The ITO, Jr. Ward-2(3), PORBANDAR V. D.R. Garments (India) Pvt. Ltd.,

ITA 259/RJT/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2393 (ITAT-RAJKOT)
• Duration Of Justice: 3 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 02-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YOGESH PANDEY
• Assessee Lawyers: VIMAL DE SAI RESPONDEN
• Section: 143(3)

Judgement Text

I.T.A. NO. 259 /RJT/201 2 : ASSESSMENT YEAR 200 9 - 1 0 : PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT . [CORAM: PRAMOD KUMAR , AM AND RAJPAL YADAV, JM ] I.T.A. NO. 259 /RJT/ 201 2 ASSESSMENT YEAR: 200 9 - 1 0 INCOME - TAX OFFICER, JR, WARD - 2(3), PORBANDAR . ......... ...... .... APPELLANT VS. D. R . GARMENTS (INDIA) PVT. LTD., PLOT NO.287, VANANA IND. ESTATE, NATIONAL HIGHWAY 8B, RANAVAV PORBANDAR ROAD, AT :VANANA, DIST.PORBANDAR . . RESPONDENT PAN AACCD1676J APPEARANCES BY: YOGESH PANDEY ........... FOR THE APPELLANT VIMAL DE SAI ...... .... F OR THE RESPONDENT D ATE OF CONCLUDING THE HEARING : 6 TH OCTOBER, 2015 DATE OF PRONOUNCING THE ORDER : 4 TH JANUARY, 2016 O R D E R PER PRAMOD KUMAR , AM : BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF THE ORDER DATED 2 9 TH FEBRUARY , 201 2 , PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961, FOR THE ASSESSMENT YEAR 200 9 - 1 0. 2. GRIEVANCE RAISED BY THE ASSESSING OFFICER IS AS FOLLOWS : - I.T.A. NO. 259 /RJT/201 2 : ASSESSMENT YEAR 200 9 - 1 0 : PAGE 2 OF 3 1. THE CIT(A) HAS ERRED IN LA W AND ON FACTS IN DELETING THE ADDITION OF RS.2,90,20,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF QUALITY CLAIM EXPENSES. 3. LEARNED REPRESENTATIVES FAIRLY AGREE THAT WHATEVER WE DECIDE ON ASSESSING OFFICER S APPEAL FOR THE ASSESSMEN T YEAR 2008 - 09 IN THIS ASSESSEE S CASE, WHICH WAS HEARD ALONG WITH THIS APPEAL, WILL EQUALLY APPLY FOR THIS APPEAL AS WELL. ALL THE MATERIAL FACTS AND CIRCUMSTANCES ARE THE SAME. 4. VIDE OUR ORDER OF EVEN DATE, WE HAVE REJECTED THE APPEAL FOR THE ASSESSME NT YEAR 2008 - 09 AND CONCLUDED AS FOLLOWS : - 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION. 7. WE FIND THAT THERE IS ENOUGH MATERIAL ON RECORD TO EVIDENCE THAT THE ASSESSEE WAS CONFRONTED WITH QUALITY CLAIMS BY THE VENDOR. THE CLAIMS WERE QUANTIFIED AND ALREADY MADE. UNDER THESE CIRCUMSTANCES, THE QUALITY CLAIM CANNOT BE SAID TO BE CONTINGENT OR UNCERTAIN LIABILITIES. HERE IS A CASE IN WHICH THE CL AIM IS QUANTIFIED BUT EVEN IN A SITUATION THE CLAIM IS NOT QUANTIFIED BUT ONLY REASONABLY ESTIMATED THE DEDUCTION IS ADMISSIBLE. AS OBSERVED BY HON BLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS LTD. VS. CIT [(2000) 245 ITR 428 (SC)], THE LAW IS WEL L SETTLED; IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUCTION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO QUANTIFIED AND DISCHARGED AT A LATER DATE. WHAT SHOULD BE CERTAIN IS INCURRING OF THE LIABILITY. IN THE PRE SENT CASE, IT IS NOT EVEN IN DISPUTE THAT THE QUALITY CLAIM WERE MADE. AS FOR THE ASSESSING OFFICER S STAND THAT IN VIEW OF DEBIT NOTE SENT BY THE BUYER, THE ASSESSEE SHOULD HAVE REDUCED ITS SALE AND ONLY SHOWN THE NET FIGURE OF SALES, WE FIND THAT WHETHER GROSS SALES IS SHOWN ON THE CREDIT SIDE, WITH A QUALITY CLAIM SHOWN ON THE DEBIT SIDE, OR WHETHER A NET SALE FIGURE IS SHOWN EFFECT IS THE SAME. HIS HYPER TECHNICAL OBJECTION DOES NOT OUR APPROVAL. LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOW GIVEN A NEW T WIST TO THE MATTER. HE SUBMITS THAT SINCE ALL THE FOREIGN BILLS WERE PURCHASED BY THE BUYER, AND THE ASSESSEE HAD ALREADY RECEIVED THE SALE PROCEEDS, THERE WAS NO LOSS TO THE ASSESSEE. THIS ARGUMENT, HOWEVER, PROCEEDS ON THE FALLACIOUS ASSUMPTION THAT BANK ER PURCHASES BILLS DRAWN ON THE BUYER, AND HE HAS NO RECOURSE TO THE ASSESSEE. EVEN THOUGH IN THE BANKING TERMINOLOGY SUCH TRANSACTIONS OF LOAN AGAINST RECEIVABLES FROM FOREIGN BUYERS ARE SOMETIMES TERMED AS FDBP (FOREIGN DOCUMENTARY BILLS PURCHASED), THES E ARE ESSENTIALLY NATURE OF LOANS I.T.A. NO. 259 /RJT/201 2 : ASSESSMENT YEAR 200 9 - 1 0 : PAGE 3 OF 3 TO EXPORTERS. NOTHING, THEREFORE, TURNS ON THE RECEIPT OF LOANS IN RESPECT OF BILLS RAISED BY THE ASSESSEE. THESE ARE NOT REVENUE RECEIPTS AT ALL, NOR WAS IT EVER THE CASE OF EVEN THE ASSESSING OFFICER, ON THE LIGHT OF THE SE DISCUSSIONS, WE APPROVE THE WELL REASONED OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY US. 6. RESPECTFULLY FOLLOWING OUR ORDER FOR THE ASSESSMENT YEAR 2008 - 0 9, WHICH IS DEEMED TO BE ATTACHED TO AND FORMING PART OF THIS ORDER AS WELL, WE APPROVE THE STAND TAKEN BY THE CIT(A) IN THE IMPUGNED ORDER AND DECLINE TO INTERFERE IN THE MATTER. 7. IN THE RESULT, THE APPEAL IS DISMISSED. PRONOUNCED TODAY ON 4 TH DAY OF JANUARY, 2016 SD/ - SD/ - ( RAJPAL YADAV ) ( PRAMOD KUMAR ) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED: 4 TH DAY OF JANUARY, 2016 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT ( 3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGIS TRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT