE SHOULD NOT BE DENIED A DEDUCTION, WHICH HE IS LEGALLY ENTI TLED TO. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MORE OPP ORTUNITY TO PROVE HIS CLAIM OF PAYMENT OF RS.60,888/- WITH NECESSARY EVIDENCES. A CCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF AO WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AFTER PROV IDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECIDE THE SAME IN ACCORD ANCE WITH THE LAW. I.T.A. NO.178 /COCH/2007 3 4. THE NEXT ISSUE RELATES TO THE DISALLOWANCE O F CONTRIBUTION TO PF, LIC WELFARE FUNDS AMOUNTING TO RS.18,84,264/- U/S 43B OF THE ACT FOR THE REASON THAT THEY HAVE BEEN PAID BEYOND THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS. BOTH THE AO AND LD CIT(A) RELIED UPON THE DECISION OF JURISDICTIONAL HIGH COU RT IN THE CASE OF SOUTH INDIA CORPORATION LTD. (2000)(242 ITR 114) IN MAKING THE IMPUGNED DISALLOWANCE. DURING THE COURSE OF HEARING, THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LAW IN THIS REGARD HAS SINCE BEEN SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD (2009) (319 ITR 306). FURTHER HE SUB MITTED THAT THE SLP FILED BY THE DEPARTMENT AGAINST THE DECISION OF KARNATAKA HIGH C OURT REPORTED IN 298 ITR 141 HAS BEEN DISMISSED BY THE HONBLE APEX COURT AS REPORTE D IN (2010) (328 ITR (ST.) 10). ON THE CONTRARY, THE LD COUNSEL FOR THE DEPARTMENT SUB MITTED THAT THE PROVISIONS OF SEC.43B ARE APPLICABLE TO ONLY THE EMPLOYERS CONTR IBUTION AND THE EMPLOYEES CONTRIBUTION ARE REGULATED BY SEC. 36 OF THE ACT. ACCORDINGLY SHE SUBMITTED THAT THE MATTER REQUIRES RE-EXAMINATION IN THE LIGHT OF BOTH THE PROVISIONS OF THE ACT. 4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND CAR EFULLY PERUSED THE RECORD. IN VIEW OF THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THIS MATTER REQUIRES RE-EXAMINATION. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF JUDICIAL DECISIONS AND THE PROVISIONS OF THE ACT. 5. THE LAST ISSUE RELATES TO THE DISALLOWANCE O F DEDUCTION U/S 80HHC OF THE ACT IN RESPECT OF THE DEPB RECEIPTS. THE TURNOVER OF THE A SSESSEE DURING THE YEAR UNDER CONSIDERATION EXCEEDED RS.10.00 CRORES. THE AO OBS ERVED THAT THE ASSESSEE HAS NOT SATISFIED CERTAIN CONDITIONS PRESCRIBED FOR ASSESSE ES WHOSE TURNOVER HAS EXCEEDED RS.10.00 CRORES AND ACCORDINGLY REDUCED THE DEDUCTI ON CLAIMED U/S 80HHC OF THE ACT. THE SAID VIEW OF THE AO WAS ALSO CONFIRMED BY THE L D CIT(A). IT IS THE CONTENTION OF THE ASSESSEE THAT THE PROVISOS INSERTED BY TAXATION LAWS (AMENDMENT) ACT, 2005 WERE NOT APPLICABLE TO THE ASSESSEE, AS IT DID NOT HAVE OPTION TO SELECT EITHER DEPB OR DUTY DRAW BACK FOR THE REASON THAT THE CASHEW EXPORTERS ARE ENTITLED TO ONLY TO DEPB I.T.A. NO.178 /COCH/2007 4 BENEFITS. ACCORDINGLY, HE CONTENDED THAT THERE IS NO JUSTIFICATION IN REDUCING THE DEDUCTION U/S 80HHC IN RESPECT OF DEPB BENEFITS. HE FURTHER SUBMITTED THAT THE LAW RELATING TO THE TAXABILITY AS WELL AS DEDUCTION U/S 80HHC IN RESPECT OF DEPB RECEIPTS HAS SINCE BEEN SETTLED BY HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS, VIDE ITS ORDER DATED 09-02-2012. ON THE CONTRARY, THE LD D. R SUBMITTED THAT THE CLAIM OF THE ASSESSEE NEEDS TO BE EXAMINED AFRESH IN THE LIGHT O F THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS, REFERRED SUPRA. 5.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE HONBLE SUPREME COURT HAS EXAMINED THIS ISSUE ELABORATELY AND FOUND THAT THE PROFIT ELEMENT HAS TO BE BROUGHT TO TAXATION. HENCE, AS SUBMITTED BY BOTH THE PARTIES, THIS ISSUE REQUIRES TO BE EXAMINED AFRESH IN THE LIGHT OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF TOPMAN EXPORTS, SUPRA. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD C IT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE ISSUE OF TAXABILITY AND DEDUCTION U/S 80HHC OF DEPB RECEIPTS IN ACCORDANCE WITH THE DECISI ON OF HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORTS, REFERRED SUPRA. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ON 29-02-2012 SD/- SD/- (N.R.S.GANESAN) (BR BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER ERNAKULAM DATED: 29TH FEBRUARY, 2012 GJ COPY TO 1 JACOB C. LUKE, PROP: NOBLE CASHEW INDUSTRIES, KOT TARAKKARA, KOLLAM. I.T.A. NO.178 /COCH/2007 5 2 THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-1, K OLLAM. 3 THE COMMISSIONER OF INCOME-TAX(APPEALS)-III, TRIV ANDRUM. 4 THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. THE DR, ITAT, COCHIN BENCH. 6 GUARD FILE. BY ORDER A SSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH