PARLE BISCUITS P.LTD, MUMBAI V. ASST CIT RG 10(3)(2), MUMBAI

ITA 3427/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9986 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 1997-1998
• Appeal Filed On: 05-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3427 /MUM/2015 (ASSESSMENT YEAR: 1997-98) M/S. PARLE BISCUITS PVT. LTD. VS. ACIT, RANGE 10(3)(2) NORTH LEVEL CROSSING VILE PARLE (EAST) MUMBAI 400057 (OLD CENTRAL CIRCLE 25) ROOM NO. 212, AAYAKAR BHAVAN MUMBAI 400020 PAN AAACP0485D APPELLANT RESPONDENT APPELLANT BY: MS. URVI MEHTA RESPONDENT BY: SHRI MANOJ KUMAR DATE OF HEARING: 15.06.2017 DATE OF PRONOUNCEMENT: 10.07.2017 O R D E R PER P.K. BANSAL, VICE PRESIDENT THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-17, MUMBAI DATED 30.03.2015 FOR A.Y. 1997-98 . 2. FIRST GROUND OF THE APPEAL RELATES TO SUSTAINING OF THE ADDITION OF RS.5,47,174/- ON ACCOUNT OF SUPPRESSION OF SALES. 3. THE FACTS RELATING TO THIS GROUND ARE THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO RECONCILE THE SALES AS PER PROFIT & LOSS ACCOUNT WITH THE ASSESSABLE VA LUE AND EXCISE DUTY AS PER RT-12 STATEMENT. THE ASSESSEE SUBMITTED THAT TH E ASSESSABLE VALUE AND EXCISE DUTY REPRESENTS THE VALUE OF GOODS REMOV ED FROM THE FACTORY ON PAYMENT OF DUTY. THE GOODS CAN BE REMOVED EITHER FO R DIRECT SALE OR FOR TRANSFER TO DEPOTS FOR SUBSEQUENT SALES. SO THE ASS ESSABLE VALUE AND EXCISE DUTY MAY NOT TALLY WITH THE SALE AS PER THE PROFIT & LOSS ACCOUNT. IT WAS FURTHER SUBMITTED THAT FOR TALLYING THE ASSESSABLE VALUE OF EXCISE DUTY AS ITA NO. 3427/MUM/2015 M/S. PARLE BISCUITS PVT. LTD. PAGE 2 OF 5 PER RT-12 STATEMENTS WITH THE SALE VALUE AS PER PRO FIT & LOSS ACCOUNT, THE SALES VALUE OF THE OPENING STOCK AT THE DEPOTS WILL HAVE TO BE ADDED TO ASSESSABLE VALUE OF EXCISE DUTY AS PER RT-12 STATEM ENTS AND THE SALES VALUE OF THE CLOSING STOCK WILL HAVE TO BE REDUCED. THE ASSESSEE ACCORDINGLY SUBMITTED THE RECONCILIATION. THE AO WAS OF THE VIE W THAT AS PER THE SAID RECONCILIATION THERE WAS A DIFFERENCE BETWEEN THE S ALES AS PER PROFIT & LOSS ACCOUNT AND AS PER THE ASSESSABLE VALUE AND EXCISE DUTY AS PER RT-12 STATEMENT TO THE EXTENT OF RS.26,88,438/-. THE ASSE SSEE HAS GIVEN THE REASONS FOR THE SAME AS INTER DEPOT TRANSFERS AND I NTERSTATE TRANSFERS AND DESTRUCTION OF GOODS BUT THE AO WAS NOT SATISFIED W ITH THE EXPLANATION OF THE ASSESSEE. THE AO WORKED OUT THE DIFFERENCE AT R S.1,21,15,442/- BY TAKING THE OPENING STOCK AT CLOSING STOCK VALUE AT RS.2,31,17,356/- AND CLOSING STOCK AT COST AT RS.3,47,98,338/- INSTEAD O F THE SALES VALUE OF RS.4,42,25,422/-. THE AO THUS MADE AN ADDITION OF R S.1,21,15,442/- ON ACCOUNT OF SUPPRESSED SALES. THE ASSESSEE WENT IN A PPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A) THE ASSESSEE CONTENDED THAT THE C LOSING STOCK WAS TO BE TAKEN AT THE SALE VALUE AT RS.4,42,25,422/-. THE DIFFERENCE WOULD BE ONLY RS.26,88,438/- AND NOT RS.1,21,15,442/-. FOR T HE SAID DIFFERENCE HE HAS GIVEN VARIOUS REASONS. ONE OF THE MAIN REASONS WAS INTERSTATE SALES. AS THE MAXIMUM RETAIL PRICE IS FIXED FOR THE PRODUC T, THE INTERSTATE SALES AFFECT THE ASSESSABLE VALUE AND EXCISE DUTY. THE OT HER REASON FOR THE INTERSTATE SALE WAS THE CENTRAL SALES TAX WHICH WOR KS OUT TO RS.21,41,264/-. THE CIT(A) AGREED WITH THE SUBMISSI ON OF THE ASSESSEE IN RESPECT OF CENTRAL SALES TAX AND THEREFORE HE REDUC ED THE AMOUNT OF RS.21,41,264/- OUT OF THE SUM OF RS.26,88,438/- AND SUSTAINED THE ADDITION TO THE EXTENT OF RS.5,47,174/-. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW. THE LEARNED A.R. BEFORE US V EHEMENTLY CONTENDED THAT THE MAIN REASON FOR THIS DIFFERENCE OF RS.5,4 7,174/- IS INTER DEPOT TRANSFER AS WELL AS DESTRUCTION OF GOODS DUE TO WHI CH THE SALES WILL NOT TALLY WITH THE ASSESSABLE VALUE AND EXCISE DUTY. TH E DIFFERENT, IT WAS ITA NO. 3427/MUM/2015 M/S. PARLE BISCUITS PVT. LTD. PAGE 3 OF 5 CONTENDED, WAS ONLY 0.03% OF THE TOTAL SALES VALUE, THEREFORE IT MUST BE DELETED. THE LEARNED D.R., ON THE OTHER HAND, RELIE D ON THE ORDER OF THE AO. WE DO AGREE WITH THE LEARNED A.R. THAT THE DIFF ERENCE AMOUNTING TO RS.5,47,174/- IS HARDLY 0.03% AS COMPARED TO THE TO TAL TURNOVER OF THE ASSESSEE COMPANY WHICH IS AT RS.167.85 CRORES. THIS MAY BE ATTRIBUTABLE TO THE INTER DEPOT TRANSFER AND DESTRUCTION OF GOOD S. NEITHER THE AO NOR THE CIT(A) HAS TAKEN INTO ACCOUNT THE FACT OF INTER DEPOT TRANSFER AND DESTRUCTION OF GOODS. THE ASSESSEE DEALS IN THE CON SUMABLE PRODUCTS, THEREFORE IT IS QUITE NATURAL THAT ALLOWANCE TO BE GIVEN TO THE ASSESSEE FOR DESTRUCTION OF GOODS DURING THE COURSE OF TRANSFER. THE LOSS BEING INCURRED AT 0.03% KEEPING IN VIEW THE QUANTUM OF TU RNOVER OF THE PRODUCTS, IN OUR VIEW IS JUST REASONABLE. WE, THERE FORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DELETE THE SAID ADD ITION. THUS THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 6. GROUND NO. 2 RELATES TO CHARGING OF CAPITAL GAINS @ 30% INSTEAD OF 20%. 7. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING THROU GH THE ORDERS OF THE TAX AUTHORITIES BELOW AS WELL AS PROVISIONS OF SECTION 112(1)(B) WE NOTED THAT THE LONG TERM CAPITAL GAINS HAS TO BE TA XED AT 20% AND NOT AT 30%. WE, THEREFORE, DIRECT THE AO TO LEVY THE TAX A T 20% ON THE LONG TERM CAPITAL GAINS EARNED BY THE ASSESSEE ON SALE OF LAN D INSTEAD OF 30%. THUS, THIS GROUND IS ALLOWED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY, 2017. SD/ - SD/ - (PAWAN SINGH) (P.K. BANSAL) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED: 10 TH JULY, 2017 ITA NO. 3427/MUM/2015 M/S. PARLE BISCUITS PVT. LTD. PAGE 4 OF 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -17, MUMBAI 4. THE PR. CIT - 10, MUMBAI 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.