JCIT, Range-1, Bhubaneswar, Bhubaneswar V. Paradeep Phosphates Ltd., Bhubaneswar

ITA 354/CTK/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1124 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-10-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 03-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion
• Section: 145; 37(1)

Judgement Text

आयकर अऩीऱीय अधधकरण, कटक न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य एवं श्री अरुण खोड़पऩया ऱेखा सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER आयकर अऩीऱ सं./ITA No.354/CTK/2019 (ननधाारण वषा / Assessment Year :2012-2013) DCIT, Corporate Circle-1(2), Bhubaneswar Vs M/s Paradeep Phosphates Limited, Bayan Bhawan, J.N.Marg, Kharvel Nagar, Bhubaneswar-751001 PAN No. : AABCP 3276 D (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) AND Cross Objection No.10/CTK/2020 (Arising out of ITA No.354/CTK/2019) (ननधाारण वषा / Assessment Year :2012-2013) M/s Paradeep Phosphates Limited, Bayan Bhawan, J.N.Marg, Kharvel Nagar, Bhubaneswar-751001 Vs DCIT, Corporate Circle-1(2), Bhubaneswar PAN No. : AABCP 3276 D (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) AND आयकर अऩीऱ सं./ITA No.326/CTK/2019 (ननधाारण वषा / Assessment Year :2012-2013) M/s Paradeep Phosphates Limited, Bayan Bhawan, J.N.Marg, Kharvel Nagar, Bhubaneswar-751001 Vs DCIT, Corporate Circle-1(2), Bhubaneswar PAN No. : AABCP 3276 D (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri A.K.Sabat & B.K.Mahapatra, CAs राजस्व की ओर से /Revenue by : Shri M.K.Gautam, CIT-DR स ु नवाई की तारीख / Date of Hearing : 12/10/2022 घोषणा की तारीख/Date of Pronouncement : 12/10/2022 आदेश / O R D E R Per Bench : ITA No.354/CTK/2019 is an appeal filed by the revenue and ITA No.326/CTK/2019 is an appeal filed by the assessee against order of the ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 2 ld. CIT(A)-1, Bhubaneswar, both dated 06.08.2019, passed in I.T.Appeal No.0253/17-18, for the assessment year 2012-2013. The assessee has also filed cross objection being CO No.10/CTK/2020 against the appeal of the revenue in ITA No.354/CTK/2019. 2. The revenue in its appeal i.e. ITA No.354/CTK/2019 has raised the following grounds :- (i) On the facts and in the circumstances of the case, the order of the Ld. CIT(A)-1, Bhubaneswar is erroneous both on facts and in law . (ii) On the facts and in the circumstance in the case, the Ld. CIT(A) is not right in deleting the disallowance made under 'diminution in value of Govt. of India Fertilizer Bonds' amounting to Rs.10,16,25,000/- ignoring the decision of the Hon'ble Apex Court in the case of Sri Sajjan Mills v. ClT, 156 ITR 585 . (iii) On the facts and in the circumstance in the case, the Ld. CIT(A) is not right in law in allowing a provision, made in the accounts of the assessee for some anticipated loss on GOl Fertilizer Bonds 011 presumption and not accrued or crystallized during the year, as expenditure allowable under section 37(1) the IT. Act. (iv) The appellant craves to alter, amend or add any other ground that may be considered necessary in course of the appeal proceedings. 3. At the time of hearing, ld.AR withdrew the cross objection filed by the assessee against the appeal of the revenue in ITA No.354/CTK/2019. Accordingly, the cross objection filed by the assessee stands dismissed as withdrawn. 4. The assessee in its appeal i.e. ITA No.326/CTK/2019 has raised the following grounds :- 1. That the Order of the learned Commissioner of Income Tax (Appeals) -1, Bhubaneswar ["CIT(Appeals)"], dated 06.08.2019 in partly allowing the appeal is contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 3 2. That on the facts and in the circumstances of the case, the learned CIT(Appeals): a. has erred both on facts and in law in holding that the grounds regarding re-opening and re-assessment proceedings has no merit and dismissing the same. b. holding that there is no infirmity on the part of the learned AO to reassess the appellant, as the AO was in possession of sufficient reasons that income chargeable to tax has escaped assessment is arbitrary, erroneous, bad, both in the eye of law and on facts. c. holding that the contention of the appellant that the and re- assessment proceeding is a mere change of opinion of the learned AO is not valid is arbitrary, erroneous and bad, both in the eye of law and on facts. d. has erred both on facts and in law in dismissing the grounds regarding re-opening and re-assessment proceedings. e. ought to have held that the issue of notice u/s.148 for re- opening the assessments is unjustified, erroneous, bad in law, without/lack of jurisdiction and legally untenable. f. has mis-appreciated/misapplied the case laws relied upon by him as the same is not applicable to the case of the appellant. " g. ought to have held that the order dated 15.11.2017 u/s.1471143(3) of the Act passed by the learned 'AO' is arbitrary, unjustified, erroneous, bad in law and legally unsustainable. 5. In the revenue’s appeal, the ld. CIT-DR submitted that the issue is against the action of the ld. CIT(A) in deleting the disallowance of the provision made in respect of an anticipated loss being the diminution in the value of Govt. of India Fertilizer Bonds. It was submitted by the ld. CIT-DR that the assessee company was receiving subsidy from the Govt. of India in the form of fertilizer subsidy in cash. As the Govt. of India was unable to pay the subsidy during the relevant point of time, the Govt. of ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 4 India Fertilizer Bonds have been issued in lieu of the subsidy in cash. It was submitted that in fact the bonds were forced on the assessee in lieu of the cash subsidy. The assessee has treated the said bonds as current assets. It was the submission that the assessee had followed AS-13, which requires the valuation to be at the cost of market price, whichever is lower. It was the submission that the bonds received against the subsidy were liable to be treated as business loss in respect of the diminution of the value only when the bonds were redeemed. It was the submission that in view of the decision of Hon’ble Jurisdictional High Court in the case of Tripty Drinks (P.) Ltd., reported in [1978] 112 ITR 721 (Ori.), wherein it has been held that in respect of the method of valuation of stock considering the provision of Section 145 of the Act, the assessee therein had claimed a revenue loss on the depreciated value of bottles and crates, which was neither lost nor broken but was still used for assessee’s business. The Hon’ble Jurisdictional High Court held that the process adopted by the assessee had no rationale and, therefore, such claim was not at all sustainable. It was the submission that the ld. CIT(A), however, had followed the decision of coordinate bench of the Tribunal in assessee’s own case for AYs. 2009-10, 2010-11 & 2014-15 to delete the addition. It was the prayer that the order of the ld. CIT(A) is liable to be reversed and that of the AO to be restored. 6. In reply, ld. AR submitted that the assessee manufactures phosphatic fertilizers. In lieu of the cash subsidy due from the Govt. of ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 5 India, the assessee had been forced to accept the fertilizers bonds issued by the Govt. of India. It was the submission that the loss in respect of the diminution in the value of the fertilizer bonds was specifically computed on the basis of the rates fixed by the Clearing Corporation of India Limited (CCIL), a corporation under the Govt. of India, which is cast to the duty in respect of the valuation of bonds and other securities. It was the submission that the methodology adopted by the assessee was a scientific method. It was supported by the rates issued by the Govt. of India itself and the loss was actually determinable, though would be actually incurred at the time of redemption. It was the submission that the issue is squarely covered by the decision of the coordinate bench of the Tribunal in assessee’s own case for the assessment years 2009-10, 2010-2011 & 2014-15 in ITA No.560/CTK/2013, dated 27.04.2018 and ITA Nos.48&49/CTIK/2018, order dated 27.08.2018, respectively. It was the submission that the ld. CIT(A) has extracted the relevant portions of the order in his order at para 4.2 to grant relief to the assessee. Ld. AR vehemently supported the order of the ld. CIT(A). 7. We have considered the rival submissions. A perusal of the decision of the Hon’ble Jurisdictional High Court in the case of Tripty Drinks (P.) Ltd. referred to supra by the ld. CIT-DR, we found that in the said case the Hon’ble Jurisdictional High Court has held that the process adopted by the assessee therein had no rationale. It was under that circumstances the Hon’ble High Court had held that the claim was not ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 6 sustainable. However, in assessee’s case herein the assessee is not fixing the rates in respect of the diminution, which is being fixed by an authority under the Govt. which has a responsibility of fixing the rates in respect of the bonds/security. Thus, clearly shows a rationale. This being so, we are of the view that the facts in the case of Tripty Drinks (P.) Ltd., referred to by the ld. CIT-DR, has no bearing to the facts of the assessee’s case and consequently the same is distinguishable. Further it is noticed that the issue in assessee’s appeal is squarely covered by the decision of coordinate bench of the Tribunal in assessee’s own case for AYs. 2009-2010, 2010-2011 & 2014-2015, referred to supra. It is also noticed that the ld. CIT(A) has also followed the judicial discipline in following the order of the coordinate bench of the Tribunal in assessee’s own case. This being so, we have no reason to interfere with the order of the ld. CIT(A) and the findings recorded by the ld. CIT(A) on this issue stands confirmed. 8. Thus, the appeal of the revenue i.e. ITA No.354/CTK/2019 stands dismissed. 9. Now, we shall decide the appeal of the assessee in ITA No.326/CTK/2019. 10. It was submitted by the ld. AR that the only issue in assessee’s appeal was against the action of the ld. CIT(A) in confirming the disallowance of the leave encashment claimed u/s.43B(f) of the Act. It was fairly agreed by both the sides that the issue is now squarely covered ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 7 by the decision of the Hon’ble Supreme Court in the case of Exide Industries Ltd., reported in 425 ITR 1 (SC)/[2020] 116 taxmann.com 378 (SC), wherein the Hon’ble Supreme Court has upheld the constitutional validity of Section 43B(f) of the Act and has held that the actual payment of liability to the employees in respect of leave encashment is a condition precedent for extending the benefit of deduction under sec.43B(f) of the Act. It was further submitted by the ld. AR that the actual payments have also not been allowed. It was the prayer that the AO may be directed to allow the claim of actual payments. 11. We have considered the rival submissions. As it is noticed that the issue of liability of leave encashment claimed u/s.43B(f) of the Act is now squarely covered by the decision of the Hon’ble Supreme Court in the case of Exide Industries Ltd. (supra), the AO is directed to verify the actual payments of the leave encashment and allow the same on actual payments. 12. In the result, appeal of the revenue (ITA No.354/CTK/2019) and cross objection of the assessee (CO No.10/CTK/2020) are dismissed, whereas appeal of the assessee in ITA No.326/CTK/2019 is partly allowed. Order dictated and pronounced in the open court on 12/10/2022. Sd/- (अरुण खोड़पऩया) (ARUN KHODPIA) Sd/- (जाजज माथन) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 12/10/2022 Prakash Kumar Mishra, Sr.P.S. ITA Nos.354 & 326/CTK/2019 & CO No.10/CTK/2020 8 आदेश की प्रनतलऱपऩ अग्रेपषत/Copy of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- 2. प्रत्यथी / The Respondent- 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. पवभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यापऩत प्रयत //True Copy//