The DCIT, Circle-5, Ahmedabad V. Nir Marketing Pvt. Ltd., Ahmedabad

ITA 724/AHD/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51044 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD , . .!'#$, % & BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ./ I.T.A. NO.724/AHD/2010 ( ( ) ( ) ( ) ( ) / / / / ASSESSMENT YEAR : 2006-07) DY.CIT CIRCLE-5 AHMEDABAD ( ( ( ( / VS. M/S.NIR MARKETING PVT.LTD. G-20, NEW MADHAVPURA MARKET, NR.POLICE COMM. OFFICE, SHAHIBAUG, AHMEDABAD * % ./+, ./ PAN/GIR NO. : AABCN 4057 G ( *- / // / APPELLANT ) .. ( ./*- / RESPONDENT ) *- 0 / APPELLANT BY : SHRI SAMIR TEKRIWAL, SR. D.R. ./*- 1 0 / RESPONDENT BY : MS. URVASHI SHODHAN (2 1 3% / / / / DATE OF HEARING : 12/12/2011 4') 1 3% / DATE OF PRONOUNCEMENT : 16/12/2011 5 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WHI CH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-XI, AHMEDABA D DATED 29/12/2009 PASSED FOR A.Y. 2006-07. THE ONLY SUBS TANTIVE GROUND READS AS FOLLOWS:- 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS.55,81,105/- ON ACCOUNT OF DISALLOWANCE OF PREMIUM ON OFCPN. ITA NO.724/AHD/ 2010 DY.CIT VS. M/S.NIR MARKETING PVT.LTD. ASST.YEAR - 2006-07 - 2 - 2. AT THE OUTSET, WE HAVE BEEN INFORMED THAT IN THE PAST ON IDENTICAL FACTS IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2 001-02, 2002-03, 2003-04 & 2004-05 THROUGH A CONSOLIDATED ORDER BEAR ING ITA NOS.3296/AHD/2004, 1643, 1983/AHD/2006 AND 3666/AHD /2007, THE RESPECTED CO-ORDINATE BENCH B ITAT AHMEDABAD VIDE ORDER DATED 20/11/2009 HAS HELD THE ISSUE IN FAVOUR OF THE ASSE SSEE AS PER THE FOLLOWING RELEVANT PARAGRAPHS:- 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, DURING THE YEAR UNDER CONSIDERATION WAS EN GAGED IN THE BUSINESS OF TRADING OF SOAP, DETERGENT POWDER AND C AKE ETC. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILE D ON 19-06-2000 DECLARING TOTAL INCOME AT RS.NIL. HOWEVER, THE ASS ESSMENT WAS FINALIZED U/S.143(3) OF THE INCOME TAX ACT, 1961 (I N SHORT THE ACT) ON 26-02-2004 DETERMINING TOTAL INCOME AT RS.19,15,841 /-. WHILE FRAMING THE ASSESSMENT, THE AO DISALLOWED RS.19,15 ,841/- ON ACCOUNT OF PREMIUM PAYABLE ON OPTIONALLY FULLY CONVERTIBLE PREMIUM NOTES (OFCPN) AS FUTURE CONTINGENT LIABILITIES. ON VERIF ICATION OF ACCOUNT, THE AO NOTICED THAT THE ASSESSEE HAD DEDUCTED AN AM OUNT OF RS.19,15,841/- AS PREMIUM ON OFCPN FROM THE TOTAL INCOME OF RS.31,35,704/- (OFCPN). WHEN THE AO ENQUIRED ABOU T THE DEDUCTION, THE ASSESSEE FILED REPLY VIDE ITS LETTER DATED 17-0 3-2003. THE ASSESSEE ALSO FILED ANOTHER REPLY ON 23-09-2003. BOTH THE R EPLIES FILED BY THE ASSESSEE WERE NOT CONSIDERED BY THE AO TO BE SATIS FACTORY. THE AO TOOK THE VIEW THAT THE ASSESSEE COMPANY HAD MADE A PROVISION FOR FUTURE CONTINGENT LIABILITIES, WHICH COULD NOT BE T HE SUBJECT MATTER OF DEDUCTION. THEREFORE, AFTER DISCUSSING THE ISSUE A T LENGTH IN THE ASSESSMENT ORDER THE AO REJECTED THE ASSESSEES CL AIM OF PREMIUM ON OFCPN AND ADDED THE SUM OF RS.19,15,841/- TO THE TO TAL INCOME OF THE ASSESSEE COMPANY. 8. RESPECTFULLY FOLLOWING THE JUDGEMENT OF THE HO N'BLE SUPREME COURT IN THE CASE OF MADRAS INDUSTRIAL INVESTMENT CORPORA TION LTD. (SUPRA) AND ALSO THE DECISION OF THE TRIBUNAL RENDERED IN T HE CASE OF NIRMA LTD. WE HOLD THAT THE ASSESSEE HAD CORRECTLY CLAIMED THE DEDUCTION ONLY IN RESPECT OF PROPORTIONATE PART OF THE PREMIUM ON OFC PN ON ACCRUAL BASIS IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY , WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ITA NO.724/AHD/ 2010 DY.CIT VS. M/S.NIR MARKETING PVT.LTD. ASST.YEAR - 2006-07 - 3 - 11. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.36,0 9,609/- BEING AMOUNT OF PREMIUM ON OFCPN. WHILE DECIDING THE REV ENUES APPEAL IN ITA NO.3296/AHD/2004 (SUPRA) WE HAVE HELD THAT T HE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION ONLY IN RESPECT OF PROP ORTIONATE PART OF PREMIUM ON OFCPN ON ACCRUAL BASIS IN THE YEAR UNDER CONSIDERATION. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT O F ASSESSMENT YEAR 2001-02 (ITA NO.3296/AHD/2004). IN VIEW OF THE DET AILED DISCUSSION GIVEN THEREIN, WE SET ASIDE THE ORDER OF THE CIT(A) AND THE DECISION RENDERED IN REVENUES APPEAL FOR AY 2001-02 (SUPRA ) SHALL APPLY WITH EQUAL FORCE TO THIS GROUND OF APPEAL OF THE ASSESSE E. ACCORDINGLY, WE ALLOW THIS GROUND OF APPEAL. 19. GROUND NO.3 RELATES TO DISALLOWANCE OF RS.26 ,89,920/- BEING AMOUNT OF PREMIUM ON OFCPN. WHILE DECIDING THE REV ENUES APPEAL IN ITA NO.3296/AHD/2004 (SUPRA) WE HAVE HELD THAT T HE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION ONLY IN RESPECT OF PROP ORTIONATE PART OF PREMIUM ON OFCPN ON ACCRUAL BASIS IN THE YEAR UNDER CONSIDERATION. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT O F ASSESSMENT YEAR 2001-02 (ITA NO.3296/AHD/2004). IN VIEW OF THE DE TAILED DISCUSSIONS GIVEN THEREIN, WE SET ASIDE THE ORDER OF THE CIT(A) AND THE DECISION RENDERED IN REVENUES APPEAL FOR AY 2001-02(SUPRA) SHALL APPLY WITH EQUAL FORCE TO THIS GROUND OF APPEAL OF THE ASSESSE E. ACCORDINGLY, WE ALLOW THIS GROUND OF APPEAL. 25. GROUND NO.3 RELATES TO DISALLOWANCE OF RS.42,2 4,671/- BEING AMOUNT OF PREMIUM ON OFCPN. WHILE DECIDING THE REV ENUES APPEAL IN ITA NO.3296/AHD/2004 (SUPRA) WE HAVE HELD THAT T HE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION ONLY IN RESPECT OF PROP ORTIONATE PART OF PREMIUM ON OFCPN ON ACCRUAL BASIS IN THE YEAR UNDER CONSIDERATION. THE FACTS OF THE PRESENT YEAR ARE SIMILAR TO THAT O F ASSESSMENT YEAR 2001-02 (ITA NO.3296/AHD/2004). IN VIEW OF THE DET AILED DISCUSSIONS GIVEN THEREIN, WE SET ASIDE THE ORDER OF THE CIT(A) AND THE DECISION RENDERED IN REVENUES APPEAL FOR AY 2001-02 (SUPRA) SHALL APPLY WITH EQUAL FORCE TO THIS GROUND OF APPEAL OF THE ASSESSE E. ACCORDINGLY, WE ALLOW THIS GROUND OF APPEAL. 3. IN THE LIGHT OF THE ABOVE DECISION OF THE TRIBUN AL, WE HAVE NOTICED THAT WHILE PASSING THE ASSESSMENT ORDER DATED 05/09 /2008, THE ASSESSING OFFICER HAS ALSO MENTIONED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT ITA NO.724/AHD/ 2010 DY.CIT VS. M/S.NIR MARKETING PVT.LTD. ASST.YEAR - 2006-07 - 4 - YEAR THE QUESTION OF PREMIUM ON OPTIONALLY FULLY CO NVERTIBLE PREMIUM NOTES (OFCPN) HAS BEEN MENTIONED AND THE PAST HISTO RY WAS FOLLOWED. LIKEWISE, THE FIRST APPELLATE AUTHORITY HAS GRANTED RELIEF FOLLOWING THE ORDER OF THE TRIBUNAL. SINCE ON IDENTICAL FACTS TH E ISSUE HAS ALREADY BEEN DECIDED BY THE RESPECTED CO-ORDINATE BENCH, THEREFO RE FOLLOWING THE SAID VIEW FOR THIS YEAR AS WELL, WE FIND NO FORCE I N THIS GROUND OF THE REVENUE AND DISMISS THE SAME. 4. IN THE RESULT, REVENUES APPEAL STANDS DISMI SSED. SD/- SD/- ( A.K. GARODIA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 16/ 12 /2011 63..(, .(../ T.C. NAIR, SR. PS 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7) 5 1 .7 8 7)/ COPY OF THE ORDER FORWARDED TO : 1. *- / THE APPELLANT 2. ./*- / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-XI, AHMEDABAD 5. 7 >> >/ // / + + + + ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD