YKK India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 440/DEL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6776 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 27-04-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 25-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Keywords: Wholly owned subsidiary
• Section: 143(3); 115JB; 154

Judgement Text

I .T.A. NO. 440/DEL/11 ASSESSMENT YEAR: 2005 - 06 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI I - 1 BENCH, NEW DELHI [CORAM: PRAMOD KUMAR AM AND BEENA A PILLAI JM ] I.T.A. NO. 440 /DEL/1 1 ASSESSMENT YEAR: 2005 - 06 YKK INDIA PVT LTD ............. .APPELLANT R13 AND 14, LGF, ANSAL CHAMBER II 6 BHIKA JI CAMA PLACE, NEW DELHI 110 066 [PAN: AAACY0201G] VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 18 ( 1), NEW DELHI .. . . RESPONDENT APPEARANCES BY: DEEPAK CHOPRA , ALONG WITH MANSVINI BAJPAI FOR THE APPELLANT AMRENDRA KUMAR , FOR THE RE SPONDENT DATE OF CONCLUDING THE HEARING : APRIL 27 , 2016 DATE OF PRONOUNC ING THE ORDER : JULY 25 , 2016 O R D E R PER PRAMOD KUMAR , AM : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER DATED 15 TH OCTOBER 2012 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTION 154 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2005 - 06. 2. GRIEVANCES RAISED BY THE ASSESSEE, IN SUBSTANCE, IS THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ADDITI ON OF RS 4 3,33,881 , MADE BY THE ASSESSING OFFICER UNDER SECTION 154, TO THE INCOME ASSESSED UNDER SECTION 143(3) READ WITH SECTION 115JB OF THE ACT. 3. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE BEFORE US IS A WHOLLY OWNED SUBSIDIARY OF YKK CORPORATIO N JAPAN, AND IS ENGAGED IN THE BUSINESS OF ZIPPERS, METALLIC AND NON METALLIC, IN INDIA. THE ASSESSMENT UNDER SECTION 143(3), IN I .T.A. NO. 440/DEL/11 ASSESSMENT YEAR: 2005 - 06 PAGE 2 OF 3 THIS CASE, WAS COMPLETED ON BOOK PROFITS OF RS 22,05,16,731. SUBSEQUENTLY, HOWEVER, RECTIFIED THIS ASSESSMENT BY HOLDING THAT THE FOLLOWING AMOUNTS NOT BEING ADDED BACK TO THE BOOK PROFITS WAS A MISTAKE APPARENT ON RECORD: PROVISION FOR WEALTH TAX RS 49,346 PROVISION FOR LEAVE ENCASHMENT RS 18,25,018 PROVISION FOR BONUS RS 12,49,188 PROVISION FOR GRA TUITY RS 12,10,329 4. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE US. 5. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MA TERIAL ON RECORD, WE FIND THAT THE ASSESSEE DOES INDEED DESERVE TO SUCCEED IN THE APPEAL. IT IS FOR THE REASON THAT, BEY OND ANY DISPUTE OR CONTROVERSY, AS PER EXPLANATION 1(C) OF SECTION 115 JB WHAT IS TO BE ADDED BACK FOR ARRIVING THE BOOK PROFIT IS THE AMOUNT OR AMOUNTS SET ASIDE FOR PROVISIONS MADE FOR MEETING LIABILITIES, OTHER THAN ASCERTAINED LIABILITIES BUT THEN WHETHER OR NOT THE PROVISIONS ARE FOR THE PURPOSES OF ASCERTAINED LIABILITIES OR UNASCERTAINED LIABILITIES IS SOMETHING WHICH CANNOT BE DE CIDED UNILATERALLY BY THE ASSESSING OFFICE R, UNLESS, OF COURSE THE PROVISIONS ARE SUCH THAT THESE CAN INHERENTLY ONLY BE FOR UNASCERTAINED LIABILITIES. THAT IS NOT EVEN THE CASE BEFORE US . IT IS A MATTER TO BE PROBED AND EXAMINED. WHAT CAN BE ADDED UNDER S ECTION 154 R.W.S 115 JB IS IN RESPECT OF WHICH, ONLY ON THE BASIS OF MATERIAL ON RECORD, AN ADVERSE INFERENCE AGAINST THE ASSESSEE CAN BE DRAWN . AS HELD BY HON BLE SUPREME COURT IN THE LANDMARK CASE OF ITO VS VOLKART BROT HERS [(1971) 82 ITR 50 (SC)], A MI STAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS . WHETHER THE PROVISION IS ON THE BASIS OF ASCERTAIN ED LIABILITY OR NOT IS SOMETHING TO BE EXAMINED ON THE FACTS OF THE CASE. IN THE PRESENT CASE, IT HAS BEEN UNCONTROVERTED STAND OF THE ASSESSEE THAT THE PROVISIONS ARE FOR ASCERTAINED LIABILITIES AND THE ASSESSEE HAS EVEN GIVEN THE DETAILS ON THE BASIS OF WHICH THE LIABILITIES ARE ASCERTAINED AS SUCH. IN THESE CIRCUMSTANCES, THE ASSESSING OFFICER WAS CLEARLY IN ERROR IN HOLDING THAT NOT ADDING BACK THESE PROVISIONS WAS A MISTAKE APPARENT ON RECORD. THAT CONCLUSION COULD HAVE BEEN ARRIVED AT ONLY AFTER REJEC TING THE EXPLANATION OF THE ASSESSEE ON MERITS, REGARDING THE LIABILITIES BEING ASCERTAINED , WHICH WAS VERY MUCH ON RECORD; THE COPIES OF THESE EXPLANATIONS HAVE BEEN FILED BEFORE US ALSO . HOWEVER, THESE EXPLANATIONS HAVE NOT EVEN BEEN CONSIDERED OR REJECT ED BY THE ASSESSING OFFICER OR EVEN BY THE CIT(A). IN VIEW OF THESE DISCUSSIONS, THE IMPUGNED ADJUSTMENTS ARE CLEARLY BEYON D THE INHERENTLY LIMITED SCOPE OF SECTION 154 OF THE ACT. WE, THEREFORE, DELETE THE IMPUGNED ADJUSTMENTS. I .T.A. NO. 440/DEL/11 ASSESSMENT YEAR: 2005 - 06 PAGE 3 OF 3 6. AS WE HAVE DECIDED THE MATTER ON THE SHORT TECHNICAL POINT AS EXPLAINED ABOVE, WE SEE NO NEED TO DEAL WITH THE MATTER ON MERITS. THAT ASPECT OF THE MATTER, GIVEN THE FACTS OF THIS CASE, WILL BE WHOLLY ACADEMIC. 7. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COU RT TODAY ON 25 TH DAY OF JULY, 2016. SD/ - SD/ - BEENA A PILLAI PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DATED : 25 TH DAY OF JULY , 2016. COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI