Navkiran Powerlooms Owners Sahakari Audyogik Sanstha Ltd., Malegaon V. Income-tax Officer,

ITA 794/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0783 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , AM . / ITA NO. 794 /PN/201 4 / ASSESSMENT YEAR : 2010 - 11 NAVKIRAN POWERLOOMS OWNERS SAHAKARI AUDYOGIK SANSTHA LTD., GAT NO.152, PLOT NO.32/33, KUSUMBA ROAD, DYANE, MALEGAON 423203 . / APPELLANT PAN: A AAJN0057C VS. THE INCOME TAX OFFICER, WARD 3(4), MALEGAON . / RESPONDENT / APPELLANT BY : WRITTEN SUBMISSIONS / RESPOND ENT BY : SHRI MAHESH AKHADE / RESPOND ENT BY : SHRI MAHESH AKHADE / DATE OF HEARING : 0 7 . 12 .20 15 / DATE OF PRONOUNCEMENT: 09 . 1 2 .2015 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF C IT (A) - I , NASHIK , DATED 19 . 0 2 .20 14 RELATING TO ASSESSMENT YEAR 2010 - 11 PASSED AGAINST ORDER U NDER SE CTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. NONE APPEARED ON BEHALF OF THE ASSESSEE , BUT WRITTEN SUBMISSIONS HAVE BEEN FILED BY THE ASSESSEE, WHICH ARE TAKEN ON RECORD. ITA NO. 794 /PN/201 4 NAVKIRAN POWERLOOMS OWNERS SAH. AUDYOGIK SAN. LTD. 2 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE BASIS OF FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX, (APPEALS) - I, NASHIK IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.40,000/ - ON ACCOUNT OF PROVISION OF STATUTORY AUDIT FEES PARTICULARLY WHEN UNDISPUTEDLY T HE APPELLANT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 2. THE APPELLANT CRAVES FOR ADDITION TO, DELETION, ALTERATION, MODIFICATION, CHANGE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF RS.40,000/ - BOOKED ON ACCOUNT OF PROVISION OF STATUTORY AUDIT FEES. 5. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE HAD MADE A PROVISION ON ACCOUNT OF STATUTORY AUDIT FEES OF RS.40,000/ - . THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE CLA IMED BY THE ASSESSEE ALONG WITH OTHER EXPENSES BEING PROVISION MADE IN THE BOOKS OF ACCOUNT. 6. THE CIT(A) NOTED THAT THE ASSESSEE HAD MADE PROVISION FOR VARIOUS AUDITS I.E. RS.40,000/ - FOR STATUTORY AUDIT FEES, RS.15,000/ - FOR TAX AUDIT AND RS.4,000/ - FOR VAT AUDIT FEES. THE CASE OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT IT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THE ABOVE MENTIONED LIABILITY WAS ASCERTAINED LIABILITY. FURTHER, THE ASSESSEE HAS ALREADY DISCHARGED THE LIABILITY OF RS.15,000/ - FOR TAX AUDIT FEES AND RS.4,000/ - FOR VAT AUDIT FEES. HOWEVER, SINCE THE STATUTORY AUDIT OR WAS TO BE APPOINTED BY THE STATE GOVERNMENT, THE PROVISION OF RS.40,000/ - WAS NOT DISCHARGED. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF RS.15,00 0/ - AND RS.4,000/ - . HOWEVER, AS REGARDS THE PROVISION OF STATUTORY AUDIT FEES OF RS.40,000/ - , SINCE THE STATE GOVERNMENT HAD NOT APPOINTED THE STATUTORY AUDIT, THEREFORE, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS CONFIRMED , TO BE ALLOWED ON PAYME NT BASIS, IN VIEW OF SECTION 43B OF THE ACT . 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). ITA NO. 794 /PN/201 4 NAVKIRAN POWERLOOMS OWNERS SAH. AUDYOGIK SAN. LTD. 3 8. THE ASSESSEE IN WRITTEN SUBMISSIONS HAS POINTED OUT THAT THE AUDIT OF THE ACCOUNTS OF ASSESSEES SOCIETY WERE COMPULSORILY TO BE AUDITED BY AN AUDIT OR APPOINTED BY THE STATE GOVERNMENT I.E. JOINT REGISTRAR OF CO - OPERATIVE SOCIETIES. THE LIABILITY TO GET THE ACCOUNTS AUDITED COULD NOT BE WAIVED UNDER ANY LAW AND EVEN THE OBLIGATION TO GET AUDIT DONE BY THE ASSESSEE , WAS NOT WAIVED BY THE JOINT - REGISTR AR OF CO - OPERATIVE SOCIETIES. SINCE THE ASSESSEE WAS FOLLOWI NG MERCANTILE SYSTEM OF ACCOUNTING, THE PROVISION FOR RS.40,000/ - ON ACCOUNT OF STATUTORY AUDIT FEES WAS MADE IN THE BOOKS OF ACCOUNT CONSIDERING THE TURNOVER OF ASSESSEE OF RS. 11.70 CRORES. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE WAS A CO - OPERATIVE SOCIETY AND ACCOUNTS OF THE SOCIETY HAD TO BE COMPULSORILY AUDITED BY THE AUDITOR APPOINTED BY THE STATE GOVERNMENT I.E. COMPULSORILY AUDITED BY THE AUDITOR APPOINTED BY THE STATE GOVERNMENT I.E. JOINT REGISTRAR OF CO - OPERATIVE SOCIETIES. SINCE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THOUGH NO AUDITOR WAS APPOINTED IN THE CASE OF ASSESSEE, HOWEVER, A PROVISION ON ACCOUNT OF STATUTORY AUDIT FEES OF RS.40,000/ - WAS MADE IN THE BOOKS OF ACCOUNT FOR THE RELEVANT YEAR. THE TOTAL TURNOVER OF THE ASSESSEE WAS RS.11.70 CRORES AND IT ESTIMATED THE QUANTUM OF AUDIT FEES AT RS.40,000/ - . THE ASSESSING OFFICER DI SALLOWED THE CLAIM OF THE ASSESSEE BEING A PROVISION MADE IN THE BOOKS OF ACCOUNT ALONG WITH PROVISION MADE ON ACCOUNT OF TAX AUDIT FEES OF RS.15,000/ - AND VAT AUDIT FEES OF RS.4,000/ - . THE CIT(A) ALLOWED RS.19,000/ - SINCE THE ASSESSEE HAD ALREADY MADE PA YME NT ON ACCOUNT OF SAID ACCOUNTS. HOWEVER, SINCE TILL DATE THE STATE GOVERNMENT HAD NOT APPOINTED ANY STATUTORY AUDITOR, THE CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND DIRECTED THAT THE SAME WOULD BE ALLOWED IN THE YEAR OF ACTUAL PAYMENT. WE FIND NO MERIT IN THE ORDER OF ITA NO. 794 /PN/201 4 NAVKIRAN POWERLOOMS OWNERS SAH. AUDYOGIK SAN. LTD. 4 CIT(A) IN THIS REGARD AND THE SAME IS REVERSED. THE PROVISION ON ACCOUNT OF STATUTORY AUDIT FEES PAYABLE BY THE ASSESSEE IS ALLOWABLE IN THE YEAR IT RELATES AS THE ASSESSEE WA S FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING AND IT WA S INCUMBENT UPON THE ASSESSEE TO RECOGNIZE ITS LIABILITY IN THE YEAR TO WHICH IT RELATES. FURTHER, WE FIND NO MERIT IN THE ORDER OF CIT(A) IN INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT AND DISALLOWING THE SAID AMOUNT. THE SAID PRO VISIONS OF THE ACT I.E. 43B OF THE ACT ARE NOT ATTRACTED AS THE PAYMENT DUE TO BE PAID BY THE ASSESSEE IS NOT ON ACCOUNT OF ANY TAX, DUTY, CESS OR FEES AS CONTEMPLATED IN SECTION 43B OF THE ACT. REVERSING THE ORDER OF CIT(A), WE DIRECT THE ASSESSING OFFIC ER TO ALLOW THE CLAIM OF THE ASSESSEE WITH REGARD TO PROVISION MADE ON ACCOUNT OF STATUTORY AUDIT FEES. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER P RONOUNCED ON THIS 9 TH DAY OF DECEMBER , 201 5 . ORDER P RONOUNCED ON THIS 9 DAY OF DECEMBER , 201 5 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 9 TH D ECEMBER , 2015 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - I , NASHIK ; 4. / THE CIT - I , NASHIK ; 5. , , - / DR SMC , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE