The ACIT, Cricle-5, Ahmedabad V. Parle International Pvt. Ltd., Ahmedabad

ITA 3561/AHD/2004

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8957 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-09-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 09-12-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: J P SHAH
• Keywords: Notional interest
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH C CC C AHMEDABAD AHMEDABAD AHMEDABAD AHMEDABAD BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI H.L. KARWA H.L. KARWA H.L. KARWA H.L. KARWA, , , , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N NN N. .. .S. SAINI S. SAINI S. SAINI S. SAINI, , , , ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE OF HEARING : 14.09.09 DRAFTED ON: 15.09. 09 ITA NO.3561/AHD/2004 C.O. NO.19/AHD/2005 ASSESSMENT YEAR : 2001-02 ASST. COMMISSIONER OF INCOME TAX, CIR.5, C.U.SHAH COLLEGE, BLDG., 2 FLOOR, AHMEDABAD. VS. PARLE INTERNATIONAL P. LTD. 101, GIDC VATVA, AHMEDABAD. PAN/GIR NO. : AAACP-9018-Q (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.C.PANDIT SR. D.R. RESPONDENT BY: SHRI J.P.SHAH O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-XI, AHMEDABAD, DATED 30.09.2004. ITA NO .3561/AHD/2004 M/S.PARLE INTERNATIONAL P. LTD. ASST.YEAR -2001-02 - 2 - 2. THE SOLE ISSUE INVOLVED IN THE REVENUES APPEAL IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN DELETING ADDITION OF RS.23,25,800/- ON ACCOUNT OF NON CHARGING OF INTEREST OF RS.18,20,000/- ON LOAN AND DISCOUNTING CHARGES OF RS.5,05,800/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HAS ADVANCED BY WAY OF INTER CORPORATE DEPOSIT A SUM OF RS.60 LACS TO TWO DIFFERENT PARTIES. THE SAID AMOUNT HAS BECOME DOUBTFUL FOR RECOVERY. NO INTEREST HAS BEEN PROVIDED IN EARLIER YEARS ALSO SINCE THE PRINCIPAL AMOUNT ITSELF WAS DOUBTFUL OF RECOVERY. IN EARLIER YEARS EXACTLY IDENTICAL POSITION CONTINUED AND THE COMPANY HAS DISCLOSED REGARDING NON-PROVISION OF THE INTEREST OF RS.18,20,000/- FOR THE SUM OF RS.60 LACS ADVANCED BY WAY OF INTER CORPORATE DEPOSIT. THIS STATE OF AFFAIRS CONTINUED SINCE LAST 4 YEARS. THE ORDERS PASSED UNDER SECTION 143(3) FOR THE PRECEDING YEARS HAVE ALSO TAKEN COGNIZANCE OF THE ABOVE REFERRED NOTICE ATTACHED TO THE BALANCE SHEET IN THE SCHEDULE FORMING PART OF ACCOUNTS SO ALSO IN THE AUDITORS REPORT. THE LEARNED ASSESSING OFFICER DID NOT MAKE ANY ADDITION ON ACCOUNT OF NON PROVISION OF INTEREST IN THE EARLIER YEARS. IT IS IN THE CURRE NT YEAR ONLY THAT ADDITION HAS BEEN MADE FOR NON PROVISION OF INTEREST OF RS.18,20,000/-. SIMILARLY, A BILL OF THE VALUE OF RS.14,05,000/- OF ONE NETOON INDIA LTD. WAS DISCOUNTED A FEW YEARS BACK. THE DISCOUNT CHARGES LEVIABLE FOR THE DISCOUNTING OF THE BILL WERE FIXED AT RS.5,05,800/- . THE SAID SUM BEING YEARLY CHARGED BY WAY OF DISCOUNTING CHARGES FOR THE MONEY ADVANCED TO NETOON INDIA UNDER BILL DISCOUNTING ITA NO .3561/AHD/2004 M/S.PARLE INTERNATIONAL P. LTD. ASST.YEAR -2001-02 - 3 - ARRANGEMENT HAS ALSO BECAME DOUBTFUL OF RECOVERY. THE PRINCIPAL SUM SO ALSO THE INTEREST ARE DOUBTFUL OF RECOVERY. SINCE LAST 5 YEARS THOSE SUM OF MONEY EITHER TOWARDS PRINCIPAL OR INTEREST HAS BEEN RECEIVED IN THE PRECEDING AND THE EARLIER YEARS EVEN IN THE CASE OF ASSESSMENT FINALIZED UNDER SECTION 143(3). NO ADDITION HAS BEEN CONSIDERED NECESSARY BY WAY OF NOTIONAL INTEREST IN RESPECT OF THE ABOVE REFERRED BILL DISCOUNTING ARRANGEMENT. LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE UNDER APPEAL THAT THE LEARNED ASSESSING OFFICER HAS MADE ADDITION OF BILL DISCOUNTING CHARGES TO THE INCOME OF THE ASSESSEE. 4. IN APPEAL, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)DELETED THE ADDITION MADE BY OBSERVING THAT INCOME IS TAXABLE WHEN IT ACCRUES TO THE ASSESSEE AND AS NO INCOME OF INTEREST OR BILL DISCOUNTING ACCRUED TO THE ASSESSEE TO THE YEAR THE ASSESSEE HAS RIGHT NOT SHOWN THE SAME AS INCOME AS THE PRINCIPAL AMOUNT DUE FROM THE ABOVE PARTIES ITSELF WAS DOUBTFUL OF RECOVER. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE LEARNED ASSESSING OFFICER WHEREAS THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THIS AMOUNT IS OUTSTANDING SINCE ASSESSMENT YEAR 1998-99. IN THE ASSESSMENTS FOR ASSESSMENT YEAR 1998-99 AND 1999-00 UNDER SECTION 143(1) AND NO ADDITION WAS MADE ON ACCOUNT OF EXPENDITURE AND DISCOUNTING CHARGES. IN THE ASSESSMENT YEAR 2000-01, THE ASSESSMENT WAS FRAMED UNDER ITA NO .3561/AHD/2004 M/S.PARLE INTERNATIONAL P. LTD. ASST.YEAR -2001-02 - 4 - SECTION 143(3) WHEREIN ALSO ACCEPTING THE FACT ABOUT NON RECOVERABILITY OF THE PRINCIPAL AMOUNT OUTSTANDING NO ADDITION WAS MADE TO THE INCOME OF ASSESSEE ON ACCOUNT OF INCOME AND DISCOUNT CHARGES. AS THERE IS NO CHANGE OF FACTS THEREFORE, FOLLOWING THE CONSISTENT STAND, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS JUSTIFIED AND DELETING THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS MADE PROVISION IN RESPECT OF PRINCIPAL AMOUNT OF DEPOSITS AND BILLS IN QUESTION IN ITS BOOKS OF ACCOUNT FOR THE ASSESSMENT YEAR 1999-00. THE ABOVE SHOWS THAT THE RECOVERY OF THE DEPOSITS AND BILLS IN QUESTION WERE DOUBTFUL. THE LEARNED ASSESSING OFFICER HAS BROUGHT NO MATERIAL ON RECORD TO SHOW THAT THE ABOVE CLAIM OF THE ASSESSEE WAS NOT BONAFIDE AND THE RECOVERY OF THE AMOUNTS WERE GOOD. THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE ACTUALLY RECEIVED ANY AMOUNT IN RESPECT OF THE DEPOSITS AND BILL S IN QUESTION EITHER DURING THE YEAR UNDER CONSIDERATION OR IN ANY SUBSEQUENT YEAR. IT IS A SETTLED POSITION OF LAW THAT EVEN IN ACCRUAL SYSTEM OF ACCOUNTING WHAT IS ASSESSABLE IS THE REAL INCOME A ND NOT A NOTIONAL INCOME. WHEN RECOVERY OF PRINCIPAL AMOUNT IS IN DOUBT IT CANNOT BE HELD THAT ANY REAL INCOME ACCRUED TO THE ASSESSEE ON ACCOUNT OF INTEREST ON SUCH PRINCIPAL AMOUNT. WE THEREFORE, DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE LEARNED COMMISSIONER OF ITA NO .3561/AHD/2004 M/S.PARLE INTERNATIONAL P. LTD. ASST.YEAR -2001-02 - 5 - INCOME TAX(APPEALS). IT IS CONFIRMED AND THE GROUND OF THE APPEAL OF REVENUE IS DISMISSED. C.O. 19/AHD/2005 C.O. 19/AHD/2005 C.O. 19/AHD/2005 C.O. 19/AHD/2005 7. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE GROUND OF APPEAL AGAINST THE DISALLOWANCE OF RS.44,660/- ON ACCOUNT OF PENALTY UNDER CENTRAL EXCISE RULES OUT OF RS.63,130/- DISALLOWED BY THE LEARNED ASSESSING OFFICER. 8. AT THE TIME OF THE HEARING, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING THE CROSS OBJECTION. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF ASSESSEE BOTH ARE DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 18/09/2009. SD/- SD/- ( ( ( ( H.L. KARWA H.L. KARWA H.L. KARWA H.L. KARWA ) )) ) ( N ( N( N ( N.S. SAINI ) .S. SAINI ) .S. SAINI ) .S. SAINI ) JUDICIAL MEMBER ACCOUN TANT MEMBER JUDICIAL MEMBER ACCOUN TANT MEMBER JUDICIAL MEMBER ACCOUN TANT MEMBER JUDICIAL MEMBER ACCOUN TANT MEMBER AHMEDABAD; DATED 18/09/ 2009 COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO COPY OF THE ORDER FORWARDED TO : :: : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XI, AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD