Western India Shipyard Ltd., Goa V. ITO, New Delhi

ITA 2551/DEL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6532 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 01-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS PARAMITA M BISWAS
• Assessee Lawyers: V V KALE
• Keywords: Depreciation; Additional evidence; Revised return
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI KULDIP SINGH: JUDICIAL MEMBER ITA NOS. 2551, 2552 & 2553/DEL/2012 ASSTT. YRS: 2004-05, 2006-07 & 2007-08 WESTERN INDIA SHIPYARD LTD., VS. INCOME-TAX OFFIC ER, PRABHAKAR MURMUGAO HARBOUR WARD-18(3), NEW DELHI VASCO, GOA. PAN: AAACW 0117 B ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI V.V. KALE CA RESPONDENT BY : MRS. PARAMITA M BISWAS CIT(DR) DATE OF HEARING : 29/02/2016. DATE OF ORDER : 08/03/2016. O R D E R PER S.V. MEHROTRA, A.M: THESE ARE ASSESSEES APPEALS AGAINST DIFFERENT ORDE RS OF LD. CIT(A)- XXI, NEW DELHI, RELATING TO A.YS. 2004-05, 2006-07 AND 2007-08. ALL THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, IN THE RELEVANT ASSESSMENT YEARS UNDER CONSIDERATION, WAS ENGAGED IN THE BUSIN ESS OF SHIP REPAIR OF ITS CLIENTS. THE AO HAD MADE DIFFERENT DISALLOWANCES IN ALL THE THREE YEARS UNDER CONSIDERATION. THE ASSESSEES APPEAL WAS DISM ISSED FOR AY 2004-05 2 ITA 2551, 2552 & 2553/DEL/2012 AND PARTLY ALLOWED FOR AY 2006-07 AND 2007-08. BEIN G AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US FOR ALL THE THREE Y EARS UNDER CONSIDERATION. 3. FIRST WE TAKE UP ITA NO. 2551/DEL/2012 FOR AY 20 04-05. 4. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: THE ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION OF RS. 8,66,000/- ARE NOT JUSTIFIED AN D ARE NOT IN LINE WITH FACTS OF THE CASE AND TAX PROVISIONS. 5. BRIEF FACTS ARE THAT THE ASSESSEE HAD FILED RETU RN OF INCOME DECLARING LOSS OF RS. 38,68,52,104/-. IN COURSE OF ASSESSMENT PROCEEDINGS , IN ORDER TO VERIFY THE DEPRECIATION CLAIMED BY ASSESSEE, THE AO REQUIRED THE ASSESSEE TO FILE 4 TOP PURCHASE BILLS FOR ADDITION IN ASSETS. HE HAS OBSERVED THAT ASSESSEE DID NOT FILE EVIDENCE FOR ADDITION OF FOLLOWING TOP 3 ASSETS: S. NO. DATE ADDITION DEPRECIATION 1 1.4.2003 14,00,000/- 3,50,000/- 2 1.4.2003 17,00,000/- 4,25,000/- 3 31.3.2004 7,28,000/- 91,000/- 8,66,000/- 6. AS THE ASSESSEE FAILED TO FURNISH THE RELEVANT EVIDENCE, THE AO DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION OF RS. 8,66,000/-. 7. BEFORE LD. CIT(A) THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS ON WHICH REMAND REPORT WAS CALLED FOR BY LD. CIT(A). LD. CIT (A) HAS OBSERVED THAT IN THE REMAND REPORT AO HAD ATTACHED A COPY OF ORDER-S HEET ENTRY WHEREIN VIDE ENTRY DATED 28.12.2006, LD. AUTHORIZED REPRESENTATI VE OF THE ASSESSEE HAD AGREED FOR THE DISALLOWANCE OF DEPRECIATION AMOUNTI NG TO RS. 8,66,000/-. 3 ITA 2551, 2552 & 2553/DEL/2012 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSE SSEE IS IN POSSESSION OF ALL THE ORIGINAL INVOICES AND THESE SHOULD HAVE BEE N ADMITTED AS ADDITIONAL EVIDENCE BY LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. LD. COUNSEL SUBMITT ED THAT THE SHARES IN THE ASSESSEE COMPANY ARE HELD BY VARIOUS PUBLIC SECTOR UNDERTAKINGS. BEFORE LD. CIT(A) THE ASSESSEE HAD, INTER ALIA, SUBMITTED THAT IT WAS ENGAGED IN THE BUSINESS OF SHIP REPAIR AND AS REGISTERED OFFICE OF THE COMPANY WAS SHIFTED FROM DELHI TO GOA AND, ACCORDINGLY, ALL THE RECORDS WERE ALSO SHIFTED TO GOA. THEREFORE, ALL THE INVOICES REGARDING ADDITIONS TO THE FIXED ASSETS WERE KEPT WITH THE ASSESSEE COMPANY IN GOA AND WERE RECEIVED IN THE OFFICE EXACTLY ON THE SAME DATE ON WHICH THE ASSESSMENT ORDER WAS PAS SED BY THE AO. UNDER SUCH CIRCUMSTANCES, THE INVOICES FILED BY ASSESSEE BEFORE LD. CIT(A) SHOULD HAVE BEEN ADMITTED. 10. BE THAT AS IT MAY, WE RESTORE THIS MATTER TO TH E FILE OF LD. AO TO EXAMINE PURCHASE INVOICES TO BE PRODUCED BY ASSESS EE BEFORE HIM AND IF THE SAME ARE FOUND TO BE IN ORDER, THEN AO WILL ALLOW T HE ASSESSEES CLAIM FOR DEPRECIATION. WE ORDER ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT ITA NO. 2551/DEL/2012 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2552/DEL/2012 (AY: 2006-07): 13. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: 4 ITA 2551, 2552 & 2553/DEL/2012 THE ADDITIONS MADE OF LEAVE ENCASHMENT EXPENSES RS . 1699606/-, PROVISION FOR BONUS RS. 957107/-, VAT RS . 4812269/-, UNCONFIRMED SUNDRY CREDITORS RS. 3359061 /- ARE NOT JUSTIFIED AND ARE NOT IN LINE WITH FACTS OF THECASE AND TAX PROVISIONS. 14. THE ASSESSEE HAD FILED REVISED RETURN OF INCOME ON 15.2.2007 DECLARING TOTAL LOSS OF RS. 95,60,975/-. THE ASSESS MENT WAS COMPLETED AT A TOTAL INCOME OF RS. 12,67,068/- AFTER MAKING FOLLOW ING ADDITIONS: LEAVE ENCASHMENT RS. 16,99,606/- PROVISION FOR BONUS RS. 9,57,107 VALUE ADDED TAX (VAT) RS. 48,12,269/- UNCONFIRMED SUNDRY CREDITOR BALANCE RS. 33,59,061 15. LD. CIT(A) PARTLY ALLOWED THE ASSESSEES APPEAL . 16. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFOR E US. 17. BRIEF FACTS APROPOS DISALLOWANCE OF LEAVE ENCAS HMENT EXPENSES ARE THAT AO MADE ADDITION OF RS. 16,99,606/- TOWARDS LE AVE ENCASHMENT EXPENSES, WHICH HAD NOT BEEN PAID DURING THE YEAR A S PER THE REQUIREMENT OF SECTION 43B. 18. LD. CIT(A) CONFIRMED THE ADDITION, INTER ALIA, OBSERVING THAT VIDE LETTER DATED 23.12.2008 THE ASSESSEE ITSELF OFFERED THIS AMOUNT FOR TAXATION. LD. CIT(A) FURTHER OBSERVED THAT AS PER THE PROVISI ON OF SECTION 246(1), ASSESSEE CAN FILE APPEAL IF IT IS AGGRIEVED BY ACTI ON OF AO AS PER PROVISION OF THE ACT BUT IN THE PRESENT CASE ASSESSEE HAD AGREED FOR THIS ADDITION. 5 ITA 2551, 2552 & 2553/DEL/2012 19. LD. COUNSEL SUBMITTED THAT ADDITION HAD BEEN MA DE ON THE BASIS OF TAX AUDIT REPORT, WHICH WAS FINALIZED ON 2.9.2006, WHER EAS THE RETURN OF INCOME WAS FILED ON 30.10.2006. HE REFERRED TO ANNEXURE 1 OF THE PAPER BOOK, FILED IN THE COURSE OF HEARING, WHEREIN THE STATEMENT OF TOTAL INCOME IS CONTAINED AND POINTED OUT THAT ASSESSEE WRONGLY MENTIONED BON US AS AGAINST LEAVE ENCASHMENT IN THE SAID COMPUTATION. HE SUBMITTED TH AT THE AMOUNT PAID UP TO DUE DATE OF FILING OF RETURN HAS TO BE ALLOWED. 20. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES. AS FAR AS LD. CIT(A)S OBSERVATIONS BASED ON PROVISIONS OF SECTIO N 246(1) ARE CONCERNED, WE DO NOT FIND ANY MERIT IN THE SAME BECAUSE, IN AN Y VIEW OF THE MATTER, A WRONG CONCESSION BY ASSESSEES REPRESENTATIVE ON LA W CANNOT BIND ASSESSEE. THERE IS NO ESTOPPEL AGAINST LAW. THERE CANNOT BE A NY DISPUTE WITH THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE THAT TO THE EXTENT THE LIABILITY TOWARDS LEAVE ENCASHMENT HAS BEEN DISCHARGED UP TO 30.10.2006, THE SAME HAS TO BE ALLOWED TO ASSESSEE. HOWEVER, THE MAIN GR IEVANCE OF ASSESSEE APPEARS TO BE THAT ONCE IT HAD MADE THE DISALLOWANC E IN STATEMENT OF TOTAL INCOME FILED BY IT, NO SEPARATE DISALLOWANCE COULD BE MADE BY AO AGAIN ON THE BASIS OF NON-PAYMENT OF THE DUES TOWARDS LEAVE ENCASHMENT AS IT WOULD AMOUNT TO DOUBLE DISALLOWANCE. 21. WE ARE OF THE OPINION THAT THE FACTS NEED TO BE EXAMINED BY AO AND TO THE EXTENT THE PAYMENT HAS BEEN MADE UP TO 30.10.20 06, THE SAME IS TO BE ALLOWED AND THE BALANCE IS TO BE DISALLOWED IF ASSE SSEE HAS NOT SUO MOTO DISALLOWED WHILE COMPUTING ITS INCOME. 6 ITA 2551, 2552 & 2553/DEL/2012 22. APROPOS ADDITION OF RS. 9,57,107/-, ON ACCOUNT OF PROVISION FOR BONUS ON THE GROUND OF DISALLOWANCE U/S 43B ON ACCOUNT OF NON-PAYMENT, WHICH WERE CONFIRMED BY LD. CIT(A), THE SUBMISSION IS TH AT THE BONUS PAYMENT OF RS. 26 LACS WERE FULLY PAID BETWEEN THE PERIOD OF TAX AUDIT REPORT AND DATE OF FILING OF INCOME-TAX RETURN. 23. HAVING HEARD BOTH THE PARTIES, WE RESTORE THIS ISSUE ALSO TO THE FILE OF AO TO EXAMINE THE ASSESSEES CLAIM REGARDING ENTIRE BONUS AMOUNT OF RS. 26 LACS BEING FULLY PAID BY IT BEFORE THE DUE DATE OF FILING OF RETURN. IN CASE THE CLAIM IS FOUND TO BE CORRECT, THEN NO ADDITION IS C ALLED FOR. 24. APROPOS THE ISSUE RELATING TO ADDITION ON ACCOU NT OF VALUE ADDED TAX (VAT), THE ASSESSEES CLAIM WAS DISALLOWED BY AO AN D THE ACTION OF AO HAS BEEN CONFIRMED BY LD. CIT(A). THE ASSESSEES CLAIM IS THAT NO VAT AMOUNT WAS ROUTED THROUGH THE REVENUE ACCOUNT./ VAT ON SAL ES WAS BEING SHOWN AS VAT LIABILITY IN BALANCE SHEET AND VAT ON PURCHASES WAS ADJUSTED AGAINST VAT LIABILITY. THEREFORE, NO DISALLOWANCE COULD BE MADE ON ACCOUNT OF NON- PAYMENT OF VAT U/S 43B AS ASSESSEE HAD NOT CLAIMED THIS EXPENDITURE. 25. LD. DR SUBMITTED THAT IN VIEW OF THE DECISION O F HONBLE SUPREME COURT IN CIT VS. CHOWRINGHEE SALES BUREAU PVT. LTD. , VAT, WHETHER ROUTED THROUGH P&L A/C OR NOT, IS TO BE TREATED AS TRADING RECEIPT AND, ACCORDINGLY, IT COULD BE ALLOWED AS DEDUCTION U/S 43B IF THE PAYMEN T WAS MADE ELSE IT IS TO BE ADDED TO ASSESSEES TOTAL INCOME. 7 ITA 2551, 2552 & 2553/DEL/2012 26. HAVING HEARD BOTH THE PARTIES, WE FIND CONSIDER ABLE FORCE IN THE SUBMISSION OF LD. DR THAT MERELY BECAUSE THE ASSESS EE HAD ROUTED A TRADING RECEIPT THROUGH BALANCE-SHEET, WILL NOT CHANGE THE TRUE NATURE OF RECEIPT IN ASSESSEES HANDS AND, THEREFORE, IF THE ASSESSEE F AILED TO DEPOSIT THE VAT IN TIME, IN TERMS OF SECTION 43B, THEN THE DISALLOWANC E IS CALLED FOR. ACCORDINGLY, THIS GROUND IS DISMISSED. 27. BRIEF FACTS APROPOS THE ADDITION MADE OF RS. 33 ,59,061/- ON ACCOUNT OF UNCONFIRMED SUNDRY CREDITOR BALANCE OF M. PALLONJI & CO., ARE THAT OUTSTANDING BALANCE IN RESPECT OF M. PALLONJI & CO. AS ON 31.3.2006 WAS SHOWN AT RS. 1,56,15,445/- AND IN AY 2005-06 AT RS . 1,22,56,384/-. AS THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION FROM TH E CREDITOR THE AO MADE THE ADDITION OF RS. 33,59,061/-. 28. LD. CIT(A) UPHELD THE ADDITION AS SIMILAR ADDIT ION TOOK PLACE IN AY 2005-06, WHICH WAS NOT CHALLENGED BY ASSESSEE BEFOR E LD. CIT(A). 29. LD. COUNSEL SUBMITTED THAT DURING ASSESSMENT PR OCEEDINGS THE ASSESSEE HAD PRODUCED COPY OF LEDGER, RELATED BILLS AND PAYMENT PROOF BEFORE AO. HOWEVER, SINCE CONFIRMATION WAS NOT AVAILABLE, THE CASE BEING BEFORE THE HIGH COURT, THE ASSESSEE COULD NOT PRODUCE THE CONFIRMATION. HOWEVER, THE ASSESSEE HAD PRODUCED COPY OF HIGH COURTS ORDE R BEFORE LD. CIT(A) CONFIRMING THE AMOUNT OUTSTANDING IN THE BOOKS OF A /C OF THE PARTIES AND ASSESSEE. LD. COUNSEL SUBMITTED THAT SINCE THE IDEN TITY OF SUNDRY CREDITOR WAS ESTABLISHED AND DIFFERENCE IN BALANCE WAS PROPERLY EXPLAINED AND, THEREFORE, THERE WAS NO REASON TO DISALLOW AND ADD BACK THE AM OUNT TO THE ASSESSEES INCOME. 30. LD. COUNSEL FURTHER SUBMITTED THAT COPY OF RECO NCILIATION STATEMENT WITH THE PARTYS ACKNOWLEDGMENT AND CONFIRMATION WA S FILED. COPY OF 8 ITA 2551, 2552 & 2553/DEL/2012 SETTLEMENT/ AGREEMENT EXECUTED BEFORE HONBLE HIGH COURT WAS ALSO FILED. LD. COUNSEL REFERRED TO THESE DOCUMENTS IN THE PAPE R BOOK. 31. LD. DR SUBMITTED THAT THE MATTER MAY BE RESTORE D BACK TO THE FILE OF AO FOR EXAMINING THESE DETAILS. 32. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE IDENTITY OF PA RTY CANNOT BE IN DISPUTE BECAUSE THE DISPUTE WAS LYING BEFORE HONBLE HIGH C OURT, IN WHICH THE DISPUTE WAS SETTLED ON THE BASIS OF CONSENT TERMS A GREED BEFORE THE HONBLE HIGH COURT OF BOMBAY IN COMPANYS PETITION NO. 3 OF 2009, A COPY OF WHICH HAS BEEN FILED IN PAPER BOOK. UNDER SUCH CIRCUMSTAN CES, WHEN THE DIFFERENCE IN BALANCE WAS ALSO DULY EXPLAINED BY ASSESSEE BY F ILING THE RECONCILIATION STATEMENT, A COPY OF WHICH HAS BEEN FILED IN PAPER BOOK, THERE WAS NO REASON TO MAKE THE ADDITION ON ACCOUNT OF UNCONFIRM ED CREDITORS. IN VIEW OF ABOVE, THIS GROUND IS ALLOWED. 33. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ITA NO. 2553/DEL/2012 FOR AY 2007-08: 34. SOLE EFFECTIVE GROUND RAISED IS AS UNDER: THE ADDITIONS MADE ON ACCOUNT OF VALUE ADDED TAX (VAT) RS. 45,01,200/-, UNCONFIRMED BALANCE OF SUNDRY CRED ITORS RS. 1,13,80,341/- ARE NOT JUSTIFIED AND ARE NOT IN LINE WITH FACTS OF THE CASE AND TAX PROVISIONS . 35. APROPOS ADDITION ON ACCOUNT OF NONPAYMENT OF VA T, THE AO MADE THE ADDITION OF RS. 45,01,200/- ON ACCOUNT OF NON PAYMENT OF VAT UPTO THE FILING OF INCOME-TAX RETURN. IN APPEAL, LD. CIT(A) CONFIRMED THE ACTION OF AO BY OBSERVING THAT VAT. IN AY 2007-08 WE HAVE REJ ECTED THE ASSESSEES CLAIM BY OBSERVING THAT IF THE ASSESSEE FAILED TO DEPOSIT THE VAT IN TIME, IN 9 ITA 2551, 2552 & 2553/DEL/2012 TERMS OF SECTION 43B, THEN THE DISALLOWANCE WAS CAL LED FOR. FOR THE VERY SAME REASONS HEREIN ALSO WE FIND NO FORCE IN THE SU BMISSION OF ASSESSEE. GROUND IS DISMISSED. 36. APROPOS ADDITION OF RS. 1,13,80,341/- ON ACCOUN T OF UNCONFIRMED BALANCE OF SUNDRY CREDITORS, WE FIND THAT THE AO MA DE ADDITION ON ACCOUNT OF DIFFERENCE IN BALANCE OF M. PALLONJI & CO. FOR T HE YEAR ENDED 31.3.2007 AND 31.3.2006. WHILE DEALING WITH ASSESSEES APPEAL FOR AY 2006-07 WE HAVE ALLOWED ASSESSEES CLAIM ON THIS COUNT BY OBSE RVING THAT SINCE THE DIFFERENCE IN BALANCE WAS ALSO DULY EXPLAINED BY AS SESSEE BY FILING THE RECONCILIATION STATEMENT, THERE WAS NO REASON TO MA KE THE ADDITION ON ACCOUNT OF UNCONFIRMED CREDITORS. THEREFORE, FOR TH E VERY SAME REASONS HEREIN ALSO WE ALLOW THE CLAIM OF ASSESSEE ON THIS COUNT. 37. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. 38. IN THE RESULT, ITA NO. 2551/DEL/2012 STANDS ALL OWED FOR STATISTICAL PURPOSES AND ITA NOS. 2552 & 2553/DEL/2012 ARE PART LY ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 08/03/2016. SD/- SD/- (KULDIP SINGH ) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08/03/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.