M/s. Mato Industries, New Delhi V. ACIT, New Delhi

ITA 2904/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86865 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 15-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJHA
• Assessee Lawyers: PARVEEN JAIN ACV
• Keywords: Question of law
• Section: 145

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL IN (DELHI BENCH E NEW DELHI) BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT A ND SHRI C.M.GARG, JUDICIAL MEMBER ITA NO. 2904/DEL/2012 (ASSESSMENT YEAR: 2007-08) MATO INDUSTRIES VS. ACIT A-5, INDUSTRIAL AREA, CIRCLE -20(1) G.T.KARNAL ROAD NEW DELHI NEW DEL HI PAN : AAAFM6530D (APPLICANT) (RESPONDENT) ASSESSEE BY : SH. PARVEEN JAIN, ACV. REVENUE BY : SHRI PDAM KANUNJHA , SR. DR. ORDER PER C.M.GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) XI DATED 01.03.2012 IN APPEAL NO. 121 / 2011-012 FOR ASSESSM ENT YEAR 2007- 08. ITA NO. 2904/ DEL/2012 2 2. ALTHOUGH THE ASSESSEE HAS RAISED AS MAN Y AS 6 GROUNDS IN THIS APPEAL BUT EXCEPT FOLLOWING GROUNDS, OTHER GR OUNDS HAVE NOT PRESSED AND THEREFORE GROUND NO. (I), (II), (IV), ( VI) ARE DISMISSED AS NOT PRESSED AND REMAINING GROUND NO. (III) AND (V) READ AS UNDER :- (III) WHETHER ON THE FACTS AND IN THE CIRCU MSTANCES OF THE CASE AND IN LAW, THE LD. ASSESSING OFFICER WAS JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 145 A OF THE INCOME-TAX ACT, 1961 WHEN THE TRADING ADDITION HAS BEEN MADE BY APPLYING G.P. ON ESTIMATED SALES? (V) WHETHER THE PROVISIONS OF SECTION 40(A)( IA) APPLYING TO PAYMENTS MADE TO RESIDENTS DURING THE Y EAR OR THE AMOUNTS STANDING AS PAYABLE IN THE BALANCE SHEE T? THE LD. ASSESSING OFFICER HAS APPLIED THE PROVISIO NS OF SECTION 40(A)(IA) TO THE AMOUNTS WHICH HAVE BEEN PA ID DURING THE YEAR. 3. BRIEFLY STATED, THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE IS A PARTNERSHIP CONCERN, DERIVING INC OME FROM MANUFACTURING EXCISABLE AUTO PART BUSHES AND ENGAGE D IN TRADING OF THE SAME GOODS. THE ASSESSEE HAS FILED ITS INCOME T AX RETURN FOR THE YEAR UNDER CONSIDERATION ON 1.11.2007 DECLARING AN INCOME OF RS. 6,89,863/- . SUBSEQUENTLY, THE CASE WAS SELECT ED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSING OFFICER RAISED VARIOUS ISSUES AND MADE CERTAIN ADDI TIONS IN REGARD TO ITA NO. 2904/ DEL/2012 3 THE TRADING ADDITION, UNDER VALUATION OF CLOSING ST OCK, ADDITION U/S 145(A) OF THE ACT , PROFESSIONAL CHARGES, ISO CERTI FICATE EXPENSES, TELEPHONE EXPENSES, CAR EXPENSES, EXCESS DEPRECIATI ON CLAIMED ON THE SUBSIDY AMOUNT AND FINALISE THE ASSESSMENT AT T OTAL INCOME OF RS. 10,38,180/- AS AGAINST THE AFORESAID RETURN INC OME. 4. BEING AGGRIEVED BY THE ABOVE ASSESSM ENT ORDER THE ASSESSEE PREFERRED APPEAL BEFORE CIT(A) IT WAS PART LY ALLOWED DELETING THE CERTAIN ADDITIONS BUT THE ASSESSEE WA S AGAIN AGGRIEVED BY THE IMPUGNED ORDER OF THE FIRST APPELLATE AUTHOR ITY I.E. CIT(A) WHICH UPHELD THE ADDITIONS MADE BY AO U/S 145A OF T HE ACT AND U/S 40(A)(IA) OF THE ACT WITH THE GROUNDS AS REPRODUCED ABOVE AND PRESSED BY THE ASSESSEE BEFORE THIS TRIBUNAL. 5. GROUND NO. (III) :- THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. SVP INDUSTRIES LTD. IN ITA NO. 495/ 2013 DATED 03.09.20 14 . THE LD. DR FAIRLY ACCEPTED , THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID DECISION OF HONBLE HIGH COURT . ITA NO. 2904/ DEL/2012 4 FROM PERUSAL OF THE DECISION OF HONBLE HIGH COURT (SUPRA) WE NOTE THAT THE ISSUE HAS BEEN DECIDED AGAINST THE RE VENUE IN FAVOUR OF THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLU SION :- 10. COMMISSIONER OF INCOME TAX (APPEALS), ON EXAMINATION OF THE ISSUE, HAD RIGHTLY HELD THAT A S PER THE RESPONDENT-ASSESSEE, THE EXCISE DUTY WAS PAYABLE AT THE TIME OF REMOVAL OF GOODS AND NOT AT THE TIME OF MANUFACTURE AND ON THE LAST DATE OF THE ACCOUNTING YEAR, THE GOODS WERE LYING IN THE BONDED WAREHOUSE AND THE DUTY WOULD BE PAYABLE ONLY AT THE TIME OF UNBONDING. THUS, THE CONTENTION OF THE RESPONDENT- ASSESSEE WAS THAT NEITHER EXCISE DUTY WAS PAID NOR THE DUTY WAS INCURRED. FURTHER, THE DUTY HAD NOT BEEN INCLUDED AND DID NOT FORM PART OF THE COST AS IT WA S NOT CLAIMED IN THE PROFIT AND LOSS ACCOUNT. THE COMMISSIONER OF INCOME TAX (APPEALS) THEREFORE DELETED THE ADDITION. 11. THE TRIBUNAL HAS AFFIRMED THE AFORESAID FIND ING AND DISMISSED THE APPEAL OF THE REVENUE. THERE IS NOTHING ON RECORD TO SHOW THAT THE REVENUE IN THE APPEAL PREFERRED BEFORE THE TRIBUNAL HAD RAISED THE CONTENTION THAT THE EXCISE DUTY HAD, IN FACT, BECOM E PAYABLE AND HAD BEEN INCURRED IN TERMS OF THE EXCIS E ACT OR THE APPLICABLE RULES. 12. IN THESE CIRCUMSTANCES, WE HAVE TO HOLD THAT THE DECISION OF THE TRIBUNAL IS CORRECT AND ACCORDINGLY , SUBSTANTIAL QUESTION OF LAW MENTIONED ABOVE, IS ANSWERED IN FAVOUR OF THE RESPONDENT- ASSESSEE AND AGAINST THE APPELLANT-REVENUE. THE APPEAL IS ACCORDINGLY DISPOSED OF. THERE WILL B E NO ORDER AS TO COSTS. ITA NO. 2904/ DEL/2012 5 IN VIEW OF THE ABOVE, WE ARE INCLINED TO HOLD THAT THE ISSUE OF DISALLOWANCE U/S 145 A OF THE ACT IS SQUARELY COVER ED IN FAVOUR OF THE ASSESSEE AND THE ADDITION MADE BY THE AO U/S 145A O F THE ACT IS DESERVE TO BE DELETED, ACCORDINGLY, GROUND NO. ( III) OF THE ASSESSEE IS ALLOWED. 6. GROUND NO. V :- APROPOS , THIS GROUND OF THE ASSESSEE, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSE SSING OFFICER HAS APPLIED THE PROVISIONS OF SECTION 40 (A) (IA) OF T HE ACT TO THE AMOUNTS WHICH HAVE BEEN PAID DURING THE YEAR . THE LD. COUN SEL, FURTHER, POINTED OUT THAT THE ASSESSING OFFICER INVOKED PROV ISIONS OF SECTION 40 (A) (IA) OF THE ACT FOR DISALLOWING THE AMOUNT O F RS. 23,100/- PAID TO SHRI NARENDER KUMAR JAIN ON ACCOUNT OF PROFESSIONAL CHARGES AND ALSO DISALLOWED AMOUNT OF RS. 23,248/- PAID TO SVP SYSTEM MANAGEMENT FOR ISO CERTIFICATE EXPENSES BY HOLDING THAT AS PER PROVISION OF SECTION 194 J OF THE ACT. THE ASSESSEE WAS REQUIRED TO DEDUCT TDS AT THE SPECIFIED RATES BUT THE ASSESSEE FAILED TO DEDUCT ANY TDS ON THESE PAYMENTS. THE LD. DEPARTMENTAL RE PRESENTATIVE POINTED OUT THE ASSESSEE DID NOT RAISE THIS GROUND BEFORE CIT(A). THEREFORE, THE SAME CANNOT BE CONSIDERED THAT AT TH IS STAGE. THE LD. ITA NO. 2904/ DEL/2012 6 COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS GROUND HAS RAISED BEFORE CIT(A) BY WAY OF APPLICATION DATED 25.08.201 1 BUT IT WAS NOT ADDRESSED AND ADJUDICATED AT THE TIME OF PASSING TH E IMPUGNED ORDER. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) REP LIED THAT IF IT IS FOUND JUST AND PROPER THAT THE DEPARTMENT HAS NO SE RIOUS OBJECTION IS THIS LIMITED ISSUE IS RESTORED TO THE FILE OF THE C IT(A) FOR PROPER ADJUDICATION. 7. ON CAREFUL CONSIDERATION ON ABOVE SUBMISS IONS OF BOTH THE SIDES, WE NOTE THAT THE LD. DR HAS NOT DISPUTED FIL ING OF APPLICATION DATED 25.08 2011 BEFORE CIT(A) RAISING ADDITIONAL G ROUND WHICH INCLUDES THE ISSUE OF DISALLOWANCE U/S 40(A) (IA) OF THE ACT WHICH HAS NOT BEEN ADDRESSED AND ADJUDICATED. THUS, WE FIND A T APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF CIT(A) FOR PROPER ADJUDICATION AS THE ASSESSING OFFICER HAS MADE CERTAIN DISALLOWANCES BY INVOKING PROVISIONS OF SECTION 40 (A) (IA) OF THE ACT. 8. ACCORDINGLY, GROUND NO. (V) OF THE AS SESSEE IS DEEM TO BE ALLOWED FOR STATISTICAL PURPOSES BY RESTORING THE I SSUE TO THE FILE OF FIRST APPELLATE AUTHORITY I.E. CIT(A) FOR PROPER AD JUDICATION AS PER PROVISIONS OF THE ACT. ITA NO. 2904/ DEL/2012 7 9. IN THE RESULT, APPEAL OF THE ASSESSEE I S ALLOWED ON GROUND NO. (III) AND DEEM TO BE ALLOWED FOR STATISTICAL PURPOS ES ON GROUND NO. (V). WE MAY ALSO POINT OUT THAT OTHER GROUNDS OF THE ASS ESSEE HAVE ALREADY BEEN DISMISSED AS NOT PRESSED. ORDER PRONOUNCED IN OPEN COURT ON 2 ND MARCH, 2015. SD/- SD/- (G.D.AGARWAL) (C.M.GARG) VICE PRESIDENT J UDICIAL MEMBER DATED 2 ND MARCH 2015 B.RUKHAIYAR COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. AR,ITAT NEW DELHI.