ITO, Jaipur V. ROCHI RAM AND SONS, Jaipur

ITA 200/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99441 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B P MUNDRA C A DHK
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 200/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2008-09 . THE INCOME TAX OFFICER, WARD 1(3), JAIPUR. CUKE VS. M/S. ROCHI RAM AND SONS, 1, SHREE JI MORI, TRIPOLIA BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAHFR 5071 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH, (JCIT) /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.P. MUNDRA (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13.10.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 30/10/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT (A), ALWAR DATED 04.12.2012 FOR THE A.Y. 2008-09. THE GROUNDS RAISED IN THE APPEAL ARE AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS)-I, JAIPUR IS JUSTIFIED IN :- I) DELETING THE DISALLOWANCE OF RS. 1,63,123/- MADE BY THE AO ON ACCOUNT OF CONTRIBUTION TO THE PF & ESI. 2 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. II) DELETING THE DISALLOWANCE OF RS. 16,82,406/- MADE B Y THE AO ON ACCOUNT OF DEAD MATERIAL STOCK. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM HAS FILED THE RETURN OF INCOME FOR THE A.Y. 2008-09 ON 24 TH SEPTEMBER, 2008 DECLARING INCOME OF RS. 38,81,914/ -. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND THERE AFTER NOTICE UNDER SECTION 143(2) WAS ISSUED. IN RESPONSE THERETO THE LD. A/R FOR THE ASSESSEE ATTENDED THE HEARING AND SUBMITTED THE BOOKS OF ACCOUNTS. FOR THE PURPOSE O F ADJUDICATING THE CONTROVERSY BEFORE US, THERE ARE TWO ISSUES, AS MENTIONED IN TH E GROUNDS STATED HEREIN ABOVE PERTAINS TO THE DELAY IN PAYMENT OF PF/ESI BY THE AS SESSEE. IN THIS REGARD THE AO HAD MENTIONED IN PARA 1 THAT EXCEPT APRIL, 2007 AND MAY , 2007 IN RESPECT TO ESI CONTRIBUTION, ALL THE CONTRIBUTIONS FOR THE MONTHS OF JUNE TO DECEMBER, 2007 WERE DEPOSITED AFTER THE DUE DATE. SIMILARLY IN RESPECT OF PF, EXCEPT FOR THE MONTH OF APRIL, 2007, ALL THE PAYMENTS TOWARDS PF CONTRIBUTION WERE DELAYED BUT THE SAME WERE PAID WITHIN THE FINANCIAL YEAR. THE AO CONSIDERING THE PROVISIONS OF SECTION 43B AND IN VIEW OF SECTION 36(1)(VA) HAS DISALLOWED THE CONTRIBUTIO N MADE BY THE ASSESSEE AND ADDED THE SUM OF RS. 1,63,123/- TO THE TOTAL INCOME OF TH E ASSESSEE. 3. THE ASSESSEE HAS PREFERRED APPEAL BEFORE LD. CIT (A), WHO AFTER REFERRING TO THE JUDGMENTS OF VARIOUS TRIBUNALS AND HIGH COURTS, HAD DELETED THE ADDITION MADE BY THE AO. THE OBSERVATIONS OF LD. CIT (A) IS REFERRED IN PARA 4.3 OF HIS ORDER AS UNDER :- 4.3. I HAVE CONSIDERED THE ASSESSMENT ORDER AND S UBMISSIONS MADE BY THE A/R. I FIND THAT THE SIMILAR ISSUE HAS BEEN DEC IDED IN FAVOUR OF THE APPELLANT BY THE LD. CIT (APPEALS)-I, JAIPUR, VIDE ORDER DATED 05.03.2012 3 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. IN ASSESSEES OWN CASE IN APPEAL NO. 884/09-10 FOR AY 2007-08, RELYING ON THE JUDICIAL PRONOUNCEMENT CITED BY THE APPELLAN T IN THE CASE OF CIT VS. VINAY CEMENT LTD., 313 ITR (ST.)-1. IN THE SAID CAS E IT WAS HELD BY THE HONBLE APEX COURT THAT STATUTORY ITEMS LIKE PF AND ESI, IF PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, HAVE TO BE ALLOWE D AS A DEDUCTION IRRESPECTIVE OF THE FACT WHETHER THE CONTRIBUTIONS RELATE TO THE EMPLOYER OR EMPLOYEE. I FIND THAT THE ABOVE SAID PAYMENTS OF EM PLOYEES CONTRIBUTION OF PF/ESI HAVE BEEN MADE DURING THE FY 2007-08 ITSEL F WHICH IS BEFORE THE DATE OF FILING OF RETURN. ACCORDINGLY, RELYING ON THE DECISIONS CITED BY THE AR OF THE APPELLANT AND THE DECISION OF CIT (AP PEALS)-I, JAIPUR VIDE ORDER DATED 05.03.2012 IN APPELLANTS OWN CASE FOR AY 2007-08, THE ADDITION OF RS. 1,63,123/- IS DELETED. THIS GROUND IS ALLOWED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE DO NOT FIND ANY REASON TO DISAGREE WITH THE ORDE R PASSED BY LD. CIT (A). THEREFORE, WE UPHOLD THE ORDER OF LD. CIT (A) IN THIS REGARD W HEREBY HE HAD DELETED THE ADDITION OF RS. 1,63,123/- ON ACCOUNT OF DELAY IN DEPOSITING TH E ESI AND PF. 6. THE NEXT GROUND OF THE REVENUE IS IN RESPECT OF DELETING THE DISALLOWANCE OF RS. 16,82,406/- MADE BY THE AO ON ACCOUNT OF DEAD MATER IAL STOCK. 7. IN THIS REGARD THE AO IN THE ASSESSMENT ORDER HA S MENTIONED AS UNDER :- DEAD RAW MATERIAL STOCK: IN ITS PROFIT AND LOSS ACCOUNT, THE ASSESSEE FIRM HAS DEBITED A SUM OF RS. 16,82,406/- ON ACCOUNT OF DEAD RAW MATERIAL STOCK. THE ASSESSEE VIDE NOTE SHEET DATED 22.11.2010 WAS ASKED TO EXPLA IN THE NATURE OF SUCH EXPENDITURE AND TO EXPLAIN AS TO HOW IT IS ALLOWABL E AS DEDUCTION, 4 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. ESPECIALLY WHEN IT IS SHOWN AS LIABILITY IN ANNEXUR E 4 OF BALANCE SHEET. IN RESPONSE TO THE ABOVE ASSESSEE FIRM, VIDE LETTER DA TED 25.11.2010 HAS REPLIED AS UNDER :- IN OUR FIRMS THE UNUSABLE AND DEFECTIVE RAW MATE RIAL IS LYING. WE DESTROY THE SAME BEFORE THE EXCISE OFFICER AND A CE RTIFICATE OBTAINED FOR DESTRUCTION OF RAW MATERIAL . JAIPUR . IN THIS REGARD, A CERTIFICATE ISSUED BY THE SUPERIN TENDENT (TECH.) OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL EXCI SE DIVISION-1, JAIPUR VIDE NO. C.NO. IV(16)06/POLICY/DIV.-I/08/4553 DATED 19.5.2008 WAS ALSO ENCLOSED WITH THE REPLY DATED 25.11.2010. THE REPLY OF THE ASSESSEE FIRM HAS BEEN CONSIDERED CAREFULLY BUT FOUND NOT ACCEPTABLE. THE STOCK OF DEAD RAW MATERIA L HAS BEEN CLAIMED AS EXPENDITURE UNDER PROFIT AND LOSS ACCOUNT AND FOR H IS ARGUMENT IT HAS FURNISHED A COPY OF CERTIFICATE ISSUED BY THE CENTR AL EXCISE DEPARTMENT. THE ASSESSEE HAS NOT ACTUALLY WRITTEN OFF THIS ITEM IN ITS BOOKS OF A/C. BESIDES, THE CENTRAL EXCISE DEPARTMENT HAS ACTUALLY ALLOWED THE REMOVAL OF SUCH STOCK FROM ITS BOOK ON 19/05/2008, WHICH IS RELEVANT TO A.Y. 2009- 10. IN VIEW OF THE ABOVE, RS. 16,82,406/- IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. WITH THESE REMARKS, TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER :- RETURNED INCOME RS. (-) 38,08,085/- ADD:[AS PER PARA 1 ABOVE] [AS PER PARA 2 ABOVE] RS. 1,63,123/ - RS. 16,82,406/- TOTAL INCOME RS.( - ) 19,62,556/ - R OUNDED OFF RS.( - ) 19,62,560/ - AFTER DISCUSSIONS, TOTAL INCOME IS COMPUTED AT R S. (-) 19,62,560/-. 5 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. 8. AGAINST THE ORDER PASSED BY THE AO, THE ASSESSEE FILED APPEAL BEFORE LD. CIT (A), WHO AFTER CONSIDERING THE MATERIAL ON RECORD HAS FO UND THAT THE DISALLOWANCE MADE BY THE AO OF RS. 16,82,406/- WAS NOT JUSTIFIED. THUS L D. CIT (A) HAS DELETED THE ADDITION. 9. NOW THE REVENUE IS BEFORE US. 10. THE UNDISPUTED FACT BEFORE US ARE THAT THE DEAD RAW MATERIAL STOCK SOUGHT TO BE WRITTEN OFF IN THE F.Y. 2007-08 WERE PURCHASED BY T HE ASSESSEE AFTER IMPORTING THE SAME THROUGH VARIOUS INVOICES COMMENCING FROM 08.11 .2005. THE DETAILS OF INVOICES AND IMPORT DOCUMENTS ARE GIVEN IN THE PAPER BOOK FR OM PAGES 2 TO 59. IT IS ALSO UNDISPUTED FACT THAT THE ASSESSEE HAS SOUGHT PERMIS SION FOR DESTROYING THE GOODS UNDER SECTION 16 OF THE EXCISE ACT FROM THE COMMISSIONER O F EXCISE VIDE ITS LETTER DATED 7.3.2008, AND SIMULTANEOUSLY BY THE EVEN DATE LETTE R THE ASSESSEE HAS ALSO SOUGHT THE REIMBURSEMENT OF THE DUTY ON THE SAID GOODS. 10.1. IT IS ALSO ADMITTED BY THE PARTIES BEFORE US THAT SUBSEQUENTLY A REMINDER DATED 26.03.2008 WAS ALSO SENT TO THE EXCISE DEPARTMENT TO ALLOW THE DESTROYING OF SAID DEAD RAW MATERIAL STOCK SO AS TO REMOVE IT FROM THE CLOS ING STOCK. 10.2. IT IS ALSO UNDISPUTED FACT THAT THE PERMISSIO N TO DESTROY THE DUTIABLE RAW MATERIAL IN STOCK WAS GRANTED BY THE EXCISE DEPARTMENT VIDE ITS LETTER DATED 19.05.2008 BEARING NO. C.NO. IV(16)06/POLICY/DIV-I/08/4553. 10.3. IT IS ALSO UNDISPUTED FACT THAT AFTER THE PER MISSION TO DESTROY THE DUTIABLE DEAD RAW MATERIAL STOCK VALUING RS. 16,82,407/-, THE CER TIFICATE OF DESTRUCTION OF RAW MATERIALS WAS ALSO ISSUED AFTER THE ACTUAL DESTRUCT ION OF THE GOODS BY THE OFFICE OF EXCISE DEPARTMENT ON 05.08.2008 VIDE NO. C.NO. CE-20 /MISC/R-II/RRS/2005/580. 6 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. 10.4. THE REASON GIVEN BY THE AO FOR MAKING DISALLO WANCE IS THAT THE ASSESSEE HAS NOT ACTUALLY WRITTEN OFF THE ITEMS IN THE BOOKS OF ACCO UNT IN A.Y. 2008-09 BUT IN THE A.Y. 2009-10, IN OUR VIEW IS NOT CORRECT INTERPRETATION. IN OUR VIEW, THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THROUGH THE COGENT DOCUMENTS FROM THE EXCISE RECORD THAT THE GOODS ARE OBSOLETE AND REQUIRED TO BE WRITTEN OFF. DEAD RAW MATERIAL STOCK DESTROYED BY IT UNDER THE SUPERVISION OF THE EXCISE DEPARTMENT WAS H AVING NIL VALUE. THE VALUE OF THE DEAD RAW MATERIAL STOCK IS NIL, AND THE VALUE IS RE QUIRED TO BE RELATE BACK TO ITS DATE OF APPLICATION FILED BY THE ASSESSEE I.E. 7 TH MARCH, 2008 AND THE REMINDER WAS GIVEN OF 26 TH MARCH, 2008. THE VALUE OF THIS RAW MATERIAL IS NIL IS ONE THING AND THE DESTROYING OF THE DEAD RAW MATERIAL STOCK IS ANOTHER THING. FOR T HE PURPOSE OF AVAILING THE REFUND OF THE DUTY AS PER THE EXCISE ACT, IT IS MANDATORY TO D ESTROY THE DEAD RAW MATERIAL STOCK BUT NONETHELESS THE VALUE OF THE RAW MATERIAL WHICH WAS LATER ON DESTROYED WAS AT THE ESTIMATION OF THE ASSESSEE WAS NIL IN THE FINANCIAL YEAR 2007-08 AND THE SAME WAS LATER ON FOUND TO BE CORRECT WHEN THE EXCISE DEPARTM ENT HAS GRANTED THE PERMISSION TO DESTROY THE SAID DEAD RAW MATERIAL STOCK. IN OUR V IEW THE FREEDOM IS REQUIRED TO BE GIVEN TO THE ASSESSEE WHO IS A COMMERCIAL ENTREPREN EUR TO DECIDE AS TO WHEN THE STOCK OF RAW MATERIAL IS DEAD OR NOT. THE PROFIT OR LOSS OF THE BUSINESS ARE REQUIRED TO BE ASSESSED TO TAX ON THE BASIS OF REAL PROFIT AND THE SAME IS REQUIRED TO BE DERIVED AFTER APPLYING THE COMMERCIALLY ACCEPTABLE ACCOUNTING PRI NCIPLE. THE VALUATION OF THE DEAD RAW MATERIAL STOCK WAS NIL, AS IS CLEAR FROM THE DE STRUCTION REPORT OF THE EXCISE DEPARTMENT PLACED AT PAGES 65 & 66 OF THE PAPER BOO K. THE JUDGMENT REFERRED BY THE LD. CIT (A) IN HIS ORDER OF HONBLE SUPREME COURT I N THE CASE OF KEDARNATH JUTE 7 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. MANUFACTURING CO. VS. CIT (1971) 82 ITR 363 (SC), I N OUR VIEW IS SQUARELY APPLICABLE. IN THE SAID JUDGMENT THE HONBLE SUPREME COURT HAS HELD AS UNDER :- WE ARE WHOLLY UNABLE TO APPRECIATE THE SUGGESTION THAT IF AN ASSESSEE UNDER SOME MISAPPREHENSION OR MISTAKE FAIL S TO MAKE AN ENTRY IN THE BOOKS OF ACCOUNT AND ALTHOUGH, UNDER T HE LAW, A DEDUCTION MUST BE ALLOWED BY THE INCOME TAX OFFICER , THE ASSESSEE WILL LOSE THE RIGHT OF CLAIMING OR WILL BE DEBARRED FROM BEING ALLOWED THAT DEDUCTION. WHETHER THE ASSESSEE IS ENT ITLED TO A PARTICULAR DEDUCTION OR NOT WILL DEPEND ON THE PROV ISION OF LAW RELATING THERETO AND NOT ON THE VIEW WHICH THE ASSE SSEE MIGHT TAKE OF HIS RIGHTS NOR CAN THE EXISTENCE OR ABSENCE OF E NTRIES IN THE BOOKS OF ACCOUNT BE DECISIVE OR CONCLUSIVE IN THE M ATTER. IN VIEW THEREOF, THE SECOND GROUND OF THE REVENU E IS ALSO DISMISSED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED ON BOTH THE GROUNDS. ORDER PRONOUNCED IN THE OPEN COURT ON 30/10/201 5. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 30/10/2015 DAS/ 8 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR. VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO WARD 1(3), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S. ROCHI RAM AND SONS, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.200/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 9 ITA NO. 200/JP/2013 A.Y. 2008-09 ITO VS. ROCHI RAM AND SONS, JAIPUR.