The Joint Commissioner of Income Tax (Osd), Jammu V. Sh.he Jasbir Singh Anand, Jammu

ITA 253/ASR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9667 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital receipt
• Section: 80IB

Judgement Text

ITA NO.253/ASR/2016 A.Y. 2012-13 2 BOOKED IN THE DAY BOOK ONLY ON THE DATE OF ACTUAL PAYMENT, IS WITHOUT ANY BASIS/THE ACCOUNTING PRACTICES. 2. THAT THE CIT(A) HAS ERRED IN DELETING THE DISALL OWANCE OF COMMISSION EXPENSES OF RS. 20 LACS MADE BY THE AO S TATING THAT THE AO HAD FAILED TO INDICATE THE NON-GENUINEN ESS OF THE EXPENSES. THE CIT(A) HAS FAILED TO APPRECIATE THE F ACTS DETAILED IN ASSESSMENT ORDER OF THE A.Y. 2011-12 ON WHICH THE AO RELIED ON A.Y. 2012-13 STATING HOWEVER FROM THE TDS CERTIFICATE FURNISHED BY THE ASSESSEE, IT IS SEEN THAT MOST OF THE PAYMENTS HAVE BEEN BOOKED IN LAST DATE OF THE F INANCIAL YEAR THE ASSESSEE CLAIMS THAT IT IS A NORMAL ACCOUN TING PRACTICE TO BOOK THE EXPENSE ON YEAR END, TO CLEAR THE ACCOUNTS. HOWEVER, THE REPLY IS NOT VERY CONVINCING , HAD THE EXPENSES BEEN REAL, THEY WOULD HAVE BEEN BOOKED THROUGHOUT THE YEAR AND THE BALANCE COULD HAVE BEEN BOOKED THROUGHOUT THE YEAR AND THE BALANCE COULD H AVE BEEN BOOKED AT THE YEAR END. BUT IN THIS CASE, IT I S SEEN THAT MAJORITY OF EXPENSES ARE BOOKED AT THE YEAR END, I. E., AFTER THE SEARCH CONDUCTING THE INCOME TAX DEPARTMENT. 3. WHETHER CIT(A) WAS RIGHT IN TREATING THE EXCISE DUTY REFUND AS CAPITAL RECEIPT, BASED ON THE JUDGMENT OF THE HO NBLE J & K HIGH COURT IN THE CASE OF M/S. SHREE BALAJI ALLOY S (SUPRA) WHEN THE ISSUE IS PENDING BEFORE THE SC. 2. APROPOS GROUND NO.1, WHILE MAKING THE DISALLOWAN CE OF MARKETING EXPENSES RS.10 LACS, THE AO OBSERVED THAT THE DOCUM ENTS FOUND IN THE SEARCH CONDUCTED ON THE ASSESSEE INDICATED THAT THE PAYMENTS HAD BEEN MADE TO SOME PERSONS IN CASH; THAT THE DOCUMENTS RE LATED TO THE ASSESSMENT YEAR 2011-12, I.E., THE IMMEDIATELY PREC EDING ASSESSMENT YEAR, AND AN ADDITION OF RS.5 LACS HAD BEEN MADE I N THAT YEAR; THAT FOR THE YEAR UNDER CONSIDERATION, THE EXPENSES HAD GONE UP, THOUGH THE SALES HAD DECLINED AND THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION WERE SIMILAR TO THOSE FOR THE IMMEDIATELY PRECEDIN G ASSESSMENT YEAR. ITA NO.253/ASR/2016 A.Y. 2012-13 4 ACCORDINGLY, THE LD. CIT(A) HAS CORRECTLY DELETED T HE DISALLOWANCE. THE GRIEVANCE OF THE DEPARTMENT IN THIS REGARD IS UNJUS TIFIED. THE ORDER OF THE LD. CIT(A) ON THIS ISSUE IS CONFIRMED. GROUND NO.1 IS REJECTED. 7. SO FAR AS REGARDS GROUND NO.2, HERE AGAIN, THE A O MADE DISALLOWANCE OF COMMISSION OF RS.20 LACS ON SALES, BASING THE DISALLOWANCE ON THE ASSESSMENT ORDER FOR THE A.Y. 2 011-12 AND OBSERVING THAT THE ONLY PURPOSE FOR PAYING THE COMMISSION WA S TO REDUCE THE PROFIT AND THAT NO SUCH PAYMENT ON THIS ACCOUNT WAS MADE IN THE EARLIER YEAR. 8. THE ASSESSEE, BEFORE THE LD. CIT(A), STATED THAT ALL THE DETAILS OF THE PARTIES TO WHOM THE COMMISSION HAD BEEN PAID, HAD D ULY BEEN GIVEN BEFORE THE AO; THAT ALL THE PAYMENTS STOOD DULY REC ORDED IN THE ASSESSEES BOOKS OF ACCOUNT; THAT TDS HAD BEEN MADE ON ALL THESE PAYMENTS, IN ACCORDANCE WITH LAW; THAT THE AO HAD R EMAINED UNABLE TO PROVE THE EXPENDITURE TO BE NON-GENUINE, OR THAT T HE SAME HAD BEEN INCURRED FOR NON-BUSINESS PURPOSES; AND THAT THE RE ASONABLENESS OF THE EXPENDITURE NEEDS TO BE JUDGED FROM THE POINT OF V IEW OF BUSINESS REQUIREMENT. 9. THE LD. CIT(A) DELETED THE DISALLOWANCE. 10. THE LD. DR HAS CONTENDED THAT HERE ALSO, THE LD . CIT(A) HAS ERRED IN FAILING TO APPRECIATE THE FACTS AS MENTIONED IN T HE ASSESSMENT ORDER FOR THE A.Y. 2011-12, ON WHICH, THE AO HAD CORRECTLY PL ACED RELIANCE FOR THE YEAR UNDER CONSIDERATION; THAT THE LD. CIT(A) FURTH ER FAILED TO CONSIDER ITA NO.253/ASR/2016 A.Y. 2012-13 6 WHATSOEVER THEREIN IN THIS REGARD, THE LD. CIT(A)S ORDER ON THIS ISSUE IS ALSO CONFIRMED. GROUND NO. 2 IS REJECTED. 14. IN GROUND NO.3, THE DEPARTMENT HAS CONTENDED TH AT THE LD. CIT(A) WAS NOT RIGHT IN TREATING THE EXCISE DUTY REFUND AS CAPITAL RECEIPT, BASED ON THE JUDGMENT OF THE HONBLE J & K HIGH COURT IN THE CASE OF M/S. SHREE BALAJI ALLOYS. 15. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE ISSUE IN QUESTION HAS ALREADY BEEN DECIDED BY THE JURISDICTI ONAL HIGH COURT OF J & K IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER, (2011) 333 ITR 335 (J&K) IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, WHERE THE HONBLE HIGH COURT HELD THAT EXCISE DUTY REFUN D IS TO BE TREATED AS CAPITAL RECEIPT AND IS NOT LIABLE TO BE TAXED. 16. HAVING HEARD BOTH THE PARTIES IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE INVOLV ED IN THE GROUNDS OF THE APPEAL OF THE REVENUE RELATING TO DEDUCTION UNDER SECTION 80IB ON EXCISE DUTY REFUND IS SQUARELY COVERED BY THE JUDGM ENT OF THE HON'BLE JURISDICTIONAL HIGH COURT OF JAMMU & KASHMIR IN THE CASE OF SHREE BALAJI ALLOYS V. CIT AND ANOTHER, (2011) 333 ITR 335 (J&K) IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, WHERE THE HON BLE HIGH COURT HAS HELD THAT THE EXCISE DUTY REFUND IS TO BE TREATED A S CAPITAL RECEIPT AND IS NOT LIABLE TO BE TAXED. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT OF JAMMU & KA SHMIR IN THE CASE OF