DCIT 9(1), MUMBAI V. BAHUBALI ELECTRONICS P. LTD, MUMBAI

ITA 4440/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3417 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 23-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Assessee Lawyers: BIKASH KUMALR BOGI
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER I.T.A.NO.4440/MUM/2009 - A.Y 2006-07 DY. COMMISSIONER OF INCOME TAX, RANGE 9(1), MUMBAI. VS. M/S BABHUBALI ELECTRONICS P. LTD., 745/2, KRISHNA CO-0-. SOCIETY, KHAR PALI ROAD, KHAR (W), MUMBAI 400 052 PAN: AAACB 4399 J (APPELLANT) (RESPONDENT) APPELLANT BY : MR. SHRAVAN KUMAR. RESPONDENT BY : MR. BIKASH KUMALR BOGI. O R D E R PER T.R.SOOD, AM: IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING G ROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT[A] ERRED IN ALLOWING ADJUSTMENT OF EXCISE DUTY TO THE OPENING STOCK U/S.145A FOLLOWING THE RATIO OF THE DECISION OF THE ITAT IN THE CASE OF HAWKINS COOKER LTD. ITAT NO.505/MUM/04 FOR A.Y 1999- 2000 WHICH IS NOT IN CONFORMITY WITH THE COORDINATE BENCH DECISIONS IN THE CASE OF WEST COAST PAPER MILLS LTD. VS. ACIT 105 TTJ (MUM) 344 AND J.B.CHEMICALS & PHARMACEUTICALS LTD. VS. AD DL. CIT 10 SOT 362 (MUM) AND HAS NOT BEEN ACCEPTED BY THE DEPA RTMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT[A] ERRED IN DIRECTING TO DELETE THE ADDITION MA DE U/S.14A TO THE EXTENT OF ` `` ` .5,L79,548/- RELYING ON THE JUDGMENT OF M.P. HIGH C OURT IN THE CASE OF SHREE SYNTHETICS LTD. VS. CIT 303 ITR 4 51 WITHOUT APPRECIATING THE FACT THAT THE JUDGMENT RELIED BY T HE LD. CIT[A] IS PRIOR TO INSERTION OF RULE 8D WHICH HAS GOT RETROSP ECTIVE EFFECT AS PER THE SPECIAL BENCH DECISIONS OF THE ITAT IN THE CASE OF DAGA CAPITAL MANAGEMENT PVT. LTD. I.T.A.NO.8057/MUM/2003. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT[A] ERRED IN ALLOWING EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND U/S.36(1)(VA) AMOUNTING TO ` `` ` .99,403/- PAID AFTER THE DUE DATE WITHOUT APPRECIATING THE FACT THAT THE EXPLANATION TO SECTION 36(1)(VA) CLEARLY STIPULATES THAT THE CONTRIBUTION HAS TO BE MADE WITHIN THE DUE DATE. 2. GROUND NO.1 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAD MODVAT BALANCE OF ` `` ` .14,83,273/- WHICH WAS REFLECTED 2 UNDER THE HEAD LOANS & ADVANCES. THE AO CONSIDERE D THE SAME AS PART OF THE CLOSING STOCK AND, ACCORDINGLY, ADDED I T TO THE INCOME U/S.145A. 3. ON APPEAL, LD. CIT[A] FOLLOWING THE ORDER OF THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILE OF THE AO WITH A DIRECT ION TO RECOMPUTE THE ASSESSMENT IN THE LIGHT OF THE DECISION OF THE TRIB UNAL. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE IN A.Y 2004-05 IN I.T.A.NO.4406/M/07 AND THE I SSUE WAS DECIDED BY THE TRIBUNAL VIDE PARA-4 WHICH IS AS UNDER: 4. THIS ISSUE IS COVERED BY THE DECISION IN THE CA SE OF HAWKINS COOKERS LTD., I.T.A.NO.505/MUM/04 FOR ASSESSMENT YE AR 1999-00 IN WHICH IT HAS BEEN HELD THAT THE ACCOUNTING TREATMEN T TO BE ADOPTED TOWARDS INCREASE IN THE VALUATION OF CLOSING STOCK, TO INCLUDE MODVAT COMPONENT DISCUSSED ELABORATELY. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE IN THE LIGHT OF THE DECISION IN THE CASE OF HAWKINS COOKERS [SUPRA]. FOLLOWING THE ABOVE DECISION, WE FIND NOTHING WRONG WITH THE ORDER OF THE LD. CIT[A] BECAUSE HE HAS ALREADY REMITTED BACK THE MATTER TO THE FILE OF THE AO FOR RECOMPUTATION OF MODVAT ADJUSTME NT IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL. ACCORDINGLY, WE DISMISS THIS GROUND OF THE REVENUE. 5. GROUND NO.2 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAS SHOWN SOME INCOME FROM DIVIDEND WHICH IS EXEMPT. IT WAS NOTED BY THE AO THAT ASSESSEE HAS NOT ALLOCATED ANY EXPENSES. FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE 3 OF DAGA CAPITAL MANAGEMENT PVT. LTD. & ORS. (2008) 119 TTJ (MUM) (S.B) 289, THE AO ALLOCATED THE EXPENSES AFTER INVO KING RULE 8D. 6. ON APPEAL, LD. CIT[A] WAS OF THE VIEW THAT RULE 8D IS NOT APPLICATION TO THE ASSESSEES CASE AND ACCORDINGLY HE DELETED THE ADDITION. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT THIS ISSUE HAS BEEN RECENTLY ADJUDICATED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO.LTD. VS. DCIT [4 3 DTR 171], WHEREIN IT WAS HELD THAT RULE 8D IS NOT OF RETROSPE CTIVE NATURE. AT THE SAME TIME, IT WAS ALSO HELD THAT SOME REASONABLE DI SALLOWANCE ON ACCOUNT OF EXPENSES CAN BE MADE. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND REMIT THE MATTER BACK TO THE FIL E OF THE AO WITH A DIRECTION TO RE-EXAMINE THE ISSUE IN THE LIGHT OF T HE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & B OYCE MFG. CO.LTD. VS. DCIT [SUPRA]. 8. GROUND NO.3 : AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAD MADE PAYMENT TOWARDS EMPLOYEES CONTRIB UTION LATE BY ONE DAY AS PER THE FOLLOWING DETAILS: MONTH EMPLOYEES CONTRIBUTION DUE DATE DATE OF PAYMENT MAY 2005 47,236 15-06-05 16-06-05 FEBRUARY 2006 52,167 15-03-06 16-03-06 TOTAL 99,403 AO ACCORDINGLY DISALLOWED THE SAME. 9. ON APPEAL, LD. CIT[A] DELETED THE ADDITION ON TH E BASIS OF THE TRIBUNALS DECISION. 4 10. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT AS FAR AS PAYMENT OF PROVIDENT FUND DUES WITH THE GRACE PERIO D IS CONCERNED, THE SAME HAS BEEN HELD ALLOWABLE U/S.43B BY THE HON 'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHRI GANAPATHY MILLS C O. LTD. 243 ITR 879. IN THIS CASE IT WAS HELD AS UNDER: HELD, (I) THAT THE TRIBUNAL WAS RIGHT IN HOLDING T HAT PAYMENTS TOWARDS PROVIDENT FUND AND EMPLOYEES STATE INSURANCE MADE W ITHIN THE GRACE PERIOD ALLOWED UNDER THE RELEVANT STATUTE, THOSE AM OUNTS WERE REQUIRED TO BE DEDUCTED IN THE COMPUTATION OF THE TAXABLE IN COME OF THE ASSESSEE. NO QUESTION OF LAW AROSE FROM ITS ORDER. FOLLOWING THE ABOVE DECISION, WE DECIDE THIS ISSUE AGAINST THE REVENUE. 11. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF DECEMBER, 2010. SD/- SD/- (R.S.PADVEKAR) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 30 TH DECEMBER, 2010. P/-* 5