M/s Escorts Construction Equipment Ltd., Faridabad V. DCIT, New Delhi

ITA 5565/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0446 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 14-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: STEPHEN GEORGE
• Assessee Lawyers: RM MEHTA A K BHATIA
• Keywords: Bad and doubtful debts
• Section: 115JB

Judgement Text

ITA NOS. 5564-5565/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NOS. 5564 & 5565/DEL/2010 A.YRS. : 2005-06 & 2006-07 M/S ESCORTS CONSTRUCTION EQUIPMENT LTD., 15/5, MATHURA ROAD, FARIDABAD - 121003 (PAN/GIR: AAACE2339R) VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 11(1), NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. RM MEHTA/ A.K. BHATIA, ADV. DEPARTMENT BY : SH. STEPHEN GEORGE, C.I.T.(D.R.) ORDER ORDER ORDER ORDER PER BENCH PER BENCH PER BENCH PER BENCH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINS T THE RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS). SINCE THE APPEALS WERE HEARD TOGETHER AND THEY ARE BEING CONSOLIDATED AND DISPOSED OF BY THIS COMMON ORDER. 2. THE COMMON ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASS ESSING OFFICER IN DISALLOWING THE PRIOR PERIOD EXPENSES. 3. IN THESE CASES ASSESSING OFFICER HAS DISALLOWED PRIOR PERIOD EXPENSES AMOUNTING TO ` 20,96,326/- FOR ASSESSMENT YE AR 2005-06 AND ` 15,55,551/- FOR ASSESSMENT YEAR 2006-07. ITA NOS. 5564-5565/DEL/2010 2 4. LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US T HAT HE SHALL BE RESTRICTING HIS CLAIM FOR ASSESSMENT YEAR 2005-06 FO R ` 1342376/-. IN THESE CASES, PRIOR PERIOD ITEMS WERE NOTED IN THE TA X AUDIT REPORT AND HENCE, THEY WERE DISALLOWED. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT PRIOR PERIOD EXPENSES ARISE OUT OF VARIOUS FAC TORS I.E. LATE RECEIPT OF BILLS, TIME LOG FOR SETTLEMENT OF BILLS ETC. HOW EVER, HE ADMITTED THAT ASSESSEE IS NOT IN A POSITION TO INDIVIDUALLY PINPOINT THE REASON FOR PRIOR PERIOD EXPENSES WHICH HAVE BEEN BOOKED IN THE CURRENT YEAR. 4.1 LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAN D RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION AND PERUSED THE RECORDS. WE FIND THAT IT IS AN ADMITTED POSITION TH AT THIS PRIOR PERIOD EXPENSES WERE OBSERVED AND NOTED IN THE TAX AUDIT R EPORT. ASSESSEE COUNSEL HAS ALSO CONCEDED THAT HE IS NOT IN A POSIT ION TO POINT OUT ON INDIVIDUALLY BASIS THE REASONS FOR BOOKING THE PRIO R PERIOD EXPENSES IN THE CURRENT YEAR. IN THESE CIRCUMSTANCES, WE DO NO T FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE AUTHORITIES BELOW AND HENCE, WE UPHOLD THE LD. COMMISSIONER OF INCOME TAX (APPEALS)S ORDER AND DECIDE THE ISSUE AGAINST THE ASSESSEE. 6. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ACTION OF THE ASSE SSING OFFICER IN TREATING AS PART OF THE BOOK PROFIT U/S 115JB. THE AMOUNTS PERTAINING TO : A) PROVISION FOR DOUBTFUL DEBTS. B) PROVISION FOR DOUBTFUL ADVANCES. C) PROVISION FOR OBSOLESCENCE OF STOCK. ITA NOS. 5564-5565/DEL/2010 3 7. AT THE OUTSET, IN THESE CASE LD. COUNSEL OF THE ASSESSEE CONCEDED THAT PURSUANT TO AMENDMENT IN SECTION 115JB FROM RET ROSPECTIVE EFFECT I.E. 1.4.2001, THESE ISSUES NOW ARE SETTLED AGAINST THE ASSESSEE. IN THESE CIRCUMSTANCES, THE ORDER OF THE LD. COMMISSION ER OF INCOME TAX (APPEALS) ON THESE ISSUES ARE UPHELD. 8. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/2/2011. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 18/2/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES