INDUSTRIAL X-RAY AND ALLIED RADIOGRAPHERS INDIA P. LTD, MUMBAI V. JT CIT 8(2), MUMBAI

ITA 746/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83787 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 28-08-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DAMODAR KUBRA
• Keywords: Capital receipt
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI AMIT SHUKLA, JM ./ I.T.A. NO. 746/MUM/2013 ( / ASSESSMENT YEAR: 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. 102, FIRST FLOOR, FAIZAN APARTMENTS, S. V. ROAD, JOGESHWARI (W), MUMBAI-400 102 / VS. JT. CIT-8(2) AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 ' ./# ./PAN/GIR NO. AAACI 1419 A ( '$ /APPELLANT ) : ( %&'$ / RESPONDENT ) '$ ' ( / APPELLANT BY : SHRI NITESH JOSHI & SHRI DAMODAR KUBRA %&'$ ' ( / RESPONDENT BY : SHRI N. SATHYA MOORTHY )* + ' , / DATE OF HEARING : 28.08.2014 -./ ' , / DATE OF PRONOUNCEMENT : 12.09.2014 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-17, MUMBAI (CIT(A) FOR SH ORT) DATED 21.11.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMEN T YEAR (A.Y.) 2009-10 VIDE ORDER DATED 19.12.2011. 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA L IS WITH REGARD TO THE TAXABILITY OF THE SUM OF RS.64.30 LACS, WRITTEN BACK BY THE ASSES SEE IN ITS ACCOUNTS FOR THE CURRENT YEAR, AS ITS INCOME FOR THE SAID YEAR. 2 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. 3. IT WOULD BE RELEVANT TO RECOUNT THE BACKGROUND F ACTS OF THE CASE, WHICH ARE LARGELY UNDISPUTED, BEING APPARENT FROM THE MATERIAL ON REC ORD. THE ASSESSEE-COMPANY, ENGAGED IN SERVICES IN RESPECT OF INDUSTRIAL RADIOGRAPHY AN D OTHER NON-DESTRUCTIVE TESTING, UNDERTOOK A CONTRACT FOR, AS STATED, SERVICES, FOR A FIRM M/S. HI-TECH TRADING COMPANY, OMAN DURING THE FINANCIAL YEAR 1996-97. THE WORK WA S COMPLETED SOMETIME DURING THE YEAR 1998-99. THE ASSESSEES ASSOCIATE CONCERN, M/S . X-RAY ACCESSORIES MANUFACTURING CO., WHICH HAD ALSO SUPPLIED MATERIAL TO THE SAID P ARTY, RECEIVED THE ENTIRE AMOUNT, I.E., INCLUDING THAT IN RESPECT OF THE WORK UNDERTAKEN BY THE ASSESSEE, PER INWARD REMITTANCE ON 15.04.1999 AT RS.75,01,665/-. THE ASSESSEES SHA RE, QUANTIFIED AT RS.64,29,570/-, WAS PAID TO IT BY ITS ASSOCIATE CONCERN ON 31.03.2000, AND WHICH STOOD ACCOUNTED FOR BY THE ASSESSEE AS AN ADVANCE FROM THE OVERSEAS CUSTOMER. THE ASSESSEE, THUS, ADMITTEDLY DID NOT DISCLOSE THE SAID SUM AS ITS INCOME, EITHER FOR A.Y. 1999-2000, I.E., THE YEAR CORRESPONDING TO THE YEAR IN WHICH THE WORK STOOD C OMPLETED, OR FOR A.Y. 2000-01, THE YEAR OF RECEIPT, EVEN AS THE SAME WAS ONLY A TRADE RECEIPT AND, THUS, IN THE NATURE OF INCOME. THE MATTER CAME TO THE NOTICE OF THE REVENU E IN THE COURSE OF THE ASSESSMENT PROCEEDINGS FOR A.Y. 2006-07, AND THE SAID SUM WAS ACCORDINGLY ASSESSED TO TAX AS INCOME FOR THE SAID YEAR. THE ASSESSMENT TRAVELLED TO THE TRIBUNAL (IN ITA NO. 6779/MUM(I)/2010), WHICH VIDE ITS ORDER DATED 14/12 /2012 (COPY ON RECORD) DELETED THE ADDITION ON THE BASIS OF THE REMAND REPORT BY THE A SSESSING OFFICER (A.O.), CALLED FOR BY THE FIRST APPELLATE AUTHORITY, HOLDING THAT THE SAM E WAS NOT TAXABLE FOR THAT YEAR; ITS FINDINGS BEING AS UNDER: 7. IN VIEW OF THE CLEAR FINDINGS OF A.O. THAT THE AMOUNT IS NOT TAXABLE IN THE RELEVANT YEAR, WE DO NOT SEE ANY REASON TO CONS IDER THE ADDITIONS ON THE BASIS OF LEGAL PRINCIPLES AS RAISED BY THE REVENUE IN GROUND NOS. 2 TO 4. THE LEARNED DR HIMSELF ADMITTED THAT GROUND NO. 5 D OES NOT ARISE AS AO HAS NOT INVOKED THE PROVISIONS OF SECTION 145A AND TO THAT EXTENT THE GROUND IS MISPLACED AND ERRONEOUS. IN VIEW OF THIS, THERE IS NO MERIT IN REVENUE GROUNDS AND ACCORDINGLY THEY ARE REJECTED. THE ASSESSEE HAVING WRITTEN BACK THE IMPUGNED AMOUN T, OUTSTANDING IN ITS ACCOUNTS AS AN ADVANCE, IN ITS ACCOUNTS FOR THE YE AR, THE REVENUE HAS BROUGHT THE SAME TO 3 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. TAX FOR THE CURRENT YEAR. THE ASSESSEE HAD NOT OFFE RED THE SAID SUM, CLEARLY REVENUE IN NATURE, EITHER ON ITS RECEIPT OR FOR A.Y. 2006-07 O R EVEN FOR THE CURRENT YEAR ON ITS WRITE BACK IN ACCOUNTS AS REVENUE. THE INTENT IS CLEARLY TO DEFRAUD THE REVENUE. THE ADDITION HAVING BEEN CONFIRMED BY THE LD. CIT(A), ESSENTIALL Y FOR THE SAME REASONS, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 4.1 WE SHALL BEGIN BY REPRODUCING THE FINDINGS BY T HE ASSESSING AND THE FIRST APPELLATE AUTHORITY, ONLY TO PROJECT CLEARLY THE STAND OF THE REVENUE: FINDINGS BY THE A.O. : 10.4 THE ABOVE FACTS CLEARLY REVEAL THAT THOUGH T HE ASSESSEE OUGHT TO HAVE PAID TAXES ON THIS AMOUNT OF RS.64,29,470/- IN THE YEAR OF RECEIPT BUT IT HAS NEVER DONE SO. IT IS VERY SHOCKING THAT THE ASSESSE E HAVING KNOWN THE FACT THAT IT HAS NEVER PAID TAXES ON THIS MONEY, STILL I S OF THE BELIEF THAT THIS MONEY IS NOT TAXABLE IN THE YEAR UNDER CONSIDERATIO N THOUGH IT HAS BEEN ACCOUNTED FOR IN THE BOOKS OF THE CURRENT YEAR. IN FACT, THE INTENTION OF THE ASSESSEE IS TO DEFRAUD THE REVENUE. OTHERWISE, THE ASSESSEE HAD A GOOD CHANCE TO OFFER THIS AMOUNT AS INCOME IN THE YEAR U NDER CONSIDERATION AND PAY TAXES THEREON. SINCE THIS AMOUNT WAS NEVER BROU GHT TO TAX AND ALSO IN VIEW OF THE FACT THAT THIS AMOUNT HAS BEEN CREDITED IN THE PROFIT & LOSS ACCOUNT IN THE YEAR UNDER CONSIDERATION, THE AFORES AID AMOUNT OF RS.64,29,570/- ON ACCOUNT OF OLD SETTLEMENT OF ACC OUNTS IS HEREBY ADDED TO THE INCOME OF THE ASSESSEE. FINDINGS BY THE LD. CIT(A) : 6.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AND THE ORDER OF THE AO. THE APPELLANT HAD RECEIVED MOBILIZATION ADV ANCE FOR CONTRACT, WHICH WAS EXECUTED SUBSEQUENTLY. INADVERTENTLY, THE CONTRACT AMOUNT WAS RECEIVED BY THE APPELLANT'S SISTER CONCERN AND LATE R ON THROUGH JOURNAL ENTRY TRANSFERRED TO THE APPELLANT WHO INSTEAD OF SHOWING THE SAME AS PART OF THE SALES, CREDITED THE ADVANCE AMOUNT. THEREFORE, THE APPELLANT HAD NEITHER SHOWN THE AMOUNT IN SALES IN THE YEAR IN WHICH IT R ECEIVED MOBILIZATION AMOUNT OR THE YEAR IN WHICH THE CONTRACT WAS EXECUT ED OR IN THE YEAR WHEN THE JOURNAL ENTRY WERE PASSED AND THE ADVANCE ACCOU NT WAS SQUARED UP. THE APPELLANT HAS FOR THE FIRST TIME SHOWN THIS AMOUNT IN THE CURRENT YEAR BUT BELOW THE LINE WHEREAS IT SHOULD HAVE TAKEN THE SAM E THROUGH JOURNAL ENTRY TO SALES ACCOUNT AND THEN OFFERED THE INCOME FOR TA XES IN THE CURRENT YEAR. 4 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. THE APPELLANT HAS NOT OFFERED THE INCOME OF TAX IN ANY OF THE YEARS AND HAS IN FACT DISPUTED THE ADDITION EVEN IN A.Y. 2006-07 IN WHICH YEAR THE CIT(A) HAS DELETED THE ADDITION AS NOT COVERED BY S ECTION 41(1). IN THE CURRENT YEAR AS THE APPELLANT HAD TAKEN THE AMOUNT TO P & L A/C, I FEEL THAT THE A.O. IS CORRECT IN TAKING IT FOR TAXATION AND H ENCE THE GROUND OF APPEAL OF THE APPELLANT IS DISMISSED. 4.2 IN OUR CLEAR VIEW, IT IS IMMATERIAL WHETHER THE AMOUNT, RECEIVED AS CONSIDERATION (THROUGH ITS ASSOCIATE CONCERN) FOR THE WORK UNDERT AKEN BY THE ASSESSEE, STOOD CREDITED TO THE ADVANCE ACCOUNT BY THE ASSESSEE BY WAY OF AN IN ADVERTENT MISTAKE, AS EXPLAINED BEFORE US BY THE LD. AUTHORIZED REPRESENTATIVE (AR) , OR INTENTIONALLY IN-AS-MUCH AS IT WAS CLEARLY NOT AN ADVANCE, AS BEING RIGHTLY CHARGE D BY THE REVENUE. THE ERROR IN FACT OCCURRED AT FAR TOO MANY INSTANCES TO BE STATED AS A CASE OF OMISSION. THE ASSESSEE, TO BEGIN WITH, DID NOT DISCLOSE, AS APPEARS TO BE, THE WORK UNDERTAKEN BY IT AS A PART OF ITS CLOSING STOCK-IN- TRADE FOR THE YEARS ENDING 31.03. 1997 AND 31.03.1998. WE SAY SO AS, WHERE SO, THE AMOUNT EXPENDED ON THE PROJECT AND CA RRIED OVER IN ACCOUNTS, WOULD STAND TO BE ADJUSTED AGAINST THE BILL IT WOULD HAVE RAISE D ON THE OVERSEAS CONTRACTEE, M/S. HI- TECH TRADING CO., ON THE COMPLETION OF THE WORK. IN ITS ABSENCE, HOW WAS THE CHARGE RAISED AND ACCOUNTED FOR, OR WAS IT, AS IT APPEARS, AGAIN, KEPT OFF THE BOOKS? WHERE SO, THE SAME WOULD FIND REFLECTION AS A REVENUE RECEIPT IN ITS ACCOUNTS AND, FURTHER, STAND TO BE ADJUSTED AGAINST THE AMOUNT SUBSEQUENTLY RECEIVED F ROM ITS GROUP CONCERN ON 31.03.2000. WHY WAS THE CONTRACTEE NOT BILLED, LEAVE ALONE DURI NG THE CURRENCY OF THE CONTRACT EXECUTION, EVEN ON THE COMPLETION OF THE WORK? WHY WAS THE ENTIRE MOBILIZATION ADVANCE APPROPRIATED TO THE ASSOCIATE CONCERN? THE RECEIPT ON 15.04.1999 BY THE SAID CONCERN IS, TO THAT EXTENT, ONLY FOR AND ON BEHALF OF THE ASSES SEE AND, FOR ALL WE KNOW, AT THE ASSESSEES INSTANCE. IN ANY CASE, THE AMOUNT STANDS ADMITTEDLY RECEIVED BY IT (ON 15.04.1999), I.E., TO THAT EXTENT, FOR AND ON BEHAL F OF THE ASSESSEE. IT MAY RATHER HAVE BEEN ONLY TO REMOVE THE SAID ABERRATION IN ITS ACCOUNTS AND SETTLE THE ASSESSEES ACCOUNT IN ITS BOOKS, THAT THE ASSOCIATE CONCERN PAID THE IMPUGNED SUM TO THE ASSESSEE ON 31.03.2000, SETTLING ITS ACCOUNT THEREWITH. THE ASSESSEE, HOWEV ER, CONTINUED TO REFLECT THE SAME IN ITS ACCOUNTS AS A LIABILITY, I.E., AS PAYABLE TO M/S. H I-TECH TRADING CO., OMAN, UP TO 5 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. 31.03.2009, WHEREAT THE SAME WAS FINALLY WRITTEN BA CK IN ITS ACCOUNTS, SO THAT IT NO LONGER REPRESENTED A LIABILITY BUT ITS OWN MONEY. WE COUL D IN FACT GO ON FURTHER, EXAMINING THE TRANSACTION/S IN GREATER DETAIL, I.E., THAN IN THE BROAD MANNER AS PRESENTLY DONE, ADDING TO THE LIST OF ANOMALIES. THE ASSESSEE, AS INDEED ITS AUDITORS; THE ASSESSEE BEING A CORPORATE ENTITY, SO THAT ITS ACCOUNTS ARE SUBJECT TO AUDIT B OTH UNDER THE COMPANIES ACT AS WELL AS THE ACT, HAVE MUCH TO ANSWER FOR. EVEN IF THEREFORE IT IS NOT A CASE OF MISTAKE, BUT OF A FRAUD, AS THE REVENUE AVERS, IT IS AN ACCOUNTING FR AUD, WHICH SHALL NOT GIVE RISE TO INCOME, OR THE REVENUE THE RIGHT TO TAX IT, FOR ANOTHER YEA R. DISTORTION IN PROFITS FOR ONE YEAR CANNOT TRANSLATE INTO AN OPPOSITE DISTORTION FOR AN OTHER YEAR (REFER: DY.CIT V. DAMAN GANGA PAPER LTD . [2014] 44 TAXMANN.COM 240 /63 SOT 47 (MUM - TRIB) (URO)). 4.3 TAX, HOWEVER, CANNOT BE LEVIED ON THE BASIS OF THE MORAL INJUNCTIONS OR ON CONSIDERATIONS OF EQUITY, BUT ON THE BASIS OF THE P ROVISIONS OF THE TAXING STATUTE (REFER: CIT VS. A. RAMAN & CO. [1968] 67 ITR 11 (SC) AND CIT V. J.H. GOTLA [1985] 156 ITR 323 (SC)). THE TWO FUNDAMENTAL PRINCIPLES OF TAX JU RISPRUDENCE ARE THAT EACH YEAR IS AN INDEPENDENT UNIT OF ASSESSMENT AND, TWO, THE CORREC T INCOME, I.E., AS ASSESSABLE FOR A PARTICULAR YEAR, IS ONLY TO BE BROUGHT TO TAX FOR T HAT YEAR. THAT THE INCOME WAS RIGHTLY ASSESSABLE FOR YEAR 1, THOUGH HAD NOT BEEN, WOULD B E NO GROUND FOR SUBJECTING IT TO TAX FOR ANOTHER YEAR, SAY YEAR 2. THIS ALSO FORMED THE BASI S FOR THE TRIBUNAL IN HOLDING IN ASSESSEES FAVOUR FOR A.Y. 2006-07; IT FINDING THAT NOTHING APART FROM DETECTION OF INCOME OF AN EARLIER YEAR/S ESCAPING ASSESSMENT HAD TRANSPIRED FOR THAT YEAR. NO TAXABLE EVENT, TO OUR MIND, HAS OCCURRED DURING THE CURRENT YEAR, NOR COULD ANY BE POINTED OUT BY THE REVENUE; THE LD. DEPARTMENTAL REPRESENTATIVE (D R) BEING SPECIFICALLY QUESTIONED IN THE MATTER DURING THE HEARING. HE IN FACT COULD NOT EVEN TELL US IF THE REVENUE WAS IN APPEAL AGAINST THE TRIBUNALS ORDER FOR A.Y. 2006-0 7. WRITE BACK IN ACCOUNTS IS ITSELF NOT A TAXABLE EVENT, AND IS IN FACT ONLY AN ACKNOWLEDGEME NT OF THE SUM WRITTEN BACK BEING NOT, OR NO LONGER, A LIABILITY, BUT A PART OF THE ASSESS EES OWN FUNDS (EQUITY). IN THIS REGARD, WE MAY ALSO CLARIFY THAT THOUGH THE JOURNAL ENTRY RECO RDING THE WRITE BACK BEARS THE NARRATION OLD SETTLEMENT OF ACCOUNTS, THERE IS NOTHING ON R ECORD, INCLUDING THE ORDERS BY THE 6 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. REVENUE AUTHORITIES, SUGGESTING IT TO BE IN FACT SO . THAT IS, NO SETTLEMENT OF ACCOUNT WITH THE FOREIGN BUYER HAD IN FACT OCCURRED DURING THE C URRENT YEAR, AND THE SAME IS ONLY A NOMENCLATURE ADOPTED BY THE ASSESSEE, PERHAPS TO JU STIFY THE SAID JOURNAL ENTRY, PASSED TO SET ITS ACCOUNTS STRAIGHT; ITS ACCOUNTS BEARING A N ON-EXISTING LIABILITY. THE REMAND REPORT BY THE A.O. OBTAINED FOR A.Y. 2006-07, AND REPRODUC ED BY THE TRIBUNAL AT PARA 6 OF ITS ORDER FOR THAT YEAR, MENTIONS OF THE CONFIRMATION T O THIS EFFECT BY HI-TECH INSPECTING SERVICES LLC, OMAN VIDE LETTER DATED 30.11.2009 (OS TENSIBLY FOR AND ON BEHALF OF THE OVERSEAS CUSTOMER, M/S. HI-TECH TRADING CO.); IT ST ATING THAT THE WORK HAD BEEN COMPLETED DURING F.Y. 1996-97 OR THEREABOUT. IN FAC T, THE PARTIES CANDIDLY ADMITTED TO IT BEING SO, I.E., OF NO SETTLEMENT WITH THE OVERSEAS BUYER HAVING OCCURRED DURING THE YEAR, ON BEING QUESTIONED IN THE MATTER DURING HEARING. SECTION 41(1) ALSO HAS NO APPLICATION IN THE FACTS OF THE CASE. THE AMOUNT WRITTEN BACK, THOUGH REFERRED TO AS A TRADE LIABILITY, WAS IN FACT NEVER ACTUALLY SO. FURTHER, NO DEDUCTION IN ITS RESPECT HAD BEEN CLAIMED BY THE AS SESSEE FOR ANY PRECEDING YEAR. THE ONLY COURSE AVAILABLE IN LAW TO THE REVENUE WAS TO BRING IT TO TAX FOR THE YEAR/S FOR WHICH THE INCOME HAD ESCAPED ASSESSMENT AND WHICH WOULD BEGIN RIGHT FROM THE YEAR FOR WHICH THE EXPENDITURE ON THE PROJECT WAS CLAIMED, B Y FOLLOWING THE DUE PROCESS OF LAW (REFER: A. RAMAN & CO. (SUPRA)). THE SAME (I.E., THE WRITE BACK) DOES NOT ITSELF GIVE RISE TO INCOME, WHICH COULD BE BROUGHT TO TAX EITHER ON THE BASIS OF ITS ACCRUAL OR RECEIPT, WITH IN FACT SECTION 145 MANDATING THE ASSESSEE TO ADOPT EITHER METHOD, EVEN AS THE ASSESSEE, BEING A COMPANY, IS EVEN OTHERWISE OBLIGED BY LAW ( COMPANIES ACT) TO FOLLOW THE ACCRUAL METHOD. WE ARE THUS CLEARLY UNABLE TO SEE AS TO HOW COULD I N THE FACTS AND CIRCUMSTANCES OF THE CASE THE IMPUGNED INCOME BE BROUGHT TO TAX FOR THE CURRENT YEAR. MERELY BECAUSE IT WAS NOT OFFERED TO TAX FOR THE YEAR TO WHICH IT REL ATES, OR WAS RIGHTLY ASSESSABLE FOR, WOULD NOT IN LAW AFFORD A REASON OR A VALID BASIS FOR BRI NGING IT TO TAX FOR ANOTHER YEAR. 4.4 WE MAY FINALLY ALSO CONSIDER THE DECISION BY TH E APEX COURT IN THE CASE OF CIT VS. SUNDARAM IYENGAR & SONS LTD. [1996] 222 ITR 344 (SC). THE SAME, THOUGH NOT RELIE D 7 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. UPON BY THE REVENUE, HAS A STRIKING SIMILARITY ON F ACTS, SO THAT WE CONSIDER IT INCUMBENT UPON US TO DO SO; RATHER, OUGHT TO HAVE BEEN ADVERT ED TO BY THE PARTIES THEMSELVES; A DECISION BY THE APEX COURT BEING DECLARATORY OF THE LAW OF THE LAND. IN THE FACTS OF THAT CASE, THE ASSESSEE WROTE BACK IN ITS ACCOUNTS THE T RADE DEPOSITS RECEIVED FROM ITS CUSTOMERS. IT NO LONGER HAVING A TRADE RELATIONSHIP WITH THEM; THE AMOUNTS OUTSTANDING, UNCLAIMED SINCE LONG, WERE WRITTEN BACK TO THE PROF IT AND LOSS ACCOUNT. THE DISPUTE AROSE AS TO ITS TAXABILITY. WHILE THE ASSESSEE CLAIMED IT TO BE A CAPITAL RECEIPT, IN THE REVENUES VIEW IT WAS A TRADE RECEIPT AND, THUS, TAXABLE AS I NCOME. THE APEX COURT CLARIFIED THAT THE TRANSACTION, THOUGH ON CAPITAL ACCOUNT AT INCEPTION , HAD IN TIME CHANGED IN CHARACTER. THIS WAS IN FACT PLAIN AND OBVIOUS, AND INFERABLE EVEN F ROM THE COMMON SENSE POINT OF VIEW. THE WRITE BACK REPRESENTED A RECEIPT OF THE TRADE A ND WAS THUS TAXABLE AS INCOME. IN OUR CONSIDERED VIEW, THE FACTS, THOUGH BROADLY S IMILAR, WOULD NOT CARRY THE REVENUES CASE FURTHER. THE RECEIPT IN THE INSTAN T CASE, BEING REVENUE IN NATURE, BORE THE CHARACTER OF INCOME FROM THE VERY INCEPTION. IT HAD ACCRUED, IF NOT EARLIER, ON THE CONCLUSION OF THE WORK, WHICH, AS IT APPEARS, WAS S OMETIME IN F.Y. 1998-99. THE CONSIDERATION STOOD CONSTRUCTIVELY RECEIVED, I.E., THROUGH ITS ASSOCIATE CONCERN, IN APRIL, 1999, AND PHYSICALLY IN MARCH, 2000. THE TRANSACTIO N WAS, THUS, CLOSED AND COMPLETE FOR ALL PRACTICAL PURPOSES. THE ONLY THING REMAINED WAS ITS PROPER ACCOUNTING, HAVING BEEN IMPROPERLY TREATED IN ACCOUNTS. IT IS THIS IMPROPER TREATMENT IN ACCOUNTS THAT STOOD CORRECTED BY THE ASSESSEE-COMPANY DURING THE YEAR B Y PASSING A JOURNAL ENTRY OF WRITE BACK. NOTHING MORE HAD TRANSPIRED DURING THE CURREN T YEAR. THE APEX COURT IN SINCLAIR MURRAY (P.) LTD. V. CIT [1974] 97 ITR 615 (SC) AND CHOWRINGHEE SALES BUREAU P. LTD. VS. CIT [1973] 87 ITR 542 (SC), CLARIFIED THAT IT IS THE N ATURE AND QUALITY OF THE RECEIPT AND NOT ITS ACCOUNTING TREATMENT THAT DETERMINES I TS TAXABILITY. WE MAY HERE ALSO DIGRESS TO CLARIFY THAT THE WRITE BACK TO THE PROFIT AND LO SS (APPROPRIATION) ACCOUNT WOULD BE OF NO CONSEQUENCE. THE PROFIT & LOSS APPROPRIATION ACCOUN T IS ONLY TOWARD APPROPRIATION OF PROFIT, EITHER ACCUMULATED (BROUGHT FORWARD) OR THA T ARISING FOR THE RELEVANT ACCOUNTING PERIOD. THE SUM HAVING NOT BEEN RECOGNIZED AS INCOM E AT ANY TIME EARLIER, BEING SO FOR THE FIRST TIME PER ITS WRITE BACK IN ACCOUNTS, IS ESSENTIALLY AS INCOME. IN FACT, ACCOUNTING 8 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. NORMS POSTULATE ALL SUCH DEBITS AND CREDITS PERTAIN ING TO EARLIER YEARS, WHICH STAND OMITTED TO BE SO ACCOUNTED IN THE RESPECTIVE PERIOD S, BEING CLASSIFIED AS SUCH, SO THAT THE IMPACT OF THE SAID OMISSION ON THE CURRENT YEARS I NCOME COULD BE ASCERTAINED. THE WRITE BACK TO THE APPROPRIATION ACCOUNT BY THE ASSESSEE I S THUS INCORRECT, THOUGH TO NO CONSEQUENCE. COMING BACK TO THE DECISION IN SUNDARAM IYENGAR & SONS LTD. (SUPRA), IN THE FACTS OF THAT CASE THERE OCCURRED A CHANGE IN CHARACTER O F THE SUM WRITTEN BACK, WITH THE WRITE BACK ITSELF SIGNIFYING AND, RATHER, BEING DETERMINA TIVE OF THE SAME, I.E., THE SAID CHANGE. THE SAID DECISION, AND OTHERS FOLLOWING IT, IS THUS DISTINGUISHABLE. 4.5 WE, ACCORDINGLY, DO NOT FIND ANY MERIT IN THE R EVENUES CASE AND, RESULTANTLY, REVERSING THE FINDINGS BY THE AUTHORITIES BELOW, DI RECT THE DELETION OF THE IMPUGNED SUM. WE DECIDE ACCORDINGLY, AND THE ASSESSEE SUCCEEDS ON ITS GROUND NO. 1. 5. VIDE IT SECOND GROUND OF APPEAL, THE ASSESSEE CO NTESTS THE ADDITION TO ITS ASSESSABLE INCOME MADE WITH REFERENCE TO THE DIFFERENCE BETWEE N THE SALES TO VARIOUS CUSTOMERS, AS REFLECTED IN ITS BOOKS OF ACCOUNT AND AS APPEARING IN ITS DETAILS AS FURNISHED BY THE RESPECTIVE PARTIES, RETRIEVED BY THE REVENUE FROM I TS COMPUTED DATA BASE. THE ASSESSEE BEING UNABLE TO RECONCILE THE DIFFERENCE, WHICH PER TAINED TO 24 PARTIES (LISTED AT PARA 11.1 OF THE ASSESSMENT ORDER), WORKING TO RS.8,25,309/-, WAS ACCORDINGLY ADDED TO ITS INCOME; THE ASSESSEES ACCOUNTS BEARING A LOWER SALES (INCO ME) BY THAT AMOUNT. IN APPEAL, THE ASSESSEE WAS REQUIRED BY THE LD. CIT(A) TO RECONCIL E THE DIFFERENCE IN RESPECT OF THE 9 PARTIES COVERING THE BULK OF THE TOTAL DIFFERENCE O F RS.8.25 LACS. THE SAME WAS SUCCESSFULLY DONE FOR 6 PARTIES AND, ACCORDINGLY, A DDITION TO THAT EXTENT DELETED. THE SAME BEING CONFIRMED FOR THE BALANCE THREE PARTIES, FOR WHICH RECONCILIATION WAS ATTEMPTED, AS WELL AS THE 15 PARTIES BEARING MINOR DIFFERENCES, T HE ASSESSEE IS IN SECOND APPEAL. 6. THE ASSESSEES CASE BEFORE US WAS THAT THE REVEN UE COULD NOT ASSESS THE DIFFERENCE AS ITS INCOME WITHOUT CONFRONTING IT WITH THE RELE VANT MATERIAL. BE THAT AS IT MAY, THE ASSESSEE HAS ON ACCOUNT OF ITS EFFORTS BEEN ABLE TO ACCESS THE COPY OF ITS ACCOUNT AS 9 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. APPEARING IN THE BOOKS OF THE RELEVANT PARTIES, AND THUS RECONCILE THE DIFFERENCE, I.E., FOR THE BALANCE THREE PARTIES. ON BEING INQUIRED AS TO THE REASON FOR THE DIFFERENCE, IT WAS EXPLAINED THAT IT IS ESSENTIALLY ON ACCOUNT OF TIMI NG DIFFERENCE, WHICH THOUGH GETS RESOLVED OVER TIME, SO THAT THE ACCOUNTS THEREWITH HAVE BEEN SUBSEQUENTLY CLOSED WITH NIL BALANCE. THE SAME HAS BEEN ALSO ACCEPTED BY THE FIR ST APPELLATE AUTHORITY FOR THE PARTIES FOR WHICH THE ADDITION HAS SINCE BEEN DELETED BY HI M, WITH THE REVENUE BEING NOT IN APPEAL. A PRAYER FOR SET ASIDE FOR THE ALL THE PART IES FOR WHICH THE ADDITION HAS BEEN SUSTAINED WAS ACCORDINGLY PRAYED FOR. 7. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. OUR FIRST OBSERVATION IN THE MATTER IS THAT THE ASSESSEE HAVI NG BEEN CALLED UPON BY THE LD. CIT(A) TO RECONCILE THE DIFFERENCE FOR 9 PARTIES, WHICH EXERC ISE HAS ADMITTEDLY BEEN UNDERTAKEN BY THE ASSESSEE, THE PRESUMPTION WOULD ONLY BE THAT TH E ASSESSEE HAS THE MATERIAL ON THE BASIS OF WHICH THE SAID DIFFERENCES COULD BE RECONC ILED, AS IT DEFINITELY COULD NOT BE ATTEMPTED WITHOUT THE ASSESSEE HAVING A COPY OF ITS ACCOUNT AS APPEARING IN THE BOOKS OF THE CUSTOMER. IT HAS ALSO NOT SHOWN THAT SUCH A REQ UEST HAD BEEN MADE BY IT, AND WHICH HAS BEEN TURNED DOWN; HAVING RATHER, AS AFORE-STATE D, UNDERTAKEN THE EXERCISE. BE THAT AS IT MAY, WE CONSIDER IT PROPER AND IN THE FITNESS OF THE THINGS THAT THE MATTER IS RESTORED BACK TO THE FILE OF THE LD. CIT(A) TO ALLOW THE ASS ESSEE AN OPPORTUNITY TO STATE ITS CASE QUA THE DIFFERENCES, ADDITION IN RESPECT OF WHICH STAND S SUSTAINED, BEFORE HIM. FURTHER, IN OUR VIEW, IF ANY PART OF THE ADDITION IS SUSTAINED ON ACCOUNT OF THE ASSESSEES ACCOUNT REFLECTING A LOWER SALES (TO ANY PARTY), IT SHOULD ALSO BE ENTITLED TO CLAIM THE TAX DEDUCTION THERE-AGAINST IN TERMS OF SECTION 199. IT CANNOT BE THAT WHILE THE SALES ARE BROUGHT TO TAX FOR THE CURRENT YEAR, THE CREDIT FOR THE TAX DEDUCT ED THEREON IS DEFERRED OR ALLOWED FOR ANOTHER YEAR. THE LD. CIT(A) ALSO SHALL CONSIDER TH IS ASPECT OF THE MATTER, WHICH THOUGH WOULD ONLY ARISE IN CASE ANY PART OF THE SALES REMA IN UN-RECONCILED. WE DECIDE ACCORDINGLY. 8. THE THIRD AND THE LAST GROUND OF THE ASSESSEES APPEAL IS IN RESPECT OF ADDITION U/S. 2(24)(X) R/W S. 36(1)(IV) OF THE ACT IN RESPECT OF THE EMPLOYEES CONTRIBUTION TO ESIC ON 10 ITA NO. 746/MUM/2013 (A.Y. 2009-10) INDUSTRIAL X-RAY & ALLIED RADIOGRAPHERS INDIA PVT. LTD. ACCOUNT OF BEING DEPOSITED BY THE EMPLOYER BEYOND T HE DUE DATE. THE SAME, AS SHOWN TO US DURING HEARING BY THE LD. AR, THOUGH AGITATED BY THE ASSESSEE BEFORE THE LD. CIT(A) (VIDE GROUND NO. 5 OF ITS APPEAL BEFORE HIM) HAD NO T BEEN ADJUDICATED BY HIM. WE, ACCORDINGLY, HAVE NO HESITATION IN ACCEDING TO THE ASSESSEES PRAYER FOR A RESTORATION BACK TO HIS FILE FOR THE PURPOSE IN ACCORDANCE WITH LAW. WE DECIDE ACCORDINGLY. 9. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. 0/ 1 )2 30 ' * 4 5 6' 789 : * 4 ' ;< ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 12, 2014 SD/- SD/- (AMIT SHUKLA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER =+ MUMBAI; >) DATED : 12.09.2014 *.)../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '$ / THE APPELLANT 2. %&'$ / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. A*B C %)D2 , , D2/ , =+ / DR, ITAT, MUMBAI 6. C E3 F + / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , =+ / ITAT, MUMBAI