The Dy. Commr. Of Income Tax, Cir.-2, JAMNAGAR V. Saurashtra Chemicals Ltd., PORBANDAR

ITA 366/RJT/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6822 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 31-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C P BHATIA
• Assessee Lawyers: DM RINDANI
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI, MANISH BORAD, ACCOUNTANT MEMBER ./ I.T.A. NO.366/RJT/2015 ( / ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 2, JAMNAGAR. / VS. SAURASHTRA CHEMICALS LTD., BIRLA SAGAR, PORBANDAR. ./ ./ PAN/GIR NO. : AAACB 8764 D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI C. P. BHATIA, SR.D.R. / RESPONDENT BY : SMT. D. M. RINDANI, A.R. / DATE OF HEARING 22/12/2017 !'# / DATE OF PRONOUNCEMENT 26/12/2017 $% / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER: THIS APPEAL OF REVENUE RELATING TO ASSESSMENT YEA R 2010-11 IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- JAMNAGAR, DATED 13.05.2015, ARISING OUT OF ORDER U/S.143(3) OF THE ACT (HEREINAFTER REFERRED TO AS, ACT) DATE D 30.03.2013, FRAMED BY JCIT, RANGE-2, JAMNAGAR. 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT THE ASSESSEE IS A LIMITED COMPANY AND ENGAGED IN MANUFA CTURING OF HEAVY ITA NO.366/RJT/ 2015 DCIT VS. SAURASHTRA CHEMICALS LTD. ASST.YEAR 2010-11 - 2 - CHEMICALS. E-RETURN DECLARING LOSS OF RS.67.61 CROR ES FILED ON 14.09.2010. CASE SELECTED FOR SCRUTINY THROUGH CASS. NOTICES U/ S.143(3), 142(1) OF THE ACT WERE DULY SERVED UPON THE ASSESSEE. NECESSA RY DETAILS AS CALLED FOR WERE SUBMITTED. LD. AO MADE DISALLOWANCE FOR LA TE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AT R S.16,69,518/- AND ALSO DISALLOWANCE OF PRIOR PERIOD EXPENDITURE IN RE SPECT OF SALES COMMISSION AND STORES OF RS.38,15,427/-. ACCORDINGL Y, LOSS ASSESSED AT RS.67.06 CRORES (APPROX). 3. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. C IT(A) AND SUCCEEDED PARTLY. NOW REVENUE IS IN APPEAL BEFORE T HE TRIBUNAL RAISING FIVE GROUNDS OF APPEAL OUT OF WHICH GROUND NO. 3, 4 AND 5 ARE GENERAL IN NATURE. GROUND NO.1, RELATES TO DELETION OF DISALLO WANCE OF RS.16,69,518/- ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTI ON TOWARDS PROVIDENT FUND AND IN GROUND NO.2 FOR DELETION OF DISALLOWANC E OF PRIOR PERIOD EXPENDITURE OF RS.37,13,142/-. 4. LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A) AND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. AS REGARDS IN GROUND NO.1, WE OBS ERVE THAT THERE WAS A ITA NO.366/RJT/ 2015 DCIT VS. SAURASHTRA CHEMICALS LTD. ASST.YEAR 2010-11 - 3 - DELAY ON THE PART OF ASSESSEE IN DEPOSITING THE EMP LOYEES CONTRIBUTION TOWARDS PROVISION FUND OF RS.16,69,518/-. HOWEVER, THE FACT IS NOT DISPUTED THAT THE IMPUGNED AMOUNT OF PROVIDENT FUND WAS DEPOSITED WITHIN THE GRACE PERIOD ALLOWED UNDER THE PROVISION S OF LAW. THE ALLEGED AMOUNT WAS PAID ON 16.07.2009 WHICH WAS WITHIN THE GRACE PERIOD ALLOWED VIDE CIRCULAR NO. C/MD/APPLY/GENL/64 DATED 28.04.1964, ISSUED BY THE REGIONAL PROVIDENT FUND COMMISSIONER. FURTHE R, IT HAS BEEN CONSISTENTLY HELD BY VARIOUS HONBLE HIGH COURTS AS WELL AS CO-ORDINATE BENCHES THAT NO DISALLOWANCE OF EMPLOYEES CONTRIBU TION TO PROVIDENT FUNDS NEEDS TO BE MADE IF THE AMOUNT IS DEPOSITED W ITHIN THE GRACE PERIOD OF FIVE DAYS. IN THE INSTANT APPEALS, THE DUE DATE WAS 15.07.2009 AND THE AMOUNT OF RS.16,69,518/- WAS PAID ON 16.07.2009, WH ICH WAS WELL WITHIN THE GRACE PERIOD OF FIVE DAYS. WE THEREFORE, FIND NO REASON TO INTERFERE IN THE FINDINGS OF THE LD.CIT(A) DELETING THE DISALLOWANCE OF RS.16,69,518/-. ACCORDINGLY, GROUND NO.1 OF REVENUE S APPEAL IS DISMISSED. 6. AS REGARDS GROUND NO.2 RELATING TO DISALLOWANCE OF RS.38,15,427/- DELETED BY THE LD. CIT(A), WE FIND THAT THIS AMOUNT COMPRISES OF PRIOR PERIOD PURCHASES OF RS.37,13,142/- AND SALES COMMIS SION OF RS.1,02,285/-. AS FAR AS COMMISSION EXPENDITURES OF RS.1,02,285/- IS CONCERNED, WE FIND THAT EVEN THOUGH THIS AMOUNT PER TAINED TO PRECEDING FINANCIAL YEAR BUT THE SAME WAS DISALLOWED IN PRECE EDING YEAR FOR NON- ITA NO.366/RJT/ 2015 DCIT VS. SAURASHTRA CHEMICALS LTD. ASST.YEAR 2010-11 - 4 - DEDUCTION OF TAX AT SOURCE. IN THE YEAR UNDER APPEA L, ASSESSEE DEPOSITED THE TAX DEDUCTED AT SOURCE AND CLAIMED THE EXPENDIT URE U/S.40(A)(IA) OF THE ACT. WE ARE OF THE VIEW THAT NO DISALLOWANCE WA S CALLED FOR THE ALLEGED AMOUNT OF RS.1,02,285/- AND LD.CIT(A) HAS R IGHTLY DELETED THE DISALLOWANCE. 7. NOW COMING TO THE PRIOR PERIOD PURCHASE EXPENDIT URE OF RS.37,13,142/-, FROM PERUSAL OF SUBMISSION MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES IT TRANSPIRES THAT THE ASSESS EE MADE PURCHASES OF STORE ITEMS IN THE MONTH OF FEBRUARY AND MARCH, 200 9 AND THE QUALITY AND RATES SHOWN IN THE BILLS FOR ITS PURCHASES WERE APPROVED ON 18.07.2009. FURTHER, THE APPELLANT CONSISTENTLY FOL LOWS THE METHOD OF BOOKING SUCH ITEMS IN ITS ACCOUNTS IN THE YEAR IN W HICH THE PURCHASES LIABILITY IS FINALLY ACCEPTED BY THE APPELLANT. WE THEREFORE FIND THAT THE LIABILITY FOR THE IMPUGNED PRIOR PERIOD EXPENDITURE OF RS.37,13,142/- HAS CRYSTALLIZED DURING THE YEAR UNDER APPEAL AND THERE FORE, THE ASSESSEE HAS CLAIMED THIS IS AN EXPENDITURE. WE THEREFORE LOOKI NG TO THE GIVEN FACTS AND CIRCUMSTANCE OF THE CASE AND THE NATURE OF THE BUSINESS AS CARRIED OUT AND ASSESSEE BEING THE LIMITED COMPANY CONSISTENTLY FOLLOWING AN ACCOUNTING SYSTEM ALONGWITH SHOWING NECESSARY DOCUM ENTS TO PROVE THAT THE LIABILITY FOR THE ALLEGED EXPENDITURE CRYSTALLI ZED IN FINANCIAL YEAR 2009-10, ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTL Y DELETED THE ITA NO.366/RJT/ 2015 DCIT VS. SAURASHTRA CHEMICALS LTD. ASST.YEAR 2010-11 - 5 - DISALLOWANCE OF RS.37,13,142/-. IN THE RESULT, GROU ND NO.2 OF THE REVENUE IS DISMISSED 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. THIS ORDER PRONOUNCED IN OPEN COURT ON 26 / 12 /201 7 SD/- SD/- ( MAHAVIR PRASAD ) ( MANISH BORAD ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 26/12/2017 PRITI YADAV, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-JAMNAGAR. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD