Rajdeep Plastics, Jamnagar V. Income Tax Officer Ward-1 (3), Jamnagar

ITA 270/RJT/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3394 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Appeal Filed On: 06-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 143(3); 208; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT BEFORE SHRI WASEEM AHMED , ACCOUNTANT MEMBER AND MS MADHUMITA ROY , JUDICIAL MEMBER ./ I.T.A. NO. 270/RJT/2018 ( / ASSESSMENT YEAR 2015 - 1 6 ) RAJDEEP PLASTICS, 351/2, GIDC, PHASE II, DARED BYPASS, JAMNAGAR - 361004. / VS. I.T.O. , WARD - 1( 3 ) , JAMNAGAR . ./ ./ PAN/GIR NO. : A A CFR4356A ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI VIMAL DESAI, C.A / RESPONDENT BY : MS NAMITA KHURANA , SR. D . R. / DATE OF HEARING 26 /02 /20 20 / DATE OF PRONOUNCEMENT 28 / 0 2 /20 20 / O R D E R PER BENCH : THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) , RAJKOT [ LD. CIT(A) IN SHORT] DATED 21/12/2017 ARISING IN THE MATTER OF ASSESSMENT ORDER PASSED UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS 'THE ACT') DATED 12/09/2017 RELEVANT TO THE ASSESSMENT YEAR S (A . Y . ) 2015 - 1 6 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ASSESSMENT ORDER U/S.143(3) IS BAD IN LAW. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AS WELL AS ON FACTS IN MAKING DISALLOWANCE OF IMPORT PURCHASE OF RS.4,86,040/ - U/S.37 OF THE ACT CONSIDERING THE ITA NO. 270 /RJT / 208 9 A.Y.201 5 - 1 6 - 2 - SAME AS PRIOR PERIOD EXPENSES AND HENCE NOT ALLOWABLE U/S.37 OF THE ACT AND THE LEARNED CIT9A) HAS ERRED IN CONFORMING THE SAME. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE OR WITHDRAW ONE OR MORE GROUNDS OF APPEAL. 2. T HE SOLITARY ISSUE RAIS ED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING T HE ADDITION MADE BY THE AO FOR RS. 4, 86 , 040 / - ON ACCOUNT OF PURCHASES BY TREATING THE SAME AS PRIOR PERIOD EXPENSES. 3. THE AO DURING THE ASSESSMENT PROCEEDINGS FOUND THAT THE ASSESSEE H AS CLAIMED PURCHASES PERTAINING TO THE IMMEDIATE PRECEDIN G ASSESSMENT YEAR AMOUNTING TO RS. 4, 86 , 040 / - AND THEREFORE THE AO TREATED THE SAME AS PRIOR PERIOD EXPENSES. THUS THE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRI EVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A) WHO CONFIRMED THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF THE LEARNE D CI T - A THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR BEFORE US FILED A PAPER RUNNING FROM PAGES 1 TO 11 AND SUBMITTED THAT THE PURCHASES WERE RECOGNIZ ED IN THE BOOKS OF ACCOUNTS ONLY ON THE RECEIPT OF THE MATERIALS WHICH WERE RECEIVED IN THE MONTH OF APRIL 2014. 5.1 THE LEARNED AR ALSO CLAIMED THAT EVEN IF THE PURCHASES ARE PRESUMED FOR THE IMMEDIATE PRECEDING ASSESSMENT YEAR THEN THE SAME WILL FORM PART OF THE CLOSING STOCK WHICH WILL EVENTUALLY BECOME THE OPENING STOCK FOR THE YEAR UNDER CONSIDERATION. THUS THE ENTIRE EXERCISE WILL BE TAX NEUTRAL. ITA NO. 270 /RJT / 208 9 A.Y.201 5 - 1 6 - 3 - 6. ON THE OTHER HAND THE LEARNER DR VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION WE NOTE THAT THE GENUINENESS OF THE EXPENSES AND PROXIMITY OF SUCH EXPENSES WITH THE BUSINESS OF THE ASSESSEE HAS NOT BEEN DOUBTED BY THE AUTHORITIES BELOW. THUS IT CAN BE INFERRED THAT THE IMPUGNED EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY BY THE ASSESSEE FOR THE PURPOSE OF ITS BUSINESS. BUT THE ONLY DRAWBACK IS THAT THE SAME WAS NOT CLAIMED IN THE YEAR TO WHICH IT PERTAI NS. HOWEVER, WE ALSO NOTE THAT THERE WAS NO CHANGE IN THE RATE OF TAX UNDER THE ACT FOR THE YEAR UNDER CONSIDERATION VIZ A VIZ THE IMMEDIATE PRECEDING ASSESSMENT YEAR. THUS, THERE CANNOT BE ANY LOSS TO THE REVENUE EVEN IF THE ASSESSEE CLAIMED SUCH EXPENSES IN THE YEAR UNDER CONSIDERATION. IN THIS REGARD WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT V. NAGRI MILLS CO. LTD. [19 58] 33 ITR 681 HAS HELD AS UNDER: '3. WE HAVE OFTEN WONDERED WHY THE INCOME - TAX AUTHORITIES, IN A MATTER SUCH AS THIS WHERE THE DEDUCTION IS OBVIOUSLY A PERMISSIBLE DEDUCTION UNDER THE INCOME - TAX ACT , RAISE DISPUTES AS TO THE YEAR IN WHICH THE DEDUCTION SH OULD BE ALLOWED. THE QUESTION AS TO THE YEAR IN WHICH A DEDUCTION IS ALLOWABLE MAY BE MATERIAL WHEN THE RATE OF TAX CHARGEABLE ON THE ASSESSEE IN TWO DIFFERENT YEARS IS DIFFERENT; BUT IN THE CASE OF INCOME OF A COMPANY, TAX IS ATTRACTED AT A UNIFORM RATE, AND WHETHER THE DEDUCTION IN RESPECT OF BONUS WAS GRANTED IN THE ASSESSMENT YEAR 1952 - 53 OR IN THE ASSESSMENT YEAR CORRESPONDING TO THE ACCOUNTING YEAR 1952, THAT IS IN THE ASSESSMENT YEAR 1953 - 54, SHOULD BE A MATTER OF NO CONSEQUENCE TO THE DEPARTMENT; AN D ONE SHOULD HAVE THOUGHT THAT THE DEPARTMENT WOULD NOT FRITTER AWAY ITS ENERGIES IN FIGHTING MATTERS OF THIS KIND. BUT , OBVIOUSLY, JUDGING FROM THE REFERENCES THAT COME UP TO US EVERY NOW AND THEN , THE DEPARTMENT APPEARS TO DELIGHT IN RAISING POINTS OF TH IS CHARACTER WHICH DO NOT AFFECT THE TAXABILITY OF THE ASSESSEE OR THE TAX THAT THE DEPARTMENT IS LIKELY TO COLLECT FROM HIM WHETHER IN ONE YEAR OR THE OTHER. IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT THE A SSESSEE IS ENTITLED TO CLAIM THE DEDUCTION OF THE IMPUGNED EXPENSES. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD. CIT (A) AND DIRECT THE AO ITA NO. 270 /RJT / 208 9 A.Y.201 5 - 1 6 - 4 - TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE A PPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 28 / 02 /20 20 - SD - - SD - ( MADHUMITA ROY ) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER RAJKOT, DATED 28 /02 /20 20 MANISH