Modern Agro Industries Tractors Division, Guntur V. The Deputy Commissioner of Income Tax, Circle -2(1), , Gutnur

ITA 457/VIZ/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2865 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Reopening of assessment; Gift; Reason to believe
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 457 /VIZ/201 8 ( / ASSESSMENT YEAR : 20 08 - 09 ) M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION , D.NO.8 - 24 - 61 AGATAVARAPPADU GUNTUR [PAN : AAJFM7809A ] VS. DY.COMMISSIONER OF INCOME TAX CIRCLE - 2(1) GUNTUR ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : SMT.SUMAN MALIK, DR / DATE OF HEARING : 12 . 0 6 . 201 9 / DATE OF PRONOUNCEMENT : 14 .06 . 201 9 / O R D E R P ER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1, GUNTUR VIDE APPEAL NO.169/2013 - 14 DATED 26.06.2018 FOR THE A.Y.2008 - 09. 2 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR 2. IN THIS CASE, THE ASSESSEE HAS FILED THE APPEAL RAISING AS MANY AS 6 GROUNDS IN 4 PAGES ALONG WITH FORM - 36. SINCE THE GROUNDS FILE D BY THE ASSESSEE ARE LENGTHY AND ARGUMENTATIVE, DURING THE PENDENCY OF APPEAL, THE ASSESSEE HAS FILED THE REVISED GROUNDS IN 4 IN NUMBER. DURING THE APPEAL HEARING, THE LD.AR REQUESTED TO TAKE UP THE REVISED GROUNDS IN PLACE OF ORIGINAL GROUNDS FILED BY THE ASSESSEE ALONG WITH THE FORM NO.36 AND THE LD.DR DID NOT OBJECT FOR TAKING UP THE REVISED GROUNDS, HENCE THE REVISED GROUNDS OF APPEAL ARE TAKEN UP FOR ADJUDICATION. 3. GROUND NO.1 AND 4 ARE GENERAL IN NATURE WHICH DOES NOT REQUIRE SPECIFIC ADJUDICATI ON. 4. GROUND NO.2 IS RELATED TO THE VALIDITY OF REOPENING OF ASSESSMENT U/S 115WH OF THE FRINGE BENEFITS TAX ACT (IN SHORT ACT). IN THIS CASE, THE ASSESSEE HAS FILED THE RETURN OF INCOME AS WELL AS THE RETURN OF FRINGE BENEFIT TAX (FBT) ON 20.09.2008 ADMITTING TOTAL INCOME OF RS.27,61,788/ - AND FRINGE BENEFITS OF RS.2,43,780/ - . THE ASSESSMENT WAS COMPLETED U/S 143(3) ON TOTAL INCOME OF RS.36,01,819/ - AND FBT ASSESSMENT WAS ALSO COMPLETED U/S 115WE(3) ON TOTAL VALUE OF FRINGE BENEFITS OF RS.2,43,780/ - BY AN ORDER DATED 31/12/2010. SUBSEQUENTLY THE AO REOPENED THE FBT 3 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR ASSESSMENT U/S 115WH OF THE ACT FOR THE REASON THAT ESCAPEMENT FBT FROM TAXATION AND COMPLETED THE FBT ASSESSMENT U/S 115WE(3) R.W.S.115WHOF THE ACT BY AN ORDER DATED 31/03/2013 ON THE FBT VALUE OF RS.11,06,790/ - . 5. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND CHALLENGED THE ORDER BOTH ON REOPENING AS WELL AS ON MERITS. THE LD.CIT(A) FOUND THAT THE EXPENDITURE WAS NOT DEBITED UNDER THE ADVERTISEMENT AND IT WAS NOT PART OF THE SALE OF GOLD COINS / TRACTORS , HENCE, CONFIRMED THE ADDITION AND DISMISSED THE ASSESSEES APPEAL ON MERITS. 6. WITH REGARD TO REOPENING OF ASSESSMENT, THE LD.CIT(A) HAS OBSERVED THAT TH E ASSESSMENT WAS REOPENED WITHIN 4 YEARS AND IN THIS SORT OF CASES, REASON TO BELIEVE IS SUFFICIENT TO REOPEN THE CASE AND FOUND THAT THE AO HAS NOT RAISED ANY SPECIFIC QUERY IN THE ORIGINAL ASSESSMENT, HENCE, HELD THAT REOPENING OF ASSESSMENT IS VALID, AC CORDINGLY DISMISSED THE APPEAL OF THE ASSESSEE. 7. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. DURING THE APPEAL HEARING, THE LD.AR ARGUED THAT THE ASSESSEE HAD FURNISHED THE FBT RETURN ALONG WITH THE ORIGINAL RETURN OF INCOME AND THE COPY OF THE COMPUTATION OF FBT RETURN WAS PLACED IN PAGE 4 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR NO.5 OF THE PAPER BOOK. THE LD.AR FURTHER SUBMITTED THAT THE AO HAS CALLED FOR THE DETAILS DURING THE INCOME TAX ASSESSMENT PROCEEDINGS VIDE QUESTIONNAIRE DATED 09.12.2010 AND IN QUESTION NO . 11 THE AO HAD SPECIFICALLY CALLED FOR THE DETAILS OF ADVERTISEMENT WHICH WERE SUBMITTED BY THE ASSESSEE VIDE HIS REPLY DATED NIL BEFORE THE AO. THE LD.AR HAS TAKEN OUR ATTENTION TO PAGE NO.36 OF THE PAPER BOOK AND ARGUED THAT THE ASSES SEE HA D SUBMITTED THE COMPLETE DETAILS OF THE ADVERTISEMENT EXPENSES VIDE LETTER DATED NIL BEFORE THE AO INCLUDING THE PURCHASE OF GOLD COINS AND ADVERTISEMENT STATING THAT THE GOLD COINS WORTH RS.17,26,020/ - WERE PURCHASED AND THE SAME WAS WRONGLY CATEGOR IZED UNDER ADVERTISEMENT INSTEAD OF SALES PROMOTION. THEREFORE, ARGUED THAT THE AO HAS EXAMINED THE DETAILS AND HENCE THERE IS NO CASE FOR REOPENING THE ASSESSMENT AND REQUESTED TO QUASH THE NOTICE ISSUED FOR REOPENING THE ASSESSMENT. 8. ON THE OTHER HA ND, THE LD.DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSEE HAS FILED THE STATEMENT OF COMPUTATION OF FRINGE BENEFITS BEFORE US IN PAGE NO. 5 OF THE PAPER BOOK AND THERE WAS NO 5 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR MENTION OF ADVERTISEMENT EXPENSES OR DISTRIBUTION OF GOLD COINS. WE HAVE REFERRED TO THE QUESTIONNAIRE DATED 09.12.2010 AND OBSERVE THAT THE AO HAS CALLED FOR THE INFORMATION WITH REGARD TO INCOME TAX ASSESSMENT PROCEEDINGS, BUT NOT THE FRI NGE BENEFIT TAX PROCEEDINGS. IN THE REPLY GIVEN BY THE ASSESSEE IN PAGE NO.27 OF THE PAPER BOOK, THOUGH THE ASSESSEE STATED TO HAVE FURNISHED THE DETAILS, THE ASSESSEE HAS NOT FURNISHED ANY SUBMISSION WITH REGARD TO THE TAXABILITY OR NON TAXABILITY OF ADV ERTISEMENT EXPENSES FOR FBT. WE HAVE GONE THROUGH THE REPLY OF THE ASSESSEE DATED NIL PLACED IN PAGE NO.36 OF THE PAPER BOOK, THE REFERENCE MADE BY THE LD.AR IT WAS MENTIONED THAT IT WAS DEBITED WRONGLY IN ADVERTISEMENT ACCOUNT INSTEAD OF SALES PROMOTION. THE ASSESSEE ALSO DID NOT MENTION WITH REGARD TO THE COST OF GOLD COIN WHICH WAS GIVEN AS AN INCENTIVE FOR PURCHASE OF TRACTOR. ON PERUSAL OF THE ASSESSMENT ORDER PASSED U/S 115WE(3 )SHOWS THAT THE AO HAS NOT APPLIED HIS MIND AND DID NOT CALL FOR ANY INFORMATION WITH REGARD TO THE FRINGE BENEFIT TAX. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE AO HAS COLLECTED THE DETAILS AND FORMED AN OPINION WITH REGARD TO THE TAXABILITY OF FRINGE BENEFITS RELATING TO THE ADVERTISEMENT EXPENSES IN THE ORIGINA L ASSESSMENT IS FAR FROM THE TRUTH. THEREFORE, WE HOLD THAT HAVING REASON TO BELIEVE THAT FRINGE BENEFITS HAVE 6 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR ESCAPED ASSESSMENT, THE AO HAS RIGHTLY REOPENED THE ASSESSMENT, ACCORDINGLY, WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE ON THIS GROUND. 10. GROUND NO.3 IS RELATED TO THE ADDITION OF RS.8,63,010/ - TO THE VALUE OF FRINGE BENEFIT IN THE REASSESSMENT. WE HAVE HEARD THE RIVAL CONTENTIONS. THE AO MADE THE ADDITION OF RS.8,63,010/ - DEBITED UNDER THE HEAD ADVERTISEMEN T EXPENSES TOWARDS THE FRINGE BENEFITS. THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS STATED THAT GOLD COINS WERE DISTRIBUTED TO THE FARMERS WHO HAVE PURCHASED THE TRACTORS AND COLLECTED COST OF THE GOLD COIN FROM THE BILL OF THE TRACTOR AND THE GOLD CO IN WAS GIVEN AS AN INCENTIVE, HENCE ARGUED THAT IT IS NOT TAXABLE FOR FBT. HOWEVER, THE ENTIRE EXPENDITURE WAS DEBITED TO P&L ACCOUNT, THEREFORE, DISTRIBUTION OF GOLD COINS PARTAKES THE CHARACTER OF FREE GIFTS UNDER SALES PROMOTION. EVEN THE SUBMISSION O F THE ASSESSEE THAT IT HAS COLLECTED THE COST OF THE GOLD COIN FROM THE FARMER ALSO LACKS EVIDENCE. THE ASSESSEE I N PAGE NO.36 OF ITS REPLY STATED THAT THE EXPENSES WERE WRONGLY CATEGORIZED UNDER THE HEAD ADVERTISEMENT INSTEAD OF SALES PROMOTION . THE SALES PROMOTION EXPENSES AND FREE GIFTS ARE COVERED UNDER FRINGE BENEFIT TAX AND THE LD.AR DID NOT PLACE ANY MATERIAL TO SHOW THAT THE SALES PROMOTION EXPENSES ARE NOT 7 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR COVERED UNDER FBT . THEREFORE, WE HOLD THAT THE AO HAS RIGHTLY MADE THE ADDITION AND WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) . ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JUNE 2019. S D/ - S D/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 14 .06.2019 L.RAMA, SPS 8 I.T.A. NO . 457 /VIZ/201 8 M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION, GUNTUR / COPY OF THE ORDER FORWARDED TO: - 1. / THE ASSESSEE - M/S MODERN AGRO INDUSTRIES TRACTORS DIVISION , D.NO.8 - 24 - 61, AGATAVARAPPADU, GUNTUR 2. / THE REVENUE DY.COMMISSIONER OF INCOME TAX, CIRCLE - 2(1), GUNTUR 3. THE PR. COMMISSIONER OF INCOME TAX , GUNTUR 4. THE COMMISSIONER OF TAX (APPEALS) - 1 , GUNTUR 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM