Appeal details
Counselvise Citation
[2015] 134 COUNSELVISE.COM (IT) 1672 (ITAT-NAGPUR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 4 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
12-08-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Assessment Year
2009-2010
Appeal Filed On
04-04-2014
Judgement Text
1 ITA NO. 180/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER. I.T.A. NO. 180/NAG/2014 ASSESS MENT YEAR : 2009-10. THE INCOME-TAX OFFICER, SHRI VILAS NARAYANRAO KHADKE, WARD-2, AMRAVATI. V/ S. SWARSUDHA ELECTRICALS, BILANPURA ACHALPUR, DIST. AMRAVATI. PAN ABDPK0893P APPELLANT. RESPONDENT. APPELLANT BY : SHRI NARENDRA KANE. RESPONDENT BY : SHRI RAJESH V. LOYA. DATE OF HEARING : 23-07-2015 DATE OF PRONOUNCEMENT : 12 TH AUGUST, 2015 O R D E R THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS)-II, NAGPUR DATED 6 TH JANUARY, 2014. GROUNDS RAISED BY THE REVENUE FOR THE SAKE OF COMPLETENESS ONLY ARE REPRO DUCED BELOW: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND LAW THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT CLAIM OF ` .9,41,276/- HAD CORRE3CTLY BEEN MADE BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT AND W AS AN ALLOWABLE EXPENDITURE. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND LAW THE LEARNED CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE HA S FOLLOWED MERCAQNTILE SYSTEM OF ACCOUNTING AND THAT HE HAS NOT OFFERED T HE PENALTY AMOUNT AT ` .6,27,517/- RECEIVED BACK FROM MSEDCL, YAVATMAL AS HIS INCOME IN THE A.Y. 2011-12. 2 ITA NO. 180/NAG/2014 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND LAW THE LEARNED CIT(APPEALS) ERRED IN ACCEPTING THAT THE SAID EXPE NSE WAS NOT THE ROUTINE EXPENSE OF ASSESSEES BUSINESS, BUT WAS IN THE NAT URE OF PENALTY FOR THE BREACH OF AGREEMENT WITH ASSESSEE AND MSEDCL AND T HUS SNOT AN ALLOWABLE EXPENDITURE UNDER THE I.T. ACT. 2. AT THE OUTSET IT HAS BEEN PLEADED FROM THE SIDE OF THE RESPONDENT ASSESSEE THAT THE TOTAL TAX EFFECT ON THE ASSESSED INCOME WA S ` .3,79,490/-, AS IS EVIDENT FROM THE NOMENCLATURE OF THE ORDER OF LEARNED CIT(APPEAL S). THEREFORE, THE PRELIMINARY OBJECTION OF THE ASSESSEE IS THAT THE TAX EFFECT IN RESPECT OF THE ADDITIONS CHALLENGED BY THE REVENUE DEPARTMENT BEING LESS THAN THE MONET ARY LIMIT FIXED BY THE CBDT VIDE INSTRUCTION NO. 5/2014 [F.NO. 279/MISC. 142/2 007-ITJ (PT)] DATED 10-07- 2014 OF ` . 4 LAKHS, THEREFORE, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE BEFORE THE TRIBUNAL. 3. ON THE OTHER HAND LEARNED D.R. MR. NARENDRA KANE VEHEMENTLY OPPOSED THE SAID OBJECTION AND FILED WRITTEN SUBMISSIONS AS UND ER : IT IS RESPECTFULLY SUBMITTED THAT: THE INST NO. 5/2014 PRESCRIBES MONETARY LIMITS FOR FILING OF THE APPEALS BY THE REVENUE AUTHORITIES. THE MONETARY LIMIT FOR FI LING OF THE APPEAL BEFORE ITAT IS ` . 4 LAKHS. AS PER PARA 11 OF THE SAID INSTRUCTION: THIS INSTRUCTION WILL APPLY TO APPEALS FILED ON O R AFTER 10 TH JULY 2014. HOWEVER, THE CASES WHERE APPEALS HAVE BEEN FILED B EFORE 10 TH JULY 2014 WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, O PERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. 2. THE APPEAL IN THIS CASE WAS APPROVED BY THE CIT -III, NAGPUR, VIDE ORDER DTD. 31/03/2014 AND THE LIMITATION DATE WAS 07/04/2014. BASED ON THE AUTHORIZATION, THE ASSESSING OFFICER I.E. ITO, WAR D-2, AMRAVATI, FILED PRESENT APPEAL ON 04/04/2014 I.E. BEFORE 10 TH JULY 2014. HENCE, INSTRUCTION NO 3/2011 WOULD BE APPLICABLE IN THIS CASE. THE S AID INSTRUCTION PROVIDED FOR THE MONETARY LIMIT EXCEEDING ` . 3 LAKHS FOR FILING APPEALS BEFORE THE ITAT. HENCE, THE APPEAL MAY BE ADJUDICATED AND DEC IDED ON MERIT. 3 ITA NO. 180/NAG/2014 3. REGARDING THE JUDGMENTS OF THE HIGHER JUDICIAL AUTHORITIES ON THIS POINT, IT IS RESPECTFULLY SUBMITTED THAT THE BOMBA Y HC IN CIT V/S. SMT VIJAYA V. KAVEKAR [2013] 30 TAXMANN.COM 412 (BOMB AY) HAS HELD THAT THE INSTRUCTIONS ISSUED BY THE BOARD ARE APPLICABLE TO ALL THE PENDING APPEALS AS ON DATE. IT IS RESPECTFULLY POINTED OUT THERE WAS ALREADY A FULL BENCH DECISION OF [2011] 198 TAXMAN 42 (PUNJAB & HARYANA) (FB) HC ON THIS POINT DTD,. 04/02/2011 WHEREIN THEY HAVE TAKEN A CONTRARY VIEW . THE FULL BENCH DECISION OF PUNJAB & HARYANA HIGH COURT WAS NOT CO NSIDERED BY THE BOMBAY HC. APART FROM THAT, DIFFERENT HIGH COURTS HAVE IN SUBSEQUENT PERIODS HELD THAT THE INSTRUCTIONS ISSUED BY THE B OARD ARE PROSPECTIVE IN NATURE AND THEY DO NOT APPLY TO THE PENDING APPEAL S AS UNDER: I) CIT V/S, NAVBHARAT EXPLOSIVE CO. P. LTD. [2011] 337 ITR 515 (CHHATTISGARH) II) CIT , BELGAUM V/S. SMT. B. SUMANGALADEVI [20 13] 352 ITR 143 (KARNATAKA). III) CITV/S. KAUSHIK K. ZAVERI [2013] 36 TAXMANN .COM 121 (GUJARAT) IV) CIT, ALWAR V/S. TIRUPATI AUTOMOBILE (P) LTD. [ 2013] 37 TQAXMANN.COM 339 (TAXMAN) V) CIT CENTRAL, JAIPUR V/S. OM PRAKASH MODI [201 4] 42 TSAXMANN.COM 114 (RAJASTHAN) VI) CIT-I V/S. ANJANI FABRICS LTD. [2014] 41 TAXMA NN.COM 361 (GUJARAT) VII) CIT V/S. VISHAL INTERMEDIATE (P) LTD. [2014] 42 TAXMANN.COM 58 (GUJARAT). 4. THE MATTER WAS CONSIDERED BY THE HONBLE SC IN THE CASE OF CIT V/S. SURYA HERBAL LTD. [2011] 114 TAXMANN.CO. 142 (SC) WHEREIN THE HONBLE SC WAS PLEASED TO HOLD THAT CIRCULAR DT. 9 TH FEB., 2011, SHOULD NOT BE APPLIED IPSO-FACTO. 5. IT IS, THEREFORE, RESPECTFULLY SUBMITTED THAT : I) INTENTION OF THE DEPARTMENT AS COMING OUT FROM THE PARA 11 IS TO APPLY THE MONETARY LIMITS PROSPECTIVELY. II) PARA 11 WAS CONSIDERED BY THE HONBLE BOMBAY HC BUT ITS OPERATION HAS NOT BEEN SPECIFICALLY QUASHED. HOWE VER, THE INSTRUCTIONS 4 ITA NO. 180/NAG/2014 HAVE BEEN INTERPRETED TO APPLY TO ALL PENDING APP EALS BEFORE THE HONBLE HC AS ON DATE. III) THERE HAS BEEN GROWING CONCURRENCE OF THE HI GH COURTS INCLUDING SUPREME COURT , AS POINTED OUT ABOVE, WHICH UPHOL D THE DEPARTMENTS VIEW. 4. ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE LEARNED A.R., MR. RAJESH V. LOYA APPEARED AND FILED THE SUBMISSIONS AS UNDER : (1) THE ADDITION OF ` .9,41,276/- MADE BY THE AO HAS BEEN DELETED BY THE LEARNED CIT(A). THE TAX EFFECT OF THE IMPUGNED ADD ITION IS ` .2,82,382/- WHICH IS 30% OF ` .9,41,276/-. (2) THE TAX EFFECT CALCULATED ON THE BASIS OF ASSE SSED INCOME IS ` .3,24,364/- AS THE ASSESSEE IS HAVING AGRICULTURAL INCOME OF ` .2,35,500/- WHICH INCREASED THE RATES OF TAX ON INCOME COMPUTED. THE COMPUTATI ON IS AS UNDER : TAX ON INCOME OF ` . 3,31,340/- ` . 44,241/- TAX ON INCOME OF ` .12,72,616 ` .3,68,605/- (3) THE TAX EFFECT IN ANY CASE DOES NOT EXCEED ` .4,00,000/- AND THEREFORE AS PER THE INSTRUCTION NO. 5/2014 DATED 10 TH JULY, 2014 THE DEPARTMENT IS PRECLUDED TO FILE THE APPEAL. (4) THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. MADHUKAR K. INAMDAR (HUF) 2009 318 ITR 0149 HAS HELD THAT THE CBDT INSTRUCTIONS APPLY TO CASES FILED BEFORE THE DATE OF INSTRUCTIO N AND WHICH ARE PENDING BEFORE THE COURTS. THE DECISION WAS FURTHER FOLLOW ED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. SEVAK PH ARMA PVT. LTD. (2013) 84 CCH 0189. (5) THE LATEST INSTRUCTION NO. 5/15 ISSUED BY THE CBDT ON 10 TH JULY, 2014 IS HELD APPLICABLE TO THE PENDING APPEALS BY THE HON BLE DELHI ITAT ON 7 TH JULY, 2015 IN THE CASE OF ACIT VS. PRASAR BHARTI B OARD CASTING CORPORATION OF INDIA CIVIL CONSTRUCTION WING, NEW DELHI. 5 ITA NO. 180/NAG/2014 5. HEARD BOTH THE SIDES. A DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT PRONOUNCED IN THE CASE OF CIT V/S. MADHUKAR K. INAM DAR (HUF) 318 ITR 149 DATED 2 ND JULY, 2009 AND ANOTHER DECISION OF HONBLE BOMBAY HIGH COURT PRONOUNCED IN THE CASE OF CIT V/S. SEVAM PHARMA P. LTD. 84 CCH 189 ORDER DATED 22 ND MARCH, 2013 ARE APPLICABLE ON US BEING WITHIN THE TERRITORIAL JURISDICTION. MOREOVER, A DECISION OF ITAT, F-BENCH, DELHI HAS AL SO BEEN PLACED BEFORE US IN THE CASE OF ACIT V/S. PRASAR BHARATI BOAD CASTING C ORPORATION OF INDIA BEARING ITA NO. 2854/DEL.2013 ASSESSMENT YEAR 2008-09, ORDE R DATED 7 TH JULY, 2015 WHEREIN IT WAS HELD AS UNDER : 4. AFTER HEARING THE LD. SR.D.R. AND PERUSING THE MATERIAL ON RECORD WE HOLD AS FOLLOWS. THE TRIBUNAL, IN THE CASE OF DC IT V/S. SUSHILA SARAOGI (2014) (11) TMI 294 ITAT KOLKATA, AFTER CONSIDER ING THE PRECEDENTS ON THE SUBJECT, HELD THAT THE INSTRUCTION NO. 5/15, I SSUED BY THE CBDT ON 10.7.2014 IS APPLICABLE TO THE PENDING APPEALS. TH E TRIBUNAL FOLLOWED THE PROPOSITION LAID DOWN IN THE JUDGEMENTS OF VARIOUS HIGH COURTS, INCLUDING THE TWO JUDGEMENTS OF THE JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT V/S. M/S PS JAIN & CO. IN ITA 179/1991 DT. 2.8.2010 AND IN THE CASE OF CIT V/S. DELHI RACE CLUB LTD. DT. 3.3.2011. WE RESPECTFULLY FOLLOW THE CO-ORDINATE BENCH ORDER. IN THE INSTANT CASES, AS THE TAX EFFE CT BEING BELOW ` .4 LACS, WE WITHOUT GOING INTO THE ISSUE ON MERITS, DISMISS TH E APPEALS OF THE REVENUE IN LIMINE AS NOT MAINTAINABLE. IT IS TO BE MENTIONED THAT THE LD. SR.DR WAS UNABLE TO POINT OUT ANY EXCEPTIONAL CIRCUMSTANCES, MENTIONED IN BOARD INSTRUCTION NO. 5 OF 2014 THAT HAVE LED TO FILING OF THIS APPEAL, DESPITE THE FACT THAT THE MONETARY LIMIT BEING BELOW THE PRESC RIBED LIMIT. 6 ALTHOUGH IT IS APPARENT FROM THE ABOVE PRECEDENTS CITED BEFORE US THAT THERE ARE CONFLICTING VIEWS BUT WE HAVE TO FOLLOW THE DEC ISION OF THE HONBLE BOMBAY HIGH COURT HAVING TERRITORIAL JURISDICTION ON THIS BENCH OF THE TRIBUNAL. WE, THEREFORE, DISMISS THIS APPEAL OF THE REVENUE IN LI MINE WITHOUT ADJUDICATING THE MERITS OF THE CASE. 6 ITA NO. 180/NAG/2014 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED IN LIMINE. SD/- (MUKUL K. SHRAWAT) JUDICIAL MEMBER NAGPUR, DATED: 12 TH AUGUST, 2015. COPY OF ORDER FORWARDED TO : 1. THE ASSESSEE. 2. REVENUE. 3. THE CIT(A) 4. THE CIT, NAGPUR. 5. THE D.R., ITAT, NAGPUR. 6. GUARD FILE. T RUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR.
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