Lusture Manufactures Pvt.Ltd., Surat V. The Income tax Officer,Ward-1(4), Surat

ITA 2402/AHD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0672 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Question of law; Bad and doubtful debts; Provision of bad debts
• Section: 234B; 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER 1. ./ I.T.A. NO.2402/AHD/2012 2. ./ I.T.A. NO.2818/AHD/2013 ( / ASSESSMENT YEAR : 2009-10 ) 1&2. LUSTURE MANUFACTURERS PVT.LTD. 301, MARUTI BUILDING KANSARA SHETI MAHIDHARPURA, SURAT / VS. THE ITO WARD-1(4) SURAT ./ ./ PAN/GIR NO. : AAACL 8205 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI TUSHAR HEMANI, AR / RESPONDENT BY : SHRI PRASOON KABRA, SR.DR / DATE OF HEARING 09/08/2016 !'# / DATE OF PRONOUNCEMENT 18/08/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-I, SURAT [CIT(A) IN SHORT] DATED 28/08/2012 AND 11/09/201 3 PERTAINING TO ASSESSMENT YEAR (AY) 2009-10 AGAINST THE QUANTUM AD DITION AND PENALTY RESPECTIVELY. SINCE THE ISSUES ARE INTER -CONNECTED, THESE APPEALS ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 2 - WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING EXPORT/IMPORT AND TRADING OF DIAMONDS . ASSESSEE FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 30/09/2009 DECLA RING TOTAL INCOME AT RS.3,67,678/-. THE CASE WAS SELECTED FOR SCRUTI NY AND THEREAFTER ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT VIDE OR DER DATED 23/12/2011 WHEREIN THE TOTAL TAXABLE INCOME WAS DETERMINED AT RS.4,19,740/- AND BOOK PROFIT U/S.115JB OF THE ACT WAS DETERMINED AT RS.5,36,62,677/-. SINCE THE INCOME-TAX PAYABLE ON THE TOTAL INCOME WA S LESS THAN 10% OF THE BOOK PROFITS, BOOK PROFIT U/S.115JB OF THE ACT WAS DEEMED TO BE TOTAL INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER O F THE ASSESSING OFFICER (AO), ASSESSEE CARRIED THE MATTER BEFORE TH E LD.CIT(A), WHO VIDE ORDER DATED 28/08/2012 (IN APPEAL NO.CAS.I/285/201 1-12) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORD ER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUND:- 1. ON FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LAO OF MAKING ADDITION OF RS.4,37,67,477/- BEING PROVISION FOR BAD DEBTS D EBITED TO PROFIT AND LOSS ACCOUNT FOR CALCULATING BOOK PROFIT U/S.11 5JB (MAT). ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 3 - 2.2. SUBSEQUENTLY, ASSESSEE VIDE LETTER DATED 27/06 /2016 HAS RAISED ADDITIONAL GROUND WHICH READ AS UNDER:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ACTION OF LD.AO IN LEVYING INTEREST U/S.234B OF THE ACT IS NOT JUST IFIED IN THE EYE OF LAW. 3. WITH RESPECT TO ADDITIONAL GROUND, LD.AR SUBMITT ED THAT THE ADDITIONAL GROUND BEING LEGAL IN NATURE, THE SAME B E ADMITTED AND FOR THIS PROPOSITION RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF NTPC VS. CIT [229 ITR 383 (SC)]. THE LD.SR.DR DID NOT SERIO USLY OBJECT TO THE ADMISSION OF ADDITIONAL GROUND. IN VIEW OF THE AFO RESAID FACTS, WE ADMIT THE ADDITIONAL GROUND. SINCE THE ADDITIONAL GROUND RAISED IS INTER- CONNECTED WITH THE MAIN GROUND, BOTH THE GROUNDS AR E CONSIDERED TOGETHER. 3.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT DURING THE YEAR ASSESSEE HAD NOT CARRIED OUT ANY BU SINESS ACTIVITY BUT THE PROFITS SHOWN BY THE ASSESSEE WAS ON ACCOUNT OF SH ARE OF PROFIT FROM PARTNERSHIP-FIRM AND OTHER INCOME. ON PERUSING THE P&L A/C., AO NOTICED THAT ASSESSEE HAD DEBITED RS.4,37,67,477/- ON ACCOUNT OF BAD DEBTS PROVISIONS AND HAD COMPUTED NET PROFIT (NP) O F RS.1,59,70,459/-. WHILE WORKING OUT PROFIT U/S.115JB OF THE ACT, ASSE SSEE HAD NOT ADDED BACK THE AMOUNT OF BAD DEBTS PROVISIONS OF RS.4,37, 67,477/-. THE AO THEREFORE SHOW-CAUSED AND ASKED THE ASSESSEE TO EXP LAIN AS TO WHY THE ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 4 - BAD DEBTS PROVISIONS NOT BE ADDED TO BOOK PROFIT U/ S.115JB OF THE ACT TO WHICH ASSESSEE INTER-ALIA SUBMITTED THAT THE PROVIS ION WAS NOT AN UNASCERTAINED LIABILITY AND THEREFORE NOT REQUIRED TO BE ADDED TO THE NET PROFITS. THE SUBMISSION OF THE ASSESSEE WAS NOT FO UND ACCEPTABLE TO THE AO IN VIEW OF THE FACT THAT AFTER THE AMENDMENT BY THE FINANCE (NO.2) ACT, 2009, WITH RETROSPECTIVE EFFECT FROM 2001, TH E AMOUNT SET ASIDE AS PROVISION ON ACCOUNT OF DIMINUTION IN THE VALUE OF ANY ASSET, WAS REQUIRED TO BE ADDED FOR WORKING OUT OF THE BOOK PR OFITS. HE THEREAFTER PLACING RELIANCE ON THE VARIOUS DECISIONS CITED IN THE ORDER ADDED THE PROVISIONS OF BAD DEBTS FOR WORKING OF PROFIT U/S.1 15JB OF THE ACT AND DETERMINED THE BOOK PROFIT U/S.115JB AT RS.5,36,62, 677/- AS AGAINST THE BOOK PROFIT OF RS.98,42,382/- THAT WAS WORKED OUT B Y ASSESSEE. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ORDER OF AO BY HOLDING AS UNDER:- 9. FROM A PERUSAL OF THE RETURN OF THE APPELLANT I T IS NOTICED THAT APPELLANT HAS SHOWN THIS AMOUNT AS 'BAD DEBT' AND N OT AS 'PROVISION FOR BAD AND DOUBTFUL DEBT'. IN THE P&L ACCOUNT OF E -RETURN, IT HAS BEEN SHOWN IT AT SR. NO. 37 AND NOT AT SR. NO.38. HOWEVER, IN AUDITED ACCOUNTS IT IS SHOWN AS 'PROVISION FOR BAD DEBT'. FROM A PERUSAL OF THE AUDIT REPORT, GROUNDS OF APPEAL AND SUBMISSION OF THE APPELLANT IT IS ESTABLISHED AND UNDISPUTED FACT THAT IT IS A PROVIS ION ONLY. THERE ARE NO INVENTORIES, NO SALES OR NO RECEIPTS EXCEPT SHARE I NCOME FROM FIRMS, DIVIDEND INCOME, INTEREST INCOME ON FDRS AND LTCG ( BECOMES LOSS AFTER INDEXATION) MAT INCOME HAS BEEN SHOWN AT RS.9 8,42,382/-. PROVISION FOR BAD DEBTS PERTAINS TO 8 PARTIES OF LO ANS & ADVANCES AND 3 PARTIES OF SHARE APPLICATION MONEY. BREAK-UP OF TH E SAME IS AN UNDER: ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 5 - SHARE APPLICATION MONEY 1,54,00,000 LOANS & ADVANCES 2,83,64,477 4,37,64,447 10. FROM A PERUSAL OF THE ABOVE FACTS IT IS APPARE NT THAT APPELLANT HAS REDUCED 'LOANS AND ADVANCES' AND 'SHARE APPLICATION MONEY' BY PROVISION FOR BAD DEBTS. HOWEVER, SHARE APPLICATIO N MONEY IS IN FACT NOT A DEBT AT ALL. IT IS AN INVESTMENT. THE 'LOANS AND ADVANCES' HAVE BEEN GIVEN BY APPELLANT TO VARIOUS' PERSONS. HOWEVE R, NO INTEREST INCOME HAS BEEN SHOWN FROM THEM IN A.Y. 2008-09 OR A.Y. 2008-09. THEREFORE, THE SAME ARE NON INCOME EARNING ASSETS O F APPELLANT. MOREOVER, THE APPELLANT HAS ALSO PURCHASED SOME DEB TS AS PER CLAUSE 11 (A) OF THE AUDIT REPORT. THEREFORE, ALL DEBTS, L OANS AND ADVANCES ARE HELD BY THE APPELLANT AS INVESTMENTS. 11. THE APPELLANT DURING THE COURSE OF APPELLAT E PROCEEDINGS RELIED UPON THE DECISION OF ITAT AHMEDABAD IN THE CASE OF VODAFONE ESSAR (GUJARAT) LTD. DATED 11.05.2012, IN ITA NO. 1999/AH D/2008 FOR A.Y. 2003-04. IN THE SAID JUDGEMENT THE DECISION OF CI T(A) DELETING THE ADDITION OF PROVISION FOR DOUBTFUL DEBTS U/S 115JB WAS CONFIRMED. THE CIT(A) HAD DELETED THE ADDITION ON 25.05.2008 B Y RELYING ON THE DECISION OF DELHI HC IN THE CASE OF HCL COM NET SYS TEMS AND SERVICES LTD. 292 ITR 299, WHICH WAS LATER UPHELD BY HON'BLE SUPREME COURT (SUPRA). THE CIT(A) ALSO FOLLOWED THE DECISION OF ITAT CALCUTTA (SB) IN THE CASE OF USHA MARTIN (SUPRA). THE ITAT IN TH E CASE OF VODAFONE ESSAR (GUJARAT) FOLLOWED THE DECISION OF HON'BLE KA RNATAKA HC IN THE CASE OF YOKOGAWA INDIA LTD. REPORTED IN 204 TAXMAN 305 (KAR) DATED 29.08.2011 FOR A.Y. 2004-05. THE HON'BLE KARNATAKA HC IS ITS DECISION (SUPRA) HAS FOLLOWED THE DECISION OF APEX COURT IN THE CASE OF VIJAYA BANK REPORTED IN 323 ITR 166. 12. IN THIS BACKGROUND THE FOLLOWING DECISION RELIE D UPON BY APPELLANT DIRECTLY AND INDIRECTLY ARE EXAMINED :- (I) 323 ITR 166 (SC), VIJAYA BANK ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 6 - THIS CASE PERTAINS TO PROVISIONS OF SECTION 36(1)(V II) AND NOT SECTION 115JB. MOREOVER, THE ASSESSMENT YEAR INVOLVED ARE A .Y. 93-94 AND A.Y. 94-95 I.E. PRIOR TO EFFECTIVE DATE OF RETROSPECTIVE AMENDMENT TO SECTION 115JB I.E. A.Y. 2001-02. THIS JUDGMENT IS NOT RELEV ANT FOR PROVISION OF SECTION 115JB AS HELD BY ITAT MUMBAI IN THE CASE OF TCFC FINANCE LTD. A.Y. 2004-05 REPORTED IN 131 ITD 103 (MUM), DA TED 09.03.2011. IN FACT THE JUDGEMENT OF ITAT MUMBAI IN THE CASE OF TCFC FINANCE LTD. (SUPRA) IS AGAINST THE APPELLANT THOUGH FACTS ARE SIMILAR TO THE CASE OF PRESENT APPEAL. THE ITAT MUMBAI HAS CONSIDERED T HE DECISIONS IN THE CASES OF VIJAYA BANK (SUPRA) AND HCL COMNET SYS TEMS & SERVICES LTD (SUPRA) IN THE DECISION. IN FACT THE DECISION O F THE APEX COURT DOES NOT EVEN DISCUSS THE PROVISIONS OF SECTION 115JB OR 115JA. (II) 204 TAXMAN 305 (KAR) - YOKOGAWA INDIA LTD. IN THIS CASE THE HON'BLE HC EXAMINED THE APPLICABIL ITY OF CLAUSE V TO EXPLANATION 1 BELOW SECTION 115 JB(2) AND UPHELD TH AT THE SAID CAUSE V IS NOT APPLICABLE FOR 'PROVISION OF DOUBTFUL OR BAD DEBTS' AS IT IS IN THE NATURE OF 'DIMINUTION IN THE VALUE OF AN ASSET'. TH E HON'BLE HC DID NOT DISCUSS THE PROVISIONS OF CLAUSE (I) TO EXPLANATION 1 BELOW SECTION 115 JB(2). THE ONLY REFERENCE TO CLAUSE (I) COMES IN TH E FORM OF ARGUMENTS OF THE COUNSEL FOR THE REVENUE (PARA 7 OF THE ORDER ). HOWEVER, THE DECISION OF THE HON'BLE HC THEN DEALS WITH ONLY CLA USE 'C' OF EXPLANATION 1, UNDER WHICH THE AMOUNT WAS ADDED BY THE A.O. IN THE CASE OF YOKOGAWA INDIA LTD. (SUPRA). IN THE OBSERVA TIONS OF THE HON'BLE HC REFERENCE TO CLAUSE (I) COMES ONLY IN FOLLOWING SENTENCE IN PARA 8 OF THE ORDER: 'REALISING THE FATALITY OF THE SAID ARGUMENT, IT IS CONTENDED NOW THAT ITEM (I) CAN NOT AMOUNT TO SATISFACTION AS PROVISIO N FOR DIMINUTION IN THE VALUE OF ASSET IS SUBSTITUTED, IN CASE OF THE ASSES SEE FALLS UNDER ITEM (C).' FROM THE LANGUAGE OF THE ABOVE REFERENCE IT CANNOT BE INTERPRETED THAT HON'BLE HC GAVE ANY SPECIFIC FINDING ON CLAUSE (I). AFTER THE ABOVE OBSERVATION THAT THE HON'BLE HC DISCUSSED THE EXPLA NATION TO SECTION 36(I)(VII) WHICH WAS ALSO A RETROSPECTIVE AMENDMENT AND DISMISSED THE APPEAL OF THE REVENUE BY RELYING ON THE DECISION OF APEX COURT IN THE ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 7 - CASE OF VIJAYA BANK (SUPRA). THE APPEAL OF THE REVE NUE IN THE CASE BEFORE HON'BLE KARNATAKA HC WAS FILED ON THE ISSUE OF ADDITION OF PROVISION FOR BAD & DOUBTFUL DEBTS UNDER CLAUSE 'C' OF EXPLANATION 1 BELOW 115 JB(2) AND QUESTION OF LAW WAS ALSO ADMITT ED ON THIS ISSUE, WHICH WAS ANSWERED IN FAVOUR OF THE ASSESSEE. CLAUS E (I) WAS NOT A PART OF QUESTION OF LAW BEFORE THE HON'BLE HIGH COURT. (III) VODAFONE ESSAR GUJARAT LTD- ITAT AHMEDABAD I TA NO. 1999/AHD/2003. IN THIS JUDGEMENT ALSO CLAUSE (I) OF EXPLANATION 1 HAS NOT BEEN DISCUSSED EXCEPT WHILE REPRODUCING THE ARGUMENTS OF DR. AFTER REFERRING TO THE DECISION OF HON'BLE KARNATAKA HC IN THE CASE OF YOK OGAWA INDIA LTD. (SUPRA) THE ITAT HELD AS UNDER: 'THUS THE PROVISION FOR BAD AND DOUBTFUL DEBTS CANN OT BE TERMED AS A PROVISION FOR LIABILITY BUT IS IN THE NATURE OF DIM INUTION IN THE VALUE OF ASSET. IN VIEW OF THE AFORESAID FACTS, WE ARE OF TH E VIEW THAT THE FACTS IN THE PRESENT CASE ARE IDENTICAL TO THAT OF THE CASE OF YOKOGWA INDIA LTD (SUPRA). WE THEREFORE, RESPECTFULLY FOLLOWING THE D ECISION OF HON'BLE HIGH COURT IN THE CASE OF CIT VS. YOKOGWA INDIA LTD ., (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ACCO RDINGLY THE APPEAL OF THE REVENUE IS DISMISSED.' IN THIS CASE ALSO THE ORIGINAL ADDITION BY THE A.O. WAS MADE UNDER CLAUSE 'C' TO EXPLANATION 1 BELOW SECTION 115 JB(2) AND REVENUE APPEAL WAS FILED BEFORE AMENDMENT TO SUCH 115 JB WAS MADE BY FINANCIAL ACT 2009. THE GROUND OF APPEAL BEFORE THE ITAT WAS THER EFORE WITH REFERENCE TO CLAUSE V AND NOT CLAUSE (I). 13. FROM A PERUSAL OF ABOVE DECISION THE FOLLOW ING FACTS EMERGE:- (A) IN THE CASE OF YOKOGAWA INDIA LTD. THE RA TIO OF THE JUDGEMENT IS THAT PROVISION FOR BAD AND DOUBTFUL DEBTS CANNOT BE ADDED BACK IN ACCORDANCE WITH CLAUSE 'C' OF EXPLANATION 1 BELOW S ECTION 115JB(2) AS IT IS A PROVISION FOR DIMINUTION IN THE VALUE OF AN ASSET AND NOT A LIABILITY. THERE IS NO FINDING ON THE APPLICABILI TY OF CLAUSE (I) OF ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 8 - EXPLANATION 1. IT IS ONLY REFERRED TO AS AN ARGUM ENT OF THE REVENUE BUT THE ENTIRE REASONING IN THE ORDER PERTAIN TO THE DE CISION OF THE APEX COURT IN THE CASE OF M/S VIJAYA BANK WHICH WAS IN T HE CONTEXT OF SECTION 36(L)(VII). THE EXPLANATION INTRODUCED WITH RETROSP ECTIVE AMENDMENT REFERRED TO IN THE JUDGEMENT OF THE APEX COURT REFE RS TO EXPLANATION INTRODUCED BELOW SECTION 36(L)(VII) BY FINANCE ACT, 2001 WITH RETROSPECTIVE EFFECT FROM 01.04.1989 AND NOT THE EX PLANATION L(I) INTRODUCED BELOW SECTION 115JB(2). (B) AS AGAINST THE ABOVE JUDGEMENT OF HON'BLE KARNA TAKA HIGH COURT WHICH DID NOT GIVEN ANY SPECIFIC DECISION REGARDING CLAUSE (I) TO EXPLANATION 1 BELOW SECTION 115JB(2), THERE IS A DI RECT DECISION OF HON'BLE HIGH COURT OF PUNJAB AND HARYANA DATED 30.0 5.2011 IN THE CASE OF STERIPLATE (P) LTD. REPORTED IN 338ITR 547 WHICH HAS SPECIFICALLY DISCUSSED THE PROVISION OF CLAUSE (I) TO EXPLANATION 1 BELOW SECTION 115JB(2) AND HELD THAT SUCH PROVISION WOULD BE ADDED TO BOOK PROFIT U/S 115JB. (C) THE ITAT MUMBAI IN ITS DECISION DATED 09.03.201 1 IN THE CASE OF TCFC FINANCE LTD. (SUPRA) HELD THAT PROVISION FOR D IMINUTION IN THE VALUE OF INVESTMENT BEING UNQUOTED SHARE (SIMILAR T O SHARE APPLICATION MONEY IN THE PRESENT APPEAL) IS TO BE ADDED TO BOOK PROFIT UNDER CLAUSE (I) TO EXPLANATION 1 BELOW SECTION 115JB(2). THIS JUDGEMENT HAS DISCUSSED THE DECISION OF APEX COURT IN THE CASE OF M/S VIJAYA BANK, THE VERY FOUNDATION OF THE JUDGEMENTS OF HON'BLE KARNAT AKA HC AND HON'BLE ITAT AHMEDABAD RELIED UPON BY THE APPELLANT . (D) IN THIS BACKGROUND WHEN WE REVERT TO THE DECISI ON OF HON'BLE ITAT AHMEDABAD IN THE CASE OF VODAFONE ESSAR (GUJARAT), WE NOTICE THAT THE ISSUE INVOLVED IN THAT CASE WAS ALSO APPLICABILITY OF CLAUSE V TO EXPLANATION 1 BELOW SECTION 115JB(2). CLAUSE (I) WA S ONLY REFERRED TO AS AN ARGUMENT OF THE REVENUE. THERE WAS NO SPECIFI C DISCUSSION OF THIS ISSUE AS THE DECISION OF HON'BLE KARNATAKA HC (SUPR A) WAS FOLLOWED WHERE FOUNDATION WAS THE DECISION OF APEX COURT IN THE CASE OF M/S VIJAYA BANK REGARDING SECTION ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 9 - (E) HOWEVER, IT IS A FACT THAT CLAUSE (I) WAS REFER RED TO BY THE REVENUE IN THE ARGUMENTS BEFORE ITAT AHMEDABAD. THEREFORE THE ISSUE OF BINDING NATURE OF THE SAID JUDGEMENT IN THE CASE OF VODAFON E ESSAR {GUJARAT) DOES ARISE, THOUGH THERE IS NO DETAILED DISCUSSION OF CLAUSE (I) IN THE JUDGEMENT. 14. IN THIS BACK GROUND WE NEED TO FIRST EXAMINE TH E PRINCIPLE OF BINDING NATURE OF JUDGMENTS LAID DOWN BY JURISDICTIONAL ITA T- AHMEDABAD IN THE CASE OF M/S ALPHA PROJECTS SOCIETY LTD. IN ITANO.2869/AHD/2011DATED 23.3.2011. IN THE PARA 7 O F THE ORDER THE ITAT HELD AS UNDER: 'THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS NOW B EEN DECIDED BY THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF C IT V. VIRGIN CREATORS IN GA NO.3200/2001. DATED 23.11.2011 AGAIN ST THE REVENUE. HOWEVER, IT IS NOTEWORTHY THAT THE SPECIAL BENCH OF ITAT MUMBAI IN THE CASE OF BHARATI SHIPYARD LTD. V . DOT IN ITA NO. 2404/MUM/2009 IN ORDER DATED 12.09,2011 HAS TAKEN A VIEW THAT THE AMENDMENT IS PROSPECTIVE IN NATURE AN D WOULD APPLY ACCORDINGLY. RESPECTFULLY FOLLOWING THE DECIS ION OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA) THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE.' 14.1. IN THE ABOVE ORDER OF JURISDICTIONAL ITAT, TH E ITAT DID NOT FOLLOW THE DECISION OF IT AT (SB) IN THE CASE OF BHARTI SH IPYARD LTD, WHICH IS OF BINDING NATURE FOR ALL BENCHES OF ITAT, FOR THE REASON THAT ONE DECISION OF HON'BLE HIGH COURT, THOUGH NOT A JURISD ICTIONAL HIGH COURT, IS CONTRARY TO THAT. IN THE PRESENT CASE ALSO THE D ECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT (SUPRA) IS CONTRARY T O THE DECISION OF ITAT AHMEDABAD. MOREOVER, THE DECISION OF HON'BLE K ARNATAKA HIGH COURT IS THE CASE OF YOKOGAWA INDIA LTD. DOES NOT D ISCUSS THE ISSUE OF CLAUSE (I) OF EXPLANATION 1 BELOW SECTION 115JB(2), EXCEPT MENTIONING IT AS REVENUE'S ARGUMENTS. ON THE OTHER HAND, THE DECI SION OF HON'BLE PUNJAB AND HARYANA HC (SUPRA), THOUGH AVAILABLE ON THE DATE THE HON'BLE IT AT AHMEDABAD GAVE ITS DECISION, HAS NOT BEEN CONSIDERED BY ITAT. ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 10 - 14.2. IN THIS CONTEXT AN ISSUE ARISES THAT WHETHER THE CIT(A) SHOULD FOLLOW THE DECISION OF ITAT AHMEDABAD IN THE CASE O F VODAFONE (ESSAR) GUJARAT OR THE DECISION OF A SUPERIOR COURT I.E. PU NJAB AND HARYANA HIGH COURT WHICH HAS PASSED A SPEAKING ORDER ON THI S ISSUE. ANOTHER ISSUE INVOLVED IS THAT THE APEX COURT IN THE CASE O F HCL COMNET SYSTEMS & SERVICES LTD. REPORTED IN 292 ITR 299 HAS HELD THAT 'PROVISION FOR BAD AND DOUBTFUL DEBT 1 AMOUNTED TO 'PROVISION FOR DIMINUTION IN THE VALUE OF ASSETS'. AFTER THAT DECI SION CLAUSE (I) TO EXPLANATION 1 BELOW SECTION 115JB(2) HAS BEEN ADDED WHICH PROVIDES THAT PROVISION FOR DIMINUTION IN THE VALUE OF ASSE T IS TO BE ADDED U/S 115JB. THIS MEANS THAT THERE IS A SPECIFIC PROVISIO N IN THE ACT FOR PROVISION FOR DIMINUTION IN THE VALUE OF ASSET' AN D THE APEX COURT HAS DEFINED THIS PHRASE TO MEAN 'PROVISION FOR BAD AND DOUBTFUL DEBTS'. CAN C1T(A) IN SUCH A SITUATION TAKE A VIEW WHICH IS CON TRARY TO THE JUDGEMENT OF APEX COURT AND SPECIFIC PROVISIONS OF THE ACT ? 14.3. WITHOUT PREJUDICE TO ABOVE THERE ARE TWO JUDG EMENTS OF HON'BLE ITAT AHMEDABAD WHICH HOLD THAT 'PROVISION FOR BAD A ND DOUBTFUL DEBTS' IS TO BE ADDED UNDER CLAUSE (I) TO EXPLANATION 1 BE LOW SECTION 115JB(2). THE RESPECTIVE JUDGEMENTS ARE AS UNDER: (A) ALEMBIC LIMITED, BARODA ITA NO. 3530/AHD/2008 FOR A.Y. 2006-07. (B) GE PLASTICS ITA NO. 483/AHD/2007 DATED 23.03.2 012 FOR A.Y. 2003-04. CONSIDERING THE FINDINGS IN THE ABOVE TWO CASES AND THE FACT THAT APPELLANT HAS DEBITED PROVISION FOR BAD/DOUBTFUL DE BTS IN THE P&L ACCOUNTS, WHICH CONSIST OF PROVISION FOR BAD SHARE APPLICATION MONEY AND BAD LOANS AND ADVANCES KEPT AS INVESTMENTS, THE RATIO OF ABOVE TWO JUDGEMENTS ALSO GOES AGAINST THE APPELLANT. 14.4. THEREFORE, AFTER CONSIDERING THE FACTS AND DE CISIONS DISCUSSED SUPRA, IT IS ESTABLISHED THAT THE CLT(A) IS EXPECTE D TO FOLLOW THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT DATED 30.0 5.2011 IN THE CASE OF STERIPLATE (P) LTD. (SUPRA) WHICH IS A DIRE CT AND SPEAKING ORDER ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 11 - ON THIS ISSUE. IN VIEW OF THE SAME GROUND NO. 2 IS DECIDED AGAINST THE APPELLANT AND THE ORDER OF ASSESSING OFFICER IS CON FIRMED. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US. 4.1. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MA DE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THE ISSUE IS S QUARELY COVERED IN FAVOUR OF ASSESSEE BY FOLLOWING DECISIONS:- SL.NO(S) IN THE CASE OF REPORTED IN/ITA.. 1. CITR VS. KIRLOSKAR SYSTEMS LTD. 220 TAXMAN 1 (KA R.) 2. NARODA ENVIRO PROJECTS LTD. VS. ITO ITA NO.2976/AHD/2010 & ORS. 3. ACIT VS. VODAFONE ESSAR GUJARAT LTD. ITA NO.1999/AHD/2008 4.2. HE ALSO PLACED ON RECORD THE COPIES OF THE AFO RESAID DECISIONS. HE FURTHER SUBMITTED THAT LD.CIT(A) HAS RELIED ON VARI OUS DECISIONS OF THE TRIBUNAL AS AGAINST THE DECISIONS RELIED UPON BY TH E ASSESSEE. HE THEREFORE SUBMITTED THAT WHEN TWO VIEWS OF TAXING PROVISIONS ARE POSSIBLE, IT IS SETTLED LAW THAT THE VIEW IN FAVOUR OF ASSESSEE HAS TO BE ADOPTED AND FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. VEGETABLE PRODUCT S LTD. REPORTED IN (1973) 88 ITR 192(SC). WITH RESPECT TO THE ADDITI ONAL GROUND ABOUT NON-LEVYING OF INTEREST U/S.234B OF THE ACT HE SUBM ITTED THAT IN THE ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 12 - PRESENT CASE, THE INTEREST U/S.234B OF THE ACT CANN OT BE CHARGED IN VIEW OF THE RETROSPECTIVE AMENDMENT TO THE ACT AND FOR T HIS PROPOSITION HE RELIED ON THE DECISION IN THE CASE OF DCIT VS. UTTA M SUGAR MILLS LTD. REPORTED IN (2012) 20 TAXMAN.COM 23. LD.SR.DR, ON T HE OTHER HAND, SUPPORTED THE ORDERS OF AO AND LD.CIT(A) AND FURTHE R SUBMITTED THAT IN THE DECISIONS RELIED UPON BY THE ASSESSEE THE FACTS WERE DIFFERENT AS IT WAS NOT A CASE WHERE CLAUSE(I) OF EXPLANATION-1 TO SECT ION 115JB OF THE ACT WAS CONSIDERED. HE FURTHER SUBMITTED WRITTEN SUB MISSIONS WHICH READ AS UNDER:- 2. IN THIS CASE, DURING THE HEARING LD.COUNSEL FO R THE ASSESSEE HAS MADE SUBMISSION THAT THE ISSUE OF ADJUSTMENT OF PROVISIO N OF BAD AND DOUBTFUL DATES U/S.115JB IS COVERED IN ASSESSEE FAVOUR BY CITING F OLLOWING DECISIONS: (A) CIT VS. KIRLOSKAR SYSTEMS LTD. (220 TAXMAN 1) (KAR .) (B) NARODA ENVIRO PROJECTS LTD. VS. ITO ITA NO.2976/A HD/2010 AND OTHERS. (C) ACIT VS. VODAFONE ESSAR GUJARAT LTD. ITA NO.1999/ AHD/2008. 3. HOWEVER, IN THIS REGARD, I WISH TO SUBMIT AND PU T ON RECORD FOLLOWING JUDGMENTS OF VARIOUS HIGH COURTS AND ITAT, WHICH CL EARLY DECIDED THE ISSUE IN REVENUES FAVOUR. (1) CIT VS. STERIPLATE (P.) LTD. 20 TAXMANN.COM 375 (P&H) (2) CIT VS. MYSORE BREWERIES LTD. 227 CTR 569 (KAR.) (3) CIT VS. YASHASWI LEASING & FINANCE LTD. 17 TAXMAN .COM 162 (KAR.) (4) ACIT VS. CHETTINAD CEMENT CORPORATION LTD. 15 TAX MANN.COM 262 (CHENNAI) (5) CIT VS. NCR CORPORATION INDIA LTD. 8 TAXMANN.COM 116 (KAR.) 4. FURTHER, DURING THE HEARING, I HAD ALREADY GIVEN 4 CASE LAWS OF VARIOUS ITATS DECIDED IN FAVOUR OF REVENUE ON SAME ISSUE. 1. SHAKTI INSULATED WIRES (P.) LTD. VS. I.T.O. 45 TAXMANN.COM 31 (MUMBAI TRIB.) ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 13 - 2. ITO VS. TCFC FINANCE LTD. 10 TAXMANN.COM 144 (MUM BAI) 3. DCIT VS. KAMAT HOTELS (INDIA) LTD. 36 TAXMANN.COM 20 (MUMBAI TRIB.) 4. EASTERN INDIA POWERTECH LTD. VS. ACIT 32 TAXMANN. COM 11 (DELHI TRIB.) 5. IN THIS REGARD, I FURTHER WISH TO STATE THAT I N CASE OF NARODA ENVIRO PROJECTS LTD. AS RELIED BY A.R. FAVOURABLE JUDGMENT WAS GIVEN TO ASSESSEE BECAUSE OF THE FACT THAT REVENUE HAS NOT POINTED OU T ANY CONTRARY BINDING DECISIONS IN ITS SUPPORT. HOWEVER, NOW IN LIGHT OF ALL THE ABOVE CASE LAWS OF VARIOUS HIGH COURTS AND ITATS THIS ISSUE OF ADDING PROVISION OF BAD AND DOUBTFUL DATES TO THE NET PROFIT FOR THE PURPOSE OF SECTION 115JB IS VERY MUCH CLEAR AND SHOULD BE DECIDED IN FAVOUR OF REVENUE ON LY. THE HONBLE ITAT IN THE CASE OF VODAFONE ESSAR GUJARAT LTD. RELIED ON Y OKOGAWA INDIA LTD. 204 TAXMAN 305 (KAR.), BUT THIS CASE PERTAINS TO CLAUSE (C) OF 115JB(2) AND NOT TO CLAUSE (I), WHICH IS SUBJECT MATTER OF THIS CASE, A ND NARODA ENVIARO PROJECTS CASE LAW RELY ON CASE OF VODAFONE ESSAR GUJARAT LTD . ONLY. 6. ACCORDINGLY, DECISIONS GIVEN BY LD.COUNSEL CA NNOT BE ACCEPTED AS GOOD LAW, AS OF NOW AND DECISION OF HIGH COURT ALWAYS PR EVAILS OVER DECISION OF ITAT. FURTHER, THIS CASE PERTAINS TO AY 2009-10 AN D ASSESSEE FILED RETURN ON 30.09.2009, I.E. AFTER AMENDMENT IN SECTION 115JB. 4.3. WITH RESPECT TO THE ADDITIONAL GROUND ABOUT NO T CHARGING OF INTEREST U/S.234B OF THE ACT, THE LD.SR.DR SUBMITTED THAT AS SESSEE WAS WELL AWARE ABOUT THE ASSESSEES LIABILITY FOR PAYMENT OF ADVAN CE TAX WHILE FILING THE RETURN OF INCOME AND THEREFORE ASSESSEE COULD NOT T AKE THE SHELTER OF THE AFORESAID DECISION. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RES PECT TO ADJUSTMENT TO BE MADE TO THE BOOK PROFITS U/S 115JB OF THE ACT AN D THE ALTERNATE CONTENTION OF CHARGING OF INTEREST U/S 234B OF THE ACT. ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 14 - 5.1. IT IS AN UNDISPUTED FACT THAT DURING THE YEAR ASSESSEE HAD DEBITED RS.4,37,67,477 ON ACCOUNT OF BAD DEBT PROVISION TO THE PROFIT AND LOSS ACCOUNT BUT WHILE CALCULATING THE BOOK PROFITS U/S 115JB THE SAME WAS NOT ADDED TO THE NET PROFITS. LD.CIT(A) HAS NOTED T HAT THE PROVISION ON ACCOUNT OF BAD DEBTS WHICH HAS BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE IS NOT ON ACCOUNT OF BAD DE BTS BUT IS ON ACCOUNT OF LOANS AND ADVANCES WHICH ARE TREATED AS INVESTME NTS BY THE ASSESSEE AND THE INVESTMENTS. THE AFORESAID FINDING OF LD CI T(A) HAS NOT BEEN CONTROVERTED BY THE LD AR. S.115JB IS A SPECIAL PR OVISION FOR PAYMENT OF TAX BY CERTAIN COMPANIES AND STIPULATES PAYMENT OF MINI MUM ALTERNATE TAX (MAT) BASED UPON THE BOOK PROFIT COMPUTED AS PER PROVISIONS OF S.115JB(2) OF THE ACT. BOOK PROFITS S HALL BE COMPUTED AS PER S.115JB(2) OF THE ACT WHICH STIPULATES THAT BOO K PROFITS MEANS NET PROFITS AS SHOWN IN THE PROFIT AND LOSS ACCOUNT PRE PARED FOR THE FINANCIAL YEAR IN ACCORDANCE WITH PART II AND III OF SCHEDULE VI OF THE COMPANIES ACT, 1956 AND ALSO COMPLYING WITH OTHER CONDITIONS AS STIPULATED IN S.115JB(2) OF THE ACT. SUCH BOOK PROFIT HAS TO BE I NCREASED BY ITEM NO (A) TO (K) OF EXPLANATION (1) TO S. 115JB OF THE AC T IF THEY ARE DEBITED TO THE PROFIT AND LOSS ACCOUNT AND FROM SUCH PROFITS I TEM NOS. (I) TO (VIII) OF THE EXPLANATION ARE TO BE REDUCED. THE FIGURE ARRIV ED AT AFTER THE ABOVE EXERCISE IS THE BOOK PROFIT OF THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR. ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 15 - 5.2. CLAUSE (I) TO EXPLANATION 1 WAS AMENDED BY FINANCE (NO 2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 1 ST APRIL 2001 WHEREBY THE AMOUNT OR AMOUNTS SET ASIDE AS PROVISION FOR DIMINUTION IN TH E VALUE OF ANY ASSET WAS REQUIRED TO BE ADDED TO THE NET PROFITS IF THE SAME WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE ASSESSMENT YEAR INVOLV ED IN THE PRESENT APPEAL ARE AY 2009-10 AND THE AFORESAID AMENDMENT T O CLAUSE (I) IS THEREFORE APPLICABLE IN THE PRESENT CASE. IN THE PR ESENT CASE, IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS DEBITED THE AMOUN T AS PROVISION IN RESPECT OF LOANS AND ADVANCES GIVEN BY THE ASSESSEE AND SHARE APPLICATION MONEY. THE AMOUNT OF PROVISION ARE THEREFORE IN RES PECT OF THE ASSETS OF THE ASSESSEE AND ARE THEREFORE THE PROVISION MADE A ND DEBITED TO THE PROFIT AND LOSS ACCOUNT BY THE ASSESSEE IS COVERED BY THE PROVISIONS OF CLAUSE (I) TO EXPLANATION 1 OF THE ACT. BEFORE US , LD AR HAS RELIED ON THE VARIOUS DECISIONS OF THE TRIBUNAL IN ITS SUPPOR T. WE ARE HOWEVER OF THE VIEW THAT IN ALL THE DECISIONS THAT ARE RELIED UPON BY LD AR, THE ISSUE IN THOSE APPEALS WAS NOT WITH RESPECT TO CLAUSE (I) TO EXPLANATION 1 OF S. 115JB AND THEREFORE THE BENEFIT OF THOSE DECISION S WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. ON THE OTHER HAND WE FIND THAT HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS S TERIPLATE (2011) 338 ITR 547, HON'BLE KARNATAKA HIGH COURT IN THE CASE O F CIT VS MYSORE BREWERIES LTD (2009) 227 CTR 569 (KAR.) AND CIT VS YASHASWI LEASING & FINANCE LTD (2012) 17 TAXMANN.COM 162 (KAR.) HAVE HELD THAT IN VIEW OF INSERTION OF CLAUSE (I) TO EXPLANATION 1 TO S. 1 15JB, WITH RETROSPECTIVE ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 16 - EFFECT, AMOUNT SET ASIDE AS PROVISION FOR DIMINUTIO N IN VALUE OF ASSETS IS TO BE ADDED BACK FOR COMPUTATION OF BOOK PROFITS U/ S 115JB OF THE ACT. IN VIEW OF THE FACT THAT THE PROVISION MADE BY THE ASSESSEE IS COVERED BY THE CLAUSE (I) TO EXPLN.1 TO S.115JB OF THE ACT AND IN VIEW OF THE VARIOUS DECISIONS OF HON'BLE HIGH COURTS CITED HEREIN, WE A RE OF THE VIEW THAT NO INTERFERENCE TO THE ORDER OF CIT(A) IS CALLED FOR A ND THUS WE DISMISS THIS GROUND OF ASSESSEE. 5.3. AS FAR AS THE ADDITIONAL GROUND OF CHARGING OF INTEREST U/S 234B IS CONCERNED, WE FIND THAT THE ASSESSEE HAD FILED THE RETURN OF INCOME ON 30 TH SEPTEMBER 2009 WHEREAS THE AMENDMENT TO CLAUSE (I) TO EXPLANATION WAS MADE BY FINANCE (NO 2) ACT 2009 WITH RETROSPECT IVE EFFECT FROM 1 ST APRIL 2001 MEANING THEREBY THAT AT THE TIME OF FILI NG OF RETURN OF INCOME, THE AMENDMENT ( HAD ALREADY COME INTO FORCE AND THAT THE ASSESSEE W AS AWARE ABOUT IT. IN SUCH A SITUATION, WE ARE OF THE VIEW THAT THE RATIO OF DECISION IN THE CASE OF UTTAM SUGAR MILLS LTD.(SUPR A) WOULD NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE BECAUSE IN THE CASE OF UTTAM SUGAR (SUPRA) THE FACTS WERE THE ASSESSEE HAD FILED THE ORIGINAL RETURN OF INCOME WITHOUT CONSIDERING THE ADJUSTMENT OF DEFERR ED TAX AND WHICH WAS AS PER THE LAW PREVAILING AT THE TIME OF FILING OF RETURN OF I NCOME. SUBSEQUENTLY DURING THE COURSE OF REGULAR ASSESSMEN T PROCEEDINGS, ASSESSEE VOLUNTARILY REVISED THE COMPUTATION OF INC OME ON THE BASIS OF NEWLY INSERTED S.115JB(2) EXPLANATION 1(H). IN SUCH A SITUATION IT WAS ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 17 - HELD THAT WHEN THE ASSESSEE WAS UNDER A BONAFIDE BE LIEF AND BASED HIS ESTIMATE OF INCOME AS PER THE LAW PREVAILING AT THE RELEVANT TIMEOF FILING THE ORIGINAL RETURN OF INCOME, NO INTEREST U/S 234B AND 234C OF THE ACT IS LEVIABLE ON ACCOUNT OF SUBSEQUENT AMENDMENT TO THE PROVISIONS. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE ADDITIO NAL GROUND OF ASSESSEE NEEDS TO BE DECIDED AGAINST THE ASSESSEE AND THEREF ORE TO BE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.2402/AHD/2012 IS DISMISSED. 7. WE NOW TAKE UP THE PENALTY APPEAL, I.E. ITA NO.2 818/AHD/2013, WHEREIN FOLLOWING GROUND HAS BEEN RAISED BY THE ASS ESSEE:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LAO OF LEVY OF MINIMUM PENALTY OF RS.49,58,855/- BEING 100% OF THE TAX ON ADDITION ON ACCOUNT OF PROVISION FOR BAD AND DOUBT FUL DEBTS OF RS.4,37,67,477/- TO BOOK PROFIT U/S.115JB OF THE AC T WITHOUT APPRECIATING THE APPELLANTS SUBMISSION AND HOLD TH AT THE CASE FALLS UNDER DEFINITION OF DEEMED CONCEALMENT IN VIEW OF WRONG PRESENTATION OF ACTS IN THE RETURN OF INCOME. LEVY OF PENALTY BEING BAD IN LAW, THE SAME NEEDS TO BE CANCELLED. 7.1. BRIEFLY STATED FACTS ARE THAT THE RETURN OF IN COME WAS FILED ON 30/09/2009 AND THE TAX WAS PAID ON BOOK PROFIT OF R S.98,42,382/-. THE ASSESSMENT WAS FRAMED U/S.143(3) OF THE ACT ON 23/1 2/2011 AND THE BOOK PROFITS U/S.115JB WAS DETERMINED AT RS.5,36,62 ,677/-. ON THE ADDITION MADE TO BOOK PROFIT U/S.115JB OF THE ACT, AO VIDE ORDER DATED ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 18 - 04/02/2013 HELD THAT ASSESSEE HAS DELIBERATELY CONC EALED THE PARTICULARS OF INCOME AND ITS CASE WAS COVERED BY EXPLANATION-1 TO SECTION 271(1)(C) OF THE ACT AND THEREFORE ASSESSEE HAD COMMITTED A D EFAULT U/S.271(1)(C). HE ACCORDINGLY VIDE ORDER DATED 04/02/2013 LEVIED P ENALTY OF RS.49,48,855/-. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 2 8/08/2012 (IN APPEAL NO.CAS.I/285/2011-12) UPHELD THE LEVY OF PENALTY BY OBSERVING AS UNDER:- 14.1. IN THE ABOVE ORDER OF JURISDICTIONAL ITAT, THE ITAT DID NOT FOLLOW THE DECISION OF ITAT (SB) IN THE CASE OF BHA RTI SHIPYARD LTD, WHICH IS OF BINDING NATURE FOR ALL BENCHES OF ITAT, FOR THE REASON THAT ONE DECISION OF HONBLE HIGH COURT, THOUGH NOT A JU RISDICTIONAL HIGH COURT, IS CONTRARY TO THAT. IN THE PRESENT CASE AL SO THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT (SUPRA) IS CO NTRARY TO THE DECISION OF ITAT AHMEDABAD. MOREOVER, THE DECISION OF HONBLE KARNATAKA HIGH COURT IS THE CASE OF YOKOGAWA INDIA LTD. DOES NOT DISCUSS THE ISSUE OF CLAUSE (I) OF EXPLANATION 1 BE LOW SECTION 115JB(2), EXCEPT MENTIONING IT AS REVENUES ARGUMENTS. ON TH E OTHER HAND, THE DECISION OF HONBLE PUNJAB AND HARYANA HC (SUPRA), THOUGH AVAILABLE ON THE DATE THE HONBLE ITAT AHMEDABAD GAVE ITS DEC ISION, HAS NOT BEEN CONSIDERED BY ITAT. 14.2. IN THIS CONTEXT AN ISSUE ARISES THAT WHETHER THE CIT(A) SHOULD FOLLOW THE DECISION OF ITAT AHMEDABAD IN THE CASE O F VODAFONE (ESSAR) GUJARAT OR THE DECISION OF A SUPERIOR COURT I.E. PU NJAB AND HARYANA HIGH COURT WHICH HAS PASSED A SPEAKING ORDER ON THI S ISSUE. ANOTHER ISSUE INVOLVED IS THAT THE APEX COURT IN THE CASE O F HCL COMNET SYSTEMS & SERVICES LTD. REPORT IN 292 ITR 299 HAS H ELD THAT PROVISION FOR BAD AND DOUBTFUL DEBT AMOUNTED TO PROVISION F OR DIMINUTION IN THE VALUE OF ASSETS. AFTER THAT DECISION CLAUSE (I) T O EXPLANATION 1 BELOW SECTION 115JB(2) HAS BEEN ADDED WHICH PROVIDES THAT PROVISION FOR DIMINUTION IN THE VALUE OF ASSET IS TO BE ADDED U/ S.115JB. THIS MEANS ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 19 - THAT THERE IS A SPECIFIC PROVISION IN THE ACT FOR PROVISION FOR DIMINUTION IN THE VALUE OF ASSET AND THE APEX COURT HAS DEFIN ED THIS PHRASE TO MEAN PROVISION FOR BAD AND DOUBTFUL DEBTS. CAN C IT(A) IN SUCH A SITUATION TAKE A VIEW WHICH IS CONTRARY TO THE JUDG EMENT OF APEX COURT AND SPECIFIC PROVISIONS OF THE ACT? 14.3. WITHOUT PREJUDICE TO ABOVE THERE ARE TWO JUDG EMENTS OF HONBLE ITAT AHMEDABAD WHICH HOLD THAT PROVISION FOR BAD A ND DOUBTFUL DEBTS IS TO BE ADDED UNDER CLAUSE (I) TO EXPLANATI ON 1 BELOW SECTION 115JB(2). THE RESPECTIVE JUDGEMENTS ARE AS UNDER: (A) ALEMBIC LIMITED, BARODA ITA NO.3530/AHD/2008 F OR AY.2006-07. (B) GE PLASTICS ITA NO.483/AHD/2007 DATED 23.03.20 12 TO AY 2003-04. CONSIDERING THE FINDINGS IN THE ABOVE TWO CASES AND THE FACT THAT APPELLANT HAS DEBITED PROVISION FOR BAD/DOUBTFUL DE BTS IN THE P&L ACCOUNTS, WHICH CONSIST OF PROVISION FOR BAD SHARE APPLICATION MONEY AND BAD LOANS AND ADVANCES KEPT AS INVESTMENTS, THE RATIO OF ABOVE TWO JUDGEMENTS ALSO GOES AGAINST THE APPELLANT. 14.4. THEREFORE, AFTER CONSIDERING THE FACTS AND DE CISIONS DISCUSSED SUPRA, IT IS ESTABLISHED THAT THE CIT(A) IS EXPECTE D TO FOLLOW THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT DATED 30.0 5.2011 IN THE CASE OF STERIPLATE (P) LTD. (SUPRA) WHICH IS A DIRE CT AND SPEAKING ORDER ON THIS ISSUE. IN VIEW OF THE SAME GROUND NO.2 IS DECIDED AGAINST THE APPELLANT AND THE ORDER OF ASSESSING OFFICER IS CON FIRMED. 7.2. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 20 - 8. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ASSESSEE HAD F ILED ALL THE REQUIRED DETAILS BEFORE AO AND THAT THE ADDITION HAS BEEN MA DE ON ACCOUNT OF DIFFERENCE OF INTERPRETATION. HE FURTHER SUBMITTED THAT SINCE QUANTUM AND PENALTY PROCEEDINGS ARE SEPARATE AND INDEPENDENT, I T IS NOT NECESSARY THAT ON EVERY ADDITION MADE, PENALTY U/S.271(1)(C) IS LE VIABLE. LD.SR.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE LOWER A UTHORITIES. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT A CASE FOR LEVY OF PENALTY FOR CONCEAL MENT OF INCOME HAS TO BE EVALUATED IN TERMS OF PROVISIONS OF EXPLANATION 1 TO SECTION 271(1)(C), AS PER WHICH IF IN RELATION TO ANY ADDITION IN THE ASSESSMENT, THE ASSESSEE OFFERS NO EXPLANATION OR OFFERS EXPLANATION WHICH I S FOUND TO BE FALSE OR IS NOT ABLE TO SUBSTITUTE THE EXPLANATION AND IS AL SO NOT ABLE TO PROVE THAT THE EXPLANATION IS BONAFIDE, THE ADDITION MADE WOUL D AMOUNT TO CONCEALMENT OF PARTICULARS, OF INCOME. IT IS WELL SETTLED THAT THE PARAMETERS OF JUDGING THE JUSTIFICATION FOR ADDITIO N MADE IN THE ASSESSMENT CASE OF THE ASSESSEE IS DIFFERENT FROM T HE PENALTY IMPOSED ON ACCOUNT OF CONCEALMENT OF INCOME OR FILING INACCURA TE PARTICULARS OF INCOME AND THAT CERTAIN DISALLOWANCE/ADDITION COULD LEGALLY BE MADE IN THE ASSESSMENT PROCEEDINGS ON THE PREPONDERANCE OF PROBABILITIES BUT NO PENALTY COULD BE IMPOSED U/S. 271(1)(C) OF THE ACT ON THE PREPONDERANCE ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 21 - OF PROBABILITIES AND REVENUE HAS TO PROVE THAT THE CLAIM OF EXPENSES BY THE ASSESSEE WAS NOT GENUINE OR WAS INFLATED TO RED UCE ITS TAX LIABILITY. FURTHER MERELY BECAUSE ADDITIONS HAVE CONFIRMED IN APPEAL OR NO APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ADDITIONS MADE, IT CANNOT BE THE SOLE GROUND FOR COMING TO THE CONCLUSION THAT ASSESSEE H AS CONCEALED ANY INCOME. BEFORE US, L.DAR HAS GIVEN THE REASONS AND THE FACTS WHICH HAD RESULTED INTO ADDITION. THESE SUBMISSIONS HAVE NOT BEEN CONTROVERTED BY THE REVENUE. FURTHER, THERE IS NOTHING ON RECORD T O DEMONSTRATE THAT ASSESSEE HAD FILED INACCURATE PARTICULARS OF INCOME OR HAD CONCEALED THE PARTICULARS OF INCOME. 9.1. WE ALSO GET SUPPORT FROM THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD. REPORTED AT (2010) 322 ITR 158 (SC), WHEREIN THE HONBLE APEX COURT HAS HELD THAT A MERE MAKING OF THE CLAIM, WHICH IS NOT SUSTA INABLE IN LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH CLAIM MADE IN THE RETURN CANN OT AMOUNT TO THE INACCURATE PARTICULARS. 9.2. CONSIDERING THE AFORESAID FACTS AND RELYING O N THE FORESAID JUDGEMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT.LTD.(SUPRA), WE ARE OF THE VIEW THAT IN THE PRESENT CASE NO CASE FOR LEVY OF PENALTY U/S. 271(1)(C) OF THE A CT HAS BEEN MADE OUT. ITA NOS.2402/AHD/12 & 2818/AHD/13 M/S. LUSTURE MANUFACTURERS PVT.LTD. VS. ITO ASST.YEAR 2009-10 - 22 - WE THUS DIRECT THE DELETION OF PENALTY U/S. 271(1)( C) OF THE ACT. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.2818/AHD/2013 IS ALLOWED. 11. IN THE COMBINED RESULT, ASSESSEES APPEAL IN IT A NO.2402/AHD/2012 IS DISMISSED, WHEREAS ASSESSEES A PPEAL IN ITA NO.2818/AHD/2013 IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18 /08/2016 SD/- SD/- ( MAHAVIR PRASAD) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 18/ 08 /2016 &.., .(../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-I, SURAT 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD