The ACIT, OSD-I, Range-4, Ahmedabad V. Interlink Industries Ltd., Ahmedabad

ITA 3626/AHD/2007

• Counselvise Citation: 362620514 RSA 2007
• Duration Of Justice: 4 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-01-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 06-09-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y R SURTI
• Assessee Lawyers: SANJAY MAJMUDAR
• Keywords: Business expenditure

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH . .. . . .. . , !'# !'# !'# !'#, , , , $ $ $ $ . .. . . .. .% % % % , , , , &' % &' % &' % &' % & # & # & # & # BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND B.R. BASKARAN, ACCOUNTANT MEMBER) ITA NO.3626/AHD/2007 [ASSTT.YEAR : 2003-2004] ACIT, OSD-1 RANGE-4, AHMEDABAD. /VS. INTERKLIN INDUSTRIES LTD. SANGHVI CHAMBERS B/S. CANARA BANK, NAVRANGPURA AHMEDABAD. ( (( ()* )* )* )* / APPELLANT) ( (( (+,)* +,)* +,)* +,)* / RESPONDENT) % - . &/ REVENUE BY : SHRI Y.R. SURTI, SR.DR 01 - . &/ ASSESSEE BY : SHRI SANJAY MAJMUDAR 2 - 13'/ DATE OF HEARING : 23 RD JANUARY, 2012 456 - 13'/ DATE OF PRONOUNCEMENT : 03-02-2012 &7 / O R D E R PER G.C. GUPTA, VICE-PRESIDENT: THIS APPEAL OF THE REVENUE FOR THE ASSTT.YEAR 2003-2004 IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VIII, AHMEDABA D. 2. THE GROUND NO.1 OF APPEAL OF THE REVENUE READS A S UNDER: 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FATS OF THE CASE DELETING THE ADDITION AMOUNTING TO RS.51 LAKHS MADE BY THE AO IN RESPECT OF VALUE OF STOCK WRITTEN OFF ON ACCOUNT OF WORK IN PROGRESS. 3. THE LEARNED DR RELIED ON THE ORDER OF THE AO. H E REFERRED TO PAGE NO.3 OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE WORK-IN-PROGRESS ITA NO.3626/AHD/2007 -2- AMOUNTING TO RS.51 LAKHS WAS WRITTEN OFF IN ACCORDA NCE WITH THE ACCEPTED PRINCIPLE OF ACCOUNTING AND NO DEFECT HAS BEEN POIN TED OUT BY THE AO IN THIS REGARD. HE RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE ITAT, JODHPUR BENCH IN THE CASE OF CIT VS. HINDUSTAN ZINC LTD., 86 TTJ (JD) 389. 4. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE H AS WRITTEN OFF WORK-IN- PROGRESS OF RS.51 LAKHS IN ITS BOOKS OF ACCOUNTS IN ACCORDANCE WITH THE ACCOUNTING STANDARDS AND NO SPECIFIC DEFECT HAS BEE N POINTED OUT BY THE AO IN THIS REGARD. THE WORK-IN-PROGRESS OF 154 MTS VALUED AT RS.51 LAKHS WAS CONSIDERED AS VALUELESS AS ON 31-3-2003 A ND EXPLAINED TO BE LUMP FORM OR SAND FORM BY THE ASSESSEE. WE FIND T HAT NECESSARY RESOLUTIONS AND ENTRIES WERE PASSED AND THE NEXT YE AR OPENING STOCK WAS LESS TO THAT EXTENT. THE ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE WITH THE DECISION OF JODHPUR BENCH OF THE ITAT IN THE CASE O F CIT VS. HINDUSTAN ZINC LTD.(SUPRA). IN THESE FACTS OF THE CASE, WE H OLD THAT THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON THIS ISSUE, W HICH IS CONFIRMED AND THE GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSE D. 5. THE GROUND NO.2 OF THE REVENUES APPEAL READS AS UNDER: 2. THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE DELETING THE ADDITION ON ACCOUNT OF PENALTY AMOUNTI NG TO RS.2,32,470/- 6. THE LEARNED DR RELIED ON THE ORDER OF THE AO. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AMOUNT IN QUEST ION WAS ON ACCOUNT OF ITA NO.3626/AHD/2007 -3- LATE DELIVERY CHARGES AND NOT PENAL IN NATURE. HE RELIED ON THE ORDER OF THE CIT(A). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE CIT(A) HAS GIVEN A FINDING THAT THERE WAS NO INFRINGEMENT OF ANY LAW IN THIS REGARD AND THAT A CLAIM ADJUSTED AGAINST THE BILLS IN CONNECTION WITH BUSIN ESS COMMITMENTS COULD NOT BE CONSIDERED AS OPPOSED TO PUBLIC POLICY AND I T WAS ONLY A ROUTINE BUSINESS EXPENDITURE. IN THESE FACTS, THERE WAS NO INFRINGEMENT OF ANY LAW ON THE PART OF THE ASSESSEE AND THE AMOUNT REPR ESENTED LATE DELIVERY CHARGES. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE AND GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSE D. 8. THE GROUND NO.3 OF THE REVENUES APPEAL READS AS UNDER: 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE DELETING THE DISALLOWANCE OF COMMISSION PAYMENT OF RS.2,89,1284/- MADE TO VARIOUS AGENTS. 9. THE LEARNED DR RELIED ON THE ORDER OF THE AO WHI LE THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A). 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT PAYMENTS WERE TO VARIOUS AGENTS WHO BROUGHT SUBSTANTIAL ORDERS TO THE ASSESSEE AND THEY ARE ALSO RESPONSIBLE FOR THE PAYMENTS FROM THESE PARTIES. THE CIT(A) HA S GIVEN A FINDING THAT THE ASSESSEE DID NOT HAVE SEPARATE MARKETING DEPART MENT AND THEREFORE THE MARKETING AGENTS AND PAYMENT OF COMMISSION CANNOT B E DISMISSED LIGHTLY. WE FIND NO JUSTIFICATION IN THE FINDINGS OF THE AO THAT THE PAYMENTS CLAIMED BY THE ASSESSEE WERE NOT TO THE SP ECIFIC PARTIES OR WERE NOT GENUINE. IN THESE FACTS OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT ITA NO.3626/AHD/2007 -4- THERE IS NO MISTAKE IN THE ORDER OF THE CIT(A) ON T HIS ISSUE IN HOLDING THAT THE CLAIM OF THE ASSESSEE WAS BASED ON NECESSARY DO CUMENTS AND BUSINESS SERVICES IN THE NORMAL COURSE AND DIRECT THE AO TO DELETE THE DISALLOWANCE. ACCORDINGLY, THE GROUND NO.3 OF THE REVENUES APPEAL IS DISMISSED. 11. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ..% /B.R. BASKARAN) &' % /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !'# !'# !'# !'# /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD