The Assistant Commissioner of Income Tax, Circle-1(1), Panaji., Panaji V. M/s Goa Carbon Ltd., Panaji

ITA 325/PAN/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2237 (ITAT-PANAJI)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KESHAV M DIXIT
• Assessee Lawyers: TAXATION; SHARMILA PRABHU SR GM FINANCE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NOS. 325 & 326/PNJ/2015 : (A.YS 2009 - 10 & 2010 - 11) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PANAJI, GOA. (APPELLANT) VS. M/S. GOA CARBON LTD. DEMPO HOUSE, CAMPAL, PANAJI, GOA (RESPONDENT) PAN : AAACG6842K ASSESSEE BY : SMT. SHARMILA PRABHU, SR. GM, FINANCE & TAXATION REVENUE BY : KESHAV M. DIXIT, DR DATE OF HEARING : 24/11/2015 DATE OF PRONOUNCEMENT : 24/11/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 325/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), PANAJI - 1 IN ITA NO. 387/PNJ/11 - 12 DT. 11.5.2015 FOR THE A.Y 2009 - 10 AND ITA NO. 326/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A), PANAJI - 1 IN ITA NO. 59/PNJ/13 - 14 DT. 11.5.2015 FOR THE A.Y 2010 - 11. SHRI KESHAV M. DIXIT, LD. DR REPRESENTED ON BEHALF OF THE REV ENUE AND SMT. SHARMILA PRABHU, SR. G.M, FINANCE & TAXATION OF THE ASSESSEE REPRESENTED ON BEHALF OF THE ASSESSEE. 2. AT THE TIME OF THE HEARING IT WAS FAIRLY AGREED BY BOTH THE SIDES THAT GROUND NOS. 1 & 2 IN A.Y 2009 - 10 IN ITA NO. 325/PNJ/2015 AND GROUND NO.2 2 ITA NOS. 325 & 326/PNJ/2015 (A.YS : 2009 - 10 & 2010 - 11) IN A.Y 2010 - 11 IN ITA NO. 326/PNJ/2015 ARE SQUARELY COVERED BY THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 192/PNJ/2015 FOR THE A.Y 2012 - 13 DT. 12.8.2015 WHEREIN THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS FOLLOWS : 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THOUGH THE ASSESSEE HAS BEEN SPECIFICALLY DIRECTED TO SHOW THAT THE CONTRACTS WERE TAKEN EXCLUSIVELY FOR THE PURCHASE OF RAW MATERIALS, THE ASSESSEE HAS NOT BEEN ABLE TO PROVE SO. IF THE ASSESSEE HAS ENTERED INTO FORWARD CONTRACT EXCLUSIVELY FOR THE PURCHASE OF THE RAW MATERIALS, THEN, TO THE EXTENT OF SAID PURCHASES OF RAW MATERIALS THE LOSS INCURRED BY THE ASSESSEE IN RESPECT OF THE FORWARD CONTRACT WOULD BE AN ALLOWABLE EXPENDITURE IN V IEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF WOODWARD GOVERNOR INDIA PVT. LTD. REFERRED TO SUPRA. HOWEVER, IF THE FORWARD CONTRACT HAS BEEN ENTERED INTO BY THE ASSESSEE AND THE SAME IS IN EXCESS OF THE COST OF PURCHASES OF RAW MATERIALS, THEN, THE EXCESS OF THE FORWARD CONTRACT IN FOREIGN EXCHANGE WOULD BE TREATED AS SPECULATIVE. THIS EVIDENCE NEEDS TO BE VERIFIED AND EXCLUSIVELY FOR THIS PURPOSE, THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR RE - ADJUDICATION. CONSEQUENTLY, CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES, THE ISSUE OF LOSS IN RESPECT OF FORWARD CONTRACT IS RESTORED TO THE FILE OF THE AO FOR RE - ADJUDICATION IN LINE WITH THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 192/PNJ/201 5 FOR THE A.Y 2012 - 13 DT. 12.8.2015. 3. IN RESPECT OF GROUND NO. 1 IN ITA NO. 326/PNJ/2015 IT WAS SUBMITTED BY THE LD. DR THAT IN THE COURSE OF THE ASSESSMENT THE AO HAD DISALLOWED THE CLAIM OF EXCESS RENT TO THE EXTENT OF RS . 13,63,296/ - . IT WAS THE SUBMISSION THAT THE ASSESSEE WAS CLAIMING THIS EXCESS RENT AS AN AFTERTHOUGHT TO REDUCE ITS INCOME. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ALLOWED THE CLAIM OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD . CIT(A) WAS LIABLE TO BE REVERSED. 3 ITA NOS. 325 & 326/PNJ/2015 (A.YS : 2009 - 10 & 2010 - 11) 4. IN REPLY, THE LD. AR SUBMITTED THAT THE AO HAS NOT DISPUTED THE GENUINENESS OF THE TRANSACTION. FURTHER, THE RENT HAS BEEN PAID BY CHEQUE, TDS HAS ALSO BEEN DEDUCTED AND THE RATE OF RENT IS THE SAME AS CHARGED FROM OTHER GROUP COMPANIES. IT WAS THE SUBMISSION THAT THIS WAS THE RENT IN RESPECT OF AN AREA OF 357.5 SQ. MTRS. ON THE FIRST FLOOR OF A BUILDING KNOWN AS DEMPO HOUSE WHERE MOST OF THE DEMPO GROUP COMPANIES ARE OPERATING FROM. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE SUSTAINED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ORDER OF THE LD. CIT(A) CLEARLY SHOWS THAT THE LD. CIT(A) HAS TAKEN INTO CONSIDERATION THE FACT THAT THE RENT BEING CHARGED TO THE ASSESSEE IS AT THE SAME RATE AS IS BEING CHARGED TO THE OTHER GROUP CONCERNS. THIS BEING SO, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH CALLS FOR ANY INTERFERENCE. IN THE RESULT, GROUND NO. 1 IN REVENUES APPEAL BEING ITA NO. 326/PNJ/2015 STANDS D ISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 24/11/2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - (GEORGE MATH AN) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 24/11/2015 *SSL* 4 ITA NOS. 325 & 326/PNJ/2015 (A.YS : 2009 - 10 & 2010 - 11) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER, 5 ITA NOS. 325 & 326/PNJ/2015 (A.YS : 2009 - 10 & 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 24/11/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 24/11/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 2 6 /11/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 2 6 /11/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 6 /11/2015 SR.PS 6. DATE OF PRONOUNCEMENT 24/11/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 2 6 /11/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER