The Dy. Commissioner of Income-tax, Jammu V. M/s. Old World Hospitality Pvt. Ltd, Jammu

ITA 459/ASR/2011

• Counselvise Citation: 45920914 RSA 2011
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 19-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Assessee Lawyers: K K MEHRA
• Keywords: Additional evidence

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.459(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN :AAACO1930E DY. COMMR. OF INCOME TAX, VS. M/S. OLD WORLD HOSPIT ALITY PVT. LTD; CIRCLE-1, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) I.T.A. NO.447(ASR)/2011 ASSESSMENT YEAR:2007-08 PAN :AAACO1930E M/S. OLD WORLD HOSPITALITY PVT. LTD. VS. ASSTT. COM MR. OF INCOME TAX, JAMMU. RANGE-1, SRINAGAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. R.L. CHHANALIA, DR ASSESSEE BY:SH. K.K.MEHRA, CA DATE OF HEARING: 13/12/2012 DATE OF PRONOUNCEMENT:17/12/2012 ORDER PER BENCH ; THESE CROSS APPEALS OF THE REVENUE AND THE ASSESSE E ARISE FROM THE ORDER OF CIT(A), JAMMU, DATED 02.06.2011 FOR THE A SSESSMENT YEAR 2007- 08. ITA NOS. 459 & 447(ASR)/2011 2 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) H AS ERRED IN DELETING DISALLOWANCE OF RS.16,68,526/- ON ACCOUNT OF EXCISE DUTY BY ADMITTING ADDITIONAL EVIDENCE DURING APPELL ATE PROCEEDINGS WITHOUT CONFRONTING IT TO THE ASSESSING OFFICER. 2. ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) HA S ERRED IN DELETING DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST OF RS.4,10,434/- PAID ON DELAYE D PAYMENT OF EXCISE DUTY WHICH IS INCLUDED IN RS.16,68,526/-, AL LOWED U/S 43B, WHICH WAS PENAL IN NATURE. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE IMPUGNED ORDER IS ERRONEOUS IN LAW, PR EJUDICIAL ARBITRARY AND NOT IN KEEPING WITH THE FACTS ON RECO RDS OF THE CASE. 2. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN FACTS A ND CIRCUMSTANCES OF THE CASE TO CONFIRM THE ADDITIONS OF RS.1,31,817/- PAID ON ACCOUNT OF SECURITY CHARGES A ND RS.3,25,000/- PAID FOR BANQUET EXPENSES MERELY ON T HE GROUND THAT THE EXPENSES RELATE TO TRANSACTION PERTAINING TO AN EARLIER YEAR. THE LIABILITY TO PAY THE AFORESAID AMOUNTS CR YSTALLIZED & QUANTIFIED DURING THE CURRENT YEAR AND AS SUCH THES E ARE ALLOWABLE AS EXPENDITURE FOR THE CURRENT YEAR. IT IS, THEREFORE, PRAYED THAT THE ADDITION OF RS.4 ,56,817/- MAY KINDLY BE DELETED. 4. THE BRIEF FACTS IN THE APPEAL OF THE REVENUE AND THAT OF THE ASSESSEE ARE THAT AS PER AUDITORS OF THE ASSESSEE-COMPANY, OUT OF THE TOTAL LIABILITY OF RS.25,09,921/- PERTAINING TO EARLIER YEARS, THE ASS ESSEE HAS ADDED BACK ONLY RS.92,477/- TO ITS INCOME AND BALANCE LIABILITY OF RS.24,17,444/- HAS NOT BEEN ADDED TO THE INCOME OF THE ASSESSEE. THE DETAI L OF SUCH LIABILITY IS ITA NOS. 459 & 447(ASR)/2011 3 APPEARING AT PAGE 2, WHICH INCLUDES THE LIABILITY O F EXCISE DUTY FOR THE YEARS 2003-04 & 2005-06 AMOUNTING TO RS.16,68,526/-, SECU RITY CHARGES OF RS.1,31,817/- AND BANQUET CHARGES OF RS.3,25,000/- . THE ASSESSEE SUBMITTED THE EXPLANATION WHICH WAS NOT FOUND SATISFACTORY BY THE AO AND THE AO ACCORDINGLY MADE THE ADDITION OF SUCH LIABILITIES A T RS.24,17,444/-. 4.1. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATI ON OF THE ASSESSEE DELETED THE DISALLOWANCE OF RS.16,68,526/- ON ACCOU NT OF EXCISE DUTY WHICH INCLUDED THE INTEREST OF RS.4,10,434/- BEING INTERE ST PAID ON DELAYED PAYMENT OF EXCISE DUTY BUT CONFIRMED THE ADDITION OF RS.1, 31,817/- ON ACCOUNT OF SECURITY CHARGES AND RS.3,25,000/- ON ACCOUNT OF BA NQUET EXPENSES. 5. THE LD. DR, SH. R.L. CHHANALIA, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT EARLIER YEARS EXP ENSES CANNOT BE ALLOWED IN THE IMPUGNED ORDER. 6. THE LD. COUNSEL FOR THE ASSESSEE, SH. K.K.MEHRA, CA ARGUED THAT ALL THE EARLIER EXPENSES HAD BEEN CRYSTALISED DURING TH E YEAR. THE EXCISE DUTY WAS PAID ON 31 ST MARCH, 2007 WHICH WAS DETERMINED IN THE MONTH OF M ARCH, 2007. AS REGARDS THE SECURITY CHARGES, HE INVITED O UR ATTENTION TO PB-18 WHERE THE BILL OF RS.1,31,817/- DATED 30.11.2006 WA S RAISED ONLY IN THE IMPUGNED YEAR AND IT WAS POSSIBLE TO BE PAID ONLY I N THE IMPUGNED YEAR WHICH HAS BEEN PAID AND CLAIMED. SIMILARLY, THE A MOUNT OF BANQUET ITA NOS. 459 & 447(ASR)/2011 4 EXPENSES, AS PER PB-19 TO 24, THE AMOUNT OF RS.6,50 ,374/- WAS DISPUTED AS IS EVIDENT PB-22, WHICH WAS SETTLED TO BE PAID FOR RS. 3,25,000/- DURING THE IMPUGNED YEAR, AS IS EVIDENT AT PB-23. ACCORDINGLY , THE SAID AMOUNT HAS BEEN PAID AS PER RECORD NOTE AT PB-24, SINCE THE SA ME HAD CRYSTALISED DURING THE YEAR. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE EXPENSES PERTAINING TO EARLIER YEAR, IN THE PRESENT CASE, THE CRYSTALISATION OF THE EXPENSES HAS BEEN DONE DURING THE YEAR; THEREFORE, THE ASCERTAINMENT OF LIABILITY CAN ONLY BE MADE DURING THE IMPUGNED YEAR AND NOT BEFORE. THEREFORE, SUCH EXPENSES ESSENTIALLY HA VE TO BE ALLOWED DURING THE YEAR WHEN THE LIABILITY IS CRYSTALISED OR THE S AME IS ASCERTAINED. THERE IS NO CASE OF THE AO THAT SUCH LIABILITY COULD BE ASCE RTAINED IN THE EARLIER YEARS EVEN IF THE ASSESSEE HAS BEEN MAINTAINING MERCANTIL E SYSTEM OF ACCOUNTING. OUR VIEWS FIND SUPPORT FROM THE DECISIONS OF THE HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. PRETTY CYCLE INDU STRIES, REPORTED IN (1980) 123 ITR 227 AND HONBLE CHATTISGARH HIGH COURT IN T HE CASE OF CIT VS. BEEKAY ENGINEERING CORPORATION, REPORTED IN (2010) 323 ITR 252. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF EXCISE DUTY AMOUNTING TO RS.16,68,5 26/- INCLUDING INTEREST ON DELAYED PAYMENT OF RS.4,10,434/-. ITA NOS. 459 & 447(ASR)/2011 5 7.1. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.1,31,817/- ON ACCOUNT OF SECURITY CHARGES AND RS .3,25,000/- ON ACCOUNT OF BANQUET EXPENSES WHICH ARE HAVING IDENTICAL FACT S AS THAT OF THE EXCISE DUTY WHICH HAS BEEN DELETED BY THE LD. CIT(A). THER EFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS NOT JU STIFIED IN CONFIRMING SUCH ADDITION ON ACCOUNT OF SECURITY CHARGES AND BANQUET EXPENSES, THE SAME ARE DIRECTED TO BE DELETED. THUS, ALL THE GROUNDS OF TH E REVENUE ARE DISMISSED AND THAT OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO.459(ASR)/2011 IS DISMISSED AND THAT OF THE ASSESSEE IN ITA NO.447(AS R)/2011 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH DECEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 17TH DECEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. OLD WORLD HOSPITALITY PVT. LTD. JAMMU. 2. THE DCIT, CIRCLE-1, JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) ITA NOS. 459 & 447(ASR)/2011 6 INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.