ITO 8(2)-2, MUMBAI V. LAUREL WIRES LTD, MUMBAI

ITA 2266/MUM/2011

• Counselvise Citation: 226619914 RSA 2011
• Duration Of Justice: 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 21-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JI TENDRA YADAV
• Assessee Lawyers: VISHWAS MEHENDALE
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, A , MUMBAI BEFORE SHRI B.R. MITTAL (JM) AND SHRI PRAMOD KUMAR (A.M ) ITA NO. 2266/M/2011 (ASSESSMENT YEAR:2004-05) ITA NO. 2267/M/2011 (ASSESSMENT YEAR:2005-06) I.T.O. 8(2)-2 R.NO.22/216A, AAYAKAR BHAVAN, M.K. MARG, MUMBAI 400020. VS. LAUREL WIRES LTD. 8, SEA BREEZE APT. 13 TH ROAD, JUHU, MUMBAI 400 049. PAN: AAACL5522F APPELLANT RESPONDENT APPELLANT BY SHRI JITENDRA YADAV RESPONDENT BY SHRI VISHWAS MEHENDALE DATE OF HEARING : 24.1.2012 DATE OF PRONOUNCEMENT: O R D E R PER B.R. MITTAL (J.M.): THE DEPARTMENT HAS FILED THESE TWO APPEALS FOR A.Y.2004-05 AND A.Y. 2005-06 AGAINST ORDERS OF LD C IT(A) BOTH DATED 25.11.2010. 2. SINCE FACTS AND GROUNDS OF APPEAL IN BOTH A.YS. ARE IDENTICAL, SAVE AND EXCEPT THAT AMOUNT VARIES, WE H EARD THESE APPEAL TOGETHER AND DISPOSE OFF THE SAME BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE 3. FIRSTLY WE TAKE UP APPEAL FOR A.Y.2004-05. ITA NO. 2266/M/2011 ITA NO. 2267/M/2011 2 4. THE ONLY EFFECTIVE GROUND OF APPEAL IS AS TO WHE THER LD CIT(A) HAS ERRED IN DELETING DISALLOWANCE OF RS.16, 60,332/- RELATING TO TURNOVER TAX AND SURCHARGE ON SALES TAX . 5. RELEVANT FACTS GIVING RISE TO THIS APPEAL ARE TH AT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF ENAMELED AND BARE COPPER WIRES. THERE WAS A SURVEY U/S.133A OF THE I.T. ACT. DURING THE COURSE OF SU RVEY A COPY OF BALANCE SHEET AND PROFIT AND LOSS A/C. FOR THE YEAR ENDING 31.03.2004 WAS FOUND. ASSESSEE STATED THAT IT WAS PROVISIONAL BALANCE SHEET AND P & L A/C. 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAD TAKEN SET OFF OF TURNOVE R TAX AND SURCHARGE PAID IN THE PROVISIONAL BALANCE SHEET AGA INST SALES TAX LEVIED ON SALES AFFECTED DURING THE YEAR. ASSESSEE STATED IT HAD TAKEN SET OFF OF TURNOVER TAX AND SUR CHARGE PAID ON RAW MATERIAL PURCHASED IN PROVISIONAL BALAN CE SHEET AGAINST SALES TAX LEVIED ON SALES EFFECTED DU RING THE YEAR. HOWEVER, SET OFF OF SALES TAX ON RAW MATERIA L WAS ALLOWED BY SALES TAX AUTHORITY AND SET OFF OF TURNO VER TAX AND SURCHARGE PAID ON RAW MATERIAL WAS NOT ALLOWED. IT WAS SUBMITTED THAT SALES TAX OFFICER HAD WITHDRAWN EXCE SS GRANT OF SET OFF OF TURNOVER TAX AND SURCHARGE. TH US, THE SUM OF RS. 16,60,332/- IS PAYABLE TOWARDS TO SALES TAX, ASSESSEE REQUESTED TO ACCEPT CHANGES MADE WITH REGA RD TO SET OFF IN THE FINAL PROFIT AND LOSS ACCOUNT. HOWE VER, AO STATED THAT UNDER THE CIRCUMSTANCES, AMOUNT OF SET OFF WHICH ARE TO BE WITHDRAWN ARE NOT AVAILABLE WITH AS SESSEE. HE STATED THAT ASSESSEE HAD WITHDRAWN CLAIM OF SET OFF OF TURNOVER TAX AND SURCHARGES BASED ON THE ORDER OF D Y. COMMISSIONER OF SALES TAX FOR THE PERIOD 1.4.2001 T O 31.3.2002 AND 1.4.2002 TO 31.3.2003 AND THE ORDER O F SALES TAX OFFICER FOR THE YEAR UNDER CONSIDERATION HAS NO T BEEN ITA NO. 2266/M/2011 ITA NO. 2267/M/2011 3 RECEIVED TILL DATE. THEREFORE, AO ADDED THE SAID A MOUNT OF RS. 16,60,332/- TO THE INCOME OF ASSESSEE AS ASSESS EE COULD NOT FURNISH ORDER OF SALES TAX AUTHORITY FOR WITHDR AWAL OF SET OFF OF TURNOVER AND SURCHARGE FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE FI RST APPELLATE AUTHORITY. 7. ON BEHALF OF THE ASSESSEE, IT WAS SUBMITTED THAT SINCE SET OFF OF TURNOVER TAX AND SURCHARGE WAS NOT ALLOW ED, THE ASSESSEE HAD WITHDRAWN SET OFF IN THE FINAL P & L A /C. AND BALANCE SHEET FURNISHED ALONG WITH THE RETURN OF IN COME. CONSIDERING ABOVE SUBMISSIONS OF THE ASSESSEE, THE LD CIT(A) DELETED THE DISALLOWANCE VIDE PARA 3.3 OF HI S IMPUGNED ORDER WHICH READS AS UNDER: 3.3. THE SUBMISSION HAS BEEN CONSIDERED AND THE DOCUMENTS FILED PERUSED. IT IS SEEN THAT THE SALES TAX OFFICER HAD WITHDRAWN THE SET OFF OF TURNOVER TAX AND SURCHARGE PAID BY THE APPELLANT ON HIS PURCHASES IN VIEW OF SUBCLAUSE (A) OF RULE 44D OF SALES TAX ACT WHEREIN ONLY SUMS COLLECTED FROM THE CLAIMANT DEALER BY OTHER REGISTER DEALER BY WAY OF SALES TAX WAS ALLOWABLE AND NOT TURNOVER TAX AND SURCHARGE. THIS HAS BEEN UPHELD IN APPEAL. IN THE CIRCUMSTANCES, THE DISALLOWANCE OF SET OFF WAS NOT WARRANTED. THE ADDITION IS DELETED. HENCE THIS APPEAL BY DEPARTMENT. 8. DURING THE COURSE OF HEARING LD D.R. SUBMITTED T HAT WHEN SET OFF OF TURNOVER TAX AND SURCHARGE AGAINST SALES TAX LIABILITY WAS NOT ALLOWED BY SALES TAX AUTHORITY, T HE SAID AMOUNT HAS TO BE ADDED AS INCOME OF THE ASSESSEE IN VIEW OF THE PROVISION OF SECTION 43B OF THE ACT. ON TH E OTHER HAND LD AR SUBMITTED THAT AMOUNT CLAIMED AS SET OFF OF ITA NO. 2266/M/2011 ITA NO. 2267/M/2011 4 TURNOVER TAX AND SURCHARGE AGAINST SALES TAX ARREAR S WAS PAID. HE SUBMITTED THAT IN THE FINAL BALANCE SHEE T THIS AMOUNT WAS NOT CLAIMED AS SET OFF. HE FURTHER SUBM ITTED THAT DIFFERENCE OF SALES TAX PAYABLE, ON ACCOUNT OF WITHDRAWAL OF TURNOVER TAX AND SURCHARGE WHICH WAS SET OFF BY THE ASSESSEE WAS PAID BEFORE DUE DATE OF FILING OF RETURN. HE JUSTIFIED ORDER OF LD CIT(A). 9. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTAT IVE OF THE PARTIES AND HAVE PERUSED THE MATERIAL PLACED ON THE RECORD. WE OBSERVE THAT THERE IS NO SUCH FINDING OF THE AUTHORITIES BELOW THAT ASSESSEE HAD NOT CLAIMED SET OFF OF TURN OVER TAX AND SURCHARGE AGAINST SALES TAX PAYAB LE IN THE FINAL BALANCE SHEET. FURTHER THERE IS NO MATERIAL ALSO ON RECORD THAT INCREASED LIABILITY OF SALES TAX WAS PA ID BY ASSESSEE BEFORE DUE DATE OF FILING OF RETURN OR SAI D AMOUNT WAS DEFERRED UNDER THE SCHEME OF STATE GOVERNMENT B EFORE DUE DATE OF FILING OF RETURN. WE CONSIDER IT PRUD ENT TO SET ASIDE THE ORDER OF AUTHORITIES BELOW AND RESTORE TH IS MATTER TO THE FILE OF AO TO DECIDE THE ISSUE AFRESH, AFTER GIVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE AND AFTER CO NSIDERING SUCH EVIDENCES AS MAY BE FILED BEFORE HIM. HENCE G ROUND OF APPEAL TAKEN BY DEPARTMENT IS ALLOWED FOR STATISTIC AL PURPOSES. 10. NOW WE TAKE UP APPEAL FOR A.Y. 2005-06 BEING ITA NO.2267/M/11. 11. IN THIS APPEAL DEPARTMENT HAS DISPUTED THE ORDE R OF THE LD CIT(A) TO DELETE RS.6,41,552/- RELATING TO T URNOVER TAX AND SURCHARGE ON SALE TAX WHICH WAS SET OFF BY THE ASSESSEE AGAINST SALES TAX LIABILITY. ITA NO. 2266/M/2011 ITA NO. 2267/M/2011 5 12. SINCE LD CIT(A) HAS DELETED THE AMOUNT INVOLVED ; BY FOLLOWING HIS ORDER FOR A.Y.2004-05, WE FOLLOWING R EASONING GIVEN FOR ASSESSMENT YEAR 2004-05 HEREIN ABOVE, ALS O SET ASIDE THE ORDERS OF AUTHORITIES BELOW FOR ASSESSM ENT YEAR I.E. 2005-06 TO THE FILE OF THE AO FOR HIS FRESH CO NSIDERATION. HENCE, GROUND OF APPEAL TAKEN BY THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTME NT ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY, 2012. SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER SD/- (B.R. MITTAL) JUDICIAL MEMBER MUMBAI, DATED 31 ST JANUARY, 2012 JANHAVI COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA NO. 2266/M/2011 ITA NO. 2267/M/2011 6 DATE INITIALS 1. DRAFT DICTATED ON: 25.01.2012 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 27.01.2012 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: