Usha Conductors Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-3(3), Hyd, Hyderabad

ITA 802/HYD/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6049 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 30-05-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Section: 43B; 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 802/HYD/2016 ASSESSMENT YEAR: 2005-06 USHA CONDUCTORS PVT. LTD., HYDERABAD [PAN: AAACU2568C] VS DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(3), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR SHRI D. SATYANARAYANA, AR FOR REVENUE : SHRI K.J. RAO, DR DATE OF HEARING : 09-11-2016 DATE OF PRONOUNCEMENT : 11-11-2016 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD D ATED 29-02-2016. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER THE AMOUNT OF SALES TAX OF RS. 1,89,822/- PAID DURING THE YEAR IS ALLOWABLE AS DEDUCTION OR NOT? 2. IN THE P&L A/C, ASSESSEE HAD CLAIMED AN AMOUNT OF RS. 1,89,822/- AS SALES TAX PERTAINING TO YEAR 2002-03. SINCE ASSESSMENT YEAR UNDER CONSIDERATION IS AY. 2005-06, A SSESSING OFFICER (AO) WAS OF THE OPINION THAT THIS AMOUNT IS N OT PERTAINING TO THE YEAR OF ACCOUNT. HE RE-OPENED THE ASSESSMENT U/ S. 147 OF THE INCOME TAX ACT [ACT] AND IN THE PROCEEDINGS, DISAL LOWED CLAIM I.T.A. NO. 802/HYD/2016 USHA CONDUCTORS PVT. LTD., :- 2 -: OF DEDUCTION U/S. 80IB AND ALSO CLAIM ON SALES TAX O F THE ABOVE AMOUNT. THE CLAIM OF SECTION 80IB WAS CONTESTED BUT WI THDRAWN BEFORE THE CIT(A). ASSESSEE HOWEVER, SUBMITTED THAT THE SALES TAX AMOUNT WAS CLAIMED ON PAYMENT BASIS. LD.CIT(A) HOWEV ER, WAS OF THE OPINION THAT AS ASSESSEE IS FOLLOWING THE MERCANTIL E SYSTEM OF ACCOUNTING AND EXPENDITURE IS BEING CLAIMED ON ACCRU AL BASIS, THE SAME, AS IT PERTAINS TO AN EARLIER YEAR, IS NOT ALLOWAB LE IN THIS ASSESSMENT YEAR. ACCORDINGLY, IT WAS HELD THAT AMOUNT H AS RIGHTLY DISALLOWED BY THE AO. 3. LD. COUNSEL SUBMITTED THAT THE AMOUNT WAS DEMANDED DURING THE YEAR BY WAY OF SALES TAX ORDER AND ASSESS EE HAS PAID SAME DURING THE YEAR. HE RELIED ON THE PROVISIONS OF SECTION 43B WHICH PERMITS ONLY ALLOWANCE OF STATUTORY TAX ON PAYMEN T BASIS AND ACCORDINGLY, IT WAS SUBMITTED THAT BOTH AO AND CIT(A ) HAVE ERRED IN DISALLOWING THE AMOUNT. 4. LD. DR HOWEVER, RELIED ON THE ORDERS OF THE AUTHORI TIES. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE PAPER BOOK ON RECORD. EVEN THOUGH ASSESSEE HAS SHO WN SEPARATELY IN THE SCHEDULES TO THE ACCOUNTS IN SCHEDUL E-16, SALES TAX OF THE YEAR AND SALES TAX PERTAINING TO YEAR 200 2-03, THE ENTIRE AMOUNT HAS BEEN CLAIMED ON PAYMENT BASIS IN THE P&L A/C ITSELF. WHETHER ASSESSEE MAKES A PROVISION IN THE RE LEVANT YEAR OR NOT AND WHETHER ASSESSEE IS ELIGIBLE FOR CLAIM IN EAR LIER YEAR OR NOT IS NOT MATERIAL HERE, AS PROVISIONS OF SECTION 43B ARE TO BE APPLIED AS FAR AS STATUTORY TAXES ARE CONCERNED. SINCE THE AMOU NT HAS BEEN PAID DURING THE YEAR, THE SAME IS ALLOWABLE U/S . 43B. IN VIEW I.T.A. NO. 802/HYD/2016 USHA CONDUCTORS PVT. LTD., :- 3 -: OF THIS, I DO NOT FIND ANY MERIT IN THE ACTION OF THE A O, AS CONFIRMED BY THE CIT(A), IGNORING THE PROVISIONS OF SECTION 43B WHICH ALLOWS DEDUCTION ONLY ON PAYMENT BASIS. MORE OVER, THE DEMAND OF SALES TAX HAS CRYSTALLISED DURING THE YEAR. IN VIEW OF THA T, ASSESSEES GROUND IS ALLOWED. AO IS DIRECTED TO DELETE THE AMOU NT. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH NOVEMBER, 2016 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 11 TH NOVEMBER, 2016 TNMM COPY TO : 1. USHA CONDUCTORS PVT. LTD., HYDERABAD. C/O. S. RA MA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6 -643, STREET NO. 9, HIMAYAT NAGAR, HYDERABAD. 2. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(3), HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-5, HYDERABAD 4. PR. COMMISSIONER OF INCOME TAX-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.