Kakatiya Cement Sugar & Industries Limited, Hyderabad V. Addl. Commissioner of Income Tax, Range-2, Hyderabad

ITA 2138/Hyd/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7839 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 18-01-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 14-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V S T SAI
• Assessee Lawyers: M V ANIL KUMAR
• Keywords: Wrong claim
• Section: 271(1)(c); 143(3); 80IA; 22; 154; 2

Judgement Text

ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS.1446 & 2138/HYD/2017 ASSESSMENT YEAR: 2009-10 M/S. KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD HYDERABAD PAN:AABCK1868J VS. ADD. COMMISSIONER OF INCOME TAX, RANGE-2 HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI M.V. ANIL KUMAR REVENUE BY : SRI V.V.S.T.SAI & SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 18/01/2021 DATE OF PRONOUNCEMENT: 20/01/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE ASSESSEES APPEALS FOR THE A.Y 2009-10 AGAINST THE ORDERS OF THE CIT (A)-1, GUNTUR, DATED 19.04.2017 AND CIT(A)-9, HYDERABAD 18 TH AUGUST, 2017. ITA NO.1446/HYD/2017 2. BRIEF FACTS OF THE CASE IN THIS APPEAL ARE THAT THE ASSESSEE COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CEMENT, SUGAR AND GENERATION OF PO WER, FILED ITS RETURN OF INCOME OFFERING INCOME OF RS.22,45,34,958 /-. FOR THE RELEVANT A.Y, THE ASSESSEE HAD RETURNED A GROSS TOT AL INCOME OF RS.32,63,02,708/- AND CLAIMED A DEDUCTION OF RS.10, 07,52,120/- ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 2 OF 6 U/S 80IA IN RESPECT OF ITS POWER DIVISION. DURING T HE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO DISALLOWE D THE COST OF STEAM CONSIDERED AS NIL VALUE AND DENIED DEDUCTION U/S 80IA IN RESPECT OF THE POWER DIVISION DUE TO WHICH IN THE S UGAR DIVISION, THE EXPENDITURE TOWARDS THE COST OF STEAM PURCHASED FROM POWER DIVISION WAS ALSO DISALLOWED. THE MATTER TRAVELLED UPTO ITAT AND THE ITAT ALLOWED DEDUCTION U/S 80IA. HOWEVER, IT HE LD THAT THE COST OF STEAM FOR THE SUGAR DIVISION CANNOT BE AT N IL. CONSEQUENTLY, THE AO PASSED CONSEQUENTIAL ORDER ON 22.7.2014 COMPUTING THE COST OF STEAM TRANSFERRED TO SUGAR DI VISION FROM POWER DIVISION TO BE AT RS.1,15,00,642/-. THE ASSES SEE FILED AN APPLICATION U/S 154 DATED 28.7.2014 SEEKING RECTIFI CATION OF THE MISTAKE APPARENT FROM RECORD IN COMPUTING THE VALUE OF THE STEAM TRANSFERRED TO THE SUGAR DIVISION. IN THE SAID APPL ICATION, THE ASSESSEE HAS SUBMITTED THAT THE VALUE OF STEAM CONS UMED BY THE SUGAR DIVISION WORKS OUT TO RS.1,54,17,891/- INSTEA D OF RS.1,15,00,642/-. THE AO, AFTER CONSIDERING THE PET ITION FILED BY THE ASSESSEE, RECALCULATED THE VALUE OF THE STEAM A ND RECOMPUTED THE COST OF STEAM TRANSFERRED FROM POWER DIVISION T O SUGAR DIVISION AT RS.1,59,00,541/-. AGGRIEVED BY THIS CALCULATION OF THE ADD. CIT VIDE ORDER DATED 11.8.2014, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) STATING THAT THE METHOD ADOPTED BY THE AO IN COMPUTING THE VALUE OF STEAM IS NOT ACCORDING TO TH E CORRECT AND SCIENTIFIC METHOD OF CALCULATION AND THAT THE AO OU GHT TO HAVE CONSIDERED THE QUANTITY AND VALUE AS PER THE BOOKS. THE CIT (A), HOWEVER, CONFIRMED THE ORDER OF THE AO AND THE ASSE SSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FO LLOWING GROUNDS OF APPEAL: 1. YOUR APPELLANT SUBMITS THAT THE CIT(A) ERRED IN LAW AND FACTS OF THE CASE IN APPRECIATING THE FACT THAT THE ASSESSING OFFICER HAS NOT FOLLOWED THE DIRECTIONS O F THE CIT(A) IN ITA NO. 268 AND HON'BLE ITAT IN ITA NO. L024/HYD/2014 WITH REGARD TO STEAM. ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 3 OF 6 2. YOUR APPELLANT SUBMITS THAT THE CIT(A) AS WELL A S THE ASSESSING OFFICER OUGHT TO HAVE CONSIDERED THE ACTU AL QUANTITY AND VALUE OF STEAM SUPPLIED TO SUGAR DIVIS ION INSTEAD OF REWORKING THE SAME. 3. YOUR APPELLANT SUBMITS THAT THE CIT(A) OUGHT NOT TO HAVE CONFIRMED THE WORKING OF THE ASSESSING OFFICER , WHICH IS NOT SCIENTIFIC METHOD OF CALCULATION, AS C OMPARED TO THE ACTUALS SUBMITTED, THEREFORE THE ASSESSING O FFICERS WORKING MAY BE DELETED. 4. THE CIT(A) OUGHT TO HAVE CONSIDERED THE SUBMISSI ON OF YOUR APPELLANT DURING THE APPELLATE PROCEEDING WOUL D HAVE APPRECIATED THE MISTAKE IN QUANTITY AND VALUE WORKED OUT BY THE ASSESSING OFFICER, THEREBY WOULD HAVE DIRECTED TO ACCEPT THE WORKING OF YOUR APPELLANT. FOR THESE AND SUCH OTHER GROUNDS THAT MAY URGED AT THE TIME OF HEARING, YOUR APPELLANT PRAYS THAT THE RELI EF CLAIMED MAY BE ALLOWED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AO THAT THE CALCULATION MADE BY THE AO IN THE ORDER U/S 154 IS NOT CORRECT AND SCIENTIFIC. 4. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T IN THE APPLICATION U/S 154, THE ASSESSEE HAD SOUGHT TH AT THE VALUE OF THE COST OF STEAM TRANSFERRED FROM POWER DIVISION T O SUGAR DIVISION SHOULD BE TAKEN AT RS.1,54,17,891/- AND THE ADD. CI T HAS RIGHTLY COMPUTED THE VALUE OF STEAM AND HAS ARRIVED AT THE VALUE OF STEAM TRANSFERRED AT RS.1,59,00,541/- WHICH IS MORE THAN THE PRAYER OF THE ASSESSEE AND IS THUS BENEFICIAL TO TH E ASSESSEE AND THEREFORE, THE ASSESSEE SHOULD NOT HAVE ANY GRIEVAN CE. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE CONTENTION OF THE LEARN ED DR IS CORRECT. IN THE APPLICATION U/S 154 IN THE LAST BUT ONE PARAGRAPH, ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 4 OF 6 THE ASSESSEES CONTENTION IS THAT THE CORRECT VALUE OF THE STEAM IS RS.1,54,17,891 AND NOT RS.1,15,27,642/- WHICH IS TH E VALUE TAKEN BY THE AO IN THE CONSEQUENTIAL ORDER DATED 22 .07.2014. FURTHER, IN THE ORDER U/S 154, THE COST OF STEAM TR ANSFERRED FROM POWER DIVISION TO SUGAR DIVISION HAS BEEN COMPUTED AT RS.1,59,00,541/- WHICH IS MORE THAN THE PRAYER OF T HE ASSESSEE IN APPLICATION U/S 154. WHEN WE ENQUIRED WHETHER THE C OMPUTATION OF THE VALUE OF STEAM FOR THIS A.Y WOULD HAVE ANY C ONSEQUENTIAL AFFECT IN THE SUBSEQUENT A.YS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE SUBSEQUENT YEARS, TH ERE WAS NO DISALLOWANCE AND THESE CALCULATIONS WOULD NOT IN AN Y WAY AFFECT THE COMPUTATION OF INCOME IN THE SUBSEQUENT YEARS. SINCE THE RELIEF GRANTED BY THE ADD. CIT U/S 154, WAS MORE TH AN THE RELIEF CLAIMED BY THE ASSESSEE IN ITS APPLICATION U/S 154 OF THE ACT, WE DO NOT SEE ANY PREJUDICE BEING CAUSED TO THE ASSESS EE. IN VIEW OF THIS, WE DO NOT SEE ANY REASON TO INTERFERE WITH TH E ORDER OF THE ADD. CIT DATED 11.8.2014 U/S 154 OF THE ACT. 6. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.1446/ HYD/ 2017 IS DISMISSED. ITA NO.2138/HYD/2017 7. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10 AG AINST THE ORDER OF THE CIT(A)-9, HYDERABAD DATED 18.8.201 7 CONFIRMING THE PENALTY LEVIED BY THE AO U/S 271(1)(C) OF THE A CT. 8. BRIEF FACTS OF THE CASE ARE THAT DUE TO THE DISA LLOWANCE OF THE DEDUCTION U/S 80IA AND THE SUBSEQUENT APPEAL TO THE ITAT AND THE REMAND OF THE ISSUE TO THE AO BY THE ITAT, THE AO PASSED THE CONSEQUENTIAL ORDERS AND ALSO INITIATED PENALTY PROCEEDINGS SINCE THERE WAS A DISPUTE WITH REGARD TO THE VALUE OF THE COST OF ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 5 OF 6 STEAM TRANSFERRED FROM POWER DIVISION TO SUGAR DIVI SION. WE FIND THAT IN THE CONSEQUENTIAL PROCEEDINGS, THE AO HAD C OMPUTED THE COST OF STEAM TRANSFERRED BY POWER DIVISION TO THE SUGAR DIVISION AT RS.1,15,00,642/- AND SUBSEQUENTLY IN THE ORDER U /S 154, DATED 11.8.2014, THE VALUE OF THE STEAM WAS RECOMPUTED AT RS.1,59,00,541/-. IN THE PENALTY PROCEEDINGS, THE A O OBSERVED THAT THE ASSESSEE HAD MADE A CLAIM OF RS.2,87,54,03 7/- TOWARDS COST OF STEAM TRANSFERRED LEADING TO EXCESS CLAIM O F RS.1,28,53,496/- AND THEREFORE, HE FELT THAT THE AS SESSEE HAS SUPPRESSED THE FACTS AND SUBMITTED INACCURATE PARTI CULARS OF INCOME. HE, THEREFORE, LEVIED PENALTY @ 100% OF TA X SOUGHT TO BE EVADED. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSES SEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GR OUNDS OF APPEAL: 1. YOUR APPELLANT SUBMITS THAT THE CIT(A) AS WELL A S THE ASSESSING OFFICER ERRED IN LAW AND FACTS OF THE CAS E IN LEVY OF PENALTY OF RS. 87,37,807/UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. YOUR APPELLANT SUBMITS THAT THERE IS NO CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS AS T HE ASSESSING OFFICER REWORKED THE COST OF STEAM ON MER E ASSUMPTION AND PRESUMPTION. 3. YOUR APPELLANT SUBMITS THAT THE CALCULATION REGA RDING COST OF STEAM SUBMITTED IS AS PER THE RECORDS AND O N SCIENTIFIC METHOD, THERE IS NO MISTAKE IN THE VALUA TION OF STEAM AS WELL AS QUANTITY OF STEAM CONSUMED BY THE SUGAR DIVISION FROM THE POWER DIVISION. HENCE THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. 4. THE CIT(A) AS WELL AS THE ASSESSING OFFICER HAVI NG ACCEPTED THE CONSISTENT METHOD OF ARRIVING AT COST OF STEAM IN THE PAST, OUGHT TO HAVE ACCEPTED THE SAME FOR TH E YEAR UNDER CONSIDERATION, THEREFORE THERE IS NO CONCEALM ENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. FOR THESE AND SUCH OTHER GROUNDS THAT MAY URGED AT THE TIME OF HEARING, YOUR APPELLANT PRAYS THAT THE RELI EF CLAIMED MAY BE ALLOWED. ITA NOS 1446 AND 2138 OF 2017 KAKATIYA CEMENT SUGAR AND INDUSTRIES LTD PAGE 6 OF 6 9. AFTER HEARING BOTH THE PARTIES AND IN VIEW OF OU R FINDINGS IN THE ASSESSEES APPEAL AGAINST THE ORDER OF THE AO U/S 154, DATED 11.8.2014, WE FIND THAT THE COMPUTATION OF THE COST OF STEAM WAS A HIGHLY TECHNICAL AND COMPLICATED ISSUE AND FURTHER, THE SAID EXERCISE HAD BEEN UNDERTAKEN WHILE PASSING THE CONSEQUENTIAL ORDER AND ALSO DURING THE PROCEEDINGS U/S 154. IN SUCH CIRCUMSTANCES, WE DO NOT AGREE WITH THE AO THA T THERE IS ANY SUPPRESSION OF INCOME OR FURNISHING OF INCORREC T INFORMATION. IT CANNOT BE TREATED AS A DELIBERATE WRONG CLAIM, I T IS A DEBATABLE ISSUE. THEREFORE, THE PENALTY LEVIED BY THE AO IS S ET ASIDE AND THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.2138 /HYD/ 2017 IS ALLOWED AND IN ITA NO.1446 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 20 TH JANUARY, 2021. VINODAN/SPS COPY TO: 1 M/S.KAKATIYA CEMENT SUGAR & INDUSTRIES LTD C/ M. ANANDAM & CO. C.AS, 7A SURYA TOWERS, SP ROAD, SECUNDERABAD 50 0003 2 ADD.CIT, RANGE-2 HYDERABAD 3 CIT (A)-1, GUNTUR, CIT (A)-9 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER