The DCIT, Circle-1(1), Baroda V. M/s. Gujarat Filaments Ltd., Baroda

ITA 1927/AHD/2010

• Counselvise Citation: 192720514 RSA 2010
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 04-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1927/AHD/2010 ASSESSMENT YEAR :2005-06 DCI, CIRCLE-1(1), AAYKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S . M/S. GUJARAT FILAMENTS LTD., 3, DEEP KUNJ SOCIETY, MAKARPURA ROAD, BARODA [ PAN NO.AAACG 7703K ] / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI T. SANKAR, SR. DR /BY RESPONDENT NONE /DATE OF HEARING 22-11-2012 /DATE OF PRONOUNCEMENT 23-11-2012 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA (CI T(A) FOR SHORT) DATED 18- 03-2010 PERTAINING ASSESSMENT YEAR (AY) 2005-06. 2. THE REVENUE HAS RAISED SOLE GROUND, WHICH READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS.5 4.00 LACS MADE U/S. ITA NO.1927/AHD/2010 A.Y. 2005-06 DCIT, CIR-1(1) BRD V. M/S/. GUJARAT FILAMENTS LTD . PAGE 2 41(1) OF THE ACT. THE LD. CIT(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE LAST INSTALLMENT WAS NOT PAID BY THE ASSES SEE AS PER THE ON- TIME-SETTLEMENT WITH SBI, AND HENCE, THE SETTLEMEN T WAS CANCELLED, BUT ASSESSEE SHOWN THE ENTIRE AMOUNT OF RS.54 LACS AS LIABILITY AS AGAINST THE REMAINING INSTALLMENT TO BE PAYABLE TO THE BANK. 3. NONE APPEARED ON BEHALF OF ASSESSEE THOUGH NOTIC E OF HEARING WAS ISSUED AND SENT BY REGISTERED POST WITH ACKNOWLEDGE MENT DUE (RPAD) AND SAME IS RETURNED WITH REMARK NOT KNOWN BY THE POS TAL DEPARTMENT. NO OTHER ADDRESSES ARE AVAILABLE ON RECORD. THEREFORE, THE A PPEAL IS TAKEN UP FOR HEARING IN THE ABSENCE OF ASSESSEE. 4. THE BRIEF FACTS ARE THAT ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURING AND TRADING OF POLYPROPYLENE MULTIFIL AMENT YARN. THE CASE OF ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS FRAMED VIDE ORDER DATED 07-12-2007 U/S. 143(3) OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), WHEREBY THE ASSESSING OFFICER (AO) MADE ADDITION ON ACCOUNT OF WAIVER OF PRINCIPAL AND INTEREST AND ALSO DISALLOWED THE CLAIM OF LOSS TO THE TUNE OF RS.2,34 ,02,295/-. AGAINST THIS, ASSESSEE FILED APPEAL BEFORE LD. CIT(A) WHO AFTER C ONSIDERING THE SUBMISSIONS OF ASSESSEE ALLOWED THE APPEAL OF ASSES SEE. 5. NOW, AGAINST THIS ORDER OF LD. CIT(A) REVENUE HA S FIELD THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 6. AT THE TIME OF HEARING, LD. SR-DR SHRI T SANKAR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT THE S UBSEQUENT YEARS CANNOT BE CONSIDERED IN THE CURRENT YEARS LIABILITY. HE RELI ED ON THE DECISION OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT V. T.V. SUNDARAM IYENGAR AND SONS LTD. (1996) 222 ITR 344 (SC). 7. WE HAVE HEARD THE LD. SR-DR AND PERUSED THE MATE RIALS AVAILABLE ON RECORD AND THE JUDGMENT CITED BY LD. DR. WE FIND TH AT GRIEVANCE OF REVENUE ITA NO.1927/AHD/2010 A.Y. 2005-06 DCIT, CIR-1(1) BRD V. M/S/. GUJARAT FILAMENTS LTD . PAGE 3 IS AGAINST THE DELETION OF ADDITION MADE U/S. 41(1) OF THE ACT. THE AO MADE ADDITION OF RS.54 LAKH ON THE BASIS THAT ASSESSEE E NTERED INTO ONE TIME SETTLEMENT (OTS FOR SHORT) WITH THE STATE BANK OF I NDIA AND HE TREATED THE WAIVER OF PRINCIPAL AMOUNT AND INTEREST AS THE INCO ME OF THE ASSESSEE. THE CONTENTION OF ASSESSEE BEFORE AO AS WELL AS LD. CIT (A) WAS THAT LIABILITY HAD NOT EXTINGUISHED AS THE OTS FAILED AND WAS CANCELLE D. WE FIND THAT LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT ASSESSE E HAS ACKNOWLEDGED THE DEBT IN ITS BALANCE-SHEET AND ACKNOWLEDGING OF SUCH DEBT BY A COMPANY IS A SUFFICIENT ACKNOWLEDGMENT WITHIN THE PROVISIONS OF SECTION 18 OF THE LIMITATION ACT, 1963. WE FURTHER FIND NO INFIRMITY INTO THE OR DER PASSED BY LD. CIT(A) AS IT IS WELL SETTLED THAT IN ORDER TO APPLY SECTION 41(1 ) OF THE ACT FOLLOWING POINTS ARE TO BE CONSIDERED:- I) IN COURSE OF ASSESSMENT, FOR AN EARLIER YEAR, AL LOWANCE OR DEDUCTION HAS BEEN MADE IN RESPECT OF TRADING LIABILITY INCUR RED BY THE ASSESSEE. II) SUBSEQUENTLY A BENEFIT OBTAINED IN RESPECT OF S UCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF DURING THE YE AR IN WHICH SUCH EVENT INCURRED; III) IN THAT SITUATION, THE VALUE OF BENEFIT ACCRUI NG TO THE ASSESSEE IS TO BE DEEMED TO BE PROFIT AND GAINS OF BUSINESS WHICH OTH ERWISE WOULD NOT BE HIS INCOME AND FOR SUCH VALUE BENEFIT IS MADE CHARG EABLE TO INCOME TAX AS INCOME OF THE PREVIOUS YEAR, WHEREIN SUCH BENEFI T WAS OBTAINED. IN OUR CONSIDERED OPINION, THE PROVISIONS OF SECTIO N 41(1) OF THE ACT COULD NOT BE INVOKED IN VIEW OF THE UNCONTROVERTED FACT THAT ASSESSEE HAS ACKNOWLEDGED THE DEBT IN ITS BALANCE-SHEET AND THE BANKER OF THE ASSESSEE HAS INITIATED PROCEEDINGS FOR RECOVERY OF ITS DUES AND THEREFORE THE LIABILITY OF THE ASSESSEE IS NOT EXTINGUISHED. WE ARE FORTIFIED BY THE JUDGMENT IN THE CIVIL APPEAL 1581 OF 2001 DATED 19-03-2002 OF HONBLE SUP REME COURT RENDERED IN THE CASE OF CCIT V. M/S. KESARIA TEA CO. LTD. AND THE JUDGMENT OF HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT V. SUGAULI SUGAR WORKS (P) ITA NO.1927/AHD/2010 A.Y. 2005-06 DCIT, CIR-1(1) BRD V. M/S/. GUJARAT FILAMENTS LTD . PAGE 4 LTD. (1999) 236 ITR 518 (SC). RESPECTFULLY FOLLOWING THE RATIO LAID THEREIN, THIS GROUND OF REVENUES APPEAL IS DISMISSED. 8. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP !' #-23/11/2012 )*+ , --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '+'-1 2 / CONCERNED CIT 4. 2- / CIT (A) 5. .56 ---1, -1 , )*+ / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ , /TRUE COPY/ =/) '> -1 , )*+ , STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 22/11 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 22/11 4) DATE OF CORRECTION 22/11 5) DATE OF FURTHER CORRECTION 6) DATE OF INITIAL SIGN BY MEMBERS 22/11 7) ORDER UPLOADED ON 23/11 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 23/11