HARINAGAR SUGAR MILLS LTD, MUMBAI V. DCIT RG 4(2)(2), MUMBAI

ITA 5543/MUM/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4214 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 07-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S JADHAVDR
• Assessee Lawyers: JAYESH DESAI
• Keywords: Opportunity of being heard
• Section: 43B; 14A

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.5543/MUM/2015 ASSESSMENT YEAR: 2012-13 M/S HARINAGAR SUGAR MILLS LTD. WORLD TRADE CENTRE, CENTER NO.1, 10 TH FLOOR, CUFFE PARADE, MUMBAI-400005 / VS. DCIT, RANGE-4(2)(2), ROOM NO.669, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 / ASSESSEE / REVENUE P.A. NO . AAACH2831H $ % & / ASSESSEE BY SHRI JAYESH DESAI $ % & / REVENUE BY SHRI V.S. JADHAV-DR / DATE OF HEARING 28/01/2016 & / DATE OF ORDER: 01/02/2016 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 03/09/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI. FIRST GROUND RAISED BY THE ASSESSEE PERTAIN S TO CONFIRMING THE ADDITION OF PROVISION OF LEAVE ENCAS HMENT ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 2 AMOUNTING TO RS.34,54,670/- U/S 43B OF THE INCOME T AX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE CRUX OF ARGUMENTS ADVANCED BY SHRI JAYESH DESAI, LD. COUNSEL FOR THE ASSESSEE, IS THAT IDENTICALLY THE ISSUE WAS CONSIDERED BY THE TRIBUNA L FOR ASSESSMENT YEAR 2007-08. THE LD. COUNSEL ALSO FURN ISHED THE COPY OF THE ORDER DATED 08/05/2015 (ITA NO.1062 AND 205/MUM/2011). THIS FACTUAL MATRIX WAS NOT CONTROVE RTED BY THE LD. DR, SHRI V.S. JADHAV. 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, I AM REPRODUCING HEREUNDER THE RELEVANT PORT ION OF THE ORDER DATED 08/05/2015 (ITA NO.205/MUM/2011) FO R READY REFERENCE:- 11. GROUND NO.2 IS RELATING TO DISALLOWANCE ON ACC OUNT OF PROVISION FOR LEAVE ENCASHMENT. THE ASSESSEE HAD CL AIMED DEDUCTION FOR PROVISION MADE FOR LEAVE ENCASHMENT A MOUNTING TO RS.19,74,366/- WHICH WAS ADDED BY THE AO TO THE INC OME OF THE ASSESSEE UNDER SECTION 43B OF THE ACT. THE ASSESSEE CLAIMED THAT THE PROVISION FOR LEAVE ENCASHMENT WAS ASCERTAINED LIAB ILITY OF THE COMPANY AND THE SAME SHOULD NOT BE CONSTRUED AS THE ITEM COVERED BY SECTION 43B OF THE INCOME TAX ACT IN VIEW OF THE DECISION OF THE HONBLE KOLKATA HIGH COURT IN THE CASE OF EXIDE IN DUSTRIES LTD. 292 ITR 470. THE ASSESSING OFFICER HOWEVER, HELD TH AT THE SAID AMOUNT WAS REMAINED UNPAID AND THEREFORE THE PROVIS ION FOR LEAVE ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 3 ENCASHMENT WAS SQUARELY COVERED UNDER THE PROVISION S OF SECTION 43B. IN APPEAL, THE LD. CIT(A) ALSO UPHELD THE FIND ING OF THE AO. 12. BEFORE US, THE LD. A.R. OF THE ASSESSEE HAS BR OUGHT OUR ATTENTION TO THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL DATED 23.01.2015 IN THE CASE OF AADITYA BIRLA FINA NCE LTD. VS. ACIT ITA NO.6630/M/2010 WHEREIN THE TRIBUNAL, WHIL E RELYING UPON VARIOUS OTHER DECISIONS OF THE TRIBUNAL AND AD OPTING THE SAME LINE, HAS RESTORED THE MATTER TO THE FILE OF THE AO OBSERVING THAT SINCE THE MATTER IN THE CASE OF EXIDE INDUSTRIES LT D. (SUPRA) WAS PENDING BEFORE THE HONBLE SUPREME COURT, THE AO TO ADJUDICATE THE ISSUE AFRESH IN THE LIGHT OF THE DECISION OF TH E HONBLE SUPREME COURT AS MAY COME IN THE CASE OF EXIDE INDUSTRIES LTD. (SUPRA). THE RELEVANT PART OF THE DECISION OF THE COORDINATE BENCH IN THE CASE OF AADITYA BIRLA FINANCE LTD. VS. ACIT (SUPR A) FOR THE PURPOSE OF REFERENCE IS REPRODUCED AS UNDER: 4.2 AT THE OUTSET LD. AR OF THE ASSESSEE HAS PRODUC ED BEFORE US A COPY OF ORDER OF THE TRIBUNAL IN THE CASE OF THE SI STER CONCERN OF THE ASSESSEE M/S. BIRLA INSURANCE ADVISORY & BROKING SE RVICES LTD., IN ITA NO.7531/MUM/2010. THE TRIBUNAL IN THE SAID CASE HAS RESTORED THE MATTER ON THE IDENTICAL ISSUE TO THE FILE OF TH E AO WHILE RELYING UPON THE DECISION IN THE CASE OF ESSAR EXPLORATION AND PRODUCTION INDIA LTD. VS. ACIT IN ITA NO.6189/MUM/2011 ORDER D ATED 8/8/2012. THE OPERATING PART OF THE ORDER FOR THE S AKE OF CONVENIENCE IS REPRODUCED AS UNDER: 3. AT THE OUTSET LD. AR OF THE ASSESSEE HAS PRODUC ED BEFORE US A COPY OF ORDER OF THE TRIBUNAL DATED 8/8 /2012 IN ITA NO.6189/MUM/2011 IN THE CASE OF ESSAR ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 4 EXPLORATION & PRODUCTION INDIA LTD. VS. ACIT, ORDER DATED 8/8/2012 , IN WHICH SIMILAR ISSUE CAME UP FOR CONSIDERATION OF ITAT. BEFORE ITAT REFERENCE WAS MA DE TO THE AFOREMENTIONED DECISION IN THE CASE OF M/S. UNIVERSAL MEDICARE PVT. LTD. VS. ACIT(SUPRA), AND A FTER HEARING BOTH THE PARTIES AND CONSIDERING THE ISSUE THAT IN ANOTHER MATTER IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UNION OF INDIA, 292 ITR 470(CAL), WHERE PROVISIONS OF SECTION 43B(F) WERE HELD TO BE ARBITRARY AND IN SPE CIAL LEAVE PETITION BEFORE HONBLE APEX COURT VIDE ORDER DATED 8/9/2008 THE JUDGMENT OF HONBLE CULCUTTA HIG H HAS BEEN STAYED AND ALSO THE FACT THAT HONBLE BOMB AY HIGH COURT HAS ADMITTED THE ISSUE IN CONSIDERATION IN THE APPEAL FILED BY THE DEPARTMENT IN THE CASE OF M/S. UNIVERSAL MEDICARE PVT. LTD.(SUPRA), THE MATTER WAS RESTORED BACK TO THE FILE OF AO WITH THE FOLLOWING OBSERVATIONS: 7. WE OBSERVE THAT MUMBAI TRIBUNAL BY ITS ORDER DA TED 30.3.2009 IN THE CASE OF UNIVERSAL MEDICARE PVT LTD . (SUPRA) ALLOWED THE CLAIM OF PROVISION FOR LEAVE ENCASHMENT ON THE BASIS OF DECISION OF HONBLE APEX COURT IN THE CASE OF BHARAT EARTH MOVERS (SUPRA) AS THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES (SUPRA) STRUCK DOWN THE PROVISION OF SEC TION 43B(F) BEING ARBITRARY, UNCONSCIONABLE. FURTHER, TH E DEPARTMENT FILED SLP BEFORE HONBLE APEX COURT AGAI NST THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA) BY ITS ORDER DATED 8.9 .2008 IN SLP NO.12060/2008 HAS STAYED THE OPERATION OF JUDGMENT OF HONBLE CALCUTTA HIGH COURT. FURTHER, I T IS ALSO A FACT THAT HONBLE BOMBAY HIGH COURT HAS ADMI TTED THE ISSUE UNDER CONSIDERATION IN THE APPEAL FILED B Y DEPARTMENT IN THE CASE OF UNIVERSAL MEDICARE PVT LT D (SUPRA). AT THE TIME OF HEARING, ID A.R. SUBMITTED THAT THE SAID APPEAL IS YET TO BE DISPOSED OF. WE ALSO OBSER VE THAT ITAT KOLKATA BENCH BY ITS ORDER DATED 30.1.2012 CONSIDERED THE SAID ISSUE AND BY FOLLOWING EARLIER DECISION ON IDENTICAL ISSUE IN THE CASE ERNST & YOU NG PVT LTD. (SUPRA) HAS RESTORED THE MATTER TO THE FILE OF AC WITH A DIRECTION TO ADJUDICATE THE SAME AS PER DECISION OF ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 5 HONBLE APEX COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA), IN VIEW OF ABOVE AND RESPECTFULLY FOLLOWIN G THE EARLIER DECISIONS (SUPRA), WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER BACK TO TH E FILE OF AO FOR ADJUDICATION AFRESH AS PER THE DECISION O F HONBLE APEX COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA). 3.1 REFERRING TO THE ABOVE OBSERVATION IT WAS PLEAD ED BY LD. A.R THAT THE MATTER MAY BE RESTORED BACK TO THE FILE OF AO WITH SIMILAR DIRECTIONS. 4. LD. D.R DID NOT HAVE ANY OBJECTION TO SUCH REQUE ST OF LD. A.R. 5. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, RESPECTFULLY FOLLOWING SUBSEQUENT DECISION OF THE TRIBUNAL ON THIS ISSUE IN THE CASE OF ESSAR EXPLORA TION & PRODUCTION INDIA LTD.,(SUPRA), WE RESTORE THIS ISSU E TO THE FILE OF A.O WITH SIMILAR DIRECTIONS. THE RELEVANT OBSERVATIONS HAVE ALREADY BEEN REPRODUCED. WE DIREC T ACCORDINGLY. 4.3 THE LD. REPRESENTATIVES OF THE PARTIES SUBMITT ED THAT THEY HAVE NO OBJECTION IF THE MATTER IN THIS CASE A LSO BE RESTORED TO THE FILE OF AO WITH A DIRECTION TO DECI DE THE SAME IN THE LIGHT OF ABOVE REPRODUCED DIRECTIONS. T HIS ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF AO TO DECIDE THE SAME AS PER THE DIRECTIONS GIVEN IN THE CASE OF SISTER CONCERN OF THE ASSESSEE AS REPRODUCED ABOVE. 13. THE LD. A.R. AS WELL AS THE LD. D.R., IN THIS C ASE, HAVE ALSO STATED THAT THEY HAVE NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE AO AS PER THE ABOVE REPRODUCED DIRECTIO NS. THIS ISSUE IS ACCORDINGLY RESTORED TO THE FILE OF THE AO AS PER T HE ABOVE REPRODUCED DIRECTIONS OF THE CO-ORDINATE BENCH OF T HE TRIBUNAL. 2.2. BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE AS WELL AS THE LD. DR FAIRLY AGREED THAT IN THE LIGHT OF THE ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 6 ABOVE DECISION, THIS ISSUE MAY BE REMANDED BACK TO THE FILE OF THE LD. ASSESSING OFFICER, CONSEQUENTLY, TH E ISSUE IS RESTORED BACK TO THE FILE OF THE LD. ASSESSING OFFI CER TO DECIDE AS PER THE DIRECTION CONTAINED IN THE AFORES AID ORDER AND DECIDE IN ACCORDANCE WITH LAW, THUS, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE NEXT GROUND PERTAINS TO DISALLOWANCE MADE U/S 14A OF THE ACT READ RULE 8D OF THE RULES. THE C RUX OF ARGUMENT ADVANCED ON BEHALF OF THE ASSESSEE IS THAT THE DISALLOWANCE MAY BE RESTRICTED TO 0.5% OF AVERAGE INVESTMENT AS PER RULE-8D(2)(III) OF THE RULES. ON THE OTHER HAND, THE LD. DR, POINTED OUT THAT THIS ISSUE WAS N OT PRESSED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IN REPLY, THE LD. COUNSEL FOR THE ASSES SEE, INVITED MY ATTENTION TO PAGE-16 OF THE PAPER BOOK CONTAINING NOTES TO THE FINANCIAL STATEMENTS FOR TH E YEAR ENDING 31/03/2012. SINCE, THE GROUND WAS NOT PRESS ED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) , I AM NOT MUCH SATISFIED WITH THE ARGUMENT OF THE ASSESSE E, HOWEVER, IN VIEW OF THE MANDATE OF ARTICLE 265 OF CONSTITUTION OF INDIA TO THE EFFECT THAT ONLY DUE T AXES HAS TO BE LEVIED/COLLECTED AND WITHOUT GOING INTO MUCH DELIBERATION, I REMAND THIS ISSUE ALSO TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE CLAIM OF THE ASSES SEE AND AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD, DEC IDE IN ACCORDANCE WITH LAW. THIS GROUND IS ALSO ALLOWED FO R STATISTICAL PURPOSES. ITA NO.5543/MUM/2015 M/S HARINAGAR SUGAR MILLS LTD. 7 FINALLY, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVE FROM BOTH SIDES AT T HE CONCLUSION OF THE HEARING ON 28/01/2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 01/02/2016 F{X~{T? P.S / ! & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * ( '#$ ) / THE CIT, MUMBAI. 4. ) ) * / CIT(A)- , MUMBAI 5. -./ ' , ) '#$ ' 1 , / DR, ITAT, MUMBAI 6. /2 3$ / GUARD FILE. & / BY ORDER, (-# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI