DCIT RG 9(1), MUMBAI V. CRYSTAL GRANITE & MARBLE P. LTD, MUMBAI

ITA 3249/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7638 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIJAY VARMA
• Keywords: Depreciation; Reasonable cause; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI T.R. SOOD, AM AND SHRI V. DURG RAO, JM I.T.A.NO. 3249/MUM/2009 ASSESSMENT YEAR : 2005-06 DY. COMMISSIONER OF INCOME-TAX, RANGE 9(1), ROOM NO. 223, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S. CRYSTAL GRANITE & MARBLE PVT. LTD., DYNAMIX HOUSE, GEN. A.K. VAIDYA MARG, GOREGAON (EAST), MUMBAI 400 063. PAN: AAACC 1661 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY VARMA RESPONDENT BY : SHRI VIJAY MEHTA O R D E R PER T.R. SOOD, AM: IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWIN G GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING DISALLOWANCE OF RS . 25,15,048/- BY ALLOWING THE DEPRECIATION @ 100% INSTEAD OF 25% ON THE WRITTEN DOWN VALUE OF THE WATER RECYCLING PLANT ALL OWED BY THE ASSESSING OFFICER, WITHOUT APPRECIATING THE FACT TH AT SYSTEM WAS JUST MEANT FOR REDUCING/PREVENTING THE BREAKAGE OF MARBLES AND GRANITES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE BY THE ASSESSING OFFICER AMOUNTING TO RS. 2,45,628/- ON AC COUNT OF CONTRIBUTION TO EMPLOYEES PROVIDENT FUND PAID AFTER THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW SECTION 36(1)(V A) OF THE I.T.ACT, 1961. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING TO MAKE ADJUSTMENT IN THE VALUE OF OPENING STOCK IN TERMS OF THE PROVISIONS OF SECTION 145A OF THE INCOME-TAX ACT, 1961 WITHOUT APPRECIATING THAT THE OPENING STOCK OF THE RELEVANT ASSESSMENT YEAR BEING THE CLO SING STOCK OF THE IMMEDIATELY PRECEDING YEAR, ANY ADJUSTMENT IN T HE VALUE OF THE OPENING STOCK WILL DISTURB THE CLOSING STOCK OF THE PRECEDING YEAR RESULTING IN CHAIN REACTION OF CHANGES DEFEATI NG THE INTENT OF SECTION 145A OF THE INCOME-TAX ACT, 1961. 2. AS REGARDS GROUND NO. 1, AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS ISSUE CAME UP BEFORE THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07 IN ITA NO. 2713/MUM/09 DATED 10.02.201 0 AND THE SAME WAS DECIDED VIDE PARAS 9 AND 9.1 WHICH READ AS UNDER: ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND RELEVANT MATE RIAL ON RECORD, WE FIND THAT THE LD CIT(A) WAS JUSTIFIED IN ALLOWING T HE CLAIM OF THE ASSESSEE. THE FINDINGS OF THE LD CIT(A) ARE GIVEN I N PARA 2.5 WHICH ARE AS UNDER: 2.5 I HAVE GONE THROUGH THE APPELLANTS SUBMISSION AS WELL AS THE ASSESSING OFFICERS ARGUMENT AND I AM OF THE CO NSIDERED VIEW THAT IN MODERN DAYS, NO INDUSTRY IS PERMITTED TO RUN WIT HOUT HAVING A POLLUTION CONTROL MACHINERY. FROM THE ABOVE DESCRI PTION OF THE WHOLE PROCESSING AND CUTTING OF THE GRANITE ROCKS, IT IS CLEAR THAT THE WATER RECYCLING PLANT/WATER RECYCLING PLANT/WATER FILTRAT ION SYSTEM INSTALLED AT THE PREMISES OF THE APPELLANT IS A WATER POLLUTI ON CONTROL PLANT AND THIS EQUIPMENT IS ESSENTIAL TO CONTROL AND PREVENT GROUND WATER POLLUTION IN THE SURROUNDING AREAS. THE APPELLANT S CONTENTION IS ALSO SUPPORTED BY THE CHARTERED ENGINEERS CERTIFICATE W HO HAS INSPECTED THE WATER RECYCLING PLANT INSTALLED AT THE FACTORY PREMISES OF THE APPELLANT COMPANY AND CERTIFIED THAT THIS PLANT CON TROLS WATER POLLUTION AS IT MECHANICALLY DISPOSES THE GENERATED TURBID AN D WASTE WATER AND ALSO CLEANS DISPOSES THE SLUDGE MIXED UP WITH WATER DURING THE PROCESS OF CUTTING AND POLISHING AND THIS EQUIPMENT IS ESSENTIAL FOR GRANITE INDUSTRY AS PER THE REQUIREMENT OF THE ENVI RONMENTAL AUTHORITY AND POLLUTION CONTROL BOARD TO CONTROL AND PREVENT THE GROUND WATER POLLUTION IN THE SURROUNDING AREA. THE KARNATAKA STATE POLLUTION AND CONTROL BOARD, BANGALORE HAS THEREFORE GRANTED ITS CONSENT UNDER THE PROVISIONS OF THE WATER PREVENTION AND OF POLLUTION ACT, 1974, VIDE LETTER DTD. 23.08.2007, WHICH IS VALID UP TO 30.09. 2008. THUS, CONSIDERING THE TOTALITY OF THE FACTS AND EVIDENCE ON RECORD, I HOLD THAT WATER RECYCLING PLANT/WATER FILTRATION SYSTEM IS EL IGIBLE FOR 100% DEPRECIATION AS PER THE NEW APPENDIX-I, PART-A, III (IX)(N) OF THE I.T. RULES. THE ASSESSING OFFICER IS THEREFORE DIRECTE D TO ALLOW DEPRECIATION ON WATER RECYCLING PLANT @100% AS AGAI NST 25% ALREADY ALLOWED TO THE ASSESSEE. THIS GROUND OF APPEAL IS ALLOWED. 9.1 THE ABOVE FINDINGS OF THE LD CIT(A) DOES NOT RE QUIRE ANY INTERFERENCE AS THE FINDINGS ARE AS PER PROVISIONS OF LAW AND AS PER I T RULES. THE EXPLANATION OFFERED BY THE ASSESSEE BEF ORE THE CIT(A) AS WELL AS HERE BEFORE US IS CORRECT AND THEREFORE, WI THOUT GOING FURTHER INTO DETAILS, WE CONFIRM THE FINDINGS OF THE LD CIT (A), WHICH REMAIN UNCONTROVERTED ALSO. 3. SINCE THE FACTS ARE IDENTICALLY SAME, FOLLOWING EARLIER ORDER OF THE TRIBUNAL, WE DECIDE THIS ISSUE AGAINST THE REVENUE. 4. AS REGARDS GROUND NO. 2, ADMITTEDLY THE PROVIDEN T FUND WAS PAID WITHIN GRACE PERIOD WHICH WAS DISALLOWED BY THE ASSESSING OFFICER. HOWEVER, THE SAME WAS ALLOWED BY THE LEARNED CIT(A). 5. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E RELIED ON THE ORDER OF THE ASSESSING OFFICER. ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 3 6. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT PAYMENTS WERE MADE WITHIN THE GRACE PERIOD AND, TH EREFORE, THE SAME SHOULD HAVE BEEN ALLOWED IN VIEW OF THE DECISION OF THE HO NBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHRI GANAPATHY MILLS CO. LTD. (243 ITR 879). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFULL Y, WE FIND THAT THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHRI GANA PATHY MILLS CO. LTD.(SUPRA) HAS HELD THAT PAYMENTS MADE WITHIN THE GRACE PERIOD TO THE PROVIDENT FUND AUTHORITIES ARE ALLOWABLE AS DEDUCTION UNDER SECTION 43B. FOLLO WING THAT DECISION, WE DECIDE THE ISSUE AGAINST THE REVENUE. 8. AS FAR AS GROUND NO.3, AFTER CONSIDERING THE RIV AL SUBMISSION, WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTICED THAT ASSESSEE HAD NOT ADDED THE AMOUNT OF SALES TAX PAID TO THE C LOSING STOCK IN TERMS OF SECTION 145A OF THE ACT AND, THEREFORE, THE ASSESSING OFFIC ER HAD ADDED THIS AMOUNT TOWARDS THE INCOME OF THE ASSESSEE. 9. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON VIDE PARA 5.2 OF HIS ORDER ON THE BASIS THAT THE PAYMENTS PERTAINED TO E XCISE DUTY. 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFUL LY, WE FIND FORCE IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ISSUE BASICALLY RELATES TO PAYMENT OF SALES-TAX. IT WAS FURTHER POINTED OUT THAT SALES-TAX WAS NOT INCLUDED IN THE PURCHASES ITSELF THAT IS WHY THE SAME IS NOT INCLUDED IN THE SALES-TAX ALSO. HOWEVER, WE FIND THAT THE LEARNED CIT(A) HAD ALLOWE D THE ASSESSEES APPEAL BUT ON THE BASIS OF EXCISE DUTY WHICH IS NOT CORRECT. T HEREFORE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE-CONSIDERATION OF THE ISSUE AND VERIFY WHETHE R THE SALES-TAX PAID WAS INCLUDED IN THE PURCHASES OR NOT AND THEN DECIDE THE ISSUE A CCORDINGLY. NEEDLESS TO SAY THAT THE ASSESSEE SHOULD BE AFFORDED ADEQUATE OPPORTUNI TY OF BEING HEARD. ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 4 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF MARCH 2010. SD. SD. (V.DURGA RAO) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 3 RD MARCH, 2010. COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE CIT-IX, MUMBAI 4. THE CIT(A)-IX, MUMBAI 5. THE DR C BENCH, MUMBAI BY ORDER /TRUE COPY/ KN/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 5 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26.02.2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 02.03.2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/A M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 6 ORDER PRONCOUNCED ON . 2. AT THE TIME OF HEARING NONE APPEARED ON BEHALF O F THE ASSESSEE- APPELLANT AS WELL AS NO PETITION FOR ADJOURNMENT WA S FILED. WE FIND FROM THE RECORDS THAT ASSESSEE-APPELLANT WAS SERVED NOTICE B Y REGISTERED POST ACKNOWLEDGEMENT DUE TWICE AND THE ACKNOWLEDG EMENT CARDS DULY SIGNED BY THE ASSESSEE ON 25.07.2007 AND 16.11.2 007 , RECEIVED BACK. IT IS THEREFORE, PRESUMED THAT THE ASSESSEE IS NOT INT ERESTED IN PURSUING THE APPEAL FILED BY IT. IT HAS BEEN HELD BY THE HONBLE MADHYA PRADESH HIGH COURT IN ESTATE OF LATE TUKOJIRAO HOLKAR VS. CWT (2 23 ITR 480)(MP) THAT IF THE PARTY, AT WHOSE INSTANCE THE REFERENCE IS MADE, FAILS TO APPEAR AT THE HEARING OR FAILS IN TAKING STEPS FOR PREPARATION OF PAPER-BOOKS, SO AS TO ENABLE HEARING OF THE REFERENCE, THE COURT IS NOT B OUND TO ANSWER THE REFERENCE. THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN CIT VS. MULTIPLAN (INDIA) PVT. LTD., 38 ITD 320 (DEL.) IS A LSO TO THE SAME EFFECT. IN THE FACTS OF THE CASE WE HOLD THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE PRESENT APPEAL BEFORE THE TRIBUNAL, ACCORDINGLY THE APPEAL OF THE ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 7 ASSESSEE IS DISMISSED AS UNADMITTED. THE ASSESSEE, IF SO ADVISED, SHALL BE FREE TO MOVE THE TRIBUNAL PRAYING FOR RECALLING OF THIS ORDER PROVIDED THE ASSESSEE IS ABLE TO ESTABLISH THE REASONABLE CAUSE BEHIND THE NON- APPEARANCE ON THE DATE OF HEARING AND IN THAT CASE THE TRIBUNAL MAY IN ITS DISCRETION RECALL THIS ORDER AND THE APPEAL MAY BE RESTORED FOR RE-HEARING. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2 007. 2. FROM THE GROUNDS FILED BY THE ASSESSEE BEFORE TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) WE FIND THAT THE LEVY PERTA INED TO CONCEALMENT OF INCOME OF RS. 1,02,744/- AND THE PENALTY LEVIED WAS RS. 22 ,248/-. THEREFORE IN VIEW OF CBDT CIRCULAR F.NO. 279/MISC.142/2007-IT DATED 15 TH MAY, 2008 THE APPEAL IS NOT MAINTAINABLE, TAX EFFECT BEING LESS THAN RS. 2 LAKH S. VIDE PARA 4 OF THIS CIRCULAR IT IS CLEARLY MENTIONED THAT THE TAX EFFECT IN ASCERTA INING MONETARY LIMITS FOR FILING OF APPEALS, IN THE CASE OF PENALTY ORDERS, WOULD MEAN QUANTUM OF PENALTY DELETED OR REDUCED. 3. THEREFORE, APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. ORDER PRONOUNCED ON THIS _______ DAY OF MAY, 2009 . (G.C. GUPTA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE ______MAY, 2009. KN COPY TO: 6. THE ASSESSEE 7. THE ITO-26(1)(2), MUMBAI. 8. THE CIT, CITY-XXVI, MUMBAI 9. THE CIT(A)-XXVIII, MUMBAI 10. THE DR, G BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 8 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 18.05.09 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 18.05.09 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER ITA NO.3249/M/09 M/S. CRYSTAL GRANITE & MARBLE PVT.LTD. 9