Devson Private Ltd, Jammu V. The Joint Commissioner of Income Tax, Jammu

ITA 306/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9533 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K DEWAN
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.306/ASR/ 2015 ASSESSMENT YEAR:2011-12 PAN : AAACD5815D M/S DEVSON PRIVATE LIMITED CHAND NAGAR, JAMMU. PAN: AAACD5815D VS. THE JT. COMMR. OF INCOME TAX, RANGE-2, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.V.K. DEWAN, ADV. RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 20/10/2016 DATE OF PRONOUNCEMENT: 28/10/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LEARNED CIT(A),JAMMU DATED 23.04.2015 FOR THE ASST. YEAR 20 11-12. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL, HOWEVER, THE CRUX OF GRIEVANCE OF ASSESSEE IS THE CONFIRMATION OF ADDITION WHICH T HE ASSESSING OFFICER HAD MADE ON ACCOUNT OF ADVANCE EXCISE DUTY PAID BY ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY IS DEALING IN WHOLESALE TRADING OF IMF, DESI WHISKY AND BEER E TC. AND HAD FILED RETURN ON 24.09.2011 DECLARING INCOME OF RS.89,30,3 50/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CAS S. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSER VED THAT THE 2 ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 43B OF THE ACT AS ADVANCE EXCISE DUTY TO THE TUNE OF RS.10,46,973/-. THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 18.03.2014 WAS CONFRONTED O N THIS POINT AND WAS ASKED TO EXPLAIN AS TO WHY THE DEDUCTION CLAIME D U/S 43B OF THE ACT MAY NOT BE DISALLOWED AND ADDED BACK TO HIS INCOME BY FOLLOWING THE PAST HISTORY OF THE CASE I.E. FOR THE ASSESSMENT YE AR 2007-08, WHICH WAS LATER ON CONFIRMED BY THE LD. CIT(A). IN RESPONSE T O THE AFORESAID QUERY, THE ASSESSEE FILED THE FOLLOWING REPLY: REGARDING DEDUCTION OF ADVANCE DUTY U/S 43B, IT IS SUBMITTED THAT FOR OBTAINING SUPPLIES OF JK DESI WH ISKY, WE ARE REQUIRED TO DEPOSIT EXCISE DUTY IN ADVANCE IN THE GOVT. ACCOUNT AND THEN APPLY TO THE EXCISE DEPARTMENT FOR OBTAINING P ERMITS FOR TAKING SUPPLIES FROM THE DISTILLERIES. THE AMOUNT OF EXCIS E DUTY IS DEPOSITED IN ADVANCE FROM TIME TO TIME. DURING THE YEAR A SUM OF RS.17,75,023/- WAS LYING AS CREDIT BALANCE AS ON 31 .03.2010 AND THE SAME HAS BEEN CLAIMED AS DEDUCTION U/S 43B OF T HE ACT. SECTION 43B OF THE ACT SAYS THAT ANY SUM PAYABLE BY THE ASS ESSEE BY WAY OF TAX, DUTY, CESS OR FEE BY WHATEVER NAME CALLED U NDER ANY LAW FOR THE TIME BEING IN FORCE IS A DEDUCTION ALLOWABLE UN DER THE INCOME TAX ACT, 1961. THE SAME HAS BEEN HELD BY THE HONBL E INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH, SPECIAL BENCH IN TH E CASE OF DY. COMMISSIONER OF INCOME TAX VS. GLAXO SMITHKLINE CON SUMER HEALTH CARE LTD., CITED IN (2007) 110 TTJ PAGE 183 WHICH I S BASED UPON THE DECISION OF HONBLE SUPREME CURT IN CASE OF BERGER PAINTS INDIA LTD. VS. CIT (2004) CTR SC 93. FURTHER RS.7,28,050/- CLA IMED AS DEDUCTION U/S 43B OF THE INCOME TAX ACT, IN THE PRE VIOUS ASSESSMENT YEAR, HAS BEEN ADDED BACK IN THE INCOME OF THE COMPANY. THE AO BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE MADE AN ADDITION TO THE TUNE OF RS.10,46,973/- ON ACCOUNT O F ADVANCE EXCISE DUTY. 3. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3 4. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SIMILAR ISSUE HAS ALREADY BEEN RESTORED TO THE ASSESSING OFFICER FOR FRESH EXAMINATION BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSM ENT YEAR 2007-08 VIDE ORDER DATED 10.12.2015 AND PRAYED THAT THE ISS UE IN HAND BEING SIMILAR MAY BE SET ASIDE TO THE FILE OF THE AO TO BE DECIDED AFRESH AFTER EXAMINING ALL THE FACTS AND CIRCUMSTANCES OF THE CA SE. 5. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE PER USED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ISSUE INVOLVE D IN THE PRESENT APPEAL ALREADY STANDS RESTORED BACK TO THE ASSESSING OFFIC ER BY THE AMRITSAR BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR TH E ASSESSMENT YEAR 2007-08 VIDE ITS ORDER DATED 10.12.2015 FOR FRESH D ECISION IN ACCORDANCE WITH LAW AFTER EXAMINING ALL THE FACTS AND CIRCUM STANCES OF THE CASE. THE RELEVANT FINDINGS GIVEN BY THE TRIBUNAL IN THE AFORESAID ORDER DATED 10.12.2015 ARE REPRODUCED AS UNDER: 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE T HROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ONLY IS SUE TO BE DECIDED BY US IN THIS APPEAL IS AS TO WHETHER THE EXCISE DU TY WHICH WAS OUTSTANDING AS ADVANCE AS ON 31.3.2007 IS ALLOWABLE EXPENDITURE IN THE YEAR OF PAYMENT OR IN THE YEAR OF INCURRING OF LIABILITY. WE FIND THAT THE CHANDIGARH BENCH OF TRIBUNAL IN THE CASE O F CIT VS. GLAXO SMITHKLINE CONSUMER HEALTH CARE LTD. 110 TTJ 183 UN DER SIMILAR FACTS AND CIRCUMSTANCES VIDE PARA 51 & 52 HAS HELD AS UNDER: 52. WE HAVE CONSIDERED IN DETAIL THE ARGUMENTS OF BOTH SIDES AND THE AUTHORITIES RELIED ON BY THEM; CONSIDERED T HE STATUTORY PROVISIONS AS WELL AS; EXAMINED THE EXACT NATURE OF THE ADVANCE PAYMENT OF EXCISE DUTY, ETC. WE HAVE FO UND THAT GENERALLY THOSE PAYMENTS ARE NOT PROVISIONAL OR REF UNDABLE. THEY ARE ACTUALLY PAYMENTS OF CENTRAL EXCISE DUTY. WE HAVE EXAMINED THE LEGISLATIVE INTENT AND PURPOSE OF SECT ION 43B. 4 THE ASSESSEES IN THE PAST WERE; NOT PAYING TAXES, D UTIES AND OTHER DUTIES TO TH GOVERNMENT IN TIME. AT THE SAME TIME, THEY WERE BOOKING THOSE ITEMS AS EXPENSES IN THEIR ACCOU NTS ON ACCRUAL BASIS ON THE GROUNDTHAT THEY ARE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. BY DOING SO THEY WERE CLAIMIN G DEDUCTION: AND REDUCING THE TAXABLE INCOME. CONCURR ENTLY IN MANY CASES, THE ASSESSEES WERE CHALLENGING THE VERY LIABILITY ITSELF BEFORE THE COURTS AND TRIBUNALS, FINALLY RES ULTING THE PAYMENTS BELATED, DEFERRED, AND SOMETIMES NEVER MAD E. IN ORDER TO STOP SUCH EXPLOITATION PRACTISED BY THE AS SESSEES, SECTION 43B HAS BEEN BROUGHT IN THE STATUTE DECLARI NG THAT 'WELL YOU CLAIM THE DEDUCTION, BUT ONLY ON ACTUAL P AYMENT'. THE LAW HAS MADE IT CLEAR THAT SUCH PAYMENTS ARE TO BE ALLOWED AS DEDUCTIONS IN'THE YEAR OF PAYMENT. SECTI ON 43B DOES NOT LAY DOWN ANY SEQUENCE OF ORDER OF EVENTS I N WHICH THE LIABILITY HAS TO BE INCURRED AND THE PAYMENT HA S TO BE MADE BY TH ASSESSEE. SECTION 43B DOES NOT LAY DOWN ANY RULE THAT THE LIABILITY TO PAY THE DUTY MUST INCUR FIRST AND ONLY THEREAFTER THE PAYMENT OF SUCH DUTY TO BE MADE SO A S TO CLAIM THE DEDUCTION UNDER JSECTIOH 43B. BUT THE REVENUE T RIES TO MAKE OUT A CASE THAT THE STATUTE HAS PRESCRIBED SUC H AN ORDER OF EVENTS. IN FACT THERE IS NO SUPH PRESCRIPTION IN THE! STATUTE; WE HAVE SEEN THAT THE EXPRESSION 'OTHERWISE ALLOWAB LE' REFERS ;TO A DECLARATION OF PERMISSION IN LAW THAT WHICH A RE AVAILABLE A DEDUCTIONS ON PAYMENT UNDER; SECTION 43B, ARE THO SE EXPENSES WHICH ARE USUALLY ALLOWED BY THE IT ACT FO R THE PURPOSE OF COMPUTING INCOME. WE HAVE SEEN THAT THE EXPRESSION 'ANY SUM PAYABLE' DOES NOT MEAN 'PAYMENT OUTSTANDING'. IN THE LIGHT OF THE DECISION OF THE S UPREME COURT IN THE CASE OF ALLIED MOTORS V. CIT (SUPRA), WE HAV E HELD THAT FOR THE PURPOSE OF SECTION 43B THE PROVISO TO THERE UNDER AND EXPLN. 2 HAVE TO BE READ AND CONSTRUED TOGETHER. 53. THEREFORE, WE HOLD THAT THE DEDUCTION FOR TAX, DUTY ETC. IS ALLOWABLE UNDER SECTION 43B OF THE IT ACT, 1961 ON PAYMENT BASIS BEFORE INCURRING THE LIABILITY TO PAY SUCH AMOUNTS. ACCORDINGLY, THE FIRST QUESTION IS ANSWERE D IN AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. WE FIND THAT FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE PARI MATERIA TO THE FACTS AND CIRCUMSTANCES OF M/S GLAXO SMITHKLINE CONSUMER HEALTH CARE LTD., THEREFORE, THE CLAIM OF THE ASSESSEE FOR ALLOWING THE DEDUCTION ON ACCOUNT OF PAYMENT OF ADV ANCE EXCISE DUTY IN THIS YEAR ON THE BASIS OF PAYMENT IS ALLOWA BLE EXPENDITURE, HOWEVER, TO EXAMINE AS TO WHETHER THE ASSESSEE AGAI N IN SUCCEEDING YEAR HAS NOT CLAIMED THE AMOUNT AS DEDUC TION THE CASE 5 IS REQUIRED TO BE REMITTED BACK TO THE ASSESSING OF FICER WHO ON THE BASIS OF RECORDS OF SUCCEEDING YEAR WILL EXAMINE AS TO WHETHER THE ASSESSEE HAD AGAIN CLAIMED THE ADVANCE EXCISE DUTY OF RS.6,23,156 OR NOT. IN CASE SUCH CLAIM HAS NOT BEEN CLAIMED IN THE SUCCEEDING YEAR, THE CLAIM IS ALLOWABLE IN THE PRESENT YEAR AN D IF THE ASSESSEE HAD CLAIMED AGAIN IN SUCCEDDING YEAR THEN THE CLAIM IS NOT ALLOWABLE IN THE PRESENT YEAR, THEREFORE, THE APPEA L IS REMITTED BACK TO ASSESSING OFFICER TO EXAMINE THESE FACTS. NEEDLE SS TO SAY THAT THE ASSESSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HEARD. 7. THEREFORE, FOLLOWING OUR OWN ORDER IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2007-08, DATED 10.12.2015 AND FOR T HE SAKE CONSISTENCY, WE CONSIDER IT APPROPRIATE TO REMIT TH IS ISSUE ALSO BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED AFR ESH AS DIRECTED IN THE ASSESSMENT YEAR 2007-08 AND IN ACCORDANCE WITH LAW, AFTER AFFORDING DUE AND ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. 8. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28/10/201 6. SD/- SD/- (N.K. CHOUDHRY) (T.S . KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 28/10/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. DEVSON PRIVATE LIMITED, JAMMU. 2. THE JCIT, RANGE-2, JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL