M/s. Jammu & Kashmir Cements Ltd, Srinagar V. Addl. Commissioner of Inocme-tax, Srinagar

ITA 78/ASR/2010

• Counselvise Citation: 7820914 RSA 2010
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R L GUPTA
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.78(ASR)/2010 ASSESSMENT YEAR:2005-06 PAN :AAACJ6799A THE JAMMU & KASHMIR CEMENTS VS. ADDL. COMMISSIONER OF INCOME TAX, LIMITED, SRINAGAR. RANGE-3, SRINAGAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.R.L.GUPTA, DR RESPONDENT BY:SH.TARSEM LAL, DR DATE OF HEARING:03/10/2012 DATE OF PRONOUNCEMENT:09/10/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), J & K, JAMMU, DATED 14.12.2009 FOR THE ASSESSMENT YEAR 200 5-06. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE LD. CIT(A), JAMMU HAS ERRED IN LAW AND FACTS. IN ANY CASE HE HAS NOT APPLIED HIS MIND TO THE ACTUAL FACT S AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT(A), JAMMU HAS ERRED IN UPHOLDIN G THE DISALLOWANCE OF RS.3,69,667/- ON ACCOUNT OF PAYMENT MADE TO SHRI ASHOK KUMAR DUTTA ARBITRARILY, ILLEGALLY AND W ITHOUT ANY ITA NO.78(ASR)/2010 2 JUSTIFICATION INSPITE OF THE FACT THAT THE PAYMENT WAS MADE TO THE EMPLOYEE SHRI ASHOK KUMAR DUTTA DURING THE YEAR UND ER APPEAL IMMEDIATELY AFTER THE FINAL DECISION OF THE HONBLE SUPREME COURT AND AFTER OBTAINING FINANCIAL SANCTIO N FROM THE COMPETENT AUTHORITY. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN THE COMP UTATION OF INCOME THE AMOUNT WAS CLAIMED AS EXPENDITURE RELATING TO PAST YEARS. ON ENQUIRY MADE BY THE AO, IT WAS STATED THAT AMOUNT WAS PAID TO ON E SH. ASHOK KUMAR DUTTA, AS BACK WAGES IN PURSUANCE OF THE DECISION OF THE DISTRICT & SESSION JUDGE/PRESIDING OFFICER IN THE STATE TRIBUNAL, LABO UR COURT JAMMU. THIS EXPENDITURE WAS WORKED OUT ON THE BASIS OF JUDGMENT DATED 31.08.1995 PASSED BY THE INDUSTRIAL TRIBUNAL, LABOUR COURT, JA MMU. THE AO WAS THEREFORE, OF THE OPINION THAT LIABILITY TO PAY THI S EXPENDITURE AROSE IN THE YEAR 1995-96 RELEVANT TO THE A.Y. 1996-07. THE AO H AS ALSO TRACED THE CASE HISTORY OF THIS DISPUTE AND HAS BROUGHT ON RECORD T HAT THE AWARD OF PAYMENT TO SH. ASHOK KUMAR WAS PASSED IN THE ASSESSMENT YEA R 1995-96. ASSESSEE COMPANY NOT BEING AGREEABLE WITH THE INITIAL AWA RD HAD AGITATED THE MATTER IN THE HONBLE J & K HIGH COURT AND APEX COURT OF T HE COUNTRY BUT HAD FAILED TO GET THE AWARD REVERSED, THEREFORE, AFTER THE SLP OF THE ASSESSEE WAS DISMISSED BY THE HONBLE SUPREME COURT THE ASSESSEE COMPANY MADE THIS CLAIM IN THE COMPUTATION OF INCOME. THE ASSESSEES CASE IS THAT AS THE ASSESSEE DID NOT ACCEPT THE ORIGINAL AWARD AND WAS IN APPEAL BEFORE THE ITA NO.78(ASR)/2010 3 HONBLE HIGH COURT AND THE APEX COURT THEREFORE, TH E LIABILITY DID NOT QUANTIFY AND ONCE THE SLP WAS DISMISSED BY THE HON BLE SUPREME COURT THE LIABILITIES QUANTIFIED. THE FINANCIAL SANCTION FOR MAKING THE PAYMENT WAS OBTAINED VIDE ORDER NO.74 DATED 10.09.2004 AND PAYM ENT WAS MADE DURING THE YEAR UNDER APPEAL HENCE THE CLAIM. IN SUPPORT O F ITS CONTENTION THE ASSESSEE HAS FILED COPIES OF HONBLE SUPREME COURT S DECISION WHEREBY SLP FILED BY THE ASSESSEE WAS DISMISSED. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSE, MR. R.L. GUPTA, ADVOCATE T HAT LIABILITY HAS BEEN CRYSTALISED DURING THE YEAR, THEREFORE, ALLOWABLE I N WHICH YEAR IT WAS CRYSTALISED. HE RELIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT, IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CIT REPORTED IN (1995) 213 ITR 523 (GUJ.), WHERE IT HAS BEEN HEL D THAT THE ASSESSEE IS MAINTAINING MERCANTILE SYSTEM OF ACCOUNTING AND THE LIABILITY IS ALLOWABLE ONLY IN THE YEAR IN WHICH IT HAS CRYSTALISED AND DE TERMINED AND IT CANNOT BE DISALLOWED MERELY BECAUSE IT RELATED TO EARLIER PRE VIOUS YEAR. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. ITA NO.78(ASR)/2010 4 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENT OF THE LD. COUNS EL FOR THE ASSESSEE THAT THE ASSESSEE MAINTAINING MERCANTILE SYSTEM OF ACCOU NTING AND LIABILITY IS ALLOWABLE ONLY IN THE YEAR IN WHICH IT HAS BEEN CRY STALISED AND DETERMINED AND IT CANNOT DISALLOWED MERELY BECAUSE IT RELAT ED TO EARLIER PREVIOUS YEAR.. IN THE PRESENT CASE, THE FACTS ARE IDENTICAL AND THE LIABILITY PERTAINS TO PRECEDING YEAR, WHICH HAS BEEN CRYSTALISED DURING T HE YEAR. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE AO IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE AND IS DIRECTED TO ALLOW THE CLAIM SO MADE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS REVERSE D. THUS, BOTH THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.78ASR)/2010 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH OCTOBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 9TH OCTOBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:THE JAMMU & KASHMIR CEMENTS LTD. SRING AR. 2. THE ADDL. CIT, RANGE-1, SRINAGAR.S 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR.