ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, KOTA V. M/S INSTRUMENTATION LIMITED, Kota

ITA 361/JPR/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1285 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 15-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KARNI DAN SINGH
• Keywords: Revenue expenditure
• Section: 271(1)(c); 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA - @ ITA NO. 361/JP/2019 FU/KZKJ.K O'KZ @ ASSESSMENT YEAR: 2015-16 A.C.I.T., CIRCLE-1, KOTA. CUKE VS. INSTRUMENTATION LTD., JHALWAR ROAD, INDRAPRASTHA INDUSTRIAL AREA, KOTA. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAACL 4212 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KARNI DAN SINGH (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K @ DATE OF HEARING: 28/05/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/06/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 02/12/2018 OF LD. CIT(A), KOTA FOR THE A.Y. 2015-16 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR DELETING THE ADDITION OF RS. 71,38,090/- MADE BY THE A.O. ON ACCOUNT OF PRIOR PERIOD EXPENSES. 3. AT THE OUTSET, THE LD AR OF THE ASSESSEE PLACED ON RECORD THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 1978-79 TO 1980-81 DATED 28/09/1984 WHEREIN EXACTLY SIMILAR ISSUE WAS DEALT WITH 2 ITA NO. 361/JP/2019 ACIT VS INSTRUMENTATION LTD. BY THE TRIBUNAL AND DISALLOWANCE MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES WAS DELETED BY THE TRIBUNAL. 4. WE HAD GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE WHEREIN SIMILAR DISALLOWANCE OF DEDUCTION ON ACCOUNT OF PRIOR PERIOD EXPENSES WAS DELETED BY THE TRIBUNAL AFTER HAVING THE FOLLOWING OBSERVATION: 18. WE HAVE HEARD THE PARTIES. CONSIDERING THE VOLUME OF TRANSACTION OF THE COMPANY AS SUCH AN CONSIDERING THE FACT THAT THE TAXATION RATE BEING THE SAME FROM ONE YEAR TO ANOTHER YEAR, IT DOES NOT MAKE ANY DIFFERENCE WHETHER THE EXPENSES ARE ALLOWED IN THE YEAR OR IN THE EARLIER YEARS. THOUGH, CLEARLY THE ASSESSEE COULD NOT BE GIVEN THE ALLOWANCE FOR DEDUCTION IN THE YEAR AND MAY ALSO HAVE LOST THE BENEFIT OF CLAIM IN THE EARLIER YEARS AS EARLIEST YEARS MAY NOT BE PENDING BUT IT IS NOT THE CASE OF THE ASSESSEE THAT EXPENSES WERE KNOWINGLY NOT CHARGED TO THE ACCOUNTS. THE CASE OF THE ASSESSEE IS THAT AS THERE WAS A TIME LIMIT FOR FINALZATION OF THE ACCOUNTS, THE ACCOUNTS DEPARTMENT AT THE HEAD OFFICE COULD NOT WAIT FOR ANY FURTHER FOR RECEIPT OF THE INFORMATION FROM THE BRANCHES THOUGH IT COULD BE ARGUED THAT THE PROVISION COULD HAVE BEEN MADE BUT AS ALREADY OBSERVED EARLIER, IT IS A CASE OF A COMPANY WHEN THE RATE OF THE TAXATION BEING THE SAME, WE HOLD THAT THE EXPENSES BE ALLOWED IN THE YEAR. THIS DISPOSES OF THE ASSESSEES APPEAL. 5. THE BENCH HAS SPECIFICALLY ASKED THE LD DR TO SAY AS TO WHETHER THE ORDER OF THE TRIBUNAL STILL SURVIVES OR THE HONBLE HIGH COURT HAVE TAKEN ANY OTHER VIEW. HOWEVER, THE LD. DR COULD NOT POINT OUT AS TO WHETHER THIS ORDER OF THE TRIBUNAL IS EVEN CHALLENGED BEFORE THE HONBLE HIGH COURT OR WHETHER THE HONBLE HIGH COURT HAS TAKEN ANY CONTRARY 3 ITA NO. 361/JP/2019 ACIT VS INSTRUMENTATION LTD. VIEW. UNDER THESE FACTS AND CIRCUMSTANCES, WE TAKE THAT THE ORDER PASSED BY THE TRIBUNAL STILL SURVIVES WHEREIN DETAILED OBSERVATION HAS BEEN MADE WITH REGARD TO DECLINE ON ACCOUNT OF PRIOR PERIOD EXPENSES. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HAS DELETED THE ADDITION AFTER OBSERVATION AS UNDER: 5. DISALLOWANCE ON PRIOR PERIOD ITEMS: IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE DEBITED PRIOR PERIOD ITEMS (NET) UNDER OTHER EXPENSES OF RS. 71,38,090/-. REVENUE EXPENDITURE OTHER THAN PERTAINING TO PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION IS NOT ALLOWABLE TO THE ASSESSEE. THEREFORE, THE ASSESSEE WAS ASKED VIDE ORDER SHEET ENTRY DATED 07/12/2017 TO SHOW CAUSE AS TO WHY THE SAME MAY NOT BE DISALLOWED AND ADDED TO ITS INCOME. 5.2 THE ASSESSEE HAS NOT SUBMITTED ANYTHING SPECIFIC IN THIS REGARD. AS PER INCOME TAX ACT, INCOME OF THE PREVIOUS YEAR IS TAXABLE AND THERE SHALL BE DEDUCTED ANY EXPENDITURE, WHICH WAS INCURRED DURING THE PREVIOUS YEAR FOR EARNING THE INCOME. THEREFORE, THE PRIOR PERIOD EXPENSES DEBITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT IS NOT DEDUCTIBLE FROM THE INCOME OF THE YEAR. HENCE, RS. 71,38,090/- IS DISALLOWED AND ADDED TO ASSESSEES TOTAL INCOME. PENALTY PROCEEDINGS U/S 271(1)(C) HAS BEEN INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF ITS INCOME. AS REGARDS GROUND NO 2, RELATED TO DISALLOWANCE ON ACCOUNT OF PRIOR PERIOD EXPENSES, THE JURISDICTIONAL [TAT IN APPEAL NO 419/JP/83, THE SAME ISSUE WAS DECIDED IN FAVOUR 4 ITA NO. 361/JP/2019 ACIT VS INSTRUMENTATION LTD. OF THE APPELLANT. THIS PRACTICE HAS ALSO. BEEN CONSISTENTLY FOLLOWED IN THE APPELLANT'S CASE FOR SEVERAL YEARS THEREFORE, NO DIFFERENT OPINION IS TAKEN IN THIS YEAR AS WELL. THE DISALLOWANCE OF RS. 71,38,090/- IS NOT BEING UPHELD. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES AMOUNTING TO RS. 71,38,090/-. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JUNE, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKA D@ DATED:- 04 TH JUNE, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE A.C.I.T., CIRCLE-1, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- INSTRUMENTATION LTD., KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 361/JP/2019) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR