ACIT, New Delhi V. M/s. Sierra Industrial Enterprises (merged in to SSPL Retail Ltd.), New Delhi

ITA 2114/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6917 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 25-10-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P SINGH
• Assessee Lawyers: S K AGARWAL

Judgement Text

I.T.A. NO.2114 /DEL/10 1/4 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2114 /DEL/2010 ASSESSMENT YEAR : 2001-02 ACIT, M/S SIERRA INDL. ENTERPRISES, CIRCLE-9 (1), MERGED IN SSPL RETAIL LTD., NEW DELHI. V. B-1/F-4, MOHAN COOP.INDL. AREA, MATHURA ROAD BADDARPUR, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAACS-3919-D APPELLANT BY : SHRI R.P. SINGH, DR. RESPONDENT BY : SHRI SUMANT CHADHA, C.A. & SHRI S.K. AGARWAL, C.A. ORDER PER A.K. GARODIA, AM: THIS IS REVENUE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)-XII, NEW DELHI DATED 11.1.2010 FOR ASSESSMENT YEAR 2001-02. 2. THE GROUND RAISED BY THE REVENUE READS AS UNDER:- . I.T.A. NO.2114/DEL/10 2/4 LD CIT(A) ERRED IN LAW AND ON THE FACTS AND CIRCUM STANCES OF THE CASE, IN REDUCING THE DISALLOWANCE OF `.14,72,726/- M ADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADDITIONAL SALE PROCEEDS OF THE CUSTOMER CLAIMS AND DEFECTIVES TO 5% OF `.29,45,451/- AND THEREBY ALLOWING RELIEF TO THE ASSESSEE AMOUNTING TO `.13,25,453/-. 3. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER W HEREAS LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD CIT(A). IT IS ALSO SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE A SSESSEE BY THE TRIBUNAL DECISION IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2 000-01 IN I.T.A. NO.4171/DEL/2009 DATED 18.3.2010. IT IS SU BMITTED THAT COPY OF THIS TRIBUNAL DECISION IS AVAILABLE ON PAGE1-2 OF T HE PAPER BOOK. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD AND THE TRIBUNAL DECISI ON CITED BY THE LD AR OF THE ASSESSEE. WE FIND THAT THE DISPUTE IN THE PRESE NT CASE IS WITH REGARD TO ADDITION MADE BY THE ASSESSING OFFICER ON AC COUNT OF DEFECTIVE GOODS. IT IS NOTED BY THE ASSESSING OFFICER THA T THE ASSESSEE COMPANY HAS CLAIMED AN AMOUNT OF `.37,35,374/- AS EXP ENDITURE ON ACCOUNT OF DEFECTIVE/DAMAGED GOODS UNDER THE HEAD CUSTOMERS CLAIM AND DEFECT. THE ASSESSING OFFICER HAD NOTED IN THE FIRST ROUND THAT AFTER TAKING INTO ACCOUNT THE GP RATE AND THIS FACT THAT NORMALLY 40% DISCOUNT IS GIVEN BY THE COMPANY ON DEFECTIVE GO ODS, THE DISALLOWANCE WAS MADE IN THE FIRST ROUND TO THE EXTENT OF `.29,45,451/-. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT (A) WHO DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE. AGAINST THAT ORDER OF LD CIT(A), THE REVENUE WAS IN APPEAL BEFORE THE TRIBUNAL. THE TRIBUNAL RESTORED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER F OR A FRESH DECISION. IN THE ORDER PASSED BY THE ASSESSING OFFICER U/S 254/143( 3), THE ASSESSING OFFICER MADE DISALLOWANCE TO THE EXTENT OF 50% OF THIS . I.T.A. NO.2114/DEL/10 3/4 AMOUNT OF `.29,45,451/- WHICH WAS DISALLOWED IN THE F IRST ROUND AND IN THIS MANNER, HE MADE DISALLOWANCE OF `.14,72,726/-. I N ASSESSMENT YEAR 2000-01 ALSO, SIMILAR DISPUTE WAS THERE BEFORE THE TRIBUNAL AND IN THAT YEAR ALSO, LD CIT(A) HAS RESTRICTED THE DISALLOWAN CE ON ACCOUNT OF CUSTOMERS CLAIM AND DEFECTS FROM 50% TO 5%. THIS ORD ER OF LD CIT(A) WAS CONFIRMED BY THE TRIBUNAL. THE RELEVANT P ARA OF THIS TRIBUNAL DECISION I.E. PARA NO.4 IS REPRODUCED BELOW: - PARA 4: THE FINDING RECORDED BY THE CIT(A) HAS NOT BEEN CONT ROVERTED BY THE LD DR,. WE ALSO FOUND THAT NO MATERIAL WAS BROUGH T ON RECORD BY THE ASSESSING OFFICER TO SUGGEST THAT ANY SALE PRICE W AS BEING FETCHED BY SUCH DEFECTIVE GOODS RETURNED BY THE CUSTOM ERS. SINCE THE ASSESSEE WAS SELLING THE PRODUCT BY THE BRAND N AME NIKE, THEY ARE EXTREMELY QUALITY CONSCIOUS AND EVERY COMPLAINT OF THE CUSTOMER IS BEING MET WITH. KEEPING IN VIEW TH E NATURE OF THE PRODUCT BEING FOOTWEAR AND APPARELS, SOME DEFECTS ARE INEVITABLE AND THE ASSESSEES CLAIM FOR SUCH DEFECTIVE GO ODS IS VERY NEGLIGIBLE LOOKING TO ITS TOTAL TURNOVER. WE, T HEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) FOR R ESTRICTING THE DISALLOWANCE TO THE EXTENT OF 5% IN PLACE OF 50% MAD E BY THE ASSESSING OFFICER. 5. IN THE PRESENT YEAR ALSO, THE FACTS ARE SIMILAR AND HENCE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THE P RESENT YEAR AND HENCE IN THE PRESENT YEAR ALSO, WE DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 5% OF `.29 ,45,451/- AS AGAINST 50% DISALLOWANCE MADE BY THE ASSESSING OFFICER. SINCE, THE LD CIT(A) HAS ALSO HELD THAT THE DISALLOWANCE BE RESTRICTED TO 5% AS IN ASSESSMENT YEAR 2000-01, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD CIT(A). . I.T.A. NO.2114/DEL/10 4/4 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING ITSELF I.E. 26 TH OCTOBER, 2010. (C.L. SETHI) (A.K. GAROD IA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. .10.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).