ACIT, Cochin V. M/s. Herbal Isolates P.Ltd, Cochin

ITA 658/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73810 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 14-10-2013
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Section: 148

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. 658/COCH/2013 ASSESSMENT YEAR : 2005-06 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(2), KOCHI. VS. M/S. HERBAL ISOLATES (P) LTD., AJAY VIHAR, M.G. ROAD, KOCHI 682 016. [PAN:AAACH 5879F] (REVENUE-APPELLANT) (ASSESSEE -R ESPONDENT) REVENUE BY SMT. LATHA V. KUMAR, JR. DR ASSESSEE BY SHRI THOMSON THOMAS, CA DATE OF HEARING 18/12/2013 DATE OF PRONOUNCEMENT 10/01/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 12.07.2013 PASSED BY LD CIT(A)-II, KOCHI AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE REVENUE IS ASSAILING THE DECISION OF LD CIT(A) IN D ELETING THE ADDITION OF RS.62,91,681/- RELATING TO THE DIFFERENCE IN THE PROCESSING CHARGE S NOTICED IN THE TDS CERTIFICATES AND THAT ACCOUNTED BY THE ASSESSEE. 2. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE S TATED IN BRIEF. THE ASSESSEE HAD DECLARED PROCESSING RECEIPTS OF RS.37,04,480/- IN I TS PROFIT AND LOSS ACCOUNT. HOWEVER, THE TDS CERTIFICATES REVEALED THAT THE AGGREGATE AM OUNT OF PROCESSING CHARGES RECEIVED BY THE ASSESSEE FROM A COMPANY NAMED SYNTHITE INDUS TRIAL CHEMICALS LIMITED WAS RS.99,96,161/-. SINCE THE AO NOTICED SHORTAGE, CI TED ABOVE, IN ACCOUNTING OF PROCESSING CHARGES, HE REOPENED THE ASSESSMENT BY I SSUING NOTICE U/S 148 OF THE ACT I.T.A. NO.658/COCH/2013 2 AND COMPLETED THE ASSESSMENT BY ADDING THE DIFFEREN CE AMOUNT OF RS.62,91,681/- TO THE TOTAL INCOME OF THE ASSESSEE. 2.1 BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THA T IT FILED THE DETAILS OF WORK ORDERS ISSUED BY IT WITH M/S SYNTHITE INDUSTRIAL CHEMICALS LTD, ACCORDING TO WHICH THE CRUDE MUSTARD OIL GENERATED OUT OF EXPELLING PROCESS IS R EQUIRED TO BE SOLD BY THE ASSESSEE AND THE AMOUNT OF SALE PROCEEDS SO REALISED IS REQU IRED TO BE DEDUCTED FROM THE AMOUNT OF PROCESSING CHARGES. ACCORDINGLY, THE ASS ESSEE HAS ISSUED CREDIT NOTES TO THE ABOVE SAID PARTY FOR THE AMOUNT REALISED ON SALE OF CRUDE MUSTARD OIL. THE CREDIT NOTES WERE ACCORDINGLY REDUCED FROM THE AMOUNT OF PROCESS ING CHARGES AND THE ASSESSEE HAS RECEIVED ONLY THE BALANCE AMOUNT. ACCORDINGLY IT W AS SUBMITTED THAT THE AMOUNT ACCOUNTED FOR BY THE ASSESSEE IS THE NET AMOUNT AFT ER DEDUCTING THE CREDIT NOTES ISSUED BY IT. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS FILED A RECONCILIATION STATEMENT ALSO BEFORE THE AO. THE LD CIT(A) RE-APPRECIATED THE MA TTER AND WAS CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND ACCORDINGLY DELETE D THE IMPUGNED ADDITION. AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY PE RUSED THE RECORD. WE HAVE ALSO GONE THROUGH THE COPY OF WORK ORDER ISSUED BY M/S S YNTHITE INDUSTRIAL CHEMICALS LTD. THE CLAUSE NO.7 OF THE SAID AGREEMENT READS AS UNDE R:- 7. THE CRUDE MUSTARD OIL GENERATED OUT OF EXPELLI NG REFERRED IN PARA 2 SHALL BE SOLD BY YOU BUT THE SALE PROCEEDS SHALL BE REDUCED FROM THE EXPELLING / DISTILLATION CHARGES REFERRED IN CLAUSE 3 AND 5. A CAREFUL PERUSAL OF THE ABOVE SAID CLAUSE WOULD SH OW THAT THE ASSESSEE IS ENTITLED TO SELL THE CRUDE MUSTARD OIL AND TAKE THE MONEY REALI SED THEREON. HOWEVER, IT IS REQUIRED TO REDUCE THE SAME FROM THE AMOUNT OF PROCESSING CH ARGES, WHICH MEANS THAT M/S SYNTHITE INDUSTRIAL CHEMICALS LTD SHALL PAY THE NET AMOUNT ONLY TO THE ASSESSEE. ACCORDING TO THE ASSESSEE, IT HAS DEBITED M/S SYNTH ITE INDUSTRIAL CHEMICALS LTD WITH GROSS PROCESSING CHARGES AND ISSUED CREDIT NOTES TO IT IN RESPECT OF SALES AMOUNT REALISED ON SALE OF CRUDE MUSTARD OIL. IT IS THE C ASE OF THE ASSESSEE THAT M/S SYNTHITE INDUSTRIAL CHEMICALS LTD HAS DEDUCTED TDS ON GROSS AMOUNT OF PROCESSING CHARGES, I.T.A. NO.658/COCH/2013 3 THOUGH IT HAS PAID ONLY THE NET AMOUNT. THE ASSESS EE HAS FILED A RECONCILIATION STATEMENT ALSO IN PAGE 7 OF THE PAPER BOOK FILED BE FORE US. A PERUSAL OF THE SAID STATEMENT WOULD SHOW THAT THE ASSESSEE HAS ISSUED C REDIT NOTES TO M/S SYNTHITE INDUSTRIAL CHEMICALS LTD TO THE TUNE OF RS.61.03 LA KHS. FURTHER M/S SYNTHITE INDUSTRIAL CHEMICALS LTD HAS ALSO DEDUCTED TDS TWICE ON RS.2.0 0 LAKHS. BESIDES THE ABOVE SAID TWO MAJOR ITEMS, THERE ARE OTHER SMALL ERRORS. ACCO RDINGLY, THE ASSESSEE HAS RECONCILED THE DIFFERENCE BETWEEN THE AMOUNT OF RS.99,96,161/- SHOWN IN THE TDS CERTIFICATES AND RS.37,04,480/- DECLARED IN THE PROFIT AND LOSS ACCO UNT. 3.1 WE NOTICE THAT THE LD CIT(A) HAS CONSIDERED THE WORK ORDERS AND WAS CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE. THE LD CIT( A) FURTHER NOTICED THAT THE IDENTICAL EXPLANATIONS GIVEN BY THE ASSESSEE TO EXPLAIN IDENT ICAL DIFFERENCE NOTICED IN ASSESSMENT YEAR 2008-09 WAS ACCEPTED BY THE AO. UNDER THESE C IRCUMSTANCES, THE LD CIT(A) HELD THAT THE VIEW ENTERTAINED BY THE AO WAS NOT SUPPORT ED BY THE PREVAILING FACTS AND ACCORDINGLY DELETED THE IMPUGNED ADDITION. 3.2 HAVING GONE THROUGH THE COPY OF WORK ORDERS , RECONCILIATION STATEMENT AND ALSO ON NOTICING THAT THE ASSESSING OFFICER HAS ACCEPTED THE RECONCILIATION STATEMENT GIVEN IN ASST. YEAR 2008-09, WE DO NOT FIND ANY INFIRMITY IN THE DECISION TAKEN BY LD CIT(A) AND ACCORDINGLY WE CONFIRM HIS ORDER. 4. IN THE RESULT, THE APPEAL FILED BY THE REVE NUE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 10-01-20 14. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 10TH JANUARY, 2014 I.T.A. NO.658/COCH/2013 4 GJ COPY TO: 1. M/S. HERBAL ISOLATES (P) LTD., AJAY VIHAR, M.G. ROAD, KOCHI 682 016. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1(2), KOCHI. 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