Smt. Vidhya Punera, Uttrakhand V. ITO, Uttrakhand

ITA 5797/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86855 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-03-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Assessee Lawyers: VAIBHAV VISHAL
• Keywords: Business income
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI I.C. SUDHIR, JM ITA NO.5797/DEL/2013 ASSESSMENT YEAR : 2010-11 VIDHYA PUNERA, NAYA BAZAR, PITHORAGARH, DISTRICT PITHORAGARH, UTTARAKHAND. PAN : ALCPP1694G VS. ITO, GIC LINK ROAD, PITHORAGARH, UTTARAKHAND. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VAIBHAV VISHAL, CA DEPARTMENT BY : SHRI J.P. CHANDRAKAR, SR. DR DATE OF HEARING : 02.03.2015 DATE OF PRONOUNCEMENT : 03.03.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 22.8.2013 IN RELATION TO THE ASSESSME NT YEAR 2010-11. ITA NO.5797/DEL/2013 2 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS APP EAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.2,31,120/- MADE BY T HE AO BY MEANS OF DISALLOWANCE U/S 43B OF THE INCOME-TAX ACT, 1961 (H EREINAFTER ALSO CALLED `THE ACT) IN RESPECT OF VAT PAYABLE. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE SHOWED VAT PAYABLE AT THE YEAR-END AMOUNTING TO RS.2,95,7 19/-. THE AO OBSERVED THAT VAT PAYABLE AMOUNTING TO RS.64,599/- (RS.20,185/- AND RS.44,414) WAS PAID BY THE ASSESSEE UP TO 15.10.201 0, BEING THE DUE DATE U/S 139(1) OF THE ACT FOR FILING THE INCOME-TA X RETURN FOR THIS YEAR. AS REGARDS THE REMAINING AMOUNT, THE AO OBSERVED TH AT THE SAME WAS DEPOSITED AFTER THE DUE DATE. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THE AMOUNT PAID AFTER THE DUE DATE BE NOT DISALLOWE D, THE ASSESSEE CONTENDED THAT NO DEDUCTION WAS CLAIMED IN THE PROF IT & LOSS ACCOUNT IN RESPECT OF VAT EXPENSE AND, HENCE, THERE WAS NO POINT IN MAKING ANY DISALLOWANCE. RELYING ON SOME CASES, THE AO HELD T HAT NOT DEBITING THE AMOUNT OF VAT IN THE PROFIT & LOSS ACCOUNT COULD BE NO BAR FOR DEDUCTION AND CONSEQUENTIAL DISALLOWANCE, IN CASE O F NON-PAYMENT. ITA NO.5797/DEL/2013 3 THAT IS HOW, THE AO MADE DISALLOWANCE U/S 43B TO TH E TUNE OF RS.2,31,120/-. THE LD. CIT(A) CAME TO HOLD THAT TH E VAT WAS TO BE TREATED AS PART OF BUSINESS RECEIPT AND ITS DEDUCT ION WAS TO BE ALLOWED, SUBJECT TO THE PRESCRIPTION OF SECTION 43B. HE, TH EREFORE, UPHELD THE VIEW TAKEN BY THE AO, BUT, WITH A DIRECTION TO TREA T VAT AS PART OF RECEIPTS AND ALLOW ONLY THAT AMOUNT AS DEDUCTION WH ICH HAS BEEN PAID AS PER SECTION 43B OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT CAN BE SEEN FROM THE GROUND S OF THE APPEAL, THAT THE ASSESSEE HAS ONLY ASSAILED THE QUESTION OF DISA LLOWANCE U/S 43B AND NOT THE FINDING OF THE LD. CIT(A) TO TREAT THE AMOU NT OF VAT AS INCOME AT THE FIRST INSTANCE. THUS, TO THIS EXTENT, THE IM PUGNED ORDER HAS ATTAINED FINALITY. THE CRUX OF THE VIEW CANVASSED BY THE LD. CIT(A) IS THAT THE ASSESSEE WILL SUFFER DISALLOWANCE U/S 43B, IF THE A MOUNT OF VAT IS NOT PAID BEFORE THE DUE DATE. THERE CAN BE NO DISPUTE O N THE PROPOSITION THAT THE AMOUNT OF SALES-TAX OR VAT IS TO BE CONSIDERED AS PART OF TRADING RECEIPTS AND IS EXIGIBLE TO TAX. THIS VIEW HAS BEE N TAKEN BY THE HONBLE ITA NO.5797/DEL/2013 4 SUPREME COURT IN SEVERAL DECISIONS INCLUDING CHOWRINGHEE SALES BUREAU LTD. VS. CIT (1973) 87 ITR 542 (SC) AND SINCLAIR MURRAY AND CO. PVT. LTD. VS. CIT (1974) 97 ITR 615 (SC). SIMILARLY, WITH THE INCLUSION OF THE AMOUNT OF TAXES CONNECTED WITH THE SALES IN THE SALE PRICE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IN RE SPECT OF TAXES SO INCLUDED IN THE SALES. HOWEVER, SECTION 43B PROVID ES THAT SUCH TAXES CAN BE ALLOWED AS DEDUCTION ONLY IF THESE ARE PAID TO THE EXCHEQUER BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. THUS, IT IS IMPERMISSIBLE TO NEITHER INCLUDE THE AMOUNT OF SALE S-TAX OR VAT ETC. IN THE SALE PRICE AND ALSO NOT CLAIM DEDUCTION FOR SUC H TAXES. ON THE CONTRARY, THE AMOUNT OF SUCH TAXES IS INCLUDIBLE IN THE SALE PRICE AND IS LIABLE TO BE TREATED AS INCOME AND, THEREAFTER, DED UCTION IS PERMISSIBLE IN RESPECT OF SUCH AMOUNT OF TAXES ON PAYMENT. 5. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE F IND THAT THE ASSESSEE NEITHER INCLUDED THE AMOUNT OF VAT IN ITS SALE PRIC E NOR CLAIMED DEDUCTION ON ACTUAL PAYMENT, WHICH IS A FORBIDDEN C OURSE OF ACTION. AS, ADMITTEDLY, THE ASSESSEE DID NOT DEPOSIT THE SUM OF RS.2,31,120/- BEFORE ITA NO.5797/DEL/2013 5 THE DUE DATE AS PER SECTION 139(1) OF THE ACT, THE SAME CANNOT BE ALLOWED AS DEDUCTION IN THE COMPUTATION OF TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. HOWEVER, SUCH AMOUNT WOULD QUALIFY FOR DEDUCTION IN THE YEAR OF ACTUAL PAYMENT. THE AO IS DIRECTED TO MAKE DISALLOWANCE FOR THE UNPAID AMOUNT OF VAT IN THE COMPUTATION OF TOTAL INCOME FOR THE INSTANT YEAR AND ALSO, SIMULTANEOUSLY, ALLOW DEDUCT ION IN THE COMPUTATION OF TOTAL INCOME FOR THE YEAR(S) IN WHIC H SUCH VAT IS ACTUALLY PAID. 6. BEFORE PARTING WITH THIS APPEAL, WE WOULD LIKE TO DEAL WITH THE CONTENTION OF THE LD. AR THAT THE SAME LD. CIT(A), IN ANOTHER CASE OF SH. DEEPAK KUMAR OLI, PROP, M/S DEEPAK AGENCY, LOHAGHAT , VIDE HIS ORDER DATED 9.9.2014, HAS ORDERED FOR THE DELETION OF DIS ALLOWANCE UNDER SIMILAR CIRCUMSTANCES AND HENCE THE SAME VIEW BE TA KEN HERE ALSO. WE ARE NOT CONVINCED WITH THE SUBMISSION ADVANCED ON B EHALF OF THE ASSESSEE IN THIS REGARD. WHAT IS RELEVANT FOR OUR P URPOSE IS THE APPLICABILITY OF THE CORRECT POSITION OF LAW AND NO T WHAT A LOWER AUTHORITY HAS WRONGLY HELD IN ANOTHER CASE. IF THE LD. CIT(A) HAS DECIDED ITA NO.5797/DEL/2013 6 SIMILAR ISSUE WRONGLY IN FAVOUR OF SOME OTHER ASSES SEE, THEN IT IS FOR THE REVENUE TO PREFER APPEAL AGAINST SUCH ORDER BEFORE THE TRIBUNAL. IN NO CASE, SUCH AN ORDER CAN HAVE A PRECEDENT VALUE. 7. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.03.201 5. SD/- SD/- [I.C. SUDHIR] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 03 RD MARCH, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.