Pratik Processors Pvt.Ltd., Surat V. The Dy.CIT.,Circle-1, Surat

ITA 191/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 50919 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , .'# '#,$% $ & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A. NO.191/AHD/2010 ( # ( # ( # ( # ( / / / / ASSESSMENT YEAR : 2006-07) PRATIK PROCESSORS PVT.LTD. 522, GIDC PANDESARA, SURAT # # # # / VS. THE ADDL.CIT RANGE-1 SURAT ) $% ./*+ ./ PAN/GIR NO. :AABCP 4205 A ( ), / // / APPELLANT ) .. ( -.),/ RESPONDENT ) ), / $/ APPELLANT BY : NONE (WRITTEN SUBMISSION) -.), 0 / $ / RESPONDENT BY : SHRI B.L.YADAV, D.R. #1 0 %/ // / DATE OF HEARING : 03/11/2011 2'( 0 % / DATE OF PRONOUNCEMENT : 11/11/11 $3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-I, SURAT DATED 16/11/2009 AND THE GROUND READS AS UNDER:- 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.2,91,055/- I N RESPECT OF ESTIMATED WORK-IN-PROGRESS IN THE ACTIVITY OF JOB W ORK OF MAN MADE FABRICS, WITHOUT APPRECIATING THE FACT THAT ITA NO .191/AHD/2010 PRATIK PROCESSORS PVT.LTD. VS. ADDL CIT ASST.YEAR 2006-07 - 2 - - THE APPELLANT COMPANY IS EXCLUSIVELY ENGAGED IN THE ACTIVITY OF JOB-WORK I.E. IT IS A SERVICE PROVIDER, - AS PER ACCOUNTING STANDARD (AS) -2 NO INVENTORY OF WIP CAN BE CONSIDERED IN THE CASE OF SERVICE PROVIDERS, - AS PER ACCOUNTING STANDARD (AS) -9 NO REVENUE IS TO BE RECOGNIZED UNLESS THE RENDERING OF SERVICES UNDER A CONTRACT IS COMPLETED OR SUBSTANTIALLY COMPLETED, AND - METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED AND EVEN ACCEPTED BY THE DEPARTMENT CANNOT BE DEPARTED. 3. ON THE DATE OF HEARING, ONLY WRITTEN SUBMISSION S WERE FURNISHED BY THE APPELLANT-ASSESSEE. FROM THE SIDE OF THE RE VENUE, LD.DR MR.B.L.YADAV APPEARED AND SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 4. AT THE OUTSET, IT IS EVIDENT THAT IN ASSESSEES OWN CASE ON IDENTICAL FACTS THE ISSUE RAISED STOOD DECIDED BY THE ITAT AH MEDABAD BENCH D BEARING ITA NO.165/AHD/2009 FOR A.Y. 2005-06 VIDE A N ORDER DATED 10/06/2011, IT WAS HELD AS UNDER:- 4 . FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING AS SESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATE D 24/12/2007 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF P ROCESSING OF MAN- MADE FABRICS ON JOB WORK BASIS. THE ASSESSING OFFI CER HAS MADE A COMPARABLE STATEMENT ABOUT THE PROFIT DECLARED AND HAVE FOUND THAT ON THE TURNOVER OF RS.8,86,82,838/-. GROSS PROFIT WAS DECLARED AT RS.1,31,68,560/- GIVING GROSS PROFIT RATIO AT 14.85 % AS AGAINST THAT IN THE IMMEDIATE PRECEDING YEAR THE GROSS PROFIT WAS A T 14.09%. 4.1. THE REASON FOR THE ADDITION WAS THAT NO WORK-I N-PROGRESS WAS DISCLOSED BY THE ASSESSEE IN THE BALANCE SHEET. TH E EXPLANATION OF THE ASSESSEE WAS THAT THE ASSESSEE WAS IN THE BUSINESS ONLY ON JOB-WORK BASIS. HOWEVER, THE ASSESSING OFFICER WAS NOT CONV INCED AND COMPUTED THE WORK-IN-PROGRESS AT RS.1,97,841/- AND TAXED ACC ORDINGLY. THE ITA NO .191/AHD/2010 PRATIK PROCESSORS PVT.LTD. VS. ADDL CIT ASST.YEAR 2006-07 - 3 - MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHO RITY AND THE LD.CIT(A) HAS AFFIRMED THE ORDER OF THE ASSESSING OFFICER IN THE FOLLOWING MANNER:- 2.3. I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. AS PER THE ACCOUN TING PRINCIPLES AS WELL AS THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF BRITISH PAINTS INDIA LTD. (SUPRA), C LOSING STOCK HAS TO BE SHOWN IN WORKING OUT THE CORRECT PROFIT. HAV ING SAID THAT THE CALCULATION MADE BY THE A.O. IS REASONABLE BY A DOPTING AVERAGE PRODUCTION PER DAY AND AVERAGE COST OF PROC ESSING, HENCE THE ADDITION MADE BY THE A.O. IS CONFIRMED AN D THIS GROUND OF APPEAL IS DISMISSED. 5. UNDISPUTEDLY, THE ORDER OF THE FIRST APPELLATE A UTHORITY WAS CRYPTIC, HOWEVER, IT HAS BEEN PLACED ON RECORD THAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05, AN APPEAL WAS DE CIDED BY THE RESPECTED ITAT AHMEDABAD BENCH (CAMP AT SURAT) IN I TA NO.1956/AHD/2007 (FOR A.Y. 2004-05) VIDE AN ORDER D ATED 15/01/2010, WHEREIN AN ANOTHER DECISION OF THE TRIBUNAL WAS QUO TED, NAMELY, VIPUL INDUSTRIES PVT.LTD. VS. ACIT (ITA NO.2649/AHD/2006) DATED 17/09/2009 AND THEREAFTER CONCLUDED AS UNDER:- 7. WE ALSO FIND THAT ONLY REASON FOR REJECTING TH E BOOK RESULT IS THAT WORK-IN-PROGRESS IS NOT CORRECTLY DECLARED WHI LE FRAMING ASSESSMENT, THE INCOME IS COMPUTED AS DECLARED BY T HE ASSESSEE ON THE BASIS OF BOOK AGAINST THE ESTIMATED EXCEPT T HAT THE VALUE OF CLOSING STOCK OF WORK IN PROGRESS IS ADDED, IT I S TO BE HELD THAT BOOK RESULT HAS TO BE ACCEPTED WHICH IS BETTER RESU LT THAN THE DECLARED IN THE IMMEDIATELY PRECEDING YEAR. THEREF ORE, NO GROUND TO REJECT THE BOOK RESULT. 6. SINCE IN ASSESSEES OWN CASE ON IDENTICAL FACTS AND CIRCUMSTANCES THE RESPECTED CO-ORDINATE BENCH HAS T AKEN A VIEW, THEREFORE, WE FIND NO REASON TO DIFFER WITH THE SAI D VIEW, HENCE, FOLLOWING THE SAME FOR THIS YEAR AS WELL, WE HEREBY DIRECT TO DELETE THE ADDITION. GROUND IS ALLOWED. 5. ON PERUSAL OF THE ABOVE ORDER, IT IS THEREFORE E VIDENT THAT IN THE PAST FOR AYS 2004-05 & 2005-06 CONSISTENTLY THE RES PECTED CO-ORDINATE ITA NO .191/AHD/2010 PRATIK PROCESSORS PVT.LTD. VS. ADDL CIT ASST.YEAR 2006-07 - 4 - BENCHES ARE TAKING A VIEW IN FAVOUR OF THE ASSESSEE , THEREFORE ON THE SAME LINES IN THE YEAR UNDER CONSIDERATION, I.E. A. Y. 2006-07, WE HEREBY FOLLOW THE SAID VIEW AND DIRECT TO GIVE THE PROPER RELIEF ACCORDINGLY. GROUND IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. SD/- SD/- (A. MOHAN ALANKAMONY) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 11 / 11 /2011 4..#, .#../ T.C. NAIR, SR. PS $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5( $3 0 -5 6$5(/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-I, SURAT 5. 5:; -# , , / DR, ITAT, AHMEDABAD 6. ; <1 / GUARD FILE. $3# $3# $3# $3# / BY ORDER, .5 - //TRUE COPY// = == =/ // / * * * * ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION..3.11.11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3.11.11. OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 11.11.11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.11.11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER