The ACIT, 1(2), Bhopal V. M/s Lilasons Industries Ltd., Bhopal

ITA 579/IND/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4861 (ITAT-INDORE)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: N D PATWA; SAKSHI VERMA
• Keywords: Competent authority

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 579/IND/2012 A.Y.2003-04 ACIT 1(2) BHOPAL :: APPELLANT VS M/S LILASONS INDUSTRIES LTD. BHOPAL PAN AAACL 5311N :: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY MISS SAKSHI VERMA AND SHRI N.D. PATWA DATE OF HEARING 2.9.2013 DATE OF PRONOUNCEMENT 3.9.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 24 TH SEPTEMBER, 2012 OF THE LEARNED FIRST APPELLATE AUTH ORITY. THE FIRST GROUND RAISED IN THE APPEAL PERTAINS TO DELET ING THE ADDITION OF RS. 53,11,548/- ON ACCOUNT OF EXCESS PROVISION M ADE FOR 2 DEFERRED SALES TAX MORE SPECIFICALLY WHEN THE ASSES SEE HAS ONLY ONE ELIGIBLE UNIT UNDER THE SALES TAX DEFERMENT SCH EME AND OUT OF THE TOTAL TAX LIABILITY OF RS.4,60,97,558/- ONLY AND AN AMOUNT OFRS. 4,09,86,000/- WAS PERMITTED TO BE CONVERTED I NTO DEFERMENT SCHEME APPROVED BY THE FINANCIAL INSTITUTIONS SICOM (MAHARASHTRA GOVERNMENT). 2. DURING HEARING, THE CRUX OF ARGUMENTS ADVANCED B Y SHRI R.A. VERMA, LEARNED SENIOR DR, IS IN SUPPORT TO THE ASSESSMENT ORDER BY CONTENDING THAT VAGUE FINDING HAS BEEN GIV EN BY THE CIT(A) AND THERE WAS NO EVIDENCE THAT PAYMENT WAS M ADE. ON THE OTHER HAND, MISS SAKSHI VERMA AND SHRI N.D. PAT WA, LEARNED COUNSEL FOR THE ASSESSEE, DEFENDED THE IMPUGNED ORD ER BY SUBMITTING THAT THE ASSESSEE SUBMITTED THREE ELIGIB ILITY CERTIFICATES, DURING ASSESSMENT STAGE AS WELL AS AP PELLATE STAGE FOR WHICH OUR ATTENTION WAS INVITED TO PARA 11 OF T HE IMPUGNED ORDER. IT WAS CONTENDED THAT THE ASSESSING OFFICER IGNORED TWO OTHER CERTIFICATES WHICH WERE FILED BY THE ASSESSEE . 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE CONCLUDING PORTION FROM THE IMPUGNED ORDER FOR READY REFERENCE :- 3 12. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSIONS OF THE APPELLANT. I HAVE ALSO PERUSED THE LEDGER OF PROVISION FOR DEFERRED SALES & PURCHASE TAX A/C AND ALSO THE THREE ELIGIBILITY CERTIFICATES ISSUED BY THE COMPETENT AUTHORITY. IT IS SEEN THAT ALL THE THREE ELIGIBILITY CERTIFICATES HAVE BEEN ISSUED BY THE SA ME AUTHORITY. IT IS NOT THE CASE OF THE A.O. THAT THE APPELLANT HAD ONLY ONE MA NUFACTURING UNIT. THE A.O. HAS ACCEPTED THE ELIGIBILITY CERTIFICATE ISSUE D BY THE AUTHORITY AND ALSO ALLOWED THE BENEFIT OF DEEMED PAYMENT WHICH IS APPARENT FROM THE FACT THAT THE A.O. HAS ONLY MADE PART DISALLOWANCE. I FIND THAT, IN THE SUBSEQUENT TWO YEARS, THE APPELLANT HAS EITHER MADE THE PAYMENT AGAINST THE DEFERRED SALES/PURCHASE TAX LIABILITY O R RECOGNISED THE LIABILITY AS INCOME AS NOT PAYABLE. IF THE ACTION OF THE A.O. IS ALLOWED TO SUSTAIN, IT WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME AMOUNT. IT IS ALSO SEEN THAT THE AMOUNT OF DEDUCTION CLAIMED BY THE APPELLANT IS WELL WITHIN THE AMOUNT FOR WHICH BENEFIT HAS BEEN GRANTED VIDE CERT IFICATES REFERRED SUPRA. I AM CONVINCED THAT THE A.O. HAS PROCEEDED O N AN INCORRECT PREMISE THAT THE APPELLANT HAS ONLY ONE ELIGIBLE UN IT FOR SALES TAX DEFERMENT. THUS, I AM OF THE CONSIDERED OPINION THA T THE ADDITION HAS BEEN MADE ON AN INCORRECT INTERPRETATION OF FACTS. HENCE, THE ADDITION MADE BY THE A.O. CANNOT BE SUSTAINED. THE DISALLOWA NCE IS, THEREFORE, DELETED. THE APPELLANT GETS RELIEF OF RS. 53,11,548/-. 2.1 IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER , CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSEL AND THE MATERIAL AVAILABLE ON RE CORD ARE KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND THAT THE ASS ESSEE MADE PROVISION FOR DEFERRED SALES TAX AND PURCHASE TAX A ND PRODUCED THREE ELIGIBILITY CERTIFICATES, ISSUED BY THE COMPE TENT AUTHORITY DURING ASSESSMENT STAGE. EVEN IN THE ASSESSMENT OR DER, THE LEARNED ASSESSING OFFICER HAS DISCUSSED THE LETTER OF THE ASSESSEE DATED 28.11.2010 WHEREIN THERE IS MENTION OF THREE ELIGIBILITY CERTIFICATES AMOUNTING TO RS. 7,89,20,550/- ISSUED BY SICOM, THEREFORE, THE CONTENTION OF THE REVENUE THAT THERE WAS ONLY ONE 4 CERTIFICATE IS NOT BORNE OUT FROM THE FACTS. EVEN T HE LEARNED ASSESSING OFFICER ACCEPTED THE ELIGIBILITY CERTIFIC ATE AND ALLOWED THE BENEFIT OF DEEMED PAYMENT AGAINST ONE CERTIFICA TE RESULTING INTO PART DISALLOWANCE. THERE IS UNCONTROVERTED FIN DING IN THE IMPUGNED ORDER THAT FOR SUBSEQUENT TWO YEARS EITHER THE ASSESSEE MADE THE PAYMENT AGAINST DEFERRED SALES/PU RCHASE TAX LIABILITY OF RECOGNISED THE LIABILITY AS INCOME AS NOT PAYABLE. THE REVENUE HAS NOT PRODUCED ANY EVIDENCE SUBSTANTIATIN G THAT THE CLAIMED DEDUCTION BY THE ASSESSEE IS NOT WITHIN THE PARAMETERS OF BENEFIT WHICH CAN BE GRANTED THROUGH THESE CERTI FICATES. THE LEARNED ASSESSING OFFICER ALSO PRESUMED THAT THE AS SESSEE HAD ONLY ONE ELIGIBLE UNIT FOR SALES TAX DEFERMENT WHER EAS ALL THREE CERTIFICATE BY SICOM WERE ISSUED ON 20.6.2002 BEARI NG CERTIFICATE NOS. 2871 (RS. 4,09,86,000/-, 3630 (RS.2,31,56,556/ -) AND 4301 (RS.1,47,78,000/-) RESPECTIVELY, TOTALLING RS. 7,89 ,20,550/-. IN VIEW OF THESE UNCONTROVERTED FACTS, WE FIND NO INFI RMITY IN THE CONCLUSION DRAWN IN THE IMPUGNED ORDER AND CONFIRM THE SAME. 3. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS. 32,60,545/- MADE ON ACCOUNT OF PROVISION FOR PURCHA SE TAX WHICH WAS NOT ASCERTAINED. THE LEARNED SENIOR DR AD VANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED. ON THE OTHER 5 HAND, THE LEARNED COUNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION FROM THE CONCLUSION DRAWN IN THE IMPUGNED ORDER :- 16. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER, AND SUBMISSIONS OF THE APPELLANT. IT IS SEEN THAT THE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. IF THE BENEFIT OF DEFERMENT SCHEME HAD NOT BEEN THERE, THE APPELLANT WOULD HAVE BEEN L IABLE TO MAKE THE PAYMENT OF ALL LOCAL TAXES COLLECTIVELY REFERRED TO AS THE PURCHASE TAX. I AM OF THE CONSIDERED OPINION THAT THE LIABILITY OF PURCHASE TAX IS LINKED WITH PURCHASES I.E. IT HAS DIRECT NEXUS WITH THE PU RCHASES. THUS, ALL THE INGREDIENTS REQUIRED FOR RECOGNITION OF THE SAI D PROVISION AS EXPENSE STOOD SATISFIED. IT IS NOT THE CASE OF THE A.O. THAT THERE WAS AMBIGUITY ON THE PAYMENT OF PURCHASE TAX I.E. WHETH ER OR NOT PURCHASE TAX WAS PAYABLE OR THAT THE AMOUNT OF PURCHASE TAX PAYABLE WAS IN DOUBT. I AM OF THE CONSIDERED OPINION THAT THE PURC HASE TAX CANNOT BE REGARDED AS UNASCERTAINED LIABILITY. I HAVE PERUSED THE LEDGER OF PROVISION FOR DEFERRED SALES AND PURCHASE TAX A/C. IT IS SEEN THAT THE PROVISION FOR PURCHASE TAX HAS BEEN CREDITED TO THE AFORESAID LEDGER, I FIND THAT IN THE SUBSEQUENT TWO YEARS, THE APPELLAN T HAS EITHER MADE THE PAYMENT AGAINST THE DEFERRED SALES/PURCHASE TAX LIABILITY OR RECOGNISED THE LIABILITY AS INCOME AS NOT PAYABLE. IF THE ACTION OF THE .O. IS ALLOWED TO SUSTAIN, IT WOULD AMOUNT TO DOUBL E TAXATION OF THE SAME AMOUNT. IT IS ALSO SEEN THAT THE AMOUNT OF DED UCTION CLAIMED BY THE APPELLANT IS WELL WITHIN THE AMOUNT FOR WHICH B ENEFIT HAS BEEN GRANTED VIDE CERTIFICATES REFERRED SUPRA. I FIND NO MERIT IN THE CONTENTION OF THE A.O. THAT THE PROVISION FOR PURCH ASE TAX IS AN UNASCERTAINED LIABILITY. I HAVE ALSO PERUSED SCH-N REGARDING NOTES ON ACCOUNTS. I AM IN AGREEMENT WITH THE SUBMISSIONS OF THE APPELLANT THAT THE SAID PARA OF THE NOTES ON ACCOUNTS DEALS WITH R EFUND OF SALES TAX OR PURCHASE TAX. THE ISSUE INVOLVED IN THE PRESENT CA SE IS NOT IN RESPECT OF REFUND BUT IN RESPECT OF PURCHASE TAX PAYABLE. AS THERE MAY BE AMBIGUITY ON THE AMOUNT OF REFUND TO WHICH APPELLAN T MAY BE ENTITLED, THE ACCOUNTING POLICY ADOPTED BY THE APPELLANT OF R ECOGNIZING THE REFUNDS ONLY ON RECEIPT BASIS AFTER COMPLETION OF A SSESSMENT CANNOT BE SAID TO BE AGAINST THE GENERALLY ACCEPTED AMOUNTING PRINCIPLES. THUS, I AM OF THE CONSIDERED OPINION THAT THE ADDITION HAS BEEN MADE ON AN 6 INCORRECT INTERPRETATION OF FACTS. HENCE, THE ADDIT ION MADE BY THE A.O. CANNOT BE SUSTAINED. THE DISALLOWANCE IS, THEREFOR E, DELETED. THE APPELLANT GETS RELIEF OF RS. 32,60,545/- 4.1 IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER , CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSEL AND THE MATERIAL AVAILABLE ON RE CORD ARE KEPT IN JUXTAPOSITION AND ANALYSED, WE FIND THAT THE ASS ESSEE MADE PROVISION OF RS. 32,60,545/- ON ACCOUNT OF PURCHASE TAX PAYABLE. THE STAND OF THE ASSESSING OFFICER IS THAT IT WAS W RONGLY CLAIMED AS IT IS NOT AN ASCERTAINED LIABILITY WHEREAS THE C LAIM OF THE ASSESSEE IS THAT IT IS ENTITLED FOR DEFERMENT OF PU RCHASE TAX AS PER THE ELIGIBILITY CERTIFICATE ISSUED BY THE PRESCRIBE D AUTHORITY. ADMITTEDLY, THE ASSESSEE WAS FOLLOWING MERCANTILE S YSTEM OF ACCOUNTING, THEREFORE, IF THE BENEFIT OF DEFERMENT SCHEME WOULD NOT HAVE BEEN THERE, THE APPELLANT WOULD HAVE BEEN LIABLE TO MAKE THE PAYMENT OF ALL THE LOCAL TAXES COLLECTIVEL Y REFERRED TO AS PURCHASE TAX. THERE IS A DIRECT NEXUS WITH THE PURC HASES, THEREFORE, THE LIABILITY OF PURCHASE TAX IS LINKED WITH THE PURCHASES. EVEN IT IS NOT THE CASE OF THE REVENUE T HAT THERE WAS ANY AMBIGUITY ON THE PAYMENT OF PURCHASE TAX, THERE FORE, SUCH PURCHASE TAX CANNOT BE REGARDED AS UNASCERTAINED LI ABILITY. THE ASSESSEE CREDITED THE SAME IN ITS LEDGER ACCOUNT WH ICH WAS 7 EXAMINED BY THE LEARNED CIT(A) AND NO CONTRARY MATE RIAL WAS BROUGHT BEFORE US. FURTHER THERE IS UNCONTROVERTED FINDING THAT IN SUBSEQUENT TWO YEARS THE ASSESSEE EITHER MADE THE P AYMENT AGAINST THE DEFERRED SALES/PURCHASE TAX LIABILITY O R RECOGNISED THE LIABILITY AS INCOME AS NOT PAYABLE. THE LEARNED CIT (A) ALSO EXAMINED SCHEDULE SCH.N ON NOTES OF ACCOUNT. IN VI EW OF THESE FACTS, WE FIND NO INFIRMITY IN THE ORDER OF THE LEA RNED CIT(A), CONSEQUENTLY, CONFIRM THE SAME. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 2.9.2013. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 3.9.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-33 8