The DCIT, Bharuch Circle, Bharuch V. M/s. Gujarat Borosil Ltd., Bharuch

ITA 1931/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1606 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 31-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHM EDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 1931/AHD/2012 (ASSESSM ENT YEAR: 2009-10) DEPUTY COMMISSIONER OF INCOME TAX, BHARUCH CIRCLE, BHARUCH VS. GUJARAT BOROSIL LIMITED, VILLAGE - GOVALI, TAL. JHAGADIA, ANKLESHWAR RAJPIPLA ROAD, DIST. BHARUCH 393110 PAN NO. AAACG8440M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KEYUR PATEL, SR. D.R. RESPONDENT BY : SHRI SUNIL TALATI, A.R. DATE OF HEARING : 07-04 -2016 DATE OF PRONOUNCEMENT : 03-05-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY REVENUE IS AGAINST THE ORDER O F CIT(A)-VI, BARODA, DATED 27.02.2012 FOR THE ASSESSMENT YEAR 2009-10 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A COMPANY STATED TO BE ENGAGED I N THE BUSINESS OF MANUFACTURING OF GLASS SHEETS. THE ASSESSEE ELECTR ONICALLY FILED ITS RETURN OF ITA NO.1931/AHD/12 A.Y. 2009-10 (DCIT VS. GUJARAT BOROSIL LTD.) 2 INCOME FOR A.Y. 2009-10 ON 26.09.2009 DECLARING TOT AL INCOME AT RS.9,53,12,992/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THEREAFTER, THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE OR DER DATED 28.12.2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.14,56,32,809/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFO RE THE LD. CIT(A) WHO VIDE ORDER DATED 27.06.2012 (IN APPEAL NO. CAB/(A)VI-467 /11-12) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUN D : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW. (I) THE LD. CIT(A) ERRED IN LAW IN DELETING THE DISALLO WANCE OF RS.4,04,19,672/- U/S 43B OF THE ACT DISREGARDING TH E FACT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING A ND ASSESSEE HAD CLAIMED DEDUCTION U/S 43B OF THE ACT WITHOUT TREATI NG THE SAME AS ACTUAL LIABILITY IN ITS BOOKS OF ACCOUNT ON THE GROUND THA T LIABILITY GETS ACCRUED ON GETTING NOTICE OF DEMAND FROM THE CONCERNED AUTH ORITIES. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O . NOTICED THAT ASSESSEE HAD CLAIMED EXCISE DUTY OF RS.4,04,19,762/- WHICH I NCLUDED PAYMENTS FOR VARIOUS PERIODS PRIOR TO THE IMPUGNED ASSESSMENT YE AR AND DEMAND WAS SHOWN AS RECOVERABLE IN THE BALANCE SHEET. THE A.O. WAS THE REFORE OF THE VIEW THAT EXCISE DUTY LIABILITY DID NOT ACCRUE DURING THE YEAR AND S INCE, ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, DEDUCTION U/S.43B OF THE ACT WAS ALLOWABLE IN THE YEAR OF PAYMENT IF THE LIABILITY ACCRUED DURING THE PREVIOUS YEAR. HE ALSO NOTED THAT ON SIMILAR FACTS IN ASSEESSEES OWN CASE FOR A.Y. 2008-09 THE DEDUCTION U/S.43B OF THE ACT WAS DISALLOWED BY HIS PREDECESSO R. HE THEREFORE DISALLOWED RES.4,04,19,762/- U/S.43B OF THE ACT. 5. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) WHO DELETED THE ADDITION BY HOLDING AS UNDER : ITA NO.1931/AHD/12 A.Y. 2009-10 (DCIT VS. GUJARAT BOROSIL LTD.) 3 5.2 I HAVE CONSIDERED THE FACTS OF THE CASE AS WEL L AS THE OBSERVATION OF THE AO AND THE ARGUMENTS PUT FORTH BY THE AR OF THE APPELLANT. ON THE BASIS OF DECISIONS OF HONBLE SUPREME COURT IN THE CASES OF KEDARNATH JUTE MFG. C O. 82 ITR 363 AND CIT V/S BHARAT CARBON & RIBBON MFG. CO. PVT. LTD. 239 ITR 505 IT I S VERY CLEAR THAT IN THE CASE OF APPELLANT EXCISE DUTY LIABILITY ACCRUED WHEN THE DE MAND FOR THE SAME WAS RAISED BY THE CONCERNED OFFICER NOTWITHSTANDING THE FACT THAT THE LIABILITY WAS DISPUTED BY THE APPELLANT. IT IS ALSO CLEAR FROM THE DECISION IN TH E CASE OF CIT V/S BHARAT CARBON & RIBBON MFG.CO.PVT.LTD. 239 ITR 505 THAT TREATMENT G IVEN IN THE BOOKS OF ACCOUNT OF THE APPELLANT IS NOT RELEVANT FOR ALLOWABILITY OF DEDUC TION UNDER IT ACT. IN FACT, FACTS OF THE CASE OF THE APPELLANT ARE IDENTICAL TO THOSE IN THE CASE OF CIT V/S BHARAT CARBON & RIBBON MFG.CO.PVT.LTD. REFERRED TO ABOVE. SINCE THE APPELLANT HAS PAID AMOUNT OF RS.4,04,19,672/- TOWARDS EXCISE DUTY DURING THE YEA R IT WAS ENTITLED TO DEDUCTION OF THE SAID AMOUNT U/S 43B OF THE IT ACT. DISALLOWANCE OF RS.4,04,19,672/- MADE BY THE AO IS HEREBY DELETED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 6.1 BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. LD. A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND LD. CIT(A) AND FURTHER SUBMITTED THAT ON IDENTICAL FACTS IN ASSESSEES OWN CASE FOR A.Y. 2008-09, REVENUE HAD PREFERRED APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL VIDE ITS ORDER DATED 07.12.2015 IN ITA NO.2463/AHD/2012 DISMISSED THE APPEAL OF REVENUE. HE POINTED TO THE RELEVANT FINDING OF TRIBUNAL. HE THEREFORE SUBMITTED THAT SINCE THE A.O. HAS ALSO ADMITTED THAT THE FACTS OF THE CA SE IN THE YEAR UNDER APPEAL ARE IDENTICAL THAT OF A.YS. 2008-09 AND SINCE FOR A.Y. 2008-09, THE MATTER HAS ALREADY BEEN DECIDED IN FAVOUR OF ASSESSEE, NO INTERFERENCE TO THE ORDER OF LD. CIT(A) IS CALLED FOR. HE THUS SUPPORTED THE ORDER OF LD. CIT (A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DE LETING THE DISALLOWANCE MADE U/S.43B OF THE ACT. WE FIND THAT LD. CIT(A) WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE HAS GIVEN A FINDING THAT THE AMOUNT OF EXC ISE DUTY PAID BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION IN VIEW OF THE DECISIONS CITED IN HIS ORDER. WE ALSO FIND THAT A.O. IN HIS ORDER HAS NOTED THAT THE FACT S IN THE IMPUGNED YEAR ARE ITA NO.1931/AHD/12 A.Y. 2009-10 (DCIT VS. GUJARAT BOROSIL LTD.) 4 SIMILAR TO THAT OF A.Y. 2008-09. WE FURTHER FIND T HAT THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-09, WHILE DECIDIN G THE APPEAL OF REVENUE HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 3.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. WE FIND THAT A REFUND OF RS.3.71CRORE WAS ADJUSTED AGA INST THE DEMAND RAISED OF RS.4.55CRORE BY THE EXCISE DEPARTMENT WHICH MEANS T HAT THE DEMAND RAISED BY THE DEPARTMENT STANDS DISCHARGED TO THE EXTENT OF RS.3. 71 CRORE. WE NOTE THAT THE ORDER PASSED BY THE CIT(A) HAD TAKEN INTO CONSIDERATION A LL THE ISSUES RAISED CONCERNING THE ALL THE MATERIAL ASPECTS OF THE CASE AND CLEAR CUT FINDING WAS GIVEN THAT ASSESSEE WAS ENTITLED TO THE SAID DEDUCTION U/S.43B OF THE ACT O N THE PAYMENT BASIS AND FURTHER HELD THAT THE DEMAND RAISED WAS NOT ON ACCOUNT OF PENALT Y AS CLAIMED BY THE A.O.BUT WAS A ROUTINE DEMAND. WE ARE IN FULL AGREEMENT WITH CIT(A ) ON THIS POINT. THE ASSESSEE HAS ALSO GIVEN NOTE IN THE 'NOTES TO ACCOUNTS' TO THE A NNUAL ACCOUNT MENTIONING THE FACTS QUA THE SAID DEMAND RAISED BY THE EXCISE DEPARTMENT AND ADJUSTMENT OF REFUND OF RS.3.71CRORE AGAINST THAT DEMAND THOUGH NOT ACCOUNT ED FOR IN THE BOOKS OF ACCOUNTS. THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BH ARAT CARBON AND RIBBON MANUFACTURING CO. PVT. LTD. (1999) 239 ITR 505 WHIL E FOLLOWING ITS EARLIER DECISION IN CASE OF KEDARNATH JUTE MANUFACTURING CO. LTD. VS. C IT 82 ITR 363 HAS HELD THAT THE LIABILITY ACCRUES OVER THE ACCOUNTING PERIOD BECAUS E OF THE DEMAND NOTICES ISSUED BY THE EXCISE DEPARTMENT AND OBLIGATION TO PAY EXCISE DUTY AROSE ON THAT STAGE. THE COURT FURTHER HELD THAT RAISING OF THE DISPUTE BY THE ASS ESSEE BY FILING WRIT PETITION FOR QUASHING OF DEDUCTION OF THAT LIABILITY WOULD NOT B E A GROUND FOR HOLDING THAT LIABILITY TO PAY EXCISE DUTY AS PER DEMAND NOTICE WAS NOT INCURR ED. THE COURT ALSO REFERRED TO THE DECISION OF KEDARNATH JUTE TO HOLD THAT IRRESPECTIV E OF THE FACT THAT THE LIABILITY WAS NOT ACCOUNTED FOR IN THE BOOKS, IT WAS DEDUCTIBLE UNDER MERCANTILE SYSTEM OF ACCOUNTING WHEN LIABILITY HAS ACCRUED. THEREFORE, ONCE THE COM PANY MAKES THE PAYMENT, WHETHER UNDER PROTEST OR OTHERWISE, BY DEBTING PROFIT & LOS S ACCOUNT OR BY SHOWING IN THE BALANCE SHEET OR AS CONTINGENT LIABILITY THE SAME W ILL BE AVAILABLE AS DEDUCTION U/S43B ON MAKING PAYMENT. FURTHER, IN THE CASE OF GLAXO SM ITHLINE CONSUMER HEALTHCARE LTD. ITA NO.343/CHANDIGARH/2005, THE FIVE MEMBERS SPECIA L BENCH OF ITAT, CHANDIGARH, IT HAS BEEN HELD THAT THE SECTION 43B IS NOT RESTRICTI VE OF PROHIBITING SECTION BY THE REVENUE BUT IT IS EQUALLY AN ENABLING PROVISION UND ER WHICH DEDUCTIONS ARE ALLOWED ON THE PAYMENT OF DUTIES AND TAXES. IN OTHER WORDS, TH E PROVISION OF SECTION 43B OVERRIDES THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED AND PROVIDES FOR THE DEDUCTION OF STATUTORY LIABILITIES IN THE YEAR OF PAYMENT IRRESP ECTIVE OF THE YEAR IN WHICH THE LIABILITY IS INCURRED. THE CASE OF THE ASSESSEE IS SQUARELY C OVERED BY THE RATIO LAID DOWN IN THE VARIOUS DECISIONS DISCUSSED ABOVE AND BY RESPECTFUL LY FOLLOWING THESE DECISIONS, WE DISMISS THE APPEAL OF THE REVENUE ON THIS POINT. 7.1 BEFORE US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN ITS SUPPORT. WE THEREFORE RELYING ON THE DECISION OF T HE CO-ORDINATE BENCH IN ITA NO.1931/AHD/12 A.Y. 2009-10 (DCIT VS. GUJARAT BOROSIL LTD.) 5 ASSESSEES OWN CASE FOR A.Y. 2008-09, FIND NO REASO N TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS, THIS GROUND OF REVENUE IS DIS MISSED. 8. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON - 04 - 201 6. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED /04/2016 S K SINHA ORDER PRONOUNCED ON 03/05/2016 SD/- S D/- SKY AC (JM) (AM) COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD 1.DATE OF DICTATION 07.04.2016 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E OTHER MEMBER 12-04-2016 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 DICTATING MEMBER FOR PRONOUNCEMENT 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .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 ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER