GMM Pfaudler Limited, Ahmedabad V. The Pr. CIT-1, Ahmedabad

ITA 285/AHD/2023

• Counselvise Citation: [2023] 101 COUNSELVISE.COM (IT) 9876 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 05-09-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 25-04-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKAMLESHMAKWANA
• Keywords: Depreciation; TDS

Judgement Text

आयकरअपीलीयअधिकरण , अहमदाबादनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, ‘’C’’BENCH,AHMEDABAD BEFOREMsSUCHITRAKAMBLE,JUDICIALMEMBER And SHRIWASEEMAHMED,ACCOUNTANTMEMBER आयकरअपीलसं./ITANo.285/AHD/2023 धििाधरणवरध / Asstt.Year:2018-2019 GMMPfaudlerLimited, 3 rd Floor, B-JadavChambers, AshramRoad, Ahmedabad-380009. PAN:AABCG0563A Vs. PrincipalCommissionerof Income-tax-1, Ahmedabad (Applicant)(Respondent) Assesseeby:ShriBandishSoparkar,A.R Revenueby:ShriKamleshMakwana,CIT.D.R सुिवाईकीतारीख /DateofHearing:06/09/2023 घोरणाकीतारीख /DateofPronouncement:29/11/2023 आदेश /ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedPrincipalCommissionerofIncometax,Ahmedabad-1, arisinginthematterofassessmentorderpassedunders.263oftheIncomeTax Act,1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2018-2019. ITAno.285/AHD/2023 A.Y.2018-19 2 2.TheonlyeffectiveissueraisedbytheassesseeisthattheLd.PCITerredin holdingtheassessmentframedu/s143(3)r.w.s.143(3A)&143(3B)oftheActas erroneousinsofarprejudicialtotheinterestofrevenue. 3.TheLd.PCITonexaminationoftheassessmentrecordsobservedthat therewasadditionoffixedassetintheyearunderconsiderationonwhich depreciationandadditionaldepreciationwasclaimedbytheassessee.However, theAOhasnotinquiredduringtheassessmentproceedingsanythingabout purchaseoffixedassetandthedepreciationclaimedthereon. 3.1Likewise,theLd.PCITfoundthattheassesseehasmadepaymentof commissiontotheforeignpartieswithoutdeductingTDSamountingtoRs. 16,68,253/-butthisfacthasnotbeverifiedbytheAOduringtheassessment proceedings. 3.2TheLd.PCITfurtherfoundthattheassesseehasclaimeddeductionu/s 80JJAAoftheAct,amountingtoRs.96,567/-only.Theassesseeinsupportof suchdeductionhasalsofiledtheformnumber10DAwhichwasdulyfiledin pursuancetotheprovisionofsection80JJAA(2)(c)oftheAct. 3.3Inviewoftheabove,theLd.PCITwasoftheopinionthattheassessment hasnotbeenframedwithnecessaryverificationandexaminationoftheprovisions oflaw.Accordingly,theLd.PCITproposedtorevisetheassessmentorderu/s263 oftheAct,byissuingashowcausenoticedated07/03/2023.Theassesseein responsetosuchnoticevideletterdated17/03/2023submittedthatthe assessmenthasbeenframedafterdueverification/examinationandapplicationof mindbytheAO.Theassesseeinsupportofhiscontentionhasdrawnthe attentionoftheLd.PCITtothenoticeissuedu/s142(1)oftheActandthereply madethereof. ITAno.285/AHD/2023 A.Y.2018-19 3 4.However,theLd.PCITwasnotsatisfiedwiththecontentionofthe assesseeandaccordinglyheldthattheassessmentframedbytheAOas erroneousinsofarprejudicialtotheinterestofrevenuebyobservingasunder: 6.Thesubmissionfiledbytheassesseehasbeengonethroughcarefully,however,the sameisnotfoundtobeacceptableforthereasonsdiscussedhereunder: (i)Regardingtheissueofdepreciationclaimedonthefixedassetpurchasedduring theyearunderconsideration,itisstatedthatduringtheassessmentproceedingsaswell asrevisionproceedings,theassesseehasfailedtoprovidethedocumentaryevidences regardingthefixedassetpurchasedduringtheyearwere'puttouse'duringtheyear underconsideration (ii)RegardingtheissueofnondeductionofTDSonpaymentofcommissiontonon resident,itispertinenttonotethattheassesseehasfailedtosubstantiatethatthe commissionwasaccruedorarisedoutsideIndia.Further,theassesseehasalsofailedto furnishthenecessarydocumentsregardingthepartytowhomcommissionwaspaidhas nopermanentestablishmentinIndia. (III)RegardingtheissueofFormNo10DA,onverificationofFormNo.10DAfiledby theassessee,itisfoundthatnecessaryparticularsprescribedasperthelawhavenot beenfilled.Theassesseehasonlymentionedinremarkscolumnregardingtheeligibility deductionofRs.96,567/-,however,particularsinsub-columnofcolumn5remainedblank. Therefore,thisissueshouldhavebeenverifiedduringtheassessmentproceedings. (iii)TheAOduringthecourseofassessmentproceedingshassimplyacceptedthe submissionsmadebytheassesseeandhasnotverified/enquiredtheabovefactsand allowedtheaboveexpenses/deductionswhichareoughttohavebeendisallowedbythe AOwhilefinalizingtheassessmentorder.MENT 7.TheabovefactsindicatesthattheAOwhilecompletingtheassessmenthavenot properlyseenandexaminedtheaboveissueandthereforetheorderpassedbytheAO wasprimafacieerroneousandprejudicialtotheinterestsofrevenue.Suchcaseswhere theassessmenthasbeencompletedwithoutconductinganyinquiriesorverificationof factstantamounttoerroneousordersasalsoorderprejudicialtotheinterestofRevenue. 5.BeingaggrievedbytheorderoftheLd.PCIT,theassesseeisinappeal beforeus. 6.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to603and submittedthattheLd.PCIThasnotpointedoutanyerrorinhisorderu/s263of theAct,withrespecttotheadditiononfixedassetanddepreciationclaimed thereon.Therefore,thesamecannotbemadesubjectmatterofrevisionu/s263 oftheAct.TheLd.ARinsupportofhisclaimreliedontheorderofAhmedabad ITAno.285/AHD/2023 A.Y.2018-19 4 TribunalinthecaseofNationalDairyDevelopmentBoardbearingITANo. 215/Ahd/2022andtheorderoftheITATCuttackBenchinthecaseofShriJyanta KumarJenav/sITOreportedin36taxmann.com592. 6.1TheLd.ARfurthersubmittedthattherewasnocommissionincome accruedtothepartiesbasedinforeigncountriesandforeignpartiesdon’thave anypermanentestablishmentinIndia.Therefore,theprovisionsofTDSarenot applicable. 6.2Likewise,theLd.ARcontendedthatthedeductionu/s80JJAAoftheActin earlieryearwasallowedandthereforethesamecannotbedisturbedintheyear underconsiderationastheclaimoftheassesseefallsduringthespecifiedperiod forwhichtheassesseeisentitledtoclaimthededuction. 6.3TheLd.ARfurtherdrawnourattentiononthevariousnoticesissuedu/s 142(1)oftheAct,duringtheassessmentproceedingsaswellastherepliesmade bytheassesseetheretowhichareplacedonpages319to601ofthepaperbook. Accordingly,theLd.ARcontendedthattheassessmenthasbeenframedbythe AOafterdueapplicationofmind. 6.4Theld.ARalsosubmittedthattherewasnoreferencetotheprovisionof explanation2tosection263oftheActintheshowcausenoticeissuedu/s263of theAct.Buttheld.PCIThasreferredtotheexplanation2tosection263ofthe Actinhisorder.However,theLd.PCIThasnotpointedoutanyinquirieswhich theAOshouldhavebeenmadeduringtheassessmentproceedingsinpursuance totheprovisionofsectionexplanation2ofthesection263oftheAct.TheLd.AR accordingly,contendedthattheassessmentframedu/s143(3)oftheActcannot bemadesubjecttotherevisionu/s263oftheAct. ITAno.285/AHD/2023 A.Y.2018-19 5 7.Onthecontrary,theLd.DRsubmittedthattheAOhasnotcarriedoutthe verificationduringtheassessmentproceedingontheissueraisedbytheLd.PCIT inhisorder.Therefore,accordingtotheLd.DRtheassessmentframedu/s143(3) oftheAct,iserroneousinsofarprejudicialtotheinterestoftherevenue.Theld. DRinsupportofhiscontentionreliedonthejudgmentofHon’bleCalcuttaHigh CourtinthecaseofPCITv/sHillQueenInvestment(P)Ltd.reportedin152 taxmann.com335andjudgmentofHon’bleSCinthecaseofCITv/sPaville Projects(P.)Ltd. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Onperusalofthenoticeissuedu/s142(1)oftheAct placedonpages413to416and556to565ofthepaperbookandthereplies madebytheassesseethereto,wenotethatthefollowingquerieswereraisedby theAOduringtheassessmentproceedings. I."PurchaseofFixedAsset YourHonour'sobservationthatAssessingOfficerhasnotenquiredoraskedanyquestion relatedtopurchaseoffixedassetsandclaimofdepreciationiswrong.YourHonour's attentionisdrawntowardsthenoticedated10/01/2020u/s142(1)topara7whichis reproducedhereforreadyreference: "Completedetailsofadditionsmadetofixedassets,includingworkinprogress duringthefinancialyear2017-18alongwiththecopiesofbills/vouchersexceeding Rs.1lakhforsuchadditions.Alsofurnishcompletedetailsofallthedeletions madetofixedassetsanditstreatmentgiveninthebooksofaccountandwhether anycapitalgainisleviableonsuchtransactions." AcopyofthesaidnoticeisattachedherewithasAnnexure1.Furtherinreplytosaid noticeasubmissiondated28/1/2022wasuploadedwhereinrequireddetailswere submittedinAnnexure13and14.Acopyofsaidletteralongwiththerelevantannexures andcopiesofinvoicesoffixedassetsexceedingRs.100000isenclosedherewithas Annexure2. II.Pleasefurnishfollowinginformationinrespectofcommissionpaid: S.NoName, addressEmail IDandPANof thepartyto whom commission paid Natureof commission Amountof Commission Dateof Commission paid TDS deducted. ITAno.285/AHD/2023 A.Y.2018-19 6 a)Pleasefurnishcopyofagreementwiththepartytowhomcommissionpaid III.Thereplymadebytheassesseewhichisreproducedasunder: 7.Completedetailsofadditionsmadetofixedassets,includingworkinprogressduring thefinancialyear2017-18alongwiththecopiesofsamplebills/vouchersexceeding Rs.1lakhforsuchadditionsisenclosedasperAnnexure13completedetailsofallthe deletionsmadetofixedassetsanditstreatmentgiveninthebooksofaccountsis enclosedasperAnnexure14. ************************************************************** 8.DetailsofthecommissionpaidisenclosedasAnnexure-8intheformatgiven. a.AgreementwasmadeforUnisourceEnterprisePvt.Ltd.isattachedasAnnexure-9for othersnowrittenagreementwasexecuted. b.Therelevantbankstatementsshowingcommissionpaymentareenclosed asAnnexure-9A. c.Thecopyofinvoicesraisedinrespectofcommissionpaidareattachedas Annexure-10. d.Againstthecommissionpaidtheassesseehasobtainedthesaleorderinrespectof productsmanufactured.TherelevantsaleinvoicesareenclosedinAnnexure-10above. 8.1Onperusaloftheabove,wenotethattherewereenquiresconductedby theAOduringtheassessmentproceedingsandthereforeitcannotbesaidthat theassessmenthasbeenframedbytheAOwithouttheapplicationofmind. Besidestheabove,wealsonotethattheLd.PCIThasnotpointedoutanyflawin thesubmissionsmadebytheassesseeinresponsetothenoticeissuedu/s263of theAct. 8.2Movingfurther,wehaveperusedthereportinform10DArelatingtothe deductionclaimedu/s80JJAAoftheActplacedonpaged602to603ofthepaper bookandfindthatitwasdulyfiledbytheassesseeforclaimingthededuction. Furthermore,theLd.PCIThasnotpointedoutanyspecificdefectinsuchreport furnishedinform10DAforclaimingthedeductionu/s80JJAAoftheAct.Inview oftheaboveandafterconsideringthefactsintotality,weareoftheviewthatthe ITAno.285/AHD/2023 A.Y.2018-19 7 assessmenthasbeenframedbytheAOafternecessaryverificationand applicationofmind. 8.3Movingfurther,wenotethatinourhumbleunderstandingthecaselaws referredbytheld.DRaredistinguishablefromthepresentfactsofthecase beforeus.Inthecasebeforeus,therewasproperverificationandapplicationof mindappliedbytheAOwhileframingtheassessmentu/s143(3)oftheAct. Hence,theorderpassedbytheLd.PCITu/s263oftheActisnotsustainable. Thus,thegroundofappealoftheassesseeisherebyallowed. 9.Intheresult,theappealfiledbytheassesseeisherebyallowed. OrderpronouncedintheCourton29/11/2023atAhmedabad. Sd/-Sd/- (SUCHITRAKAMBLE)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated29/11/2023 Manish