M/s.Muthoot Vehicles & Asset Fiance Ltd, Cochin V. ACIT, Ernakulam

ITA 623/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69081 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 04-12-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2013
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: A S NARAYANAMOORTHY
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO.623/COCH/2013 ASSESSMENT YEAR : 2008-09 MUTHOOT VEHICLES AND ASSET FINANCE LTD., MUTHOOT CHAMBERS, OPP. SARITHA THEATRE COMPLEX, BANERJI ROAD, KOCHI-682 018. [PAN: AADCM 4352R] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), KOCHI. (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI A.S. NARAYANAMOORTHY, CA REVENUE BY SMT. LATHA V. KUMAR, JR. DR DATE OF HEARING 04/12/2013 DATE OF PRONOUNCEMENT 06/12/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 08-07-2013 PASSED BY LD CIT(A)-II, KOCHI CONFIRMING THE DISALL OWANCE OF PROVISION FOR LEAVE ENCASHMENT U/S 43B(F) OF THE ACT. 2. THE FACTS RELATING TO THE SAID ISSUE ARE STATED IN BRIEF. THE ASSESSEE CLAIMED A SUM OF RS.3,32,251/- RELATING TO THE PROVISION FOR LEAVE ENCASHMENT AS DEDUCTION AND THE SAME WAS DISALLOWED BY THE AO BY INVOKING THE P ROVISIONS OF SEC. 43B(F) OF THE ACT. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE P ROVISION FOR LEAVE ENCASHMENT IS NOT A STATUTORY LIABILITY BUT ONLY A CONTRACTUAL LIABIL ITY AND ACCORDINGLY CONTENDED THAT THE SAME WOULD NOT FALL WITHIN THE PURVIEW OF SEC. 43B OF THE ACT. IN THIS REGARD, THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL KERALA HIGH COURT IN I.T.A. NO.623/COCH/2013 2 THE CASE OF CIT VS. HINDUSTAN LATEX LTD (2012)(209 TAXMAN 42). THE LD CIT(A), HOWEVER, CONFIRMED THE ADDITION BY HOLDING THAT THE FACTS PREVAILING IN THE INSTANT CASE IS DISTINGUISHABLE FROM THAT EXISTED IN THE CASE OF HINDUSTAN LATEX LTD (SUPRA). AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. WE NOTICE THAT THIS BENCH OF TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE C ASE OF M/S KERALA FEEDS LTD (ITA NO. 179 & 180/COCH/2013) AND THE TRIBUNAL, VIDE ITS ORD ER DATED 27-09-2013, HAS SET ASIDE THIS ISSUE TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS:- 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WITH REGARD TO THE CLAIM OF PROVISION FOR LEAVE ENCASHMENT, T HE LD COUNSEL PLACED RELIANCE ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF HINDUSTAN LATEX LTD (SUPRA) AND ALSO ON THE DECISION RENDERED BY HONBL E RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. RAJ. STATE BRIDE AND CONSTRUCTI ON CORPORATION LTD (2012)(346 ITR 53). WE NOTICE THAT THE RAJASTHAN HIGH COURT, IN THE ABOVE CITED CASE, HAS CONSIDERED THE CLAIM OF DEDUCTION OF PROVISION FOR LEAVE ENCASHMENT FOR ASSESSMENT YEAR 2000-01. HOWEVER, THE PROVISIONS O F SEC. 43B(F) WAS INSERTED INTO THE ACT BY FINANCE ACT,2001 W.E.F. 1.4.2002, W HICH COULD NOT HAVE BEEN CONSIDERED BY HONBLE RAJASTHAN HIGH COURT. HENCE, RELIANCE PLACED BY THE ASSESSEE ON THE SAID DECISION MAY NOT BE USEFUL FOR THE YEAR UNDER CONSIDERATION. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECI SION RENDERED BY THE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF HIN DUSTAN LATEX LTD (SUPRA) AND NOTICE THAT THE HIGH COURT HAS ALLOWED THE CLAIM OF THE ASSESSEE ON TWO GROUNDS VIZ., (A) THE HONBLE KERALA HIGH COURT, IN PARA 5 OF ITS ORDER, HAS CONCURRED WITH THE VIEW EXPRESSED BY THE HONBLE CALCUTTA HIG H COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA) THAT CLAUSE (F) OF SECT ION 43B IS UNCONSTITUTIONAL. (B) THE DECISION RENDERED BY THE HONBLE CALCUTTA HIGH COURT HAS NOT BEEN CHALLENGED BEFORE THE SUPREME COURT. (PARA 5 A ND 8). ACCORDINGLY, THE HONBLE KERALA HIGH COURT, BY FOLLOWING THE DEC ISION RENDERED BY THE HONBLE SUPREME COURT IN THE CASE OF BERGER PAINTS LTD VS. CIT (266 ITR 99), HAS FURTHER HELD THAT THE REVENUE HAVING NOT C HALLENGED THE CORRECTNESS OF THE LAW LAID DOWN BY THE CALCUTTA HI GH COURT, IT IS NOT OPEN TO THE REVENUE TO CHALLENGE ITS CORRECTNESS IN THE CASE OF ANOTHER ASSESSEE. I.T.A. NO.623/COCH/2013 3 9. HOWEVER, WE NOTICE THAT THE DEPARTMENT HAS C HALLENGED THE DECISION RENDERED BY THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD, BY FILING APPEAL BEFORE HONBLE SUPREME COURT AND T HE HONBLE APEX COURT HAS STAYED THE JUDGMENT OF THE HONBLE CALCUTTA HIGH CO URT. IN FACT, THE HONBLE APEX COURT HAS PASSED TWO INTERIM ORDERS IN THIS RE GARD, WHICH ARE DETAILED BELOW:- (A) THE FIRST ORDER WAS PASSED ON 08-09-2008 IN TH E PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) CC 12060/2008 IN THE CASE OF CIT VS. EXIDE INDUSTRIES LTD (FROM THE JUDGMENT AND ORDER DATED 2 7-6-2007 IN APO NO.301/2005 OF THE HIGH COURT OF CALCUTTA). THE OR DER READS AS UNDER:- UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING ORDER ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNE D JUDGMENT, UNTIL FURTHER ORDERS. (B) THE SECOND ORDER WAS PASSED ON 08-05-2009 IN T HE PETITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NO(S) 22889/2008 (FROM THE VERY SAME JUDGMENT OF THE HIGH COURT OF CALCUTTA). THE ORDER READS AS UNDER: - PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL AP PEAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHI CH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTAND ING INTEREST DEMAND AS OF DATE IS CONCERNED, IT WOULD BE OPEN TO THE DEPAR TMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APPEAL OF THE DEPARTMENT IS AL LOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTIO N 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE E NTITLED TO MAKE A CLAIM IN ITS RETURNS. THUS, IT IS NOTICED THAT THE HONBLE APEX COURT HAS NOT ONLY STAYED THE OPERATION OF THE HONBLE CALCUTTA HIGH COURT IN THE CASE OF EX IDE INDUSTRIES LTD (SUPRA), BUT ALSO OBSERVED THAT THE ASSESSEE WOULD, DURING T HE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) IS ON THE STAT UTE BOOK. THOUGH THE INTERIM ORDERS WERE PASSED BY THE HONBLE APEX COURT IN THE YEARS 2008/2009, IT WAS NOT BROUGHT TO THE NOTICE OF HONBLE JURISDICTIONAL HIGH COURT. WE FURTHER NOTICE THAT THE HONBLE SUPREME COURT HAS MODIFIED THE DEC ISION RENDERED IN THE CASE OF BERGER PAINTS (SUPRA) IN ITS SUBSEQUENT DECISION IN THE CASE OF GANGADHARAN (304 ITR 61). THE OPERATIVE PART OF THE SAID DECIS ION READS AS UNDER:- IN ANSWERING THE REFERENCE, WE HOLD THAT MERELY BE CAUSE IN SOME CASES THE REVENUE HAS NOT PREFERRED APPEAL THAT DOES NOT OPERATE AS A BAR FOR I.T.A. NO.623/COCH/2013 4 THE REVENUE TO PREFER AN APPEAL IN ANOTHER CASE WHE RE THERE IS JUST CAUSE FOR DOING SO OR IT IS IN PUBLIC INTEREST TO DO SO O R FOR A PRONOUNCEMENT BY THE HIGHER COURT WHEN DIVERGENT VIEWS ARE EXPRESSED BY THE TRIBUNALS OR THE HIGH COURTS. 10. WE ALSO NOTICE THAT THE CALCUTTA BENCH OF TR IBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF S.R BATLIBOY & CO. I N ITA NO.1598/KOL/2011 AND THE TRIBUNAL, VIDE ITS DECISION DATED 13-03-2012, HAS S ET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONSIDER THE ISSUE AFRESH AS PER THE DECISION OF HONBLE APEX COURT IN THE CASE OF EXIDE INDUSTRIES L TD (SUPRA). ACCORDINGLY, WE SET ASIDE THE ORDERS OF LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS UNDER CONSIDERATION AND RESTORE THEM TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF DISCUSSION S MADE SUPRA. 4. CONSISTENT WITH THE VIEW TAKEN IN THE CASE O F KERALA FEEDS LTD (SUPRA), WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND REST ORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THI S ISSUE AFRESH IN ACCORDANCE WITH THE DECISION RENDERED BY HONBLE SUPREME COURT IN THE C ASE OF M/S EXIDE INDUSTRIES LTD (SUPRA). 5. IN THE RESULT, THE APPEAL FILED BY THE ASSES SEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 06-12-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 6TH DECEMBER, 2013 GJ COPY TO: 1. MUTHOOT VEHICLES AND ASSET FINANCE LTD., MUTHOOT CHAMBERS, OPP. SARITHA THEATRE COMPLEX, BANERJI ROAD, KOCHI-682 018. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), KOCHI. I.T.A. NO.623/COCH/2013 5 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4.THE COMMISSIONER OF INCOME-TAX, KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN