The ACIT- 2(1), Bhopal V. M/s M.P. State Civil Supplies Corporation Ltd., Bhopal

ITA 344/IND/2013

• Counselvise Citation: 34422714 RSA 2013
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 23-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: AJAY K CHHAJED
• Keywords: Bad and doubtful debts
• Section: 43B; 194C

Judgement Text

INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 344/IND/2013 A.Y.2008-09 ASSTT. COMMISSIONER OF INCOME TAX 2(1) BHOPAL :: APPELLANT VS M.P. STATE CIVIL SUPPLIES CORPORATION LIMITED BHOPAL PAN AACCM-5763D :: RESPONDENT REVENUE BY SHRI R.A.VERMA ASSESSEE BY SHRI AJAY K. CHHAJED DATE OF HEARING 9.10.2013 DATE OF PRONOUNCEMENT 25 .10.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 26.2.2013 OF THE LEARNED FIRST APPELLATE AUTHORITY, BHOPAL. THE FIRST GROUND RAISED BY THE REVENUE PERTAINS TO DELETING T HE ADDITION OF RS.46,32,840/- MADE ON ACCOUNT OF DISALLOWANCES OF CLAIM OF BAD DEBTS WRITTEN OFF INCLUDED UNDER THE HEAD MISCELLA NEOUS EXPENSES. THE CRUX OF ARGUMENTS ON BEHALF OF THE R EVENUE IS THAT NEITHER NECESSARY DETAILS WERE FURNISHED BY THE ASS ESSEE NOR ANY ATTEMPT WAS MADE ON BEHALF OF THE ASSESSEE TO SUBST ANTIATE THE CLAIM. IT WAS ALSO PLEADED THAT THE IMPUGNED AMOUN T WAS NOT INCLUDED IN THE INCOME OF THE ASSESSEE. ON THE OTH ER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE ORDER OF THE LEARNED CIT(A) BY SUBMITTING THAT THE ASSESSEE IS DOING THE BUSINESS OF FOOD GRAINS FOR THE LAST 30 YEARS AND FCI REIMBURSES THE AMOUNT. THE ASSESSEE HAS ALSO FILED WRITTEN SUBMISSIONS. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS CARRYING ON VARIOUS ACTIVITIES FOR PROC UREMENT AND SALE OF FOOD GRAINS AT VARIOUS DISTRICTS IN THE STATE OF MP. THE ASSESSEE WROTE OFF RS.46,32,840/- TOWARDS GUNNY BAGS BY CLAI MING THAT THE ISSUE RELATES TO PRE-REORGANISED STATE OF MADHYA PR ADESH AND A COMMITTEE KNOWN AS SALBC (STATE ASSET & LIABILITIES BIFURCATION COMMITTEE) WAS CONSTITUTED BY THE GOVERNMENT. THIS COMMITTEE INSPECTED THE REPORT OF THE ASSESSEE CORPORATION. T HE COMMITTEE CONVEYED ITS RECOMMENDATION VIDE LETTER DATED 10.8. 2005 AND SUCH RECOMMENDATION WAS APPROVED BY THE CENTRAL GOVERNME NT VIDE LETTER DATED 20.10.2005. THUS, THE ASSETS AND LIABI LITIES OF THE ASSESSEE WERE DIVIDED, BASED ON THE AUDITED BALANCE SHEET FOR THE PERIOD ENDING ON 30 TH MARCH, 2001. THE RATIO OF THE LIABILITIES WAS 70.62 : 29.38 IN FAVOUR OF MP & CHHATTISGARH STATE CORPORATIONS, RESPECTIVELY. AS PER THE DECISION 70.62% OF THE UN REALISED AMOUNT WAS TO BE BORNE BY THE ASSESSEE AND ACCORDINGLY THE CLAIM TO THE EXTENT OF RS.46,32,840/- WAS WRITTEN OFF. THE DETAI LED CALCULATION OF THE SAME HAS BEEN SUMMARISED AT PAGE 3 OF THE IMPUG NED ORDER. THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFF ICER ON THE GROUND THAT NECESSARY DETAILS/SUPPORTING DETAILS WE RE NOT FURNISHED BY THE ASSESSEE. IN THE PRE-ORGANISED STA TE THERE WAS OUTSTANDING CLAIM OF RS.15.79 CRORES IN RESPECT OF PROCUREMENT OF PADDY/RICE/FOOD GRAINS, ETC. THIS AMOUNT INCLUDES RS.3,59,16,015/- ON ACCOUNT OF INCIDENTAL AND COST OF GUNNY BAGS. FOR SETTLEMENT OF SUCH CLAIM, A TRIPARTITE MEETING INCLUDING REPRESENTATIVES OF FCIT, ASSESSEE STATE CORPORATION AND CHHATTISGARH WAS HELD ON 4.8.2005 IN WHICH IT WAS A GREED THAT FCI WILL REIMBURSE 40% OF THIS AMOUNT TO THE ASSESSEE C ORPORATION. THE REST OF THE AMOUNT WAS WRITTEN OFF AND THE LOSS ON THIS ACCOUNT WAS WRITTEN OFF AT 60% OF SUCH LIABILITY WHICH WAS BORN E BY THE STATE CORPORATION. FINALLY, THE AMOUNT OF RS.46,32,840/- WAS WRITTEN OFF AS BAD DEBTS BY THE ASSESSEE. THE RELEVANT PORTION OF PARA (4) OF THE LETTER DATED 10.8.2005 OF THE CHAIRMAN, SALBC HAS B EEN REPRODUCED AT PAGE 5 ONWARDS OF THE IMPUGNED ORDER. KEEPING IN VIEW THE TOTALITY OF FACTS, WE FIND NO INFIRMITY IN THE STAND OF THE LEARNED CIT(A), CONSEQUENTLY, THIS GROUND OF THE RE VENUE IS DISMISSED. 4. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS.7,67,574/- MADE U/S 40(A)(IA) OF THE ACT. THE CR UX OF ARGUMENTS ON BEHALF OF THE REVENUE IS IN SUPPORT TO THE ASSES SMENT ORDER WHEREAS THE LEARNED COUNSEL FOR THE ASSESSEE DEFEND ED THE IMPUGNED ORDER. 4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.10,06,328/- BY INVOKING PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT. THE DETAILS OF AMOUNTS AND T DS DEDUCTED, IF ANY, HAVE BEEN REPRODUCED AT PAGE 6 OF THE IMPUGNED ORDER. THE STAND OF THE ASSESSEE IS THAT THE PROVISIONS OF SEC TION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. THE RELEVANT PORTION OF THE IMPUGNED ORDER IS REPRODUCED HEREUNDER :- THE DETAILED SUBMISSION OF THE LD. AR INCLUDING E VIDENCES ADDUCED IN THE FORM OF A PAPER BOOK HAS BEEN CONSID ERED CAREFULLY. THE TRAINING EXPENSES FOR TRAINING, NECESSARY LODGI NG & BOARDING OF THE STAFF/PERSONNEL PAID TO INSTITUTE OF SOFTWARE T ECHNOLOGY, BHOPAL, FOOD CORPORATION OF INDIA, INSTITUTE OF FOOD SECURI TY, GURGAON TOTALLING TORS.1,88,500/- AS PER THE LD. AR, DOES N OT ATTRACT PROVISIONS OF TAX DEDUCTION AT SOURCE UNDER INCOME TAX ACT. THIS VIEW OF THE LD. AR IS NOT CORRECT AND THE APPELLANT WAS REQUIRED TO DEDUCT TAX AT SOURCE ON PAYMENT OF RS. 1,67,500/- M ADE TO FOOD CORPORATION OF INDIA, INSTITUTE OF FOOD SECURITY, GURGAON U/S 194J OF THEACT. HOWEVER, PAYMENT OFRS. 21,000/- MADE TO THE INSTITUTE OF SOFTWARE TECHNOLOGY, BHOPAL IS BEYOND THE PURVIEW O F THE SECTION SINCE PAYMENT IS BELOW RS. 30,000/-. FOR VIOLATION OF PROVISIONS LAID DOWN IN SECTION 194J, ADDITION MADE UNDER SECTION 4 0(A)(IA) IS SUSTAINED TO THE EXTENT OF RS. 1,67,500/-. SIMILARL Y, DETAILS OF PAYMENT OF RS.71,254/- MADE TO SEVEN PARTIES ON COM POSITE BILLS SINCE NOT FURNISHED, I FIND THAT PROVISIONS OF SECT ION 194C IS ATTRACTED AND ADDITION U/S 40(A)IA) IS JUSTIFIED. O THER PAYMENTS UNDER DIFFERENT HEADS ARE LESS THAN THE MINIMUM AMO UNT OF EACH PAYMENT AND LESS THAN THE GROSS PAYMENT OF THE YEAR AS STIPULATED IN THE PROVISIONS, ADDITIONS CANNOT BE MADE UNDER S ECTION 40(A)(IA) OF THE ACT. SIMILARLY, NO ADDITION UNDER SECTION 40 (A)(IA) CAN BE MADE ON STORAGE CHARGES AND TRANSPORTATION CHARGES SINCE THE APPELLANT HAS PRODUCED THE EVIDENCE OF DEDUCTION OF TAX AT SO URCE IN TIME. ACCORDINGLY, ADDITION ON THIS COUNT IS RESTRICTED T O RS.2,38,754/- IF THE AFORESAID UNCONTROVERTED FINDING IS ANALYSED , WE NOTE THAT NECESSARY EVIDENCE WAS PRODUCED BY THE ASSESSEE FOR VARIOUS PAYMENTS LIKE TRAINING EXPENSES, PAYMENT TO SOFTWAR E TECHNOLOGY, ETC. WHEREVER THE LEARNED CIT(A) FOUND THAT TDS WAS TO BE DEDUCTED WAS DULY CONSIDERED AND FOR THE REMAINING AMOUNT SI NCE THE NECESSARY EVIDENCE WAS PRODUCED, THE SAME WAS CONSI DERED ACCORDINGLY IN WHICH WE FIND NO INFIRMITY. IT IS AF FIRMED. 5. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS.61,49,779/- MADE IN VIEW OF PROVISIONS OF SECTIO N 43B OF THE ACT. THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS I N SUPPORT TO THE ADDITION WHEREAS THE LEARNED COUNSEL FOR THE ASSESS EE CONTENDED THAT THE ASSESSMENT ORDER WAS PASSED ON 24.12.2010 AND THIS AMOUNT WAS ADDED TWICE. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. FROM THE PROOF OF PAYMENT OF TAXES AND COMPUTATION OF INCOME FILED ALONG WITH THE RETURN, IT WAS FOUND THAT THE UNPAID BONUS WAS ADDED BACK, THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LEARNED CIT(A). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25. 10.2013. SD/- SD/- (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 25.10.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE VYAS 2525