MAHINDRA FORGINGS LTD, MUMBAI V. ASST CIT CIR 6(3), MUMBAI

ITA 484/MUM/2012

• Counselvise Citation: 48419914 RSA 2012
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 23-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREETAM SINGH
• Assessee Lawyers: DEVDATTA MAINKAR
• Keywords: Depreciation; Business expenditure; Bad and doubtful debts; Unabsorbed depreciation
• Section: 37; 28; 43B

Judgement Text

, CH CHCH CH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . .. . . .. . , ,, , !'#$ !'#$ !'#$ !'#$ , ' ' ' ' %& %& %& %& BEFORE S/SH.H.L.KARVA,PRESIDENT & RAJENDRA,ACCOUNTA NT MEMBER /. ITA NO. 484/MUM/2012 , ' ' ' ' ( ( ( ( / ASSESSMENT YEAR-2007-08 MAHINDRA FORGINGS LTD. 1 ST FLOOR, MAHINDRA TOWERS, P.K.KURNE CHOWK (WORLI), MUMBAI- 400018 VS. ACIT CIRCLE 6(3), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI. PAN:AABCM6632J ( )* / APPELLANT ) ( +,)* / RESPONDENT ) )* )* )* )* - - - - ' '' ' / APPELLANT BY : SHRI DEVDATTA MAINKAR +,)* . - ' / RESPONDENT BY : SHRI PREETAM SINGH ' ' ' ' . .. . /0 /0 /0 /0 / DATE OF HEARING : 17 -12-2013 12( . /0 / DATE OF PRONOUNCEMENT : 24-12-2013 PER RAJENDRA, A.M. CHALLENGING THE ORDER DATED 17.10.2011 OF THE CIT(A )-12,MUMBAI,ASSESSEE-COMPANY HAS FILED FOLLOWING GROUNDS OF APPEALS: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A)ERRED IN CONFIRMING DISALLOWANCE OF SALES TAX PAYMENTS OF FA RIDABAD BRANCH TO THE TUNE OF RS. 25,98,927 WITHOUT APPRECIATING THAT IT IS PAYMENT OF TAXES AL LOWABLE U/S 43B.EVEN OTHERWISE,THE SAID AMOUNT IS ALLOWABLE EITHER AS BUSINESS EXPENDITURE U/S 37 AS AN EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS OR U/S 28 AS BUSINESS LOSS. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS.1,60,000 CLAIMED AS D EDUCTION U/S 35D BEING STAMP DUTY PAID FOR INCREASE IN SHARES CAPITAL. 3.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN NOT ALLOWING CARRY FORWARD OF BUSINESS LOSS AND UNABSOR BED DEPRECIATION TO THE TUNE OF RS.18,67,48, 917. THE APPELLANT RESERVES THE RIGHT TO ADD TO, AL TER OR AMEND ANY OF THE GROUNDS OF APPEAL. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING,MACHINING,SELLING AND JOB WORK INCLUDING HEAT TRATMENT OF FORGINGS AND COMPONENTS, FILED ITS RETURN OF INCOME ON 30/10/2007 DECLARING A TOTAL LOSS OF RS,18,67,48,918/-.ASSESSI NG OFFICER FINALISED THE ASSESSMENT,U/S.143(3) OF THE ACT,ON 06/10/2009 DETERMINING THE TOTAL LOSS OF THE ASSESSEE AT RS.6.46 CRORES. 2. FIRST GROUND OF APPEAL IS REGARDING THE DISALLOWANC E OF SALES TAX PAYMENTS OF FARIDABAD BRANCH;TO THE TUNE OF RS.25,98,927/-;DEBITED TO HEADQUARTER A CCOUNT.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD WRITTEN OFF RS.8.73 LAC S AS BAD DEBTS FOR THE YEAR UNDER CONSIDERATION AND RS.52.70 LACS AS OLD BALANCES.HE DIRECTED THE A SSESSEE TO FURNISH DETAILS OF THE WRITTEN OFF AMOUNTS AND THE YEAR IN WHICH SAME HAD BEEN ACCOUNT ED FOR.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE-COMPANY,HE MADE A DISALLOWANCE OF RS.6 1.43LACS;INCLUDING THE AMOUNT WRITTEN OFF ON ACCOUNT OF SALES TAX PAYMENT OF RS.25.98 LACS;UNDER THE HEAD BAD DEBTS AND OLD BALANCES WRITTEN OFF. 2 ITA NO.484/MUM/2012 MAHINDRA FORGINGS LTD. 2.1. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,HE HELD THAT BAD DEBTS OF THE YEAR UNDER APPEAL,AMOUNTING TO RS.8.73 LACS,WERE ALLOWABLE DED UCTION,THAT OUT OF THE OLD BALANCES WRITTEN OFF AMOUNTS WRITTEN OFF UNDER THE HEADS ADVANCES TO SUP PLIERS WRITTEN OFF (RS.24.11LACS),OTHER ADVANCES(RS.2.59LACS)HAD TO BE ALLOWED.BUT,WITH REG ARD TO THE BALANCE AMOUNT OF RS. 25.98 LACS, CLAIMED UNDER THE HEAD SALES TAX PAYMENTS OF FARIDA BAD BRANCH DEBITED TO HEAD QUARTER A/C.,HE HELD THAT NO DETAILS REGARDING THE SAME;IN THE FORM OF LEDGER ACCOUNT/JOURNAL AND COPIES OF CHALLANS SHOWING PAYMENT;HAD BEEN PRODUCED TO ESTABLISH THE CLAIM MADE BY THE ASSESSEE,THAT THE CLAIM HAD NOT BEEN BACKED BY REQUISITE PRIMARY DOCUMENTARY EV IDENCE SO THE AMOUNT IN QUESTION COULD NOT BE ALLOWED AS CLAIMED BY THE ASSESSEE-COMPANY.FINALLY ,HE UPHELD THE ORDER OF THE AO. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR)SUBMITTED TH AT PAYMENT OF TAXES WAS ALLOWABLE UNDER SECTION 43B OF THE ACT,THAT THE SAID AMOUNT WAS ALS O ALLOWABLE EITHER AS BUSINESS EXPENDITURE (U/S.37)AS AN EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS OR AS BUSINESS LOSS(U/S.28), THAT AO OR THE FAA HAD NOT LOOKED IN TO THE ISSUE FROM ABOV E ANGLES,THAT SALES-TAX WAS ACTUALLY PAID.DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE O RDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT AO HAD MADE DISALLOWANCE WITHOUT CONSIDERING THE FACTS OF THE CASE,THAT BOTH THE AUTHORITIES HAVE NOT DEALT WITH THE ISSUE OF APPLICABILITY OF SECTION 28 OR 37 OF THE ACT.THEREFORE,WE ARE OF THE OPINION THAT I N THE INTEREST OF JUSTICE,MATTER SHOULD BE REMITTED B ACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.AO IS DIRECTED TO GRANT A REASONABLE OPPORTUNITY OF HE ARING TO THE ASSESSEE .ASSESSEE IS DIRECTED TO FURNISH ALL THE RELEVANT DETAILS BEFORE THE AO. GRO UND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT GROUND OF APPEAL IS REGARDING DISALLOWANCE OF RS,1,60,000/-CLAIMED AS DEDUCTION U/S. 35D OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS.1.60 CRORES AS DEDUCTION U/S.35D.HE DI RECTED THE ASSESSEE TO FURNISH THE DETAILS IN THIS REGARD.AFTER CONSIDERING THE REPLY FILED BY TH E ASSESSEE,HE HELD THAT THE EXPENDITURE WAS CAPITAL IN NATURE.HE RELIED UPON THE DECISIONS OF THE HONB LE SUPREME COURT DELIVERED IN THE CASES OF BROOKE BOND LTD.(225 ITR 798) AND PUNJAB STATE INDU STRIAL DEVELOPMENT CORPORATION (225 ITR 792). 3.1. AGAINST THE ORDER OF THE AO,FAA FILED AN APPEAL BEF ORE THE FAA.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,HE HELD THAT IN THE EAR LIER AY.SIMILAR DISALLOWANCE HAD BEEN MADE BY THE AO AND THE FAA HAD CONFIRMED THE ACTION OF THE AO.THEREFORE,HE DISMISSED THE GROUND RAISED BY THE ASSESSEE. 3.2. BEFORE US,AR FAIRLY ADMITTED THAT ISSUE WAS DECIDED AGAINST HIM IN EARLIER YEAR.AS THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY THE ABOVE REFE RRED TWO JUDGMENTS OF THE HONBLE APEX COURT,SO WE DECIDE THE GROUND NO. 2 AGAINST THE ASS ESSEE. 4. LAST GROUND OF APPEAL DEALS WITH CARRY FORWARD OF L OSSES AND UNABSORBED DEPRECIATION OF RS.18.67 LACS.IN THE APPELLATE PROCEEDINGS IT WAS SUBMITTED THAT THE ASSESSEE WAS ENTITLED TO CARRY FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION TO THE TUNE OF RS.15,32,10,000/- AS SHOWN IN THE RETURN OF INCOME,THAT THE LOSSES AND UNABSORBED DEPRECIATI ON PERTAINED TO THE DEMERGER UNDERTAKING AND WERE ALLOWED TO BE CARRIED FORWARD UNDER SECTION 72 A OF THE ACT,THAT THE AO HAD NOT QUANTIFIED THE AMOUNT OF BROUGHT FORWARD AND CARRY FORWARD OF LOSS ES AND UNABSORBED DEPRECIATION.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,FAA HEL D THAT IN THE ASSESSMENT ORDER, ISSUE UNDER CONSIDERATION HAD NOT BEEN DEALT WITH BY THE AO,THA T IT COULD NOT BE A MATTER OF APPEAL BEFORE HIM, THAT THE ASSESSEE MIGHT TAKE NECESSARY ACTION AND F ILE AN APPLICATION BEFORE THE AO REGARDING THE CLAIM.HE FURTHER MENTIONED THAT THE AO MIGHT LOOK I NTO IT AND TAKE NECESSARY ACTION AS REQUIRED TO BE TAKEN UNDER THE ACT WITH REGARD TO THE CLAIM MAD E BY THE ASSESSEE. 3 ITA NO.484/MUM/2012 MAHINDRA FORGINGS LTD. 4.1. BEFORE US,AR SUBMITTED THAT FAA HAD NOT DECIDED THE GROUND RAISED BEFORE HIM.DR SUPPORTED THE ORDER OF THE FAA. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT FAA HAD ALREADY PASSED NECESSARY INSTRUCTIONS.IN THESE CIRC UMSTANCES WE ARE OF THE OPINION THAT GROUND OF APPEAL FILED BY THE ASSESSEE IS ACADEMIC IN NATURE, HENCE IS BEING TREATED AS DISMISSED. AS A RESULT,APPEAL FILED BY THE ASSESSEE-COMPANY STANDS DISMISSED. 3 &4 ' 3/ . UK UKUK UK !5 . !/ 67. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DECEMBER,2013 . %'8 . 12( ' # 9 :%' 24 FNLACJ FNLACJ FNLACJ FNLACJ , 2013 2 . ;. SD/- SD/- ( . . - H.L.KARWA) ( !'#$ !'#$ !'#$ !'#$ / RAJENDRA) / PRESIDENT ' ' ' ' %& %& %& %& /ACCOUNTANT MEMBER / MUMBAI, :%' /DATE: 24 TH DECEMBER,2013 SK %'8 %'8 %'8 %'8 . .. . +/< +/< +/< +/< ='<(/ ='<(/ ='<(/ ='<(/ / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT (A) / > ? , 4. THE CONCERNED CIT / > ? 5. DR B BENCH, ITAT, MUMBAI / <@; +/' CH CHCH CH , . . # . 6. GUARD FILE/ ; A ,