M/s. Orient Ceramic and Industries Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 2119/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6827 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER I TA NO . 2119/DEL/2014 (ASSESSMENT YEAR: 2009 - 10 ) M/S. ORIENT CERAMIC AND INDUSTRIES LIMITED (NOW KNOW AS M/S. ORIENT BELL LTD), IRIS HOUSE, 16, BUSINESS CENTRE, NANGAL RAYA, NEW DELHI PAN:AAACO0305P VS. ADDL. CIT, RANGE - 13, NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. MANOJ KUMAR, CA REVENUE BY: NONE DATE OF HEARING 23/06/ 2016 DATE OF PRONOUNCEMENT 28 / 06 /2016 O R D E R PER PRASHANT MAHARISHI , A . M . 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - XVI, NEW DELHI DATED 24/12/2013 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) U/S 250 OF THE INDIAN INCOME TAX ACT IS WITHOUT APPRECIATING THE TRUE AND CORRECT FACTS OF THE CASE OF THE APPELLANT COMPANY NAMELY M/S ORIENT CERAMIC AND INDUSTRIES LIMITED NOW KNOWN AS M/S ORIENT BELL LIMITED. 2. THAT THE IMPUGNED ORDER HAS BEEN PASSED WITHOUT AFFORDING AN OPPORTUNITY TO BE HEARD TO THE ASSESSEE AND AGAINST THE PRINCIPLE OF AUDI AULTRUM PARDON AND HENCE PARDONED BY LAW. 3. THAT THE CIT(A) HAS GROSSLY ERRED IN UPHOLDING T HE DISALLOWANCE MADE BY THE LD A.O WITH RESPECT TO WRITE OFF OF CLAIM OF DUTY DRAW BACK ALTHOUGH THE SAME HAS BECOME IRREVOCABLE DURING THE YEAR UNDER CONSIDERATION AND HAS FURTHER GROSSLY ERRED IN DRAWING AS ADVERSE INFERENCE OF THE ORDER OF THE ASSISTANT COMMISSIONER (DBK) WHICH WAS PASSED IN JANUARY 2010 REJECTING THE CLAIM OF THE APPELLANT FOR DUTY DRAWBACK, WAS APPLICABLE ONLY FOR ASS. YR. 2010 - 11. 4. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSI NG OFFICER TO DISALLOW EXPENSES INCURRED ON WRITING - OFF,' DUTY DRAW BACK', AMOUNTING TO RS. 32,28,9 24/ - . 5. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT DUTY DRAW BACK, AMOUNT WAS ALREADY INCLUDED IN THE TAXABLE INCOME OF THE APPELLANT COMPANY DURING THE FINANCIAL YEAR 2002 - 2003 AND APPELLANT HAD ALREADY PAID THE APPLICABLE TAXES THEREON, (ERRONEOUSLY MENTIONED AS FINANCIAL YEAR 2001 - 2002) WHICH HAS PAGE 2 OF 4 NOW BEEN WRITTEN - OFF, BEING THE SAME IS NOT LEGALLY ENFORCEABLE F ROM THE CUSTOM DEPARTMENT BY THE APPELLANT COMPANY. 6. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSS ERRED IN NOT APPRECIATING THE FACT THAT CUSTOM DEPARTMENT HAD NEVER ACCEPTED THE CLAIM OF THE APPELLANT COMPANY OF DUTY DRAW BACK AMOUNTING TO RS. 32,28,924 / - AND THE AMOUNT HAD BECOME IRRECOVERABLE DURING THE YEAR UNDER CONSIDERATION. 7. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSSLY ERRED IN IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY THAT THE AMOUNT OF DUTY DRAW BACK HAS BEEN WRITTEN OFF FROM THE BOO KS OF ACCOUNT AS THE SAME COULD NOT BE ENFORCED LEGALLY FROM THE CUSTOM DEPARTMENT. 8. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSSLY ERRED IN IGNORING THE SUBMISSIONS MADE BY THE APPELLANT COMPANY THAT THE AMOUNT OF DUTY DRAWBACK HAS BEEN WRITTEN OFF FROM T HE BOOKS OF ACCOUNT ON THE ADVICE OF LEGAL DEPARTMENT, STATUTORY AUDITORS OF THE APPELLANT COMPANY, AND THE AFFIDAVIT FILED BY THE APPELLANT COMPANY DURING COURSE OF PROCEEDINGS. 9. THAT LD. CIT (A) - XVI, NEW DELHI HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT AN AFFIDAVIT WAS ALSO SUBMITTED IN THIS RESPECT THAT THE APPELLANT COMPANY IS NOT PURSUING THIS CLAIM FROM THE CUSTOM DEPARTMENT AS THE SAME IS NOT LEGALLY ENFORCEABLE AND HAS BEEN WRITTEN OFF FROM THE BOOKS OF ACCOUNTS. 10. THAT LD. CIT (A) - XV I, NEW DELHI HAS GROSSLY ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT COMPANY DOES NOT HOLD ANY RIGHT TO CONTEST THE CLAIM OF THE DUTY DRAW BACK AS THE SAME HAS BEEN WRITTEN OFF ONLY FOR THE REASON THAT THE SAME IS NOT LEGALLY ENFORCEABLE FROM THE CUSTOMER DEPARTM ENT. 3. THE ASSESSEE HAS RAISED AS MUCH AS 10 GROUNDS OF APPEAL, HOWEVER, THE BRIEF FACTS ARE AS UNDER: - THE APPELLANT IS A COMPANY ENGAGED IN MANUFACTURING GLAZED TILES AND FIL ED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2009 SHOWING INCOME OF RS. 107719777/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE LD ASSESSING OFFICER HAS DISALLOWED DUTY DRAW BACK WRITTEN OFF AND MADE AN ADDITION OF RS. 3228924/ - . THE MAIN REASON FOR DISALLOWANCE WAS THAT CLAIM FOR REJ ECTION OF DUTY DRAWBACK WAS PASSED BY THE AUTHORITY IN JANUARY 2010 RELEVANT TO AY 2010 - 11 AND THEREFORE ASSESSEE CANNOT BE PERMITTED TO WRITE IT OFF IN AY 2009 - 10. THE APPEAL WAS PREFERRED BEFORE THE LD CIT(A), WHO IN TURN CONFIRMED THE DISALLOWANCE OF WR ITE OFF THEREFORE THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US THOUGH ASSESSEE HAS RAISED SEVERAL GROUNDS, HOWEVER, WE TAKE GROUND NO. 4 OF THE APPEAL WHICH IS THE CRUX OF THE APPEAL. 5. BEFORE US THE LD AR SUBMITTED THAT DUTY DRAWBACK IS INCOME DERIVED FROM THE EXPORT BUSINESS AND SAME WERE ACCOUNTED FOR AS INCOME IN AY PAGE 3 OF 4 2002 - 03 AS THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE CUSTOMER AUTHORITIES VIDE THEIR ORDER DATED 20.01.2010, THE SAME WAS WRITTEN OFF ON THE ADVICE OF STATUTORY AUDITORS. THEREFORE IT IS BAD DEBT AND SHOULD BE ALLOWED AS DEDUCTION. 6. THE LD DR RELIED ON THE ORDER OF THE LD CIT(A) AND STATED THAT THE SAME IS ALLOWABLE AS DEDUCTION. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE ASSESSEE HAS BOOKED REVENUE ON ACCOUNT OF DUTY DR AW BACK CLAIM IN AY 2002 - 03. ON THIS INCOME THE ASSESSEE IS ALREADY PAID DUE TAX THEREON. FURTHER THIS SUM IS HELD TO BE NOT PAYABLE TO THE ASSESSEE BY THE REVENUE AUTHORITY IN JANUARY 2010 WHICH IS RELEVANT TO AY 2010 - 11. THEREFORE, THIS LOSS HAS CRYSTALL IZED TO THE ASSESSEE IN THE AY 2010 - 11. THERE IS NO DISPUTE ON THIS FACT. HOWEVER, THE CLAIM OF THE ASSESSEE IS THAT IT HAS WRITTEN OF BAD DEBT AS IRRECOVERABLE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE FOR THE PREVIOUS YEAR. THIS INCOME HAS ALREADY BEEN OF FERED FOR TAXATION AND HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR. IN VIEW OF THIS WE ARE FULLY SATISFIED THAT CLAIM OF THE ASSESSEE FALLS U/S 36(1)(VII) OF THE INCOME TAX ACT. THE AMOUNT HAS ARISEN OUT OF THE CLAIM OF THE ASSESSEE WHICH IS A DEBT OF THE ASSESSEE AND SAME HAS BECOME BAD. FURTHER, IT IS NOT NECESSARY TO ESTABLISH THE YEAR IN WHICH SUCH CLAIM HAS BECOME BAD. IT IS ALLOWABLE IN THE YEAR IN WHICH IT IS WRITTEN OFF IN THE BOOKS OF ACCOUNT. IN VIEW OF THIS GROUND NO. 4 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. AS THE EFFECTIVE GROUND OF THE APPEAL OF THE ASSESSEE WHICH IS GROUND NO. 4 IS DECIDED IN FAVOUR OF THE ASSESSEE THEREFORE, WE REFRAIN TO DISCUSS OTHER GROUNDS OF THE APPEAL WHICH ARE MORE OR LESS SUPPORTING GROUND NO. 4. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8 / 06 /2016 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 / 06 / 2016 A K KEOT COPY FORWARDED TO PAGE 4 OF 4 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI