DCIT, New Delhi V. M/s Jain Tube Company Ltd., New Delhi

ITA 2693/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2731 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SATPAL SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D: NEW DELHI) BEFORE SHRI R.P.TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.2693 /DEL/ 2011 (ASSESSMENT YEAR: 2005-06) DCIT VS. J AIN TUBE COMPANY LTD. CIRCLE -4(1) D-20 CONNAUGHT PLACE NEW DELHI NEW DELHI AAACJO538R (APPELLANT) (RESPONDENT) ASSESSEE BY : SATPAL SINGH, DR REVENUE BY : SHRI SATISH AGGARWAL, CA. ORDER PER SHAMIM YAHYA, AM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST O RDER CIT(A) DATED 18.3.2011 AND PERTAINS TO ASSESSMENT YEAR 2005-06. 2. THE ISSUE RAISED IS THAT CIT (A) HAS ERRED I N DELETING THE ADDITION OF RS. 22,62,384/- MADE BY THE ASSESSING OFFICER DISALLOWI NG THE EXPENSES ON ACCOUNT OF PROVISIONS OF OLD RUSTY AND DAMAGED STOR ES AND RAW MATERIAL. ITA NO2 693 / DEL/ 2011 2 3. IN THIS CASE, THE ASSESSEE HAS CLAIMED PROVIS ION OF RS. 22,62,834/- FOR OLD RUSTY AND DAMAGED STORES. ASSESSING OFFICER DIS ALLOWED THE SAME AND ADDED BACK TO THE TAXABLE INCOME OF THE ASSESSEE. 4. BEFORE THE LD. CIT(A) ASSESSEE MADE THE FOL LOWING SUBMISSIONS :- THE ASSESSEE COMPANY HAD NOT BEEN ENGAGED IN THE RECENT PAST AS IT HAD BECOME SICK AND HAD APPROACHED BIFR FOR REHABILITATION. THE ASSESSEE HAD OBTAINED LOANS FRO M VARIOUS INSTITUTIONS AND BANK. THE STOCK OF THE ASSESSEE CO MPANY WAS HYPOTHECATED WITH THE TERM LENDING INSTITUTION IFCL LTD AND PUNJAB NATIONAL BANK LTD. THE ASSESSEE HAD WRITTEN OFF A SUM OF RS. 22 ,62,834/- FROM THE OPENING VAUE OF BROUGHT FORWARD STOCK WHICH WAS INADVERTENTLY CLASSIFIED AS A PROVISION BUT WAS THE AMOUNT OF REDUCTION IN VALUE TO BRING IT IN LINE WITH THE REA LIZABLE VALUE OF STOCK AS PER SCHEDULED-7 OF THE CURRENT ASSESTS AND LOANS AND ADVANCES ATTACHED TO THE BALANCE SHEET. THE SAI D FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER VIDE COMMUNICATION DATED 26.11.2010 OF THE ASSESSEES CO UNSEL A COPY OF WHICH IS PLACE AT PAGE NO. 44-46 OF THE PAP ER BOOK. THE CLAIM OF THE ASSESSEE IS BASED ON ACCEPTED AND JUDICIALLY APPROVED ACCOUNTING CONCEPT THAT THE INVENTORY SHOU LD BE VALUED AT A LOWER OF COST OR REALIZABLE VALUE. THE ASSESSEE HAD VALUED THE CLOSING INVENTORY AT L OWER OF COST OR REALIZABLE VALUE AND HAD FURNISHED COPY OF BALANCE SHEET ALONG WITH SCHEDULES FOR THE YEAR ENDING 31 ST MARCH 2005 WHEREIN IN SCHEDULE NO. 7 (ATTACHED AT PAGE NO . 34 OF THE 1 ST PAPER BOOK) UNDER THE HEAD INVENTORIES A SUM OF RS . 22,62,834/- HAD BEEN WRITTEN OFF FROM THE VALUE OF OPENING INVENTORY OF STORES, SPARES AND TOOLS AND RAW MATER IAL TO SHOW THE VALUE OF THE CLOSING INVENTORY AT COST OR NET R EALIZABLE VALUE WHICHEVER IS LOWER. THE ASSESSEE HAD SUBSEQUENTLY SOLD THE DAMAGED AND RUSTY INVENTORY AND STORES AT A MUCH LOWER SUM THAN VALUE D AT THE CLOSE OF THE FINANCIAL YEAR ENDED 31/03/05. COPY OF THE INVOICES RAISED BY M/S JAIN TUBE COMPANY LIMITED FO R SALE ITA NO2 693 / DEL/ 2011 3 OF OLD DAMAGED RUSTY STORES AND SPARES AND RAW MATE RIAL AT A SUM OF RS. 4,15,000/- IS ENCLOSED FOR YOUR READY PE RUSAL. 5. LD. CIT(A) CONSIDERED THE ABOVE SUBMISSI ON, HE ALSO NOTED THAT ASSESSEE HAS RELIED UPON THE DECISION OF HONBLE DE LHI HIGH COURT IN CIT VS. HOTLINE TELETUBE & COMPONENTS LTD. 175 TAXMAN 2 86 WERE IN SIMILAR ISSUE WAS EXAMINED. LD. CIT ALSO REFERRED TO THE D ECISION OF THE TRIBUNAL IN CIT VS. BHARTI HEALTH CARE LTD. 6. CONSIDERING THE ABOVE LD. CIT HELD TH AT ASSESSEES CLAIM FOR DEDUCTION WITH REGARD TO PROVISION FOR DIMINUTION HAVING BECO ME ABSOLETE AND OLD WAS ALLOWED. 7. AGAINST THE ABOVE ORDER, REVENUE IS IN AP PEAL BEFORE US. 8. WE HAVE HEARD BOTH THE COUNSEL AND PERUSE D THE RECORD WE FIND THAT THE ASSESSEE COMPANY HAD NOT BEEN ENGAGED IN WORK I N THE RECENT PAST AS IT HAD BECOME SICK. ASSESSEE HAD VALUED THE CLOSING IN VENTORY AT LOWER OF COST OR REALIZABLE VALUE. IN THIS CONNECTION, A SUM OF R S. 22,62,834/- HAD BEEN WRITTEN OFF FROM THE VALUE OF OPENING INVENTORY OF STORES, SPARES AND TOOLS AND RAW MATERIAL TO SHOW THE VALUE OF CLOSING INVEN TORY AT COST OR NET REALIZABLE VALUE WHICHEVER IS LOWER. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANYTHING TO SHOW THAT ABOVE DEDUCTION IN THE REALIZABLE VALUE WAS ITA NO2 693 / DEL/ 2011 4 NOT CORRECT. HE HAS SIMPLY DISMISSED THE ASSESSEES CONTENTION WITHOUT COGENTLY REBUTTING THE SAME. 9. WE FIND THAT ASSESSEE HAS MADE THE VAL UATION INVENTORY AT COST OR REALIZABLE VALUE WHICHEVER IS LOWER AS THESE STORES WERE OLD AND HAD BECOME RUSTY. ASSESSEE HAS MADE REDUCTION OF SUM OF AMOUN T OF RS. 22,62,834/- IN THIS REGARD. AS A MATTER OF FACT, IT HAS ALSO BEEN BROUGHT ON RECORD THAT ASSESSEE HAS SUBSEQUENTLY SOLD THE DAMAGED AND RUST Y INVENTORY AND STORES AT MUCH LOWER SUM. 10. IN THE BACKGROUND OF AFORESAID DISC USSION, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF LD. CIT(A). A CCORDINGLY WE AFFIRM THE SAME. WE ALSO FIND THAT THE CASE LAW RELIED UPON BY THE LD. CIT(A) IS ALSO GERMANE AND SUPPORT THE CASE OF THE ASSESSEE. 11. IN THE RESULT, THIS APPEAL FILED BY TH E REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 31 JULY, 2013. SD/- SD/- (R.P.TOLANI ) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER BINITA RUKHAIYAR DATE: 31 JULY, 2013 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI ITA NO2 693 / DEL/ 2011 5 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4044/DEL/2011 A.Y. : 1992-93 JOGINDER KUMAR, VS. ASSISTANT COMMISSIONER OF I NCOME TAX, S/O SH. NOTA RAM, PANIPAT CIRCLE, PANIPAT KHANNA KOTHI, KRISHANPURA, PANIPAT-132103 [PAN : AAYPG0984H) (APPELLANT) (RESPONDENT) ITA NO2 693 / DEL/ 2011 6 ASSESSEE BY : NONE DEPARTMENT BY : SMT. SHUMANA SEN, SR. D.R O R D E R PER SHAMIM YAHYA: AM THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORD ER DATED 13.6.2011 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL), KARNAL. 2. THIS CASE WAS LISTED FOR HEARING BEFORE THE TRI BUNAL ON 15-4-2013 AND FOR THIS ASSESSEE WAS INFORMED. TODAY I.E. ON 15-4-2013 WHEN THE CASE WAS CALLED ON BOARD, NONE APPEARED ON BEHALF O F THE ASSESSEE NOR ANY REQUEST FOR ADJOURNMENT HAS BEEN FILED BEFORE T HE TRIBUNAL DESPITE THE SERVICE OF NOTICE UPON THE ASSESSEE. IT SEEMS THAT THE ASSESSEE IS NOT INTERESTED IN PROSECUTING ITS APPEAL; HENCE, THE A PPEAL FILED BY THE ASSESSEE IS LIABLE TO BE DISMISSED, FOR NON-PROSECU TION. IN OUR ABOVE VIEW, WE FIND SUPPORT FROM THE FOLLOWING DECISIONS: 1. IN THE CASE OF CIT VS. B.N. BHATTACHARGEE AND ANOTH ER, REPORTED IN 118 ITR 461 [RELEVANT PAGES 477 & 478] WHEREIN THEI R LORDSHIPS HAVE HELD THAT: THE APPEAL DOES NOT MEAN MERELY FILING OF THE APPE AL BUT EFFECTIVELY PURSUING IT. ITA NO2 693 / DEL/ 2011 7 2. IN THE CASE OF ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT; 223 ITR 480 (M.P.) WHILE DISMISSING THE REFERENCE MADE AT THE I NSTANCE OF THE ASSESSEE IN DEFAULT MADE FOLLOWING OBSERVATION IN T HEIR ORDER: IF THE PARTY, AT WHOSE INSTANCE THE REFERENCE IS M ADE, FAILS TO APPEAR AT THE HEARING, OR FAILS IN TAKING STEPS FOR PREPARATION OF THE PAPER BOOKS SO AS TO ENABLE HEAR ING OF THE REFERENCE, THE COURT IS NOT BOUND TO ANSWER THE REFERENCE. 3. IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. MULTI PLAN INDIA (P) LTD.; 38 ITD 320 (DEL), THE APPEAL FILED BY THE REV ENUE BEFORE THE TRIBUNAL, WHICH WAS FIXED FOR HEARING. BUT ON THE DATE OF HEARING NOBODY REPRESENTED THE REVENUE/APPELLANT NOR ANY CO MMUNICATION FOR ADJOURNMENT WAS RECEIVED. THERE WAS NO COMMUNI CATION OR INFORMATION AS TO WHY THE REVENUE CHOSE TO REMAIN A BSENT ON THAT DATE. THE TRIBUNAL ON THE BASIS OF INHERENT POWERS , TREATED THE APPEAL FILED BY THE REVENUE AS UN-ADMITTED IN VIEW OF THE PROVISIONS OF RULE 19 OF THE APPELLATE TRIBUNAL RUL ES, 1963. 3. THE ASSESSEE, IF SO DESIRED, SHALL BE FREE TO MO VE THIS TRIBUNAL PRAYING FOR RECALLING THIS ORDER AND EXPLAINING REA SONS FOR NON- COMPLIANCE ETC. THEN THIS ORDER MAY BE RECALLED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE , IS DISMISSED, FOR NON-PROSECUTION. ORDER PRONOUNCED IN THE OPEN COURT ON 15/4/2013, UPON CONCLUSION OF HEARING. ITA NO2 693 / DEL/ 2011 8 SD/- SD/- [A.D. JAIN) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 15/4/2013 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES