The Dy. CIT., Circle-5, Ahmedabad V. M/s Riddhi Siddhi Gluco Biols Ltd, Ahmedabad

ITA 1796/AHD/2010

• Counselvise Citation: 179620514 RSA 2010
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-05-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) ITA NO.1796/AHD/2010 A. Y.: 2007-08 THE D. C. I. T., CIRCLE-5, 2 ND FLOOR, C.U. SHAH CHAMBERS, ASHRAM ROAD, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 701, SAKAR I, OPP. GANDHIGRAM STATION, ASHRAM ROAD, AHMEDABAD 380 009 PA NO. AABCR 3417 Q (APPELLANT) (RESPONDENT) APPELLANT BY SHRI K. MADHUSUDAN, SR. DR RESPONDENT BY NONE DATE OF HEARING: 17-05-2012 DATE OF PRONOUNCEMENT: 08-06-2012 O R D E R PER A. MOHAN ALANKAMONY: THE REVENUE HAS FILED THIS APPEAL AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A) -XI, AHMEDABAD IN APPEAL NO. CIT(A)/XI/1020/2009-10 DATED 19-03-20 10, FOR THE ASSESSMENT YEAR 2007-08. 2. THOUGH THE REVENUE HAS RAISED THREE GROUND IN IT S APPEAL THE ONLY SURVIVING GROUND IS GROUND NO.1 AND THE SAME I S REPRODUCED HEREIN BELOW, OTHER GROUNDS ARE GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION MADE OF RS.3,80,03,537/- ON ACCOUNT OF DEFERMENT OF SALE S-TAX. ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 2 3. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF MANUFACTURING AND TRADING OF STARCH, TA PIOCA, CHEMICALS, MAIZE GRAIN AND ALLIED PRODUCTS FILED ITS RETURN ON 31-10-2007 DECLARING TOTAL INCOME AT RS.13,14,89,550/-. THE CA SE WAS SELECTED FOR SCRUTINY AND SUBSEQUENTLY ORDER U/S 143(3) OF T HE IT ACT WAS PASSED ON 12-11-2009. DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS THE LEARNED AO ON VERIFICATION OF THE B ALANCE SHEET NOTICED THAT HE ASSESSEE HAD SHOWN TOTAL SALES TAX LIABILITY OF RS.12,09,56,123/- UNDER THE HEAD SALES TAX DEFERME NT AS AGAINST RS.8,29,52,586/- SHOWN OUTSTANDING FOR THE PRECEDIN G YEAR WHICH INCLUDED SALES TAX OF RS.3,80,03,537/- PERTAINING T O CURRENT YEAR. THE LD. AO OPINED THAT THE AMOUNT OF RS.3,80,03,537/- C LAIMED AS DEDUCTIBLE EXPENDITURE BY THE APPELLANT COULD BE A LLOWED ONLY IF THE SAME WAS CONVERTED INTO LOANS AND DEFERMENT FOR PAY MENT WAS ALLOWED DURING THE PREVIOUS YEAR BY THE CONCERNED AUTHORITIES. SINCE THE ASSESSEE HAD NOT PRODUCED ANY SUCH EVIDENCE OR CERTIFICATE FROM THE COMMERCIAL DEPARTMENT, BELGAUM, THE LEARNED AO HELD THAT THE CLAIM OF THE ASSESSEE WAS HIT BY THE PROVISIONS OF SECTION 43B OF THE ACT AND THEREFORE DISALLOWED RS.3,80,03,537/- BEING DEFERMENT OF SALES TAX AND ADDED THE SAME TO THE INCOME OF THE A SSESSEE. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E LEARNED CIT(A). THE LEARNED CIT(A) CONSIDERING THE FACTS AN D CIRCUMSTANCES OF THE CASE AS WELL AS HIS EARLIER DECISION IN THE ASSESSEES OWN CASE FOR THE AY 2006-07 AND THE DECISION OF ITAT AHMEDAB AD B BENCH ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 3 IN ASSESSEES OWN CASE IN ITA NO.1500/AHD/2009 DATE D 07-08-2009 FOR THE AY 2003-04 ALLOWED THE ASSESSEES APPEAL O N THIS ISSUE. 5. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), TH E REVENUE IS IN APPEAL BEFORE US. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE HAVE HEARD THE LEARNED DR AND CAREFULLY PERUSED THE MATERIAL AVAIL ABLE BEFORE AND WE FIND THAT AS STATED BY THE LEARNED CIT(A), ITAT AHMEDABAD B BENCH IN ASSESSEES OWN CASE IN ITA NO.1500/AHD/200 9 FOR THE AY 2003-04 VIDE ORDER DATED 07-08-2009 DECIDED THE SAM E ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE RELEVANT PORTION OF THE SAID ORDER IS REPRODUCED HEREIN BELOW: 6. THE FACTS UNDISPUTED ARE THAT THE ASSESSEE IS H AVING MANUFACTURING UNIT IN KARNATAKA. KARANATAKA GOVERNM ENT HAD AMENDED THE SALES TAX ACT FOR PROVIDING DEFERMENT O F THE SALES TAX LIABILITY AND TO TREAT THE SAID SALES TAX COLLECTED AS LOAN FOR USE OF THE ASSESSEE COMPANY. IN THIS CONNE CTION, WE MAY REFER TO SECTION 19C OF THE KARANATAKA SALES TA X ACT, 1957, WHICH IS REPRODUCED AS UNDER: '19C- POWER OF GOVERNMENT TO NOTIFY EXEMPTION OF TAX OR DEFERRED PAYMENT OF TAX FOR NEW INDUSTRIES. (1) THE GOVERNMENT MAY, IN SUCH CIRCUMSTANCES AND S UBJECT SUCH CONDITIONS AS MAY BE PRESCRIBED, BY NOTIFICATI ON DEFER PAYMENT BY ANY NEW INDUSTRIAL UNIT OF THE WHOLE OR ANY PART OF THE TAX PAYABLE IN RESPECT OF ANY PERIOD OR EXEMPT THE WHOLE OR ANY PART OF THE TAX PAYABLE BY A NEW INDUSTRIAL UNI T IN RESPECT OF ANY PERIOD: ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 4 PROVIDED THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE ACT OR IN THE RULES MADE THEREUNDER BUT SUBJECT TO SUCH CONDITIONS AS THE STATE GOVERNMENT MAY, BY GENERAL OR SPECIAL ORDER SPECIFY, WHERE A DEALER TO WHOM INCENTIVES BY WAY O F DEFERMENT OFFERED BY THE STATE GOVERNMENT IN ITS OR DERS ISSUED FROM TIME TO TIME HAS BEEN GRANTED BY VIRTUE OF ELI GIBILITY CERTIFICATE AND WHERE LIABILITY EQUAL TO THE AMOUNT OF ANY SUCH TAX PAYABLE BY SUCH DEALER HAS BEEN CREATED AS LOAN BY THE DEPARTMENT OF INDUSTRIES AND COMMERCE, GOVERNMENT O F KARNATAKA, THEN SUCH TAX SHALL BE DEEMED, IN PUBLIC INTEREST, TO HAVE BEEN PAID. (2) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, THE DEFERRED PAYMENT OF TAX UNDER SUB-SECTION (1) SHALL NOT ATTR ACT PENALTY UNDER CLAUSE (II) OF SUBSECTION (2) OF SECTION 13, PROVIDED THE CONDITIONS LAID DOWN FOR PAYMENT OF THE TAX DEFERRE D ARE SATISFIED.' BASED ON THE ABOVE AMENDMENT, VIDE LETTER NO.8.7.20 03 ISSUED BY THE JOINT DIRECTOR, DISTRICT INDUSTRIES CENTRE, BELGAUM ISSUED A CERTIFICATE (COPY PLACED ON RECORD), WHEREIN INTE R ALIA MENTIONING IN PARAGRAPH 13 AS FOLLOWS: '13. THAT THE UNIT IS ELIGIBLE TO AVAIL SALES TAX D EFERMENT (BOTH KST & CST) AS AN UNIT UNDERTAKING EXPANSION O N THE SALE OF FINISHED GOODS AS PER F.D. NOTIFICATION CITED AT REFERENCE 2 ABOVE, FOR A PERIOD OF 8 YEARS WITH EFF ECT FROM 14.12.2001 I.E., THE DATE OF THE COMMENCEMENT OF COMMERCIAL PRODUCTION AS EVIDENCED BY THE FIRST SAL E INVOICE BEARING NO.3447 DATED 14.12.2001 AND LIMITE D TO 80% OF INVESTMENT MADE ON FIXED ASSETS WHICH WORKS OUT TO RS.39,62,40,000 (RUPEES THIRTY NINE CRORES SIXTY TWO LAKHS FORTY THOUSAND ONLY).' ACCORDINGLY, THE JOINT COMMISSIONER OF COMMERCIAL T AXES, VIDE LETTER DT.5.11.2003 (COPY PLACED ON RECORD) IS SUED CERTIFICATE OF ENTITLEMENT STATING THEREIN THAT THE TAX WHICH IS ENTITLED FOR DEFERMENT SHALL BE PAYABLE BY THE ASSE SSEE'S UNIT OVER A PERIOD OF'5 YEARS IN TEN EQUAL HALF YEARLY I NSTALLMENTS COMMENCING FROM THE DATE OF EXPIRY OF THE PERIOD OF DEFERMENT ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 5 I.E., WITH EFFECT FROM 14.12.2009. IN VIEW OF THE A BOVE FACTUAL MATRIX, WE ARE OF THE CONSIDERED VIEW THAT THE ASSE SSEE HAVING FULFILLED ALL THE CONDITIONS, THE LEARNED CIT(A) IS PERFECTLY JUSTIFIED IN DELETING THE ADDITION OF RS.42,21,000 ON ACCOUNT OF DEFERMENT OF SALES TAX. ACCORDINGLY, WE DISMISS GRO UND NO.1 OF THE REVENUE. 6.1 WE ALSO FIND THAT ITAT AHMEDABAD B BENCH IN I TA NOS. 1047 AND 1048/AHD/2010 FOR AYS 2005-06 AND 2006-07 VIDE ORDER DATED 30-06-2012 IN ASSESSEES OWN CASE BY FOLLOWING THE AFORESAID ORDER DATED 07-08-2009 SUPRA HAD ALSO DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE WH EREIN IT WAS OBSERVED AS UNDER: 3.1 SINCE IN THE PAST AS WELL, THE RESPECTED CO-OR DINATE BENCH HAS AFFIRMED THE VIEW OF THE LEARNED CIT(APPE ALS), THEREFORE, WE HAVE NO REASON TO TAKE ANY OTHER VIEW TO FOLLOW THE SAME RECORDS. IDENTICALLY FOR THIS YEAR AS WELL WE HEREBY UPHOLD THE ORDER OF THE LEARNED CIT(APPEALS) AND DI SMISS THIS GROUND OF THE REVENUE. 6.2 FURTHER FROM THE ABOVE DECISIONS IT IS CLEAR TH AT JOINT DIRECTOR, DISTRICT INDUSTRIES CENTRE, BELGIUM, KARNATAKA HAD ISSUED A CERTIFICATE STATING THAT THE UNIT IS ELIGIBLE TO AVAIL SALES TA X DEFERMENT BOTH KST AND CST FOR A PERIOD OF EIGHT YEARS WITH EFFECT FR OM 14-12-2001. THIS SHOWS THAT THIS UNIT OF THE ASSESSEE IS ELIGIBLE FO R THE BENEFIT OF DEFERMENT OF SALES TAX FOR THE SALES MADE UP TO 13- 12-2009. THE RELEVANT CASE FALLS FOR THE PREVIOUS YEAR 2006-07 A ND THE ASSESSMENT YEAR 2007-08 WHICH IS WELL WITHIN THE PERIOD OF SAN CTION GRANTED BY THE APPROPRIATE AUTHORITIES IN THE STATE OF KARNATA KA. HENCE, THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF DEFERM ENT OF SALES TAX FOR THE RELEVANT ASSESSMENT YEAR. THE CERTIFICATE REQU IRED BY THE LEARNED ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 6 AO HAS BEEN ALREADY PRODUCED DURING THE ASSESSMENT PROCEEDINGS OF THE EARLIER YEARS, THE EFFECT OF WHICH WILL BE P REVALENT TILL ITS EXPIRY OF THE PERIOD I.E. ON 13-12-2009. FURTHER NO MATERI ALS ARE PRODUCED BEFORE US BY THE REVENUE TO SUGGEST THAT THE CERTIF ICATE GRANTED BY THE JOINT DIRECTOR, DISTRICT INDUSTRIES CENTRE, BEL GAUM, KARNATAKA DATED 05/11/2003 IS WITHDRAWN OR CANCELLED. THEREFORE, THE DECISION RENDERED BY OUR EARLIER BENCHES WHICH ARE CITED HER EIN ABOVE WILL BE SQUARELY APPLICABLE TO THIS CASE BEFORE US AND HENC E, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-06-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD ITA NO.1796/AHD/2010 (AY: 2007-08) DCIT, CIR-5, AHMEDABAD VS M/S. RIDDHI SIDDHI GLUCO BOILS LTD. 7 1. DATE OF DICTATION: 01-06-12 (NO DICTATION COVER ED MATTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 04-06-12 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR.P.S ./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: