DOW CHEMICAL INTERNATIONAL PVT. LTD., MUMBAI V. ADDL.C.I.T.RG. 10(2), MUMBAI

ITA 6767/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75663 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 17-02-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: M P LOHIAV IJAY VAIDYA
• Keywords: Principle of natural justice; Revised return
• Section: 11

Judgement Text

, MH MHMH MH INCOME TAX APPELLATE TRIBUNAL,MUMBAI - D BENCH. , MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU MK0 ,L VH ,E IKOYU BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR. S.T.M . PAVALAN,JUDICIAL MEMBER /. ITA NO.6767/MUM/2011, ! ! ! ! / ASSESSMENT YEAR-2008-09 DOW CHEMICAL INTERNATIONAL PVT. LTD. UNIT NO.1, CORPORATE PARK, V.N.PURAV MARG, CHEMBUR, MUMBAI-400071 VS ACIT RANGE 10(2) R.NO.433/474, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020 PAN:AAACD4467B ( '# / APPELLANT) ( $%'# / RESPONDENT) &' &' &' &' ( ( ( ( / ASSESSEE BY : SHRI M.P.LOHIA/V IJAY VAIDYA ) ( / REVENUE BY : SHRI A.C.TEJPAL ) )) ) '* '* '* '* / DATE OF HEARING : 17-02-2014 +,! ) '* / DATE OF PRONOUNCEMENT : 21-02-2014 , 1961 ) )) ) 254 )1( '-' '-' '-' '-' . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM : CHALLENGING THE ORDER DATED 07.07.2011 OF THE CIT(A )-21,MUMBAI ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEAL:- BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE, D CIPL (HEREINAFTER REFERRED TO AS THE APPELLANT) RESPECTFULLY CRAVES TO PREFER AN APPEAL AGAINST THE APPELLATE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - XXI, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)J UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 (THE ACT), IN RESPECT OF THE ORDER PASSED BY THE ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE 10(2), MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED AOJ UNDER SECTION 11 5WE(3) OF THE ACT ON THE FOLLOWING GROUNDS: GROUND 1 : THE LEARNED CIT(A) ERRED IN NOT ENTERTAINING AND DI SMISSING GROUND NO 1 RELATING TO REDUCING A SUM OF RS 20,588,485 (TRANSFER ALLOWANCE) FROM EXPE NSES LIABLE FOR FRINGE BENEFITS. GROUND 2 : THE LEARNED CIT(A) ERRED IN DISMISSING THE APPEAL W ITHOUT CONSIDERING THE SUBMISSIONS FILED AND THEREBY DENYING NATURAL JUSTICE TO THE APPELLANT. GROUND 3 : THE LEARNED CIT(A) ERRED IN NOT REDUCING A SUM OF R S 20,588,485 (TRANSFER ALLOWANCE) FROM EXPENSES LIABLE FOR FRINGE BENEFITS AS IT HAS ALREA DY BEEN TAXED IN THE HANDS OF EMPLOYEE AS SALARY. GROUND 4 : THE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE LEARNED AC IN LEVYING INTEREST OF RS 1,162,487 UNDER SECTION 11 5WJ OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT THE TIME OF HEARIN G OF THE APPEAL, SO AS TO ENABLE THE HONORABLE MEMBERS TO DECIDE THIS APPEAL ACCORDING TO LAW. 2 ITA NOS. 6767/MUM/2011 DOW CHEMICAL INTERNATIONAL PV T. LTD. . 2. ASSESSEE-COMPANY ENGAGED IN THE BUSINESS OF DESIGN & ENGINEERING, PROCESS ENGINEERING FOR PETRO CHEMICAL PLANTS AND COMPUTER AIDED ENGINEERIN G,FILED ITS RETURN OF INCOME ON 06.10.2008 DECLARING VALUE OF FRINGE BENEFIT (FB) AT RS. 6.7CR ORES.INITIALLY THE RETURN WAS PROCESSED U/S. 115 WE(1) OF THE ACT. SUBSEQUENTLY THE CASE WAS SELECTE D FOR THE SCRUTINY AND A NOTICE U/S 115WE(2) OF THE ACT WAS ISSUED.BESIDES,A NOTICE U/S.142(1) O F THE ACT,DATED24.11.2010 WAS ALSO ISSUED BY THE ASSESSING OFFICER(AO),WHEREIN CERTAIN DETAILS W ERE CALLED FROM THE ASSESSEE.AO DIRECTED THE ASSESSEE TO FILE FRINGE BENEFIT TAX (FBT) RECONCILI ATION WITH RESPECT TO P&L A/C.VIDE HIS ORDER DATED 08.12.2010,AO COMPUTED THE VALUE OF FB AT RS. 6,74,43,601/-. 3. ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPEL LATE AUTHORITY(FAA).IT WAS SUBMITTED BEFORE HIM THAT DURING THE ASSESSMENT PROCEEDINGS,VIDE LET TER DATED 08.12.2010,ASSESSEE-COMPANY HAD REQUESTED THE AO TO REDUCE TRANSFER ALLOWANCE OF RS . 2.05 CRORES FROM FBT,THAT THE SAID AMOUNT WAS ALREADY TAXED AS SALARY IN THE HANDS OF THE EMP LOYEES, THAT THE AO HAD NOT ACCEPTED ITS REQUEST FOR WITHDRAWAL OF TRANSFER ALLOWANCE.ASSESS EE FILED THE COPY OF THE SAID LETTER DURING APPELLATE PROCEEDINGS AND REQUESTED THE FAA THAT TR ANSFER ALLOWANCE AMOUNTING TO RS.2,05,88, 485/-SHOULD NOT BE INCLUDED IN THE VALUE OF FB. 4. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, FAA HELD THAT ASSESSEE HAD FILED RETURN OF FB WHEREIN VALUE OF THE FB WAS DECLARED AT RS. 6.74 CR OES, THAT AO HAD PASSED THE ORDER ON 08.12. 2010,THAT THE ASSESSEE HAD FILED ITS SUBMISSIONS IN THE TAPAL OF THE AO AFTER PASSING THE ASSESSMENT ORDER,THAT THE GROUND OF APPEAL WAS NOT EMANATING FROM THE ASSESSMENT ORDER OR OUT OF ANY CLAIM MADE BY THE ASSESSEE DURING THE ASSESS MENT PROCEEDINGS,THAT ASSESSEE DID NOT FILE REVISED RETURN EVEN AFTER NOTICING MISTAKE OF INCLU DING VALUE OF TRANSFER ALLOWANCE, AMOUNTING TO RS. 2.05 CRORES IN THE FB RETURN,THAT DURING THE AS SESSMENT PROCEEDINGS IT DID NOT FILE ANY CLAIM BEFORE THE AO,THAT RELIEF CLAIMED BY IT DURING APPE LLATE PROCEEDINGS COULD NOT BE ENTERTAINED. FINALLY,HE DISMISSED THE APPEAL FILED BY THE ASSESS EE. 5. BEFORE US, AUTHORISED REPRESENTATIVE (AR)CONTENTED THAT INFORMATION WERE FILED BEFORE THE AO ABOUT THE TRANSFER ALLOWANCE(RS.2.05CRORES),THAT EM PLOYEES HAD ALREADY PAID TAX ON THE TRAVELLING ALLOWANCE,THAT ASSESSEE WAS NOT LIABLE TO PAY FBT O N THE SAID AMOUNT,THAT FAA HAD NOT DECIDED THE ISSUE AS TO WHETHER THE CLAIM MADE BY THE ASSES SEE WAS CORRECT OR NOT ? HE RELIED UPON THE DECISION OF THE HONBLE BOMBAY HIGH COURT DELIVERED IN THE CASE OF PRITHIVI BROKERS AND SHAREHOLDERS PVT. LTD.(349 ITR 336).HE ALSO REFERRE D TO PAGES NO.34,36,37,39 OF THE PAPER BOOK IN THIS REGARD.DEPARTMENTAL REPRESENTATIVE (DR) REL IED UPON THE CASE OF GOETZ INDIA LTD. DELIVERED BY THE HONBLE SUPREME COURT OF INDIA (28 4 ITR 323). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ASSESSEE HAD MADE A REQUEST TO THE FAA TO EXCLUDE THE TRANSF ER ALLOWANCE FROM THE VALUE OF FB, THAT FAA DID NOT ADJUDICATE THE ISSUE ON MERITS.IN OUR OPINI ON, HE SHOULD HAVE DISCUSSED THE ISSUE ON MERITS AND SHOULD HAVE DECIDED THE ISSUE BY A SPEAKING ORD ER.FILING OR NOT FILING OF A REVISED RETURN FOR A FRESH CLAIM DOES NOT BIND THE HANDS OF THE FAA.IN T HE CASE OF PRITHIVI BROKERS & SHAREHOLDERS PVT. LTD.(SUPRA) HONBLE JURISDICTIONAL HIGH COURT HAS CLEARLY HELD THAT APPELLATE AUTHORITIES CAN ENTERTAIN FRESH CLAIM MADE BY THE ASSESSEE, EVEN IF , A REVISED RETURN IS NOT FILED BY THE ASSESSEE. IT IS SETTLED PRINCIPLE OF TAXATION-JURISPRUDENCE THAT IN ASSESSMENT PROCEEDINGS DOUBLE TAXATION/ DOUBLE DEDUCTION SHOULD BE AVOIDED. IN THE CASE UND ER APPEAL, IF THE EMPLOYEES HAD PAID TAX ON THE TRANSFER ALLOWANCE THEN THERE WAS NO JUSTIFICAT ION TO TAX IT AGAIN IN THE HANDS OF THE ASSESSEE IN FORM OF VALUE OF FB. AS THE FAA HAS NOT DECIDED THE ISSUE ON MERITS,SO I N THE INTEREST OF JUSTICE,MATTER IS RESTORED BACK TO HIS FILE FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO TH E ASSESSEE AND PASS SPEAKING ORDER AFTER CONSIDERING THE PAPERS REFERRED BY US IN OUR ORDER AT PARA 5 AND ANY OTHER MATERIAL PRODUCED BY THE ASSESSEE BEF ORE HIM. GROUND NO.1 IS ALLOWED IN PART IN FAVOUR OF THE ASS ESSEE. 3 ITA NOS. 6767/MUM/2011 DOW CHEMICAL INTERNATIONAL PV T. LTD. . GROUND NO.2 DEALS WITH LEVYING OF INTEREST OF RS. 1 1.62 LACS U/S 115WJ OF THE ACT. AS THE GROUND IS CONSEQUENTIAL TO THE FIRST GROUND OF APPEAL, IT IS ALLOWED FOR STATISTICAL PURPOSES AS WE HAVE ALREADY RESTORED BACK THE BASIC ISSUE TO THE FILE O F THE FAA SO THE ISSUE ON LEVYING INTEREST BECOMES ACADEMIC IN NATURE. AS A RESULT, APPEAL FILED BY THE ASSESSEE-COMPANY STANDS PARTLY ALLOWED. /'0 /'0 /'0 /'0 &' &' &' &' 1 1 1 1 2 2 2 2 ) )) ) - -- - VAKR% VAKR% VAKR% VAKR% 3 3 3 3 ) )) ) ' ' ' ' 45 4545 45 . ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBURARY,2014 . . ) +,! 6 7 21 QJOJH QJOJH QJOJH QJOJH , 201 4 , ) - 8 SD/- SD/- ( MK MKMK MK0 00 0 ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU ,L VH ,E IKOYU / DR. S.T.M.PAVALAN) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 7 /DATE: 21.02.2014. SK . . . . ) )) ) $'9 $'9 $'9 $'9 :9!' :9!' :9!' :9!' / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / '# 2. RESPONDENT / $%'# 3. THE CONCERNED CIT(A)/ ; < , 4. THE CONCERNED CIT / ; < 5. DR D BENCH, ITAT, MUMBAI / 9=- $' M MM MH HH H , . . . 6. GUARD FILE/ - / %9' %9' %9' %9' $' $'$' $' //TRUE COPY// . / BY ORDER, > / 4 DY./ASST. REGISTRAR , /ITAT, MUMBAI