Shahpura Syntex Pvt. Ltd., JODHPUR V. ACIT, BHILWARA

ITA 576/JODH/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62041 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 1998-1999
• Appeal Filed On: 06-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Depreciation
• Section: 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 576/JODH/2010 ASSTT. YEAR : 1998-99 SHAHPURA SYNTEX PVT. LTD., VS. A.C.I.T., CIRCLE, C/O M/S. MANISH SUKHANI & CO. BHILWARA. 660, 12 TH C. ROAD, SARDARPURA, JODHPUR.(PAN : AAHCS 4550 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GOUTAM CHAND BAID, A.R. RESPONDENT BY : SHRI G.R. KOKANI, D.R. DATE OF HEARING : 04.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 06.07.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A), AJMER DATED 03.09.2010 FOR THE ASSESSMENT YEAR 1998 -99. 2. WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH TH E PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE LD. COUNSEL FOR THE ASSESSEE, WHILE ARGUING ON GROUND NO. 1, 2 & 3, SUBMITTED THAT HE WOULD NOT BE PRESSING THESE GROUN DS OF APPEAL OF THE ASSESSEE. IT IS STATED THAT ON THESE GROUNDS, THE ASSESSEE RAISE D ADDITIONAL GROUNDS OF APPEAL ITA NO. 576/JODH/2010 2 BEFORE THE LD. CIT(A), WHICH HAVE NOT BEEN ADMITTED BY THE LD. CIT(A). THE LD. COUNSEL FOR THE ASSESSEE, ACCORDINGLY, SUBMITTED TH AT HE WOULD NOT BE PRESSING THESE GROUNDS. ACCORDINGLY, GROUNDS NOS. 1 TO 3 OF APPEAL OF THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 4. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE ORD ER OF THE LD. CIT(A) IN DISMISSING THE ASSESSEES CONTENTION THAT WDV OF TH E BLOCK OF ASSETS SHOULD BE TAKEN AT RS.10,95,475/- INSTEAD OF RS.8,85,797/- IN SPITE OF THE FACT THAT NO DEPRECIATION WAS CLAIMED / ALLOWED FOR THE ASSESSME NT YEAR 1992-93. THE ASSESSEE ON GROUND NO. 5, RAISED THE ALTERNATE CONTENTION TH AT IN CASE WDV AS PER ASSESSEE IS NOT TAKEN THEN THE LOSS FOR THE ASSESSMENT YEAR 1992-93 WOULD BE INCREASED BY RS.2,09,679/-. THE ASSESSEE SUBMITTED BEFORE THE LD . CIT(A) THAT THE AO COMPUTED SHORT-TERM CAPITAL GAINS ON SALE OF ASSETS BY RFC A T RS.15,48,691/- AND THE AO HAS WRONGLY TAKEN WDV OF BLOCK OF ASSETS AT RS.8,85,796 /- INSTEAD OF RS.10,95,478/-. IT WAS SUBMITTED THAT WDV OF BLOCK OF ASSETS AS ON 31.01.1991 WAS RS.10,95,478/- WHICH IS ALSO CLEAR FROM THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 1991- 92. NO RETURN OF INCOME FOR THE ASSESSMENT YEARS 19 92-93 TO 1997-98 WAS FILED AND NO DEPRECIATION HAS BEEN CLAIMED. THEREFORE, WDV OF BLOCK OF ASSETS SHOULD NOT BE TAKEN AT RS.8,85,796/-. THE LD. CIT(A), HOWEVER, FOUND THAT THE AO IN THE ASSESSMENT ORDER FOUND WDV AT RS.8,85,796/- ON THE BASIS OF RETURN OF INCOME ITA NO. 576/JODH/2010 3 FILED BY THE ASSESSEE. SIMILAR ISSUE WAS RAISED IN THE PROCEEDINGS U/S. 154 OF THE IT ACT BEFORE THE AO AND THE SAME HAS ALSO BEEN REJECT ED. 5. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT NO RETURN WAS FILED F ROM THE ASSESSMENT YEAR 1992- 93 TO 1997-98 AND NO DEPRECIATION HAS BEEN CLAIMED AND FOR WHICH THERE IS NO NEED TO FILE THE RETURN OF INCOME. HE HAS, HOWEVER, ACCE PTED THAT 154 ORDER HAS BECOME FINAL AND IS NOT CHALLENGED BY THE ASSESSEE. HE HAS REFERRED TO THE COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 1998-99 UNDER APPEAL , COPY OF WHICH IS FILED AT PAGE 6 & 7 OF THE PAPER BOOK. ON THE OTHER HAND, TH E LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5.1 THE LD. COUNSEL FOR THE ASSESSEE IN THE ALTERNA TE CONTENTION SUBMITTED THAT IF THE CLAIM OF ASSESSEE IS NOT ACCEPTED THEN THE LOSS FOR THE ASSESSMENT YEAR 1992-93 MAY BE INCREASED BY RS.2,09,679/-. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE OR DER OF THE LD. CIT(A). THE LD. CIT(A) CORRECTLY NOTED IN THE APPELLATE ORDER THAT THE WDV OF BLOCK OF ASSETS WAS TAKEN BY THE AO AT RS.8,85,796/- ON THE BASIS OF TH E RETURN OF INCOME FILED BY THE ASSESSEE, WHICH IS EVIDENT FROM PAGE 7 OF THE PAPER BOOK, WHICH IS COMPUTATION OF ITA NO. 576/JODH/2010 4 INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL, IN WHI CH THE ASSESSEE HAS SHOWN WDV AS ON 01.04.1997 AT RS.8,85,796/-. WHATEVER CLA IM WAS MADE BY THE ASSESSEE BEFORE THE AO, THE SAME WAS CORRECTLY TAKE N INTO CONSIDERATION BY THE AUTHORITIES BELOW AND EVEN THE SAME ISSUE WAS CONFI RMED IN THE PROCEEDINGS U/S. 154 OF THE IT ACT, WHICH HAS BECOME FINAL ON THE SA ME ISSUE. THEREFORE, NO FURTHER INTERFERENCE IS CALLED FOR IN THE MATTER WHETHER TH E ASSESSEE CLAIMED DEPRECIATION IN EARLIER YEAR OR NOT. AS REGARDS THE ALTERNATE CLAIM OF ASSESSEE, WE RELY UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF MARUBENI INDIA P. LTD. VS. CIT, 328 ITR 306, IN WHICH IT WAS HELD THAT THE JURISDIC TION OF TRIBUNAL IS CONFINED TO THE PASSING OF ORDERS ON SUBJECT MATTER OF APPEAL. THE INCENTIVES TO THE EMPLOYEES, THOUGH NOT ALLOWABLE IN THE RELEVANT ASSESSMENT YEA R, MAY BE AVAILABLE IN THE YEAR OF PAYMENT, BUT THE TRIBUNAL CANNOT GRANT DIRECTION TO ALLOW DEDUCTION FOR THAT YEAR. SINCE THE APPEAL FOR THE ASSESSMENT YEAR 1992 -93 IS NOT UNDER CONSIDERATION, THEREFORE, NO SUCH DIRECTION CAN BE ISSUED IN FAVOU R OF THE ASSESSEE. ACCORDINGLY, GROUNDS NOS. 4 & 5 OF APPEAL OF THE ASSESSEE ARE DI SMISSED. 7. ON GROUND NO. 6, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF RS.30,000/- OUT OF SALARY PAID TO THE ACCOUNTANT OF RS.54,000/- . THE AO OBSERVED IN THE ASSESSMENT ORDER THAT THE ASSESSEE WAS ASKED TO PRO DUCE THE ACCOUNTANT FOR VERIFICATION OF HIS SALARY, BUT HE WAS NOT PRODUCED ON THE GROUND THAT HE HAS LEFT THE ITA NO. 576/JODH/2010 5 JOB. THE AO MADE DISALLOWANCE OF RS.30,000/-, WHICH IS ALSO CONFIRMED BY THE LD. CIT(A). 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACCOUNTANT WAS NOT UNDER THE CONTROL OF THE ASSESSEE AFTER LEAVING THE JOB A ND THE AO HAS NOT TAKEN ANY STEP TO SUMMON HIM FOR EXAMINATION IF HE WAS NOT SATISFI ED WITH THE EXPLANATION OF THE ASSESSEE AND THE CONFIRMATION OF THE ACCOUNTANT FIL ED IN THIS REGARD. THE LD. COUNSEL FOR THE ASSESSEE, HOWEVER, ADMITTED THAT NO REQUEST WAS MADE TO THE AO TO SUMMON THE ACCOUNTANT FOR EXAMINATION. ON CONSIDERA TION OF THE ABOVE FACTS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION. IT IS WELL SETTLED LAW THA T WHEN THE ASSESSEE CLAIMED DEDUCTION OF EXPENSES, HE HAS TO PROVE THAT SAME WE RE LAID OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE ASSESS EE COULD NOT JUSTIFY THE PAYMENT OF SALARY OF RS.54000/- PAID TO THE ACCOUNTANT. THE REFORE, PART DISALLOWANCE WAS JUSTIFIED. SINCE THE ONUS UPON THE ASSESSEE IS NOT DISCHARGED AND THE REQUEST WAS NOT MADE TO SUMMON THE ACCOUNTANT FOR EXAMINATION, THE AUTHORITIES BELOW WERE NOT BOUND TO SUMMON THE ACCOUNTANT TO PROVE THE CAS E OF THE ASSESSEE. ACCORDINGLY, GROUND NO. 6 OF THE APPEAL OF ASSESSEE IS DISMISSED. 9. ON GROUND NO. 7, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF RS.13,000/- PAID TO THE AUDITORS FOR OTHER SERVICES. THE ASSESS EE CLAIMED THE ABOVE AMOUNT ON ITA NO. 576/JODH/2010 6 ACCOUNT OF PAYMENT FOR OTHER SERVICES. NO DETAILS OR EXPLANATION OF THE EXPENSES WAS FURNISHED BEFORE THE AO. ACCORDINGLY, THE AMOUN T WAS DISALLOWED. THE SAME IS THE POSITION BEFORE THE LD. CIT(A) AND NO DETAIL S HAVE BEEN FURNISHED. 10. AFTER HEARING THE LD. COUNSEL FOR THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE A UTHORITIES BELOW. THE AO SPECIFICALLY NOTED THAT NO EXPLANATION OR THE DETAI LS OF EXPENSES HAVE BEEN GIVEN FOR OTHER SERVICES. THE ASSESSEE COULD NOT PROVE TH AT EXPENSES WERE INCIDENTAL TO THE CAPITAL GAINS AND INTEREST INCOME. SINCE THE ON US UPON THE ASSESSEE HAS NOT BEEN DISCHARGED TO PROVE THAT THE EXPENSES WERE INC URRED FOR THE PURPOSE OF BUSINESS, THEREFORE, THE AMOUNT WAS RIGHTLY DISALLO WED BY THE AUTHORITIES BELOW. THIS GROUND IS ACCORDINGLY DISMISSED. 11. ON GROUND NO. 8, THE ASSESSEE CHALLENGED THE OR DER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.1,89,312/- ON ACC OUNT OF INTEREST ON TERM LOAN PAID TO RFC. THE ASSESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT IT HAS HUGE LIABILITIES DUE AGAINST RAJASTHAN FINANCIAL CORPORA TION AND THE FIXED ASSETS OF THE ASSESSEE WERE SEIZED BY THE RFC ON 28.02.1992, WHIC H WERE SOLD SUBSEQUENTLY ON 20.01.1993 FOR RS.25,00000/-, BUT THE SAME WERE ADJ USTED ONLY DURING THE YEAR UNDER CONSIDERATION AGAINST ITS DUES. THE BALANCE O F SURPLUS WAS TRANSFERRED TO BANK OF RAJASTHAN TO BE ADJUSTED AGAINST THE DUES. RFC CHARGED INTEREST OF ITA NO. 576/JODH/2010 7 RS.1,89,312/- ON ITS DUES AND THE SAME WERE ASCERTA INED AND CRYSTALLIZED DURING THE ASSESSMENT YEAR UNDER APPEAL. IT WAS, THEREFORE, PR AYED THAT THE ADDITION MAY BE DELETED. THE LD. CIT(A), HOWEVER, NOTED THAT THE AO FOUND THAT INTEREST OF RS.7,54,215/- PAID BY RFC WAS NET AMOUNT AFTER ADJU STING THE EXPENSES. THE UNIT WAS TAKEN OVER BY THE RFC IN 1992 AND, THEREFORE, I NTEREST PAID ON TERM LOAN DURING THE SUBSEQUENT PERIOD TILL THE DATE OF SALE OF UNIT CANNOT BE TREATED AS ALLOWABLE EXPENDITURE IN THE HANDS OF THE ASSESSEE COMPANY AND ACCORDINGLY, THE ADDITION WAS CONFIRMED. 12. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND SUBMITTED THAT INTEREST WAS PAID FOR BUSINESS PURPOSES ONLY AFTER SALE. THEREFORE, THE SAME WAS ALLOWABLE DEDUCTION. ON THE OTHER HAND, THE LD. D.R. RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 13. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE D O NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE ASSESSEE. THE ASSESSEE CLAI MED THAT IT WAS HAVING HUGE LIABILITIES AGAINST RFC AND ITS ASSETS HAVE BEEN SE IZED IN FEBRUARY, 1992 AND WERE SOLD BY THE RFC IN JANUARY, 1993. AFTER COMPLETION OF SALE ETC. OF THE ASSETS OF THE ASSESSEE COMPANY, THE BALANCE AMOUNT DUE UPON THE A SSESSEE IS ASCERTAINED LIABILITY AND COULD NOT BE SUBJECTED TO FURTHER CON SIDERATION. THE LIABILITY, THEREFORE, PERTAINED TO THE ASSESSMENT YEARS IN WHI CH THE LOANS HAVE BEEN ADJUSTED ITA NO. 576/JODH/2010 8 BY SELLING THE ASSETS. THEREFORE, THE ASSESSEE CANN OT CLAIM THAT THE INTEREST LIABILITY WAS ASCERTAINED AND CRYSTALLIZED DURING THE YEAR UN DER CONSIDERATION, I.E., 1998-99. THE LD. CIT(A), ON PROPER APPRECIATION OF FACTS AND MATERIAL ON RECORD RIGHTLY CONFIRMED THE ADDITION. THE LIABILITY OF EARLIER YE AR CANNOT BE ALLOWED AS DEDUCTION IN THE ASSESSMENT YEAR UNDER APPEAL IN VIEW OF THE FACTS AND CIRCUMSTANCES NOTED IN THE IMPUGNED ORDER. ACCORDINGLY, GROUND NO. 8 OF AP PEAL OF THE ASSESSEE IS ALSO DISMISSED. 14. GROUND NO. 9 IS RELATING TO CHARGING OF INTERES T U/S. 234B AND 234C OF THE IT ACT, WHICH IS MANDATORY AND CONSEQUENTIAL IN NATURE AND ACCORDINGLY, THIS GROUND OF THE ASSESSEES APPEAL IS DISMISSED. NO OTHER POI NT IS ARGUED OR PRESSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, JODHPUR 6. GUARD FILE ASSTT. REGISTRAR TRUE COPY