MERISANT INDIA P. LTD, MUMBAI V. CIT 20, MUMBAI

ITA 6818/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0311 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR LD
• Assessee Lawyers: SANJAY R PARIKHLD
• Section: 143(3)

Judgement Text

ITA NO. 6818/M/2014 MERISANT INDIA PRIVATE LIMITED ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.6818/MUM/2014 ( / ASSESSMENT YEARS: 2010-11) MERISANT INDIA PRIVATE LIMITED C/O. HASMUKH SHAH & CO 409-410 DALAMAL CHAMBERS NEW MARINE LINES MUMBAI - 400 0 20 / VS. DEPUTY COMMISSIONER OF INCOME TAX RANGE 9(2) AAYKAR BHAVAN M.K.ROAD MUMBAI -400 020 ! ./ ./PAN/GIR NO. AACCM-3132-E ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : SANJAY. R.PARIKH,LD. AR RE VENUE BY : SUMAN KUMAR, LD. DR / DATE OF HEARING : 01/08/2017 / DATE OF PRONOUNCEMENT : 04 /08/2017 ITA NO. 6818/M/2014 MERISANT INDIA PRIVATE LIMITED ASSESSMENT YEAR-2010-11 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 CONTESTS THE ORDER OF LD. COMMISSIONER OF I NCOME TAX (APPEALS)-20 [CIT(A)], MUMBAI DATED 15/09/2014 QUA CONFIRMATION OF CERTAIN ADDITIONS. 2.1 THE FACTS LEADING TO THE DISPUTE ARE THAT THE A SSESSEE, BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING & DISTRIBUTION OF CONSUMER FOOD PRODUCTS AND LOW CALO RIE SWEETENERS WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 20/03/2013 A T RS.35,62,660/- AFTER CERTAIN ADDITIONS / ADJUSTMENTS AS AGAINST RETURNED LOSS OF RS.64,72,535/- FILED BY THE ASSESSEE ON 28/09/2010. 2.2 THE ASSESSEE HAS SUFFERED ADDITION OF RS.66,99, 741/- ON ACCOUNT OF PROVISION FOR EXPENSES AND ANOTHER ADDITION OF RS.33,02,087/- ON ACCOUNT OF PROVISION OF PRICE RATE DIFFERENCE AND BOTH THE ADDITIONS ARE SUBJECT MATTER OF THIS APPEAL. 2.3 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE MADE PROVISION FOR CERTAIN EXPENSES AMOUNTING TO RS .66,99,741/- WHICH, IN THE OPINION OF LD. AO, WERE NOT CRYSTALLIZED DUR ING IMPUGNED AY AND HENCE NOT ALLOWABLE TO THE ASSESSEE. 2.4 THE SECOND ADDITION OF RS.33,02,087/- IS RELATE D WITH PRICE RATE DIFFERENCE WHICH WERE REDUCED FROM SALES / TURNOVER BUT NO EXPLANATION THEREOF WAS FILED BEFORE LD. AO AND HENCE ADDED TO THE INCOME OF THE ASSESSEE. ITA NO. 6818/M/2014 MERISANT INDIA PRIVATE LIMITED ASSESSMENT YEAR-2010-11 3 3.1 AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 15/09/2 014 AND RAISED SIMILAR CONTENTIONS. QUA ADDITION ON ACCOUNT OF PROVISIONS, THE LD. CIT(A) PROVIDED RELIEF TO THE EXTENT OF RS. 6.00 LA CS, BEING VAT PAYMENT MADE BY ASSESSEE BEFORE FILING OF RETURN OF INCOME AND CONFIRMED THE BALANCE PROVISION OF RS.60,99,741/-. 3.2 REGARDING ADDITION OF RS.33,02,087/- ON ACCOUNT OF PRICE DIFFERENCE, LD. CIT(A) AFTER APPRECIATING ASSESSEE S WORKING, PROVIDED RELIEF TO THE EXTENT OF RS.25,75,432/- SINCE THE SA ME REPRESENTED DIFFERENCE ON ACCOUNT OF VAT / EXCISE AND CONFIRMED THE BALANCE ADDITION OF RS.7,34,4,18/- SINCE THE SAME WERE REVE RSED SUBSEQUENTLY AND HENCE A MERE PROVISION. STILL AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US. 4.1 THE LD. COUNSEL FOR ASSESSEE [AR] STRESSED THE POINT THAT THE ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING WAS REQUIRED TO MAKE PROVISION FOR ALL KNOWN EXPENSES AND THEREFORE , THE ASSESSEES CLAIM WAS JUSTIFIED. OUR ATTENTION IS DRAWN TO THE FACT THAT ALL THE EXPENSES FOR WHICH PROVISION WAS MADE ACTUALLY CRYS TALLIZED IN THE IMPUGNED AY DULY SUPPORTED WITH RELEVANT INVOICES / DETAILS AND DUE TDS, WHEREVER APPLICABLE, HAS BEEN DEDUCTED THERE-F ROM IN THE IMPUGNED AY ONLY AND HENCE ADDITION WAS NOT JUSTIFI ED. REGARDING PRICE RATE DIFFERENCE, RELIANCE HAS BEEN PLACED ON THE DE CISION OF THIS TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR EARLIER YEARS. 4.2 PER CONTRA , LD. DR PLACED RELIANCE ON THE STAND OF LD. CIT(A) AND CONTENDED THAT NO DEDUCTION COULD BE ALLOWED AGAINS T PROVISIONS AND THE ITA NO. 6818/M/2014 MERISANT INDIA PRIVATE LIMITED ASSESSMENT YEAR-2010-11 4 ASSESSEE FAILED TO FILE SUFFICIENT DETAILS THEREOF BEFORE THE LOWER AUTHORITIES AND THEREFORE, THE ADDITIONS WERE JUSTI FIED PARTICULARLY WHEN ADEQUATE RELIEF HAS ALREADY BEEN PROVIDE BY LD. CIT (A) ON MERITS. 5. SO FAR AS THE ADDITION ON ACCOUNT OF PROVISION F OR EXPENSES IS CONCERNED, AFTER HEARING RIVAL CONTENTIONS, WE FIND SOME STRENGTH IN THE OPINION OF THE LD. AR THAT THE ASSESSEE FOLLOWING M ERCANTILE SYSTEM OF ACCOUNTING WAS REQUIRED TO MAKE PROVISION FOR KNOWN EXPENSES PROVIDED THEY WERE CRYSTALLIZED DURING THE IMPUGNED AY. THE LD. AR HAS CONTENDED THAT THESE EXPENSES PERTAINED TO IMPUGNED AY AND DUE TDS HAS BEEN DEDUCTED THERE-FROM, AS APPLICABLE AND THE SE EXPENSES ARE DULY SUPPORTED BY RELEVANT INVOICES / VOUCHERS / DE TAILS ETC. THEREFORE, WE DEEM IT FIT TO REMIT THE MATTER BACK TO THE FILE OF LD. AO FOR VERIFICATION OF THE ASSESSEES CLAIM. THE ASSESSEE IS ALSO DIREC TED TO SUBSTANTIATE HIS CLAIM FORTHWITH IN THIS REGARD AND PROVIDE NECE SSARY INFORMATION / DOCUMENTS ETC. THIS GROUND OF ASSESSEES APPEAL STA NDS ALLOWED FOR STATISTICAL PURPOSES. 6. REGARDING BALANCE ADDITION OF RS.7,34,418/- ON A CCOUNT OF RATE DIFFERENCE , WE FIND THAT COMPLETE DETAILS WERE FURNISHED BY T HE ASSESSEE BEFORE LD. CIT(A), WHO AFTER APPRECIATING THE SAME WITH DUE APPLICATION OF MIND REACHED A CONCLUSION THAT THE BALANCE AMOUN T WAS REVERSED SUBSEQUENTLY AND HENCE MERE PROVISION IN NATURE. TH E LD. AR COULD NOT CONTROVERT THE SAME AND SIMPLY PLACED RELIANCE ON T HE DECISION IN ASSESSEES FAVOR FOR EARLIER YEARS. NO RELIEF COULD BE PROVIDED TO ASSESSEE AGAINST PROVISIONS WHICH HAVE BEEN REVERSE D SUBSEQUENTLY ITA NO. 6818/M/2014 MERISANT INDIA PRIVATE LIMITED ASSESSMENT YEAR-2010-11 5 AND HENCE, WE FIND NO REASON TO INTERFERE WITH FIND INGS OF LD. CIT(A). RESULTANTLY, THIS GROUND OF ASSESSEES APPEAL STAND S DISMISSED. 7. IN NUTSHELL, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON 04 TH AUGUST, 2017. SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04.08.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. + ( ) / THE CIT(A) 4. + / CIT CONCERNED 5. $'- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI