DCIT, Circle - 1, Kolkata, Kolkata V. M/s. Caledonian Jute & Industries Ltd., Kolkata

ITA 52/KOL/2011

• Counselvise Citation: 5223514 RSA 2011
• Duration Of Justice: 3 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 11-01-2011
• Court: TRIBUNAL
• Department Lawyers: DR SWETABH SUMAN LD CITSR DR
• Assessee Lawyers: B C JAIN FCA LD
• Keywords: Business income; Corroborative evidences; Onus to prove
• Section: 43B

Judgement Text

, C , INCOME TAX APPELLATE TRIBUNAL, BENCH- C KOLKATA ( ) BEFORE . , ! SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER '#$ /AND 1 & ' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER $( / ITA NO. 52/KOL/2011 A.Y 2004-05 D.C.I.T, CIRCLE-1, KOLKATA - #' - - VERSUS - . M/S. CALEDONIAN JUTE & INDUSTRIES LTD PAN: AABCC 4856E ( &* / APPELLANT ) ( +, &* / RESPONDENT ) &* .' / FOR THE APPELLANT / SHRI . DR. SWETABH SUMAN LD.CIT/SR.DR +,&* .' / FOR THE RESPONDENT: / SHRI B.C.JAIN, FCA, LD.AR /'#0 1 2 /DATE OF HEARING : 29-01-2014 34 1 2 /DATE OF PRONOUNCEMENT:31 -01-2014 5 / ORDER 1 &' , ! SHRI GEORGE MATHAN, JUDICIAL MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, KOLKATA IN APPEAL NO. 172/CIT(A)-I/CIR- 1/06-07 DATED 30-09-2010 FOR THE ASSESSMENT YEAR 2 004-05. 2. DR. SWETABH SUMAN, LEARNED. CIT/SR.DR REPRESENT ED ON BEHALF OF THE REVENUE AND SHRI B.C.JAIN, FCA,, LEARNED AR REP RESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL IN ITA NO. 52/KOL/2011 F OR A.Y 2004-05, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- I) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.1,44,81,560/- MADE ON ACCOUNT OF LIABILITY FOR B ONUS PERTAINS TO ASSESSMENT YEAR 1997-98 & 1998-99 WRITTEN BACK IN T HE YEAR OF ASSESSMENT WHEN ASSESSEE DID NOT FILE THE RETURN O F INCOME FOR THE ASSESSMENT YEARS 1997-98 & 1998-99 AND THERE IS NO THING ON RECORD TO SHOW THAT THE PROVISION OF BONUS SO CREAT ED BY DEBITING ITA NO. 52/KOL/11 M/S. CALEDONIAN JUTE & INDUS. LTD 2 THE P & L A/C WAS DISALLOWED IN THE ASSESSMENT IN THE RELEVANT EARLIER ASSESSMENT YEARS. 2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.49,00,184/- MADE ON ACCOUNT OF INTEREST IN THE NATURE OF PENALT Y FOR DELAYED CONTRIBUTION TO ESI FUND DEBITED TO THE P & L A/C. 3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,23,65,775/- MADE ON ACCOUNT OF INTEREST ON SA LES TAX BEING PRIOR PERIOD LIABILITY BY HOLDING THAT SUCH INTER EST ON SALES TAX IS ALLOWABLE U/S. 43B. 4) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 98,26,543/- AND RS.27,61,088/- BEING EMPLOYEES CONTRIBUTION TO PF & ESI RESPECTIVELY WHICH WAS PAID AFTER DUE DATE OF THE RELEVANT ACT WITHOUT APPRECIATING THE FACT THAT SUCH BELATED PAY MENT IS NOT ALLOWABLE U/S. 36(1)(VA) READ WITH SECTION 2(24)(X) . 5). THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LD. CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.2,53,354/- AND RS.2,23,908/- MADE ON ACCOUNT OF MISCELLANEOUS EXPE NSES AND BROKERAGE RESPECTIVELY WITHOUT APPRECIATING THE FA CT THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO PROVE A ND SUBSTANTIATE THE GENUINENESS OF EXPENDITURE BY PRODUCING SUPPORTING EVIDENCES. 6) THAT THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, LD.CIT(APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.1,44,72,803/- MADE ON ACCOUNT OF CST BY OBSERVIN G THAT THE CLAIM IS ALLOWABLE U/S. 43B ON ACTUAL PAYMENT BASI S WITHOUT APPRECIATING THE FACT THAT THERE IS NOTHING ON RECO RD TO SHOW THE AMOUNT WAS CREDITED IN THE P & L A/C AND OR FORMIN G PART OF BUSINESS INCOME. 4 IN RESPECT OF GROUND NO.1, IT WAS SUBMITTED BY TH E LEARNED CIT/.DR THAT THIS ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) IN AL LOWING THE LIABILITY FOR BONUS DEBITED IN THE P & L A/C IN THE RELEVANT ASSESSMEN T YEARS. IT WAS THE SUBMISSION THAT THE LIABILITY FOR BONUS PERTAINED TO THE ASSESSM ENT YEARS 1997-98 & 1998-99, FOR WHICH ASSESSMENT YEARS THE ASSESSEE HAD NOT FILED I TS RETURNS. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ALLOWED THE SAME ON THE GR OUND THAT THE SAID EXPENDITURE HAVE NEVER BEEN CLAIMED AND ALLOWED IN ANY OF THE EARLIER YEARS. HE HAS VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 5. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS SU PPORTED THE ORDER OF THE LD.CIT(A). ITA NO. 52/KOL/11 M/S. CALEDONIAN JUTE & INDUS. LTD 3 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAS CLAIMED DEDUCTION ON A CCOUNT OF PROVISION FOR BONUS WRITTEN BACK. THE YEAR-WISE BREAK UP WAS ALSO PRO VIDED. ONLY BECAUSE THE RETURNS FOR THE AYS. 1997-98 & 1998-99 WERE NOT SUBMITTED BY THE ASSESSEE, THE PROVISION WRITTEN BACK HAD BEEN DISALLOWED BY THE AO. A PERUS AL OF THE ORDER OF THE LD.CIT(A) CLEARLY SHOWS THAT HE HAS TAKEN INTO CONSIDERATION THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF KEDARNATH & SONS AND D ELETED THE SAME. AS SAID EXPENDITURE REPRESENTING THE BONUS RELATING TO TH E AYS. 1997-98 & 98-99 HAD NEVER BEEN CLAIMED, IN ANY EARLIER ASSESSMENT YEARS , HE HAS ALLOWED THE SAME. IN THE CIRCUMSTANCES, THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE STAND CONFIRMED. THIS ISSUE OF REVENUES APPEAL STANDS DISMISSED. 7. IN REGARD TO GROUND NO.2, IT WAS SUBMITTED BY TH E LEARNED CIT/.DR THAT THIS ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) IN D ELETING THE ADDITION OF RS. 49,00,184/- MADE ON ACCOUNT OF INTEREST, IN THE NA TURE OF PENALTY, FOR DELAYED PAYMENT TO ESI CONTRIBUTION FUND. IT WAS THE SUBM ISSION THAT INTEREST PAID ON DELAYED PAYMENT TO ESI CONTRIBUTION FUND WAS IN T HE NATURE OF PENALTY. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD.CIT(A) ON THIS ISSUE WAS LIABLE TO BE REVERSED. HE HAS VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 8. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS SU BMITTED THAT THE INTEREST PAID ON DELAYED PAYMENT TOWARDS ESI CONTRIBUTION FUND WA S NOT PENAL IN NATURE. IT WAS THE SUBMISSION THAT THERE WERE PROVISIONS FOR LEVY OF PENALTY UNDER THE ESI (GENERAL) REGULATIONS, 1950. SUCH PENALTY HAD NOT BEEN LEVIED ON THE ASSESSEE. IT WAS THE SUBMISSION THAT INTEREST WAS CHARGEABLE U/S. 31- A OF THE ESI (GENERAL) REGULATIONS ACT, 1950. IT WAS THE SUBMISSION THAT THE LD.CIT(A ) WAS RIGHT IN HOLDING THAT THE INTEREST WAS COMPENSATORY. HE HAS SUPPORTED THE ORD ER OF THE LD.CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERU SAL OF THE REGULATIONS 31A OF THE EMPLOYEES STATE INSURANCE (GENERAL) REGULATION S, 1950 CLEARLY SHOWS THAT INTEREST ON CONTRIBUTION DUE, BUT NOT PAID IN TIME IS COMPENSATORY IN NATURE. IN FACT, REGULATION 31C OF THE ESI REGULATIONS 1950 USES THE WORD PENALTY , WHEREAS REGULATION 31A IS FOR SIMPLE INTEREST ON CONTRIBUTI ON DUE, BUT NOT PAID IN TIME. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD.CIT(A ) WAS RIGHT IN LAW IN DELETING THE ITA NO. 52/KOL/11 M/S. CALEDONIAN JUTE & INDUS. LTD 4 ADDITION MADE BY THE AO ON ACCOUNT OF INTEREST ON DELAYED PAYMENT OF CONTRIBUTION TO ESI. WE UPHOLD THE SAME. THIS GROUND OF REVENUE STANDS DISMISSED. 10. IN RESPECT OF GROUND NO.3, IT WAS SUBMITTED BY THE LEARNED CIT/DR THAT THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .2,23,65,775/- MADE ON ACCOUNT OF INTEREST ON SALES TAX. HE HAS VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 11. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS S UBMITTED THAT THE INTEREST ON THE ARREAR OF SALES TAX PAID IS COMPENSATORY IN N ATURE. THE SAME IS ALLOWABLE IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF LAKSHMANDASS MATHURADAS VS. CIT REPORTED IN (2002) 254 ITR 799(S C). HE HAS SUPPORTED THE ORDER OF THE LD.CIT(A). . 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. AS IT IS NOTICED THAT THE LD.CIT(A) HAS DELETED THE ADDITION REPRESENTING INTEREST ON S ALES TAX BEING PRIOR PERIOD LIABILITY BY FOLLOWING THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF LAKSHMANDASS MATHURADAS (REFER TO SUPRA), WE ARE OF THE VIEW THA T THE FINDINGS OF THE LD.CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. THE SAME IS HEREBY UPHELD. THIS GROUND OF REVENUES APPEAL STAN DS DISMISSED. 13. IN REGARD TO GROUND NO.4, IT WAS SUBMITTED BY T HE LEARNED CIT/DR THAT THIS ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) IN DE LETING THE ADDITION OF RS.98,26,543/- AND RS.27,61,088/- ON ACCOUNT OF DEL AYED PAYMENT OF THE EMPLOYEES CONTRIBUTION TO PF/ESI RESPECTIVELY. HE HAS VEHEME NTLY SUPPORTED THE ORDER OF THE AO. 14. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS S UBMITTED THAT THE CONTRIBUTIONS TO ESI & PF IN RESPECT OF THE EMPLOYEES CONTRIBUT ION HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF CIT VS. M/S. VIJ AY SHREE LIMITED IN ITAT NO.245 OF 2011 IN GA NO. 2607 OF 2011 DATED 7 TH SEPTEMBER 2011, THE SAME WAS ALLOWABLE 15. WE HAVE CONSIDERED THE RIVAL SUBMISSION. AS IT IS NOTICED THAT THE LD.CIT(A) HAS DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXRUSION LTD VS. CIT REPORTED IN 3 19 ITR 306(SC) AS ALSO THE FACT THAT THE ISSUE NOW STANDS DIRECTLY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL CALCUTTA HIGH COURT IN THE CASE OF M /S. VIJAY SHREE LIMITED (REFER TO ITA NO. 52/KOL/11 M/S. CALEDONIAN JUTE & INDUS. LTD 5 SUPRA), THE FINDING OF THE LD.CIT(A) ON THIS ISSUE STANDS CONFIRMED. THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. 16. IN RESPECT OF GROUND NO.5, IT WAS SUBMITTED BY THE LEARNED CIT/DR THAT THIS ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) IN DE LETING THE ADDITION OF RS.2,53,354/- AND RS.2,23,908/- MADE ON ACCOUNT OF MISCELLANEOUS EXPENSES AND BROKERAGE MADE ON ADHOC BASIS. HE HAS VEHEMENTLY SUPPORTED THE ORD ER OF THE AO. 17. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS S UPPORTED THE ORDER OF THE LD.CIT(A). 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS MADE AN ADHOC D ISALLOWANCE OUT OF THE MISCELLANEOUS EXPENSES AND BROKERAGE WITHOUT POINT ING OUT ANY SPECIFIC DEFECTS IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE OR VOUCHERS PRODUCED. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE LD.CIT(A ) WAS RIGHT IN LAW IN DELETING THE ADHOC DISALLOWANCE MADE BY THE AO. WE UPHOLD THE SA ME. THIS GROUND OF REVENUES APPEAL STANDS DISMISSED. 19. IN REGARD TO GROUND NO.6, IT WAS SUBMITTED BY T HE LD.CIT/DR THAT THIS ISSUE WAS AGAINST THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS.1,44,72,803/- MADE ON ACCOUNT OF CST[CENTRAL SALES TAX] BY HOLDING THA T THE CLAIM IS ALLOWABLE U/S.43B OF THE ACT ON ACTUAL PAYMENT BASIS. HE HAS VEHEMEN TLY SUPPORTED THE ORDER OF THE AO. 20. IN REPLY, THE LEARNED AR FOR THE ASSESSEE HAS S UPPORTED THE ORDER OF THE LD.CIT(A). 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LD.CIT(A) CLEARLY SHOWS THAT HE HAS TAKEN INTO CONS IDERATION THE FACT THAT GOVT OF WEST BENGAL INDUSTRIAL RECONSTRUCTING DEPARTMENT H AS PASSED AN ORDER ON 23-08- 2003, WHICH HAS SANCTIONED SALES TAX LOAN OF RS.8,5 0,99,289/- IN FAVOUR OF THE ASSESSEE AND ALSO HAS BEEN DIRECTED IN THE SAME ORD ER TO BE PAID IN FAVOUR OF THE COMMISSIONER OF COMMERCIAL TAXES FOR CLEARING THE L IABILITY OF SALES TAX AND INTEREST THEREON. IT CLEARLY SHOWS THAT THE AMOUNT HAS BEEN FULLY PAID AND IN VIEW OF PROVISIONS OF SECTION 43B OF THE I.T ACT 1961 THE S AME IS ALLOWABLE IN THE YEAR OF PAYMENT BEING AY 2004-05. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ITA NO. 52/KOL/11 M/S. CALEDONIAN JUTE & INDUS. LTD 6 FINDINGS OF THE LD.CIT(A) ON THIS ISSUE IS ON A RIG HT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. WE UPHOLD THE SAME. THIS GROUND OF RE VENUES APPEAL STANDS ALSO DISMISSED. 22. IN THE RESULT, THE REVENUES APPEAL IN ITA NO.5 2/KOL/2011 FOR THE ASSESSMENT YEAR 2004-05 STANDS DISMISSED AS STATED ABOVE. 5 / 6 /' 7 8 THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT 31- 01-2014 SD/- SD/- ** PRADIP SPS 5 1 +..9 :94; / COPY OF THE ORDER FORWARDED TO: 1. . &* / THE APPELLANT : DCIT,CIRCLE-1, 7 TH FL, AAYKAR BHAWAN, KOL-69. . 2 +,&* / THE RESPONDENT- M/S. CALEDONIAN JUTE & INDUSTR IES LTD 9 BRABOURNE ROAD, KOL-1. 3 4. . .5' / THE CIT, .5' ( )/ THE CIT(A) 5 . #<.7 +.' / DR, KOLKATA BENCH 6 . GUARD FILE . ,9 +./ TRUE COPY, 5'// BY ORDER, $ /ASSTT REGISTRAR ( . , ! ) ABRAHAMP.GEORGE,ACCOUNTANTMEMBER ( 1 & ' , ! ) GEORGE MATHAN, JUDICIAL MEMBER ( (( ( 2 2 2 2 ) )) ) DATE 31/01/2014