DCIT 10(2)(1), MUMBAI V. LYKA EXPORTS P.LTD, MUMBAI

ITA 2052/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1327 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Depreciation; Additional evidence; Bad and doubtful debts; Unabsorbed depreciation
• Section: 43B; 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.2052/MUM /2015 ASSESSMENT YEAR-2004-05 DCIT-10(2)(1), R. NO.216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / VS. M/S LYKA EXPORTS PVT. LTD. 101, SHIV SHAKTI INDL. ESTATE ANDHERI KURLA ROAD, ANDHERI (EAST), MUMBAI-400059 PAN NO. AAACL0638A ( / REVENUE) ( / ASSESSEE) / REVENUE BY SHRI RAJESH KUMAR YADAV- DR / ASSESSEE BY NONE / DATE OF HEARING : 18/04/2017 / DATE OF ORDER: 21/04/2017 ITA NO.2052/MUM/2015 M/S LYKE EXPORTS PVT. LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 16/01/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, ALLOWING LOSS OF RS.1,21,83,407/- BY HOLDIN G THAT THE SIMILAR NATURE OF EXPENSES WAS ALLOWED IN EARLIER YEAR WITHOUT APPRECIATING THAT THE ALLOWANCE OF SIM ILAR EXPENSES IN EARLIER YEARS CANNOT BE THE BASIS FOR SUBSEQUENT YEAR, WITHOUT DETERMINING THEIR ALLOWABI LITY. 2. DURING HEARING OF THIS APPEAL, NONE WAS PRESENT FOR THE ASSESSEE IN SPITE OF THE FACT THAT ON EARLIER HEARING ON 30/11/2011, THE APPEAL WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. SHRI RAJESH KR. YADAV, LD. DR, DEFENDED THE ADDITION MADE BY THE ASSESSING OFFICER BY ADVANCING ARGUMENTS, WHICH IS IDENTICAL TO THE GROU ND RAISED. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFOR E COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUN DER THE RELEVANT PORTION AND THE FACTUAL FINDING RECORD ED BY LD. COMMISSIONER OF INCOME TAX (APPEAL) FOR READY REFERENCE AND ANALYSIS:- 1.3.1. I HAVE CAREFULLY CONSIDERED THE SUBMISSION S AND CONTENTION OF THE LD. AR OF THE APPELLANT AND A LSO CAREFULLY GONE THROUGH THE FACTS AND RECORDS. IT IS SEEN FROM THE STATEMENT OF INCOME FILED BY THE APPELLANT ALONG WI TH THE RETURN OF INCOME THAT THE APPELLANT IS ENTITLED TO CARRY F ORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION LOSS FOR THE ITA NO.2052/MUM/2015 M/S LYKE EXPORTS PVT. LTD. 3 ASSESSMENT YEAR 1997-1998 TO 2004-2005 AMOUNTING TO RS.3,89,93,910. IT IS A MATTER OF RECORD THAT THE A PPELLANT DID NOT FILE ANY DOCUMENTS WHICH WERE REQUIRED BY THE L D.AO DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS BUT THE SAME WERE SUBMITTED BY THE APPELLANT DURING THE COURSE O F THE APPELLATE PROCEEDINGS. MY LEARNED PREDECESSOR SENT THE SAME FOR EXAMINATION/VERIFICATION BY THE LD.AO AS ACCORD ING TO HIM THEY CONSTITUTE ADDITIONAL EVIDENCES. HOWEVER, TILL DATE NO REMAND REPORT IS RECEIVED, MATTER BEING TOO OLD IS NOW TAKEN UP ON ITS OWN MERIT TREATING THAT LD. AO HAS NO OBJECT ION FOR THE ADMISSION OF THE ADDITIONAL EVIDENCE. IT IS SEEN FR OM THE ASSESSMENT ORDER THAT THE LD.AO DURING THE COURSE O F ASSESSMENT PROCEEDING OBSERVED THAT THE UNSECURED L OANS OF THE APPELLANT HAD INCREASED AND IT FAILED TO PRO DUCE THE PERSONS AND PROVE THE CREDITWORTHINESS OF THE LOAN CREDITORS FOR THE YEAR UNDER CONSIDERATION. HOWEVER, .A BARE PERUSAL OF THE AUDITED BALANCE SHEET WHICH WAS FILED BY THE APPELLANT ALONG WITH THE RETURN AS. INDICATED BY THE LD.AO IN HIS ORDER, IT CAN BE SEEN THAT THE UNSECURED LOAN HAD IN FACT DEC REASED DURING THE PERIOD UNDER CONSIDERATION FROM RS.2,32, 70,,001/- TO RS. 1,23,03,955/-. THEREFORE THERE IS NO MERIT IN T HE ARGUMENT OF THE LD.AO THAT THE UNSECURED LOANS HAVE INCREASED AND IT IS FOR WANT OF VERIFICATION OF THE UNSECURED LOAN THAT HE HAD DISALLOWED THE LOSS OF THE APPELLANT. FURTHER A BAR E. PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF THE APPELLANT REVEALED T HAT THE EXPENSES ON ACCOUNT OF OPERATION AND OTHER EXPENSES HAS IN FACT DECREASED AS COMPARED TO LAST YEAR AND SO IS THE LO CAL SALES, WHICH HAS DRASTICALLY FALLEN. DOWN .. FROM RS.8,93,29,540/ - TO RS.4,01,44,620/-. THE NATURE OF EXPENSES REVEALED T HAT THE SAME EXPENSES WERE CLAIMED BY THE APPELLANT IN THE YEAR UNDER CONSIDERATION EXCEPT THE PROVISIONS FOR DOUBTFUL DEBTS(RS.1,25,48,871); PROVISIONS FOR DIMINUTION IN THE VALUE, OF ASSETS(RS.11,81,750); LOSS OF MISAPPROPRI ATION OF STOCK(RS.349,657), DIFFERENCE IN THE EXCHANGE FLUCTUATION(RS.6,38,945) AND SUNDRY BALANCES WRITTE N OFF (RS.13,01,814). FURTHER, I FIND THAT IN THE PREVIOU S YEAR THE LD.A0 HAS ACCEPTED THE OTHER CLAIMS OF THE EXPENSES BY T HE APPELLANT AND HAD MADE NO ADDITION. THE APPELLANT I N THE COMPUTATION OF INCOME HAD DISALLOWED SEVERAL EXPENS ES , WHICH ARE NOT EVEN OTHERWISE ALLOWABLE SUCH AS GRAT UITY PROVISIONS, DONATION, PROVISIONS FOR DOUBTFUL - DEB TS, PROVISION FOR DIMINUTION IN THE . VALUE OF INVESTMENT AND DISALLOWANCES AS PER THE PROVISION OF SECTION 43B AND 36, IN ALL AMO UNTING TO RS.1,57,01,732/- OUT OF THE TOTAL CLAIM OF RS.4,41, 39,903/- WHICH MEANS CLEARLY 35.57% OF THE ENTIRE EXPENSES. WAS SUO MOTO DISALLOWED BY THE APPELLANT REDUCING THE LOSS TO RS.1,51,43,270/- AS AGAINST THE LOSS SHOWN AS PER P ROFIT AND ITA NO.2052/MUM/2015 M/S LYKE EXPORTS PVT. LTD. 4 LOSS ACCOUNT OF RS. 4,07,8.0,823/- DO NOT FIND ANY REASON OTHER THAN THE NON SUBMISSIONS' ,OF THE DETAILS WHICH PRO MPTED THE . LD. A0 TO DISALLOW THE EXPENSES. IT WAS STATED BYTHE L EARNED AR OF THE APPELLANT THAT IT HAD REQUESTED THE LD.A0 TO GI VE TIME UPTO 1ST WEEK OF DECEMBER 2006 WHEN THE DETAILS AS CALLED FO R WOULD BE SUBMITTED TO THE LD.A0. HOWEVER, WITHOUT GIVING ANY TIME THE LD.A0 PASSED THE ORDER ON 29-11-2006. THEREFORE, IT IS NOT A CASE WHERE THE DETAILS ARE NOT AVAILABLE WITH THE APPELL ANT OR THE APPELLANT WAS CLAIMING EXPENSES EXCEPT THE ONE DISC USSED FOR THE FIRST TIME AND THERE HAS BEEN AN UNUSUAL INCREA SE IN THE EXPENSES BUT A SIMPLE CASE WHERE THE DETAILS WERE N OT FURNISHED AND IN. EARLIER YEAR THE SIMILAR TYPE OF EXPENSES WERE CLAIMED AND IN FACT ALLOWED BY THE LD.A0. FIND THAT ON A PERUSAL OF THE EXPENSES, THE EXPENSES . .ON . ACCOUNT OF LOSS . OF MISAPPROPRIATION OF STOCK (RS.3,19,657), DIFFER ENCE IN THE EXCHANGE FLUCTUATION (RS.6,38,945) AND SUNDRY BALAN CES WRITTEN OFF (RS.13,01,814) ARE ALSO NOT ALLOWABLE AS THE AP PELLANT HAD NOT GIVEN ANY EVIDENCE FOR THE CLAIM OF THE SAME. ' THUS A FURTHER DISALLOWANCES IS WARRANTED OF THE AMOUNT OF RS. 22, 60,416/- AND THE CURRENT YEAR LOSS SHOULD BE ASSESSED AT RF.1,21 ,83,407/- AS AGAINST RS.1,51,43,270/- DETERMINED BY THE APPELLAN T. LOOKING' TO THE PAST HISTORY OF THE APPELLANT IT CAN BE SEEN THAT THE APPELLANT IS INCURRING LOSSES ON YEAR TO YEAR BASIS AND ALSO THE FACT THAT THE APPELLANT HAS NOT ACCEPTED/ RENEWED ANY FIXED DEPOSIT AS THE LIMIT FOR FURTHER RENEWAL/ ACCEPTANC E OF THE FIX DEPOSITS HAS EXHAUSTED. LOOKING TO THE FACT S OF THE APPELLANT CASE AND THE PREVIOUS HISTORY, I DO NOT F IND THE ACTION OF THE LD.AO IN REJECTING THE LOSSES CLAIMED BY THE APPELLANT IN EARLIER YEAR AS NOT ALLOWABLE. HOWEVER , THE APPELLANT'S LOSS AS CLAIMED BY IT IN THE CURRENT YE AR IS REDUCED AS PER THE DISCUSSION ABOVE. THE ID. AO IS DIRECTED TO DETERMINE THE LOSS ACCORDINGLY AND ALLOW THE BROUGH T FORWARD OF LOSSES OF THE CURRENT YEAR AND THE OTHER YEARS ACCORDINGLY. THIS GROUND OF APPEAL IS ACCORDINGLY P ARTLY ALLOWED. 2. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. 2.2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN ANIMAL HEALTH CARE PRODUCTS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED LOSS OF RS.1,51,43,265/-. DURING SCRUTINY PROCEEDINGS, THE LD. DCIT ISSUED NOTICE U/ S 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), ITA NO.2052/MUM/2015 M/S LYKE EXPORTS PVT. LTD. 5 DATED 19/07/2006 ASKING THE ASSESSEE TO FURNISH CER TAIN DETAILS, MENTIONED THEREIN. TO WHICH, THE ASSESSEE RESPONDED AND FILED THE DETAILS ON 26/09/2006. THE LD. ASSESSING OFFICER MADE THE ADDITION ON THE PLEA THA T DETAILS CALLED FOR BY HIM ON 16/11/2006 WERE NOT FURNISHED, THEREFORE, HE DISALLOWED THE CLAIMED LOS S OF RS.1,51,43,265/-. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL), IT IS NOTED TH AT DURING APPELLATE PROCEEDINGS, THE ASSESSEE FILED TH E DETAILS, WHICH WERE SENT TO THE FILE OF THE ASSESSI NG OFFICER FOR REMAND REPORT. HOWEVER, THE LD. ASSESSI NG OFFICER FILED NO REPLY TO THE REMAND REPORT AS IS E VIDENT FROM PARA 1.21. OF THE IMPUGNED ORDER. THERE IS A FACTUAL FINDING IN THE IMPUGNED ORDER THAT THE AUDITED BALA NCE SHEET WAS EXAMINED BY HIM, WHICH INDICATES THAT UNSECURED LOANS HAS IN FACT DECREASED DURING THE PE RIOD UNDER CONSIDERATION FROM RS.2,32,70,001/- TO RS.1,23,03,955/-. THE NATURE OF EXPENSES REVEALED T HAT SAME EXPENSES WERE CLAIMED BY THE ASSESSEE IN THE Y EAR UNDER CONSIDERATION EXCEPT THE PROVISION FOR DOUBTF UL DEBT (RS.1,25,48,871/-). WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL) HAS ELABORATELY DISCUSSED THE FACTUAL MATRIX AND OBSERVED THAT DETA ILS WERE DULY AVAILABLE ON RECORD FOR WHICH THE ASSESSE E WAS CLAIMING EXPENSES. WE FIND NO INFIRMITY IN THE DIRE CTION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) TO DETERMINE THE LOSS ACCORDINGLY AND TO ALLOW THE BRO UGHT FORWARD LOSSES OF THE CURRENT YEAR AND OTHER YEARS ITA NO.2052/MUM/2015 M/S LYKE EXPORTS PVT. LTD. 6 ACCORDINGLY. NO CONTRARY FACTS WERE BROUGHT TO OUR NOTICE BY THE REVENUE, THEREFORE, WE AFFIRMED THE CONCLUSI ON DRAWN IN THE IMPUGNED ORDER, RESULTANTLY, THE APPEA L OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 18/04/2017. SD/- SD /- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 21/04/2017 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI