ACIT, New Delhi V. M/s. Tirupati Udyog Ltd., Delhi

ITA 5618/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7504 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT GOEL
• Assessee Lawyers: J P CHANDRAKAR
• Section: 43B

Judgement Text

ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES H NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER ITA NO. 5618/DEL/2012 ASSTT.YEAR: 2009-10 ACIT, VS TIRUPATI UDYOG LTD. CIRCLE 16(1), D-14, SECOND FLOOR, NEW DELHI. PREET VIHAR, DELHI-110092 (PAN:AABCT3941R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMIT GOEL, FCA RESPONDENT BY: SHRI J.P. CHANDRAKAR, SR.DR O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)- XIX, NEW DELHI DATED 09.08.2012 IN APPEAL NO. 224/2 011-12 FOR AY 2009-10. THE SOLE GROUND RAISED BY THE REVENUE READS AS UNDE R:- '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO UNDER SECTION 43B OF THE I. T. ACT AMOUNTING TO RS.18,76,023/- FOR THE FOLLOWING REASO NS: I) THE CIT(A) FAILED TO APPRECIATE THAT THE ACCOUNT ANT OF THE ASSESSEE HAS HIMSELF REPORTED THAT THE EXPENSE WAS INCURRED BUT NOT PAID. ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 2 II) EVEN IF WE ACCEPT THE CONTENTION OF THE ASSESS EE THAT THE AMOUNT WAS NOT PAYABLE AS EXPORT DUTY AND COULD NOT BE DISALLOWED U/S 43B OF THE I.T. ACT, THE AMOUNT WAS NOT AN ALLOWABLE EXPENSE AS IT WAS NOT INCURRED FOR THE PU RPOSE OF BUSINESS. III) CONTENTION OF THE ASSESSEE THAT THE AMOUNT WA S NOT DEBITED TO THE PROFIT & LOSS ACCOUNT COULD NOT BE A CCEPTED WHEN THE ASSESSEE'S ACCOUNTANT HAS REPORTED U/S 44 AB OF THE ACT THAT THE AMOUNT WAS INCURRED. 2. APROPOS AFOREMENTIONED GROUND, WE HAVE HEARD ARG UMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL P LACED ON RECORD. LD. DR SUBMITTED THAT THE LEARNED CIT(A) HAS ERRED IN DELE TING THE ADDITION MADE BY THE AO UNDER SECTION 43B OF THE I.T. ACT AMOUNTING TO R S.18,76,023/- BECAUSE THE CIT(A) FAILED TO APPRECIATE THAT THE ACCOUNTANT OF THE ASSESSEE HAS HIMSELF REPORTED THAT THE EXPENSE WAS INCURRED BUT NOT PAID . EVEN IF WE ACCEPT THE CONTENTION OF THE ASSESEE THAT THE AMOUNT WAS NOT P AYABLE AS EXPORT DUTY AND COULD NOT BE DISALLOWED U/S 43B OF THE ACT, THE AMO UNT WAS NOT AN ALLOWABLE EXPENSE AS IT WAS NOT INCURRED FOR THE PURPOSE OF A SSESSEES BUSINESS. LD. DR VEHEMENTLY CONTENDED THAT WHEN THE ASSESSEES ACCOU NTANT HAS REPORTED U/S 44AB OF THE ACT THAT THE AMOUNT WAS INCURRED, THEN THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT WAS NOT DEBITED TO PROFIT & LOSS ACCOUNT COULD NOT BE ACCEPTED. SUPPORTING THE ASSESSMENT ORDER, LD. DR SUBMITTED THAT THE AO MADE IMPUGNED DISALLOWANCE U/S 43B OF THE ACT WHICH WAS DELETED BY THE CIT(A) WITHOUT ANY JUSTIFIED AND COGENT REASONING. HE FIN ALLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT O F THE AO. ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 3 3. REPLYING TO THE ABOVE, LD. AR REITERATED ITS ARG UMENTS WHICH WERE PLACED BEFORE THE CIT(A) AND SUBMITTED THAT THE AO MADE DI SALLOWANCE WITHOUT ASSIGNING ANY REASON OR UTTERING ANY WORD FOR MAKIN G SUCH DISALLOWANCE AND, ON THE OTHER HAND, THE CIT(A) RIGHTLY HELD THAT SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT OF THE PROFIT AND LOSS ACCOUNT AS AN EXPENDI TURE NOR CLAIMED ANY DEDUCTION IN RESPECT OF THE AMOUNT AND, THEREFORE, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARISE AND THER E WAS NO CASE FOR THE AO FOR INVOKING PROVISIONS OF SECTION 43B OF THE ACT IN RE SPECT OF EXPORT DUTY PAYABLE. LD. AR VEHEMENTLY CONTENDED THAT THE AO HAS NOT GIV EN ANY REASON FOR MAKING IMPUGNED DISALLOWANCE AND THE CIT(A) AFTER CONSIDER ING AND ACCEPTING THE EXPLANATION OF THE ASSESSEE RIGHTLY DELETED THE ADD ITION. 4. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS AN D CONTENTIONS, WE OBSERVE THAT FROM THE ASSESSMENT ORDER, WE CLEARLY NOTE THAT THE AO HAS NOT ASSIGNED ANY REASON FOR MAKING DISALLOWANCE U/S 43B OF THE ACT. DURING FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED DETAI LED WRITTEN SUBMISSIONS BEFORE THE CIT(A) AND MAIN RELEVANT PART OF THESE S UBMISSIONS READS AS UNDER:- IT MAY BE SUBMITTED THAT THE APPELLANT HAS NOT CLA IMED THIS AMOUNT OF RS.1876023/- AS EXPENDITURE. AS A CO NSERVATIVE APPROACH, THE APPELLANT HAS MERELY CREATED A PROVIS ION BY DEBITED THE CUSTOMER A/C (SEZ UNITS) AND CREDITING THE EXPORT DUTY PAYABLE ACCOUNT. THE APPELLANT HAS, AS A MATTE R OF ABUNDANT PRECAUTION RAISED DEBIT NOTE ON THESE UNIT S SO THAT, IF IN FUTURE, THE AMOUNT BECOMES PAYABLE, THE APPELLAN T DOES NOT HAVE TO SUFFER ANY LOSS. YOUR HONOUR WILL APPRECIAT E THAT THE POSITION OF THE APPELLANT IS MORE LIKE A AGENT IN A S MUCH AS ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 4 THAT IT HAS TO COLLECT DUTY FROM THE CUSTOMERS (SEZ UNITS) AND PAY IT TO THE GOVT. ALC. THE APPELLANT HAS NEITHER DEBITED THIS AMOUNT TO ITS PROFIT & LOSS ACCOUNT NOR HAS IT CLAI MED THE DEDUCTION OF THIS AMOUNT IN ANY OTHER MANNER. SINCE NO DEDUCTION HAS BEEN CLAIMED, THERE IS CASE OF MAKING DISALLOWANCE THEREOF UNDER ANY MANNER, EITHER AS MA DE BY THE A.O. U/S 43B OR OTHERWISE. IN THE CASE OF CIT VS NO BLE AND HEWRIT M PVT. LTD. (2008) 305 ITR 324 (DEL), THE HO N'BLE DELHI HIGH COURT HELD THAT WHERE THE AMOUNT WAS NOT DEBITED TO P&L A/C, AMOUNT COULD NOT BE DISALLOWED U/S 43B. IT IS FURTHER SUBMITTED THAT THE AMOUNT OF RS.18760 23/- IS NOT A 'REVENUE RECEIPT' OR 'INCOME BY ANY STRETC H OF IMAGINATION. THE AMOUNT HAS NEITHER BEEN RECOVERED FROM THE CUSTOMERS NOR THEY HAVE ADMITTED TO THERE LIABILITY FOR THIS AMOUNT TO THE APPELLANT. THE APPELLANT HAS, AS AN A BUNDANT PRECAUTION RAISED A DEBIT NOTE ON THEM TO SAFEGUARD ITS INTEREST IN VIEW OF UNCERTAINTY PREVAILING AT THAT TIME. THE JUDGMENT OF HON'BLE HIGH COURT HAS HELD THAT NO DUTY WAS PAYABL E. ACCORDINGLY THERE IS NO WAY BY WHICH THE IMPUGNED A MOUNT OF RS.1876023/- CAN BE COVERED U/S 43B. 5. FROM THE OPERATIVE PART OF THE IMPUGNED ORDER, W E OBSERVE THAT THE CIT(A) DELETED THE ADDITION WITH FOLLOWING OBSERVAT IONS AND CONCLUSION:- THE AR CONTENDED THAT THE AMOUNT WAS NOT CLAIMED AS EXPENDITURE AND HENCE IT CANNOT BE DISALLOWED U/ S 43B AND RELIED ON THE DECISION IN THE CASE OF CIT VS. NOBLE AND HEWITT (I) PVT. LTD. (305 ITR 324) (DELHI). THE HEAD NOTES READS AS UNDER: 'HELD, DISMISSING THE APPEAL, THAT SINCE THE ASSESS EE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOR CLAIM ANY DEDUCTION IN RESPECT OF T HE AMOUNT AND CONSIDERING THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING T HE DEDUCTION NOT CLAIMED WOULD NOT ARISE.' THE AR FURTHER CONTENDED THAT THE AMOUNT WAS NOT PAYABLE TO THE GOVERNMENT BY WAY OF TAX, DUTY, CESS , FEE AND HENCE THE AMOUNT IS OUTSIDE THE SCOPE OF THE PROVIS IONS OF S.43B. ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 5 THE HON'BLE HIGH COURT HAS UPHELD THAT SUPPLIES MA DE TO SEZ UNITS ARE OUTSIDE THE LIABILITY FROM TAXES/ CUS TOMS DUTY. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE CAS E, THERE IS NO CASE FOR INVOKING PROVISIONS OF S.43B IN RESPECT OF EXPORT DUTY PAYABLE. THE AO HAS NOT GIVEN ANY REASONS FOR MAKIN G DISALLOWANCE. I AM IN AGREEMENT WITH THE CONTENTION S OF THE AR. THE DISALLOWANCE IS HEREBY DELETED. 6. UNDER ABOVE SET OF FACTS AND CIRCUMSTANCES OF TH E CASE, WE MAY POINT OUT THAT THE AO MADE ALLEGED DISALLOWANCE U/S 43B OF TH E ACT WITHOUT ASSIGNING ANY REASON OR WITHOUT POINTING OUT THIS ISSUE TO TH E ASSESSEE. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE ALLEGED THAT ASSESSEE HAS NEITHER DEBITED THIS AMOUNT TO ITS P&L ACCOUNT NOR HAS IT CLAIMED THE DEDUCTION OF THIS AMOUNT IN ANY OTHER MANNER. PLACING RELIANCE ON THE DECISION OF JURISD ICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS NOBLE AND HEWITT (I) PVT. LTD . (SUPRA), THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH A FINAL CONCLUSION THA T THERE WAS NO CASE FOR INVOKING PROVISIONS OF SECTION 43B OF THE ACT IN RESPECT OF EXPORT DUTY PAYABLE. AS NOTED ABOVE, THE HONBLE JURISDICTIONAL HIGH COURT OF DEL HI IN THE CASE OF CIT VS NOBLE AND HEWITT (I) PVT. LTD. (SUPRA) GRANTED RELI EF FOR THE ASSESSEE WITH A FINAL CONCLUSION THAT THERE WAS NO CASE FOR INVOKING PROV ISIONS OF SECTION 43B OF THE ACT IN RESPECT OF EXPORT DUTY PAYABLE. AS NOTED AB OVE, THE HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF C IT VS NOBLE AND HEWITT (I) PVT. LTD. (SUPRA) DISMISSING THE APPEAL OF THE REVE NUE HAS HELD THAT SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOR CLAIMED ANY DEDUCTION IN THIS RESPE CT, THEREFORE, SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING, THE QUESTION OF ITA NO.5618/DEL/2012 ASSTT.YEAR: 2009-10 6 DISALLOWING THE DEDUCTION WHICH WAS NOT CLAIMED WOU LD NOT ARISE. LD. DR HAS NOT DISPUTED THIS FACTUM THAT THE ASSESSEE HAS NEIT HER DEBITED THE AMOUNT TO THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE NOR CLAIMED ANY DEDUCTION IN RESPECT OF THE IMPUGNED AMOUNT. THUS, WE ARE UNABLE TO SEE AN Y VALID REASON TO INTERFERE WITH THE CONCLUSION OF THE CIT(A) AND WE UPHOLD THE SAME. ACCORDINGLY, SOLE GROUND OF THE REVENUE BEING DEVOID OF MERITS IS DIS MISSED. 7. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2014. SD/- SD/- (J.S. REDDY) (CHANDRAMOHA N GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 29 TH DECEMBER, 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER AS STT. REGISTRAR