The DCIT, (OSD), Range-1, Ahmedabad V. M/s. Deepkiran Foods Pvt. Ltd., Ahmedabad

ITA 2381/AHD/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9819 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A C SHAH
• Keywords: Unexplained investment; Depreciation; Transfer pricing
• Section: 10B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2381/AHD/2013 ( / ASSESSMENT YEAR : 2009-10) DCIT, (OSD), RANGE-1, AHMEDABAD. / VS. M/S. DEEPKIRAN FOOD PVT. LTD. ./ ./ PAN/GIR NO. : AABCD 2018 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUMIT KUMAR VERMA, SR.D.R. / RESPONDENT BY : SHRI A.C. SHAH, A.R. / DATE OF HEARING 08/12/2016 / DATE OF PRONOUNCEMENT 14/12/2016 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-VI, AHMEDABAD, DATED 22.07.2013 FOR THE ASSESSMENT YEAR (AY) 2009-10 AND FOLLOWING GROUNDS HAVE BEEN TAKEN:- (I ). THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.50.24 LACS BEING EXCESS STOCK OF FINISHED/SEMI-FINISHED GOODS AS PER STOCK STATEMENT GIVEN TO BANK COMPARED TO BOOKS. (II). THE CIT(A) HAS ERRED IN LAW AND ON FACT BY RELYING ON THE DECISION FOR A.Y.2007-08 WHEREBY RELIANCE HAS BEEN PLACED ON A JUDGMENT, THE FACTS OF WHICH ARE DISTINCTLY DIFFERENT. HERE THE AO HAS GIVEN A FINDING THAT THE ASSESSEE HAS NOT MAINTAINED ANY QUANTITATIVE RECORDS, ITA NO.2381/AHD/2013 DCIT VS. M/S. DEEPKIRAN FOODS PVT. LTD. ASST.YEAR 2009-10 - 2 - 2. THE RELEVANT FACTS OF THE CASE ARE:- IN THIS CASE, REFERENCE TO TRANSFER PRICING OFFICER WAS MADE AFTER OBTAINING APPROVAL FROM THE COMMISSIONER OF INCOME-TAX-1, AHMEDABAD. THE TRANSFER PRICING OFFICER VIDE ORDER DATED 23/08/2012 PASSED U/S. 92CA(3) OF THE ACT HAS PROPOSED NO ADJUSTMENT TO THE ARMS LENGTH PRICE OF THE TRANSACTIONS. THE ORDER DATED 23/08/2012 PASSED U/S.92CA(3) OF THE ACT BY THE TPO IS MADE PART OF THIS ORDER. 3. THE ASSESSEE HAS CLAIMED TO BE IN THE BUSINESS OF MANUFACTURING OF PROCESSED FOOD PRODUCTS AND ITS ENTIRE SALES ARE TO M/S. DEEP FOOD INC., U.S.A. AND HAS CLAIMED EXEMPTION U/S.10B AT RS.12,27,27,116/- 4. THE ASSESSEE HAS CLAIMED DEDUCTION U/S.10(B). AS PER THE ASSESSEE COMPANY THEY ARE IN MANUFACTURING BUSINESS AND ARE ELIGIBLE FOR THE DEDUCTION U/S. 10B. 5. BUT LD. AO WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE AND HELD THAT THE PRODUCTS MANUFACTURED OR PRODUCED BY THE ASSESSEE (I.E. FOOD PRODUCTS FROM VARIOUS RAW MATERIALS) ARE HAVING A DISTINCTIVE NAME AND CHARACTER AND ARE COMMERCIALLY MARKETABLE. FURTHER, GRANTED A CERTIFICATE UNDER THE CENTRAL EXCISE RECOGNIZING IT AS A MANUFACTURER OF EXCISABLE GOODS AND HELD THAT THE ASSESSEE IS NOT A MANUFACTURER BUT A TRADER. THEREFORE, DEDUCTION U/S.10(B) WAS NOT ALLOWED BY THE DEPARTMENT AND DISALLOWANCE OF RS.12,27,27,116/- WERE MADE. ITA NO.2381/AHD/2013 DCIT VS. M/S. DEEPKIRAN FOODS PVT. LTD. ASST.YEAR 2009-10 - 3 - 6. ON PERUSAL OF THE STOCK AS SHOWN TO THE BANK FOR AVAILING LOAN AND STOCK AS SHOWN IN THE BOOKS OF ACCOUNTS DIFFERENCES WERE NOTICED. THE ASSESSEE WAS GIVEN A NOTICE AND IN CONSEQUENCE TO THE NOTICE ASSESSEE SUBMITTING STATEMENT OF STOCK DIFFERENCE AS UNDER: STOCK DETAILS AMOUNT AS PER STOCK STATEMENT AMOUNT AS PER BALANCE SHEET DEFFERENCE AMOUNT REMARK FINISHED GOODS RAW MATERIAL PACKING MATERIAL SEMI FINISHED GOODS IQF VEGETABLE OUT SIDER PURCHASE GOODS IN TRANSIT WORK IN PROGRESS 1,04,04,565 47,64,547 90,30,140 8,62,089 2,23,743 5,039 0 0 5,42,44,34 59,86,541 1,05,41,652 8,17,978 2,23,743 5,039 4980131 93052 49,80,131 -12,21,994 -15,11,512 44,111 0 0 -4980131 -93052 GOODS IN TRANSIT R/M STOCK NOT TAKEN IN BANK STATEMENT IMPORT P/M STOCK NOT TAKEN IN BANK STATEMENT STOCK INTERCHANGE FROM S.F. TO R/M. * MATERIAL USE IN MFG CONSUME. IN BANK STOCK STATEMENT. TOTAL STOCK AMOUNT 2,52,90,123 2,80,72,570 -27,82,447 DEFERENCE AS PER BANK STATEMENT * GOODS ON TRANSIT OF RS.49,80,131/- PRESENTED THE AMOUNT OF INVOICES, THE INVOICE DATES ARE BEFORE MARCH 2008 I.E. YEAR END BUT BILL OF LOADING DATE IS AFTER 31 ST MARCH, 2009. THEREFORE, IT IS NOT TAKEN AS EXPORT SALES BUT IT IS TAKEN AS GOODS IN TRANSIT STOCK. THE GOODS IN TRANSIT STOCK IS NOT TAKEN IN BANK STATEMENT BUT IT IS TAKEN IN OUR ACTUAL STOCK AS PER BOOKS ON 31.03.2009. 7. THE CONTENTION HAS BEEN CONSIDERED AND IS NOT ACCEPTABLE. ALTHOUGH THE OVERALL STOCK AS PER THE BANK STOCK STATEMENT IS LESS AS COMPARED TO THE STOCK SHOWN IN THE BOOKS, HOWEVER, THERE IS EXCESS STOCK SHOWN TO THE BANK WITH RESPECT TO FINISHED GOODS AND SEMI-FINISHED GOODS TOTALING TO RS.50,24,242/-. AT THIS JUNCTURE, IT MAY BE POINTED OUT THAT NOT QUANTITATIVE RECORDS HAVE BEEN MAINTAINED BY THE ASSESSEE AS HAS ITA NO.2381/AHD/2013 DCIT VS. M/S. DEEPKIRAN FOODS PVT. LTD. ASST.YEAR 2009-10 - 4 - BEEN QUALIFIED BY THE AUDITOR IN FORM-3CD REPORT. THE REASONING OF THE ASSESSEE THAT SINCE THE OVERALL BANK STOCK IS LESS AS COMPARED TO BOOK STOCK, NO ADDITION IS CALLED FOR IS CLEARLY UNACCEPTABLE. THE ASSESSEE HAS NOT DENIED THAT EXCESS STOCK HAS BEEN SHOWN BY IT TO THE BANK. THUS, THIS EXCESS STOCK WOULD REPRESENT UNEXPLAINED INVESTMENT TAXABLE U/S.69B, AND IS ACCORDINGLY ADDED TO THE INCOME AS INCOME FROM OTHER SOURCES NOT ELIGIBLE FOR EXEMPTION U/S.10B AND ADDITION OF RS.50,24,242/- WAS MADE. 8. IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT CAPITALIZED THE AMOUNT OF INTEREST PAID TO THE BANK FOR THE PERIOD UP TO THE DATE. THE ASSESSEE VIDE ORDER SHEET DATED 11/12/2012 WAS THEREFORE REQUIRED TO FURNISHED DETAILS OF SUCH INTEREST. 9. ASSESSEE STATED THAT THE AMOUNT OF RS.13656/-, WHICH WAS PAID BY MACHINERY PUT TO USE. THEREFORE, THE AMOUNT OF INTEREST OF RS.13,656/- WAS ADDED INCOME OF THE ASSESSEE. 10. ON PERUSAL OF RECORDS, IT WAS SEEN THAT ALL THE BROUGHT FORWARD DEPRECIATION HAS ALREADY BEEN ADJUSTED IN THE ASSESSMENT ORDER FOR A.Y.2006-07 AND NO BALANCE IS AVAILABLE FOR CARRY FORWARD. AS SUCH THE CLAIM OF BROUGH FORWARD DEPRECIATION WAS NOT ALLOWED. 11. SUBJECT TO THE ABOVE, THE TOTAL INCOME OF THE ASSESSEE IS COMPUTED AS UNDER: ITA NO.2381/AHD/2013 DCIT VS. M/S. DEEPKIRAN FOODS PVT. LTD. ASST.YEAR 2009-10 - 5 - PROFIT & GAINS OF BUSINESS & PROFESSION PROFIT AS PER PROFIT & LOSS ACCOUNT ADD: DISALLOWABLE AS PER RETURN OF INCOME LESS: INCOME CONSIDERED SEPARATELY LESS: DEPRECIATION AS CLAIMED EXEMPTION U/S. 10B AS CLAIMED LESS: EXEMPTION UNDER 10B DISALLOWED ADD: OTHER INCOME NOT ELIGIBLE AS SHOWN ADD: STOCK DIFFERENCE (PARA-6) ADD: INTEREST CAPITALIZED (PARA-7) TOTAL INCOME AS PER NORMAL PROVISIONS ROUNDED OFF 6,10,69,545 4,09,96,596 12,27,27,116 12,27,27,116 16,35,83,754 6,12,09,503 22,47,93,257 12,27,27,116 6,10,69,545 50,24,242 13,656 18,88,34,559 18,88,34,560 5. AGAINST THE SAID ORDER APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE AND THEREFORE, APPELLANT IS BEFORE US. WE HAVE GONE THROUGH THE IMPUGNED ORDER AND RELEVANT RECORD FILED BY THE ASSESSEE AS WELL AS BY THE DEPARTMENT AND LD.ASSESSEE REPRESENTATIVE HAS FILED AN ORDER OF LD.CIT(A) IN APPEAL NO. CIT(A)- VI/ADDITIONAL CIT/R-1/361/10-11 ORDER DATED 28/07/2011 TITLED AS NAME OF THE APPELLANT M/S. DEEPKIRAN FOODS PVT. LTD.,101, ASTRON TECH PARK, OPP: FUN REPUBLIC, SATELLITE, AHMEDABAD. 6. HE DRAWN OUR ATTENTION TOWARDS THE ORDER OF LD. CIT(A) IN WHICH SIMILAR ISSUES WERE DEALT WITH BY THE LD.CIT(A) AND APPEAL WAS ALLOWED BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE FOR THE A.Y.2007-08. SO IN THESE CIRCUMSTANCES WHEN IN EARLIER YEAR LD. CIT(A) HAS ALLOWED CLAIM OF THE ASSESSEE IN THIS YEAR UNDER CONSIDERATION ON SAME GROUND ADDITION CANNOT BE MADE. ITA NO.2381/AHD/2013 DCIT VS. M/S. DEEPKIRAN FOODS PVT. LTD. ASST.YEAR 2009-10 - 6 - 7.IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 14 /12/2016 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/12 /2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-VI, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY