M/s STI India Limited, Rau Pithampur,Mhow V. Deputy Commissioner of Income Tax- 5(1), Indore, Indore

ITA 611/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4607 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 19-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Assessee Lawyers: S S SOLANKI
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

[ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.611/IND/2017 ASSESSMENT YEAR: 2001-02 M/S. STI INDIA LIMITE D PLOT NO.SONVAY INDUSTRIAL AREA RAU PITHAMPUR LINK ROAD, TEHSIL MHOW, INDORE / VS. DCIT - 5(1) INDORE ( APPELLANT ) ( REVENUE ) P.A. NO. AAECS3348C APPELLANT BY SHRI S.S. SOLANKI, A.R. RESPONDENT BY SMT. ASHIMA GUPTA, D.R. DATE OF HEARING: 17.01.2019 DATE OF PRONOUNCEMENT: 13.02.2019 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER O F THE CIT(A)-II, INDORE DATED 20.6.2017 PERTAINING TO T HE [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 2 ASSESSMENT YEAR 2001-02. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LEARNED CIT(A) ERRED IN MAINTAINING DISAL LOWANCE MADE BY THE A.O. ON A/C OF PRIOR PERIOD EXPENSES OF RS.65,5 9,774/- BY PASSING A VAGUE ORDER. THE ADDITION SO MADE AND SU STAINED BEING ILLEGAL AND WRONG, THE SAME THEREFORE, REQUIRE TO B E DELETED. 2. THAT THE LEARNED CIT(A) ERRED IN MAINTAINING DISALL OWANCE OF RS.1,71,272/- U/S 35D. THE DISALLOWANCE SO MAINTAI NED BEING WRONG, THE SAME REQUIRE TO BE DELETED. 3. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE NON ALLOWANCE OF RS.3,81,31,748/- MADE BY THE A.O. BY GIVING ANOTHER SET OF THEORY CONTRADICTORY TO WHICH WAS USED IN DISALLOWING GROU ND NO.1. THE NON ALLOWANCE SO MADE BEING ILLEGAL AND WRONG, THE SAME REQUIRE TO BE DELETED. 4. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE STA ND OF THE A.O. OF NOT ENTERTAINING THE CLAIM OF RS.8,00,01,570/- IN R ESPECT OF REVERSAL OF QUALITY REBATE. THE CLAIM MADE BY THE ASSESSEE BEING LEGAL AND PROPER, THE SAME REQUIRE TO BE ALLOWED. 2. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSES SEE STATED THAT HE DOES NOT WISH TO PRESS GROUND NO.2 OF THE APPEAL. THEREFORE, THE GROUND NO.2 OF THE ASSESSEES APPEAL IS DISMISSED AS NOT PRESSED. 3. FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING OF YARN AND TEXTILE PRODUCTS AND FILED A RETURN DECLARING LOSS OF RS.15,29,07,395/- ON 31.10.2001. THE CASE OF THE [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 3 ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS THE ACT) WAS FRAMED. THE A.O. OBSERVED THAT THE ASSESSEE CLAIMED EARLIER YEAR EXPENSE S OF RS.65,59,774/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD INTIMATED THAT THE INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2002-03 IT HAD DISALLOWED AMOUNT OF RS.11,81,33,318/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. THE BREAKUP OF THE SAME WAS FURNISHED AS EXPENSES RELATED TO PREVIOUS YEAR RS.3,81,31,748/-. INCOME IN RESPECT OF ACQUIRING OF REBATE OFFERED IN THE PREVIOUS YEAR BUT NOT ACCEPTED BY THE SUPPLIER OF RS.8,00,01,517/-. THE A.O. DID NOT ACCE PT THIS EXCEPT THE CONTENTION OF THE ASSESSEE AND MADE ADDITION OF RS.65,59,774/-. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) WHO AFTER CONSIDERING SUBMIS SIONS DISMISSED THE APPEAL. NOW THE ASSESSEE IS IN APPEAL BEF ORE THIS TRIBUNAL. 4. GROUND NO.1 IS AGAINST CONFIRMING THE ADDITION OF RS.75,59,774/- BY DISALLOWING THE CLAIM OF THE ASSESSE E BEING EXPENDITURE RELATED TO PRIOR PERIOD EXPENSES. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 4 MADE IN THE WRITTEN SUBMISSIONS. THE SUBMISSIONS OF THE ASSESSEE ARE RELATED TO ALL THE GROUNDS RAISED IN THE APP EAL WHICH ARE REPRODUCED AS UNDER: [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 5 [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 6 [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 7 [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 8 [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 9 5. LD. D.R. OPPOSED THE SUBMISSIONS AND SUPPORTED ORDERS OF THE AUTHORITIES BELOW. 6. APROPOS TO GROUND NO.1, WE FIND THAT THE ASSESSING OFFICER DISALLOWED THIS CLAIM BY OBSERVING THAT ASSESS EE HAS NOT SUBMITTED ANY EVIDENCE THAT THESE EXPENSES WERE CRYSTALIZED DURING THE YEAR UNDER APPEAL. THE A.O. DID NOT ACCEPT THE EXPLANATION THAT THE BILLS AND VOUCHERS WERE RECEIVED LATE. WE FIND THAT THE A.O. HAS NOT MADE ANY ENQUIRY INDEPENDENTLY WHERE THESE EXPENSES WERE INCU RRED OR NOT AND WHAT WAS THE REASON FOR SUBMISSION OF BILLS AT LATER DATE. THERE IS NO DISPUTE WITH REGARD TO THE FAC T THAT THE EXPENSES RELATED TO THE PREVIOUS YEAR WERE ONLY ALLOWABLE. HOWEVER, PRIOR PERIOD EXPENDITURE CAN BE ALLOWED SUBJECT TO THE ASSESSEE SATISFIES THE A.O. THAT THE EXPENDITURE WAS CRYSTALIZED DURING THE YEAR UNDER APPEAL AND THERE WAS SUFFICIENT REASON FOR MAKING BELATED CLAIM . IN THE ABSENCE OF THE SAME EXPENDITURE WOULD NOT BE [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 10 ALLOWABLE. THE ASSESSEE HAS FURNISHED VARIOUS DOCUMENT S ENCLOSED AT PAPER BOOK NOS.1 TO 216. IT WOULD BE IN TEREST OF JUSTICE THAT THIS ISSUE IS RESTORED TO THE FILE O F THE A.O. THE A.O. WOULD VERIFY WHETHER THIS EXPENDITURE CLAIM ED TO BE OF PRIOR PERIOD CRYSTALIZED DURING THE YEAR UNDER APPEAL AFTER MAKING DUE ENQUIRY. GROUND NO.1 OF THE ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NOS.3 & 4 ARE INTER RELATED. THE CONTENTIO N OF THE ASSESSEE IS THAT THE ASSESSEE MAKE A CLAIM DURING THE ASSESSMENT PROCEEDINGS AS THIS CLAIM WAS NOT MADE IN THE REGULAR REPORT. WE FIND THAT BOTH OF THESE CLAIMS OF THE ASSESSEE WERE REJECTED SUMMARILY BY LD. CIT(A) IN PARA NOS.5 & 6 OF HIS ORDER AS UNDER:- [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 11 [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 12 8. SINCE THE CLAIM IS RELATED TO BUSINESS EXPENDITURE , WE ARE OF THE VIEW THAT THE ASSESSEE SHOULD HAVE BEEN GIV EN SUFFICIENT OPPORTUNITY TO PRESENT HIS CASE. THEREFO RE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON BOTH THE IS SUES AND RESTORE TO THE FILE OF THE A.O. TO DECIDE IT AFRESH AFTER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. THE APPEAL FIL ED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 . 02.2019. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 13/02/2019 VG/SPS [ITA NO.611/IND/2017] [M/S. STI INDIA LIMITED, INDORE] 13 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE