BRITACEL SILICONES LTD, MUMBAI V. DCIT 8(1), MUMBAI

ITA 3170/MUM/2010

• Counselvise Citation: 317019914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 30-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T T JACOB
• Assessee Lawyers: PRAMOD KUMAR PARIDA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER. I.T.A. NO. 3170/MUM/2010. ASSESS MENT YEAR : 2005-06. M/S BRITACEL SILICONES LTD., DY. COMMISSIONER OF INCOME-TAX, F-18, F BLOCK ROAD, MIDC MAROL, VS. 8(1), MUMBAI. ANDHERI (EAST), MUMBAI 400 093. PAN AABCB 2289 A APPELLANT. RESPONDENT. APPELLANT BY : SHRI PRAMOD KUMAR PARIDA. RESPON DENT BY : SHRI T.T. JACOB. O R D E R. PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-16, MUMBAI DATED 02-03-2010. 2. IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LEARNED CIT(APPEALS) IN CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEES CLAIM FOR DEDUCTION U/S 80IB IN RESPECT OF INTEREST INCOME AND ALSO DISALLOWING THE CLAIM OF THE ASSESSEE FOR THE BENEF IT OF NETTING OF INTEREST INCOME. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DRESSER RAND INDIA P. LTD. 330 ITR 453 WHEREIN IT WAS HELD FOLLOWING 2 ITA NO. 3170/MUM/2010 ASSTT. YEAR : 2005-06 THE DECISION OF HONBLE SUPREME COURT IN THE CASE O F LIBERTY INDIA VS. CIT 317 ITR 218 THAT INTEREST ON DEPOSITS WILL NOT BE ELIGI BLE FOR DEDUCTION U/S 80IB. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT(APPEAL S) CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF ASSESSEE S CLAIM FOR DEDUCTION U/S 80IB AND DISMISS GROUND NO.1 OF THE ASSESSEES APP EAL. 4. GROUND NO. 2 RELATING TO ASSESSEES CLAIM FOR LO SS ON SALE OF DEPRECIABLE ASSETS AMOUNTING TO RS.6,28,107/- HAS NOT BEEN PRES SED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 5. THE ISSUE RAISED IN GROUND NO. 3 RELATES TO THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUN T OF ASSESSEES CLAIM FOR LOSS DUE TO EMBEZZLEMENT. 6. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH IT S RETURN OF INCOME, THE ASSESSEE COMPANY HAD DEBITED A SUM OF RS.1 LAKH ON ACCOUNT OF CASH STOLEN. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THAT CASH OF RS.1 LAKH WAS STOLEN FROM ITS DIRECTOR MR. NAISHADH H. DESAI WHEN HE WAS TRAVELLING FROM MUMBAI TO COIMBATORE ON 04-12-2 004. A COPY OF FIR FILED WITH THE POLICE DEPARTMENT WAS ALSO PRODUCED BY THE ASSESSEE IN SUPPORT. ON FURTHER EXAMINATION OF THIS ISSUE, THE AO FOUND THA T STOLEN CASH TO THE EXTENT OF RS.62,000/- WAS RECOVERED BY THE POLICE AND RELEASE OF THE CASH SO RECOVERED WAS ORDERED BY THE METROPOLITAN MAGISTRATE. HE, THEREFO RE, HELD THAT THE LOSS CLAIMED BY THE ASSESSEE ON ACCOUNT OF STOLEN CASH WAS ALLOW ABLE ONLY TO THE EXTENT OF RS.38,000/- AND THE ASSESSEES CLAIM FOR THE BALANC E LOSS OF RS.62,000/- WAS DISALLOWED BY THE AO. BEFORE THE LEARNED CIT(APPEAL S), THE ASSESSEE SUBMITTED 3 ITA NO. 3170/MUM/2010 ASSTT. YEAR : 2005-06 THAT INSPITE THE ORDER PASSED BY THE METROPOLITAN M AGISTRATE, THE STOLEN CASH WAS NOT ACTUALLY RECEIVED BY IT. THIS SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE LEARNED CIT(APPEALS) AS, ACCORDIN G TO HIM, THE ASSESSEE COMPANY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, WAS NOT ENTITLED TO CLAIM DEDUCTION ON ACCOUNT OF STOLEN CASH WHICH WAS RECOV ERED BY THE POLICE AND ORDERED TO BE RELEASED BY THE COURT. HE, THEREFORE, CONFIRMED THE DISALLOWANCE MADE BY THE AO ON THIS ISSUE. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT A LOSS OF R S.1 LAKH WAS SUFFERED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AS A R ESULT OF CASH STOLEN FROM ITS DIRECTOR ON 04-12-2004 AND THIS BEING THE UNDISPUTE D POSITION, THE ASSESSEE COMPANY FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, IN OUR OPINION, WAS ENTITLED TO CLAIM DEDUCTION OF THE SAID LOSS TO THE EXTENT O F RS.1 LAKH. ALTHOUGH THE SAID STOLEN CASH TO THE EXTENT OF RS.62,000/- WAS RECOVE RED BY THE POLICE AND RELEASE OF THE SAME WAS ALSO ORDERED BY THE COURT, THE FACT RE MAINS TO BE SEEN IS THAT THE ASSESSEE HAS NOT RECEIVED THE SAID AMOUNT TILL DATE AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE. WE, THEREFORE, FIND MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT AS AND WHEN THE SAID CASH IS RECEIVED BY THE ASSESSEE, THE SAME CAN BE BROUGHT TO TAX IN THE YEAR OF RECEI PT U/S 28. HE HAS SUBMITTED THAT THE ASSESSEE IS READY TO UNDERTAKE TO OFFER THE SAI D AMOUNT TO TAX IN THE YEAR OF RECEIPT. WE, THEREFORE, HOLD THAT A DEDUCTION FOR THE ENTIRE AMOUNT OF RS.1 LAKH STOLEN IN THE YEAR UNDER CONSIDERATION CAN APPROPRI ATELY BE ALLOWED TO THE ASSESSEE AS CLAIMED AS THE LOSS TO THAT EXTENT WAS INCURRED BY THE ASSESSEE IN THAT YEAR. IN THAT VIEW OF THE MATTER, WE DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON THIS ISSUE AND ALLOW GROUND NO. 3 OF THE ASSESSEE. 4 ITA NO. 3170/MUM/2010 ASSTT. YEAR : 2005-06 8. AS REGARDS GROUND NO.4, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SOUGHT ONLY A CONSEQUENTIAL RELIEF IN RESPECT OF ISSUES RAISED THEREIN RELATING TO CHARGING OF INTEREST U/S 234A, 234B, 234C AND 234D. THE AO IS A CCORDINGLY DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSESSEE ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. . ORDER PRONOUNCED ON THIS 15 TH DAY OF JULY, 2011. SD/- SD/- (ASHA VIJAYRAGHAVAN) (P. M. JAGTAP) JUDICIAL MEMBER A CCOUNTANT MEMBER MUMBAI, DATED: 15 TH JULY, 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, F-BENCH. (TRUE COPY ) BY ORD ER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MUMBA I. WAKODE