The DCIT, Circle-8, Ahmedabad V. Shilp Gravures Ltd., Ahmedabad

ITA 2018/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1233 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 29-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R T SHAH
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 2018/AHD/2013 (ASSESSMENT YEAR: 2010-11) THE DCIT, CIRCLE-8, AHMEDABAD V/S SHILP GRAVURES LTD., 101, KASHI PAREKH COMPLEX, B/H. BHAGWATI CHAMBERS, C.G. ROAD, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADCS0868G APPELLANT BY : SHRI PRASOON KABRA, SR. D. R. RESPONDENT BY : SHRI R.T. SHAH, A.R. ( )/ ORDER DATE OF HEARING : 09 -06-201 6 DATE OF PRONOUNCEMENT : 20 -06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A)-XIV, AHMEDABAD DATED 23.05. 2013 PERTAINING TO A.Y. 2010-11. ITA NO2018/A HD/2013 . A.Y. 2010-1 1 2 2. THE GRIEVANCE OF THE REVENUE READ AS UNDER:- 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALL OWANCE OF LOSS ON ACCOUNT OF FIRE FROM RS.20,81,443/- TO RS.10,40,722/- & THE REBY GAVE RELIEF OF RS. 10,40,722/-ON ACCOUNT OF NON-EXCISABLE GOODS CLAIME D TO HAVE BEEN DESTROYED BY BUT WITHOUT ANY SUPPORTING EVIDENCE OF ITS VALUATION. 2. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE OF RS.70,29,821/- MADE U/S. 80IA OF THE ACT. 3. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,05,491/- MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION T O PF/ESI. 4. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.41,343/- MADE ON ACCOUNT OF SUNDRY CREDITORS! U/S. 41 (1) OF THE ACT . 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAV E UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF ENGRAVING/RE- ENGRAVING OF COPPER PLATED CYLINDERS, CYLINDERS, SC REENS AND PLATES MANUFACTURE OF GRAVURE PRINTING CYLINDERS, INK PROO FING MACHINES AND WEB GUIDING MACHINES AND IS ALSO TRADING OF MS PIPE S, INK FLOW CONTROL COMPONENTS. 4. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEE DINGS AND ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, THE A.O NOT ICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 39,81,000/- O N ACCOUNT OF LOSS OF MATERIAL ON FIRE. THE ASSESSEE WAS ASKED TO JUST IFY THE CLAIM OF LOSS ITA NO2018/A HD/2013 . A.Y. 2010-1 1 3 ON ACCOUNT OF FIRE. THE ASSESSEE FILED A DETAILED R EPLY WHICH READ AS UNDER:- '3) WITH REGARD TO LOSS ON ACCOUNT OF FIRE ON 11 09 2009 IN COMPANY'S FACTORY PREMISES AT RAKANPUR, RESULTED INTO PARTIAL DESTRUC TION OF STOCK CONSUMABLES, PLANT & MACHINERY AND BUILDING, THE COMPANY HAS LOD GED A CLAIM WITH THE UNITED INDIA INSURANCE COMPANY LIMITED AND THE SURV EYOR'S REPORT IS AWAITED. PENDING THE SETTLEMENT OF CLAIM, THE COMPANY HAS AC CUMULATED OF LOSS OF RS. 39.81 LACS PERTAINING TO THE PARTIAL DESTRUCTION OF STORES CONSUMABLES AND OTHER MATERIALS. NECESSARY ACCOUNTING ENTRIES IN RE SPECT OF THE INSURANCE CLAIM AND FOR THE LOSS OF PLANT AND MACHINERY AND B UILDING WILL BE PASSED IN THE YEAR OF SETTLEMENT OF CLAIM WITH THE INSURANCE COMPANY. AS DESIRED BY YOUR GOOD SELF, WE ENCLOSE HEREWITH THE FOLLOWING. (PAGE NO. 1 TO 14) A) FIRE REPORT B) POLICE REPORT C) FORENSIC LABORATORY REPORT D) NEWS PAPER CUTTING OF DIVYA BHASKAR DATED 10.11.200 9.' 5. THE A.O. FOUND THE AFOREMENTIONED REPLY NOT COMPLET E. THE A.O. WAS OF THE OPINION THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO JUSTIFY THE CLAIM OF QUANTUM OF LOSS ON ACCOUNT OF FIRE. 6. THE ASSESSEE WAS FURTHER ASKED TO EXPLAIN, ASSESSEE FILED A DETAILED REPLY WHICH READS AS UNDER:- 'LOSS ON ACCOUNT OF FIRE ON 09.11.2009 OUR CLIENT ENCLOSES HEREWITH COPY OF FIRE CLAIM MAD E TO UNITED INSURANCE CO. LTD. ON ESTIMATED BASIS OF RS.20260000/-. THERE AFTER THE COMPANY HAS ASSESSED ABOUT THE ACTUAL LOSSES SUFFERED. WE A RE INSTRUCTED BY OUR CLIENT TO ENCLOSE HEREWITH STATEMENT SHOWING DETAIL S OF LOSS CLAIMED ON ACCOUNT OF FIRE AGGREGATING TO RS.4621744/- IN A.Y. 2010-11 AND LOSS OF RS.3682581/- IN A.Y.2011-12. THUS TOTAL LOSS ON ACC OUNT OF FIRE WAS ITA NO2018/A HD/2013 . A.Y. 2010-1 1 4 RS.4621744+3682581=RS.83043251-. AGAINST THE TOTAL LOSS OF RS.8304325/- THE AMOUNT RECEIVED FROM THE INSURANCE COMPANY IS RS.5289000/-. INSURANCE CLAIM RECEIVED SHOWN AS INC OME RS.5289000/- IN A.Y.2011-12. WE ENCLOSE HEREWITH SUBSEQUENT YEAR AU DITED ACCOUNT IN SUPPORT OF THE INCOME SHOWN.(PAGE NO.2 TO 20)' 7. AFTER PERUSING THE AFOREMENTIONED REPLIES O F THE ASSESSEE, THE A.O. WAS OF THE OPINION THAT THE QUANTUM OF LOSS ON ACCOUNT OF FIRE IS WIDELY DIVERGENT IN THE INSURANCE CLAIM AND THE BOO KS OF ACCOUNTS. 8. ON FURTHER QUERY, THE ASSESSEE FURNISHED COP Y OF PANCHNAMA OF EXCISE DATED 10 TH NOVEMBER, 2009 ALONG WITH COPIES OF RG-23 REGISTERS. 9. ON PERUSAL OF THE SAME, THE A.O FOUND THAT THE EXCISE DEPARTMENT HAS DETERMINED THE QUANTUM OF LOSS ON AC COUNT OF FIRE AT RS. 20,81,443/- AND ACCORDINGLY DISALLOWED THE SAME . 10. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM. IT WAS STRONGLY CONTENDED THAT THE EXCIS E DEPARTMENT HAS QUANTIFIED THE LOSS ONLY IN RESPECT OF EXCISABLE GO ODS WHEREAS THERE WERE NON-EXCISABLE GOODS ALSO WHICH HAVE BEEN GUTTE D IN THE FIRE. THE LD. CIT(A) WAS CONVINCED WITH THIS CLAIM OF THE ASS ESSEE BUT AT THE SAME TIME ALLOWED 50% OF THE CLAIM ON ACCOUNT OF LO SS OF NON- EXCISABLE GOODS DUE TO FIRE AND CONFIRMED THE ADDIT IONS IN RESPECT OF BALANCE 50% OF THE DISALLOWED AMOUNT. 11. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO2018/A HD/2013 . A.Y. 2010-1 1 5 12. THE LD. D.R. COLD NOT POINT OUT ANY FACTUAL ERROR I N THE FINDINGS OF THE LD. CIT(A), LD. COUNSEL FOR THE ASSESSEE REITER ATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 13. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE OR DERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE FA CTUAL MATRIX AS DEMONSTRATED BEFORE THE LOWER AUTHORITIES. THE UNDI SPUTED FACT IS THAT THE ASSESSEE WAS HAVING BOTH EXCISABLE AND NON-EXCI SABLE GOODS. IT IS ALSO NOT IN DISPUTE THAT BOTH CATEGORIES OF GOODS W ERE GUTTED IN FIRE. WE FIND THAT THE A.O. WAS CARRIED AWAY WITH THE QUA NTIFICATION OF LOSS BY THE EXCISE DEPARTMENT AND COMPLETELY IGNORED THE LOSS OF NON- EXCISABLE GOODS. SINCE, THERE WAS NO BIFURCATION OF GOODS, EXCISABLE AND NON-EXCISABLE. THE LD. CIT(A) RESTRICTED THE DI SALLOWANCE TO 50%. IN OUR CONSIDERED OPINION, THE ALLOWANCE OF 50% OF THE CLAIM ON ACCOUNT OF LOSS OF NON-EXCISABLE GOODS SHOULD MEET THE ENDS OF JUSTICE. WE, THEREFORE, DECLINE TO INTERFERE, GROUND NO. 1 I S ACCORDINGLY ALLOWED. 14. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O FO UND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IA OF THE ACT AT RS. 70,29,821/-. THE A.O. WAS OF THE FIRM BELIEF THAT T HE ASSESSEE IS NOT ENTITLED FOR THIS DEDUCTION AND ACCORDINGLY DISALLO WED THE SAME. 15. BEFORE THE FIRST APPELLATE AUTHORITY, STRONG RELIAN CE WAS PLACED ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDDHASWAMY SPINNING MILLS PVT. LTD. 231 CTR 36 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND ALSO CONSIDERING THE DECISION OF THE HONBLE MADRAS HIGH COURT (SUPRA). THE LD. CIT(A) OBSERVED THAT THIS ISSUE HAD FIRST COME UP IN A.Y. 2009-10 WHERE THE ITA NO2018/A HD/2013 . A.Y. 2010-1 1 6 CLAIM WAS ALLOWED. FOLLOWING THE PRECEDENCE, THE LD . CIT(A) ALLOWED THE CLAIM OF DEDUCTION. 16. BEFORE US, THE LD. D.R. COULD NOT BRING ANY DISTING UISHING DECISION IN FAVOUR OF THE REVENUE. LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE FINDINGS OF THE LD. CIT(A). 17. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTH ORITIES BELOW. AN IDENTICAL ISSUE WAS DECIDED BY US IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE IN ASSESSEES OWN CASE IN ITA N O. 2290/AHD/2012 WHEREIN WE HAVE HELD THAT THE RATIO LAID DOWN BY TH E HONBLE MADRAS HIGH COURT IN THE CASE OF VELAYUDDHASWAMY SPINNING MILLS PVT. LTD (SUPRA) SQUARELY APPLY ON THE FACTS OF THE CASE. RE SPECTFULLY FOLLOWING OUR OWN DECISION, WE CONFIRM THE FINDINGS OF THE LD . CIT(A) AND DISMISS GROUND NO. 2. 18. ON FURTHER PROBE, THE A.O. FOUND THAT THE ASSESSEE HAS NOT DISPUTED EMPLOYEES CONTRIBUTION TO PROVIDENT FUND, ESI ON OR BEFORE THE DUE DATE. THE A.O. ACCORDINGLY ADDED THE AMOUNT SO PAID/DEPOSITED AFTER THE DUE DATE AND MADE AN ADDIT ION OF RS. 2,05,491/-. 19. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE STRONGLY RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN T HE CASE OF ALOM EXTRUSIONS LTD. 319 ITR 306. THE LD. CIT(A) ACCORDI NGLY DIRECTED THE A.O. TO DELETE THE IMPUGNED DISALLOWANCE. 20. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. ITA NO2018/A HD/2013 . A.Y. 2010-1 1 7 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND AFTER CAREF ULLY PERUSING THE FACTS IN ISSUES, IN OUR CONSIDERED OPINION, THI S ISSUE HAS TO BE DECIDED IN FAVOUR OF THE REVENUE AND AGAINST THE AS SESSEE IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT GIVEN IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION 36 6 ITR 170. RESPECTFULLY FOLLOWING THE SAME, WE SET ASIDE THE F INDINGS OF THE LD. CIT(A) AND CONFIRM THE ADDITION OF RS. 2,05,491/- A S MADE BY THE A.O. GROUND NO. 3 IS ALLOWED. 22. ON PERUSAL OF THE BALANCE SHEET, THE A.O. FOUND THA T SUNDRY CREDITORS OUTSTANDING FOR MORE THAN 3 YEARS. THE AS SESSEE WAS ASKED TO FURNISH THE DETAILS OF THE SAME. ASSESSEE FILED A DETAILED REPLY. ON PERUSAL OF THE SAME, THE A.O. WAS OF THE FIRM BELIE F THAT THE CREDITORS OUTSTANDING FOR MORE THAN 3 YEARS CONSTITUTE INCOME U/S. 41 OF THE ACT. ACCORDINGLY THE A.O. MADE AN ADDITION OF RS. 4 1,343/- MADE U/S. 41(1) OF THE ACT. 23. BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE CONTENDED THAT OUT OF THE ADDITION OF RS. 41,343/- AN AMOUNT OF RS . 25,684/- STANDING IN THE NAME OF OMKAR ENTERPRISE HAS ALREADY BEEN AD DED TO THE INCOME OF THE ASSESSEE IS IN A.Y. 2011-12 AND REQUE STED THE LD. CIT(A) TO DELETE THE SAME. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS OF THE OPINION THAT THE A.O. HAS NOT GIVEN ANY FINDING REGARDING CESSATION OF LIABILITY, THE ADDIT ION WAS ACCORDINGLY DELETED. 24. BEFORE US, THE LD. D.R. COULD NOT BRING ANY DEMONST RATIVE EVIDENCE WHICH COULD SHOW THAT THE LIABILITIES HAVE CEASED TO EXIST MERELY BECAUSE THE CREDITORS WERE OUTSTANDING FOR M ORE THAN 3 YEARS ITA NO2018/A HD/2013 . A.Y. 2010-1 1 8 WOULD NOT IPSO FACTO JUSTIFY THE ADDITIONS MADE U/S . 41(1) OF THE ACT. MOREOVER, THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATE D THAT PART OF THE OUTSTANDING CREDITORS HAVE ALREADY BEEN TAKEN AS IN COME. 25. CONSIDERING THE FACTS IN TOTALITY, WE DO NOT FIND A NY JUSTIFICATION IN THE ADDITIONS MADE U/S. 41(1) OF THE ACT, THE LD .CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION WHICH REQUIRES NO INT ERFERENCE. 26. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 20 - 06 - 2016 . SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH 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,AHME DABAD