The Deputy Commissioner of Income tax, Bathinda V. Sh. Amarinder Singh Prop., Bathinda

ITA 455/ASR/2013

• Counselvise Citation: 45520914 RSA 2013
• Duration Of Justice: 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.455(ASR)/2013 ASSESSMENT YEAR:2008-09 PAN :ABNPS5740D DY.COMMR. OF INCOME TAX, VS. SH.AMRINDER SINGH PROP . CIRCLE-1, BATHINDA. M/S. FORTUNE GLOBAL SERVICES , BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.MAHAVIR SINGH, DR RESPONDENT BY:SH.P.N.ARORA, ADVOCATE DATE OF HEARING: 21/05/2014 DATE OF PRONOUNCEMENT:22/05/2014 ORDER PER BENCH ; THIS APPEAL OF THE REVEUE ARISES FROM THE ORDER O F THE CIT(A), BATHINDA, DATED 14.03.2013 FOR THE ASSESSMENT YEAR 2008-09.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND O N FACTS IN DELETING THE DISALLOWANCE OF RS.13,70,900/- MADE ON ACCOUNT OF PRIOR PERIOD ITEM VIZ. EXPENDITURE ON ACCOUNT OF CU STOM DUTY ACTUALLY INCURRED IN THE FINANCIAL YEAR 2006-07 BUT CLAIMED IN THE INSTANT ASSESSMENT YEAR 2008-09. ITA NO.455(ASR)/2013 2 2. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW IN GIVING THE AFORE- MENTIONED RELIEF BY INTERPRETING THE LAW AS IN SECT ION 145A OF THE INCOME-TAX ACT, 1961 TO MEAN THAT THE EXPENDITURE I S ALLOWABLE ONLY IN THE YEAR OF SALE OF GOODS IN RESPECT OF WHI CH CUSTOM DUTY HAS BEEN PAID. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS RUNNING BUSINESS OF IMPORTING COPPER WIRE FROM SRI LANKA AND MALAYSIA. DURING THE COURSE OF ASSESSMENT, THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED CUSTOM DUTY AND HANDLING CHARGES WHICH INTER-ALIA INCLUDES RS.13,2 1,306/- AND RS.46,164/- RESPECTIVELY PERTAINING TO THE FINANCIAL YEAR 2006- 07 RELEVANT TO ASSESSMENT YEAR 2007-08 AS PER AUDIT REPORT OF THE AUDITOR. A SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE WHO SUBMITTED THE EXPLANATION . THE AO AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, WHICH WAS NOT FOUND SATISFACTORY TO THE AO TREATED THE SAID AMOUNT OF R S.13,70,470/- BEING PRIOR PERIOD EXPENSES AS INCOME OF THE ASSESSEE FOR THE I MPUGNED YEAR AND MADE AN ADDITION ACCORDINGLY. 3. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE DELETED THE ADDITION SO MADE AND THE ORDER OF THE L D. CIT(A) AT PAGE 3 OF HIS ORDER IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER: THE ONLY ISSUE INVOLVED IN THIS CASE IS ON ACCOUNT OF ALLOWABILITY OF SUM OF RS.1370470/- PAID BY THE ASSESSEE ON 21.08.2 006 AS PAYMENT OF CUSTOM AND EXCISE DUTY TOWARDS THE CLEARANCE OF CONTAINERS ON ACCOUNT OF PURCHASE OF GOODS FROM MILLENIUM LANK WI RES PVT. LTD; SRI LANKA ON 30.10.2006 OF 2971666/- AND ON 31.10.2006 OF RS.2952721/- TOTALING AMOUNTING TO RS.5924387/- (RS.2971666 + R S.2952721). ITA NO.455(ASR)/2013 3 ACCORDING TO THE SUBMISSIONS MADE BY THE ASSESSEE A PPELLANT BEFORE THE AO THAT THESE GOODS HAS NOT BEEN SOLD DURING T HE ASSESSMENT YEAR 2007-08 BUT HAS NOT SOLD IN THE YEAR 2008-09 AND HA S BEEN CARRIED FORWARDED AS CLOSING STOCK AS ON 31.03.2007. THE AO HAS MADE THE ADDITION ON THIS ACCOUNT ON THE REPORT OF THE AUDIT OR THAT THESE ARE PRIOR PERIOD EXPENDITURE AS PER COLUMN 22(B) OF THE AUDIT REPORT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE BEFORE THE AO AS REPRODUCED IN THE ASSESSMENT ORDER AND GOING THROUG H THE PROVISIONS OF SECTION 145A OF THE ACT, I AM OF THE VIEW THAT T HE AUDITOR HAS WRONGLY BEEN REPORTED IT AS EXPENSES PERTAINING TO THE EARLIER YEARS WHEREAS AS PER ADMITTED FACTS THE EXPENDITURE ON ACCOUNT OF PAYMENT OF CUSTOM HAS BEEN PAID IN RESPECT OF THE GOODS SOL D IN THE ASSESSMENT YEAR 2008-09 AND AS PER SETTLED LAW THE EXPENDITUR E IS ALLOWABLE ONLY IN THE YEAR OF SALE OF GOODS IN RESPECT OF WHICH TH IS CUSTOM DUTY HAS BEEN PAID. AS SUCH, THE AO IS NOT JUSTIFIED IN MAKI NG AN ADDITION OF RS.1370470/-. THE SAME IS DELETED. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS SUBMITTED THE EXPLANATION BEFORE THE A.O. THAT THE AMOUNT OF RS.13,21,306/- AS CUSTOM DUTY AND RS.46,164/- A S HANDLING CHARGES WERE PAID ON 22.08.2006 BY M/S. EMM KAY ELECTRICALS, JAL ANDHAR VIDE DEMAND DRAFT BY THE SAID CONCERN AGAINST CLEARING OF GOOD S PURCHASED FROM M/S. MILLENIUM LAKKA WIRES PVT. LTD. SRI LANKA. THE GOOD S WERE PURCHASED FOR RS.5924387/- AND THE SAID GOODS WERE LYING IN THE C LOSING STOCK AND WERE NOT SOLD DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007- 08 NOW THE QUESTION ARISES WHETHER CUSTOM DUTY AND HANDLING CHARGES PAID CAN BE CLAIMED AS AN EXPENDITURE DURING THE YEAR IN WHICH THE GOODS ARE SOLD OR NOT. THIS IS ACCEPTED PRINCIPLE OF ACCOUNTING TH AT FOR ANY INCOME MATCHING EXPENDITURE HAS TO BE ALLOWED WHICH, IN FACT, BY MI STAKE WAS NOT CLAIMED BY ITA NO.455(ASR)/2013 4 THE ASSESSEE IN THE PRECEDING YEAR WHICH IN FACT, WAS PAID BY M/S. EMM KAY ELECTRICALS AS MENTIONED HEREINABOVE. THE ASSES SEE RECTIFIED THE MISTAKE BY DEBITING TO OPENING STOCK AND AMOUNT OF RS.13,70,470/- BY CREDITING TO M/S. EMM KAY ELECTRICALS AND CLAIMED E XPENDITURE AGAINST SALES MADE DURING THE YEAR FOR THE SAME STOCK. THIS FACT IS NOT DISPUTED BY THE A.O. IN FACT, THE SAID EXPLANATION IS PRODUCED AT PAGE 2-3 OF AOS ORDER. ACCORDING TO ACCEPTED ACCOUNTING PRINCIPLE AND AS P ER INCOME-TAX PROVISIONS, WE FIND NO DEFECT IN CLAIMING THE MATCH ING EXPENDITURE AGAINST THE INCOME MADE DURING THE YEAR AND ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHICH IS A WELL REASON ED ORDER. THUS, ALL THE GROUNDS OF THE REVENUE ARE DISMISSED. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.455(ASR)/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND MAY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22ND MAY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.AMRINDER SINGH PROP. M/S. FORTUNE G LOBAL SERVICES, BATHINDA. 2. THE DCIT, CIR.1, BATHINDA. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR.