M/s Punhab Agro Industries Corp Ltd., Chandigarh V. DCIT, Chandigarh

ITA 782/CHANDI/2011

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3793 (ITAT-CHANDIGARH)
• Duration Of Justice: 5 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MANINDER ARORA
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 782/CHD/2011 ITA NOS. 55 & 849/2013 A.YS: 2008-09 TO 2010-11 M/S PUNJAB AGRO IND. CORP. LTD., VS THE DCIT, 2-A, SECTOR 28-A, CIRCLE 4(1), MADHYA MARG, CHANDIGARH. CHANDIGARH. PAN: AAACP9905G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANINDER ARORA RESPONDENT BY : SHRI SUSHIL KUMAR DATE OF HEARING : 20.09.2016 DATE OF PRONOUNCEMENT : 22.09.2016 O R D E R PER BHAVNESH SAINI,JM THIS ORDER SHALL DISPOSE OFF ALL THE ABOVE APPEALS BY THE ASSESSEE FOR DIFFERENT ASSESSMENT YEARS. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE FINDINGS OF AUTHORITIES BEL OW. ITA 782/2011 ( A.Y. 2008-09) 3. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINS T THE ORDER OF LD. CIT(APPEALS), CHANDIGARH DATED 16.06.2011 FOR ASSESSMENT YEAR 2008-09,CHALLENGING THE ORDER OF LD. CIT(APPEALS) IN DISALLOWING INTEREST O F RS. 2 1,04,25,000/- ON ACCOUNT OF INTEREST PAID TO PUNJAB GOVERNMENT. 4. THE BRIEF FACTS ON THE ISSUE ARE THAT ASSESSEE H AD DEBITED AMOUNT OF RS. 1,04,25,000/- TO THE PROFIT & LOSS ACCOUNT AS INTEREST PAYABLE TO THE PUNJAB GOVERNMEN T ON AMOUNT OF RS. 5.5 CRORES RECEIVED BY THE ASSESSE E AS ASSISTANCE IN THE FORM OF LOAN FOR SETTING UP AGRO BASED PROJECT IN THE STATE OF PUNJAB. THE ASSESSING OFFI CER HAS MADE ADDITION OF THE SAID INTEREST OF RS. 1,02,00,560/- AFTER ALLOWING 2% EXPENDITURE. 4(I) THE LD. CIT(APPEALS), AFTER CONSIDERING FACTS OF THE CASE AND SUBMISSIONS OF THE ASSESSEE, NOTED THAT ASSESSEE HAD DEBITED INTEREST EXPENDITURE TO THE PR OFIT & LOSS ACCOUNT AS INTEREST ON LOAN TAKEN FROM PUNJA B GOVERNMENT. AS PER PROVISIONS OF SECTION 145(1) OF THE INCOME TAX ACT, INCOME UNDER THE HEAD PROFIT AND G AINS OF BUSINESS OR PROFESSION OR 'INCOME FROM OTHER SO URCES' IS TO BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE ASSESSEE IS FOLLOWING CASH SYSTE M OF ACCOUNTING IN RESPECT OF RECEIPTS FROM VARIOUS PROJ ECTS ON CASH BASIS BUT THE RELATED EXPENDITURE IS BEING CLAIMED ON ACCRUAL BASIS. THE LD. CIT(APPEALS), THEREFORE, HELD THAT THIS AMOUNT CLAIMED BY THE ASS ESSEE IS NOT ALLOWABLE IN VIEW OF EXPLICIT PROVISIONS OF SECTION 145(1) OF THE ACT. THIS GROUND WAS, ACCORDINGLY, DISMISSED. 