DCIT, New Delhi V. M/s. Sentiss Pharma Pvt. Ltd., New Delhi

ITA 6189/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2810 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 12-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Assessee Lawyers: N P GUPTA
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI G BENCH , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI B.P. JAIN, ACCOUNTANT MEMBER, ITA NO. 6 18 9 /D EL /20 1 4 [ ASSESSMENT YEAR : 20 11 - 12 ] THE ADDL. C.I.T VS. M/S SENTISS PHARMA PVT. LTD RANGE 14 [FORMERLY KNOWN AS PROMED NEW DELHI EXPORTS PVT. LTD 212, ASHIRWAD COMMERCIAL COMPLEX D 1, GREEN PARK, NEW DELHI P AN : A AAC P 1612 Q [APPELLANT] [RESPONDENT] DATE OF HEARING : 2 1 . 12 . 201 7 DATE OF PRONOUNCEMENT : 22 . 12 .201 7 ASSESSEE BY : S HRI N.P . GUPTA, ADV REVENUE BY : SHRI KAUSHLENDRA TIWARI, SR. DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER, THIS APPEAL OF THE REVENUE ARISES FROM THE ORDER DATED 0 1 .08.201 4 OF THE LD. CIT(A) - X VII , DELHI FOR AY 20 11 - 12 . 2 ITA NO. 6189/DEL/2014 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.48,85,131/ - MADE BY THE AO IGNORING THE FACT THAT THE PROVISIONS WAS CREATED TO MEET UNASCERTAINED LIABILITY AND HENCE REQUIRED TO BE ADDED BACK WHILE CALCULATING THE BOOK PROFIT. 2. ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 17,70,004/ - MADE BY THE AO IGNORING THE FACT THAT THE PROVISIONS WAS CREATED TO MEET UNASCERTAINED LIABILITY AND HENCE REQ UIRED TO BE ADDED BACK WHILE CALCULATING THE BOOK PROFIT. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FRESH GROUND OF APPEAL AND /OR DELETE OR AMEND ANY OF THE GROUNDS OF APPEAL. 3. THE LD. AR SHRI N.P. GUPTA, AT THE VERY OUTSET, FILED A COPY OF THE ORDER OF THE ITAT G BENCH, NEW DELHI IN THE CASE OF DCIT VS. M/S SAGE METALS LTD FOR A.Y 2009 - 10 IN ITA NO. 63131/DEL/2013 ORDER DATED 01.09.2015 AND CONTENDED THAT THE TRIBUNAL HAS DECI DED IDENTICAL ISSUE WHILE DECIDING THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE LD. CIT(A). HE ACCORDINGLY SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. THE LD. AR ALSO DREW OUR ATTENTION T OWARDS THE DECISION OF THE HON'BLE 3 ITA NO. 6189/DEL/2014 HIGH COURT OF DELHI IN THE CASE OF CIT VS. DCM SHRIRAM CONSOLIDATED LTD IN ITA NO. 947/2007 ORDER DATED 02.04.2009 WHERE THE ISSUE WHICH PERTAINS TO THE PROVISION OF GRATUITY IS COVERED AGAINST THE REVENUE. THE LD. AR DR EW THE ATTENTION OF THE BENCH TO PARA 7 AT PAGE 9 OF THE ORDER OF THE TRIBUNAL [SUPRA] AND SUBMITTED THAT SINCE THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE GROUNDS RAISED BY THE REVENUE SHOULD BE DISMISSED. 4 . THE LD. DR , ON THE OTHER HAND , WHILE SUPPORTING THE ORDER OF THE A.O, COULD NOT CONTROVERT THE FACTUAL POSITION AND FAIRLY CONCEDED THAT THE ISSUE S RAISED IN THIS APPEAL STAND COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF HON'BLE HIGH COURT OF DELHI [SUPRA] AND THE TRIBUNAL [SUPRA]. 5 . WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES , P ERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AND THE DECISION OF THE HON'BLE HIGH COURT OF DELHI AND THE ORDER OF THE TRIBUNAL . ON A PERUSAL OF THE SAID ORDERS, W E FIND THAT THE ORDER OF THE ITAT G BENCH, NEW DELHI IN THE CASE OF DCIT VS. M/S SAGE METALS LTD FOR A.Y 2009 - 10 [SUPRA] HAS DECIDED IDENTICAL ISSUE WHILE DECIDING THE APPEAL FILED BY THE REVENUE. WE FIND THAT THE ISSUE S UNDER CONSIDERATION ARE 4 ITA NO. 6189/DEL/2014 SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID ORDER OF THE TRIBUNAL [SUPRA]. THE GROUND RAISED BY THE REVENUE IN THE SAID ORDER READS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AND MERITS OF THE CASE IN DELE TING THE ADDITION OF RS. 26,97,000/ - MADE BY THE AO ON ACCOUNT OF PROVISION OF GRATUITY AND LEAVE ENCASHMENT. 6. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE TRIBUNAL READS AS UNDER: 7. IN VIEW OF ABOVE, WE ARE INCLINED TO HOLD THAT SINCE THE PROV ISION FOR GRATUITY AND LEAVE ENCASHMENT WERE FULLY EXPLAINED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND THE LD. CIT(A) ALSO RECORDED THAT THE PROVISION WAS COMPUTED ON THE BASIS OF SCIENTIFIC METHODOLOGY AND ALSO CERTIFIED BY THE ACTUARIAL SPECIALIST . UNDER ABOVE NOTED FACTS, WE RESPECTFULLY FOLLOW THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ROTORK CONTROLS INDIA PVT. LTD. (SUPRA), WHEREIN IT WAS HELD THAT A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION AND THE SAME IS RECOGNIZED WHEN (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WILL BE RQUIRED TO SETTLE THE OBLIGATION, AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOU NT OF THE OBLIGATION AND IF THESE CONDITIONS ARE NOT MET NO PROVISION CAN BE RECOGNIZED. MEANING THEREBY FOR LEGAL 5 ITA NO. 6189/DEL/2014 RECOGNITION OF A PROVISION AFORESAID CONDITIONS ARE TO BE FULFILLED OR REQUIRED TO BE MET BY THE ASSESSEE. 8. IN THE PRESENT CASE, THE ASSESS EE BY WAY OF SCIENTIFIC METHODOLOGY HAD ESTABLISHED THAT THE IMPUGNED PROVISIONS WERE RECOGNIZED BY USING A SUBSTANTIAL SCIENTIFIC METHODOLOGY AND ESTIMATION WHICH WAS ALSO CERTIFIED BY AN ACTUARIAL SPECIALIST. IN THIS SITUATION, THE PROVISION FOR GRATUITY AND LEAVE ENCASHMENT ITA NO.6313/DEL/2013 7 MADE BY THE ASSESSEE ARE HELD TO BE FULLY EXPLAINED OR SUSTAINABLE AND THE SAME IS ALLOWABLE AS PER RATIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF ROTORK CONTROLS (SUPRA). ACCORDINGLY, WE ARE UNABLE TO SEE ANY INFIRMITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND WE UPHELD THE SAME. ACCORDINGLY, SOLE GROUND OF THE REVENUE BEING DEVOID OF MERITS BEING DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. 7. WE FUR THER FIND THAT THE HON'BLE HIGH COURT [SUPRA] HAS HELD AS UNDER: THE SECOND ISSUE WHICH PERTAINS TO THE PROVISIONS OF GRATUITY IS COVERED AGAINST THE REVENUE BY VIRTUE OF JUDGMENTS OF THISCOURT IN CIT VS, HEWLETT PACKARD INDIA [P] LTD 2008 - TMI - 3577 [DEL] ; CIT VS.BECHTEL INDIA [P] LTD [2008] 2 DTR [DEL] 145 AND ITA NO. 1249/2007 TITLED CIT VS. DCM SRIRAM CONSOLIDATED LTD DECIDED ON 21.11.2008. NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION. 6 ITA NO. 6189/DEL/2014 8. IN VIEW OF THE ABOVE, S INCE THE ISSUES UNDER CONSIDERATION HAVE ALREADY BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE, THEREFORE, IN THE ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD. DR, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) DELETING TH E ADDITIONS. ACCORDINGLY, THE ORDER OF THE CIT(A) IS UPHELD AND THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 9 . IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 6189/DEL/2014 IS DISMISSED. THE ORDER IS PR ON OUNCED IN THE OPEN COURT ON 2 2 . 12 .201 7 . S D / - S D / - [H.S. SIDHU] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 N D DECEMBER , 201 7 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI