M/s. Uday Edible Products Ltd., Delhi V. DCIT, New Delhi

ITA 3948/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3201 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 18-10-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K JIWANI
• Assessee Lawyers: D C GARG
• Keywords: Depreciation; Bad and doubtful debts
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC, NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3948/DEL/2016 ASSESSMENT YEAR: 2011-12 M/S UDAY EDIBLE PRODUCTS LTD. VS. DCIT, CIRCLE 18(1 ), KD-20, PITAMPURA, NEW DELHI DELHI 110 034 (PAN: AABCK6441P) (ASSESSEE) (RESPONDENT) A SSESSEE BY : SH. D.C. GARG, CA REVENUE BY : SH. V.K. JIWANI, SR. DR ORDER THIS APPEAL IS FILED BY ASSESSEE AGAINST THE ORDER DATED 04.5.2016 PASSED BY THE LD. CIT(A)-22, NEW DELHI RELATING TO ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS:- (1) THAT THE ORDER DATED 04-05-2016 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LD. COMMISSIONER OF INC OME-TAX (APPEALS) XXII, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED TO UPHOLD THE AC TION OF THE LEARNED ASSESSING OFFICER TO COMPLETE/PASS THE ASSE SSMENT U/S 143 OF THE INCOME TAX ACT. 1961 BY IGNORING FAC TUAL POSITION AND AS MUCH AS THE ID. ASSESSING OFFICER W AS NOT JUSTIFIED TO TREAT A SUM OF RS.10,90,625/- ON ACCOU NT OF FOR INTEREST RECEIVED BY THE APPELLANT COMPANY AS INCOM E FROM OTHER SOURCES' AS AGAINST 'PROFITS AND GAINS FROM B USINESS/ AND PROFESSION' DECLARED BY THE APPELLANT COMPANY O N THE GROUND THAT THE SAID INCOME IS INTEREST INCOME AND EARNED ON FDR. (2) THAT THE ORDER DATED 04-05-2016 PASSED U/S 250 OF THE INCOME-TAX ACT, 1961 BY THE LEARNED COMMISSIONER OF 2 INCOME-TAX (APPEALS) XXII, NEW DELHI IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIE D TO UPHOLD THE ACTION OF LD. ASSESSING OFFICER TO DISALLOW A O F RS. 2,34,73,419/- ON ACCOUNT OF VARIOUS EXPENSES ( INCLUDING COST OF GOODS SOLD - RS.8,39,699/-, SECURITY EXPENS ES - RS. 1,18,471/-, ADMINISTRATIVE EXPENSES -- RS.1,45, 566, BAD DEBTS -- RS. 1,69,12,401/-, BANK CHARGES - RS.85,01 6, OTHER EXPENSES - RS. 8,598/- AND DEPRECIATION - RS. 53,66 ,668/-) CLAIMED BY THE APPELLANT COMPANY ON THE GROUND THAT SINCE THERE IS NO INCOME WHICH IS ELIGIBLE TO BE ASSESSED UNDER THE HEAD 'INCOME FROM BUSINESS & PROFESSION' THE EXPENS ES DEBITED TO P&L ACCOUNT INCLUDING DEPRECIATION U/S 3 2 IS NOT ALLOWABLE WHILE COMPUTING TOTAL TAXABLE INCOME. 2. FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NO T DISPUTED BY THE PARTIES, HENCE, THE SAME ARE NOT REPRODUCED HERE F OR THE SAKE OF BREVITY. 3. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSES SEE STATED THAT ASSESSEE HAS FILED ALL THE RELEVANT EVIDENCES BEFOR E THE AO AS WELL AS LD. CIT(A) IN SPITE OF THE SAME THE REVENUE HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. HE HAS ALSO FILED PAPER BOOK IN WHIC H HE HAS ATTACHED VARIOUS DOCUMENTARY EVIDENCES. HE STATED THAT REVEN UE AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE EVIDENCES FILED BY THE ASSESEE AND DECIDE THE ISSUE IN DISPUTE AGAINST THE ASSESSEE. WITH REG ARD TO GROUND NO. 1 RELATING TO FDR INTEREST IS CONCERNED, LD. COUNSEL OF THE ASSESSEE STATED THAT LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AO TO TREAT A SUM OF RS. 10,90,625/- ON ACCOUNT OF FDR INTEREST RECEIVED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AS AGAINST PROFITS AND GAINS FROM BUSINESS / AND PROFESSION DECLARED BY THE ASS ESSEE ON THE GROUND THAT THE SAID INCOME IS INTEREST INCOME AND EARNED ON FDR. HE FURTHER STATED THAT LD. CIT(A) OBSERVED THAT THE ASSESSE CO ULD NOT FURNISH ANY EVIDENCE TO ESTABLISH THE NEXUS OF FDR WITH THE BUS INESS OF THE ASSESSEE AND A CONTINUANCE OF THE SAME PURPOSE IN THE YEAR U NDER CONSIDERATION 3 THOUGH SPECIFICALLY ASKED ON 10.03.2016. NOW HE U NDERTAKES TO FURNISH THE DOCUMENTS / EVIDENCES IN THIS REGARD. HENCE, HE REQUESTED THAT THE ISSUE IN DISPUTE MAY BE SET ASIDE TO THE FILE OF TH E AO TO DECIDE THE SAME AFRESH, AS PER LAW. SIMILARLY, WITH REGARD TO GROUN D NO.2 RELATING TO DISALLOWANCE OF RS. 2,34,73,419/- IS CONCERNED, LD. COUNSEL OF THE ASSESSEE STATED THAT LD. CIT(A) WAS NOT JUSTIFIED I N UPHOLDING THE ACTION OF DISALLOWING THE AMOUNT IN DISPUTE CLAIMED BY THE ASSESSEE ON THE GROUND THAT SINCE THERE IS NO INCOME WHICH IS ELIGI BLE TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION THE EXPENSES DEBITED TO P&L ACCOUNT INCLUDING DEPRECIATION U/S. 32 OF THE ACT IS NOT ALLOWABLE WHILE COMPUTING TOTAL TAXABLE INCOME. IT WAS FURTHER STATED BY HIM THAT LD. CIT(A) HAS OBSERVED THAT THE DETAILS W ERE NOT FURNISHED BY THE ASSESSEE WHICH REQUIRED TO BE EXAMINED. NOW HE UNDERTAKES TO FURNISH THE DOCUMENTS / EVIDENCES IN THIS REGARD. HENCE, HE REQUESTED THAT THE ISSUE IN DISPUTE MAY ALSO BE SET ASIDE TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH, AS PER LAW. 3.1 ON THE CONTRARY, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND OPPOSED THE REQUEST OF THE LD. COUNSEL OF THE ASSESSEE. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. I FIND THAT LD. CIT(A) HAS DEALT THE ISSUES IN DISPUTE BY OBSE RVING AS UNDER VIDE PARA NO. 5.1 TO 6.1 AT PAGE NO. 5 & 6 OF THE IMPUGN ED ORDER :- 5.1 SINCE, NO BUSINESS WAS DONE BY THE APPELLANT, THE DEPRECIATION WAS NOT ALLOWED. THE PROVISION FOR BAD DEBTS, WAS ALSO DISALLOWED ON THE GROUND THAT IT WA S ONLY A PROVISION. MOREOVER NO INCOME OR LOSS WAS ASSESSED UNDER THE HEAD 'BUSINESS OR PROFESSION' . 5.2 IN THE WRITTEN SUBMISSIONS, THE APPELLANT CLAI MED THERE, THESE FIXED DEPOSITS WERE PLEDGED AGAINST BA NK GUARANTEES ISSUED BY BANKS AND THE CORRESPONDING INCOME WAS SHOWN AS OTHER INCOME ONLY TO COMPLY WIT H THE REQUIREMENTS OF COMPANIES ACT AND ACCOUNTING 4 STANDARDS. AS PER THE APPELLANT, IT SHOULD HAVE BEE N ASSESSED UNDER THE HEAD BUSINESS OR PROFESSION. HOWEVER, THE APPELLANT COULD NOT FURNISH ANY EVIDEN CE TO ESTABLISH THE NEXUS OF FDR WITH THE BUSINESS OF THE APPELLANT AND A CONTINUANCE OF THE SAME PURPOSE IN THE YEAR UNDER APPEAL THOUGH SPECIFICALLY ASKED ON 10.03.2016 (SUPRA). THEREFORE, GROUND NO. 1 OF THE APPEAL IS DISMISSED. 6. REGARDING GROUND NO. 2, THE COST OF GOODS SOLD, ACTUALLY IS CLOSING STOCK OF GOODS WRITTEN OFF , WH ILE THE SELLING EXPENSES, ARE NOTHING BUT A PROVISION FOR B AD DEBTS. THE DEPRECIATION IS NOT ALLOWABLE AS NS2 BUS INESS HAS BEEN DONE. EXCLUDING THESE THREE MAJOR ITEMS, T HE REMAINING EXPENSES CLAIMED, COME TO RS. 3,57,651/- BEING SECURITY EXPENSES, ADMINISTRATIVE EXPENSES, FINANCIAL EXPENSES AND OTHER EXPENSES. IN THE ABSEN CE OF JUSTIFICATION OF THE SAME, THE AO ON ESTIMATE BA SIS ALLOWED RS. 50,000/- OUT OF THE SAME UNDER THE HEAD 'OTHER SOURCES'. 6.1 IN ORDER TO APPELLANT'S CLAIM, THE APPEAL WAS ASKED TO CLARIFY CERTAIN ISSUES, VIDE ORDER SHEET ENTRY DATED 10.03.2016 (SUPRA). HOWEVER, THE SAID DETAILS WERE NOT FURNISHED BY THE APPELLANT. THEREFORE, THE APPELLANT ALSO FURNISHED THE SPECIFIC INFORMATION REQUIRED TO EXAMINE THE ALLOWABILITY OR OTHERWISE O F THE CLAIM THE APPELLANT. CONSIDERING THE SAME, GROUND N O. 2 OF THE APPEAL IS ALSO DISMISSED. 4.1 AFTER PERUSING THE AFORESAID FINDINGS OF THE LD . CIT(A) AND KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE PRES ENT CASE AS WELL AS ARGUMENTS ADVANCED BY THE PARTIES, ESPECIALLY THE STATEMENT OF THE LD. COUNSEL OF THE ASSESSEE FOR PRODUCTION OF ALL THE DOCUMENTS /EVIDENCES 5 WITH REGARD TO THE CLAIM OF THE ASSESSEE, I AM OF THE VIEW THAT IN THE INTEREST OF JUSTICE, ONE MORE CHANCE SHOULD BE GIV EN TO THE ASSESSEE TO PRODUCE THE DOCUMENTS / EVIDENCES BEFORE THE AO F OR CORROBORATING ON THE ISSUES IN DISPUTE. THEREFORE, THE ASSESSEE IS DIRECTED TO FURNISH THE DOCUMENTS / EVIDENCES WITH REGARD TO THE ISSUES IN DISPUTE BEFORE THE AO AND ACCORDINGLY AO IS ALSO DIRECTED TO DECIDE TH E ISSUES IN DISPUTE AFRESH, AS PER LAW, AFTER EXAMINING ALL THE DOCUME NTS/EVIDENCES FILED BY THE ASSESSEE. WITH THIS OBSERVATION, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 01/03/2018. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:- 01/03/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. 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