Dy.Commissioner of Income Tax-6, Kanpur V. M/s U.P State Yarn Company Ltd., Kanpur

ITA 189/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0552 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 24-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.189/LKW/2014 ASSESSMENT YEAR:2004 - 05 M/S U.P. STATE YARN COMPANY LTD., SMITH SQUARE, 14/72, CIVIL LINES, KANPUR. PAN:AAACU1674K VS DY.C.I.T. - 6, KANPUR. (RESPONDENT) (APPELLANT) SHRI HARISH GIDWANI, D. R. APPELLANT BY NONE RESPONDENT BY 12/03/2015 DATE OF HEARING 21 /04/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, KANPUR DATED 27/12/2013 FOR THE ASSESSMENT YEAR 2004 - 2005. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,45,96,000/ - ON ACCOUNT OF TRADE TAX COLLECTED BUT NOT PAID BY THE ASSESSEE RELYING UPON THE CBDT CIRCULAR NO. 496 DATED 25/09/1987 AND NO. 674 DATED 29/12/1993 WI THOUT APPRECIATING THAT NEITHER OF THE TWO CIRCULARS WOULD APPLY ON THE FACTS OF THE CASE. 2. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,45,96,000/ - , TRADE TAX COLLECTED BUT NOT PAID, BY RELYING ON CBDT CIRCULAR NO. 496 DATED 25/09/1987 WITHOUT APPRECIATING THAT THE SAID CIRCULAR WOULD HAVE APPLICATION ONLY WHERE THE RELEVANT STATE LAW 2 HAS BEEN AMENDED DEEMING DEFERRED TAX AS TAX PAID, WHICH IS NOT THE POSITION HERE AS NO SUCH AMENDMENT HAS BEEN PLEADED BEFORE THE ASSESSI NG OFFICER OR THE CIT(A). 3. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN PLACING RELIANCE ON CBDT CIRCULAR NO. 674 DATED 29/12/2013 WITHOUT APPRECIATING THAT THE SAID CIRCULAR ALLOWED DEDUCTION U/S 43B ONLY WHERE STATE GOVERNMENTS HAD NOTIFIED SCHEMES UN DER WHICH SALES TAX WAS DEEMED TO BE ACTUALLY COLLECTED AND CONVERTED AS LOAN WHICH IS NOT THE POSITION HERE AS NO SUCH SCHEME OF CONVERSION BY THE STATE GOVERNMENT HAS BEEN PLEADED BEFORE THE ASSESSING OFFICER OR THE CIT(A) 4. THE ORDER OF THE CIT (A), K ANPUR BEING ERRONEOUS, UNJUST AND BAD IN LAW BE VACATED AND THE ORDER OF THE AO BE RESTORED. 3. THIS APPEAL WAS LAST FIXED FOR HEARING ON 23/01/2015 AND ON THIS DATE AN APPLICATION WAS MOVED BY SHRI ABHINAV MEHROTRA, ADVOCATE AND A.R. OF THE ASSESSEE SE EKING ADJOURNMENT. THE MATTER WAS ADJOURNED TO 12/03/2015. ON THIS DATE, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THERE IS NO REQUEST FOR ADJOURNMENT AND THEREFORE, WE PROCEED TO DECIDE THIS APPEAL OF THE REVENUE EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT CIT(A) HAS REPRODUCED THE CONTENTS OF CBDT CIRCULAR NO. 674 DATED 29/12/83 WHEREIN IT IS CLARIFIED THAT WHERE THE STATE GOVERNMENTS MAKE AN AMENDMENT IN THE SALES TAX ACT TO THE EFFECT THAT THE SALES TAX DEFERRED UNDER THE SCHEME SHALL BE TREATED AS ACTUALLY PAID, THE STATUTORY LIABILITY SHALL BE TREATED AS DISCHARGED FOR THE PURPOSE OF SECTION 43B. THEREAFTER, HE HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE 3 BY STATING THAT IN VIEW OF CLEAR CIRCULAR OF CBDT, THIS DISALLOWANCE IS NOT COVERED BY THE PROVISIONS OF SECTION 43B B UT HE HAS NOT GIVEN A FINDING THAT AS REQUIRED IN THE CIRCULAR QUOTED BY HIM , THE STATE GOVERNMENT IN THE PRESENT CASE HAS MADE AN AMENDMENT IN THE SALES TAX ACT OR NOT. HENCE, IN OUR CONSIDERED OPINION, THE ORDER OF CIT(A) IS NOT SUSTAINABLE BUT STILL IN THE INTEREST OF JUSTICE, WE FEEL THAT THE MATTER SHOULD GO TO CIT(A) FOR FRESH DECISION TO DECIDE THE ISSUE AFRESH AFTER EXAMIN ING THIS ASPECT IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. WE ORD ER ACCORDINGLY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 /04/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR