Sanap Agro Animals Pvt.Ltd., Nashik V. ACIT, Cir.1, Nashik, Nashik

ITA 453/PUN/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62761 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK MISHRA
• Keywords: Non-deduction of tax
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER , AND SHRI G.S.PANNU, ACCOUNTANT MEMBER. ITA.NO.453/PN/2011 (ASSTT. YEAR : 2005-06) SANAP AGRO ANIMALS (P) LTD. SAKET, NEAR K.J.MEHTA HIGH SCHOOL, DAWAKHAR WADI, NASHIK ROAD, NASHIK. .. APPELLANT VS. ITO, WARD-2(1), NASHIK. .. RESPONDENT AND ITA.NO.499/PN/2011 (ASSTT. YEAR : 2005-06) ITO, WARD-2(1), NASHIK. .. APPELLANT VS. SANAP AGRO ANIMALS (P) LTD. SAKET, NEAR K.J.MEHTA HIGH SCHOOL, DAWAKHAR WADI, NASHIK ROAD, NASHIK. .. RESPONDENT APPELLANT BY : SHRI M.K.KULKARNI RESPONDENT BY : SHRI ALOK MISHRA DATE OF HEARING : 05.07.2012 DATE OF PRONOUNCEMENT : 26.07.2012 ORDER PER SHAILENDRA KUMAR YADAV, JM : BOTH THESE APPEALS ARE CROSS APPEALS ARISING OUT O F THE ORDER OF THE CIT(A) FOR A.Y. 2005-06, SO THEY ARE BEING D ISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2 2. IN ITA.NO.453/PN/2011, THE ASSESSEE HAS RAISED T HE ISSUE OF ADDITION OF RS.18,64,891/-. BRIEF FACTS OF THE CAS E ARE THAT THE ASSESSEE IS A REGISTERED COMPANY ENGAGED IN EXPORT OF GRAPES. DURING THE ASSESSMENT PROCEEDINGS, THE A.O. HAS MAD E AN ADDITION OF RS.17,64,891/- U/S.68 OF THE INCOME TAX ACT, HER EINAFTER REFERRED TO AS THE ACT, ON ACCOUNT OF LOAN STATED TO HAVE BEEN RECEIVED FROM SMT.YOGINI SHRIRAM KATKADE AND SMT.AS HA SANAP RESPECTIVELY. THE MATTER WAS CARRIED BEFORE THE FI RST APPELLATE AUTHORITY WHO CONFIRMED THE ADDITION BY OBSERVING T HAT ASSESSEE COULD NOT PROVE THE IDENTITY AND GENUINENESS OF THE SAID LOAN TRANSACTIONS. THE CIT(A) ALSO OBSERVED THAT ASSESS EE HAS NOT RAISED THIS ISSUE IN ITS GROUNDS OF APPEAL. ACCORDINGLY H E CONFIRMED THE SAME. THE STAND OF THE ASSESSEE BEFORE US IS THAT IT HAS RAISED THIS GROUND BEFORE THE CIT(A). IN THIS REGARD, HE DREW OUT ATTENTION TO THE GROUNDS OF APPEAL RAISED BY THE CIT(A). INTER- ALIA, VIDE GROUND NO.5, HE HAS RAISED THIS ISSUE WHICH READS AS UNDER : 5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE ADDITION MADE OF RS.58,36,862/- VIDE PARA N OS.5.1.6 AND 7 OF THE ASSESSMENT ORDER IS BAD IN LAW, WITHOU T JURISDICTION AND BE QUASHED. 3. ACCORDING TO THE LD.AR, THIS FIGURE OF RS.58,36, 862/- INCLUDES THE AMOUNT OF RS.18,64,891/- RAISED BY THE ASSESSEE IN ITS APPEAL. SO, THE CIT(A) WAS NOT JUSTIFIED IN OBSERVING THAT THIS ISSUE IS DISMISSED BECAUSE THE SAME HAS NOT BEEN PRECISELY R AISED. HAD THIS ISSUE NOT BEEN RAISED BEFORE THE CIT(A), THEN WHAT WAS THE OCCASION FOR HIM TO GIVE HIS FINDING ON THE SAME. W E FIND THAT FIGURE OF RS.58,36,862/- INCLUDES THE AMOUNT OF RS.18,64,8 91/-. ACCORDING TO US, THOUGH THIS ISSUE HAS NOT BEEN RAI SED SEPARATELY, BUT IS EMBEDDED IN THIS COMBINED FIGURE OF RS.58,36 ,862/- IN GROUND NO.5 BEFORE THE CIT(A), SO CIT(A) WAS NOT JU STIFIED IN DISMISSING THE SAME POINT AS DISCUSSED ABOVE, IN TH E INTEREST OF JUSTICE, WE SET ASIDE THIS ISSUE TO THE A.O. WITH D IRECTION TO DECIDE THE SAME AS PER FACT AND AFTER PROVIDING DUE OPPORT UNITY OF BEING HEARD TO THE ASSESSEE. SINCE WE ARE RESTORING THE BASIC ISSUE TO THE 3 A.O. ON THE PRELIMINARY ISSUE, WE ARE RESTRAINING T O COMMENT ON THE OTHER ISSUES AT HAND. ITA.NO.499/PN/2011 A.Y. 2005-06 4. THIS APPEAL HAS BEEN FILED BY THE REVENUE ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HON'BLE COMMISSIONER OF INCOME-TAX(APPEALS)-II, NASHIK, HAS ERRED IN DELETING THE ADDITION OF RS.39,71,971/- RELYING ON THE DECISION OF THE HON'BLE ITAT, PUNE BENCH, PUNE, IN APPELLANTS OWN CASE FOR A.Y. 2006-07. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) IGNORED THE FACT THAT THE ASSESSEE HAS ADOPTED MER CANTILE SYSTEM OF ACCOUNTING AND UPON THE BASIS OF THIS SYSTEM OF ACCOUNTING, IT HAS COMPUTED ITS PROFITS AND HENCE, PROVISIONS OF S ECTION 40(A)(IA) OF THE ACT ARE SQUARELY APPLICABLE IN THIS CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(APPEALS) IGNORED THE FACT THAT IN THE DECISION IN THE CASE O F MATHURAM AGRAWAL VS. STATE OF MADHYA PRADESH AIR, 2000 SC 10 9, THE HON'BLE COURT HELD THAT THERE IS NO ANY AMBIGUITY I N THE LANGUAGE USED IN SEC.40(A)(AI) OF THE I.T. ACT, 1961, WHERE IT SEEK TO DISALLOW THE EXPENDITURE FOR THE STATED REASON. THE SETTLED PRINCIPLES IN THE SAID DECISION IS THE SUBJECT OF THE TAX, THE PERSON WHO IS LIABLE TO PAY THE TAX AND THE RATE AT WHICH THE TAX IS TO BE PAID ARE ALL CLEAR WHILE APPLYING SECTION 40(A)(IA) OF THE ACT, THEREF ORE, THE SAID DECISION DOES NOT HELP THE RESPONDENT. 5. DURING THE ASSESSMENT PROCEEDINGS, A.O. DISALLOW ED CERTAIN ITEMS OF EXPENDITURE INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN THE CIT(A) GRANTED RELIEF TO THE ASSESSEE. THE SAM E HAS BEEN OPPOSED BEFORE US BY REVENUE. ON OTHER HAND, THE L D. AR SUPPORTED THE ORDER OF THE CIT(A). 6. AFTER GOING THROUGH THE ABOVE SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT ASSESSEE HAS CLAIMED FOLLOWING EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. (I) SHIPPING CHARGES RS.6,75,134/- (II) COLD STORAGE EXPENSES RS.3,45,641/- (III) INSPECTION AND TESTING CHARGES RS.70,285/- (IV) TRANSPORTATION EXPENSES RS.1,31,000- (V) CLEARING & FORWARDING EXPENSES RS.28,20,196/- 4 THE A.O. EXAMINED THE ABOVE ITEMS OF EXPENDITURE A ND CONSIDERED THAT ASSESSEE WAS LIABLE TO DEDUCT TAX A T SOURCE IN COMPLIANCE OF CHAPTER XVII-B OF THE ACT U/S.194C IN RESPECT OF ITEM NO.(I) AND (V), U/S.194I IN RESPECT OF ITEM NO.(II) AND U/S.194J IN RESPECT OF ITEM NO.(III). AS THE ASSESSEE DID NOT DEDUCT ANY TAX UNDER THE SAID PROVISIONS, THE A.O. INVOKED THE PRO VISIONS OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWED THE AGGREGATE A MOUNT OF RS.39,71,971/-, WHICH WAS UPHELD BY THE CIT(A) AS D ISCUSSED ABOVE. THE VERY ISSUE OF DISALLOWANCE OF EXPENDITU RE IN RESPECT OF SHIPPING CHARGES, COLD STORAGE EXPENSES, LABORATORY TESTING CHARGES, ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOUR CE U/S.194C, 194I AND 194J OF THE ACT, WAS INVOLVED IN A.Y. 2006 -07. THE A.O. HAD INVOKED THE PROVISIONS OF SECTION 40(A)(IA) AND MADE AN ADDITION OF RS.28,53,089/-. THE CONCERNED CIT(A) H AD UPHELD THE ACTION OF THE A.O. VIDE HIS ORDER DATED 20.07.2009. PUNE BENCH VIDE ITS ORDER IN ITA.NO.192/PN/2009 (A.Y. 2006-07) DATED 17.01.2011 HAS REVERSED THE ORDER OF THE CIT(A) BY OBSERVING THAT THE AMOUNTS IN QUESTION WERE ALREADY PAID. FOLLOWI NG THE SAME, THE CIT(A) GRANTED RELIEF TO THE ASSESSEE IN THE YE AR UNDER CONSIDERATION. THE DECISION OF THE CIT(A) IS FORTI FIED BY THE DECISION OF THE SPECIAL BENCH OF ITAT, VISAKHAPATNAM, IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL.CIT 70 DTR (VISAKHA) (SB)(TRIB) 81. FACTS BEING SAME, FOLLOWING THE SAME REASONING WE A RE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE CIT(A) WHO HAS DELETED THE ADDITION OF RS.39,71,971/-. THE SAME IS UPHELD. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSE AND THE APPEAL FILED BY THE REV ENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 26 TH DAY OF JULY 2012. SD/- SD/- ( G.S.PANNU ) ( SHAILENDRA KUMAR YAD AV ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 26 TH JULY, 2012. 5 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CIRCLE-1, NASHIK/ITO, WARD-2(1), NASHIK. 3. THE CIT(A)-II, NASHIK. 4. THE CIT CONCERNED. 5. THE DR B BENCH, PUNE. 6. GUARD FILE. BY ORDER SR.PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.