M/s Schenck Process India Ltd., Kolkata V. A.C.I.T.,Circle-12(2), Kolkata

ITA 1933/KOL/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9445 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 28-07-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 16-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL L D ADD
• Assessee Lawyers: JAI SONI LD
• Keywords: Charitable institution; Set aside
• Section: 43B; 80G

Judgement Text

1 IT A NO . 1933/KOL/2019 AY 2014 - 15 SCHENCK PROCESS (I) P.LTD , A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI A. T. VARKEY, JM AND DR. ARJUN LAL SAINI, AM ] ITA NO. 1933 /KOL/20 19 ASSESSMENT YEAR: 20 1 4 - 15 M/S. SCHENCK PROCESS INDIA PVT. LTD PAN: AA ECS 4728C VS. A .C.I.T CIR - 12(2) , KOLKAT A APPELLANT RESPONDENT DATE OF HEARING (VIRTUAL) 2 8 .07 .20 20 DATE OF PRONOUNCEMENT 19 . 0 8 .20 20 FOR THE APP ELLANT SHRI JAI SONI , LD.AR FOR THE RESPONDENT SHRI SUPRIYO PAL, L D. ADD. CIT /DR ORDER SHRI A. T. VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - 4 , KOLKATA DATED 1 8 - 06 - 2019 FOR THE ASSESSMENT YEAR 20 14 - 15 . 2. GROUND NOS. 1 AND 2 READ AS UNDER: - 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. CIT(A)] ERRED IN UPHOLDING THE ACTION OF LD. ASSISTANT COMMISSIONER OF INCOME TAX [HEREINAFTER REFERRED TO AS LD. AO] IN MAKING DISALLOWANCE U/S . 43B(F) OF THE INCOME TAX ACT, 1961 ('ACT') AMOUNTING TO RS. 5,17,130/ - . 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE SAID CLAIM OF THE APPELLANT WAS BASED ON THE WRIT PETITION CHALLENGING THE INTRODUCTION OF CLAUSE (F) TO SECTI ON 43B WHICH HAD BEEN DISPOSED IN FAVOUR BY THE DIVISION BENCH OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. - VS. - UNION OF INDIA [2007 ] 292 ITR 470 (CAL.). THE SAID CASE HAS BEEN SUBSEQUENTLY STAYED BY THE HON'BLE SUPREME COURT T ILL FURTHER ORDERS. IN THE EVENT THE HON'BLE SUPREME COURT STRIKES DOWN CLAUSE (F) TO SECTION 43B, NECESSARY DIRECTION MAY BE ISSUED BY THE ASSESSING OFFICER TO DELETE THE SAID ADDITION IN CASE OF THE APPELLANT. 2 IT A NO . 1933/KOL/2019 AY 2014 - 15 SCHENCK PROCESS (I) P.LTD 3 . FROM THE AFORESAID GROUNDS OF APPEAL RAISED BY THE ASSESSEE, IT IS NOTED THAT THE ASSESSEE IS AGGRIEVED BY THE ACTION OF THE L D. CIT(A) IN UPHOLDING THE ACTION OF AO IN MAKING DISALLOWANCE U/S. 43B(F) OF THE INCOME TAX ACT, 1961 ( IN SHORT, REFERRED TO AS THE ACT). 4 . BRIEF FACTS OF THE C ASE ARE THAT THE AO ON PERUSAL OF THE COMPUTATION OF TOTAL INCOME NOTED THAT THE ASSESSEE HAS OFFERED A SUM OF RS.7,77,906/ - FOR DISALLOWANCE U/S. 43B OF THE ACT. HOWEVER, AS PER TAX AUDIT REPORT (CLAUSE 21(1)(B)/ENCLOSURE - 10 ), THE TOTAL SUM DISALLOWABLE U /S. 43B WORKS OUT AT RS.16,26,996/ - , WHICH INCLUDE D INTER - ALIA NON - PAYMENT OF LEAVE ENCASHMENT OF RS. 5,17,130/ - . IN SUPPORT OF THE CLAIM, THE ASSESSEE HAS RELIED ON THE DECISION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD VS. UN ION OF INDIA (U.O.I) (2007) 292 ITR 470 (CAL) AND CONTENDED THAT SECTION 43B(F) IS ULTRA - VIRES THE CONSTITUTION OF INDIA . THE AO NOTED THAT SINCE REVENUES APPEAL WAS PENDING BEFORE THE HONBLE SUPREME COURT ON A CIVIL APPEAL, HE (AO) DISALLOWED AN AMOUNT OF RS. 5,17,130/ - AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE L D.CIT(A), WHO WAS PLEASED TO CONFIRM THE SAME. AGGRIEVED, THE ASSESSEE IS BEFORE US. 5. BEFORE US THE ONLY PLEA OF THE ASSES SEE IS THAT IN THE LIGHT OF THE DECISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. EXIDE INDUSTRIES LTD ., WHICH IS REPORTED IN 116 TAXMAN.COM 378 (SC) , WHEREIN THE HONBLE COURT DISAGREED WITH THE DECISION OF HONBLE CALCUTTA HIGH COURT AND HAS UPHELD THE C ONSTITUTIONAL VALIDITY OF SECTION 43B(F) OF THE ACT. THEREFORE, ACCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE ( IN SHORT, THE LD. AR ) THE MATTER MAY BE REMITTED BACK TO THE AO FOR DECIDING THE ISSUE ( L IS ) IN THE LIGHT OF THE SAID DECISION OF THE HONBLE SUPREME COURT IN THE EXIDE CASE (SUPRA) . 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ( IN SHORT, THE LD. DR) DID NOT OBJECT TO THE SUGGESTION OF REMANDING THE ISSUE B ACK TO AO FOR DECIDING THE MATTER AS PER THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE EXIDE INDUSTRIES (SUPRA). IN THE LIGHT OF THE AFORESAID SUBMISSIONS, WE SET A SIDE THE IMPUGNED ORDER OF THE L D. CIT(A) AND DIRECT THE AO TO DECIDE THE IMPUGNED I SSUE OF LEAVE ENCASHMENT CLAIM OF RS. 5,17,130/ - IN THE LIGHT OF THE SAID DECISION OF THE HONBLE SUPREME COURT IN THE EXIDE CASE (SUPRA) . NEEDLESS TO SAY 3 IT A NO . 1933/KOL/2019 AY 2014 - 15 SCHENCK PROCESS (I) P.LTD THAT ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF HEARING BEFORE THE AO PASSE S THE ORDER AS PER LAW. TH ESE GROUND S OF ASSESSEES APPEAL ARE ALLOWED FOR STATISTICAL PURPOSE. 7. GROUND NO. 3 IS AGAINST THE ACTION OF THE L D. CIT(A) IN DISALLOWING DEDUCTION OF DONATION U/S. 80G OF THE ACT AMOUNTING TO RS.1,25,000/ - . 8. THE AO NOTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80G OF THE ACT IN RESPECT OF A SUM OF RS. 1,25,000/ - WHICH ASSESSEE CLAIMED TO HAVE PAID AS DONATION . SINCE THE ASSESSEE DID NOT PRODUCE ANY RECEIPT , ( 80G CERTIFICATES ) ETC. IN RESPECT OF PAYMENT OF DONATION, THE CLAIM (RS. 1,25,000/ - ) UNDER SECTION 80G OF THE ACT WAS DISALLOWED. 9. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A) , WHO NOTED THAT THE ASSESSEE HAS MADE DONATION TO PUSHPANJALI CROSSJAY CHARITABLE TRUST AMOUN TING TO RS. 2,50,000/ - DURING THE RELEVANT ASSESSMENT YEAR. ACCORDING TO THE L D. CIT(A) , THIS FACT IS EVIDENT FROM CLAUSE 33 ENCL: OF TAR (TAX AUDIT REPORT) AND, T HEREFORE, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80G OF THE ACT TO THE TUNE OF RS. 1,2 5,000/ - . HOWEVER, T HE L D. CIT(A) NOTED THAT THE DONATION RECE I PT WAS ISSUED ON 26 - 11 - 2014 VIDE A CHEQUE ISSUED ON 15 - 07 - 2013, WHICH ACCORDING TO THE L D. CIT(A) WAS CLEARLY OUT OF LIMITATION TIME . ACCORDING TO THE L D. CIT(A) SINCE NO BANK STATEMENT WAS FUR NISHED TO PROVE THAT CHEQUE WAS ENCASHED BEFORE 31 - 03 - 2014 /31 - 03 - 2013 OR WITHIN TH E PERIOD ALLOWED BY LAW FOR ENCASHMENT OF THE CHEQUE , HE DISMISSED THIS GROUND OF APPEAL OF ASSESSEE. AGGRIEVED, THE ASSESSEE IS BEFORE US. 10. HAVING HEARD BOTH THE PARTIES. THE ONLY PLEA OF ASSESSEE IS THAT THE AO HAS DISALLOWED THE EXEMPTION UNDER SECTION 80G OF THE ACT ON THE GROUND THAT THE ASSESSEE DID NOT PRODUCE ANY SUPPORTING DOCUMENTS. FURTHER T HE L D. CIT(A) HAS CONFIRMED THE DISALLOWANCE SINCE THE CHEQUE WAS DATED 15 - 07 - 2013 AND THE RECEIPT WAS GIVEN BY THE SAID CHARITABLE TRUST ON 26 - 11 - 2014 , WHICH ACCORDING TO THE L D. CIT(A) WAS CLEARLY BARRED BY TIME. SINCE THE ASSESSEE COULD NOT BRING ANY MATERIAL TO SHOW THAT THE SAID CHEQUE WAS ENCASHED, THE L D. CIT(A) DID NOT ACCEPT THE CLAIM OF ASSESSEE . ACCORDING TO THE LD . AR, IF AN OPPORTUNITY IS GIVEN TO ASSESSEE, IT IS READY TO BRING EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE, IN FACT, HAD GIVEN CHEQUE AND THE PAYMENTS WERE IN FACT, CREDITED IN THE ACCOUNTS 4 IT A NO . 1933/KOL/2019 AY 2014 - 15 SCHENCK PROCESS (I) P.LTD O F SAID CHARITABLE TRUST . IN VIEW OF ABOVE, WE SET ASIDE THE IMPUGNED ORDER OF THE L D. CIT(A) AND REMAND THIS ISSUE ALSO BACK TO THE FILE OF THE AO FOR FRESH CONSIDERATION/ADJUDICATION OF THE ISSUE. IF THE AO AFTER VERIFICATION FINDS THAT THE PAYMENTS WERE CREDITED/ENCASHED BY THE DONE E - TRUST WHICH , WHO ENJOYS THE 80G APPROVAL, BE NEFIT/CL AIM OF DEDUCTION, MAY BE ALLOWED IN ACCORDANCE TO LAW . THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 1 1 . IN THE RESULT, THE APPEAL OF ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSE . ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 AUGUST 2020 . SD/ - SD/ - ( ARJUN LAL SAINI ) ( ABY. T. VARKEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 19 AUGUST 2020 **PP (SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. SCHENCK PROCESS INDIA PVT. LTD., 2 ND FLOOR, NO. 3, (OLD NO. 18 & 23), 3 RD MAIN ROAD, 1 ST PHASE, PEENYA INDUSTRIAL AREA, BANHGALORE, KARNATAKA - 560058 2 RESPONDENT - A CIT, CIR - 12(2) , KOLKATA . 3. 4. 5. CIT(A) - 4 , KOLKATA (SENT THROUGH E - MAIL) CIT - , KOLKATA. DR, ITAT, KOLKATA. (SENT THROUGH E - MAIL) BY ORDER, / TRUE COPY, ASSISTANT REGISTRAR