The Dy. Commissioner of Income-tax, Jammu V. Smt. Sneh Gupta Prop., Jammu

ITA 5/ASR/2014

• Counselvise Citation: 520914 RSA 2014
• Duration Of Justice: 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 05-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Depreciation; Opportunity of being heard

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.05(ASR)/2014 ASSESSMENT YEAR:2007-08 PAN :ABCPG9621N DY.COMMR. OF INCOME TAX, VS. SMT. SNEH GUPTA, CIRCLE-1, JAMMU. PROP. M/S. NEW INDIA DISTILLERIES, SUNJWAN, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.MAHAVIR SINGH, DR RESPONDENT BY:SH. P.N.ARORA, ADVOCATE DATE OF HEARING: 05/05/2014 DATE OF PRONOUNCEMENT:20/05/2014 ORDER PER BENCH ; THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER OF THE CIT(A), JAMMU DATED 03.10.2013 FOR THE ASSESSMENT YEAR 200 7-08.THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED DUE TO NON-ADJUSTMENT OF CENTR AL INVESTMENT SUBSIDY RECEIVED. ITA NO.5(ASR)/.2014 2 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN ALLOWING RELIEF ON ACCOUNT OF DISALLOWANCE BEING 50% OF REBATE ON SALES. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN IGNORING THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE AS HOW THE DISCOUNT HAS BEEN ALLOWED IN EACH CASE ON E ACH INVOICE. 2. AS REGARDS GROUND NO.1 OF THE REVENUE, THE BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE CENTRAL INVESTMENT SU BSIDY AMOUNTING TO RS.5,77,092/- HAS NEITHER BEEN CREDITED TO THE APPR OPRIATE ASSET ACCOUNT IN RESPECT OF WHICH SUBSIDY HAS BEEN RECEIVED NOR THE SAME HAS BEEN TAKEN AS INCOME. THE ASSESSEE HAS DELIBERATELY CLAIMED EXCES SIVE DEPRECIATION DURING THE YEAR DUE TO NON-ADJUSTMENT OF SUBSIDY R ECEIVED AND ACCORDINGLY, THE AO TREATED RS.5,77,092/- AS INCOME OF THE ASSES SEE. 3. THE LD. CIT(A) VIDE PARA 4.2 OF HIS ORDER OBSERV ED THAT EACH ASSESSMENT IS A SEPARATE ASSESSMENT YEAR AND THEREF ORE, NEITHER SUBSIDY RECEIVED IN THE EARLIER YEARS COULD BE ADDED AS IN COME FOR THE IMPUGNED YEAR NOR THE DEPRECIATION CLAIMED IN THE EARLIER Y EARS COULD BE DISALLOWED DURING THE IMPUGNED YEAR AND ACCORDINGLY, HE ALLOWE D THE RELIEF OF RS.5,77,092/- TO THE ASSESSEE. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) THAT EAC H ASSESSMENT YEAR IS A SEPARATE ASSESSMENT YEAR AND SUBSIDY RECEIVED IN TH E PRECEDING YEAR CANNOT ITA NO.5(ASR)/.2014 3 BE INCOME OF THE IMPUGNED YEAR AND THEREFORE THE AO WAS NOT JUSTIFIED IN TREATING THE SAID AMOUNT OF SUBSIDY AS INCOME OF TH E IMPUGNED YEAR. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF T HE LD. CIT(A), WHO HAS RIGHTLY ALLOWED THE RELIEF TO THE ASSESSEE. THUS, G ROUND NO.1 OF THE REVENUE IS DISMISSED. 5. AS REGARDS GROUND NO.2 OF THE REVENUE, THE BRIEF FACTS OF THE CASE ARE THAT THE AO MADE A DISALLOWANCE OF RS.15,44,000/- BEING 50% OF REBATE ALLOWED ON SALES FOR THE REASONS REBATE ALLOWED WAS EXORBITANT. THE ASSESSEE SUBMITTED THAT THE REBATE OF RS.30,88,000/- WAS GIV EN ON THE SALES OF RS.3,16,30,730/- TO M/S. BULLA RAM & CO. THE AO ACC ORDINGLY OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE AS TO HOW THIS EXORBITANT DISCOUNT HAS BEEN ALLOWED ON A SALE OF RS.3,16,30,730/- AND ACCORDINGLY RESTRICTED THE REBATE AT 15% OF THE AMOUNT CLAIMED. 6. THE LD. CIT(A) VIDE PARA 4.4. OF HIS ORDER OBSER VED THAT THE AO HAS NOT MADE ANY ENQUIRY FROM THE OTHER PARTY TO WHOM REBATES ARE ALLOWED AND MERELY ON PRESUMPTIONS CONCLUDED THAT THE REBATES A RE EXORBITANT. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAS FILED A RETURN OF LOSS OF RS.1,00,28,849/- AND NO TAX WOULD BE PAYABLE IF SUC H REBATES ARE NOT CLAIMED. THIS REASONING OF THE LD. CIT(A) CANNOT BE THE BASIS OF DELETION OF ADDITION MADE BY THE AO. IN FACT, AN ENQUIRY IN THE MATTER SHOULD HAVE BEEN ITA NO.5(ASR)/.2014 4 MADE BY THE AO BEFORE MAKING ANY DISALLOWANCE WHICH HAS NOT BEEN DONE IN THE PRESENT CASE. THEREFORE, IN THE INTEREST OF JUSTICE, THE MATTER IS SET ASIDE TO THE FILE OF THE A.O. WHO WILL MAKE ENQUIRY FROM THE PERSONS WHO HAVE RECEIVED THE REBATES AND ALLOW THE REBATE ACCORDING LY BUT BY AFFORDING ADEQUATE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, G ROUND NO.2 & 3 OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I N ITA NO.05(ASR)/2014 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH MAY, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 20TH MAY, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SMT. SNEH GUPTA. JAMMU 2. THE DCIT CIR.1, JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR