ITO WD 2(1), KALYAN V. DINESH PLASTIC WORK, THANE

ITA 2902/MUM/2010

• Counselvise Citation: 290219914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALAY H SHAH
• Keywords: Capital receipt
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, MUMBAI. BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A NO.2902/ MUM/2010 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, 2 (1) .. APPELLANT 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN. VS DINESH PLASTIC WORK ,. RESPONDEN T F-53, MIDC, MURBAD, THANE. PA AACFD 0003G APPEARANCES: JITENDRA YADAV, FOR THE APPELLANT MALAY H SHAH, FOR THE RESPONDENT O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CAL LED INTO QUESTION CORRECTNESS OF CIT(A)S ORDER DATED 25 TH DECEMBER, 2009, IN THE MATTER OF ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1 961, FOR THE ASSESSMENT YEAR 2006-07 ON THE FOLLOWING GROUNDS: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A), THANE ERRED IN DELETING THE ADDITION U/S.28( IV) AMOUNTING TO RS .8,54,670 ON ACCOUNT OF CAPITAL RESERVE CREDITED TO PARTNERS CAPITAL ACCOUNT FOR THE YEAR UNDER CONSIDERATION, THE SAME BEING THE CAPI TAL RECEIPT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE ADDITION MADE OF RS. 8, 54,670 SINCE THE WAIVER OF THE SAME BY THE S.T. DEPARTMENT FOR ADVANCE PAYMENT OF DEFERRED SALES TAX LIABILITY OF EARLIER YEARS (SHOWN AS CREDITOR) TANTAMO UNT TO BENEFIT TO THE ASSESSEE AND SHOULD HAVE BEEN CREDITED TO THE P&L ACCOUN T THEREBY PROVISIONS OF SECTION 28(IV)/CESSATION OF LIABILITY U/S.4 1(1) ARE CLEARLY ATTRACTED IN THIS CASE. I.T.A NO.2902/ MUM/2010 DINESH PLASTIC WORK 2 2. BRIEFLY STATED THE MATERIAL FACTS ARE LIKE THIS. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESS EE HAS CREDITED PARTNERS CAPITAL ACCOUNT UNDER THE HEAD CAPITAL RESERVE AMO UNTING TO RS. 8,54,670. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE SOURCE AND DETAILS OF THE ABOVE CAPITAL INTRODUCED BY THE PARTNERS. IN REPLY, IT WA S SUBMITTED BY THE ASSESSEE THAT THE AMOUNT HAS BEEN CREDITED ON ACCOUNT OF THE EARLY REP AYMENT OF THE DEFERRED SALES TAX TERM LOAN ON THE BASIS OF NET PRESENT VALUE SCHEME WHICH WAS INTRODUCED BY THE MAHARASHTRA GOVERNMENT UNDER MAHARASHTRA VALUE ADDED TAX ACT, 2002. IT WAS SUBMITTED THAT THE MAHARASHTRA GOVERNMENT DETERMINED THE NET PRESENT VALUE AS THE SALES TAX TERM LOAN AT ` .13,94,147 AND THE BALANCE AMOUNT OF ` . 8,54,670 WAS CREDITED TO PARTNERS CAPITAL ACCOUNT DIRECTLY FROM THE CAPIT AL RESERVE AS THE SAME WAS CAPITAL RECEIPT. THE AO DID NOT ACCEPT THE ABOVE EXPLANATI ON OF THE ASSESSEE AND TREATED THE SAME AS REVENUE RECEIPT AND ADDED THE SAME TO THE TOTA L INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE THE CIT(A). LEARNED CIT (A) AFTER A DETAILED DISCUSSION IN THE IMPUGNED ORDER ON THE SUBJECT, DELETED THE DISALLOWANCE TREATING THE SAME AS CAPITAL RECEIPT. AG GRIEVED, THE ASSESSING OFFICER IS IN APPEAL BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE I SSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY SPECIAL BENCH OF THIS DECISION OF THIS TRIBUNAL IN THE CASE OF SULZER INDIA LTD VS JCIT (42 SOT 457). 4. LEARNED DEPARTMENTAL REPRESENTATIVE, HOWEVER, SUBM ITS THAT SINCE MISCELLANEOUS PETITION POINTING OUT MISTAKE APPARENT O N RECORD IS PENDING IN THE CASE OF SULZER INDIA LTD (SUPRA), WE NEED NOT FOLLOW THE SAME. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PERU SED THE MATERIAL ON RECORD. WE ARE NOT PERSUADED BY THE SUBMISSION OF LEARNED DEPAR TMENTAL REPRESENTATIVE. AS THE THINGS STAND RIGHT NOW, THE SPECIAL BENCH DECISION CONSTITUTES A BINDING PRECEDENT TO US AND MERELY BECAUSE RECTIFICATION PETI TION HAS BEEN FILED BEFORE THE SPECIAL BENCH, THE BINDING NATURE OF SPECIAL BENCH DECISION IS NOT DILUTED OR OTHERWISE CURTAILED. THEREFORE, RESPECTFULLY FOLLOW ING THE DECISION OF SPECIAL I.T.A NO.2902/ MUM/2010 DINESH PLASTIC WORK 3 BENCH IN THE CASE OF SULZER INDIA LTD(SUPRA) , WE UP HOLD THE ORDER OF THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 6. IN THE RESULT, APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 6 TH JUNE, 2011 SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER MUMBAI, DATED 6 TH JUNE, 2011 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS),II, THANE 4. COMMISSIONER OF INCOME TAX, III , THANE 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI