DCIT, CHENNAI V. Refex Refrigerants Ltd., CHENNAI

ITA 611/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9402 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K N DHANDAPANI IRS
• Assessee Lawyers: M NARAYANAN CITRETD
• Keywords: Audit objection
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . ! ' , #'$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO.611/MDS/2016 # % &% / ASSESSMENT YEAR : 2009-2010 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5(1) CHENNAI 600 034. VS. M/S. REFEX INDUSTRIES LIMITED NO.20, MOOKER NALLAMUTHU STREET, GEORGE TOWN, CHENNAI 600 001. [PAN AACCR 2495P] ( / APPELLANT) ( /RESPONDENT) '( ) * / APPELLANT BY : SHRI. K.N. DHANDAPANI, IRS, JCIT. +,'( ) * /RESPONDENT BY : SHRI. M. NARAYANAN, ADDL. CIT(RETD) ! ) - / DATE OF HEARING : 12-05-2016 ./& ) - / DATE OF PRONOUNCEMENT : 24-05-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED A GAINST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-3 , CHENNAI IN ITA NO.86/14-15/A-3, DT 31.12.2015 FOR THE ASSESSMENT Y EAR 2009-2010 PASSED U/S.143(3) R.W.S. 263 AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). ITA NO.611/MDS/2016. :- 2 -: 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- 2. THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE HIGH COURT AGAINST THE ORDER OF THE HONBLE ITA T SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX U/S.263 OF THE INCOME TAX ACT. 3. THE LD. CIT(A) HAS ERRED IN NOT DECIDING THE APPEAL OF THE ASSESSEE ON MERIT BUT ALLOWING THE RELIEF ON THE BASIS OF I.T.A.T. DECISION WHICH HAS BEEN CONTESTED IN HIGH COURT OF MADRAS. 3. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF REFILLING HYDRO FLUOROCARBONS GASES AND FILED RETURN OF INCOME WITH TOTAL INCOME OF =95,55,830/-. THE ASSE SSMENT WAS COMPLETED U/S.143(3) OF THE ACT ON 28.12.2011. SUB SEQUENTLY, THE LD. COMMISSIONER OF INCOME TAX-V, CHENNAI VIDE ORDER U/ S.263 OF THE ACT, DATED 18.03.2014 HAS SET ASIDE THE ASSESSMENT ORDER U/S.143(3) OF THE ACT PASSED ON 28.12.2011 AS ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF THE REVENUE AND MODIFIED THE ASSESSMENT ORDER TO THE EXTENT OF DISALLOWANCE OF BRAND BUILDING EXPENSES OF =1,99,13 ,832/- AS CAPITAL IN NATURE AND ENHANCEMENT OF INCOME ON ACCOUNT OF EXCESS CLAIM U/S.35D OF THE ACT =18,53,614/-. AS PER THE DIRECT IONS OF LD. COMMISSIONER OF INCOME TAX, THE LD. ASSESSING OFFI CER ISSUED NOTICE U/S.143(2) R.W.S. 263 OF THE ACT DATED 25.03.2014 A ND IN COMPLIANCE, THE ASSESSEE FILED REQUEST LETTER TO ADJOURN PROCEE DING TILL THE DISPOSAL ITA NO.611/MDS/2016. :- 3 -: OF APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER U /S.263 OF THE ACT DATED 18.03.2014 WITH TRIBUNAL. THE LD. ASSESSING O FFICER CONSIDERED THE TRIBUNAL PROCEEDINGS AS SEPARATE AND DIRECTED ASSESSEE TO SUBMIT THE DETAILS AND THE LD. ASSESSING OFFICER RELIED ON THE DIRECTIONS OF THE LD. COMMISSIONER OF INCOME TAX AND THE MATERIA L ON RECORD AND DISALLOWED THE CLAIM AND ASSESSED TOTAL INCOME AT = 3,24,29,797/- AND PASSED ORDER U/SEC. 143(3) R.W.S 263 DATED 27.06.20 14 AND RAISED DEMAND. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE FILED WRITTEN SUBMISSION THAT THE OR DER OF THE LD.CIT PASSED U/S.263 DATED 18.03.2014 WAS CANCELLED BY IT AT VIDE ORDER IN ITA NO.972/MDS/2014 DATED 09.9.2014 AND THE LD. AS SESSING OFFICER HAS NO JURISDICTION OF PASSING AN ORDER AS ORDER U/ S. 263 OF THE ACT WAS IS CANCELLED. THE LD. COMMISSIONER OF INCOME T AX (APPEALS) BASED ON THE ORDER OF ITAT FOUND THAT THERE IS NO E RROR IN THE FINDINGS OF THE ASSESSING OFFICER IN ACCEPTING THE CLAIM OF THE ASSESSEE IN TREATING THE ADVERTISEMENT EXPENSES AS REVENUE IN N ATURE, SINCE THE ITAT HAS SET ASIDE THE ORDER OF CIT, THE ORDER U/S. 143(3) R.W.S. 263 DATED 27.06.2014 DOES NOT SURVIVE AND ALLOWED THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. AGGRIEVED BY THE ORDER OF ITA NO.611/MDS/2016. :- 4 -: COMMISSIONER OF INCOME TAX (APPEALS), THE REVENUE H AS ASSAILED AN APPEAL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ARGU ED THAT THE DEPARTMENT HAS NOT ACCEPTED THE DECISION OF ITA T ON SETTING ASIDE THE ORDER OF THE CIT U/S.263 OF THE ACT AND THE LD . COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON RELYING ON THE ITAT ORDER WITHOUT DECIDING THE APPEAL ON MERITS AND PRAYED FOR ALLO WING THE APPEAL. 6. CONTRA, THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND OPPOSED THE GROUNDS OF THE REVENUE. 7. WE HEARD RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND EVIDENCE. THE ONLY CONTENTION OF THE DEPARTMENT BEFORE THE TRIBUNAL THAT THE REVENUE HAS NOT ACCEPTED THE ORD ER OF TRIBUNAL AND AN APPEAL HAS BEEN FILED IN MADRAS HIGH COURT. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERE FILING OF APPEAL IN HIGH COURT CANNOT BE A REASON TO TAKE A DIFFERENT VIEW. THE ORDER OF TR IBUNAL IS BINDING ON ALL THE AUTHORITIES IN THE STATE OF TAMIL NADU AND UNION TERRITORY OF PONDICHERRY. THEREFORE, THE COMMISSIONER OF INCOM E TAX (APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE BY FO LLOWING THE CO- ORDINATE BENCH DECISION IN ASSESSEES OWN CASE IN ITA ITA NO.611/MDS/2016. :- 5 -: NO.972/MDS/2014, ASSESSMENT YEAR 2009-2010 OBSERVED AT PARA 10 AND 11 AS UNDER:- 10. THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE C ASE OF SH.JASWINDER SINGH VS. CIT (SUPRA) HAS HELD THAT EX ERCISE OF REVISIONAL POWER ON THE BASIS OF AUDIT OBJECTION IS NOT TENABLE IN LAW. THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE COMING TO SUCH A CONCLUSION HAS TAKEN INTO CONSIDERATION THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SOHANA WOOLLEN MILLS REPORTED AS 296 ITR 238 AN D THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF JEEWANLAL (1929) LTD.,VS. ACIT REPORTED AS 108 ITR 407 (CALCUTTA). THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SOHANA WOOLLEN MILLS (SUPRA) HAS HELD THAT MERE AUDIT OBJECTION AND MERELY BECAUSE A DIFFERENT VIEW CAN B E TAKEN ARE NOT ENOUGH TO SAY THAT ORDER OF THE ASSESSING O FFICER IS ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF REVENUE . 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE COMMISSIONER OF INCOME TAX WITHOUT EXAMINING THE RECORDS AND PROPER APPLICATIO N OF MIND HAS INVOKED THE PROVISIONS OF SECTION 263 IN DISALL OWING THE ADVERTISEMENT EXPENDITURE CLAIMED BY THE ASSESSEE. THERE IS NOTHING ON RECORD TO SUGGEST THAT THE ORDER OF ASSE SSING OFFICER IS NOT SUSTAINABLE IN LAW. WE DO NOT FIND A NY ERROR IN THE FINDINGS OF ASSESSING OFFICER IN ACCEPTING THE CLAIM OF THE ASSESSEE WITH REGARD TO TREATING ADVERTISEMENT EXPE NSES AS REVENUE IN NATURE. IN VIEW OF THE ABOVE, THE IMPUGN ED ORDER IS SET ASIDE AND THE APPEAL OF THE ASSESSEE IS ALLOWED . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED COPY OF THE ORDER OF ITAT IN ITA NO.972/MDS/2014, FOR ASSESSMENT YEAR 2009-20 10 DATED 09.09.2014 AND WE FIND THE ORDER OF THE ITAT HAS BE EN DECIDED ON ITA NO.611/MDS/2016. :- 6 -: MERITS AND WE RESPECTFULLY FOLLOWING THE ORDER OF C O-ORDINATE BENCH DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED ON TUESDAY, THE 24TH DAY OF MA Y, 2016, AT CHENNAI. SD/- SD/- ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER ( . ! ' ) (G. PAVAN KUMAR) /JUDICIAL MEMBER / CHENNAI 3 / DATED:24.05.2016 KV 4 ) +#-56 76&- / COPY TO: 1 . '( / APPELLANT 3. ! 8- () / CIT(A) 5. 6 9: +#-# / DR 2. +,'( / RESPONDENT 4. ! 8- / CIT 6. :;% < / GF