TML DISTRIBUTION COMPANY LIMITED, MUMBAI V. CIT - 1, MUMBAI

ITA 3427/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9038 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 13-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Assessee Lawyers: RAJAN R VORA NIKHIL TIWARI
• Section: 143(3); 263

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.3427/MUM/2014, /ASSESSMENT YEAR-2009-10 TML DISTRIBUTION COMPANY LTD. 3 RD FLOOR, NANAVATI MAHALAYA, 18 HOMI MODY STREET, MUMBAI-400001 PAN: AACCT9000E VS. CIT-1, 3 RD FLOOR, ROOM NO. 387, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. ( / APPELLANT) ( / RESPONDENT) ! / ASSESSEE BY : SHRI RAJAN R. VORA/NIKHIL TIWARI / REVENUE BY : SHRI B.B.RAJENDRA PRASAD ' / DATE OF HEARING : 04 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 13. 01-2017 , 1961 ' 254(1) #$ ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THE PRESENT APPEAL BY ASSESSEE U/S 253 OF THE INCOM E-TAX ACT IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX, MUMBAI (FOR SHOR T THE CIT) U/S 263 DATED 30.03.2014 FOR ASSESSMENT YEAR(AY) 2009-10. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: THE APPELLANT IS IN RECEIPT OF THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME- TAX - 1, MUMBAI ('CIT') UNDER SECTION 263 OF THE IN COME-TAX ACT, 1961 ('THE ACT') IN CONNECTION WITH THE ORDER PASSED BY THE ASSESSING O FFICER ('AO') UNDER SECTION 143(3) OF THE ACT. THE APPELLANT BEING AGGRIEVED BY THE ORDER PASSED BY THE LEARNED CIT HAS PREFERRED THIS APPEAL ON THE FOLLOWING GROUNDS WHIC H ARE WITHOUT PREJUDICE TO EACH OTHER: 1. PROCEEDING UNDER SECTION 263 IS BAD IN LAW AND I NVALID A. THE LEARNED CIT HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT ORDER PASSED BY THE AO UNDER SECTION 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, WITHOUT APPRECIATING THAT THE AO HAD PASSE D ORDER AFTER EXAMINING THE FACTS OF CASE AND DOCUMENTS AVAILABLE ON RECORD. B. THE LEARNED CIT HAS ERRED IN LAW AND ON FACTS IN ASSUMING JURISDICTION UNDER SECTION 263 EVEN AFTER ADMITTING THAT THE CLAIM WAS EXAMINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT. C. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THAT T HE APPELLANT HAD DISCLOSED ALL FACTS BEFORE THE AO WHICH HAS BEEN DULY CONSIDERED BY THE AO DURING THE ASSESSMENT PROCEEDINGS AND HENCE THE ORDER OF THE C IT IS BAD IN LAW AND INVALID. 2. WITHOUT PREJUDICE TO ABOVE GROUNDS: A. THE LEARNED CIT HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE ORDER PASSED BY THE AO UNDER SECTION 143(3) AND DIRECTING THE AO TO DISALLOW AMOUNT OF PROVISION FOR LEAVE ENCASHMENT FOR THE YEAR UNDER CONSIDERATI ON DISREGARDING THE FACT THAT THE THEN AO HAS AFTER DETAILED EXAMINATION ALLOWED CLAI M OF DEDUCTION OF PROVISION FOR LEAVE ENCASHMENT VIDE ORDER UNDER SECTION 143(3) OF THE ACT. B. THE LEARNED CIT OUGHT TO HAVE APPRECIATED THE FA CT THAT THE APPELLANT HAD PAID THE 2 ITA NO. 3427/M/2014 TML DISTRIBUTION COMPANY LTD. APPLICABLE TAXES AND HAD CORRECTLY CLAIMED THE DEDU CTION IN RESPECT OF PROVISION FOR LEAVE ENCASHMENT IN RETURN OF INCOME. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-C OMPANY IS ENGAGED IN THE BUSINESS OF DISTRIBUTION , LOGISTICS OF COMMERCIAL AND PASSENGE R VEHICLES AND OTHER AUTOMOBILE PRODUCTS, AND IT FILED ITS RETURN OF INCOME FOR RELEVANT AY O N 30.09.2009 DECLARING LOSS AT RS. 8,19,51,342/-. THE ASSESSMENT WAS COMPLETED U/S 143 (3) ON 16.12.2011 ACCEPTING THE RETURN INCOME OF THE ASSESSEE AT RS. 8,19,51,343/-. SUBSEQ UENTLY, THE LD. CIT PASSED THE ORDER U/S 263 OF THE ACT DIRECTING THE ASSESSING OFFICER (AO) TO RE-FRAME THE ORDER DISALLOWING THE QUANTUM OF PROVISION FOR LEAVE ENCASHMENT DEBITED T O THE PROFIT & LOSS ACCOUNT TO THE YEAR UNDER CONSIDERATION. AGGRIEVED, BY THE ORDER OF CIT THE ASSESSEE FILED THIS APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARGUED THAT THE RETURN OF INCOME WAS FILED ON 30.09.2009. THE ASSESSEE PAID THE TAX BY WAY OF TD S AND ADVANCE TAX AND CLAIMED THE DEDUCTION FOR ALLOWABILITY OF LEAVE ENCASHMENT IN T HE RETURN OF INCOME AS PER INTERIM DIRECTION PASSED BY APEX COURT IN SLP NO. 22889/08 WHILE STAYING THE ORDER OF HONBLE KOLKATA HIGH COURT IN CASE OF EXIDE INDUSTRIES LTD. VS. UNION OF INDIA 292 ITR 472. THUS, THE ASSESSEE PAID THE TAX BY WAY OF TDS AND ADVANCE TAX AND CLAIMED THE DEDUCTION. THE LD AR FURTHER ARGUED THAT A SHOW-CAUSE NOTICE U/S 263 DATED 18.11.2013 WAS ISSUED TO THE ASSESSEE. IN THE SAID NOTICE THE LD CIT DISCLOSED THAT ASSESSEE MADE THE PROVISION OF RS. 60,61,204/- FOR LEAVE ENCASHMENT WHICH IS DEBITED T O THE PROFIT & LOSS ACCOUNT WHICH OUGHT TO HAVE BEEN DISALLOWED FOR COMPUTATION OF IN COME, THE DISALLOWANCE WAS REQUIRED TO BE MADE IN SPECIFIC PROVISION OF SECTION 43(F) OF T HE ACT. THE NOTICE FURTHER DISCLOSED THAT THE DECISION OF KOLKATA HIGH COURT IN CASE OF EXIDE INDUSTRIES LTD. VS. UOI 292 ITR 470 IS STAYED BY HONBLE APEX COURT VIDE ORDER DATED 08.05 .2009, THE RETURN OF INCOME WAS FILED AND THE ASSESSEE WOULD PAY TAX, IF SECTION 43B(F) E XIST IN THE STATUTE BOOK. THUS, THE AO OUGHT TO HAVE DISALLOWED THE CLAIM OF LEAVE ENCASHM ENT. THE ASSESSEE FILED REPLY OF SHOW CAUSE NOTICE VIDE ITS REPLY DATED 10.01.2014. THE A SSESSEE FURNISHED THE DETAILS FOR PROVISIONS OF LEAVE ENCASHMENT WHICH IS AS UNDER: PARTICULARS AMOUNT RS. LIABILITY TRANSFERRED FROM TATA MOTORS LTD IN RESPE CT OF EMPLOYEES JOINING THE COMPANY PERTAINING TO EARLIER YEARS (SACHIN B. SATHE) 58,16,721/- LESS: PAYMENT DURING FY 2008-09 1,01,517/- 3 ITA NO. 3427/M/2014 TML DISTRIBUTION COMPANY LTD. SUB-TOTAL(RS.) 56,55,204 ADD: PROVISION MADE DURING FY 2008-09 4,06,000/- CLOSI NG OUTSTANDING AS ON 31.03.2009 60,61,204/- ASSESSEE FURTHER CONTENDED THAT ONLY RS. 4,06,000/- HAS BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT WHICH REPRESENT THE LIABILITY FOR LEAVE ENC ASHMENT. THE LD. CIT AFTER CONSIDERING THE REPLY CONCLUDED THAT THE AO WOULD HAVE DISALLOW ED THE CLAIM OF LEAVE ENCASHMENT IN THE RETURN OF INCOME WHICH HAS NOT BEEN DONE. THUS, THE ORDER IS ERRONEOUS AND DIRECTED THE AO TO RE-FRAME THE ORDER AS THE SAME IS PREJUDICIAL TO THE INTEREST OF REVENUE. THE LD. AR OF THE ASSESSEE FURTHER ARGUED THAT THE ORDER PASSED B Y AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE ASSESSEE HAS ALREAD Y PAID THE TAX AND MADE THE CLAIM. THE ASSESSEE HAS MADE SUFFICIENT DISCLOSURE AND THE ORD ER PASSED BY LD. CIT IS LIABLE TO BE SET ASIDE. ON THE MERIT IT WAS ARGUED THAT THE ASSESSEE MADE SUFFICIENT DISCLOSER IN THE RETURN OF INCOME. AT THE TIME OF SCRUTINY THE AO RAISED THE S PECIFIC QUERY WITH REGARD TO THE PROVISION OF LEAVE ENCASHMENT AND THE ASSESSEE VIDE REPLY DAT ED 23.12.2011 FILED DETAILED SUBMISSION REFERRING THE DECISION OF THE CALCUTTA HIGH COURT A ND THE ORDER OF HONBLE APEX COURT IN SLP NO. 22889/2008 AND ALSO CONTENDED THAT THE ASS ESSEE HAS PAID THE TAX. IT WAS ARGUED THAT THE ORDER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. ON THE OTHER HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF LD. CIT. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND PERUSED THE ORDER OF LD. CIT. WE HAVE NOTICED THAT WHILE MAKING THE CLAIM, THE ASSES SEE HAS PAID THE TAX IN ACCORDANCE WITH THE DIRECTION OF HONBLE APEX COURT IN SLP NO. 2289 /2008. THE AO EXAMINED THE ALLOWABILITY TO THE CLAIM OF LEAVE ENCASHMENT. DURI NG THE ASSESSMENT, THE ASSESSEE FURNISHED THE SUFFICIENT INFORMATION VIDE REPLY DATED 22.12.2 011. THE AO PASSED THE ORDER AFTER CONSIDERING THE SUBMISSION IN REPLY DATED 22.12.201 1. AS THE ASSESSEE HAS ALREADY PAID THE TAX BEFORE FILING OF THE RETURN OF INCOME. THE ORDE R IS NOT PREJUDICIAL TO THE INTEREST OF REVENUE. THE HONBLE APEX COURT IN MALABAR INDUSTRIAL COMPAN Y VS. CIT ( 243 ITR 83) HELD THAT COMMISSIONER HAS JURISDICTION TO REVISE THE ASSES SMENT ORDER IF TWIN CONDITIONS AS PROVIDED IN SECTION 263 ARE FULFILLED I.E. THE ORD ER IS NOT ONLY ERRONEOUS BUT PREJUDICIAL TO THE INTEREST OF REVENUE, BOTH TWIN CONDITIONS ARE E SSENTIAL PERQUISITE. WE HAVE NOTICED THAT THE ORDER PASSED BY AO IS NOT PREJUDICIAL TO THE IN TEREST OF REVENUE, AS THE ASSESSEE HAS ALREADY PAID THE TAX ON THE PROVISIONS FOR LEAVE EN CASHMENT. THUS, AS PER OUR CONSIDERED OPINION, THE ORDER PASSED BY LD. CIT WAS NOT WARRA NTED. THUS, WE HOLD THAT THE ORDER PASSED BY AO WAS IN ORDER. IN THE RESULT THE GROUND NO.1 OF THE APPEAL IS ALLOWED. 4 ITA NO. 3427/M/2014 TML DISTRIBUTION COMPANY LTD. 5. AS WE HAVE ALLOWED THE APPEAL OF THE ASSESSEE ON GR OUND NO.1. THUS, THE DISCUSSION ON GROUND NO.2 IS BECOME ACADEMIC. AS A RESULT, APPEAL FILED BY THE ASSESSEE I S ALLOWED. *'+ ,-' . / ! 01 2 ! ' 3 . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY,2017. 5 ! 6 7 13 ( , 201 7 ! 01 ; SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER 1 /MUMBAI, 7 /DATE: 13.01.2017 SK ' )*+ ,+ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ., ( <' , 4. THE CONCERNED CIT / ., <' 5. DR E BENCH, ITAT, MUMBAI / =>0 '?, B BB B , . . . 1 6. GUARD FILE/ 0 *1 =' ' //TRUE COPY// 5 / BY ORDER, / DY./ASST. REGISTRAR ( ?, , 1 /ITAT, MUMBAI