THIRUMALAI CHEMICALS LTD, MUMBAI V. ADDL CIT RG 1(3), MUMBAI

ITA 3277/MUM/2010

• Counselvise Citation: 327719914 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 22-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH; KUSUM INGALE
• Keywords: Double taxation relief; Opportunity of being heard; Additional evidence
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI B. RAMAKOTAI AH (AM) I.T.A. NO.3277/MUM/2010 (A.Y. 2006-07) THIRUMALAI CHEMICALS LTD., THIRUMALAI HOUSE, PLOT NO.101/102, SION MATUNGA ESTATE, SCHEME NO.6, ROAD NO.29, SION (E), MUMBAI-400 022. PAN : AAACT2015M. VS. ADDL. COMMR. OF INCOME-TAX, RANGE-1(3), MUMBAI. APPELLANT RESPONDENT I.T.A. NO.4250/MUM/2010 (A.Y. 2006-07) ASSTT. COMMR. OF INCOME-TAX, RANGE-1(3), MUMBAI. VS. THIRUMALAI CHEMICALS LTD., THIRUMALAI HOUSE, PLOT NO.101/102, SION MATUNGA ESTATE, SCHEME NO.6, ROAD NO.29, SION (E), MUMBAI-400 022. PAN : AAACT2015M. APPELLANT RESPONDENT ASSESSEE BY SHRI HIRO RAI. DEPARTMENT BY SHRI D .S.SUNDER SINGH & MS. KUSUM INGALE. DATE OF HEARING 22-11-2011 DATE OF PRONOUNCEMENT 30-11-2011 O R D E R PER D.K. AGARWAL, JM : THESE CROSS APPEALS BY THE ASSESSEE AND REVENUE AR E DIRECTED AGAINST THE ORDER DATED 30-03-2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSM ENT YEAR 2006-07. ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 2 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY DERIVES INCOME FROM MANUFACTURING, TRADING AND EXPORT OF CHEMICALS. THE RETURN WAS FILED DECLARING TOTAL INCOME AT RS.16,23,83,927/-. HOWEVER, THE ASSESSMENT WAS COMP LETED AFTER MAKING VARIOUS ADDITIONS/DISALLOWANCES AT AN INCOME OF RS.34,78,4 2,890/-. ON APPEAL, THE LD. CIT(A) PARTLY ALLOWED THE APPEAL WITH ENHANCEMENT. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE AND REVENUE BOTH ARE IN APPEAL BEFORE US. ITA NO.3277/MUM/2010 (ASSESSEES APPEAL): 4. GROUND NO. 1 IS AGAINST THE SUSTENANCE OF DISALL OWANCE OF DEDUCTION U/S.35 OF RS.7,71,21,358/- AND GROUND NO.2 IS AGAINST NON-ADJ UDICATION OF ISSUE OF CREDIT UNDER DTAA WITH MALAYSIA. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE IS NOT PRESSING THE ABOVE GROUNDS,WHICH WAS NOT OBJECTED TO BY THE LD. D.R. 6. THAT BEING SO, AND IN THE ABSENCE OF ANY SUPPORT ING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE ABOVE GROUNDS TAKEN B Y THE ASSESSEE ARE, THEREFORE, REJECTED BEING NOT PRESSED. 7. GROUND NO. 3 IS AGAINST THE SUSTENANCE OF DISALL OWANCE OF PRIOR PERIOD EXPENSES RS.2,20,050/- AND IN GROUND NO. 4 THE ASSESSEE CONT ENDED THAT THE SAID EXPENSES TREATED AS PRIOR PERIOD EXPENSES IN ASSESSMENT YEAR 2007-08 BE ALLOW ED AS DEDUCTION IN THE YEAR UNDER CONSIDERATION. 8. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ABOVE GROUND NO. 3 HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIB UNAL IN ASSESSEES OWN CASE IN THIRUMALAI CHEMICALS LTD. VS. ADDL. CIT AND VICE VERSA IN ITA NOS.2072 AND 3349/MUM/2009 FOR ASSESSMENT ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 3 YEAR 2005-06 VIDE ORDER DATED 15-06-2011, THEREFOR E, THE ISSUE MAY BE DECIDED ACCORDINGLY. HE FURTHER SUBMITS THAT HE IS NOT PRESSING GROUND NO. 4. 9. ON THE OTHER HAND, THE LD. D.R., WHILE RELYING O N THE ORDERS OF THE AO AND CIT(A), ALSO RELIED ON THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005-06 (SUPRA). 10. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE TRI BUNAL IN THE ASSESSEES OWN CASE (SUPRA) IN PARA 3 OF THE ORDER HAS DISMISSED SIMILAR ISSUE ON THE G ROUND THAT THE SAID ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE TRIBUNAL IN THE PRECEDI NG ASSESSMENT YEARS I.E. 2002-03, 2003-04 AND 2004-05. RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL, WE REJECT THE ABOVE GROUNDS RAISED BY THE ASSESSEE. 11. GROUND NOS. 5 & 6 ARE AGAINST THE SUSTENANCE OF DISALLOWANCE OF DEDUCTION OF LEASE RENTAL OF RS.25,84,492/- AND DISALLOWANCE OF DEDUCTION OF RS.26,56,029/- ON CATALYSTS. 12. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA) HAS DECIDED THE ABOVE I SSUES AGAINST THE ASSESSEE, THEREFORE, THE ISSUE MAY BE DECIDED ACCORDINGLY. 13. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF AO, LD. CIT(A) AND THE TRIBUNAL (SUPRA). 14. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA) HAS DEC IDED THE ABOVE ISSUES AGAINST THE ASSESSEE FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL FOR TH E ASSESSMENT YEARS 2002-03, 2003-04 AND 2004- 05 VIDE PARA 6.1 OF THE ORDER (SUPRA). RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL , THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, R EJECTED. 15. GROUND NOS.7, 8 & 9 ARE AGAINST THE SUSTENANCE OF ADDITION U/S.145A. ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 4 16. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 HAS SET ASIDE THIS ISSUE TO THE FILE OF THE AO VIDE PARA 11 OF THE ORDER, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO. 17. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD. CIT(A). 18. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE BRIEF FACTS OF T HE ABOVE ISSUE ARE THAT THE AO, INTER ALIA, OBSERVED THAT THE ASSESSEE HAS NOT FOLLOWED THE MET HOD OF VALUATION OF CLOSING STOCK AS PRESCRIBED IN SECTION 145A OF THE INCOME-TAX ACT IN ASMUCH AS THE OUTSTANDING BALANCE UNDER THE MODVAT CREDIT HAS NOT BEEN INCLUDED IN THE VALUE OF CLOSING STOCK. THE AO HAS STATED THAT IT IS MANDATORY TO INVOKE SECTION 145A WHICH HAS NOT BEEN DONE BY THE ASSESSEE. HE ACCORDINGLY ADDED THE ENTIRE MODVAT CREDIT TO THE VALUE OF CLOS ING STOCK. THE RELIANCE BY ASSESSEE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF I NDO NIPPO CHEMICALS CO. LTD. HAS NOT BEEN ACCEPTED BY THE A.O. ON THE GROUND THAT THE DECISIO N PERTAINS TO THE PERIOD PRIOR TO THE ASSESSMENT WHEREBY SECTION 145A WAS INTRODUCED IN T HE STATUTE. THE AO, WHILE RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF BR ITISH PAINTS INDIA LTD. REPORTED IN 188 ITR 44 OBSERVED THAT IT WAS HELD THAT EXCISE DUTY BEING O VERHEAD EXPENDITURE IS REQUIRED TO BE INCLUDED IN THE VALUATION OF THE CLOSING STOCK OF FINISHED G OODS. IT WAS FURTHER HELD THAT ANY SYSTEM OF ACCOUNTING WHICH EXCLUDES EXCISE DUTY AND SUCH OTHE R SIMILAR ITEMS WILL RESULT IN DISTORTED PICTURE OF PROFIT SINCE THE PROFIT OF A YEAR IS LIK ELY TO BE SHIFTED TO ANOTHER YEAR AND ACCORDINGLY THE AO HAS INCREASED THE VALUE OF CLOSING STOCK BY RS.5,85,85,846/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CI T(A), WHILE ALLOWING THE ASSESSEES PLEA THAT THE VALUE OF OPENING STOCK SHOULD BE INCREASED BY THE A MOUNT OF ADDITION MADE BY THE AO IN THE VALUE OF CLOSING STOCK IN THE EARLIER YEAR, REJECTE D THE OTHER PLEA TAKEN BY THE ASSESSEE. WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESS EE THAT THE ISSUE IS COVERED BY THE ORDER OF THE ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 5 TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 WHEREIN THE TRIBUNAL VIDE PARA 11 OF THE ORDER HAS HELD AS UNDER : 11. AFTER HEARING BOTH THE SIDES, CONSIDERING THE ORDER OF THE A.O. AND LD. CIT(A) AND THE VARIOUS DECISIONS CITED BEFORE US, WE ARE OF THE CONSIDERED OPINION THAT THE MATTER REQUIRE FRESH AD JUDICATION AT THE LEVEL OF A.O. IN THE LIGHT OF THE DECISION OF HONBLE BOM BAY HIGH COURT IN THE CASE OF M/S. MAHALAXMI GLASS WORKS (P) LTD. (SUPRA) . WE, THEREFORE, RESTORE THE ISSUE TO THE FILE OF THE A.O. WITH A DI RECTION TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION CITED SUPRA AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THIS GROUND OF THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. IN THE ABSENCE OF ANY DISTINGUISHING FEATURE BROUGH T ON RECORD BY THE PARTIES, WE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), SET AS IDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTE R TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN IN THE SAID ORDER OF THE TRIBUNAL AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATIST ICAL PURPOSES. 19. GROUND NO.10 IS AGAINST THE SUSTENANCE OF DISAL LOWANCE U/S.14A OF RS.22,11,718/-. 20. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN DIVIDEND INCOME OF RS.58,66,466/- AND CLAIMED EXEMPTION FROM TAX IN THE COMPUTATION OF INCOME. HE FURTHER OBSERVED THAT THE ASSESSEE COMPA NY FURNISHED THE DETAILS OF CALCULATION UNDER RULE 8D AND WORKED OUT THE DISALLOWANCE AT RS .14,64,145/-. HOWEVER, THE AO DID NOT ACCEPT THE SAME IN VIEW OF THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. SINCE REPORTED IN 117 ITD 169 (BOM.) (SB) AND WORKED OUT THE DISALLOWANCE UNDER RULE 8D(2)(II) AMOUNTING TO RS.2 2,11,718/- AS PER WORKING GIVEN AT PAGE 15 OF THE ASSESSMENT ORDER AND ADDED THE SAME TO THE T OTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A), WHILE AGREEING WITH THE VIEWS OF THE AO , UPHELD THE ADDITION MADE BY THE AO. ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 6 21. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN THE ASSE SSEES OWN CASE FOR ASSESSMENT YEAR 2005-06 WHEREIN THE TRIBUNAL, AFTER CONSIDERING THE EARLIER DECISION OF THE TRIBUNAL AND THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODRE J & BOYCE MFG. CO. LTD. VS. DCIT (2010) 328 ITR 81 (BOM) WHEREIN IT HAS BEEN HELD THAT RULE 8D IS NOT APPLICANBLE FOR THE YEAR UNDER CONSIDERATION, DIRECTED THE AO TO RESTRICT THE QUAN TUM OF DISALLOWANCE TO 2% OF DIVIDEND INCOME. HE, THEREFORE, SUBMITS THAT SIMILAR DISALLOWANCE OF 2% OF DIVIDEND INCOME BE SUSTAINED IN THIS YEAR ALSO. 22. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD. CIT(A). 23. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT FOLLOWING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO. LTD. (SUPRA), RULE 8D IS NOT APPLICABLE PRIOR TO ASSESSMENT YEAR 2008-09, THEREF ORE, THE AO AND THE LD. CIT(A) WERE NOT JUSTIFIED IN MAKING THE DISALLOWANCE UNDER RULE 8D OF RS.22,11,718/-. HOWEVER, KEEPING IN VIEW THE LAW LAID DOWN BY THE HONBLE JURISDICTIONAL HI GH COURT (SUPRA) THAT THE AO IS DUTY BOUND TO DETERMINE THE EXPENDITURE WHICH HAS BEEN INCURRED I N RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME UNDER THE ACT AND THE SUB MISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT NO INTEREST EXPENDITURE HAS BEEN INCURRED IN RELATI ON TO EARNING OF SUCH DIVIDEND INCOME AND ALSO KEEPING IN VIEW THE CONSISTENT VIEW OF THE TRI BUNAL IN THE ASSESSEES OWN CASE (SUPRA), WE DIRECT THE AO TO RESTRICT THE QUANTUM OF DISALLOWAN CE TO 2% OF DIVIDEND INCOME. WE HOLD AND ORDER ACCORDINGLY. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED. 24. GROUND NOS. 11 & 12 ARE AGAINST THE DISALLOWANC E OF DEDUCTION U/S.10B RS.14,01,767/- AND ALLOCATION OF EXPENSES OF RS.5,00,000/- TO THE 80IB UNIT. 25. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO, INTER ALIA, OBSERVED THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION U/S.10B RS.14,01,767 /-. ON PERUSAL OF THE DETAILS OF ALLOCATION ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 7 OF HEAD OFFICE EXPENSES, THE AO OBSERVED THAT ONLY ACTUAL HEAD OFFICE WORKING EXPENSES HAVE BEEN APPORTIONED TO THIS UNIT. IN THE ABSENCE OF AN Y WORKING GIVEN BY THE ASSESSEE, THE AO ADDED THE AMOUNT OF RS.5,00,000/- AS PART OF THE INDIRECT EXPENSES ON ACCOUNT OF SALARY AND OTHER ADMINISTRATIVE EXPENSES OF THE HO. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE WAS ASKED TO SHOW CAUSE WHETHER THE UNIT UNDER CONSIDERATION HAS THE APPROVAL IN TERMS OF EXPLANATION 2 TO CLAUSE (IV) OF SECTION 10B. THE ASSESSEE WAS ALSO A SKED THAT IN THE ABSENCE OF APPROVAL, THE UNIT OF THE ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION U/S.10B AND THERE SHALL BE ENHANCEMENT. IN RESPONSE, THE ASSESSEE HAS FILED COPY OF APPROVAL I SSUED BY THE DEVELOPMENT COMMISSIONER BUT HAS NOT FILED RATIFICATION ORDER BY THE BOARD. IN THE ABSENCE THEREOF, THE LD. CIT(A) DIRECTED THE AO TO WITHDRAW THE BENEFIT GRANTED U/S.10B. 26. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE MAKES REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE I.E. COPY OF LETTER DATED 05-04 -2010 ISSUED BY THE ASSTT. DEVELOPMENT COMMISSIONER TO SHOW THAT RATIFICATION WAS APPROVE D BY THE BOA. HE FURTHER SUBMITS THAT THE LD. CIT(A), WITHOUT ASKING ABOUT THE RATIFICATION APPRO VAL BY THE BOA, HAS DIRECTED THE AO TO WITHDRAW THE CLAIM OF THE ASSESSEE. SINCE PROPER OP PORTUNITY WAS NOT ALLOWED TO THE ASSESSEE, THEREFORE, THE ADDITIONAL EVIDENCE MAY BE ADMITTED AND ISSUE MAY BE DECIDED ACCORDINGLY. 27. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF AO AND LD. CIT(A). 28. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ADDI TIONAL EVIDENCE SUBMITTED BY THE ASSESSEE AT THIS STAGE GOES TO THE ROOT OF THE MATTER, THEREFOR E, IN THE INTEREST OF JUSTICE, WE ADMIT THE SAME. SINCE IT WAS NOT BEFORE THE AO AND LD. CIT(A), THER EFORE, IN THE INTEREST OF JUSTICE, WE CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE OF AO TO DECIDE THE SAME AFRESH IN THE LIG HT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 8 ITA NO.4250/MUM/2010 (REVENUES APPEAL): 29. THE GROUND TAKEN BY THE REVENUE READS AS UNDER : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFF ICER TO DELETE AN AMOUNT OF RS.13,68,000/- BEING UNCLAIMED DEPOSITS/DIVIDEND/DEBENTURES/INTERESTS IGNORING THE PROVISIONS OF SECTION 28(IV)/41(1) OF THE INCOME-TAX ACT, 1961. 30. BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT IN THE BALANCE-SHEET THE ASSESSEE HAS SHOWN (A) UNPAID DIVIDEND RS.27,15,948/-, (B) U NPAID MATURED DEPOSITS RS.23,80,000/-, (C) UNPAID MATURED DEBENTURES RS.15,28,600/- AND (D) IN TEREST ACCRUED ON UNPAID AMOUNTS RS.23,87,082/-. ON BEING ASKED, IT WAS EXPLAINED BY THE ASSESSEE THAT AS PER SECTION 205C OF THE COMPANIES ACT THESE AMOUNTS ARE TO BE TRANSFERRED T O THE INVESTOR EDUCATION & PROTECTION FUND IF THEY REMAIN UNCLAIMED FOR 7 YEARS. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES EXPLANATION. THE AO, AFTER RELYING ON THE DECISION IN THE CASE O F CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD. (1996) 222 ITR 344 (SC) AND KEEPING IN VIEW THAT TH ESE AMOUNTS HAVE COME FROM THE EARLIER ASSESSMENT YEARS AND CONSEQUENTLY ONLY THE INCREMEN TAL FIGURE IS TO BE ADDED ADDED THIS YEAR, ADDED THE AMOUNT OF RS.13,68,000/- (RS.23,80,000/- MINUS RS.10,12,000/- DISALLOWED LAST YEAR) TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD. C IT(A), WHILE OBSERVING THAT THE ABOVE LIABILITIES ARE STATUTORY LIABILITIES, FOLLOWED THE APPELLATE ORDER FOR THE ASSESSMENT YEAR 2005-06 IN ASSESSEES OWN CASE AND DELETED THE ADDITION MADE B Y THE AO. 31. THE LD. D.R. SUPPORTS THE ORDER OF THE AO. 32. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITS THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBU NAL IN THE ASSESSEES OWN CASE (SUPRA), THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) IN DE LETING THE ADDITION BE UPHELD. 33. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 9 ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY T HE ORDER OF THE TRIBUNAL FOR THE ASSESSMENT YEAR 2005-06 (SUPRA) WHEREIN THE TRIBUNAL AFTER CON SIDERING THE PROVISIONS OF SEC. 205(C)(1) AND 205(C)(2) OF THE COMPANIES ACT, HELD THAT SINCE THE ASSESSEE COMPANY HAS CREDITED THE IMPUGNED AMOUNTS TO THE IEPF WHICH IS IN LINE WITH SUB-SECTIONS (1) AND (2) OF SECTION 205(C) WHICH IS A STATUTORY REQUIREMENT, UPHELD THE ORDER OF LD. CIT(A) AND REJECTED THE GROUND RAISED BY THE REVENUE. IN THE ABSENCE OF ANY DISTINGUISHIN G FEATURE BROUGHT ON RECORD BY THE REVENUE, WE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L (SUPRA), DECLINE TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ACCOUNT AND ACCORD INGLY THE GROUND TAKEN BY THE REVENUE IS REJECTED. 34. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30TH DA Y OF NOVEMBER, 2011. SD/- SD/- ( B. RAMAKOTAIAH) (D.K. AGARW AL) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI: 30TH NOVEMBER , 2011. NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-2,MUMBAI. 4 CIT-1,MUMBAI. 5.DR,J BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, AS ST.REGISTRAR, ITAT, MUMBAI. ITA NOS.3277 & 4250/M/2010 THIRUMALAI CHEMICALS LTD. 10 DETAILS DATE INITIALS DESIGNATI ON 1. DRAFT DICTATED ON 22-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 23-11-2011 SR.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/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 . DATE O N WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER