M/s Pradeep Industries, Khandwa V. THE ACIT, Khandwa

ITA 233/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5982 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 16-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESHPANDE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO. 233/IND/2016 A.Y. : 2008-09 M/S.PRADEEP INDUSTRIES, PADAWA INDORE ROAD, KHANDWA ACIT, KHANDWA VS APPELLANT RESPONDENT PAN NO. AABFP5048G A PPELLANT BY : SHRI S.S.DESHPANDE, C. A. RESPONDENT BY : S HRI MOHD. JAVED, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-22, NEW DELHI, CAMP OFFICE AT INDORE, DATE D 19.01.2016 FOR THE ASSESSMENT YEAR 2008-09. DATE OF HEARING : 22 .0 6 20 16 DATE OF PRONOUNCEMENT : 22 .0 6 . 201 6 M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 2 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2008 -09 ON 18.9.2008. DURING THE YEAR UNDER CONSIDERATION, IT WAS NOTICED THAT THE ASSESSEE HAS RECEIVED RS. 18,86,31 0/-. IN THE BALANCE SHEET, THE ASSESSEE HAS SHOWN THIS AMOUNT AS NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME DEPOSIT. T HE ASSESSEE CONTENDED THAT THE ASSESSEE FIRM HAS PURCH ASED KEYMAN INSURANCE POLICIES FROM ICICI PRUDENTIAL LIM ITED , OF PARTNER SHRI SUNIL KUMAR GUPTA AND SMT. MANJULA PRA MOD KUMAR GUPTA, KHANDWA AND THEY HAVE PAID PREMIUM OF R S. 2,50,000/- EACH ON 23.02.2008, IN ALL OF RS. 5,00,0 00/- AND ACCORDINGLY DEBITED IN THE PROFIT AND LOSS ACCOUNT AS PER THE PROVISIONS OF THE INCOME-TAX ACT, 1961. AGAINST THE POLICIES, WHICH WERE MATURED BUT NOT GIVEN BY THE INSURANCE CO MPANY, THEY HAVE APPROACHED TO THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BHOPAL AND THEY HAVE AWARDED R S. 13,03,625/- WITH INTEREST @ 6% TILL THE PAYMENTS OF INSURANCE MADE BY THE ASSESSEE FIRM. THE ASSESSEE HAS ALSO GO NE BEFORE NATIONAL COMMISSION, NEW DELHI, AND NATIONAL COMMISS ION, M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 3 3 NEW DELHI HAS DIRECTED TO GIVE PAYMENT OF RS. 18,18, 860/- ON 9.4.2007. THEREFORE, THE ASSESSEE HAS OFFERED FOR TAXATION IN THE YEAR WHEN THE ASSESSEE HAS RECEIVED THIS AMOUNT AFTER THE ORDER OF NATIONAL REDRESSAL FORUM, NEW DELHI. THE AO DISPUTED THAT THIS AMOUNT IS TAXABLE IN THE ASSESSM ENT YEAR IN WHICH THE ASSESSEE RECEIVED THE PAYMENT. THEREFORE, IN THE YEAR UNDER CONSIDERATION , THE AMOUNT WAS DISALLOWED . 3. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CI T(A) HAS DISMISSED THE APPEAL. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM D ERIVING INCOME FROM MANUFACTURE AND SALE OF PULSES. THE RET URN OF INCOME WAS FILED DECLARING THE INCOME OF RS. 7,15,7 00/-. THE ASSESSEE IMPORTED CERTAIN PULSES IN THE YEAR 1997-9 8 THROUGH A MARINE CARGO AFTER INSURING 250 METRIC TONES OF TUAR DAL FOR A SUM OF RS. 30 LAKHS. SOME OF THE GOODS WERE DAMAG ED DURING THE COURSE OF THE TRANSPORTATION COSTING RS. 13,03,625/-. THE ASSESSEE CLAIMED THE AMOUNT FOR TH ESE DAMAGES FROM THE INSURANCE COMPANY. THIS CLAIM WAS REJECTED BY THE INSURANCE COMPANY ON THE GROUND THAT THE DA MAGES M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 4 4 WERE CAUSED BY WAY OF SPONTANEOUS COMBUSTION AND THIS WAS NOT COVERED UNDER THE POLICY. AGAINST THIS REJECTIO N, THE ASSESSEE FILED A PETITION BEFORE THE M.P. STATE CON SUMER DISPUTES REDRESSAL COMMISSION. THE CLAIM OF THE ASS ESSEE HAS BEEN ACCEPTED BY THE SAID COMMISSION ON 11.8.2 004 AND AWARDED THE AMOUNT OF LOSS WITH A PAYMENT OF INTEREST @6%. THE ASSESSEE AND THE INSURANCE COMPANY BOTH FILED T HE APPEAL BEFORE THE NATIONAL DISPUTE REDRESSAL COMMIS SION. THE NATIONAL COMMISSION ISSUED AN INTERIM ORDER FOR DEP OSITING THE AMOUNT AWARDED WITH THE COMMISSION WITH A DIRECTIO N THAT THE ASSESSEE WOULD BE ABLE TO WITHDRAW THE AMOUN T BY FURNISHING THE ADEQUATE SECURITY. THE ASSESSEE PROV IDED THE BANK GUARANTEE BY KEEPING A F.D. OF RS. 18,19,000/- AND RECEIVED THE AMOUNT OF RS. 18,86,310/- DURING THE A SSESSMENT YEAR 2008-09. THIS AMOUNT WAS CREDITED IN THE BOOKS OF ACCOUNTS IN THE NAME OF NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION . THE PETITION BEFORE THE NATI ONAL CONSUMER DISPUTES REDRESSAL COMMISSION WAS DECIDED IN FAVOUR OF THE ASSESSEE WITH A MODIFICATION THAT INTE REST WOULD BE RECEIVED @ 9% P.A. AFTER RECEIPT OF THIS JUDGEME NT THE BANK M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 5 5 GUARANTEE WAS WITHDRAWN DURING THE ASSESSMENT YEAR 20 11- 12 AND THE AMOUNT HAS BEEN CREDITED IN THE PROFIT A ND LOSS ACCOUNT ALONGWITH INTEREST AND OFFERED FOR TAXATION. THIS AMOUNT HAS BEEN TAXED BY THE AO VIDE HIS ORDER DATE D 31.12.2013 FOR THE ASSESSMENT YEAR 2011-12. WHILE F RAMING THE ASSESSMENT, THE AO TREATED THIS AMOUNT AS THE I NCOME OF THE ASSESSEE SINCE IT WAS RECEIVED DURING THE YEAR U NDER CONSIDERATION. THE AO DID NOT CONSIDER THAT THE AS SESSEE HAS FURNISHED THE BANK GUARANTEE BY TAKING THE FIXED DE POSIT OF THE EQUAL AMOUNT. THE LD. CIT(A) ON THE SAME REASON S DISMISSED THE APPEAL OF THE ASSESSEE. THE LD. AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THIS WAS A CONTRACTUAL ACCRUAL OF INCOME AND NOT THE STATUTORY INCOME. THE INCOME WOULD BE SETTLED ONLY WHEN THE FINAL DISPO SAL OF THE APPEAL WAS MADE. THE LD. AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS, WHI CH WERE ON THE LINES THAT THE ASSESSEE IS ENTITLED TO DEDUC TION IN THE ACCOUNTING YEAR IN WHICH DISPUTE IS SETTLED. (I) CIT VS. PHALTON SUGAR WORKS, 162 ITR 622. (II) CIT VS. PURSHOTHAM GOKULDAS, M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 6 6 (1999) 237 ITR 115 (KER). (III) CIT VS. BANNO E. COVASJI, 147 ITR 744 (M.P.) (IV) TANJORE PERMANENT BANK VS. CIT,, 207 ITR 924 (MAD). 5. THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE HAS ALREADY OFF ERED THIS INCOME FOR THE ASSESSMENT YEAR 2011-12 WHEN THE FINA L DISPOSAL OF THE APPEAL WAS MADE. THEREFORE, IT MAY B E ALLOWED. 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES. I HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BEL OW. I HAVE PERUSED THE CASE LAWS RELIED UPON BY THE LD. AUTHO RIZED REPRESENTATIVE FOR THE ASSESSEE. LOOKING TO THE FAC TS AND CIRCUMSTANCES OF THE CASE, I FIND THAT IT IS AN ADM ITTED CASE ON RECORD THAT THE APPEAL WAS FILED BEFORE THE NATIONAL CONSUMER REDRESSAL COMMISSION, NEW DELHI, BY ORIENTAL INSURAN CE COMPANY, WHICH IS ON PAGE 5 OF THE PAPER BOOK AND TH E MATTER WAS ALSO DECIDED BY THE STATE CONSUMER FORUM, BHOPAL. THE COPY OF THE SAME IS ON PAGE 8 OF THE PA PER BOOK. I HAVE GONE THROUGH THE ORDER OF REDRESSAL FORUM, WHIC H CLARIFIES THAT THE ASSESSEE HAS RECEIVED THIS AMOUN T BY THE M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 7 7 ORDER OF NATIONAL CONSUMER FORUM AND THE ASSESSEE G OT THE COMPENSATION BY THE STATE CONSUMER DISPUTE AND REDR ESSAL COMMISSION, BHOPAL AND AWARD WAS GIVEN ON 11 TH AUGUST, 2014. THE INSURANCE COMPANY PREFERRED APPEAL NO. 32 8 TO NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NE W DELHI AND INSURANCE COMPANY WAS DIRECTED TO MAKE THE PAYMENT AND TO DEPOSIT THE SAID AWARD TO THE ASSESSE E. THE ASSESSEE GOT PREPARED THE BANK GUARANTEE FROM CENTR AL BANK OF INDIA AND IT WAS FURNISHED BEFORE THE REGISTRAR OF NATIONAL COMMISSION VIDE FDR DATED 16.10.2006 OF RS. 18,19,0 00/- AND REQUESTED THE REGISTRAR OF NATIONAL COMMISSION FOR MAKING THE PAYMENT TO THE ASSESSEE FIRM. THEREFORE, THE ASSESSEE HAD OFFERED THIS AMOUNT FOR TAXATION IN TH E YEAR UNDER CONSIDERATION. I HAVE GONE THROUGH THE DECISI ON OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PH ALTON SUGAR WORKS REPORTED IN 162 ITR 622, WHEREIN IT HAS BEEN HELD THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION IN THE ACCOUNTING YEAR IN WHICH DISPUTE WAS SETTLED. SIMILA R VIEW WAS TAKEN BY THE HON'BLE KERALA HIGH COURT IN THE C ASE OF CIT VS. PURSHOTHAM GOKULDAS, 237 ITR 115, WHEREIN IT WAS HELD M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 8 8 THAT A CONTRACTUAL LIABILITY IF DISPUTED WOULD NOT A CCRUE TILL THE DISPUTE WAS SETTLED. I FIND THAT THE HON'BLE JURISD ICTIONAL HIGH COURT IN THE CASE OF CIT VS. BANNO E. COVASJI, 147 ITR 744 HAS HELD THAT THE SAME INCOME CANNOT BE TAXED DOUBLY IN TWO DIFFERENT ASSESSMENT YEARS/HANDS. IN THE CASE OF TA NJORE PERMANENT BANK VS. CIT, 207 ITR 924, THE HON'BLE MA DRAS HIGH COURT HAS HELD THAT AN AMOUNT ASSESSED ON THE BASIS OF ACCRUAL COULD NOT HAVE BEEN ASSESSED IN THE EARLIER YEAR ON THE BASIS OF RECEIPT. I FIND THAT THE CASE LAWS RELIED U PON BY THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ARE SQUA RELY COVERED IN THE CASE OF THE ASSESSEE. RESPECTFULLY F OLLOWING THE SAME, I AM OF THE VIEW THAT THE AO AND LD. CIT(A) BO TH ARE NOT JUSTIFIED IN MAKING THE ADDITION. THE SAME IS DELE TED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 20 TH JUNE, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER M/S. PRADEEP INDUSTRIES, KHANDWA VS. ACIT, KHANDWA I.T.A.NO. 233/IND/2016 - A.Y.2008-09 9 9 DATED : 20 TH JUNE, 2016. CPU*