ACIT, Nashik V. Indo Russian Aviation Ltd, Nashik

ITA 2214/PUN/2012

• Counselvise Citation: 221424514 RSA 2012
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P L PATHADE
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 2214/PN/2012 (ASSTT.YEARS : 2009-10) ACIT, CIRCLE-1, NASHIK .. RESPONDENT VS. INDO RUSSIAN AVIATION LTD., C/O. HAL ADMINISTRATIVE BLOCK, OJHAR TOWNSHIP, A/P. OJHAR, TAL : NIPHAD, NASHIK .. APPELLANT PAN NO.AAACI5908C ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI P.L. PATHADE DATE OF HEARING : 24-12-2013 DATE OF PRONOUNCEMENT : 30-12-2013 ORDER PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL IS FILED BY THE REVENUE ON FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.74,71,018/- WHICH WAS ADDED U/S.37(1) ON ACCOUNT OF LIQUIDATED DAMAGES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.16,54,288/- WHICH WAS ADDED ON A/C OF AIR SHOW EXPENSES AS THESE EXPENSES ARE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A)-I, NASHIK WAS JUSTIFIED IN DELETING THE ADDITION OF RS.21,08,730/- WHICH WAS ADDED ON ACCOUNT OF UNJUSTIFIED DEDUCTION OF PAYMEN T MADE OUT OF PROVISION FOR THE A.Y. 2008-09 OUT OF PROFIT BEFORE TAX AS PER THE P/L ACCOUNT. 2 4. THE APPELLANT PRAYS THE ORDER OF THE A.O. MAY BE RESTORED. 5. THE APPELLANT PRAYS TO ADDUCE SUCH OTHER FURTHER EVIDENCE TO SUBSTANTIATE HIS CASE. 2. THE ASSESSEE IS A JOINT VENTURE OF HINDUSTAN AERONAUTICS LTD. (HAL), ICICI LTD., RAC, MIG AVIAZA PLAST PLC & GRPZ. FIRST ISSUE IS WITH REGARDS TO ADDITION OF RS.74,71,018/- ADDED U/S.37(1) ON ACCOUNT OF LIQUID ATED DAMAGES. THE ASSESSING OFFICER MADE THE ADDITION I N QUESTION IN RESPECT OF LIQUIDATED DAMAGES FOR NON S UPPLY OF THE MATERIAL TO ITS CUSTOMER LIKE INDIAN AIR FORCE AND INDIAN NAVY AS PER CONTRACT ARRIVED BETWEEN THEM. THE A.O. HAS MADE DISALLOWANCE U/S.37(1). IN APPEAL CI T(A) GRANTED THE RELIEF. SAME HAS BEEN OPPOSED BEFORE U S ON BEHALF OF REVENUE AND HAS STATED THAT LD. CIT(A) WA S NOT JUSTIFIED IN DELETING THE ADDITION OF RS.74,71,018/ - ADDED BY THE ASSESSING OFFICER U/S.37(1) ON ACCOUNT OF LI QUIDATED DAMAGES. 2.1 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD WE FIND THAT THE PUNE BENCH OF T HE TRIBUNAL IN ITA NOS.208 TO 211/PN/2009 DATED 23-12- 2010 HAS DECIDED THE SIMILAR ISSUE FOR A.Y. 2001-02 IN FAVOUR OF THE ASSESSEE BY OBSERVING AS UNDER : WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY . IT IS EVIDENT THAT THE EXPENDITURE IN QUESTION HAS RESULTED IN THE COURSE OF BUSINESS IN TERMS OF A CONTRACTUAL BREACH AND THERE IS NO BREACH OR INFRACTION OF LAW SO AS TO JUSTIFY THE DISALLOWANCE IN TERMS OF EXPLANATION TO SECTION 37(1) OF THE ACT. THE FINDINGS OF THE COMMISSIONER OF INCOME-TAX (APPEALS ) IN THIS REGARD ARE APPROPRIATE AND DO NOT REQUIRE A NY INTERFERENCE AND ARE ACCORDINGLY AFFIRMED. 2.2 NOTHING CONTRARY WAS BROUGHT BEFORE US ON BEHAL F OF REVENUE. ON PERUSAL OF FACTS, IT IS CLEAR THAT THE SE ARE NOT IN THE NATURE OF PENALTY ETC. FURTHER, THERE IS NO MATERIAL 3 EVIDENCE ON RECORD TO TREAT THEM AS INFRACTION OF L AW. IN VIEW OF ABOVE AND TO MAINTAIN CONSISTENCY IN JUDICI AL ORDER THE ADDITION MADE BY THE ASSESSING OFFICER, HAS BEE N RIGHTLY DELETED BY THE CIT(A) WHICH NEEDS NO INTERF ERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. NEXT ISSUE IS WITH REGARD TO ADDITION OF RS.16,5 4,288/- WHICH WAS ADDED ON ACCOUNT OF AIR SHOW EXPENSES. T HESE EXPENSES WERE ADDED BY ASSESSING OFFICER BEING NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS. SAME WAS DELETED BY CIT(A). SAME HAS BEEN OPPOSED BEFORE US. 3.1 WE FIND THAT SIMILAR ISSUE COME UP BEFORE THE T RIBUNAL IN ITA NOS.208 TO 211/PN/2009 DATED 23-12-2010 WHEREIN THIS ISSUE WAS DECIDED IN FAVOUR OF ASSESSE E BY OBSERVING AS UNDER : WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY . ON PERUSAL OF THE RESPECTIVE ORDERS OF THE AUTHORIT IES BELOW, WE FIND NO JUSTIFICATION TO INTERFERE WITH T HE CONCLUSION DRAWN BY THE COMMISSIONER OF INCOME-TAX (APPEALS). IT IS EVIDENT THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ARRIVED AT A FACTUAL FINDI NG THAT THERE IS NO MATERIAL TO SUGGEST THAT THE EXPENDITURE WAS FOR NON-BUSINESS PURPOSES. IN OUR VIEW, NO COGENT REASON HAS BEEN ASSIGNED BY THE ASSESSING OFFICER TO DISALLOW THE SAID EXPENDITURE AND THE COMMISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN DELETING THE ADDITION. THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) IS THEREFORE CONFIRMED. THUS ON THIS GROUND, REVENUE FAILS. NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FAC TS BEING SIMILAR, SO FOLLOWING THE SAME REASONING WE A RE NOT INCLINED TO INTERFERE IN THE FINDING OF THE CIT(A) WHO HAS DELETED THE AIR SHOW EXPENSES OF RS.16,16,54,288/- ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF NON-BUSINESS PURPOSES. THIS REASONED FINDING OF THE CIT(A) NEED S NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 4 4. NEXT ISSUE IS WITH REGARDS TO ADDITION OF RS.21,08,730/- CLAIMED AS DEDUCTION OUT OF PROVISI ON FOR A.Y. 2008-09. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE AS UNDER AND MADE THE ADDITION IN QUESTION. FURTHER, IT IS SEEN FROM THE COMPUTATION OF TOTAL INCOME THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF PAYMENT MADE OUT OF PROVISION FOR THE A.Y. 2008-09 AMOUNTING TO RS.21,08,730/- OUT OF PROFIT BEFORE TA X AS PER THE PROFIT & LOSS ACCOUNT. THE ASSESSEE WAS ASKED TO JUSTIFY THE SAME. HOWEVER, THE ASSESSEE COULD NOT SUBSTANTIATE THIS CLAIM OF DEDUCTION AND SO THE SAID CLAIM AMOUNTING TO RS.21,08,730/- IS DISALLOWED AND ADDED BACK TO THE INCOME RETURNED BY THE ASSESSEE. 4.1 THE MATTER WAS CARRIED BEFORE THE FIRST APPELLA TE AUTHORITY WHO HAS GRANTED RELIEF TO THE ASSESSEE. SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF REVENUE AND INT ER ALIA STATED THAT CIT(A) WAS NOT JUSTIFIED IN DELETING TH E ADDITION OF RS.21,08,730/- WHICH WAS ADDED ON ACCOUNT OF UNJUSTIFIED DEDUCTION OF PAYMENT MADE OUT OF PROVIS ION FOR A.Y. 2008-09 OUT OF PROFIT BEFORE TAX AS PER PROFIT AND LOSS ACCOUNT. THE LD. AR SUPPORTED THE ORDER OF THE CIT (A) ON THIS ISSUE. 4.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MATERIAL ON RECORD WE FIND THE ASSESSEE HAS CLAIMED THE ACCRUED EXPENSES INCURRED DURING F.Y. 2008-09 WHICH WAS DEBITED TO THE PROVISION ACCOUNT FOUND CORRECT BY T HE CIT(A). THE ASSESSEE ALSO STATED THAT AN AMOUNT OF RS.38,416/- WHICH WAS PAID ON ACCOUNT OF FRINGE BEN EFIT TAX WAS ERRONEOUSLY INCLUDED IN CALCULATION OF RS.21,08,730/-. THUS, THE DISALLOWANCE OF RS.21,08 ,730/- WAS REDUCED TO RS.38,416/- AND ASSESSEE GOT RELIEF OF RS.28,70,314/- AND BALANCE WAS CONFIRMED. HOWEVER, THE REVENUE HAS RAISED INCORRECT FIGURE IN ITS GROUND B UT FACTS REMAIN THAT CIT(A) WAS JUSTIFIED IN GRANTING RELIEF OF RS.28,70,314/- BECAUSE ASSESSEE HAS CLAIMED ACTUAL 5 EXPENSES INCURRED DURING F.Y. 2008-09 WHICH WAS DEB ITED TO THE PROVISION ACCOUNT. THIS FACTUAL AND LEGAL F INDING OF THE CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 5. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30-12-2013. SD/- SD/- (G.S. PANNU) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED : 30 TH DECEMBER, 2013 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-I, NASHIK 4. THE CIT-I, NASHIK 5. D.R. A BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SEC RETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE