M/s.Cherukunnu Tea Estates P.Ltd, Idukki V. DCIT, Kottayam

ITA 799/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73920 (ITAT-COCHIN)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 20-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Keywords: Unexplained cash credit
• Section: 115JB; 68

Judgement Text

1 ITA NO. 799/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 799/COCH/2013 (ASSESSMENT YEAR 2008-09) M/S CHURAKULAM TEA ESTATES P LTD VS THE DY.CIT, C IR.1 VNDIPERIYAR, IDUKKI 686 602 KOTTAYAM PAN : AAACC9024B (APPELLANT) (RESPONDENT) APPELLANT BY : MATHEW JOSEPH RESPONDENT BY : SMT. LATHA V KUMAR DATE OF HEARING : 25-03-2014 DATE OF PRONOUNCEMENT : 31-03-2014 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-IV, KOCHI DATED 09-10-2013 AND PERTAINS TO A SSESSMENT YEAR 2008- 09. 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS INCLU SION OF RS.1.10 CRORE OFFERED BY THE ASSESSEE AS UNEXPLAINED CREDIT FOR C OMPUTATION OF MAT. 2 ITA NO. 799/COCH/2013 3. SHRI MATHEW JOSPEH, THE LD.REPRESENTATIVE FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE OFFERED A SUM OF RS.1.1 0 CRORE AS INCOME U/S 68 OF THE ACT. ACCORDING TO THE LD.REPRESENTATIVE, INCOME OFFERED AS UNEXPLAINED CREDIT DOES NOT FORM PART OF THE PROFIT & LOSS ACCOUNT. HOWEVER, THE ASSESSING OFFICER HAS TAKEN THE SAME A S PART OF THE PROFIT & LOSS ACCOUNT FOR COMPUTATION OF MAT. ACCORDING TO THE LD.REPRESENTATIVE, THE ASSESSING OFFICER FOUND THAT ALL EXTRAORDINARY ITEMS HAVE TO BE ROUTED THROUGH THE PROFIT & LOSS ACCOUNT. THE LD.REPRESEN TATIVE SUBMITTED THAT ACCOUNTING STANDARD AS-10 IS NOT APPLICABLE TO PLAN TATION COMPANIES. REFERRING TO THE COPY OF AS-10, THE LD.REPRESENTATI VE SUBMITTED THAT THE PROVISION IN AS-10 DOES NOT DEAL WITH FORESTS, PLAN TATIONS AND SIMILARLY REGENERATIVE AND NATURAL RESOURCES. HOWEVER, THE L OWER AUTHORITIES FAILED TO CONSIDER AS-10 ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI). ACCORDING TO THE LD.REPRESENTATIVE, BOOK P ROFIT HAS TO BE COMPUTED AS PER THE PROVISIONS OF THE COMPANIES ACT. THE C OMPANIES ACT PRESCRIBES COMPUTATION OF BOOK PROFIT AS PER THE AC COUNTING STANDARDS ISSUED BY ICAI. WHEN AS-10 EXCLUDES FORESTS, PLANT ATIONS AND SIMILARLY REGENERATIVE AND NATURAL RESOURCES, ACCORDING TO TH E LD.REPRESENTATIVE, PLACING RELIANCE ON AS-10 FOR THE PURPOSE OF COMPUT ING BOOK PROFIT FOR PLANTATION COMPANY IS NOT JUSTIFIED. THIS ARGUMENT OF THE ASSESSEE WAS NOT ADDRESSED BY LOWER AUTHORITIES. THEREFORE, ACC ORDING TO THE 3 ITA NO. 799/COCH/2013 LD.REPRESENTATIVE, UNEXPLAINED CASH CREDIT OFFERED AS INCOME U/S 68 OF THE INCOME-TAX ACT CANNOT FORM PART OF THE PROFIT & LOS S ACCOUNT. 4. ON THE CONTRARY, SMT. LATHA V KUMAR, THE LD.DR S UBMITTED THAT ADDITION MADE U/S 68 OF THE INCOME-TAX ACT FORMS PA RT OF THE PROFIT OF THE ASSESSEE, THEREFORE, IT SHOULD BE ROUTED THROUGH TH E PROFIT & LOSS ACCOUNT. SINCE THE ASSESSEE FAILED TO INCLUDE THIS SUM OF RS .1.10 CRORE IN THE PROFIT & LOSS ACCOUNT, ACCORDING TO THE LD.DR, THE BOOK PR OFIT WAS NOT PREPARED IN ACCORDANCE WITH SCHEDULE VI OF COMPANIES ACT. THE REFORE, ACCORDING TO THE LD.DR, THE LOWER AUTHORITIES HAVE RIGHTLY REJEC TED THE CLAIM OF THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSE SSEE IS NOT QUESTIONING THE COMPUTATION OF INCOME U/S 115JB OF THE ACT. TH E CLAIM OF THE ASSESSEE IS THAT THE UNACCOUNTED CASH CREDIT OFFERE D AS INCOME U/S 68 OF THE ACT COULD NOT FORM PART OF THE PROFIT & LOSS AC COUNT. WHEN THE ASSESSING OFFICER FOUND CASH CREDIT IN THE BOOKS OF ACCOUNT WHICH COULD NOT BE EXPLAINED BY THE ASSESSEE, THAT HAS TO BE TREATE D AS INCOME OF THE ASSESEE U/S 68 OF THE ACT FOR ALL PRACTICAL PURPOSE S. THEREFORE, THE INCOME OFFERED U/S 68 WOULD FORM PART OF THE PROFIT & LOSS ACCOUNT. IT IS NOT A QUESTION OF APPLYING AS-10, BUT IT IS A QUESTION WH ETHER THE SUM OF RS.1.10 4 ITA NO. 799/COCH/2013 CRORE WHICH WAS TREATED AS INCOME U/S 68 OF THE INC OME-TAX ACT WOULD FORM PART OF THE PROFIT & LOSS ACCOUNT OF THE ASSES SEE OR NOT? WHEN RS.1.10 CRORE WAS TAKEN AS INCOME OF THE ASSESSEE U /S 68 OF THE ACT, THE SAME HAS TO FORM PART OF THE PROFIT & LOSS ACCOUNT. IN OTHER WORDS, IT HAS TO BE DEEMED TO BE DERIVED FROM THE ORDINARY BUSINESS OF THE ASSESSEE. THEREFORE, THERE IS NO QUESTION OF EXCLUSION OF THE SAME FROM THE PROFIT & LOSS ACCOUNT. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY. ACCORDINGLY, THE SAME IS C ONFIRMED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST MARCH, 2014. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 31 ST MARCH, 2014 PK/- COPY TO: 1. M/S CHURAKULAM TEA ESTATES PVT LTD, VANDIPERIYAR , IDUKKI 686 602 2. DY.CIT, CIR.1, KOTTAYAM 3. THE COMMISSIONER OF INCOME-TAX, KOTTAYAM 4. THE COMMISSIONER OF INCOME-TAX(A)-IV, KOCHI 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH