Shri Ramesh Chandra Punera, Uttrakhand V. ITO, Uttrakhand

ITA 5796/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8142 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 07-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R C DANJAY
• Assessee Lawyers: VAIBHAV VISHAL
• Keywords: Business income
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SH. LALIT KUMAR, JUDICIAL MEMBER ITA NO. 5796 /DEL/201 3 AY: 20 10 - 11 SH. RAMESH CHANDRA PUNERA VS. ITO, GIC LINK ROAD NAYA BAZAR, PITHORAGARH PITHORAGARH DT. PITHORAGARH, UTTARAKHAND UTTARAKHAND 110 092 PIN: 262 501 PAN : AJPPP 5626 H (APPELLANT) (RESPONDENT) APPELLANT BY : SH. VAIBHAV VISHAL, C.A. RESPONDENT BY : SH. R .C.DANJAY, SR.D.R. ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF I NCOME T AX ( A PPEALS) - II, D EHRADUN DATED 22.8.2013 FOR THE A SSESSMENT Y EAR 2010 11, ON THE FOLLOWING GROUND S . 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) S ORDER IS ENTIRELY ERRONEOUS IN LAW AND FACTS OF THE CASE. HE HAS CONFIRMED THE ADDITIONS MADE BY AO FOR RS.1,06,447/ - IN RESPECT OF DISALLOWANCE U/S 43B FOR VAT PAYABLE SHOWN UNDER LIABILITY SIDE OF BALANCE SHEET THOUGH NO DEDUCT ION UNDER PROFIT &LOSS ITA 5796/DEL/2013 A.Y. 2010 - 11 SH. RAMESH CHANDRA PUNERA 2 WAS CLAIMED. IN SUCH CIRCUMSTANCES S.43B IS NOT AT ALL ATTRACTED. THE ORDER PASSED BY AO AND CONFIRMED BY CIT(A), WITHOUT UNDERSTANDING LEGISLATIVE INTENTION W.R.T. SECTION 43B. THEREFORE ACTION OF CIT(A) IS NOT CORRECT IN LAW, UNJ USTIFIED AND DESERVES TO BE DELETED. 2. THE QUESTION BEFORE LD.CIT WAS WHETHER THE VAT PAYABLE SHOWN IN LIABILITY SIDE OF BALANCE SHEET WILL BE DISALLOWED U/S 43B AND NOT THE QUESTION WHETHER VAT COLLECTED FORMED PART OF ASSESSEE S TRADING RECEIPT. THE SQUARELY COVERED CASE (1993) 200 ITR 759 (GAU.) INDIA CARBONS LTD. VS. INSPECTING ASSISTANT CIT WAS PROVIDED TO LD.CIT AND HE COULD NOT UNDERSTAND CORRECT INTERPRETATION OF LAW. THE ORDER OF LD.CIT IS BAD IN LAW AND THEREFORE THE ADDITION CONFIRMED BY HIM DESERVES TO BE DELETED. 2 . FACTS IN BRIEF: - T HE ASSESSEE IS AN INDIVIDUAL AND IS IN THE BUSINESS OF RUNNING A PETROL PUMP, TRANSPORTATION ETC. HE HAS INCOME FROM HOUSE PROPERTY, BUSINESS AND PROFESSION AS WELL AS OTHER SOURCES. THE SOLE ISSUE THAT IS AGITATED BEFORE US IS, WHETHER SECTION 43B OF THE I NCOME T AX ACT , 1961 (THE ACT) CAN BE INVOKED TO DISALLOW AN AMOUNT, WHEN THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION WHILE COMPUTING ITS INCOME FROM BUSINESS. IT IS THE CASE OF THE ASSESSEE THAT A SEPARAT E ACCOUNT IS MAINTAINED FOR VAT COLLECTED FROM THE CUSTOMERS AND PAID TO THE AUTHORITIES. IT IS THE CASE OF THE REVENUE THAT THE ASSESSEE SHOULD NECESSARILY TAKE INTO ACCOUNT THE VAT COLLECTED FROM ITS CUSTOMERS INTO IT S TURNOVER AND THEREAFTER CLAIM D EDUC TION AS PER SECTION 43B. 2.1 . THE REVENUE RELIES ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BUREAU (P) LTD. VS. CIT (1973) 87 ITR 542 AND SINCLAIR MURRAY & CO. (P) LTD. VS. CIT (1974) 97 ITR 615 FOR THE PROPOSITION THAT A TAX OR DUTY IS PART OF THE ITA 5796/DEL/2013 A.Y. 2010 - 11 SH. RAMESH CHANDRA PUNERA 3 DEALER S TRADING OR BUSINESS RECEIPT EVEN IF THE TAX OR DUTY IS CHARGED SEPARATELY OR CREDITED TO A SEPARATE ACCOUNT IN THE DEALER S BOOKS. REVENUE ALSO RELIED ON THE ORDER IN THE CASE OF FOOD SPECIALITIES LTD. VS. ACIT OF THE DELHI C BENCH OF THE ITAT. 3 . AFTER CONSIDERING RIVAL SUBMISSIONS WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE IN QUESTION IS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENU E BY THE DECISION OF THE J URISDICTIONAL HIGH COURT IN THE CASE OF COMMISSIONER OF I NCOME T AX VS. NOBLE AND HEWITT (I) PVT. LTD. (2008) REPORTED IN 305 ITR 324 (DEL.) . THE HON BLE JURISDICTIONAL HIGH COURT HELD THAT SINCE THE ASSESSEE DID NOT DEBIT THE AM OUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOT CLAIMED ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT A RISE. 3.1 . RESPECTFULLY FOLLOWING THE BINDING DECISION OF THE J URISDICTIONAL HIGH COURT WE ALLOW THIS APPEAL OF THE ASSESSEE. 4 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH APRIL, 2016. SD/ - SD/ - (LALIT KUMAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 25 TH APRIL , 2016 MANGA ITA 5796/DEL/2013 A.Y. 2010 - 11 SH. RAMESH CHANDRA PUNERA 4 COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR