SPR Publications (India) Private Limited, Hyderabad V. ACIT., Circle-3(2), Hyderabad, Hyderabad

ITA 1955/HYD/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6422 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 12-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2014
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Additional evidence
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1955/HYD/2014 ASSESSMENT YEAR: 2010-11 SRP PUBLICATIONS (INDIA) PVT. LTD., HYDERABAD [PAN: AAKCS2889Q] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO, AR FOR REVENUE : SHRI B.R. RAMESH, DR DATE OF HEARING : 12-04-2016 DATE OF PRONOUNCEMENT : 05-07-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : S THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-II, HYDERABAD DATED 16-09-2014. 2. BRIEFLY STATED, ASSESSEE IS ENGAGED IN THE BUSINES S OF NEWSPAPER PUBLICATION AND ADVERTISEMENT. IT FILED ITS R ETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 26-09-201 0 ADMITTING NIL INCOME AND UN-ABSORBED DEPRECIATION OF RS. 1,49, 78,679/-. THE SCRUTINY ASSESSMENT U/S. 144 OF THE INCOME TAX ACT [ACT] WAS I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 2 -: PASSED ON 21-03-2013 DETERMINING THE INCOME AT RS. 4,98,95,274/-. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER (AO) ISSUED, SEVERAL NOTICES REQUESTING ASSE SSEE TO APPEAR BEFORE HIM AND FURNISH THE REQUIRED INFORMATION AS EX TRACTED IN THE ORDER OF AO, FOR WHICH THERE WAS NO COMPLIANCE. THEREFORE, THE ASSESSMENT WAS COMPLETED U/S. 144 OF THE ACT BASED ON THE INFORMATION AVAILABLE ON RECORD BY MAKING THE FOLLOW ING ADDITIONS/DISALLOWANCES: I. DEPRECIATION ON FIXED ASSETS- RS. 1,54,86,314/-; II. DISALLOWANCE OF EXPENDITURE- RS. 3,76,28,282/-; III. DISALLOWANCE OUT OF PERSONNEL COST AND PRODUCTION EXPENSES - RS. 1,17,59,357/-; IV. BROUGHT FORWARD LOSSES - NIL 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE CIT(A), THE AR FILED ADDITIONAL EVIDENCE UNDER RULE 46A. THE A DDITIONAL EVIDENCE SUBMITTED WAS SENT TO THE AO BY CIT(A) AND THE AO WAS DIRECTED TO EXAMINE THE EVIDENCE, CAUSE FURTHER ENQUIR IES AS DEEMED FIT AND SUBMIT HIS REPORT AFTER GIVING DUE OPPO RTUNITY TO ASSESSEE. 4.1. THE AO HAS SENT HIS REMAND REPOT ON 23-01-2014 W HEREIN IT WAS STATED THAT THOUGH THE NOTICES WERE ISSUED TO THE ASSESSEE CALLING FOR DETAILS, THERE WAS NO RESPONSES FROM AS SESSEE . AFTER THE REPORT, LD. CIT(A) CONFIRMED THE ADDITION BY STATING AS UNDER: 5. IT IS PERTINENT TO MENTION THAT WHAT ASSESSING OFFICER CALLED FOR IN REMAND PROCEEDINGS IS BILLS/VOUCHERS IN SUPPORT OF EXPENSES. WHAT AUTHORISED REPRESENTATIVE SUBMITTED IS MERE LEDGER ACCOUNTS. FROM THE I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 3 -: FACTS AND CIRCUMSTANCES OF THE CASE, IT IS EVIDENT THAT DESPITE REPEATED OPPORTUNITIES GIVEN DURING THE ASSESSMENT PROCEEDIN GS, DURING THE REMAND PROCEEDINGS, THE APPELLANT DID NOT AVAIL THE OPPORTUNITIES GIVEN FOR THE BEST REASONS KNOWN TO HIM. IT IS PERTINENT TO MENTION THAT IN THE CASE OF CIT VS. MOTOR GENERAL FINANCE LTD., (254 IT R 449); HON'BLE DELHI HIGH COURT HELD THAT AS THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE/DOCUME NT, AN ADVERSE INFERENCE IN TERMS SECTION 114 OF THE INDIA N EVIDENCE ACT CAN BE DRAWN TO THE EFFECT, HAD THOSE DOCUMENTS BEEN PRODUCED, THE SAME WOULD HAVE GONE AGAINST THE INTEREST OF THE ASSESSEE AND HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF M OTILAL PADAMPAT UDYOG LTD., VS. CIT (187 ITR 515) HELD THA T WHERE THE ASSESSEE FAILED TO ADDUCE PROOF WITH REGARD TO THE GENUINENE SS OF PURCHASE TRANSACTIONS, ALTHOUGH IT HAS BEEN GIVEN AMPLE OPPORTUNITY TO DO SO, THE ADDI TION ON THAT COUNT WAS JUSTIFIED . 5.1. THEREFORE IN THE ABSENCE OF ANY EVIDENCES ADMI TTED BY THE APPELLANT DESPITE REPEATED OPPORTUNITIES IN SUPPORT OF ITS CLAIM, I DO NOT CONSIDER IT NECESSARY TO INTERFERE WITH THE ADDITIO NS MADE BY THE AO 5. AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE FILED SECOND APPEAL BEFORE THE ITAT ON THE FOLLOWING GROUNDS: 1. THE LD.CIT (APPEALS) ERRED BOTH IN LAW AND ON F ACTS IN UPHOLDING THE ASSESSMENT MADE U/S 144 OF THE IT ACT BY THE LD.AO. 2. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT, FOR THE AY 2010- 11 WHEN THERE IS NO REJECTION OF BOOKS OF ACCOUNT, THE DISALLOWANCE OF DEPRECIATION OF RS. 1,54,86,314/- CANNOT BE MADE. 3. THE AO OUGHT TO HAVE APPRECIATED THE FACT THAT, ONCE THE AMOUNT OF ADDITION TOWARDS BLOCK OF ASSETS IS ENTERED INTO TH E SAME SHOULD BE CONTINUED FROM EACH YEAR UNLESS IT IS DISCARDED OR REMOVED AND DEPRECIATION SHOULD BE ALLOWED ON THAT. 4. IN THIS REGARD WE HAVE PLACED RELIANCE IN THE CA SE OF M/S. COROMANDAL INDUSTRIES LTD HAVING ITA NO'S 287,288,289 AND 1512 /H/08. 5. THE LD.CIT(A) ERRED IN CONFIRMING THE ORDER OF A O, WHILE DISALLOWING 5% OF THE EXPENDITURE UNDER THE HEAD OF 'PURCHASE O F RAW MATERIAL' WHICH AMOUNTS TO RS. 3,76,28,282/- WITH THE CONTENT ION THAT THE SAME IS ABNORMAL WHEN COMPARED WITH EARLIER YEARS. 6. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LD. AO, THAT ANY ADDITION CANNOT BE MADE WITHOUT SUPPORTING MATERIAL. HERE THE AO HAS MADE THE ADDITION ON ADHOC BASIS I.E., DISAL LOWING EXPENDITURE OF RS. 3,76,28,282/- UNDER 'PURCHASE OF RAW MATERIAL' @ 5%. I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 4 -: 7. THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE EXPL ANATION GIVEN BY THE ASSESSEE REGARDING THE COMPARISON OF PAPER CIRCULAT ION WITH PURCHASE OF RAW MATERIAL. 8. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AND HAS NOT MAINTAINED ANY CONSISTENCY WITH THE PREVIOU S YEAR REGARDING DISALLOWANCE OF 5% EXPENDITURE OF 'PURCHASE OF RAW MATERIAL' OF RS. 1,17,59,357/- 9. WITHOUT ANY PROPER REASON AND MATERIAL IN HAND, THE LD.CIT(A) ERRED IN DISALLOWING EXPENDITURE INCURRED FOR PERSONNEL C OST AND PRODUCTION EXPENSES OF RS. 1,17,59,357/- (5% OF EXPENDITURE UN DER PERSONNEL COST AND PRODUCTION EXPENSES). 10. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO REGARDING DISALLOWANCE OF THE BROUGHT FORWARD LOSSE S OF RS. 2,88,64,295/- AND RS. 3,27,14,445/- OF THE AY. 2008 -09 & 2009-10 WITHOUT ASSIGNING ANY SPECIFIC REASONS. 11. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE ADD ITIONAL GROUND RAISED BY THE ASSESSEE COMPANY TOWARDS EXPENDITURE DISALLO WED U/S. 40(A)(IA) OF THE ACT FOR THE AY. 2010-11 AS THE TDS OF RS. 2, 89,05,040/- RELATING TO AY.2009-10 WAS PAID IN AY 2010-11. 12. THE ASSESSEE MAY ADD, ALTER OR MODIFY OR SUBST ITUTE ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT T HE TIME OF HEARING OF THE APPEAL. 6. LD. COUNSEL WHILE REFERRING TO THE ORDERS OF THE E ARLIER YEARS AND PRAYER FOR ADDITIONAL EVIDENCE SUBMITTED THAT ASSESS EE COULD NOT PRESENT PROPERLY BEFORE THE AUTHORITIES DUE TO ARREST OF MD AND SUBSEQUENT CIVIL/CRIMINAL PROCEEDINGS AND FINANC IAL DIFFICULTIES. ASSESSEE IS NOW IN A POSITION TO SUBSTA NTIATE AND MAINLY REQUESTED FOR RESTORING THE ISSUES TO THE FILE OF THE AO FOR FRESH EXAMINATION. 6.1. LD. DR HOWEVER, HAS NO OBJECTION FOR VERIFICATIO N AS SOME OF THE ISSUES WERE ALSO REMITTED IN EARLIER YEARS TO THE F ILE OF AO. I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 5 -: 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL ON RECORD. GROUND NOS. 1 & 12 IS GENERAL IN NATURE AND REQUIRE NO ADJUDICATION. 7.1. AS FAR AS DISALLOWANCE OF DEPRECIATION (GROUND NOS. 2, 3 & 4) IS CONCERNED, THE SAME HAS BEEN ADJUDICATED IN ASS ESSEES OWN CASE FOR THE AY. 2009-10 IN ITA NOS. 353/HYD/2013 & 665/HYD/2013. THE RELEVANT PARA OF THE SAID ORDER IS AS UNDER: 12. THE NEXT ISSUE IS WITH RESPECT TO THE DISALLO WANCE OF DEPRECATION MADE BY THE AO. WE FIND THAT THE AO HA S PASSED EX- PARTE ORDER U/S. 144 OF THE ACT AND REASONABLE OPPO RTUNITY WAS NOT GIVEN TO THE ASSESSEE TO REPRESENT ITS CASE. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E IS IN POSSESSION OF RELEVANT BILLS WITH RESPECT TO PURCHA SES MADE DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE SAME WE RE NOT PRODUCED EVEN BEFORE THE CIT(A). IN THE INTEREST O F JUSTICE, WE REMIT THE ISSUE BACK TO THE FILE OF THE CIT(A) TO EXAMINE THE BILLS AND THEREAFTER CONSIDER THE CLAIM OF DEPRECIATION MADE BY THE ASSESSEE. BEFORE US LD. COUNSEL FILED ADDITIONAL EVIDENCE STATIN G THAT THE ASSESSEE-COMPANY COULD TRACE OUT VARIOUS BILLS AND VO UCHERS AND IN A POSITION TO SUBSTANTIATE THE CLAIM. TO THE EXTENT OF WDV, AO IS DIRECTED TO EXAMINE THE PAST ORDERS AND ALLOW THE NE CESSARY DEPRECIATION. THE ADDITIONS TO FIXED ASSETS DURING THE YEAR REQUIRE EXAMINATION OF COST AS WELL AS USAGE DURING THE YEAR. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH, WE R EMIT THE ISSUES TO THE FILE OF THE AO TO EXAMINE THE EVIDENCE BEI NG SUBMITTED BY ASSESSEE AND THEREAFTER CONSIDER THE CLAIM OF DEPRECIATION MADE BY ASSESSEE. THESE GROUNDS ARE A LLOWED FOR STATISTICAL PURPOSES. 7.2. GROUND NOS. 5 TO 9 IS WITH RESPECT TO ADHOC DISA LLOWANCE OF CONSUMPTION OF RAW MATERIAL AND PERSONNEL COST. THIS ISSUE HAS I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 6 -: ALSO BEEN ADJUDICATED IN ASSESSEES OWN CASE FOR THE AY. 2009-10 IN ITA NOS. 353/HYD/2013 & 665/HYD/2013. THE RELEV ANT PARA OF THE CO-ORDINATE BENCH DECISION IS AS UNDER: 16. WITH RESPECT TO CONSUMPTION OF RAW MATERIAL, THE CIT(A) HAS GIVEN A FINDING THAT INCREASE IN MATERIAL CONSU MPTION HAS EFFECTED A CORRESPONDING INCREASE IN CIRCULATION RE VENUE. IT IS THE BASIC PRINCIPLE THAT WHEN THERE IS A RISE IN CIRCUL ATION REVENUE THERE SHOULD BE A CORRESPONDING INCREASE IN MATERIAL CONS UMPTION. THE CONSUMPTION OF RAW MATERIAL INCREASES ON PRINTING M ORE NUMBER OF COPIES OF PRINTED PUBLICATION. HOWEVER, WE ARE IN CONFORMITY WITH THE ORDER OF THE CIT(A) ON THIS ISSUE AND ALLOW THE EXPENDITURE INCURRED FOR MATERIAL CONSUMED OF RS. 4,45,22,334/- . THE LEARNED CIT(A) HAS NOT ADMITTED ANY MATERIAL HENCE GROUND ( 3) IS INFRUCTUOUS. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINA TE BENCH IN THE AFORESAID CASE, WE SET ASIDE THE ORDER OF CIT(A) TO THI S EXTENT AND ALLOW THE EXPENDITURE INCURRED ON THE SAME. THERE IS NO REASON TO DISALLOW 5% OF EXPENDITURE ON ADHOC BASIS. THESE GRO UNDS ARE ALLOWED. 7.3. AS FAR AS GROUND NO. 10, THIS ISSUE PERTAINS TO THE BROUGHT FORWARD LOSSES OF EARLIER YEARS WHICH SHOULD HAVE B EEN SET-OFF DURING THE CURRENT YEAR WHILE ASSESSING THE INCOMES AT A POSITIVE FIGURE. THE ACTION OF THE AO CANNOT BE APPRECIATED. HOWEVER, AS SEEN FROM THE ORDERS OF ITAT PERTAINING TO EARLIER YE ARS, THERE ARE VARIOUS ISSUES WHICH WERE SENT BACK TO THE AO FOR EXAM INATION AND RE-DETERMINATION. CONSEQUENT TO THOSE ORDERS, IF TH ERE ARE ANY BROUGHT FORWARD LOSSES AND (OR) UN-ABSORBED DEPR ECIATION, ASSESSEE IS ENTITLED TO CLAIM SET-OFF AND CARRY FORWAR D OF THE SAME AS THE CASE MAY BE IN THIS YEAR. AO IS DIRECTED TO RE -DETERMINE THE AMOUNT AND ALLOW THE NECESSARY BENEFIT AS PER THE PR OVISIONS OF LAW. THIS GROUND IS CONSIDERED ALLOWED FOR STATIS TICAL PURPOSES. I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 7 -: 7.4. GROUND NO. 11 IS AN ADDITIONAL GROUND CLAIMING ALLOWANCE OF THE AMOUNT OF RS. 2,89,05,040/- WHICH WAS DISALLOW ED IN AY. 2009-10 AS THE TDS WAS NOT REMITTED IN THAT YEAR. SINC E THE TDS WAS REMITTED DURING THE IMPUGNED ASSESSMENT YEAR, ASSE SSEE IS ENTITLED TO CLAIM THE DEDUCTION OF THE SAME AMOUNT. THE A MOUNT WAS CONFIRMED IN ASSESSEES OWN CASE FOR AY. 2009-1 0 IN ITA NOS. 353/HYD/2013 & 665/HYD/2013. THE RELEVANT PARA OF TH E SAID ORDER IS AS UNDER: 11. THE NEXT GROUND IS ON THE ISSUE OF DISALLOWANC E U/S. 40(A)(IA) OF THE ACT. AS IT HAS BEEN ADMITTED BY T HE ASSESSEE ITSELF THAT THE TDS HAS BEEN REMITTED INTO GOVERNMENT ACCO UNT ON 5.10.2009, WE DIRECT THE CIT(A) TO ALLOW THE TDS PA YMENT IN THE NEXT YEAR. CONSEQUENT TO THE ABOVE ORDER, THE AMOUNT IS ALLOWABLE IN THIS YEAR. ACCORDINGLY, AO IS DIRECTED TO ALLOW THE AMOU NT AS PER THE PROVISIONS OF LAW. THIS GROUND IS ALLOWED. 8. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH JULY, 2016 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 05 TH JULY, 2016 TNMM I.T.A. NO. 1955/HYD/2014 SPR PUBLICATIONS (INDIA) PVT. LTD., :- 8 -: COPY TO : 1. SRP PUBLICATIONS (INDIA) PVT. LTD., C/O. P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD. 2. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-II, HYDERABA D. 4. COMMISSIONER OF INCOME TAX-3, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.