M/s Pioneer Torsteel Mills Pvt. Ltd., Hyderabad V. ITO,Ward 16(2), Hyderabad

ITA 253/HYD/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2650 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-09-2018
• Assessment Year: 2006-2007
• Appeal Filed On: 18-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J DIVYA
• Keywords: Revised return; Capital expenditure
• Section: 143(3); 263

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE S MT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S . RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 2 53 /HYD/201 4 ASSESSMENT YEAR: 20 06 - 07 M/S PIONEER TARSTEEL MILLS PVT. LTD., HYDERABAD. PAN AACCP0357L VS. INCOME - TAX OFFICER, WARD 16(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K.C. DEVDAS REVENUE BY : SMT. K.J. DIVYA DATE OF HEARING : 19 - 0 9 - 201 8 DATE OF PRONOUNCEMENT : 09 - 11 - 201 8 O R D E R PER S . RIFAUR RAHMAN, A .M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) V , HYDERABAD, DATED 22 / 1 1/201 7 FOR AY 20 06 - 07. 2. BRIEF FACTS OF THE CASE ARE, ASSESSEE COMPANY FILED ITS E - RETURN FOR THE AY 2006 - 07 ON 27/11/2006 ADMITTING TOTAL INCOME OF RS. 21,48,088/ - AND REVISED RETURN OF INCOME ON 08/02/2008 ADMITTING TOTAL INCOME OF RS. 23,27,752/ - . THE AO COMPLETED THE ASSESSMEN T U/S 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT) ACCEPTING THE RETURN OF INCOME. 2.1. SUBSEQUENTLY, THE CIT VIDE ORDER U/S 263 OF THE ACT DATED 24/08/2011 HELD THAT INPUT CREDIT TO THE EXTENT OF RS. 15,40,545/ - WAS NOT AN ALLOWABLE DEDUCTION ON THE GROUND THAT IT PERTAINED TO PURCHASE OF CERTAIN CAPITAL ITEMS, AND ACCORDINGLY DIRECTED THE AO TO 2 ITA NO. 253 /HYD/201 4 M/S PIONEER TORSTEEL MILLS PVT. LTD. BRING THE SAID AMOUNT TO TAX. HE FURTHER DIRECTED THE AO TO EXAMINE THE ASSESSEES CLAIM OF INPUT CREDIT OF VAT ON FURNACE OIL, STORES AND OXYGEN WITH REFERENCE TO THE PURCHASE INVOICES AND ACCORDINGLY DECIDE THE ALLOWABILITY OF SUCH CLAIM. 2.2 CONSEQUENTLY, THE AO DETERMINED THE TOTAL INCOME AT RS. 41,77,563/ - VIDE HIS ORDER U/S 143(3) RWS 263 DATED 28/12/2011 BY MAKING THE FOLLOWING ADDITIONS: 1. RS. 15,40,545/ - TOWARDS INPUT CREDIT. 2. RS. 3,09,666/ - WITH REGARD TO FURNACE OIL, STORES AND OXYGEN 3. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE PREFERRED AN APPEAL ONLY WITH REGARD TO THE ADDITION OF RS. 3,09,666/ - ON ACCOUNT OF INPUT CREDIT OF VAT CLAIM ED ON FURNACE OIL, STORES AND OXYGEN. 4. BEFORE THE CIT(A), THE ASSESSEE STATED THAT IT HAD FILED EVIDENCES FOR PURCHASE OF FURNACE OIL, STORES AND OXYGEN AS REQUIRED BY THE AO, BUT, THE AO DISALLOWED THE SAME ON THE GROUND THAT THE CLAIM TO SUCH AN EXTEN T OF RS. 3,09,666/ - WAS NOT GENUINE AND WHILE DOING SO, THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO RECONCILE THE DIFFERENCES, IF ANY. 5. THE CIT(A) AFTER CONSIDERIN G THE SUBMISSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO AND REJECTED THE CONTENTION OF THE ASSESSEE THAT AN OPPORTUNITY WAS NOT GIVEN TO RECONCILE THE DIFFERENCES. 6. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RA ISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN CONFIRMING THE ADDITION RS. 3,09,666/ - , OUT OF THE INPUT CREDIT OF VAT C LAIMED ON FURNACE OIL, STORES AND OXYGEN. 3 ITA NO. 253 /HYD/201 4 M/S PIONEER TORSTEEL MILLS PVT. LTD. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN NOT GIVING AN OPPORTUNITY TO THE APPELLANT TO RECONCILE THE DIFFERENCES, IF ANY, BEFORE CONFIRMING THE ADDITION OF RS. 3,09,666/ - . 4. THE ADDITION OF RS. 15,40,000/ - WHICH REPRESENTS PAYMENT OF VAT IS WHOLLY UNSUSTAINABLE. 5. ANY OTHER GROUND OR GROUNDS AS MAY BE URGED AT THE TIME OF HEARING. 6.1 THE ASSESSEE FILED THE FOLLOWING ADDITIONAL GROUNDS: 1 . THE ORDER O F THE AUTHORITIES BELOW IN HOLDING THAT THE PAYMENT OF RS.15,40, 000/ - TOWARDS VAT WAS NOT AN ALLOWABLE DEDUCTION AS IT IS IN THE NATURE OF CAPITAL EXPENDITURE IS WHOLLY UNSUSTAINABLE BOTH ON FACTS AND IN LAW. 2. THE AUTHORITIES BELOW FAILED TO NOTE THAT T HE PAYMENT OF RS.15,40, 000 WHICH REPRESENTED PAYMENTS TOWARDS VAT WAS A DEDUCTIBLE EXPENDITURE AS IT WAS CLAIMED AS AN INPUT CREDIT TO THE EXTENT OFRS.13,45,317 AND THEREFORE WAS DEDUCTIBLE . 7. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. 8. WITH REGARD TO GROUND NO. 4 AND ADDITIONAL GROUND, LD. AR VEHEMENTLY ARGUED THAT THESE ARE LEGAL GROUNDS AND IT WAS NOT APPEALED BEFORE LD. CIT(A) , B UT THAT IT CAN BE RAISED BEFORE SECOND APPELLATE AUTHORITIES. WE NOTICED THAT THE GROUND RAISED IN GROUND NO. 4 AND ADDITIONAL GROUNDS ARE FOR THE GRIEVANCES OUT OF THE ORDER U/S 263. ASSESSEE HAS NOT CHALLENGED THE ORDER U/S 263. THE ORDER PASSED BY THE AO IS AS PER THE DIRECTIONS OF CIT U/S 263. THEREFORE, THESE GROUNDS ARE NOT COMING OUT OF THE ORDER PASSED U/S 143(3) R.W.S. 26 3. ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 9. WITH REGARD TO GROUND NOS. 2 & 3, LD. AR SUBMITTED THAT ASSESSEE HAS SUBMITTED RELEVANT PURCHASE BILLS BEFORE THE AO RELATING TO PURCHASE OF FURNACE OIL, STORES AND OXYGEN. FURTHER, HE SUBMITTED THAT ASSESSE E HAS MAINTAINED SEPARATE VAT LEDGERS FOR FURNACE OIL, & STORES AND HE BROUGHT TO OUR NOTICE THE LEDGER EXTRACTS, WHICH IS PLACED ON RECORD AT PAGE 10 OF PAPER BOOK. THESE WERE ALSO PLACED BEFORE THE AO. BUT, AO HAS NOT GIVEN PROPER OPPORTUNITY TO EXPLAIN 4 ITA NO. 253 /HYD/201 4 M/S PIONEER TORSTEEL MILLS PVT. LTD. THE DIFFERENCES. FURTHER, HE BROUGHT TO OUR NOTICE, THE FINAL ASSESSMENT ORDER UNDER AP VAT ACT, 2005 FOR THIS AY, WHICH IS PLACED ON RECORD AT PAGES 117 TO 123 OF PAPER BOOK. IN THE ABOVE ORDER, THE SALES DEPARTMENT HAS ACCEPTED THE ABOVE PURCHASES AND V AT CREDITS CLAIMED BY THE ASSESSEE. HE SUBMITTED THAT THE DISALLOWANCE IS NOT PROPER AS THE ASSESSEE WAS NOT GIVEN PROPER OPPORTUNITY TO EXPLAIN THE DIFFERENCES FOUND BY THE AO. 10. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . WE N OTICE THAT AO HAS DISALLOWED THE VAT CREDIT TO THE EXTENT OF RS. 3,09,666/ - AS NOT GENUINE . ACCORDING TO THE ASSESSEE, AO HAS NOT GIVEN PROPER OPPORTUNITY TO EXPLAIN THE TRANSACTION. BUT, NOW, ASSESSEE HAS FILED BEFORE US THE FINAL VAT ASSESSMENT ORDER, WH ICH IS PART OF PAPER BOOK, AS PER WHICH, THE ASSESSEE HAS PAID THE TOTAL TAX AS PER THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNT. THE MAIN A UTHORITIES ON PURCHASE AND SALES HAVE ASSESSED THE BOOKS OF THE ASSESSEE AND COMPLETED THE ASSESSMENT. THEREFORE, T HERE ARE NO DISCREPANCIES RELATING TO PURCHASE AND SALES , AND ALSO IN VAT CREDIT AVAILED BY THE ASSESSEE. THEREFORE, IN OUR VIEW, THE LEDGER MAINTAINED ON PURCHASE OF FURNACE OIL, STORES AND OXYGEN ARE PROVED TO BE CORRECT. HENCE, GROUND NOS. 2 & 3 ARE ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 9 TH NOVEMBER , 2018. SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 9 TH NOVEMBER , 2 018. KV 5 ITA NO. 253 /HYD/201 4 M/S PIONEER TORSTEEL MILLS PVT. LTD. COPY TO: - 1) MOHD. MURTUZA, THE DIRECTOR, M/S PIONEER TORSTEEL MILLS PVT. LTD., 1 - 4 - 880/A, BAKARAM, MUSHEERABAD, HYDERABAD. 2) ITO, WARD 16(2) , HYDERABAD. 3) CIT(A) V , HYDERABAD. 4) CIT IV , HYD . 5 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6 ) GUARD FILE