The ACIT, Circle-5, Baroda V. M/s. Shivam Cotton Indusries, Baroda

ITA 228/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 76727 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANISTA
• Section: 43B; 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 228 /AHD/2011 (ASSESSMENT YEAR: 2007-08) THE ACIT, CIRCLE-5, BARODA V/S M/S. SHIVAM COTTON INDUSTRIES, JUNI KITHARDI, TAL: KARJAN, DIST: VADODARA-391 240 (APPELLANT) (RESPONDENT) PAN: AAGFS 6213H APPELLANT BY : SHRI R.K. DHANISTA, SR. D. R. RESPONDENT BY : SHRI SAKAR SHARMA A.R. ( )/ ORDER DATE OF HEARING : 12-05-201 4 DATE OF PRONOUNCEMENT : 16-05-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A)-V, BARODA DATED 16.11.2010 FOR A.Y. 2007-08. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A FIRM STATED TO BE ENGAGED IN THE BUSI NESS OF GINNING AND PRESSING OF COTTON. ASSESSEE FILED ITS RETURN OF IN COME FOR A.Y. 07-08 ON 22.10.2007 DECLARING TOTAL INCOME OF RS. 62,73,130/ -. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER ITA NO 228/ AHD/2011 . A.Y. 2007- 08 2 SECTION 143(3) VIDE ORDER DATE 24.12.2009 AND THE T OTAL INCOME WAS DETERMINED AT RS. 88,86,320/-. AGGRIEVED BY THE OR DER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 16.11.2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED B Y THE ORDER OF CIT(A) THE REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAIS ED THE FOLLOWING GROUNDS:- 1 (I). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS ALSO IN LAW, THE ID.CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.7,83,786/- MADE BY THE AO U/S.43B OF THE IT ACT, 1961. L(II). THE ID.CIT(A) HAS ERRED IN HOLDING THAT MARK ET CESS IS NOT A TAX AND IS NOT COVERED U/S.43B OF THE 1 T ACT, 1961. THE ID.CIT(A) HAS TAKEN INTO CONSIDE RATION ONLY ONE LIMB OF SECTION 43B I.E. TAX, WHEREAS IT ALSO INCLUDES ANY DUTY, CESS OR FEES UND ER ANY LAW PAYABLE. THUS, MARKET CESS IS CLEARLY COVERED U/S.43B. THE ASSESSEE HAD DEBITED A SUM OF RS.13,54,491/- AS MARKET CESS PAID TO SHREE KHETIWADI UTPANN BAZAR SAMITI, OUT OF WHICH RS.7,83 ,786/- WAS PAID IN THE MONTH OF NOVEMBER, 2007. THUS, IT WAS NOT DEDUCTIBLE EXPENSE AS PER PROVISIO NS OF SECTION 43B OF THE ACT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NO TICED THAT ASSESSEE HAD DEBITED TO ITS PROFIT AND LOSS ACCOUNT A SUM OF RS. 13,54,491/- AS TAX (MARKET FEES) PAID TO SHRI KHETIWADI UTPANN BAZAR S AMITI, KARJAN. HE FURTHER NOTICED THAT THE AMOUNT DEBITED INCLUDED A PAYMENT OF RS. 7,83,786/- WHICH WAS PAID IN THE MONTH OF NOVEMBER 2007 I.E. AFTER THE CLOSE OF FINANCIAL YEAR. A.O WAS OF THE VIEW THAT S INCE THE AMOUNT WAS A LIABILITY OF TAX AND WAS PAID AFTER THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1), THE AMOUNT CANNOT BE ALLOWED AS DED UCTION U/S 43B AND HE ACCORDINGLY DISALLOWED THE SAME U/S. 43B OF THE ACT. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFOR E CIT(A). CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 4.2. IN APPEAL, IT IS ARGUED THAT MARKET CESS PAYMENTS C ANNOT BE BROUGHT WITHIN THE AMBIT OF SECTION 43B. IT IS STATED THAT THE PAYMENT UNDER GUJARAT AG RICULTURAL PRODUCE MARKET ACT, 1963 OR RULES MADE THEREOF DOES NOT PRESCRIBE ANY DUE DATES FOR M AKING SUCH PAYMENTS. THE DECISION IN THE CASE OF CIT VS. MANSUKLAL PRACHIBHAI 227 ITR 429 (M P) AND CIT VS. MOHANSINGH 216 ITR 432 (MP) WERE MAINLY RELIED UPON. 4.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER. SECTION 43B PERMITS DEDUCTIBILITY OF CERTAIN PRESCRIBED EXPENSES ON PAID BASIS. MARKET CESS IS NOT A TAX AS IT IS PAID BY THE TRADE R FOR ENJOYING THE FACILITIES AND SERVICES RENDERED BY THE MARKET. IN MY HUMBLE OPINION, THUS, THE MARKET CESS IS NOT COVERED U/S. 43B. THE ITA NO 228/ AHD/2011 . A.Y. 2007- 08 3 PLEA OF THE APPELLANT IS THUS ACCEPTED AND THE DISA LLOWANCE IS DIRECTED TO BE DELETED. GOUND NO. 1 IS ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS NO W IN APPEAL BEFORE US. 6. BEFORE US, THE LD. D.R. SUBMITTED THAT CIT(A) HAS W RONGLY CONSIDERED THE MARKET CESS PAID BY THE ASSESSEE AS NOT A TAX COVER ED UNDER SECTION 43B OF THE ACT. HE FURTHER SUBMITTED THAT THE MARKET CE SS WAS CLEARLY COVERED U/S. 43B AS SECTION 43B INCLUDES ANY DUTY CESS OR F EES PAID UNDER ANY LAW. HE THEREFORE SUBMITTED THAT A.O HAD RIGHTLY D ISALLOWED THE PAYMENT AND THEREFORE THE ORDER OF A.O. NEEDS TO BE UPHELD. THE LD. A.R. ON THE OTHER HAND SUPPORTED THE ORDER OF CIT(A) AND FURTHE R SUBMITTED THAT TAX WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN. H E SUBMITTED THAT (CBDT) VIDE ORDER DATED 31.10.2007 ISSUED U/S. 119 OF THE ACT HAD EXTENDED THE DUE DATE OF FILING OF RETURN UP TO 15 TH NOVEMBER 2007 IN STEAD OF 31 ST OCTOBER 2007 AND SINCE THE TAX WAS DEPOSITED ON 07 .11.2007 I.E. BEFORE THE DUE DATE OF FILING OF RETURN, NO DI SALLOWANCE U/S. 43B CAN BE MADE. . HE ALSO PLACED ON RECORD THE COPY OF ORD ER OF CBDT 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT CBDT IN ORDER DATED 31 ST OCTOBER 2007 PASSED U/S. 119 OF THE ACT, 1961 HAD ALLOWED THE RETURN AND REPORTS OF AUDIT IN THE CASE OF COMPANIES AND FIRMS TO BE FILED UP TO 15 TH OF NOVEMBER 2007 INSTEAD OF 31 ST OCTOBER 2007 FOR A.Y. 07-08. IT IS AN UNDISPUTED FACT THAT THE YEAR UNDER APPEAL IS A.Y. 07-08 AND ASSESSEE HAD ELECTRO NICALLY FILED THE RETURN OF INCOME ON 22.10.2007. IT IS ALSO AN UNDI SPUTED FACT THAT ASSESSEE HAD DEPOSITED THE MARKET FEES ON 7 TH NOVEMBER 2007 WHICH IS ITA NO 228/ AHD/2011 . A.Y. 2007- 08 4 WELL BEFORE THE EXTENDED DATE OF FILING OF RETURN. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT SINCE THE ASSESSEE H AS PAID THE AMOUNT BEFORE THE DUE DATE OF FILING OF RETURN AS PER PROV ISO TO SECTION 43B, NO DISALLOWANCE U/S 43B CAN BE MADE. IN VIEW OF THE A FORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A ) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 05 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITA T,AHMEDABAD