Telsa Marketing P.Ltd, Ernakulam V. The DCIT, Ernakulam

ITA 40/COCH/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6269 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-04-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 04-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Section: 43B; 154

Judgement Text

1 ITA NO. 40/COCH/2014 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 40/COCH/2014 (ASSESSMENT YEAR 2008-09) M/S TELSA MARKETING (P) LTD VS THE DY.CIT, CIR.4 (2) 25/2915, PUTHIYA ROAD JUNCTION KOCHI THAMMANAM, KOCHI PAN : AAACT8736H (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI K.K. JOHN, SR DR DATE OF HEARING : 29-04-2014 DATE OF PRONOUNCEMENT : 02-05-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-II, KOCHI DATED 29-10-2013 AND PERTAINS TO A SSESSMENT YEAR 2008- 09. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISAL LOWANCE OF RS.25,45,880 TOWARDS SALES-TAX PAYMENT. 2 ITA NO. 40/COCH/2014 3. NO ONE APPEARED FOR THE ASSESSEE EVEN THOUGH THE APPEAL WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. THEREFOR E, WE HEARD THE LD.DR AND PROCEEDED TO DISPOSE OF THE APPEAL ON MERIT. 4. SHRI K.K. JOHN, THE LD.DR SUBMITTED THAT THE ASS ESSEE HAS PRODUCED, AS EVIDENCE, BEFORE THE CIT(A) IN RESPECT OF PAYMEN T OF SALES-TAX TO THE EXTENT OF RS. 57,63,342. HOWEVER, THE PAYMENT OF S ALES-TAX TO THE EXTENT OF RS.25,45,880 WAS MADE DURING THE ASSESSMENT YEAR 2007-08; THEREFORE, IT CANNOT BE ALLOWED DURING THE YEAR UND ER CONSIDERATION. THEREFORE, THE CIT(A) CONFIRMED THE DISALLOWANCE ON LY TO THE EXTENT OF RS.25,45,880 WHICH HAS TO BE CLAIMED FOR THE ASSESS MENT YEAR 2007-08. ON A QUERY FROM THE BENCH, WHEN THE ASSESSEE PAID T HE SALES-TAX BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09, THE LD.DR SUBMITTED THAT THE ORDER OF ASSE SSMENT FOR THE ASSESSMENT YEAR 2008-09 WHY IT WAS NOT ALLOWED, HAS TO BE RECTIFIED U/S 154 OF THE ACT. THEREFORE, IT IS FOR THE ASSESSEE TO INITIATE PROCEEDINGS U/S 154 OF THE ACT. ACCORDING TO THE LD.DR, THE ASSESS ING OFFICER MAY NOT INITIATE SUO MOTU PROCEEDINGS FOR RECTIFYING THE AS SESSMENT ORDER FOR THE ASSESSMENT YEAR 2007-08. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD.DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS A DE ALER, TRADER AND 3 ITA NO. 40/COCH/2014 DISTRIBUTOR / AGENT FOR INDUSTRIAL CONSTRUCTION AND EARTHMOVING EQUIPMENTS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DE BITED AN AMOUNT OF RS.83,02,222 AS EXPENDITURE TOWARDS SALES-TAX PAYME NT. THE ASSESSEE EXPLAINED BEFORE THE ASSESSING OFFICER THAT THE SAL ES-TAX WAS PAID ON THE BASIS OF THE ASSESSMENT ORDER PASSED BY THE ASSISTA NT COMMISSIONER OF COMMERCIAL TAX, ERNAKULAM FOR THE ASSESSMENT YEARS 1997-98 TO 2004-05 INCLUDING INTEREST. THE ASSESSEE PAID RS.83,02,222 AND THE SAME WAS CLAIMED AS EXPENDITURE. HOWEVER, THE ASSESSING OFF ICER DISALLOWED THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER ALSO FOUND THAT THE ASSESSEE FILED AN APPEAL AGAINST THE SALES-TAX ASSESSMENT BE FORE THE SALES-TAX APPELLATE TRIBUNAL. ACCORDING TO THE ASSESSING OFF ICER, WHEN THE MATTER WAS PENDING BEFORE THE SALES-TAX APPELLATE TRIBUNAL , THE LIABILITY TO PAY SALES-TAX WAS AN UNASCERTAINABLE LIABILITY, THEREFO RE, IT CANNOT BE ALLOWED DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOUND THAT WHEN THE LIABILITY BECAME FINAL, THE PAYMENT OF SUC H LIABILITY CAN BE CLAIMED AS EXPENDITURE. 6. FROM THE MATERIALS AVAILABLE ON RECORD IT APPEAR S THAT THE ASSESSEE FILED AN APPEAL BEFORE THE SALES-TAX APPELLATE TRIB UNAL DISPUTING THE TURNOVER QUANTIFIED BY THE ASSESSING OFFICER UNDER THE SALES-TAX ACT. THE FACT REMAINS IS THAT THERE IS AN ASSESSMENT ORDER U NDER SALES-TAX ACT AND THE APPEAL IS PENDING AGAINST THE ASSESSMENT ORDER. THEREFORE, DURING THE 4 ITA NO. 40/COCH/2014 PENDENCY OF THE APPEAL BEFORE THE SALES-TAX APPELLA TE TRIBUNAL, IF THE ASSESSEE PREFERS TO DISCHARGE ITS LIABILITY, IT HAS TO BE ALLOWED AS DEDUCTION / EXPENDITURE IN VIEW OF SECTION 43B OF THE ACT. B Y CHANCE, IF THE ASSESSEE SUCCEEDS IN THE APPELLATE PROCEEDINGS BEFORE THE SA LES-TAX APPELLATE TRIBUNAL AND THE TAX PAID BY THE ASSESSEE WAS REFUN DED BY THE SALES-TAX AUTHORITIES, THEN THE SAME HAS TO BE TAKEN AS INCOM E U/S 41(1) OF THE ACT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINI ON THAT THE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE TO THE EX TENT OF RS.57,56,342. 7. NOW COMING TO THE BALANCE AMOUNT OF RS.25,45,880 , THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE SAME WAS PAID IN THE PREVIOUS YEAR RELEVANT TO THE ASSES SMENT YEAR 2007-08. NO DOUBT, EACH ASSESSMENT YEAR IS SEPARATE AND DIST INCT, THEREFORE, THE CIT(A) MAY NOT BE ABLE TO GIVE DIRECTION IN RESPECT OF THE ASSESSMENT YEAR FOR WHICH THE APPEAL IS NOT PENDING. HOWEVER, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ASSESSING OFFICER HAS TO AC T REASONABLY BY INITIATING PROCEEDINGS U/S 154 OF THE ACT ESPECIALLY WHEN THE ASSESSEE PAID THE SALES-TAX DEMAND DURING THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2007-08. THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE JURISDICTION OF THE APPELLATE AUTHORITIES IS ONLY CONFINED TO THE A SSESSMENT YEAR FOR WHICH THE APPEAL RELATES. THEREFORE, THOUGH THIS TRIBUNA L CANNOT GIVE ANY DIRECTION TO ALLOW THE EXPENDITURE / SALES-TAX PAID FOR THE ASSESSMENT YEAR 5 ITA NO. 40/COCH/2014 2007-08, THE ASSESSEE WILL BE AT LIBERTY TO FILE AP PLICATION U/S 154 OF THE ACT IF THEY ARE SO ADVISED. IF SUCH AN APPLICATION IS FILED BY THE ASSESSEE U/S 154 OF THE ACT, THE ASSESSING OFFICER SHALL CONSIDE R THE SAME AND SHALL PASS NECESSARY ORDER ON MERIT IN ACCORDANCE WITH LA W WITHOUT BEING INFLUENCED BY ANY OF THE OBSERVATIONS MADE IN THE O RDER. 8. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE A SSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 02 ND APRIL, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 02 ND MAY, 2014 PK/- COPY TO: 1. TELSA MARKETING PVT LTD, 25/2915, PUTHIYA ROAD J UNCTION, THAMMANAM, KOCHI 2. DY.CIT, CIR.4(2), KOCHI 3. THE COMMISSIONER OF INCOME-TAX, KOCHI 4. THE COMMISSIONER OF INCOME-TAX(A)-II, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH