The ITO, Ward-8(2), Ahmedabad V. Space Automation Pvt.Ltd., Ahmedabad

ITA 2741/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67550 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 28-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: KSHATRIYA

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD . , ! ' ' ' ' # $%, ! BEFORE SHRI A.MOHAN ALANKAMONY,ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A. NO.2741/AHD/2010 ( ' '(' ' '(' ' '(' ' '(' / / / / ASSESSMENT YEAR : 2007-08) INCOME-TAX OFFICER WARD-8(2) AHMEDABAD / VS. SPACE AUTOMATION PVT.LTD. ANISON 2 ND FLOOR SWASTIK SOCIETY NAVRANGPURA AHMEDABAD !) ./*+ ./ PAN/GIR NO. : AANCS 8382 B ( ), / // / APPELLANT ) .. ( -.), / RESPONDENT ) AND CO NO.308/AHD/2010 AY 2007-08 (IN ITA NO.2741/AHD/2010) SPACE AUTOMATION PVT.LTD. THE INCOME TAX OFFICER AHMEDABAD VS. AHMEDABAD (CROSS OBJECTOR) .. (RESPONDENT) REVENUE BY : SHRI D.K.SINGH SR.D.R. ASSESSEE BY : SHRI KSHATRIYA, AR #'/ 0 %1 / / / / DATE OF HEARING : 28/6/2013 2( 0 %1 / DATE OF PRONOUNCEMENT : 14/08/2013 3 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD.COMMISSION ER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD(CIT(A) FOR SHORT) DA TED 02/07/2010 ITA NO.2741 /AHD/2010 (BY REVENUE) AND CO NO.308/AHD/2010 (BY ASSESSEE) ITO VS. SPACE AUTOMATION PVT.LTD. ASST.YEAR 2007-08 - 2 - FOR ASST.YEAR 2007-08. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER:- I) THE LD.CIT(A)-XIV, AHMEDABAD HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.32,46,000/- MADE BY THE ASSESSING OFFICER U/S.41(1) OF THE IT ACT. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.COMMISSIONER OF INCOME-TAX(A)-XIV, AHMEDABAD OUG HT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3) IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CO MMISSIONER OF INCOME-TAX(A)-XIV, AHMEDABAD MAY BE SET-ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEF FACTS ARE THAT IT WAS NOTED BY THE ASSESSI NG OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD SHO WN CURRENT LIABILITIES OF RS.32,79,224/- WHICH INCLUDES AN AMOUNT OF RS.32.46 LACS ON ACCOUNT OF ADVANCES FROM CUSTOMERS. AS PER THE DETAILS SUBMIT TED BY THE ASSESSEE IN THIS REGARD, IT WAS NOTED BY THE AO THAT THESE ADVANCES ARE FROM 159 CUSTOMERS. AFTER MAKING SOME ENQUIRIES, THE AO ADDED THIS AMOU NT OF ADVANCE FROM CUSTOMERS RS.32.46 LACS U/S.41(1) OF THE I.T. ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD .CIT(A), WHO HAS DELETED THIS ADDITION AND NOW THE REVENUE IS IN APPEAL BEFORE US . 3. THE LD.DR SUPPORTED THE ASSESSMENT ORDER, WHEREA S LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THIS IS AN ADMITTED POSITION OF FACT THAT THE LIABILITY IN QUE STION BEING ADVANCES FROM CUSTOMERS OF RS.32.46 LACS IS BEING SHOWN BY T HE ASSESSEE AS ITA NO.2741 /AHD/2010 (BY REVENUE) AND CO NO.308/AHD/2010 (BY ASSESSEE) ITO VS. SPACE AUTOMATION PVT.LTD. ASST.YEAR 2007-08 - 3 - CURRENT LIABILITY IN THE BALANCE-SHEET AND THE ASSE SSEE HAS NOT WRITTEN BACK THIS AMOUNT BY CREDITING IN THE PROFIT & LOSS ACCOU NT. IN THE LIGHT OF THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT THE PROVISIONS OF SECTION 41(1) OF THE ACT ARE NOT BE ATTRACTED IN TH E PRESENT CASE BECAUSE WE FIND THAT EVEN AS PER EXPLANATION-1 INSERTED IN SECTION 41(1) OF THE ACT WITH EFFECT FROM 01/04/1997, ONLY FOR THOSE LIA BILITIES, IT CAN BE SAID THAT THERE A REMISSION OR CESSATION OF LIABILITY FO R WHICH THE ASSESSEE HAD WRITTEN BACK THE LIABILITY AND CREDITED THE AMOUNT IN THE P&L ACCOUNT. IN THE PRESENT CASE, THE FACTS ARE DIFFERENT AND ASSES SEE HAS NOT WRITTEN BACK THE LIABILITY AND THE ASSESSEE IS SHOWING THE LIABI LITY IN THE BALANCE-SHEET AS CURRENT LIABILITY. THERE ARE SEVERAL JUDGEMENTS OF HONBLE APEX COURT ON THIS ISSUE AS PER WHICH IT WAS HELD BY THE HONB LE APEX COURT THAT EVEN IF THE ASSESSEE HAS WRITTEN BACK THE LIABILITY AND CREDITED THE AMOUNT IN P&L ACCOUNT, SUCH UNILATERAL ACT OF THE ASSESSEE DOES NOT TANTAMOUNT TO REMISSION OR CESSATION OF LIABILITY AND THESE JU DGEMENTS ARE RENDERED IN THE CASE OF SUGALI SUGAR AS REPORTED AT 236 ITR 518 AND KESARIA TEA AS REPORTED AT 254 ITR 434. ALTHOUGH, IN VIEW OF THE AMENDMENT IN SECTION 41(1) OF THE ACT W.E.F. 01/04/1997 BY WAY O F INSERTION OF EXPLANATION-1, IN THE CASE OF WRITE BACK OF THE LIA BILITY BY THE ASSESSEE, THERE WILL BE A CASE OF REMISSION OR CESSATION OF L IABILITY BECAUSE OF THE EXPLANATION-1, BUT WHERE THERE IS NO WRITE BACK OF LIABILITY BY THE ASSESSEE AND THE LIABILITY IS SHOWN BY THE ASSESSEE IN THE BALANCE-SHEET, THESE JUDGEMENTS ARE VERY MUCH APPLICABLE EVEN AFTE R THIS AMENDMENT IN SECTION 41(1) OF THE ACT. AS PER ANOTHER JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF T.V.SUNDARAM IYANGAR AS REPORTED AT 222 ITR 344(SC), IT WAS HELD BY THE HONBLE APEX CO URT THAT WHEN THE ITA NO.2741 /AHD/2010 (BY REVENUE) AND CO NO.308/AHD/2010 (BY ASSESSEE) ITO VS. SPACE AUTOMATION PVT.LTD. ASST.YEAR 2007-08 - 4 - ASSESSEE HAD RECEIVED ADVANCE FROM CUSTOMERS IN EAR LIER YEARS AND IN THE PRESENT YEAR, SUCH ADVANCES WHERE WRITTEN OFF BY TH E ASSESSEE BY WAY OF CREDITING IN P&L ACCOUNT, THEN IT IS A CASE OF REMI SSION/CESSATION OF LIABILITY AND THE AMOUNT HAS TO BE ADDED U/S.41(1) OF THE ACT BECAUSE THE RECEIPTS WERE IN COURSE OF TRADING TRANSACTION AND WHEN THE LIABILITY IS ADMITTED AS NO MORE PAYABLE AND ASSESSEE HIMSELF HA D ADMITTED THAT IT HAD BECOME HIS OWN MONEY, THEN THE CHARACTER OF THE RECEIPTS CHANGES AND IT BECOMES REVENUE RECEIPT. ALTHOUGH, THIS JU DGEMENT IS IN FAVOUR OF REVENUE IN THE FACTS OF THAT CASE, BUT IN THE FACTS OF THE PRESENT CASE, EVEN THIS JUDGEMENT DOES NOT HELP THE REVENUE BECAUSE IN THE PRESENT CASE, THE LIABILITY IN QUESTION IS NOT WRITTEN BACK BY THE AS SESSEE AND ASSESSEE IS STILL SHOWING THIS AS LIABILITY. IN VIEW OF ABOVE DISCUSSION AND IN VIEW OF THESE THREE JUDGEMENTS OF HONBLE APEX COURT CITED SUPRA AND IN THE FACTS OF THE PRESENT CASE, THE ADDITION MADE BY THE AO IN THE PRESENT CASE IS NOT JUSTIFIED AND, HENCE, WE DECLINE TO INTERFER E WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. GROUND RAISED BY THE REVENUE IS HEREBY DISMISSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 6. NOW, WE TAKE UP THE CROSS-OBJECTION FILED BY TH E ASSESSEE. THE GROUNDS RAISED BY THE ASSESSEE IN ITS CO ARE AS UND ER:- 1) THE LEARNED CIT(A) ERRED IN FAILING TO APPRECIA TE THE FACT THAT THE LD.A.O. HAD NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THAT THE LIABILITIES TO THE EXTENT OF RS.32,46000/- WHERE EVER CLAIMED AND ALLOWED AS DEDUCTION(S) TO THE APPELLAN T, SO AS TO ATTRACT THE PROVISIONS OF SECTION 41(1) OF THE ACT IN THE CASE AND THE LD.CIT(A) HAS FURTHER ERRED IN NOT DECIDING THI S GROUND ON ITS LEGALITY THOUGH THE APPELLANT HAD CITED A FEW DECIS IONS IN THE ITA NO.2741 /AHD/2010 (BY REVENUE) AND CO NO.308/AHD/2010 (BY ASSESSEE) ITO VS. SPACE AUTOMATION PVT.LTD. ASST.YEAR 2007-08 - 5 - STATEMENT OF FACTS ATTACHED ALONG WITH APPEAL MEMO IN FORM NO.35 FILED BEFORE HIM. 2) THE LD.CIT(A) OUGHT TO HAVE DECIDED THIS ISSUE ON THE ABOVE LEGAL GROUND THAT THE PROVISIONS OF SECTION 41(1) A RE NOT APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE A PPELLANT. 3) IT IS THEREFORE, PRAYED THAT THE HONBLE TRIBUN AL MAY BE PLEASED TO DECIDE THIS GROUND IN FAVOUR OF THE ASSE SSEE AND IT MAY BE HELD THAT THE PROVISIONS OF 41(1) ARE NOT APPLIC ABLE ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. WE FIND THAT THE ISSUE RAISED BY THE ASSESSEE IN THE CROSS OBJECTION IS THE SAME AS HAS BEEN RAISED BY THE REVENUE IN IT S APPEAL AND THE ASSESSEES C.O. IS ONLY WITH REGARD TO ONE MORE ARG UMENT OF THE ASSESSEE FOR DELETING THE ADDITION OF RS.32.46 LACS, BUT SIN CE WE HAVE ALREADY UPHELD THE ORDER OF THE LD.CIT(A) BY WAY OF DISMISS ING THE APPEAL OF THE REVENUE, THE CO OF THE ASSESSEE HAS BECOME INFRUCTU OUS. HOWEVER, AS PER THE JUDGEMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF T.V. SUNDARAM IYANGAR REPORTED AT 222 ITR 344 (SC) INVOC ATION OF THE PROVISIONS OF SECTION 41(1) IS JUSTIFIED IN RESPECT OF ADVANCE FROM CUSTOMERS ALSO IF THE LIABILITY IS NO MORE PAYABLE AND THE SAME IS CREDITED TO THE P&L ACCOUNT BY THE ASSESSEE. AS PER THIS JU DGEMENT, THE PLEA TAKEN BY THE ASSESSEE DOES NOT SURVIVE AND, HENCE R EJECTED FOR THIS REASON ALSO, ALTHOUGH THIS JDUGEMENT OF HONBLE APEX COURT IS NOT SQUARELY APPLICABLE IN THE PRESENT CASE BECAUSE IN THE PRESE NT CASE, THE ASSESSEE HAS NOT WRITTEN BACK THE LIABILITY IN QUESTION. IN ANY CASE, SINCE THE CO HAS BECOME INFRUCTUOUS, THIS C.O. IS LIABLE TO BE DISMISSED. WE ORDER ACCORDINGLY. THUS, CROSS OBJECTION FILED BY THE AS SESSEE IS DISMISSED. ITA NO.2741 /AHD/2010 (BY REVENUE) AND CO NO.308/AHD/2010 (BY ASSESSEE) ITO VS. SPACE AUTOMATION PVT.LTD. ASST.YEAR 2007-08 - 6 - 8. IN THE COMBINED RESULT, THE APPEAL OF THE REVENU E AND THE CROSS OBJECTION FILED BY THE ASSESSEE BOTH ARE DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE SD/- SD/- (. ) (# $%) ! ! ( A. MOHAN ALANKAMONY ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 14/ 08 /2013 61.., '.../ T.C. NAIR, SR. PS 3 0 -%7 87(% 3 0 -%7 87(% 3 0 -%7 87(% 3 0 -%7 87(%/ COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. % #9 / CONCERNED CIT 4. #9() / THE CIT(A)-XIV, AHMEDABAD 5. 7'$: -% , , / DR, ITAT, AHMEDABAD 6. :;'