3 5. THE LD. CIT(APPEALS) ALSO CONSIDERED THE DISALLOWANCE OF INTEREST WHILE CALCULATING BOOK PRO FITS UNDER SECTION 115JB OF THE ACT. THE ASSESSING OFFI CER ADDED THE AMOUNT OF INTEREST WHILE CALCULATING BOOK PROFITS FOR THE PURPOSE OF SECTION 115JB OF THE ACT . THE LD. CIT(APPEALS) NOTED THAT IN THE CASE OF COMPANY, WHICH IS REQUIRED TO PAY TAX ON BOOK PROFITS UNDER SECTION 115JB HAS TO PREPARE ITS PROFIT & LOSS ACCO UNT IN ACCORDANCE WITH PROVISIONS OF PART-II AND PART-I II OF SCHEDULE-VI TO THE COMPANIES ACT, 1956. IN THE CAS E OF THE ASSESSEE, INTEREST WAS RECEIVED BEING CREDITED ON CASH BASIS, WHEREAS INTEREST PAID HAS BEEN CLAIMED ON ACCRUAL BASIS AND SO THE ACCOUNTS WERE NOT IN ACCORDANCE WITH PROVISIONS OF SCHEDULE-VI TO THE COMPANIES ACT. THEREFORE, INTEREST CLAIMED IN THE PROFIT & LOSS ACCOUNT HAS TO BE ADDED TO THE DECLARED BOOK PROFITS TO ARRIVE AT THE CORRECT FIGURE OF BOOK PRO FITS AND ARGUMENT OF THE ASSESSEE WAS NOT CORRECT. THIS GRO UND WAS ALSO DISMISSED. 6. AFTER CONSIDERING RIVAL CONTENTIONS, WE ARE NOT INCLINED TO INTERFERE WITH THE IMPUGNED ORDER. THE LD. COUNSEL FOR THE ASSESSEE ADMITTED THAT ASSESSEE IS A COMPANY WHO IS FOLLOWING CASH SYSTEM OF ACCOUNTING IN RESPECT OF RECEIPTS FROM VARIOUS PROJECTS. HE HAS ALSO ADMITTED THAT RELATED EXPENDITURES ARE, HOWEVER, CLAIMED DEDUCTION ON ACCRUAL BASIS. THE PROVISIONS OF 4 SECTION 145(1) OF THE ACT ARE, THEREFORE, CLEARLY APPLICABLE IN THE CASE OF THE ASSESSEE BECAUSE INCO ME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION IS TO BE COMPUTED IN ACCORDANCE WITH EI THER CASH OR MERCANTILE SYSTEM OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE ASSESSEE IS FOLLOWIN G CASH SYSTEM OF ACCOUNTING REGULARLY IN RESPECT OF A LL THE INTEREST AMOUNT, THEREFORE, THE RELATED EXPENDITURE CANNOT BE ALLOWED ON ACCRUAL BASIS. 6(I) FURTHER, AS REGARDS CALCULATION OF BOOK PROFIT UNDER SECTION 115JB, THE LD. CIT(APPEALS) HAS GIVEN SAME REASONING AND CONFIRMED THE ADDITION. DURING THE COURSE OF ARGUMENTS, LD. COUNSEL FOR THE ASSESSEE W AS NOT ABLE TO POINT OUT ANY INFIRMITY IN THE ORDER OF LD. CIT(APPEALS) IN DISMISSING THE APPEAL OF THE ASSESS EE. 7. SINCE ASSESSEES COUNSEL IS NOT ABLE TO MAKE OUT ANY CASE FOR THE ASSESSEE, THEREFORE, WE DO NOT PRO POSE TO INTERFERE WITH THE ORDERS OF AUTHORITIES BELOW. THE APPEAL OF THE ASSESSEE, THEREFORE, STANDS DISMISSED . IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . ITA 55/CHD/2013 ( A.Y. 2009-10) 8. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(APPEALS) CHANDIGARH DATED 04.10.2012 FOR ASSESSMENT YEAR 2009-10 ON THE 5 FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE LEARNED C.I.T (APPEALS) IS BA D IN LAW AND AGAINST THE FACTS OF THE CASE. 2 THAT THE LD. CIT (APPEALS) HAS ERRED IN DISAL LOWING THE INTEREST EXPENDITURE OF RS. 10059350/- ON A/C OF INTEREST PA YABLE TO GOVERNMENT OF PUNJAB BOTH ON FACTS AND LAW. HENCE, THE DISALLOWAN CE OF THE SAME IS LIABLE TO BE DELETED. 3. THAT THE LD. A.O. HAS ERRED IN CONSIDE RING THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 10059350/- WHILE CAL CULATING BOOK PROFIT U/S 115JB BOTH ON FACTS AND LAW. HENCE, THE DISALLOWANC E OF THE SAME IS LIABLE TO BE DELETED. ITA 849/CHD/2013 ( A.Y. 2010-11) 9. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINS T THE ORDER OF LD. CIT(APPEALS), CHANDIGARH DATED 06.05.2013 FOR ASSESSMENT YEAR 2010-11 ON THE FOLLO WING GROUNDS : 1 T HAT THE ORDER OF THE LD, CIT (A) IS BAD UNDER FACTS & LAW. 2. THAT THE LD, CIT (A) IS NOT JUSTIFIED IN UPH OLDING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 99,76,460/- PAYABLE TO TH E GOVT. OF PUNJAB. 3. THAT THE LD. CIT (A) IS NOT JUSTIFIED IN UPHOL DING THE DISALLOWANCE OF INTEREST AMOUNTING TO RS. 99,76,460/- WHILE CALCULA TING THE BOOK PROFIT U/S. 115-JB. 10. IN BOTH THESE APPEALS, ASSESSEE HAS RAISED SIMI LAR GROUNDS OF APPEAL. THE LD. CIT(APPEALS) NOTED IN H IS FINDINGS IN BOTH THE IMPUGNED ORDERS THAT SIMILAR ADDITIONS HAVE BEEN CONFIRMED BY HIM IN ASSESSMENT YEAR 2007-08 VIDE ORDER DATED 13.06.2011. THE LD. 6 CIT(APPEALS) ALSO NOTED THAT THE FACTS OF THE ISSUE ARE IDENTICAL ON BOTH THESE ADDITIONS. THEREFORE, LD. CIT(APPEALS) FOLLOWING HIS ORDER FOR ASSESSMENT YEA R 2007-08 DISMISSED BOTH THESE GROUNDS OF APPEAL OF T HE ASSESSEE IN BOTH THE ASSESSMENT YEARS. THE LD. COU NSEL FOR THE ASSESSEE WAS NOT ABLE TO POINT OUT WHETHER ASSESSEE CHALLENGED THE ORDER OF LD. CIT(APPEALS) F OR ASSESSMENT YEAR 2007-08 UPHOLDING THE SIMILAR ADDITIONS ON WHICH THE PRESENT APPEALS HAVE BEEN FI LED. THE LD. COUNSEL FOR THE ASSESSEE WAS ALSO NOT ABLE TO POINT OUT THE STATUS OF ASSESSMENT YEAR 2007-08 AT PRESENT. HE WAS ALSO NOT ABLE TO POINT OUT IF THE ORDERS OF LD. CIT(APPEALS) FOR 2007-08 WAS EVER CHALLENGED BEFORE HIGHER FORUM. THE LD. COUNSEL FOR THE ASSES SEE WAS NOT ABLE TO POINT OUT ANY INFIRMITY IN THE ORDE R OF LD. CIT(APPEALS) IN ASSESSMENT YEAR UNDER APPEALS A S WELL AS IN PRECEDING ASSESSMENT YEAR 2007-08 WHICH HAVE BEEN FOLLOWED BY LD. CIT(APPEALS) IN IMPUGNED ORDERS. THEREFORE, ON THIS GROUND ITSELF, BOTH THE APPEALS OF THE ASSESSEE ARE LIABLE TO BE DISMISSED. HOWEVER, WE MAY NOTE THAT IDENTICAL ISSUE WAS CONSIDERED BY LD. CIT(APPEALS) IN ASSESSMENT YEAR 2 008- 09 AND APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. THE ASSESSEE PREFERRED APPEAL IN ITA 782/2011 ASSESSMEN T YEAR 2008-09 BEFORE THE TRIBUNAL WHICH HAVE ALSO BE EN DISMISSED BY US ABOVE. THEREFORE FOLLOWING REASONS FOR DECISION GIVEN IN ASSESSMENT YEAR 2008-09, WE DISMI SS 7 BOTH THE APPEALS WHICH HAVE BEEN FILED BY ASSESSEE ON IDENTICAL ISSUES. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. 12. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( ANNAPURNA GUPTA) (BHAVNESH SAI NI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND SEPTEMBER, 2016. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD