HERBICIDES (INDIA) LTD, Jaipur V. ACIT, Jaipur

ITA 391/JPR/2013

• Counselvise Citation: 39123114 RSA 2013
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: N S VYAS

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES SMC, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA- @ ITA NO. 391/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 M/S HERBICIDES (INDIA) LTD., 12, INDUSTRIAL AREA, JHOTWARA, JAIPUR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAAFH 6414 R VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI N.S. VYAS (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 21/10/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 23/10/2015 VKNS'K @ ORDER PER: R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 02/01/2013 PASSED BY THE LEARNED CIT(A)-I, JAIPUR F OR A.Y. 2008-09. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE AUTHORITIES BELOW ERRED IN MAKING THE AD DITION OF RS. 2,00,000/- IN THE DECLARED TRADING RESULTS BY THE P ETITIONER TO COVER UP ANY ALLEGED LEAKAGE OF REVENUE. ITA 391/JP/2013_ M/S HERBICIDES INDIA LTD. VS. ACIT 2 2. THAT THE AUTHORITIES BELOW FURTHER ERRED IN DISALL OWING A SUM OF RS. 11,59,210/- U/S 40A(IA) OF THE IT ACT, 1961 O N ACCOUNT OF COMMISSION EXPENSES CLAIMED. 3. THAT THE ADDITION/DISALLOWANCES SO MADE BY THE AUT HORITIES BELOW IS BAD IN LAW AS WELL AS ON FACTS. 4. WITHOUT PREJUDICE TO THE ABOVE, THE DISALLOWANCES /ADDITIONS SO MADE IN VERY MUCH EXCESSIVE. 2. BRIEF FACTS OF THE CASE ARE - THAT THE ASSESSING OFFICER FOUND THAT THE G.P. RATE OF 20.27% DISCLOSED BY THE ASSESSEE WAS LE SS AND MADE ADDITION OF RS. 5 LACS TAKING A CUE FROM THE PRECEDING YEAR G.P. RATE OF 20.81%. 3. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WH ERE THE LD CIT(A) HELD THAT THE ASSESSEES TURNOVER SHARPLY DECLINED FROM 20.94 CRORES TO 12.94 CRORES, LD CIT(A) REDUCED THE DISALLOWANCE OF RS. 2 LACS BY FOLLOWING OBSERVATIONS: I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SU BMISSIONS MADE. IT IS STATED THAT THE STOCK REGISTER HAS BEEN MAINTAINED, VARIOUS PAYMENTS WERE MADE IN CASH WHICH ARE NOT SUBJ ECT TO FULL VERIFICATION AND, THEREFORE, REJECTION OF BOOK S OF ACCOUNTS IS JUSTIFIED. THE TURNOVER OF THE APPELLANT SHARPLY DECLINED TO RS. 12.94 CRORES AGAINST RS. 20.94 CRORES IN THE PR EVIOUS YEAR I.E. A DROP OF RS. 8 CRORES ON NEARLY 38%. THROUGH, BECAUSE OF DEALING IN SELECTIVE PRODUCTS THE GP RATE WAS MAINTA INED AT 20.27% AGAINST 20.81% FOR PREVIOUS YEAR. IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND PAST HISTORY OF THE CAS E LUMP SUM ITA 391/JP/2013_ M/S HERBICIDES INDIA LTD. VS. ACIT 3 TRADING ADDITION OF RS. 2 LAC IS DIRECTED TO MAKE T O COVER UP POSSIBLE LEAKAGE OF REVENUE. THE APPELLANT PARTLY SU CCEEDS ON THIS GROUND. 4. AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL. THE L D COUNSEL FOR THE APPELLANT HAS RELIED ON THE HONBLE ITATS ORDER DAT ED 19/06/2009 PASSED IN ITA NO. 1689/JP/2008 IN ASSESSEES OWN CASE AND I N THAT CASE THE ASSESSING OFFICER MADE DISALLOWANCE OF RS. 4,33,441/ -, WHICH WAS REDUCED TO RS. ONE LAC BY THE LD CIT(A). THE HONBLE ITAT FURT HER REDUCED THE SAME TO RS. 50,000/-. IT IS PLEADED THAT THE FACTS OF THE CASE ARE SIMILAR TO A.Y. 2005-06. 4.1 APROPOS GROUND NO. 2, RELIANCE IS PLACED ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. VECTOR SHIPPING SERVICES (P) (2013) 357 ITR 642 (ALL) IN WHICH PROPOSITION THAT SE CTION 40(A)(IA) DISALLOWANCE CAN BE MADE ONLY IN RESPECT OF AMOUNT R EMAINING PAYABLE AT THE END OF THE YEAR ON WHICH TDS IS NOT DEDUCTED. I N THIS CASE IT IS ADMITTED FACT THAT THE ENTIRE AMOUNT OF COMMISSION WAS PAID DURING THE YEAR ITSELF AND NO AMOUNT WAS PAYABLE. THEREFORE, IN A.Y. 2007-08 IN IMMEDIATE PRECEDING YEAR, THE LD CIT(A) HAS DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: ITA 391/JP/2013_ M/S HERBICIDES INDIA LTD. VS. ACIT 4 HOWEVER, SG. N.J. VYAS AR OF THE ASSESSEE HAS SUBMI TTED THAT HONBLE APEX COURT APPROVES THE HONBLE COURTS RUL ING THAT DISALLOWANCE U/S 40(A)(IA) APPLIES ONLY TO AMOUNTS P AYABLE AS ON 31 ST MARCH AND MET TO AMOUNTS ALREADY PAID DURING THE Y EAR. FURTHER, IT IS ALSO SEEN THAT DEPARTMENTS SLP AGAI NST THIS ORDER OF HONBLE ALLAHABAD HIGH COURT IN CASE OF VECTOR S HIPPING SERVICES PVT. LTD. (SUPRA) HAS ALREADY BEEN DISMISS ED, MEANING THEREBY, HONBLE APEX COURT HAS APPROVED THE JUDGME NT OF HONBLE ALLAHABAD HIGH COURT IN CASE OF VECTOR SHIP PING SERVICES PVT. LTD. AND ALSO THE CASE OF MERILYN SHI PPING AND TRANSPORT PVT. LTD., WHEREIN IT HAS BEEN HELD THAT D ISALLOWANCE U/S 40(A)(IA) APPLIES ONLY TO AMOUNTS PAYABLE AS ON 31 ST MARCH BUT NOT TO AMOUNTS ALREADY PAID DURING THE YEAR. IT IS CONTENDED THAT THE DEPARTMENTAL SLP AGAINST T HE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN CASE OF VECTOR SHIPPING SER VICES PVT. LTD. (SUPRA) HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT. THE REFORE, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 5. THE LD DR, ON THE OTHER HAND, CONTENDS THAT AS FA R AS GP/TRADING ADDITION IS CONCERNED IN A.Y. 2005-06 CANNOT BE COM PARED WITH THE FACTS OF A.Y. 2008-09. EVERY YEAR IS A DISTINCT AND SEPARATE UNIT OF ASSESSMENT AND PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO FACTUAL FINDINGS. THE LD CIT(A) HAS TAKEN A REASONABLE LENIENT VIEW WHICH MAY BE UPHE LD. APROPOS THE SECOND GROUND, RELIANCE IS PLACED ON THE ORDER OF T HE LOWER AUTHORITIES. ITA 391/JP/2013_ M/S HERBICIDES INDIA LTD. VS. ACIT 5 6. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. APROPOS 1 ST GROUND OF APPEAL, LOOKING ON THE FACTS ON RECORD, INTEREST OF JUSTICE WILL BE SERVED IF THE TRADING ADDITION IS RESTRICTED TO RS. ONE LAC INSTEAD OF RS . 2 LACS RETAINED BY THE LD CIT(A). THIS GROUND IS PARTLY ALLOWED. 6.1 APROPOS SECOND GROUND, I FIND MERIT IN THE ARGU MENT OF THE LD COUNSEL FOR THE ASSESSEE, IT HAS NOT BEEN DISPUTED THAT THE ENTIRE AMOUNT OF COMMISSION WAS PAID DURING THE YEAR AND THERE WAS NO PAYABLE AMOUNT AT THE END OF THE YEAR. IN VIEW THEREOF, THE HONBLE ALLAHABAD HIGH COURT JUDGMENT IN CASE OF VECTOR SHIPPING SERVICES PVT. L TD. (SUPRA) IS FULLY APPLICABLE. BY RESPECTFULLY FOLLOWING THE SAME, GROU ND NO. 2 OF THE APPEAL IS ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/01/2015. SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 23 RD OCTOBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S HERBICIDES (INDIA) LTD., JAIPUR. . ITA 391/JP/2013_ M/S HERBICIDES INDIA LTD. VS. ACIT 6 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDR @ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 391/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR