The ACIT, Circle-1(1)(2), Baroda V. M/s. Styrolution ABS (I) Ltd., (Formerly Ineos ABS (I) Ltd.,), Baroda

ITA 568/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8225 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRASSON KABRA
• Keywords: Retrospective amendment; Tax effect; Capital expenditure
• Section: 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA.NO.568/AHD/2015 / ASSTT.YEAR : 2010-11 ACIT, CIR.1(1)(2) BARODA. VS M/S.STYROLUTION ABS(I) LTD. (FORMERLY IEOS ABS(I) LTD.) 6 TH FLOOR, ABS TOWER O.P. ROAD VADODARA 390 007. PAN : AAACB 6164 H / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SULABH PADSHAH REVENUE BY : SHRI PRASSON KABRA, SR.DR / DATE OF HEARING : 08/11/2017 / DATE OF PRONOUNCEMENT: 09/11/2017 !'/ O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST ORDER OF THE PR.CIT-1, VADODARA DATED 12.03.2015. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ID.CIT (APPEALS) ERRED IN DELETING THE DISALLOWANCE/ADDITI ON OF RS. 15,24,182/- MADE BY THE AO, OUT OF REPAIRS TO PLANT AND MACHINE RY WITHOUT APPRECIATING THE FACT THAT THE SAME WAS HAVING ENDURING BENEFIT TO THE ASSESSEE, AND THEREFORE, ASSESSING OFFICER RIGHTLY TREATED IT AS CAPITAL EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ,LD.CIT (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS. 6,94,990/-BEING 10% OF ITA NO.568/AHD/2015 2 ENVIRONMENT EXPENSES, BY NOT APPRECIATI NG THE FACT THAT THERE WAS ABNORMAL/UNREALISTIC INCREASE IN THE EXPENSES WHEN THE TURNOVER ALMOST REMAINED STATIC, AND THEREFORE, ASS ESSING OFFICER IS JUSTIFIED DISALLOWING 10% OF THE SAME ACCORDINGLY. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT (APPEALS) ERRED IN DIRECTING THE AO TO CONSI DER ONLY EXPENDITURE WHILE CALCULATING THE DISALLOWANCE OF RS. 30,51,474 /- U/S 14A OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE ITS ELF AGREED FOR DISALLOWANCE BEFORE THE AO, AND THE ALTERNATIVE STA NCE OF THE ASSESSEE HAS NO LOCUS STANDI. 4. THE APPELLANT CRAVES LEAVE TO ADD-TO, AMEND OR ALTER THE ABOVE GROUNDS AS MAY BE DEEMED NECESSARY. 3. AT THE OUTSET, THE LD.COUNSEL FOR THE ASSESSEE S UBMITTED A NOTE STATING THAT THE AO HAS CONFIRMED ADDITION U/S.14A OF RS.30 ,51,474/- AT THE TIME OF GIVING EFFECT TO THE LD.CIT(A)S ORDER DATED 13.2.2 015, AND ACCORDINGLY NO RELIEF IS GRANTED TO THE ASSESSEE COMPANY ON ADDITI ON MADE BY THE AO U/S.14A. THUS THE APPEAL FILED BY THE REVENUE FOR THE A.Y.2010-11 IS ONLY ON FIRST TWO GROUNDS AND IS BELOW TAX EFFECT. IT IS F URTHER SUBMITTED THAT THE ASSESSEE-COMPANY HAS NOT FILED FURTHER APPEAL AGAIN ST THE ADDITION U/S.14A OF THE ACT. THE LD.COUNSEL FOR THE ASSESSEE FURTHER S UBMITTED THAT TAX EFFECT ON THE IMPUGNED ADDITIONS CONTESTED BY THE REVENUE BEF ORE THE TRIBUNAL IS BELOW RS.10 LAKHS, AND THEREFORE, IN VIEW OF RECENT CBDT INSTRUCTION NO.21 OF 2015 DATED 10.12.2015 RESTRICTING FILING OF THE APPEAL WHERE TAX EFFECT IS BELOW RS.10 LAKHS, APPEAL OF THE REVENUE IS NOT MAI NTAINABLE AND LIABLE TO BE DISMISSED IN LIMINE . IN THIS BEHALF, THE LD.COUNSEL FOR THE ASSESSEE FILED A WORKING TO SHOW THAT TAX EFFECT IS BELOW RS.10.00 L AKHS. IT READS AS UNDER: SR. NO. AMOUNT OF ADDITION MADE ON WHICH DEPARTMENT HAS FILED APPEAL AMOUNT (RS.) REMARKS 1. PLANT & MACHINERY REPAIR EXPENSES 15,24,182 ALLOWED BY CIT(A) IN ITA NO.568/AHD/2015 3 FAVOUR OF THE ASSESSEE. 2. ENVIRONMENT EXPENSES 6,94,990 ALLOWED BY CIT(A) IN FAVOUR OF ASSESSEE 3. DISALLOWANCE U/S.4A 30,51,474 ADDITION CONFIRMED BY CIT(A) TOTAL (1+2) 22,19,172 TAX RATE 30% TAX EFFECT 6,65,752 LESS THAN RS.10,00,000 EVEN IF SURCHARGE IS ADDED, IT IS BELOW RS.10 LAKH S. SECTION 14A THERE IS NO DIFFERENCE AFTER CIT(A)S ORDER. 4. WHEN THE BENCH CONFRONTED THE LD.DR WITH THE ABO VE SUBMISSIONS OF THE ASSESSEE, THE LD.DR WAS UNABLE TO CONTEST THE S AME, RATHER, LD.DR SUBMITTED THAT ISSUE IS LEFT TO THE TRIBUNAL TO DEC IDE THE SAME IN ACCORDANCE WITH LAW. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE RECORD. WE FIND THAT APPEAL OF THE REVENUE WAS FILED ON 13.3.2015. CBDT HAS ISSUED INSTRUCTION NO.21 OF 2015 DATED 10.12.2015 WHEREBY THE BOARD HAS PROHIBITED ITS SUBORDINATE AUTHORITIES FROM FILING OF THE APPE AL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE CIT(A) WHERE THE TAX EFFEC T BY VIRTUE OF THE RELIEF GIVEN BY THE CIT(A) IS LESS THAN RS.10 LAKHS. THE INSTRUCTIONS HAVE BEEN MADE APPLICABLE WITH RETROSPECTIVE EFFECT, MEANING THEREBY, THESE INSTRUCTIONS ARE APPLICABLE ON PENDING APPEALS ALSO. IN THE PRE SENT CASE, TAX EFFECT AS PER THE CALCULATION SHEETS REPRODUCED ABOVE, ON THE ADD ITION DELETED BY THE LD.CIT(A) AND CONTESTED BY THE REVENUE, WOULD BE LE SS THAN RS.10 LAKHS. ITA NO.568/AHD/2015 4 THEREFORE, THE PRESENT APPEAL DESERVES TO BE DISMIS SED BEING TREATED TO BE FILED IN VIOLATION OF THE ABOVE CBDT INSTRUCTION. IT IS DISMISSED IN LIMINE . 6. IT IS FURTHER OBSERVED THAT IN CASE ON RE-VERIFI CATION AT THE END OF THE AO, IT CAME TO THE NOTICE THAT TAX EFFECT IS MORE O R IT FALLS WITHIN THE AMBIT OF EXCEPTION PROVIDED IN THE INSTRUCTION, THEN THE DEP ARTMENT WILL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RECALL OF THIS ORDER AND REVIVE ITS APPEAL FOR FRESH HEARING. SUCH APPLICATION SHOULD BE FILED WITHIN L IMITATION PRESCRIBED UNDER THE LAW. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED DUE TO LOW TAX. ORDER PRONOUNCED IN THE COURT ON 9 TH NOVEMBER, 2017 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ACCOUNTANT MEMBER ( MAHAVIR PRASAD ) JUDICIAL MEMBER AHMEDABAD; DATED 09/11/2017