M/s. Arti Ship Breaking, Bhavnagar V. The Income tax Officer,Ward-2(2), Bhavnagar

ITA 3153/AHD/2011

• Counselvise Citation: 315320514 RSA 2011
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 26-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 12-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Assessee Lawyers: M K PATEL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.3153 / AHD/2011 (ASSESSMENT YEAR 2006-07) M/S. ARTI SHIP BREAKING SHIV BUILDING, DIWANPARA ROAD, BHAVNAGAR-346001 VS. ITO, WARD 2(2), BHAVNAGAR PAN/GIR NO. : AAEFA7172R (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI MK PATEL, AR RESPONDENT BY: SHRI D K SINGH, SR. DR DATE OF HEARING: 26.10.2012 DATE OF PRONOUNCEMENT: 30.11.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORD ER OF LD. CIT(A) XX, AHMEDABAD DATED 06.09.2011 FOR THE ASSESSMENT Y EAR 2006-07. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: (1) THAT ON FACTS AND IN LAW THE LEARNED CIT (A) HAS GRIEVOUSLY ERRED IN CONFIRMING THE RE-OPENING OF ASSESSMENT U/ S.147 OF THE ACT. (2) THAT ON FACTS AND IN LAW, THE LEARNED CIT (A) HAS GRIEVOUSLY ERRED IN CONFIRMING THE ADDITION OF RS.2 2,77,292/- BEING EXCISE DUTY PAYMENT. (3) THAT ON FACTS IN LAW, IT OUGHT TO HAVE BEE N HELD THAT THE EXCISE DUTY IS ALLOWABLE SINCE IT CRYSTALLIZED IN T HE YEAR UNDER CONSIDERATION. (4) THE APPELLANT CRAVES LEAVE TO ADD, ALTE R, AMEND ANY GROUND OF APPEAL. I.T.A.NO.3153 /AHD/2011 2 2. REGARDING THE MERIT OF THE ADDITION MADE BY THE A.O., BRIEF FACTS ARE THAT IT IS NOTED BY THE A.O. ON PAGE 2OF THE AS SESSMENT ORDER THAT AS PER THE ASSESSEE, THE EXCISE AND CUSTOMS LIABILITY IN QUESTION WAS DISPUTED LIABILITY FOR AN EARLIER YEAR AND IN FINANCIAL YEAR 2004-05, PURSUANT TO SUCH DISPUTED LIABILITY, PAYMENT OF RS.22,77,252/- WAS M ADE TO CUSTOMS DEPARTMENT UNDER PROTEST. AS PER THE ASSESSEE, SIN CE THE LIABILITY WAS DISPUTED, IT WAS SHOWN IN THE BALANCE SHEET UNDER T HE HEADING LOANS AND ADVANCES AND CARRIED FORWARD. IT WAS THE CLAIM OF THE ASSESSEE THAT LIABILITY HAS CRYSTALLIZED IN THE PRESENT YEAR AS P ER THE DECISION OF CESTAT AND, THEREFORE, THE SAME SHOULD BE ALLOWED I N THE PRESENT YEAR. THE A.O. WAS NOT SATISFIED AND HE MADE THE ADDITION . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD . CIT(A) BUT WITHOUT SUCCESS AND NOW, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 3. IT WAS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT THE ORDER OF CESTAT IN APPEAL NO. E/573/04 DATED 24.05.2005 IS A VAILABLE ON PAGES 24-26 OF THE PAPER BOOK AS PER WHICH THE APPEAL OF THE ASSESSEE WAS DISMISSED. HE SUBMITTED THAT THE DATE OF THIS TRIB UNAL ORDER FALLS WITHIN THE FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT Y EAR 2006-07 AND, THEREFORE, LIABILITY HAS CRYSTALLIZED IN THIS YEAR AND HENCE, DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE IN THE PRESENT YE AR. HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT REND ERED IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. VS C IT AS REPORTED IN 213 ITR 523 (GUJ.). 4. AS AGAINST THIS, LD. D.R. SUPPORTED THE ORDERS O F AUTHORITIES BELOW. HE ALSO SUBMITTED THAT THIS EXPENDITURE IS NEITHER CONNECTED TO THE PRESENT YEAR NOR IT WAS PAID DURING THE PRESENT YEAR AND HE NCE, DEDUCTION IS NOT ALLOWABLE IN THE PRESENT YEAR. I.T.A.NO.3153 /AHD/2011 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW AND THE JUDGEMENT CITED BY THE LD. A.R. REGARDING THE FACT S, WE FIND THAT THE IMPUGNED EXPENDITURE WAS PERTAINING TO PRIOR PERIOD AND THE SAME WAS PAID DURING THE FINANCIAL YEAR 2004-05, RELEVANT TO ASSESSMENT YEAR 2005- 06 BUT THE DEDUCTION IS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEAR 2006- 07 ON THE BASIS OF DECISION OF CESTAT. IN THE LIGH T OF THESE FACTS, WE HAVE TO CONSIDER APPLICABILITY OF THE DECISION OF H ONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. (SUPRA). IN THAT CASE, IT WAS HELD BY THE HON BLE GUJARAT HIGH COURT THAT MERELY BECAUSE THE EXPENSES RELATES TO A TRANS ACTION OF AN EARLIER YEAR, IT DOES NOT BECOME LIABILITY PAYABLE IN THE E ARLIER YEAR UNLESS IT CAN BE SAID THAT THE LIABILITY WAS DETERMINED AND CRYST ALLIZED IN THE YEAR IN QUESTION ON THE BASIS OF MAINTAINING ACCOUNTS ON TH E MERCANTILE BASIS. HENCE, IT WAS HELD IN THAT CASE BY HONBLE GUJARAT HIGH COURT THAT IF LIABILITY HAS CRYSTALLIZED IN THE LATER YEAR, DEDUC TION IS ALLOWABLE IN THE LATER YEAR BUT IN THE PRESENT CASE, THE AMOUNT IN Q UESTION IS RELATING TO PAYMENT OF CUSTOM AND EXCISE DUTY AND HENCE, SECTIO N 43B IS APPLICABLE. AS PER THE PROVISIONS OF SECTION 43B, IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM, DEDUCTION SHOULD BE ALLOWED ONLY IN COMPUTATION OF INCOME IN THE YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. AS PER THE FACTS OF THE PRESENT CASE, THIS AMOUNT WAS NOT PAID BY THE ASSESSEE IN T HE PRESENT YEAR AND THIS IS AN ADMITTED FACTUAL POSITION. HENCE, AS PER THE PROVISIONS OF SECTION 43B, DEDUCTION IS NOT ALLOWABLE TO THE ASSESSEE IN THE PRESENT YEAR IN THE LIGHT OF THESE PROVISIONS OF SECTION 43B AND THE FA CTS OF THE PRESENT CASE. I.T.A.NO.3153 /AHD/2011 4 THIS JUDGEMENT OF HONBLE GUJARAT HIGH COURT CITED BY THE LD. A.R. IS NOT RELEVANT IN THE PRESENT CASE BECAUSE IN THAT JU DGEMENT, SECTION 43B WAS NOT APPLICABLE AS THE DISPUTE WAS NOT RELATING TO TAX AND DUTIES BUT IT WAS RELATING TO FEES PAID TO THE EXPERT, OUT OF POC KET EXPENSES INCURRED BY CONSULTANT FIRM AND DISCHARGE OF LIABILITY ON ACCOU NT OF DEMURRAGE CLAIMED BY PORT AUTHORITIES. HENCE, AFTER INSERTIO N OF SECTION 43B OF THE INCOME TAX ACT, 1961 AND RELATING TO THE LIABILITY OF DEDUCTION IN RESPECT OF PAYMENT OF TAX AND DUTIES, SECTION 43B IS THE OV ERRIDING SECTION IN RESPECT OF THE YEAR OF ALLOWABILITY OF SUCH EXPENDI TURE INCURRED IN RELATION TO PAYMENT OF TAX AND DUTIES WHICH IS ALLOWABLE IN THE YEAR OF PAYMENT ONLY. HENCE, IN THE PRESENT CASE, SINCE THESE EXPE NSES WERE NOT PAID IN THE PRESENT YEAR, DEDUCTION IS NOT ALLOWABLE IN THE PRESENT YEAR. HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (G. C GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO.3153 /AHD/2011 5 1. DATE OF DICTATION 22/11/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 23.11.212.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 30/11/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.30/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30/11/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .