SUMITOMO CHEMICAL INDIA P.LTD, MUMBAI V. CIT 3, MUMBAI

ITA 3381/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2712 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ON PASSED
• Keywords: Opportunity of being heard
• Section: 37(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . . , , ! '#, $ , % BEFORE SHRI B.R.BASKARAN, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.3381/MUM/2014 ( $ & '& / ASSESSMENT YEAR: 2008-09) SUMITOMO CHEMICAL INDIA PVT. LTD. 6 TH FLOOR, MOTI MAHAL, 195, J. TATA ROAD, CHURCHGATE, MUMBAI - 400020 / VS. THE COMMISSIONER OF INCOME TAX 3 AAYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AAECS3750L ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 04.04.2016 !' /DATE OF PRONOUNCEMENT:15.07.2016 #$ / O R D E R PER AMARJIT SINGH, JM: THIS IS AN APPEAL FILED AGAINST THE ORDER DATED NIL RECEIVED BY THE ASSESSEE ON 13.03.2014 PASSED BY THE COMMISSION ER OF INCOME TAX - 3, MUMBAI [HEREINAFTER REFERRED TO AS THE CI T] RELEVANT TO THE A.Y.2008-09. ASSESSEE BY: SHRI AJIT KUMAR JAIN & MS. RADHIKA THAKKAR DEPARTMENT BY: SHRI MANJUNATHA SWAMY ITA NO.3381/MUM/14 A.Y.2008-09 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT ERRED IN CONCLUDING THAT THE L EARNED ASSESSING OFFICER (LEARNED AO) HAD NOT APPLIED HIS MIND AND HAD FAILED TO MAKE ENQUIRY WITH RESPECT TO THE ALLOWABILITY OF THE CLAIM FOR PROVISION FOR DISCOUN T OF RS.1,05,94,855/-, WITHOUT CONSIDERING THE FACT THAT THIS ISSUE WAS EXAMINED AND ADJUDICATED BY THE LEARNED A O DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, TH EREBY EXCEEDING HIS JURISDICTION UNDER THE PROVISIONS SEC TION 263 OF THE ACT. 2. THE LEARNED CIT ERRED IN DISALLOWING THE PROVISI ON FOR DISCOUNT OF RS.1,05,94,855/- UNDER THE PROVISIONS O F SECTION 37(1) OF THE ACT. 3. THE LEARNED CIT ERRED IN DISALLOWING THE PROVISI ON FOR LEAVE ENCASHMENT OF RS.18,81,377/- UNDER SECTION 43 B OF THE ACT, ALTHOUGH THE VALIDITY OF THE SAID PROVISIO N HAS BEEN STRUCK DOWN BY THE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. & ANR (292 ITR 470) AND IS NO W PENDING BEFORE THE HONOURABLE SUPREME COURT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE REGULAR ASSESSMENT OF THE A.Y.2008-09 WAS COMPLETED ON 10.02.2012 U/S.143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DETERMINING TOT AL INCOME TO THE TUNE OF RS.11,04,65,510/- AS AGAINST DECLARED TOTAL INCOME OF RS.54,80,768/-. THE COMMISSIONER OF INCOME TAX PER USED THE RECORD OF THE ASSESSMENT YEAR OF 2008-09 AND CAME TO KNOW THAT THE ASSESSEE COMPANY HAD DEBITED THE PROFIT & LOSS ACCOUNT WITH AN AMOUNT OF RS.1,82,76,000/- TOWARDS DISCOUNT AND REBATE UNDER THE HEAD OPERATING AND OTHER EXPENSES (SCH-17), WHICH INCL UDED AN AMOUNT ITA NO.3381/MUM/14 A.Y.2008-09 3 OF RS.1,05,94,855/-, BEING PROVISION MADE FOR DISCO UNTS ON PRODUCTS SOLD DURING THE YEAR. THE PROVISION WAS MADE AND T HE ACTUAL AMOUNT WAS NOT PAID. THE ASSESSING OFFICER DID NOT ASSESS THE SAID ASPECT OF THE ASSESSMENT. IT WAS ALSO FOUND THAT THE ASSESSE E MADE THE PROVISION OF LEAVE ENCASHMENT OF RS.18,81,377/- (AS PER ANNEX URE 9 TO TAX AUDIT REPORT) WHICH WAS NOT PAID BEFORE THE DUE DAT E OF FILING OF RETURN AND WAS OF THE VIEW THAT THE SAID AMOUNT WAS DISALL OWABLE U/S.43B OF THE ACT AND REQUIRED TO BE ASSESS AS INCOME. SINCE BOTH THE ASPECTS WERE NOT EXAMINED BY THE ASSESSING OFFICER, THEREFO RE BY PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE CIT DIRECTED THE ASSESSING OFFICER TO RE-EXAMINE THE ABOVE SAID ISSU ES IN THE INTEREST OF JUSTICE. FEELING AGGRIEVED THE ASSESSEE HAS FIL ED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 TO 3:- 4. ALL THE ISSUES ARE INTERCONNECTED THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. MOREOVER THESE ISSUES O NLY LEAD TO THE CONTROVERSY IN CONNECTION WITH TAKEN UP THE MATTER BY THE CIT IN VIEW OF THE PROVISION U/S.263 OF THE ACT. WE HAVE HEARD THE ARGUMENTS ADVANCED BY THE LEARNED REPRESENTATIVE OF THE PARTI ES AND PERUSED THE RECORD CAREFULLY. THE LEARNED REPRESENTATIVE OF T HE ASSESSEE HAS ARGUED THAT AN AMOUNT OF RS.1,82,76,000/- WAS DEBIT ED TO THE PROFIT & LOSS ACCOUNT TOWARDS DISCOUNT AND REBATE AND WHICH INCLUDES AN AMOUNT OF RS.1,05,94,855/- BEING PROVISION MADE TOW ARDS SCHEME OF ITA NO.3381/MUM/14 A.Y.2008-09 4 DISCOUNTS AND THE SAID SCHEME WAS INVOKED BY ISSUAN CE OF CREDIT NOTES AND THIS FACT WAS EXAMINED BY THE ASSESSING OFFICER , THEREFORE, THE ORDER U/S.263 OF THE ACT IS WRONG AGAINST LAW AND F ACTS AND IS LIABLE TO BE SET ASIDE. IT IS ALSO ARGUED THAT THE ASSESSEE MADE THE PROVISION FOR LEAVE ENCASHMENT OF RS.18,81,377/- DURING THE FINAN CIAL YEAR 2007-08 IN ACCORDANCE WITH LAW AND SPECIFICALLY IN VIEW OF THE LAW SETTLED IN CALCUTTA HIGH COURT DECISION IN THE CASE OF EXIDE I NDUSTRIES LTD. VS. UOI 292 ITR 470, THEREFORE, THE ORDER U/S.263 IN QU ESTION IS WRONG AGAINST LAW AND FACTS AND IS LIABLE TO BE SET ASIDE . ON THE OTHER HAND THE LEARNED DEPARTMENT HAS STRONGLY RELIED UPON THE ORDER PASSED BY THE CIT IN QUESTION. 5. KEEPING IN VIEW OF THE ARGUMENT ADVANCED BY THE PARTIES AND PERUSING THE RECORD CAREFULLY, IT CAME INTO NOTICE THAT THE ASSESSMENT FOR THE A.Y.2008-09 OF THE ASSESSEE WAS COMPLETED V IDE ORDER DATED 10.02.2012. ON APPRAISAL OF THE SAID ORDER WE FOUN D THAT THE ASSESSING OFFICER DID NOT CONSIDER THE PROVISION FO R DISCOUNT OF AN AMOUNT OF RS.1,82,76,000/- WHICH INCLUDES AN AMOUNT OF RS.1,05,94,855/- BEING PROVISION MADE TOWARDS SCHEM E OF DISCOUNT. IT ALSO APPEARS ON RECORD THAT THE PROVISION FOR LE AVE ENCASHMENT OF RS.18,81,377/- WAS NOT DISCUSSED AND CONSIDERED BY THE ASSESSING OFFICER IN HIS ORDER DATED 10.02.2012. WHETHER THE CLAIM OF THE ASSESSEE IS JUSTIFIABLE OR NOT IS NOT AT ALL DISCUS SED BY THE ASSESSING OFFICER ON THE ABOVE SAID POINTS I.E. ON THE POINT OF DISCOUNT AND ITA NO.3381/MUM/14 A.Y.2008-09 5 REBATE AND ON THE POINT OF LEAVE ENCASHMENT. IN TH E SIMILAR SITUATION THE HONBLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI H AS PASSED THE ORDER IN CASE OF HORIZON INVESTMENT CO. LTD. IN ITA NO.1593/MUM/2013 AND IN CASE OF ARVEE INTERNATIONAL VS. ADDL. CIT RG 19(1) [2006] 101 ITD 495(MUM)[2006] 8 SOT 452 (M UM). IT IS CATEGORICALLY HELD IN THE ABOVE MENTIONED LAW THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER WITHOUT DUE A PPLICATION OF MIND WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO INTE REST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE ACT. THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE QUITE SIMILAR WITH THE ABOVE MENTIONED LAW RELIED BY THE LEARNED REPRESENTATIVE OF THE DEPARTMENT. IN VIEW OF THE LAW MENTIONED ABOVE, WE ARE OF THE V IEW THAT THE CIT HAS PASSED THE ORDER U/S.263 OF THE ACT IN QUESTION CORRECTLY AND JUDICIOUSLY WHICH DOES NOT REQUIRE TO BE INTERFERE WITH AT THIS APPELLATE STAGE, THEREFORE, THE PRESENT APPEAL IS ORDERED TO BE DISMISSED. 6. IN RESULT THE APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY , 2016. SD/- SD/- (B.R.BASKARAN) (AMARJIT SINGH) # / ACCOUNTANT MEMBER %& # /JUDICIAL MEMBER ' ( MUMBAI; )# DATED :15 TH JULY, 2016 MP MP MP MP ITA NO.3381/MUM/14 A.Y.2008-09 6 ) * +$!', -,'! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT- 4. * / CIT 5. -./ &&01 , 01' , ' ( / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. ) / BY ORDER, - & //TRUE COPY// ./# /(DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI