ITO, Ward - 8(1), Kolkata, Kolkata V. M/s Amusar Services & Suppliers Pvt. Ltd., Kolkata

ITA 609/KOL/2012

• Counselvise Citation: 60923514 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA PRASAAD
• Assessee Lawyers: A K TIBREWAL

Judgement Text

I.T.A. NO . 6 09 /KOL./201 2 ASSESSMENT YEAR : 200 7 - 20 0 8 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI N.K. SAINI (ACCOUNTANT MEMBER) , AND SHRI GEORGE MATHAN (JUDICIAL MEMBER) I.T.A. NO. 609 /KOL . / 20 1 2 ASSESSMENT YEAR : 200 7 - 20 0 8 INCOME TAX OFFICER , ........................ ... ..... .... ............ .. .APP ELL ANT WARD - 8( 1 ) , KOLLKATA, AAYAKAR BHAWAN, P - 7, CHOWRINGHEE SQUARE, 5 TH FLOOR, ROOM NO. 12A, KOLKATA - 700 069 - VS. - M/S. AMUSAR SERVICES & SUPPLIERS PVT. LTD., ....... . RESPONDENT 1, COCK BURN LANE, 4 TH FLOOR, KOLKATA - 700 016 [PAN : AA D C A 9277 D ] APPEARANCES BY: SHRI RAJENDRA PRASAAD , J CIT, FOR THE DEPARTMENT SHRI A .K. TIBREWAL , FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 2 8 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JANUARY 30 , 201 5 O R D E R PER GEORGE MATHAN : THIS IS AN APPEAL FILED BY THE REVENU E AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - VIII , KOLKATA IN APPEAL NO. 353 / CIT (A) - VIII / KOL/09 - 10 DATED 17 .0 1 .2012 FOR THE ASSESSMENT YEAR 200 7 - 0 8 . 2 . SHRI RAJEN DRA PRASAD , J CIT, SR. D.R., REPRESENTED ON BEHALF OF THE REVENUE AND SHRI A .K. TIBREWAL , F.C.A. , REPRESENTED ON BEHALF OF THE ASSESSEE . 3. IN THE REVENUE S APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUND: - I.T.A. NO . 6 09 /KOL./201 2 ASSESSMENT YEAR : 200 7 - 20 0 8 PAGE 2 OF 4 WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(APPEALS) - VIII, KOLKATA WAS JUSTIFIED IN LAW IN DELETING THE ADDITION MADE ON ACCOUNT OF CESSATION OF THE LIABILITY SHOWN IN PARTS BY THE ASSESSEE AND NOT BRINGING THE WHOLE AMOUNT IN TO THE NET OF TAXATION UNDER SECTION 41(1) OF THE I.T. ACT, 1961 . 4 . AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE LD. J CIT, SR. D.R. THAT THE ONLY ISSUE IN THE REVENUE S APPEAL WAS AGAINST THE ACTION OF THE LD. CIT(APPEALS) IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER REPRESENTING THE C ESSATION OF THE LIABILITY IN RESPECT OF ONE OF THE ASSESSEE S CREDITORS M/S. RUDGORMACH, RUSSIA . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.33,37,011/ - FROM M/S. RUDGORMACH, RUSSIA ON 01.04.2006. IT WAS THE SUBMISSION THAT OUT OF THE SAID AMOUNT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS.6,26,128/ - UNDER THE HEAD SERVICING AND SUPPLYING SPARE PARTS OF MINING MACHINERY TO COAL INDIA LIMITED , AS PER THE AGREEMENT DATED 02.04.2011, WHICH WAS AMENDED BY A LETTER DATED 18.12.2006 . IT WAS THE SUBMISSION THAT ACCORDINGLY THE BALANCE OF RS.27,10,883/ - REMAINED OUTSTANDING. AS THE AMOUNT OF RS.33,37,011/ - WHICH WAS TREATED AS ADVANCE BY THE ASSESSEE, HAD BEEN APPROPRIATED TO THE EXTENT OF RS.6,26,128/ - TOWARDS THE SERVICING AND SUPPLYIN G SPARE PARTS IN RESPECT OF COAL INDIA LIMITED, THE AMOUNT OF RS.33,37,011/ - WAS LIABLE TO BE TREATED AS ADVANCE INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE LD. CIT(APPEALS) WRONGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. IN RE PLY, LD. A.R. SUBMITTED THAT THE AMOUNT OF RS.33,37,011/ - WAS NOT RECEIVED BY THE ASSESSEE ON 01.04.2006 BUT WAS RECEIVED AS A CONSEQUENCE OF AN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE AND M/S. RUDGORMACH, RUSSIA DATED 02.04.2001. AS PER THE SAID AGRE EMENT, THE ASSESSEE WAS TO RENDER REPAIR OF BROKEN PARTS, REPAIR OF EQUIPMENT UNDER FIELD CONDITIONS, SUPERVISION OF EQUIPMENT OPERATION UNDER THE OBSERVATION BY COAL INDIA LIMITED SPECIALISTS, TIMELY AND PROPER ASSISTANCE TO COAL INDIA LIMITED SPECIALISTS AND OTHER REQUIREMENTS. I.T.A. NO . 6 09 /KOL./201 2 ASSESSMENT YEAR : 200 7 - 20 0 8 PAGE 3 OF 4 CONSEQUENT TO THIS, THE RUSSIAN COMPANY HAD PAID THE ASSESSEE AN ADVANCE OF 2 , 50 ,000 US DOLLARS. IT WAS THE SUBMISSION THAT THE AMOUNT OF RS.33,37,011/ - WAS THE OPENING BALANCE AS ON 01.04.2006. IT WAS THE SUBMISSION THAT DURING TH E YEAR THE ASSESSEE HAD INCURRED THE EXPENDITURES IN RESPECT OF THE AGREEMENT AND IN COMPLIANCE OF THE SAME HAD ADJUSTED THE AMOUNT OF RS.6,26,128/ - FROM THE SAID ADVANCE AS PER THE AMENDMENT TO THE AGREEMENT DATED 02.04.2001 MADE VIDE LETTER DATED 18.12.2 006. IT WAS THE SUBMISSION THAT THE BALANCE REMAINED AS ADVANCED AND WAS SHOWN AS ADVANCE IN THE ACCOUNTS OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE BALANCE AMOUNT OF RS.27,10,883/ - DID NOT CEAS E AND CONSEQUENTLY THE PROVISIONS OF SECTION 41(1) DID NO T APPLY. LD. A.R. DREW OUR ATTENTION TO THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU WAREHOUSING CORPORATION REPORTED IN 292 ITR 310 (MAD.) TO SUBMIT THAT AS LONG AS THE LIABILITY IS APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE, THE SAME CANNOT BE TREATED AS AN INCOME UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 . HE VEHEMENTLY SUPPORTED THE ORDER OF LD. CIT(APPEALS). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSE SSEE HAS SHOWN THE LIABILITY OF RS.27,10,883/ - AS A LIABILITY IN ITS ACCOUNTS. THE AMOUNT OF RS.33,37,011/ - CLEARLY IS THE BALANCE AS ON 01.04.2006. THIS IS NOT AN AMOUNT RECEIVED BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR. A PERUSAL OF THE MODIFI CATION TO THE AGREEMENT DATED 02.04.20 0 1 VIDE LETTER DATED 18.12.2006 CLEARLY SHOWS THAT M/S. RUDGORMACH, RUSSIA HAS CATEGORICALLY DIRECTED THE ASSESSEE TO ADJUST THE NECESSARY EXPENSES REQUIRED FOR THE MARKETING, PROMOTIONAL AND L IAS I ONING WORK INCLUDING COMMISSION ON BEHALF OF M/S. RUDGORMACH AGAINST THE OUTSTANDING LYING WITH THE ACCOUNT. THIS CLEARLY SHOWS THAT THERE IS NO CESSATION OF LIABILITY. FURTHER A PERUSAL OF THE ORDER OF LD. CIT(APPEALS) CLEARLY SHOWS THAT THE LD. CIT(APPEALS) HAS DELETED THE ADDITION BY FOLLOWING THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF TAMILNADU WAREHOUSING I.T.A. NO . 6 09 /KOL./201 2 ASSESSMENT YEAR : 200 7 - 20 0 8 PAGE 4 OF 4 CORPORATION REFERRED TO SUPRA AS ALSO THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF SUGAULI SUGAR WORKS (P) LIMITED REPORTED IN 236 ITR 518 (SC ), WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT EVEN UNILATERAL WRITING OFF OF THE LIABILITY IN THE BOOKS OF ACCOUNT DOES NOT AMOUNT TO CESSATION OR REMISSION OF LIABILITY TO BRING INTO THE NET OF TAXATION UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 . IN THE PRESENT CASE, THE AMOUNT HAS ANY WAY NOT BEEN WRITTEN OFF. IT REMAINS AS A LIABILITY IN THE BOOKS OF THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(APPEALS) IS ON RIGHT FOOTING AND DOES NOT CALL FOR ANY INTE RFERENCE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY , 201 5 . SD/ - SD/ - N.K. SAINI GEORGE MATHAN ( ACCOUNTANT MEMBER) ( JUDICIAL MEMBER ) KOLKATA, THE 30 TH D AY OF JANUARY , 201 5 COPIES TO : (1) INCOME TAX OFFICER, WARD - 8(1), KOLLKATA, AAYAKAR BHAWAN, P - 7, CHOWRINGHEE SQUARE, 5 TH FLOOR, ROOM NO. 12A, KOLKATA - 700 069 (2) M/S. AMUSAR SERVICES & SUPPLIERS PVT. LTD., 1, COCK BURN LANE, 4 TH FLOOR, KOLKATA - 700 016 (3) COMMISSIONER OF INCOME TAX (APPEALS) ( 4 ) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S.