Asian Tubes Ltd., Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 3236/AHD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6155 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Revenue expenditure

Judgement Text

ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH,AH MEDABAD. (BEFORE SHRI T.K. SHARMA & SHRI A. K. GARODIA) I.T .A. NO.3236/AHD/2010 (ASSESSMENT YEAR 2006- 2007) ASIAN TUBES LTD., 101,SAKAR III, NEAR I.T. CIRCLE, ASHRAM ROAD, AHMEDABAD-14. (APPELLANT) VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIORCLE-1, 1 ST FLOOR, JITENDRA CHAMBERS, NR. R.B.I., AHMEDABAD. (RESPONDENT) PAN: AABCA 2797 E APPELLANT BY : SHRI GAURAV NAHTA RESPONDENT BY : SHRI SAMIR TEKRIWAL, SR.D.R. ( (( ( )/ )/)/ )/ ORDER PER: SHRI A.K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER OF LD. CIT (A)- VI, AHMEDABAD DATED 21-9-2010 FOR ASSESSMENT YEAR 2 006-07. 2. GROUND NO.1 OF ASSESSEES APPEAL IS AS UNDER:- 1. THE LD. CIT(A) VI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN PASSING APPELLATE ORDER DATED 21-9-2010 FOR A.Y. 2006-07 IN THE CASE OF APPELLANT BY CONFIRMING THE DISALLOWANCE OF RS.1,30,500/- ON ACCOUNT OF INCREASE IN AUTHORIZED CAPITAL. ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 2 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. THAT THE ASSESSEE HAS PAID RS.1,30,500/- AS ROC FEES FOR INCREASING THE AUTHORIZED CAPITAL FROM RS. 3 CRORES TO RS.5 CRORES. THE A.O. DISALLOW ED THE SAME BY FOLLOWING VARIOUS JUDGEMENTS I.E. JUDGMENT OF HONBLE APEX CO URT IN THE CASE OF PUNJAB STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD ., (PSIDC LTD.) (1997) 225 ITR 792 AND IN THE CASE OF BROOKE BOND INDIA LT D. VS. CIT (1997) 225 ITR 798 AND ALSO OF HONBLE GUJARAT HIGH COURT IN T HE CASE OF VARELI TEXTILE INDUSTRIES VS. CIT (2006) 284 ITR 238 (GUJ. ).BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT (A). BEFORE THE LD. CIT(A), RELIANCE WAS PLACED BY THE ASSESSEE ON THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. GENERAL INSURANCE CORPORATION (2006) 286 ITR 232 (SC). IT IS OBSERVED BY THE LD. CIT (A) IN PARAGRAPH 2.3 OF HIS ORDER THAT THE ISSUE INVOLVED BEFORE THE HON BLE APEX COURT (SUPRA) WAS REGARDING OTHER EXPENSES IN CONNECTION WITH THE ISSUE OF BONUS SHARES AND NOT EXPENSES INCURRED TOWARDS PAYMENT OF ROC FE ES FOR INCREASING AUTHORIZED CAPITAL. THE LD. CIT (A) DECIDED THIS IS SUE AGAINST THE ASSESSEE AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US . 4. IT IS SUBMITTED BY LD. A.R. OF THE ASSESSEE BEFO RE US THAT IN THE PRESENT CASE, THE ISSUE IS REGARDING ROC FEES PAID FOR INCR EASING AUTHORIZED SHARE CAPITAL FOR BONUS SHARES AND HENCE, AS PER THE DECI SION OF HONBLE APEX COURT RENDERED IN THE CASE OF GENERAL INSURANCE COR PORATION (SUPRA), THE DISALLOWANCE MADE BY THE A.O. SHOULD BE DELETED. 5. AS AGAINST THIS, IT IS SUBMITTED BY THE LD. D.R. OF THE REVENUE THAT IN THE CASE OF CIT VS. GENERAL INSURANCE CORPORATION ( SUPRA), THE DISALLOWANCE ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 3 MADE BY THE A.O. WAS REGARDING ROC FEES PAID BY THE ASSESSEE FOR INCREASING AUTHORIZED CAPITAL AND OTHER EXPENSES IN CONNECTION WITH THE ISSUE OF BONUS SHARES. IT IS FURTHER SUBMITTED THAT THE L D. CIT (A) HAS BIFURCATED THESE EXPENSES INTO TWO CATEGORIES. ONE CATEGORY WA S RELATING TO THE INCREASE IN THE AUTHORIZED SHARE CAPITAL FROM RS.75 CRORES T O RS.250 CRORES AND THE SECOND CATEGORY WAS RELATING TO OTHER EXPENSES FOR ISSUE OF BONUS SHARES. IT IS ALSO POINTED OUT THAT IN RESPECT OF FIRST CATEGO RY OF EXPENDITURE I.E. RELATING TO EXPENSES FOR INCREASE IN AUTHORIZED SHARE CAPITA L, IT WAS HELD BY THE LD. CIT (A) IN THAT CASE THAT THE SAME WAS NOT ALLOWABL E IN TERMS OF THE DECISION OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE O F BOMBAY BURMAH TRADING CORPORATION LTD. VS. CIT 145 ITR 793 AND TW O OTHER DECISIONS OF THE SAME HIGH COURT. HOWEVER, FOR THE EXPENDITURE F ALLING IN SECOND CATEGORY, IT WAS HELD BY THE LD. CIT (A) THAT THE S AME IS ALLOWABLE AS REVENUE EXPENDITURE. BEING AGGRIEVED, THE REVENUE C ARRIED THE MATTER BEFORE THE TRIBUNAL IN THAT CASE AND THE TRIBUNAL UPHELD T HE DECISION OF LD. CIT (A) AND IT WAS APPROVED BY HONBLE BOMBAY HIGH COURT AN D THEN BEFORE THE HONBLE APEX COURT, APPEAL WAS FILED BY THE REVENUE AND HENCE, THE ISSUE IN DISPUTE IN THAT CASE BEFORE THE TRIBUNAL AND HIG H COURT AND BEFORE APEX COURT WAS REGARDING OTHER EXPENDITURE INCURRED BY T HE ASSESSEE FOR ISSUING THE BONUS SHARES AND NOT THE ROC FEES PAID BY THE A SSESSEE FOR INCREASING AUTHORIZED CAPITAL AND THEREFORE, THIS JUDGMENT IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE FIND THAT THE LD. A.O. HAS MADE THE DISALLOWANCE BY FOLL OWING TWO JUDGMENTS OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. PSIDC (SUPRA) AND IN THE ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 4 CASE OF BROOKE BOND INDIA LTD., (SUPRA). AS AGAINST THIS, THE A.R. OF THE ASSESSEE HAS PLACED RELIANCE ON ANOTHER JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF GENERAL INSURANCE CORPORATI ON (SUPRA). WE HAVE GONE THROUGH BOTH THESE JUDGMENTS WHICH ARE FOLLOWE D BY THE A.O. AND FIND THAT THE ISSUE INVOLVED WAS REGARDING THE EXPENSES INCURRED BY THE ASSESSEE TOWARDS FEES PAID TO ROC FOR INCREASE IN AUTHORIZED CAPITAL AND THE SAME WAS DECIDED AGAINST THE ASSESSEE WHEREAS IN THE SEC OND CASE ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. A.R. I.E. JUDGM ENT RENDERED IN THE CASE OF CIT V/S GENERAL INSURANCE CORPORATION (SUPRA), T HE ISSUE INVOLVED WAS REGARDING OTHER EXPENSES INCURRED BY THE ASSESSEE-C OMPANY ON ISSUE OF BONUS SHARES. IN THAT CASE, THE ISSUE RELATING TO P AYMENT OF ROC FEES FOR INCREASE IN AUTHORIZED CAPITAL WAS DECIDED BY LD. C IT (A) AGAINST THE ASSESSEE AND IT APPEARS THAT THE ASSESSEE HAS NOT C ARRIED THE MATTER IN FURTHER APPEAL. BE THAT AS IT MAY BUT THE SECOND JUDGMENT C ITED BY THE LD. A.R. OF THE ASSESSEE IS OF NO HELP TO THE ASSESSEE IN THE P RESENT CASE, BECAUSE THIS ISSUE WAS NOT BEFORE THE HONBLE APEX COURT AS TO W HETHER THE PAYMENT OF ROC FEES FOR INCREASE IN AUTHORIZED CAPITAL IS ALLO WABLE OR NOT. HENCE, THE ISSUE REGARDING PAYMENT OF ROC FEES FOR INCREASE IN AUTHORIZED CAPITAL IS COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF HON BLE APEX COURT RENDERED IN THE CASE OF PSIDC (SUPRA) AND BROOKE BOND INDIA LTD., (SUPRA) AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. THEREFORE, THIS GROUND NO.1 OF THE ASSESSEE IS REJECTED. 7. GROUND NO.2 OF THE ASSESSEE IS AS UNDER:- 2. THE LD. CIT (A) ALSO ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS.1,74,625/- ON ACCOUNT OF LATE PA YMENT OF PF AND ESIC. ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 5 8. THE ISSUE IN DISPUTE AS PER THIS GROUND IS RELAT ING TO DISALLOWANCE MADE BY THE A.O. IN CONNECTION WITH LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC. IT WAS SU BMITTED BY THE LD. A.R. OF THE ASSESSEE THAT THE ISSUE IS NOW COVERED IN FA VOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD., 319 ITR 306 (SC). RESPECTFULLY FOL LOWING THIS JUDGMENT OF HONBLE APEX COURT, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE GROUND NO.2 OF THE ASSESSEE IS ALL OWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 08 - 07 - 2 011. SD./- SD./- ( T. K. SHARMA) (A.K. GARODIA) JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD. DATED: 08- 07 - 2011. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)-VI, AHMEDABAD. 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD. ITA NO.3236/AHD/2010 . ASS ESSMENT YEAR 2006- 07 6 1.DATE OF DICTATION 1 - 07 -2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 4 /07 / 2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2011 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2011 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2011. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..