ACIT, CHENNAI V. M/s. Sun Paper Mills Ltd., CHENNAI

ITA 806/CHNY/2011

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6552 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 02-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: R MEENAKSHISUNDARAM

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH D CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A.NO. 806/MDS/2011 ASSESSMENT YEAR : 2004-05 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(4), CHENNAI 600 034. VS. M/S. SUN PAPER MILLS LTD., NEW NO.86 (OLD NO.46), E.V.K.SAMPATH ROAD, VEPERY, CHENNAI 600 007. PAN AAACS 5044 B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR RESPONDENT BY : SHRI R.MEENAKSHISUNDARAM, ADVOCATE O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE REVENUE. THE RELEVANT ASSESSMENT YEAR IS 2004-05. THIS APPEAL IS DIRECTE D AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-V , AT CHENNAI DATED 27.1.2011. THE APPEAL ARISES OUT OF THE ASSE SSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1 961. ITA 806/11 :- 2 -: 2. THE ASSESSEE WAS SUBJECTED TO MAT ASSESSMENT UND ER SEC.115JB. THE ASSESSEE HAD MADE PROVISIONS IN PRO FIT AND LOSS ACCOUNT TOWARDS GRATUITY AND BONUS. IN COMPUTING T HE BOOK PROFIT FOR THE PURPOSE OF SEC.115JB THE ASSESSING OFFICER HELD THAT THE ABOVE PROVISIONS ARE MADE FOR UNASCERTAINED LIABILI TY. ACCORDINGLY, HE ADDED BACK THOSE AMOUNTS TO THE BOO K PROFIT OF THE ASSESSEE COMPANY. IN FIRST APPEAL, THE COMMISS IONER OF INCOME-TAX (APPEALS) HELD THAT THOSE PROVISIONS HAV E BEEN MADE AGAINST ASCERTAINED LIABILITY AND THEREFORE, THE AS SESSING OFFICER WAS NOT JUSTIFIED IN ADDING BACK THOSE AMOUNTS TO T HE BOOK PROFIT OF THE ASSESSEE COMPANY. THE APPEAL FILED BY THE A SSESSEE WAS ALLOWED. THE REVENUE IS AGGRIEVED AND THEREFORE, T HE APPEAL BEFORE US. 3. THE ONLY GROUND RAISED BY THE REVENUE IN THE PRE SENT APPEAL IS THAT THE COMMISSIONER OF INCOME-TAX (APPE ALS) HAS ERRED IN DELETING ` 1,00,52,647/- BEING PROVISION FOR BONUS FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT UNDER SEC.115 JB. 4. WE HEARD BOTH SIDES IN DETAIL AND CONSIDERED THE MATTER. 5. WE FIND THAT THE PROVISION MADE BY THE ASSESSEE TOWARDS BONUS WAS NOT AN UNASCERTAINED LIABILITY. THE ASSE SSEE WAS BOUND TO PAY BONUS TO ITS EMPLOYEES AND IN FACT THE BONUS WAS ACTUALLY PAID BY THE ASSESSEE COMPANY. THE ONLY TH ING IS THAT THE BONUS WAS PAID AFTER THE CLOSE OF THE PREVIOUS YEAR . THE HONBLE SUPREME COURT IN THE CASE OF BHARAT EARTH MOVERS V. CIT (245 ITR 428) HAS HELD THAT IN SUCH CASES OF PROVISION F OR BONUS, IT IS TO ITA 806/11 :- 3 -: BE SEEN THAT THE LIABILITY IS NOT UNASCERTAINED BUT AT THE MAXIMUM THE QUANTUM ALONE IS EXACTLY NOT ASCERTAINABLE. IT IS NOT POSSIBLE TO HOLD THAT THE LIABILITY ITSELF WAS UNASCERTAINED . BUT IN THE PRESENT CASE, WE FURTHER FIND THAT EVEN THE QUANTUM HAS ALREADY BEEN ASCERTAINED BY THE ASSESSEE AND IT WAS BROUGHT IN A PROVISION ONLY FOR THE REASON THAT IT WAS NOT PAID DURING THE RELEVANT PREVIOUS YEAR. THEREFORE, THE COMMISSIONE R OF INCOME- TAX (APPEALS) HAS RIGHTLY HELD THAT THE ADJUSTMENT MADE BY THE ASSESSING AUTHORITY WAS NOT PERMITTED IN LAW. 6. IN RESULT, THIS APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING, ON THURSDAY, THE 14 TH DAY OF JULY, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 14 TH JULY, 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR