Jayashree Electron Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 805/PUN/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7672 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E . , , ! , ' # BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AW ASTHY, JM . / ITA NO. 805/PUN/2016 '% & '& / ASSESSMENT YEAR : 2010-11 M/S. JAYASHREE ELECTRON PVT. LTD. FLAT-2, 1 ST FLOOR, SRUSHTI PRABHAT APARTMENT, LANE NO.15, PRABHAT ROAD, OPP. SYMBOSIS SCHOOL, PUNE-411 004 PAN : AAACJ7011R ....... / APPELLANT (% / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1), PUNE. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI / DATE OF HEARING : 17.04.2018 / DATE OF PRONOUNCEMENT : 18.04.2018 ) / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-7, PUNE DATED 27.01.2016 FOR THE ASS ESSMENT YEAR 2010-11. 2 ITA NO. 805/PUN/2016 A.Y.2010-11 2. THE NOTICE OF APPEAL WAS SENT TO ASSESSEE THROUGH R PAD ON 08.03.2018 FOR 17.04.2018. ACKNOWLEDGMENT OF THE NOTICE AVAILABLE ON FILE IN DICATES THAT THE NOTICE WAS DULY SERVED ON ASSESSEE. DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE. IT SEEMS THAT THE A SSESSEE IS NOT KEEN TO PURSUE THE APPEAL. WE, THEREFORE, PROCEED TO DECIDE THE A PPEAL OF ASSESSEE WITH THE ASSISTANCE OF LD. DR AND MATERIAL AVAILABLE ON RECORD. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ELECTRONIC CO MPONENTS AND SOFTSTARTERS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 27 .09.2010 DECLARING TOTAL INCOME OF RS.3,86,40,680/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE AC T). SUBSEQUENTLY, RE- ASSESSMENT PROCEEDINGS WERE INITIATED AND NOTICE U/S. 148 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 22.03.2013. IN RE-ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER INTER ALIA MADE FOLLOWING ADDITIONS/DISALLOWANCES: I) DISALLOWANCE ON ACCOUNT OF MEDICAL EXPENSES, RS.1,02,926/-. II) DISALLOWANCE ON ACCOUNT OF VAT REFUND RECEIVABLE RS.14,54,175/-. 4. AGGRIEVED BY ASSESSMENT ORDER DATED 24.03.2014 PASS ED U/S.143(3) R.W.S.147 OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ADDITIONS AND DISMISSED THE APPEAL OF ASSESSEE. NOW, TH E ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF CO MMISSIONER OF INCOME TAX (APPEALS). THE ASSESSEE IN APPEAL HAS RAISED FOLLOWING GROU NDS: ON FACTS AND IN LAW, 1.0 DISALLOWANCE OF REIMBURSEMENT OF MEDICAL EXPENSES 1.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF EXPENDITURE OF RS.1,02,926/- BEING MEDICAL EXPENSES INITIALLY P AID BY THE EMPLOYEE BY CHEQUE TO THE HOSPITAL AND REIMBURSED BY THE ASSESS EE COMPANY TO THE EMPLOYEE IN CASH ON A BANK HOLIDAY. 3 ITA NO. 805/PUN/2016 A.Y.2010-11 1.2 THE LEARNED CIT(A) ERRED IN HOLDING THAT THE AP PELLANT CANNOT TAKE SHELTER OF RULE 6DD(J) AND THE EXPENDITURE DOES NOT FALL UNDER THE EXCEPTIONS PROVIDED U/R.6DD. 2.0 DISALLOWANCE OF RS.14,54,175 BEING IMPAIRMENT LOSS ON VAT 2.1 THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISA LLOWANCE OF RS.14,54,175 BEING IMPAIRMENT LOSS ON VAT. 2.2 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH AT AMOUNT OF RS.14,54,175 WAS WRITTEN OFF IN VIEW OF CIRCULAR OF COMMISSIONER OF SALES TAX, MAHARASHTRA STATE, MUMBAI VIDE TRADE CIR.NO.DC SO/R & RA/2009- 10/B DT.15.04.2010 R.W.S.50(2) OF MVAT ACT, 2002 CA RRYING FORWARD THE REFUND IS NOT PERMITTED TO NEXT FINANCIAL YEAR AND FURTHER, WHENEVER, THE REFUND IS RECEIVED IN NEXT YEAR, IT IS ACCOUNTED ON RECEIPT BASIS AS PER CONSISTENT ACCOUNTING POLICY ADOPTED BY THE COMPANY . 3.0 THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 5. SHRI AJAY MODI REPRESENTING THE DEPARTMENT SUBMITTED THAT ASSESSEE HAS CLAIMED REIMBURSEMENT OF MEDICAL EXPENSES. THE EXPENDITURE TO THE TUNE OF RS.1,02,926/- HAS BEEN DISALLOWED AS PAYMENT WAS MADE IN C ASH. THE ASSESSEE HAS FAILED TO SHOW COMPELLING CIRCUMSTANCES UNDER WHICH ASSESSEE WAS FORCED TO MAKE PAYMENT IN CASH. THE LD. DR FURTHER PO INTED THAT THE ASSESSEE HAD MADE ANOTHER PAYMENT OF RS.52,432/- ON 15 .11.2009 THROUGH CHEQUE AND THE SAID CHEQUE WAS ACCEPTED BY HOSPITAL. O N THE SAME DATE, ASSESSEE HAS MADE PAYMENT OF RS.62,432/- IN CASH AND A GAIN ON 01.11.2009, CASH PAYMENT OF RS.40,494/- WAS MADE BY ASSESSEE TO T HE HOSPITAL. SINCE THE HOSPITAL ACCEPTED CHEQUE PAYMENT OF RS.52,432/- ON 15.11.2 009, THE REMAINING AMOUNT COULD HAVE ALSO BEEN PAID BY WAY OF CHEQUE. 5.1 IN RESPECT OF DISALLOWANCE OF RS.14,54,175/-, THE LD. DR SU BMITTED THAT ASSESSEE HAS ADMITTED THAT THE SAID AMOUNT IS VAT REFUN D RECEIVABLE PENDING ASSESSMENT WITH THE SALES TAX AUTHORITIES. ONCE THE AM OUNT IS HELD TO BE RECEIVABLE PENDING ASSESSMENT, THE ASSESSEE HAS ERRED IN WRITING OFF THE SAME. THE LD. DR VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 4 ITA NO. 805/PUN/2016 A.Y.2010-11 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE LD. DR AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE IN APPEAL HAS RAISED TW O ISSUES: (I) DISALLOWANCE OF REIMBURSEMENT OF MEDICAL EXPENSES RS.1,02,926 /- AND; (II) DISALLOWANCE OF RS.14,54,175/- BEING IMPAIRMENT LOSS ON VAT. THE ASSESSEE HAS REIMBURSED MEDICAL EXPENSES TOWARDS H OSPITALIZATION EXPENSES OF AN EMPLOYEE. THE ASSESSEE BEFORE, THE AUTHOR ITIES BELOW HAS SUBMITTED THAT PAYMENT OF RS.1,02,926/- TO HOSPITAL WAS MA DE ON TWO DATES I.E. RS.62,432/- ON 15.11.2009 AND RS.40,494/- ON 01.11.2009 . ON BOTH THE DATES, IT WAS BANK HOLIDAY THEREFORE; THE ASSESSEE WAS U NDER COMPELLING CIRCUMSTANCES TO MAKE PAYMENT IN CASH. IT IS AN UNDISPUT ED FACT THAT THE EXPENDITURE HAS BEEN INCURRED ON ACCOUNT OF MEDICAL EXIGE NCIES. THE AUTHORITIES BELOW HAVE RAISED NO DOUBT OVER THE PAYMENT S MADE. OSTENSIBLY, PAYMENTS WERE MADE ON THE DATES WHEN BANKS WERE CLOSE D. SUCH PAYMENTS FALL WITHIN THE EXCEPTION PROVIDED U/S.6DD(J) OF INCOME TAX R ULES, 1962. HENCE, NO DISALLOWANCE IS WARRANTED. WE FIND MERIT IN GROUND NO.1 RAISED IN APPEAL BY ASSESSEE, ACCORDINGLY, THE SAME IS ALLOWED . 7. IN GROUND NO. 2 OF APPEAL, THE ASSESSEE HAS ASSAILED DISALLOWANCE OF RS.14,54,175/-. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT ASSESSEE HAS SHOWN ABOVE SAID AMOUNT AS VAT REFUND RECEIVABLE PENDING ASSESSMENT. THE ASSESSEE HAS PURPORTEDLY WRITTEN OFF VAT REFUND IN VIEW OF CIRCULAR ISSUED BY SALES TAX DEPARTMENT. THE ASSESSEE MAY HAVE WRITTEN OFF THIS AMOUNT IN THE ASSESSMENT YEAR UNDER APPEAL, HOWEVER, THE ASSESSEE IS UNDER OBLIGATION TO DECLARE THE AMOUNT AS AND WHEN REFUND IS RECEIVED FROM O R ADJUSTED BY THE SALES TAX DEPARTMENT. WE DO NOT SEE ANY ERROR IN ASSES SEE WRITING OFF VAT REFUND AT THIS STAGE. IN ANY CASE REFUND HAS NOT CRYSTA LLIZED TILL THE ASSESSMENT 5 ITA NO. 805/PUN/2016 A.Y.2010-11 IS COMPLETED. ACCORDINGLY, GROUND NO. 2 RAISED IN THE APPEAL BY ASSESSEE IS ALLOWED . 8. IN THE RESULT, THE IMPUGNED ORDER IS SET ASIDE AND APP EAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 18 TH DAY OF APRIL, 2018. SD/- SD/- ( . / D. KARUNAKARA RAO ) ( ! /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; !' / DATED : 18 TH APRIL, 2018 SB ) * +',- . ', / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-7, PUNE. 4. THE CIT-6, PUNE. 5. %&' () , * () , +,- , / DR, ITAT, A BENCH, PUNE. 6. './ 01 / GUARD FILE. // TRUE COPY // *2 / BY ORDER, 3 (- / PRIVATE SECRETARY * () , / ITAT, PUNE.