The ACIT,Vapi Circle, Vapi V. M/s. Vijay Industries, Nani Daman

ITA 774/AHD/2013

• Counselvise Citation: 77420514 RSA 2013
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: SAKAR SHARMA
• Section: 139

Judgement Text

, , , , C, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, C BENCH . .. . . . . . , , , , ! ! ! ! ' #$ ' #$ ' #$ ' #$ , , , , % % % % BEFORE S/SHRI N.S. SAINI, ACCOUNTANT MEMBER AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.774/AHD/2013 [ASSTT.YEAR : 2006-2007] ACIT, VAPI CIRCLE VAPI. /VS. M/S. VIJAY INDUSTRIES PLOT NO.726/3, DABHEL SOMNATH ROAD NANI DAMAN 396 210. PAN : AACFV 2522 J ( (( ('( '( '( '( / APPELLANT) ( (( ()*'( )*'( )*'( )*'( / RESPONDENT) + , - / REVENUE BY : SHRI J.P. JHANGID, SR.DR /$ , - / ASSESSEE BY : SHRI SAKAR SHARMA '0 , $1/ DATE OF HEARING : 12 TH NOVEMBER, 2013 234 , $1/ DATE OF PRONOUNCEMENT : 22-11-2013 5 / O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A ),VALSAD DATED 27.12.2012. 2. IN THE FIRST GROUND OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(A) ERRED IN DELETIN G THE ITA NO.774/AHD/2013 -2- DISALLOWANCE OF CUSTOM DUTY AMOUNTING TO ` 29,57,537/- MADE BY THE AO. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE, THE AO FOUND THAT THE ASSESSEE WAS SH OWING PURCHASE AND SALES INCLUSIVE OF EXCISE DUTY AND CVD BEING A DUTY OF EXCISE WAS ALREADY INCLUDED IN THE PURCHASE . THEREFORE, CHARGING IT AGAIN TO THE PROFIT & LOSS ACCOUNT RESU LTED IN DOUBLE DEDUCTION OF SUCH EXPENSES, AND THEREFORE, MADE DIS ALLOWANCE OF ` 29,57,537/-. 4. BEFORE THE LD.CIT(A), THE ASSESSEE SUBMITTED THA T THE BILLS OF IMPORT PURCHASE DO NOT CONTAIN CVD OR CUSTOM DU TY BECAUSE IT HAS TO BE PAID SEPARATELY AT THE DOCK. THE ASS ESSEE FILED COPY OF THE IMPORT PURCHASE BILLS AND PURCHASE REGISTER REFLECTING THE ENTRIES OF THESE BILLS. THE ASSESSEE ALSO FILED DO CUMENTS EVIDENCING THE PAYMENT OF CUSTOM DUTY PAID AS PER T HE SHIPPING BILLS. THE BALANCE IN THE CUSTOM DUTY ACCOUNT WAS DEBITED IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. IT WAS, THE REFORE, SUBMITTED THAT THE DOCUMENTS PROVED THAT THERE WAS NO DUPLICA TION IN CLAIMING CUSTOM DUTY. IT WAS CLAIMED ONLY ONCE BY DEBITING CUSTOM DUTY ACCOUNT IN THE BOOKS OF ACCOUNTS, AND T HE ADDITION MADE BY THE AO NEEDS TO BE DELETED. 5. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISS IONS OF THE ASSESSEE OBSERVED THAT THE AO WAS CONFUSED ON T HE ISSUE OF ITA NO.774/AHD/2013 -3- CVD AND CUSTOMS DUTY. HE OBSERVED THAT THE CUSTOMS DUTY WAS PAID SEPARATELY AT THE DOCK AND THE SAME WAS VERIFI ABLE FROM THE IMPORT PURCHASE BILLS AND PURCHASE REGISTER REFLECT ING THE ENTRIES OF THESE BILLS. THE ASSESSEE HAS ALSO SUBMITTED CO PIES OF THE DOCUMENTS EVIDENCING PAYMENT OF CUSTOMS DUTY AND CO PY OF THE CUSTOMS DUTY ACCOUNT FROM THE BOOKS OF THE ASSESSEE . THE ACCOUNT REFLECTS THE ENTRIES OF CUSTOM DUTY PAID AS PER THE SHIPPING BILLS. BALANCE IN THE CUSTOMS DUTY ACCOUN T IS FOUND IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. HAD THE ASSESSEE BEEN CLAIMING CENVAT OF THE DUTY, THE CREDIT ENTRY WOULD HAVE APPEARED IN HIS ACCOUNT. THESE DOCUMENTS EVIDENTLY PROVED THAT THERE WAS NO DUPLICATION IN CLAIMING CUSTOM DUTY, A ND HENCE HE DIRECTED THE AO TO DELETE THE ADDITION. 6. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND, THE LEARNED AR OF THE ASSESSEE SUPPORTE D THE ORDER OF THE LEARNED CIT(A), AND DRAWN OUR ATTENTION TO PAGE S 87 TO 94 OF THE PAPER BOOK, WHICH CONTAINED COPIES OF PURCHASE REGISTER, COPIES OF RELEVANT PURCHASE INVOICES AND EVIDENCE O F PAYMENT OF CUSTOM DUTY. 7. WE FIND, NO ERROR IN THE FINDINGS OF THE LEARNED CIT(A) COULD BE POINTED OUT BY THE LEARNED DR. WE FIND TH AT THE DISALLOWANCE WAS MADE BY THE AO ON THE GROUND THAT THE ASSESSEE HAS CLAIMED DOUBLE DEDUCTION OF CUSTOM DUT Y, BUT NO MATERIAL WAS BROUGHT ON RECORD BY THE AO TO SHOW TH AT THE ITA NO.774/AHD/2013 -4- ASSESSEE HAS ACTUALLY CLAIMED DOUBLE DEDUCTION OF C USTOM DUTY AMOUNT AND THE AO SIMPLY ARRIVED AT THE ABOVE CONCL USION ON THE BASIS OF HIS INFERENCE ABOUT THE SYSTEM OF ACCOUNTI NG FOLLOWED BY THE ASSESSEE, WITHOUT ACTUALLY VERIFYING THE PURCHA SE ACCOUNT OF THE ASSESSEE. THUS, IN OUR VIEW, DISALLOWANCE WAS MADE ON THE WRONG FOOTING. FURTHER, WE FIND THAT THE LEARNED C IT(A) AFTER DIRECTLY VERIFYING THE PURCHASE REGISTER WITH THE R ELEVANT PURCHASES BILLS ARRIVED AT THE FINDING THAT NO DOUB LE DEDUCTION OF CUSTOM DUTY WAS CLAIMED BY THE ASSESSEE, WHICH REQU IRES NO INFERENCE BY US, THEREFORE, THE GROUND OF THE APPEA L OF THE REVENUE IS DISMISSED. 8. THE GROUND NO.2 OF THE APPEAL IS DIRECTED AGAINS T THE ORDER OF THE LEARNED CIT(A) IN DELETING THE DISALLOWANCE OF ` 11,60,212/- UNDER SECTION 40(A)(IA) OF THE ACT. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON REC ORD. IN THE INSTANT CASE, THE AO OBSERVED THAT THE ASSESSEE SHO ULD HAVE DEDUCTED THE TDS ON ADVANCE PAYMENTS MADE TO TWO PA RTIES VIZ. M/S.MORAKHIA METAL & ALLOYS P. LTD., AND SUPER COND UCTORS (G) P. LTD. TOTALING TO ` 13,98,975/- AND TDS WAS DEDUCTED ON THE SAME IN THE MONTH OF MARCH, 2006 AND THE TDS SO DED UCTED WAS DEPOSITED TO THE CREDIT OF THE CENTRAL GOVERNMENT O N 17.4.2006. HE ALSO OBSERVED THAT FROM THE LEDGER ACCOUNT OF TH E CONTRACT PAYMENTS TO THESE PAYEES THAT DURING THE MONTH OF M ARCH, 2006, ITA NO.774/AHD/2013 -5- A SUM OF ` 2,38,763/- WAS ONLY PAID OR CREDITED. ACCORDING T O THE AO, THE TDS WAS DEDUCTIBLE FROM SUM OF ` 11,60,212/- OUT OF TOTAL SUM OF ` 13,98,975/- ON OR BEFORE FEBRUARY, 2006 ON PAYMENT OR CREDIT, WHICHEVER WAS MADE EARLIER AND T DS SO DEDUCTED WAS TO BE PAID TO THE ACCOUNT OF CENTRE GO VERNMENT BY 31.3.2006, WHICH WAS NOT DONE. THEREFORE, THE AO D ISALLOWED THE EXPENSES OF ` 11,60,212/- BY INVOKING THE PROVISIONS OF UNDER SECTION 40(A)(IA) OF THE ACT. 10. THE LEARNED CIT(A) AFTER CONSIDERING SUBMISSION S OF THE ASSESSEE OBSERVED THAT EVEN THOUGH THE ASSESSEE HAD NOT DEDUCTED TDS AT THE TIME OF PAYMENTS BUT BEFORE THE END OF T HE FINANCIAL YEAR, TDS WAS MADE AND PAID TO THE CREDITS OF THE G OVERNMENT ACCOUNT DURING APRIL 2006. THEREFORE, SECTION 40( A)(IA) WAS NOT ATTRACTED IN THESE PAYMENTS. CHARGING INTEREST ON SHORT PAYMENT/LATE DEDUCTION AND PAYMENTS OF TDS IS ALTOG ETHER A DIFFERENT ISSUE, BECAUSE, TDS WAS MADE LATE BY THE ASSESSEE WOULD NOT SUFFER FROM THE RIGOR OF DISALLOWANCE OF THOSE PAYMENTS IN THIS CASE. HENCE, HE DELETED THE DISA LLOWANCE MADE BY THE AO. 11. THE LD. DR RELIED ON THE ORDER OF THE AO AND TH E LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARN ED CIT(A), AND ALSO RELIED ON THE ORDER OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ROYAL BUILDERS, TAX APPEAL NO.5 20 OF 2012 ORDER DATED 11.2.2013. ITA NO.774/AHD/2013 -6- 12. WE FIND THAT THE LEARNED CIT(A) HAD DELETED THE DISALLOWANCE ON THE GROUND THAT THE ASSESSEE HAD DE DUCTED TDS ON THE PAYMENTS MADE TO TWO PARTIES VIZ. MORAKHIA M ETAL & ALLOYS AND SUPERTECH CONDUCTORS P. LTD. DURING THE FINANCIAL YEAR ITSELF AND DEPOSITED THE SAME TO THE CREDIT OF THE CENTRAL GOVERNMENT IN THE MONTH OF APRIL, 2006, AND HENCE, NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS CALLED FOR. THE LEARNED DR HAS NOT DISPUTED THIS FINDING OF THE LEARNED CIT (A) BY BRINGING ANY COGENT AND RELEVANT MATERIAL ON RECORD . SINCE THE TDS ON THE PAYMENTS WAS DEDUCTED DURING THE FINANCI AL YEAR AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139 (1) OF THE ACT, THE LEARNED CIT(A) DELETED THE DISALLOWANCE OF ` 11,60,212/- MADE UNDER SECTION 40(A)(IA). WE FIND THAT THE ORD ER OF THE LEARNED CIT(A) IS SUPPORTED BY THE ORDER OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. ROYAL BUILDERS (S UPRA), WHEREIN IT WAS HELD THAT FOR EXPENSES INCURRED IN T HE MONTH OF FEBRUARY, 2007 TDS WAS DEDUCTED IN THE MONTH OF MAR CH, 2007 AND PAID TO THE CREDIT OF CENTRE GOVERNMENT IN THE MONTH OF APRIL, 2007, WHICH BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT, NO DISALLOW ANCE OF EXPENDITURE CAN BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. WE, THEREFORE, CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUND OF THE APPEAL OF THE REVENUE. ITA NO.774/AHD/2013 -7- 13. THE GROUND NOS.3 AND 4 ARE GENERAL IN NATURE, A ND HENCE, NO SEPARATE ADJUDICATION IS REQUIRED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( ' #$ ' #$ ' #$ ' #$ /KUL BHARAT /JUDICIAL MEMBER . .. . . . . . /N.S. SAINI /ACCOUNTANT MEMBER C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD