ASST CIT 6(2)(2), MUMBAI V. ENVIROCHEM TCH SOLUTIONS (INDIA) P. LTD, MUMBAI

ITA 7677/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2294 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Section: 43B; 143(3)

Judgement Text

, INCOME - TAX APPELLATE TRIBUNAL - E BENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA, ACCOUNTANT MEMBER AND C.N. PR ASAD , JUDICIAL MEMBER / ITA NO. 7677 /MUM/20 1 4 : / ASSESSMENT YEAR - 20 1 0 - 1 1 ACIT - 6(2)( 2), MUMBAI. VS. M /S. ENVIROCHEM TECH SOLUTION (INDIA) PVT. LTD., (FORMERLY KNOWN AS M/S. AQUATECH INDUSTRIES INDIA PVT. LTD.) 221, UNIQUE INDUSTRIES ESTATE, OFF VEER SAVARKAR MARG, PRABHADEVI, MUMBAI 25 . PAN : AAACA 4437 A (APPELLANT) (RESPONDENT) REVENUE BY: SHRI R.K. SAHU SR. DR ASSESSEE BY: SHRI KISHOR CHAUDHARI CA / DATE OF HEARING: 28 / 0 7/ 2016 / DATE OF PRONOUNCEMENT : 26/ 10 / 2016 , 1961 254(1) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDER DATED 01/10/2014 OF THE CIT(A) - 14 , MUMBAI, THE ASSESSING OFFICER (AO) HAS FILED THE PRESENT APPEAL. A SSESSEE - COMPANY , ENGAGED IN THE BUSINESS OF T URN KEY CONTRACTS FOR WATER TREAT MENT PLANTS, FILED ITS RETURN OF INCOME ON 13/10/2010 DECLARING TOTAL INCOME OF RS. 8.91 CRORES . THE AO COMPLETED THE ASSESSMENT UNDER SECTION 143(3) ON 28/03/2013 DETERMINING THE INCOME AT RS. 9.30 CRORES. 2. E FFECT IVE GROUND OF APPEAL IS ABOUT PAYMENT M ADE BY THE ASSESSEE UNDER THE HEAD PROPERTY TAX . DURING THE COURSE OF ASSESSMEN T PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS. 35 LAKHS ON ACCOUNT OF PROPERTY TAX UNDER THE HEAD ADMINISTRATIVE OVERHEADS . HE DIRECTED TH E ASSESSEE TO FILE EXPLANATION IN THAT REGARD. AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE , THE AO HELD THAT THE JUDGMENT ABOUT THE DISPUTE OF PROPERTY TAX WAS DELIVERED IN THE MONTH OF JULY, 2010 , THAT THE ACCOUNTS OF THE ASSESSEE HAD BEEN FINALIZE D ON 31/03/2010 , THAT THE PROVISION S OF PROPERTY TAX WAS ONLY A CONTINGENT LIABILITY , THAT AS PER THE PROVISIONS OF THE ACT CONTINGENT LIABILITY CANNOT BE ALLOWED WHILE DETERMINING THE ASSESSABLE INCOME OF AN ASSESSEE. THEREFORE, H E MADE AN ADDITION OF R S . 35 LAKHS TO THE INCOME OF THE ASSESSEE. 3 . AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, IT WAS ARGUED THAT IT HAD A FACTORY PREMISES IN THE ITA NO. 7677/MUM/ 2014 (A.Y. 20 1 0 - 11 ) 2 MIDC AREA OF NAVI MUMBAI , THAT NONE OF THE LOCAL AUTHORITIES WERE PROVIDED FACILITIES LIKE ROAD, WATER ETC. TO THE FACTORIES, THAT THEY WERE ASKING FOR TAXES ALL THE FACTORY OWNERS REFUSED TO PAY THE TAXES , THAT THE MATTER WENT UPTO THE HONBLE APEX COURT, THAT THE ASSESSEE HAD MADE A PROVISION FOR M UNICIPAL T AXES DURING THE YEAR , THAT IT ALSO MADE A PAYMENT OF RS. 34.78 LAKHS ON 11/10/2010 . A COPY OF THE RECEIPT EVIDENCING THE PAYMENT OF PROPERTY TAX WAS SUBMITTED BEFORE THE FAA . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESS MENT ORDER, HE HELD THAT MUNICIPAL TAXES OF RS.34.78 LAKHS WERE PAID ON 11/10/2010 , THAT THE ASSESSEE HAD FILED ITS RETURN OF INCOME ON 13/10/2010 , THAT DUE DATE OF FILING OF THE RETURN FOR THE YEAR UNDER APPEAL WAS 15/10/2010 AS NOTIFIED BY THE CBDTS ORD ER DATED 27/09/2010 ( F.NO.225/72/2010/ITA.II) . HE FURTHER OBSERVED THAT THE TAXES WERE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN AND REFERRED TO THE PROVISO TO SECTION 43B OF THE ACT . AS THE MUNICIPAL TAXES WERE PAID BEFORE THE DUE DATE OF FILING OF RETURN, SO, HE DELETED THE ADDITION OF RS. 34.78 LAKHS , MADE BY THE AO. 4 . DURING THE COURSE OF HEARING BEFORE US, THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE AO. THE A UTHORIZED REPRESENTATIVE (AR) RELIED UPON THE ORDER OF THE FAA A ND CONTENDED THAT IT WAS NOT A CONTINGENT LIABILITY, THAT LIABILITY HAS CRYSTALLIZED , THAT AS PER A CCOUNTING S TANDARD - 4 LIABILITY TOWARDS MUNICIPAL TAXES WERE ALLOWABLE . HE REFERRED TO PAGE NO. 46 OF THE PAPER BOOK. 5 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MADE T HE DISALLOWANCE TREATING THE LIABILITY AS CONTINGENT LIABILITY, THAT THE FAA ALLOWED THE APPEAL OF THE ASSESSEE OBSERVING THAT THAT PAYMENT WAS MADE BEFORE DUE DATE OF FILING OF RETURN . IN OUR OPINION, THE ORDER OF THE FAA DOES NOT NEED ANY INTERFERENCE FROM OUR SIDE AS THE PROPERTY TAXES WERE PAID BEFORE DUE DATE OF FILING OF RETURN, THAT THE PROVISIONS OF SECTION 43B WERE RIGH T LY ANALYZED BY THE FAA AND WERE APPLIED IN CORRECT MANNER . THEREF ORE, UPHOLDING HIS ORDER , WE DECIDE THE EFFECT IVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCT. , 2016. 26 TH , 2016 SD/ - S D/ - S D/ - SD/ - S D/ - ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 26/10 / 2016. ITA NO. 7677/MUM/ 2014 (A.Y. 20 1 0 - 11 ) 3 V R / - / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ / BY ORDER, //TRUE COPY// / DY./ASST. REGISTRAR , / ITAT, MUMBAI.