M/s. Rasna Pvt. Ltd., Ahmedabad V. The ACIT.,Circle-5, Ahmedabad

ITA 2573/AHD/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5988 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C THAKER
• Keywords: Depreciation
• Section: 14A

Judgement Text

, *CH* *CH**CH* *CH* IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ , , ! ' BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER /. I.T.A. NOS.200 & 279 /AHD/2012 ( !# $ / ASSESSMENT YEAR : 2008-09) RASNA PVT. LTD., OPP. SEARS TOWER, GULBAI TEKRA, AHMEDABAD 380 006 & JCIT(OSD), CIRCLE 5, AHMEDABAD. # / VS. DY.CIT CIRCLE 5, AHMEDABAD. & RASNA PVT. LTD. RASNA HOUSE OPP. SEARS TOWER, PANCHWATI AHMEDABAD. & /. '( /. PAN/GIR NO . : AABCR 5577 P & /. I.T.A. NOS. 2573& 2833/AHD/2012 ( !# $ / ASSESSMENT YEAR : 2009-10) RASNA PVT. LTD., OPP. SEARS TOWER, GULBAI TEKRA, AHMEDABAD 380 006 & ACIT, CIRCLE 5, AHMEDABAD. # / VS. JCIT, S.K. RANGE, HIMATNAGAR, NOW ACIT, CIR -5, ABAD & RASNA PVT. LTD. RASNA HOUSE OPP. SEARS TOWER, PANCHWATI, AHMEDABAD 380 015. & /. '( /. PAN/GIR NO . : AAACW 4408 M ( &) / APPELLANT) .. ( *&) / RESPONDENT) REVENUE BY : SHRI MUDIT NAGPAL, SR. D.R. ASSESSEE BY : SHRI K. C. THAKER, A.R. + #, - . / DATE OF HEARING 14/02/2018 /0$ - . /DATE OF PRONOUNCEMENT 08/03/2018 2 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 1 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE ARE FOUR APPEALS BY THE ASSESSEE AND REVEN UE AGAINST EACH OTHER AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS)-XI & VIII, AHMEDABAD, DATED 25/11/2011 & 27/09/2012 FOR THE ASSESSMENT YEARS (A YS) 2008-09 & 2009-10. 2. SINCE IN ALL FOUR APPEALS ASSESSEE ARE SAME AND ISSUES ARE COMMON ONLY AMOUNTS AND ASSESSMENT YEARS ARE DIFFERENT. THEREFORE, FOR THE SAKE OF CONVENIENCE, WE WOULD LIKE TO DISPOSE OF ALL FOUR APPEALS BY WAY OF A COM MON ORDER. 3. FIRST WE TAKE UP ITA NO.200/AHD/2012 FOR A.Y. 20 08- 09. FOLLOWING GROUNDS HAS TAKEN BY THE ASSESSEE IN THIS APPEAL. 1. THE LD. C.I.T. (APPEALS) HAS ERRED IN LAW AND ON FACTS IN NOT RESTRICTING THE DISALLOWANCE U/S.14A OF RS.88,279/- AS CLAIMED BY THE APPELLANT AND HOLDING THAT THE PROVISION OF SECTION 14A AND R.W.S. RULE 8 -D WILL BE APPLICABLE TO THE FACTS OF THE APPELLANT. 2. THE LD. C.I.T.(APPEALS) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS.14,04,455/- BEING PROVISION FOR DOUBTFUL ADVANCES WITHOUT PROPERLY APPRECIATING THE FACTS OF THE APPELLANT. 3. THE LEARNED C.I.T. (APPEALS)HAS ERRED IN LAW AN D ON FACTS IN TREATING THE ENTIRE AMOUNT OF RS.4,22,75,3 21/- AS PROVISION FOR LIABILITY FOR DAMAGED GOODS IN AS MUCH AS THAT THE PROVISION FOR A.Y.2008-09 WAS ONLY 3 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 RS.2,13,68,444/- AND THEREFORE THE PROVISION AMOUNT SHOULD HAVE BEEN TAKEN AT RS.2,13,68,444/- ONLY . 4. HE HAS ERRED IN LAW AND ON FACTS IN DIRECTING T HE VERIFICATION OF ACTUAL EXPENDITURE INCURRED IN THE SUBSEQUENT YEARS FOR THE ENTIRE AMOUNT OF RS.4,22,77,321/- INSTEAD OF RESTRICTING THE SAME FO R RS.2,13,68,444/- WHICH IS PROVISION FOR A.Y.2008-09 FOR WHICH CLAIMS WILL BE RECEIVED IN THE SUBSEQUENT YEARS IN AS MUCH AS THAT THE OTHER AMOUNT OF RS.2,09,06,877/- IS THE ACTUAL EXPENDITURE & NOT TH E PROVISION. 4. THE RELEVANT FACTS AS CULLED OUT FROM THE MATER IALS ON RECORD ARE AS UNDER:- THE ASSESSEE COMPANY IS MAINLY DEALING IN DISTRIBUTION OF SOFT DRINK CONCENTRATE. THE COMPANY BUYS SOFT CONCENTRATE IN BULK QUANTITY FROM SUPPLIER M/S . PIOMA INDUSTRIES AND SELLS THROUGH VARIOUS CLEARING AND FORWARDING AGENTS AS WELL AS THROUGH OWN DEPOT TO T HE STOCKIEST. THE ASSESSEE ALSO PREPARES A MIXTURE OF SUGAR AND INSTANT MIXTURE AND SALES THEREOF AFTER PACKING IN BOTTLES AND CARTOONS. 5. DURING THE YEAR UNDER CONSIDERATION, ON VERIFICA TION OF SCHEDULE-P OF OTHER EXPENSES OF THE COMPANYS AUDIT ED ACCOUNT, IT IS NOTICED THAT THE ASSESSEE HAS DEBITE D RS.4,22,75,321/- UNDER THE HEAD LIABILITY FOR DAMA GED GOODS. OUT OF ABOVE SAID AMOUNT RS.2,13,68,444/- B EING THE PROVISION MADE AND COMPUTED FOR DAMAGED GOODS RETURN CLAIMED FOR A.Y. 2008-09 ON THE BASIS OF LAS T YEAR. RS.2,09,06,877/- ACTUAL AMOUNT OF DGR CLAIMED BORNE BY THE ASSESSEE REMAINED UNABSORBED FROM PROVISION ALR EADY MADE IN EARLIER YEAR. THEREAFTER, AO ISSUED A SHOW- CAUSE NOTICE TO THE ASSESSEE FOR DISALLOWANCE OF ABOVE SA ID CLAIM. 4 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 IN HIS REPLY ASSESSEE STATED THAT ISSUE OF DISALLOW ANCE OF PROVISION OF DAMAGED GOODS HAD ARISEN IN A.Y. 1997- 98 AND THE DEPARTMENT HAS FILED APPEAL BEFORE THE ITAT. TH E APPEAL OF THE DEPARTMENT HAS BEEN DECIDED BY THE ITAT AND IT HAS BEEN HELD THAT THE EXPENDITURE INCURRED IN THE SUBS EQUENT YEAR WAS TO BE ALLOWED AND THE SURPLUS IN THE PROVI SION FOR A.Y. 1997-98 WAS NOT ALLOWED. ASSESSEE HAS FURNISHE D A COPY OF THE ORDER DATED 24/02/2006 OF THE ITAT. LD. AO WAS NOT AGREE WITH THE CONTENTION OF THE ASSESSEE A ND DISALLOWANCE OF RS.4,22,75,321/- WAS MADE. 6. IT WAS SEEN BY THE AO THAT ASSESSEE HAS SHOWN INVESTMENT OF RS.32,99,16,000/- IN SHARES/MUTUAL FU NDS, INCOME FROM WHICH DOES NOT FORM PART OF TOTAL INCOM E. THEREAFTER, AO ISSUED A NOTICE TO THE ASSESSEE. ASS ESSEE STATED THAT IT HAS FURNISHED WORKING OF DISALLOWABL E EXPENSES AS PER RULE 8D OF THE I.T. RULES, 1962. TH EREFORE, THERE IS NO DISPUTE THAT THE PROVISION OF SECTION 1 4A ARE APPLICABLE. IN VIEW OF THE PROVISION OF SECTION 10( 35)/10(38) OF THE ACT, THE PROSPECTIVE DIVIDEND INCOME OF SUCH INVESTMENTS WOULD BE AN EXEMPTED INCOME. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES, IT IS CLEA R THAT THE INVESTMENTS IN MUTUAL FUNDS BEARING TAX FREE RETURN S AMOUNTS TO DIVERSION OF THE BUSINESS FUND. BY USING THE BUSINESS FUNDS OF SUCH NATURE FOR OTHER FINANCIAL A CTIVITIES, WHICH DID NOT YIELD ANY TAXABLE RETURN, AMOUNTED TO AN EFFORT TOWARDS REDUCTION IN THE TAX LIABILITY WHILE CLAIMING INTEREST EXPENDITURE INCURRED ON FUNDS UTILIZED FOR SUCH INVESTMENTS. BUT LD. AO WAS NOT AGREE WITH THE CONT ENTION OF THE ASSESSEE AND DISALLOWANCE OF RS.18,81,765/- WAS MADE. 5 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 7. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO PARTLY A LLOWED THE APPEAL OF THE ASSESSEE. 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER. SO FAR AS ISSUE PERTAINING TO DAMAG ED GOODS RETURN IS CONCERNED. THE APPELLANT COMPANY DE ALS IN FOOD ITEMS WHICH HAVE SPAN OF LIFE FOR THREE YEARS IN RESPECT OF STANDARD PACKAGE OF RASNA AND LESS THAN 3 YEARS IN RESPECT OF OTHER BRANDS. ON THE PASSAGE OF TIME, TH ESE PRODUCTS DEVELOP CHANGE OF TASTE AND ALSO GET DETER IORATED AND FOR OTHER REASON, LIKE BREAKAGE OF PACKS, BOTTL ES AND HUMIDITY ETC., THE GOODS BECOME DEFECTIVE. SUCH DAM AGED AND DEFECTIVE PRODUCTS HAVE TO BE ACCEPTED BACK FRO M THE TRADERS WHO HAVE TO BE COMPENSATED IN THIS REGARD. THIS IS A PRACTICE PREVAILING IN THE MARKET AND IS FOLLOWED BY OTHER COMPANIES, WHO ARE IN TO FMCG PRODUCTION AND TRADIN G. 9. ASSESSEE CITED AN ORDER OF ITAT IN ASSESSEES OW N CASE IN ITA NO.25/AHD/2011 DATED 14/02/2014. ITAT HAS ALLOWED SUCH RELIEF IN FAVOUR OF THE ASSESSEE AND R ELEVANT PARA OF THE SAME IS REPRODUCED AS UNDER: 3. THE FIRST GROUND RELATES TO DISALLOWANCE OF RS.8,5,813/- MADE ON ACCOUNT OF PROVISION FOR DAMAGED GOODS. 4. LD. C1T(A) HAS DEALT THIS GROUND AS UNDER: - '2.2. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A. R. OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I AM INCLINED TO ACCEPT THE CONTENTIONS PUT FORTH BY THE A.R. OF THE APPELLANT. SIMILAR ISSUE AROSE IN THE APPELL ANT'S OWN CASE FOR EARLIER ASSESSMENT YEARS AND THE SAME HAS ALREADY BEEN DECIDED IN FAVOUR OF THE APPELLANT BY MY PREDECESSOR AS WELL AS HON'BLE JURISDICTIONAL 6 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 I.T.A.T., AHMEDABAD. IN THE IMMEDIATELY PRECEDING A . Y. 2006-07, SIMILAR DISALLOWANCE WAS DELETED BY MY PREDECESSOR VIDE HIS ORDER DATED 30-06-09. THE TRIBUNAL VIDE ITS ORDER DATED 29-10-2009 IN ITA NO.2491/AHD/2009, UPHELD THE ORDER OF CIT(A). HOWEVER, IN THE SUBSEQUENT ORDER DATED 09-07-2010 IN ITA NO.1951/AHD/2008 FOR A.Y. 2005-06, TRIBUNAL'S FINDING ON THIS ISSUE IS AS UNDER:- 'WE FIND THAT THE DETAILS OF ACTUAL EXPENDITURE INCURRED IN THE SUBSEQUENT YEAR BY THE ASSESSEE OUT OF THE PROVISION OF RS.54,41,218/- MADE DURING THE YEAR HAVE NOT BEEN BROUGHT ON RECORD. IN ABSENCE OF THE ABOVE, WE ARE UNABLE TO ADJUDICATE THE ISSUE COMPLETELY. WE THEREFORE, RESTORE THE ISSUE BACK TO THE LEARNED ASSESSING OFFICER AND DIRECT HIM TO ADJUDICATE THE ISSUE AFRESH IN LIGHT OF THE DECISION OF THE TRIBUNAL QUOTED ABOVE AND AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES.' 2.2.1. IT IS SEEN THAT THE PROVISION MADE DURING TH E YEAR IS RS.2,07,14,615/-. A.O. IS DIRECTED TO VERIF Y THE ACTUAL EXPENDITURE INCURRED IN THE SUBSEQUENT YEAR BY THE APPELLANT OUT OF THE SAID AMOUNT. IF THE ACTUAL EXPENDITURE IS EQUAL TO OR MORE THAN THE SAID SUM, HE SHALL DELETE THE ENTIRE DISALLOWANCE. IF THE ACTUAL EXPENDITURE IS LESS THAN THE SAID SUM, DISALLOWANCE TO THE EXTENT OF THE SHORT-FALL WILL SURVIVE, AND THE BALANCE DISALLOWANCE WILL GET DELETED. THUS, SUBJEC T TO VERIFICATION, THIS GROUND OF APPEAL IS ALLOWED.' SINCE LD.CIT(A) HAS FOLLOWED THE EARLIER ORDER OF T HE TRIBUNAL FOR A.Y.2005-06 IN ASSESSEE'S OWN CASE, WE ARE NOT INCLINED 7 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THE SA ME IS HEREBY UPHELD. THIS GROUND OF REVENUE'S APPEAL IS DISMISSED. 10. APART FROM THAT ASSESSEE ALSO FILED A COPY OF T HE JURISDICTIONAL HIGH COURT IN THE MATTER OF CIT VS. HEWLETT PACKARD INDIA SALES (P.) LTD. [2014] 49 TAXMANN.COM 166 (KARNATAKA). IN THIS JUDGMENT SIMILAR RELIEF WAS GR ANTED BY THE HONBLE HIGH COURT AND RELEVANT PARA OF THE SAI D JUDGMENT IS REPRODUCED AS UNDER: 6. HEARD LEARNED ADVOCATES FOR BOTH THE SIDES. MAI NLY TWO ISSUES HAVE ARISEN FROM THE PRESENT SET OF APPE ALS NAMELY (I) DISALLOWANCE OF THE PROVISION MADE FOR T HE CURRENT YEARS UNDER APPEAL AND (II) DISALLOWANCE OF ACTUAL LIABILITY PERTAINING TO EARLIER YEARS. SO FAR AS THE ISSUE WI TH REGARD TO DELETION OF ADDITION BY THE CIT(A) BEING THE PROVIS IONS MADE FOR DAMAGED GOODS FOR THE CURRENT YEAR AND EARLIER YEARS, THE TRIBUNAL HAS PROCEEDED ON THE BASIS OF THE ASSE SSEE'S OWN CASE IN THE PREVIOUS YEARS. THE TRIBUNAL HAS CONSIDERED THE FACT THAT THE ISSUE IS SQUARELY COVE RED BY THE DECISION OF THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR PREVIOUS YEARS, THE FACTS BEING EXACTLY IDENTICAL IN THE CAS E ON HAND ALSO. 7. IT IS REQUIRED TO BE NOTED THAT THERE IS A CHAN GE IN THE METHOD OF ACCOUNTING EMPLOYED DURING THE YEARS UNDE R REVIEW FROM THAT OF EMPLOYED IN THE IMMEDIATELY PRE CEDING YEAR. WE HAVE ALSO CONSIDERED THE GOVERNMENT NOTIFI CATION NO.9949 DATED 25.01.1996 WHEREBY CERTAIN ACCOUNTING STANDARDS FOR ASSESSEES FOLLOWING MERCANTILE SYSTEM OF ACCOUNT HAVE BEEN MADE COMPULSORY FROM A..Y. 1997-9 8 AND. FIND THAT THE CASE OF THE ASSESSEE IS COVERED BY THE SAME. THE DECISIONS CITED BY LEARNED ADVOCATE FOR T HE ASSESSEE ALSO APPLIES ON THE FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE. 8. THE APEX COURT IN THE CASE OF ROTORK CONTROLS INDIA (P.) LTD (SUPRA) OBSERVED THAT A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF 8 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 ESTIMATION AND THAT A PROVISION IS RECOGNIZED WHEN (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOUR CES WILL BE REQUIRED TO SETTLE THE OBLIGATION AND (C) RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. THE APEX C OURT OBSERVED THAT IF THESE CONDITIONS ARE NOT MET, NO P ROVISION CAN BE RECOGNIZED. THEREFORE WE ARE OF THE VIEW THA T THE CIT(A) AND THE TRIBUNAL HAVE RIGHTLY DISALLOWED THE ADDITION MADE BY THE OFFICER. WE DO NOT FIND ANY ERROR IN TH E SAME. 9. IN VIEW OF THE ABOVE, THE QUESTIONS RAISED IN TH E PRESENT APPEALS ARE ANSWERED IN FAVOUR OF THE ASSES SES AND AGAINST THE REVENUE. THE ORDERS PASSED BY THE TRIBUNAL ARE CONFIRMED. NO COSTS. 11. THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCH AND JURISDICTIONAL HIGH COURTS JUDGMENT, WE ALLOW THIS GROUND OF APPEAL IN FAVOUR OF THE APPELLANT. 12. NOW WE COME TO GROUND RELATED TO DISALLOWANCE U/S.14A. AS WE CAN SEE RULE 8D, PROVISION WAS MADE FROM THE A.Y. 2008-09 AND PRESENT APPEAL IS ALSO PERTAIN S TO A.Y. 2008-09. AS WE CAN SEE APPELLANT WAS CONTAINING THA T INTEREST BEARING FUND HAS NOT BEEN INVESTED IN THE STOCK AND BONDS, THE INCOME FROM WHICH PROVISION OF INCOM E TAX. HOWEVER, THE APPELLANT HAS NOT FURNISHED ANY EVIDEN CE TO PROVE ITS CONTENTION AND APPELLANT CONTENTION WAS T HAT IN RESPECT OF INCOME WHICH IS EXEMPT, THE INVESTMENT I N TAX FREE BOND THEREOF ARE MADE IN EARLIER YEARS. NORMAL EXPENDITURE INCURRED DURING THE YEAR WHICH CANNOT B E IDENTIFIED PRECISELY ARE NOT CONSIDERED AS EXPENDIT URE INCURRED IN RELATION TO SUCH INCOME. SUCH DISALLOWA NCE IN TERMS OF SECTION 14A HAVE NOT BEEN MADE EVEN IN THE PAST ASSESSMENTS. AS RULE 8D HAVE INCORPORATED FOR THE A .Y. 2008-09 AND BEFORE THE LOWER AUTHORITIES APPELLANT COULD NOT FURNISHED ANY EVIDENCE TO PROVE ITS CONTENTION AND EVEN BEFORE US. THEREFORE, IN OUR CONSIDERED OPINION, AP PELLANT 9 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 CASE IS WHOLLY AND SQUARELY COVERED WITH THE PROVIS ION OF SECTION 14A(3) WHICH MAKES IT MANDATORY TO MAKE DISALLOWANCE AS PER THE PROVISION OF SECTION 14A (2) R.W. RULE 8D OF INCOME-TAX RULES, 1962. 13. WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSE D BY THE LD. CIT(A). THEREFORE, THIS GROUND OF APPEAL IS DIS MISSED. 14. SO FAR AS GROUND RELATED TO DOUBTFUL ADVANCES O F RS.14,04,455/- IS CONCERNED. THE AO HAS DEALT WITH THIS ADDITION IN PARA 7 OF THE ASSESSMENT ORDER AND STAT ED THAT IT IS SEEN THAT THE ASSESSEE, IN SCHEDULE-P OF TH E PROFIT AND LOSS ACCOUNT HAS SHOWN PROVISIONS FOR DOUBTFUL ADVA NCES OF RS.14,04,455/- WHICH IS NOT ALLOWABLE AS EXPENSES, AS IT IS A PROVISION MADE BY THE ASSESSEE. LD. AR OF THE ASS ESSEE FAIRLY CONCEDED THAT SUCH EXPENSES ARE NOT ALLOWABL E. THESE EXPENSES WERE INADVERTENTLY LEFT TO BE ADDED IN THE COMPUTATION OF INCOME. THEREFORE, AN ADDITION OF RS.14,04,455/- WAS MADE. IN APPEAL LD. CIT(A) HELD THAT IT IS SEEN THAT APPELLANT HAS CONCEDED THE DISALLOWANC E DURING THE ASSESSMENT PROCEEDINGS AND ACCORDINGLY, APPELLA NT CANNOT CONTEST THIS DISALLOWANCE BEFORE HIM. 15. SINCE APPELLANT HAS CONCEDED BEFORE THE LOWER AUTHORITY. THEREFORE, WE DO NOT WANT TO INTERFERE I N THE ORDER PASSED BY THE LOWER AUTHORITY. IN THE RESULT WE CONFIRM THE ADDITION OF RS.14,04,455/-. 16. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.200/AHD/2012 IS PARTLY ALLOWED. 10 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 17. NOW WE COME TO ITA NO.2573/AHD/2012 FOR ASST YE AR 2009-10: 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN UPHOLDING THE DISALLOWANCE OF RS.7,01,708/ - U/S.14A OF THE ACT WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE APPELLANT. 2. HE HAS ERRED IN LAW AND ON FACTS IN UPHOLDING T HE DISALLOWANCE OF RS.12,47,754/- BEING PROVISION FOR DOUBTFUL ADVANCES WITHOUT PROPERLY APPRECIATING TH E FACTS OF THE APPELLANT. 3. HE HAS ERRED IN LAW AND ON FACTS IN UPHOLDING T HE DISALLOWING GROSS PROFIT LOSS OF RS.26,99,595/- WIT HOUT PROPERLY CONSIDERING THE FACTS AND EVIDENCE ADDUCED BY THE APPELLANT. 18. SO FAR DISALLOWANCE OF RS.7,01,708/- U/S.14A OF THE ACT IS CONCERNED. WE HAVE ALREADY CONFIRM THIS DISA LLOWANCE MADE BY THE LOWER AUTHORITIES AS WE HAVE DECIDED IN ITA NO.200/AHD/2012 SO SAME FINDINGS APPLY HERE. 19. SO FAR GROUND RELATED TO DISALLOWANCE OF RS.12,47,754/- BEING PROVISION FOR DOUBTFUL ADVANCE S IS CONCERNED. IN ITA NO.200/AHD/2012 BEFORE THE LOWER AUTHORITIES, ASSESSEE HIMSELF CONCEDED. SUCH EXPEN SES ARE NOT ALLOWABLE AND ON THE BASIS OF ASSESSEES ADMISS ION, THIS ADDITION WAS MADE. 20. SO FAR AS GROUND RELATED TO DISALLOWANCE OF GRO SS PROFIT LOSS OF RS.26,99,595/- IS CONCERNED. SINCE THE ISSU E IN RESPECT OF FINISHED GOODS AT THE BOARDER OF BANGLAD ESH IS IN DISPUTE AND MATTER IS PENDING BEFORE THE CIVIL COUR T, THE LOSS CLAIMED ON THIS ACCOUNT CANNOT BE ALLOWED AND HENCE , THE SAME ADDED BACK TO THE TOTAL INCOME BY THE LOWER AUTHORITIES. 11 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 21. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND T HE SUBMISSION OF THE APPELLANT VERY CAREFULLY. THERE I S NO DOUBT ABOUT THE FACT OF LITIGATION AND BONAFIDE DIS PUTE ABOUT THE GOODS AT THE BANGLADESH BORDER. IT IS THU S A REASONABLE FORESEEABLE LOSS. IT IS A WELL SETTLED L EGAL POSITION THAT WHILE AN INCOME IS BOOKED ONLY WHEN IT ACTUALL Y CRYSTALLIZES, A LOSS IS BROUGHT TO THE BOOKS AT THE POINT OF TIME WHEN IT CAN BE REASONABLY FORESEEN. THIS APPRO ACH UNDERLIES THE ACCOUNTANCY PRINCIPLE OF CONSERVATISM WHICH IS DULY RECOGNIZED BY HONBLE SUPREME COURT IN THE CASE OF CHAINRUP SAMPATRAM VS. COMMISSION OF INCOME TAX [(1953) 24 ITR 481(SC)]. IN VIEW OF THESE DISCUSSIONS, THE DISALLOWANCE MADE BY THE LOWER AUTHORITIES IS DELETED. THE GROUND OF THE APPELLANT IS DISMISSED. 22. IN OUR CONSIDERED OPINION, LD. CIT(A) HAS PASSE D REASONED AND DETAILED ORDER WITH REGARD TO THIS GRO UND. THEREFORE, WE DO NOT WANT TO INTERFERE MEANING THER EBY THIS GROUND OF APPEAL IS DISMISSED. 23. IN THE RESULT, ASSESSEES APPEAL IN ITA NO.2573/AHD/2012 IS PARTLY ALLOWED. 24. NOW WE COME IN ITA NO.279/AHD/2012 FOR ASST YEA R 2008-09: 1. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRE D IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO VERIFY THE ACTUAL EXPENDITURE INCURRED BY THE ASSES SEE IN THE SUBSEQUENT YEAR, OUT OF THE PROVISION MADE B Y IT OF RS.4,22,75,321/- UNDER THE HEAD 'LIABILITIES FOR DAMAGED GOODS', IN CONTRAVENTION OF SEC.251 OF THE IT. ACT. 12 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 2. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO DECIDE THE ISSUE OF DEPRECIATION OF RS.27,25,296/- CLAIMED ON 'GOODWILL', IN THE LIGHT OF THE FINAL DE CISION OF THE HON'BLE HIGH COURT FOR THE A.Y. 2002-03, IN CONTRAVENTION OF SEC. 251 OF THE I.T. ACT. 3. THE LD. COMMISSIONER OF INCOME TAX (A) HAS ER RED IN LAW AND ON FACTS IN SETTING ASIDE THE ISSUE OF DISALLOWANCE OF THE ASESSEES CLAIM OF EXPENDITURE OF RS.18,81,765/- U/S.14A OF THE I.T. ACT TO THE FILE OF THE ASSESSING OFFICER, IN CONTRAVENTION OF SEC. THE I.T . ACT. 25. SO FAR AS GROUND NO.1 IS CONCERNED. SINCE, WE H AVE ALREADY GIVEN RELIEF TO THE ASSESSEE IN ITA NO.200/ AHD/12 WITH REGARD TO DAMAGE GOODS RETURN (DGR). 26. SO FAR AS DEPRECIATION OF RS.27,25,296/- CLAIME D ON GOODWILL IS CONCERNED. IN OUR CONSIDERED OPINION, ON ACCOUNT OF SEVERAL JUDICIAL PRECEDENCE, LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF DEPRECIATION ON GOODWILL. THER EFORE, WE ARE NOT INCLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 27. SO FAR DISALLOWANCE OF THE ASSESSEES CLAIM OF EXPENDITURE OF RS.18,81,765/- U/S.14A OF THE I.T. A CT IS CONCERNED. IN OUR CONSIDERED OPINION, CIT(A) HAS RI GHTLY SET ASIDE THE ISSUE OF DISALLOWANCE OF THE ASSESSEES C LAIM BECAUSE ASSESSEE HAS SHOWN SEVERAL INVESTMENT AND H AS RIGHTLY DIRECTED THE AO TO VERIFY WHETHER INCOME FR OM THESE INSTRUMENT ARE TAXABLE OR NOT. LD. CIT(A) HAS MEREL Y GIVEN THE DIRECTION TO THE AO TO SEE WHETHER BENEFIT SHOU LD BE GIVEN TO APPELLANT OR NOT, AFTER GOING THROUGH THE FACTS AND FIGURES PROVIDED BY THE ASSESSEE. THEREFORE, WE ARE NOT INCLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A). 13 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 28. IN THE RESULT, APPEAL OF THE DEPARTMENT IN ITA NO.279/AHD/2012 IS DISMISSED. 29. IN THE LAST WE COME TO ITA NO.2833/AHD/2012 FOR ASST YEAR 2009-10: (I). THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF LIABILITIES FOR DAMAGED GOODS O F RS.1,89,45,235/-. (II). THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS DELETING THE DISALLOWANCE OF DEPRECIATION OF RS.20,43,972/- ON GOODWILL. (III) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE OF RS.2,67,184/- FOR LATE PAYMENT OF EMPLOYEE'S CONTRIBUTION TO PROVIDENT FUND BY IGNORI NG THE PROVISIONS OF SECTION 36(1) (VA) R.W.S. 2(24)(X ) OF THE ACT. (IV) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE DISALLOWANCE OF RS.32,28,899/- ON ACCOUNT OF DESTROYED STOCK. 30. WITH REGARD TO DISALLOWANCE OF LIABILITIES FOR DAMAGED GOODS OF RS.1,89,45,235/- IS CONCERNED. WE HAVE ALR EADY GIVEN RELIEF TO THE ASSESSEE IN THIS CASE ON THE BA SIS OF CO- ORDINATE BENCH ORDER AND JUDGMENT OF THE HONBLE HI GH COURT. THEREFORE, THIS GROUND OF APPEAL IS DISMISSE D. 31. SO FAR AS DISALLOWANCE OF DEPRECIATION OF RS.20,43,972/- ON GOODWILL IS CONCERNED. WE HAVE AL READY HELD IN CONNECTING APPEAL THAT ASSESSEE IS ALLOWED FOR DEPRECIATION ON GOODWILL. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 14 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 32. SO FAR AS LATE PAYMENT OF EMPLOYEES CONTRIBUTI ON TO PROVIDENT FUND IS CONCERNED. HONBLE GUJARAT HIGH C OURT IS VERY MUCH CLEAR THAT LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND WILL BE ADDED TO THE INCOME OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE JUDGMEN T OF CIT VS. GSRTC [2014] 41 TAXMANN.COM 100(GUJARAT), WE AL LOW THIS GROUND OF APPEAL OF DEPARTMENT. 33. SO FAR AS DELETING THE DISALLOWANCE OF RS.32,28 ,899/- ON ACCOUNT OF DESTROYED STOCK IS CONCERNED. THIS AM OUNT HAS BEEN DISALLOWED ON THE GROUND THAT SIMILAR ADDI TION WAS MADE IN THE A.Y. 2008-09 IN THE CASE OF WAVES F OODS PVT. LTD. ON THE GROUND THAT CLAIM OF THE ASSESSEE REGARDING STOCK BECOME ABSOLUTE ON ACCOUNT OF EXPIRY DATE HAS NOT BEEN ACCEPTED BY THE DEPARTMENT. ACCORDINGLY, ADDIT ION OF RS.32,28,899/- WAS MADE. THE PRODUCT DEALT BY THE RASNA PVT. LTD. HAS SHELF LIFE OF 18 TO 24 MONTHS DEPENDI NG UPON PRODUCTS. AFTER THE PERIOD OF SHELF LIFE PRODUCTS B ECOME NON- SALEABLE OR NON RE-USABLE FOR PUBLIC CONSUMPTION. F URTHER, AS ALL THE RASNA PRODUCTS OF FOODS CONSISTING OF SU GAR PROTEINS, PRODUCTS ARE CUT AND AFTER VERIFICATION I T IS EITHER SOLD AS WASTE OR DESTROYED DEPENDING UPON THE DAMAGES/LOSS OF THE CONTENTS OF FINISHED GOODS. THE SE PRODUCTS ARE CONSUMED BY THE PUBLIC AND THEY ARE AL SO SUBJECT TO GOVT. HEALTH DEPARTMENT INSPECTION AND I TEM WHICH IS PERISHABLE IN NATURE AFTER THE EXPIRY OF I TS SHELF LIFE. SUCH ITEM HAS TO BE DESTROYED AND THE LOSS OF CONSU MABLE STOCK CAN BE HELD AS ACCIDENTAL TO THE BUSINESS OF ALLOWABILITY. IN OUR CONSIDERED OPINION, LD.CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE AS PER LAW. THEREFORE, WE DO NOT WANT TO INTERFERE IN THE ORDER PASSED BY THE LD.CIT(A). 34. IN THE RESULT, APPEAL OF THE DEPARTMENT IN ITA NO.2833/AHD/2012 IS PARTLY ALLOWED. 15 ITA NOS.200, 279, 2573 & 2833/AHD/2012 RASNA PVT. LTD. ASST.YEARS 2008-09 & 2009- 10 31. IN THE RESULT, APPEALS FILED BY THE ASSESSEE IN ITA NOS.200 & 2573/AHD/2012 ARE ALLOWED. APPEALS FILED BY THE DEPARTMENT IN ITA NO.279/AHD/2012 IS DISMISSED AND ITA NO. 2833/AHD/2012 IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 08/03/2018 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 08/03 /2018 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. &) / THE APPELLANT 2. *&) / THE RESPONDENT. 3. . + 2. / CONCERNED CIT 4. + 2. () / THE CIT(A)- XI & VIII, AHMEDABAD. 5. 567 !.!# , , / DR, ITAT, AHMEDABAD 6. 78 9, / GUARD FILE. / BY ORDER, *5. !. //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION27/02/2018 (DICTATION-PAD 7 PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER .. 27/02/2018 3. OTHER MEMBER...27/02/2018 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S ..07/03/2018 6. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 08/03/2018. 7. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 9. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 10. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER TRUE COPY