TEXPORT INDUSTRIES LTD, MUMBAI V. ACIT 7(3), MUMBAI

ITA 5246/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9018 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 11-09-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMURTHY
• Keywords: Opportunity of being heard; Earning of tax free income
• Section: 43B; 143(3); 14A; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 5246/MUM /2011 ASSESSMENT YEAR : 2006-07 M/S TEXPORT INDUSTRIES LTD., C/O SHANKARLAL JAIN & ASSOCIATES, 12, ENGINEER BUILDING, 265 PRINCESS STREET, MUMBAI 400 002. PAN AAACT 5016A VS. ASSISTANT COMMISSIONER OF INCOME TAX 7(3), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L. JAIN DEPARTMENT BY : SHRI KRISHNAMURTHY DATE OF HEARING 11-9-2012 DATE OF PRONOUNCEMENT 14.09.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 4-3-2011 PASSED BY THE LD. CIT(A) 13, MUMBAI FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF EXPORT, TRADING AND MANU FACTURING OF WOVEN AND KNITTED GARMENTS. DURING THE COURSE OF ASSESSME NT PROCEEDING, FROM THE TAX AUDIT REPORT, THE A.O. OBSERVED THAT THE AS SESSEE HAS PAID THE EMPLOYEES CONTRIBUTION TOWARDS PF AND ESIC BEYOND THE DUE DATE. THE ITA NO. 5246/MUM/2011 2 A.O. AFTER RELYING ON CERTAIN DECISIONS, DISALLOWED THE PF AND ESIC RS. 6,12,452/- AND ADDED THE SAME TO THE TOTAL INCOME O F THE ASSESSEE. BESIDES THIS, THE A.O. FURTHER OBSERVED THAT THE AS SESSEE HAS CLAIMED EXEMPT INCOME ON ACCOUNT OF LONG TERM CAPITAL GAIN OF RS. 76,99,92/- AND SHARE OF PROFIT RS. 30,86,733/- AGGREGATING TO RS. 38,56,725/-. THE A.O. AFTER INVOKING THE PROVISIONS OF SECTION 14-A READ WITH RULE 8D OF THE OF THE INCOME TAX RULES, 1962 WORKED OUT THE DI SALLOWANCE AMOUNTING TO RS. 4,19,628/- AS PER WORKING GIVEN IN PARA 5 OF THE ASSESSMENT ORDER AND ACCORDINGLY COMPLETED THE ASSE SSMENT ON A TOTAL INCOME OF RS. 13,14,900/- UNDER NORMAL PROVISION OF THE ACT AND BOOK PROFIT AT RS. 3,45,69,549 UNDER THE PROVISIONS OF S ECTION 115JB OF THE INCOME TAX ACT, 1961 (THE ACT) VIDE ORDER DTD. 15-1 2-2008 PASSED U/S 143(3) OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE UPHOLDING THE DISALLOWANCE OF THE PF AND ESIC, DIRECTED THE A.O. TO WORK OUT THE DISALLOWANCE U/S 14A AS PER DIRECTION GIVEN AT PAGE 5 OF THE APPELLATE ORDER AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO. 1 & 2 ARE AGAINST THE SUSTENANCE OF D ISALLOWANCE OF PF AND ESIC RS. 6,12,452/. 5. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT NOW THIS ISSUE STANDS COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF ITA NO. 5246/MUM/2011 3 THE HONBLE SUPREME COURT IN CIT VS. ALOM EXTRUSION S LTD. (2009) 319 ITR 306 (SC), THEREFORE, THE ISSUE MAY BE DECIDED A CCORDINGLY. 6. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE ORD ER OF THE A.O. AND THE LD. CIT(A) 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THE FACTS ARE NOT IN DISPUTE INASMUCH AS IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS DEPOSITED THE ENTIRE AMOUNT OF PF MUCH BEFORE THE D UE DATE OF FILING OF RETURN. THE ISSUE RELATING TO RETROSPECTIVE OPERAT ION OF OMISSION OF SECOND PROVISO TO SECTION 43B WAS CONSIDERED BY THE HONBLE SUPREME COURT IN CIT VS. ALOM EXTRUSIONS LTD. [2009] 319 I TR 306/185 TAXMAN 416 (SC) WHEREIN IT WAS HELD THAT IT IS CURATIVE IN NATURE AND WOULD APPLY RETROSPECTIVELY, WITH EFFECT FROM 1-4-1988. THE H ONBLE DELHI HIGH COURT IN CIT VS. AIMIL LTD. (2010) 321 ITR 508 (DEL) HAS HELD THAT IF THE EMPLOYEES SHARE OF CONTRIBUTION IS PAID BEFORE THE DUE DATE OF FILING OF THE RETURN U/S 139(1), THEN NO DISALLOWANCE CAN BE MADE. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS AND THE CONSISTENT VI EW OF THE TRIBUNAL, WE ARE OF THE VIEW THAT THE DISALLOWANCE OF RS. 6,12,4 52/- SUSTAINED BY THE LD. CIT(A) IS NOT SUSTAINABLE IN LAW AND ACCORDINGL Y WE DELETE THE SAME. THE GROUND TAKEN BY THE ASSESSEE IS, THEREFORE, ALL OWED. ITA NO. 5246/MUM/2011 4 8. GROUND NO. 3 & 4 ARE AGAINST THE SUSTENANCE OF D ISALLOWANCE OF RS. 1,38,250/- U/S 14A OF THE ACT. 9. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGR EED THAT THIS ISSUE MAY BE SET ASIDE TO THE A.O. IN VIEW OF THE DECISIO N OF THE HONBLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MANUFAC TURING COMPANY LTD. VS. DCIT AND OTHERS (2010) 328 ITR 81 (BOM). 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE Q UESTION OF MAKING THE DISALLOWANCE U/S.14A IS NO MORE RESINTEGRA IN VIEW OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GO DREJ & BOYCE MANUFACTURING COMPANY LTD. (SUPRA) HOLDING THAT THE PROVISION OF SECTION 14A ARE APPLICABLE AND THE DISALLOWANCE HAS TO BE WORKED OUT BY THE A.O. ON SOME REASONABLE BASIS AND NOT UNDER RUL E 8D. SINCE THE A.O. WHILE CALCULATING THE DISALLOWANCE U/S.14A HAS ALSO APPLIED RULE 8D OF THE INCOME TAX RULES, 1962, WHICH IS APPLICABLE FROM THE A.Y. 2008-09, WE RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT (SUPRA) DIRECT THE A.O. T O MAKE DISALLOWANCE, IF ANY, IN THE LIGHT OF THE ABOVE DECISION, AFTER ALLO WING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GRO UNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATIST ICAL PURPOSE. ITA NO. 5246/MUM/2011 5 11. IN THE RESULT, THE ASSESSEES APPEAL STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 14.09.2012 SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 14-9-2012 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 13, MUMBA I 4. COMMISSIONER OF INCOME TAX 7 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH E, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI