DCIT, New Delhi V. M/s Cengage Learning India Pvt. Ltd., Delhi

ITA 830/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3650 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 830/DEL/2013 (ASSESSMENT YEAR: 2009 - 10 ) DCIT, CIRCLE - 3(1), NEW DELHI VS. CENGAGE LEARNING INDIA PVT. LTD, 418, FIE, PATPARGANJ, DELHI PAN:AACCT5522B (APPELLANT) (RESPONDENT) REVENUE BY : - SK. JAIN, DR ASSESSEE BY: DR. RAKESH GUPTA, ADV SH. S O MIL AGARWAL, ADV DATE OF HEARING 01/03 / 2017 DATE OF PRONOUNCEMENT 10 / 0 4 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. THIS IS AN APPEAL FILED REVENUE AGAINST THE ORDER OF THE LD CIT ( A) - VI, NEW DELHI DATED 16.11.2012 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WHETHER THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 14032185/ - MADE ON ACCOUNT OF DISALLOWANCE ON PROVISIONS OF SALES RETURN IGNORING THE FACT THAT: - A. THE ASSESSEE DID NOT SHOW ANY AMOUNT UTILIZED DURING THE YEAR UNDER THIS HEAD FOR ASSESSMENT YEARS 2007 - 08 & 2008 - 09. B. THERE WERE DIFFERENCES BETWEEN THE CLOSING BALANCE AND THE OPENING BALANCE FOR AYS 2008 - 09 AND ASSESSMENT YEAR 2009 - 10 RESPECTIVELY. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS A COMPANY WHO FILED ITS RETURN OF INCOME DECLARING AN I NCOME OF RS. 2 184 8283/ AND SUBSEQUENTLY THE ASSESSMENT UNDER SECTION 143 (3) OF THE INCOME TAX ACT WAS PASSED ON 26/12/2011 WHEREIN AN ADDITION OF RS. 1 403 2185/ WAS MADE ON ACCOUNT OF PROVISION FOR SALES RETURN . THE ASSESSEE COMPANY IN ITS PROFIT AND LOSS ACCOUNT CLAIMED AN AMOUNT OF RS. 1 239 3064/NATIONAL ACCOUNT OF PROVISION FOR SALES RETURN, WHICH WAS QUESTION BY THE ASSESSING OFFICER PAGE 2 OF 4 DURING THE COURSE OF ASSESSMENT PROCEEDINGS . THE ASSESSEE CONTENDED THAT AS PER THE SALES RETURN POLICY CONSISTENTLY BUILDING FOLLOWED BY THE ASSESSEE . THE COMPANY HAS RECORDED IN BOOKS OF ACCOUNT . THE PROVISION FOR SALES RETURN ON THE AMOUNT OF PROCESS MADE DURING THE YEAR . THE ASSESSEE SUBMITTED THAT AS ON THE OPENING OF THE YEAR . A PROVISION OF RS. 9 75, 9881/ WAS STANDING TO WHICH THE ADDITION . DURING THE YEAR WAS OF RS. 1 666 5367/ AND DURING THE YEAR THE GOLDEN UTILIZED WAS RS. 1 403 2184/ AND THE CLOSING BALANCE RESULTING THERE FROM WAS RS. 1 239 3064/ . THEREFORE THE CLAIM OF THE ASSESSEE WAS THAT DURING THE YEAR THE PROVISION WAS MADE OF RS. 1 666 5367/ - OUT OF WHICH THE PROVISION UTILIZED DURING THE YEARS OF RS. 14032184/ . THE LD. ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE THE DISALLOWA NCE . THEREFORE, ASSESSEE PREFERRED AN APPEAL BEFORE THE LORD 1 ST APPELLATE AUTHORITY WHO DELETED THE ABOVE DISALLOWANCE . THEREFORE, REVENUE BEING AGGRIEVED WITH THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IS PREFERRED APPEAL BEFORE US. 4. LD. DEPARTMENTA L REPRESENTATIVE RELIED HEAVILY ON THE ORDER OF THE LD. ASSESSING OFFICER AND VEHEMENTLY THE CONTESTED DISALLOWANCE DELETED BY THE LD. 1 ST APPELLATE AUTHORITY. 5. THE LD. AUTHORIZED REPRESENTATIVE EXPLAINED THE REASON FOR THE PROVISIONING AND HE SUBMITTED THA T THAT THE PROVISION HAS BEEN MADE ON THE BASIS OF THE PAST EXPERIENCE AND THE POLICY CONSISTENTLY FOLLOWED BY THE ASSESSEE . HE FURTHER REFERRED TO THE PAGE NO. 80 OF THE PAPER BOOK WHEREIN THE COMPUTATION OF TOTAL INCOME IS PLACED ACCORDING TO WHICH THE PROVISION FOR SALES RETURN OF RS. 1 66 EX 5367/ HAS BEEN ADDED TO THE TOTAL INCOME AND A SUM OF RS. 1 403 2184/ HAS BEEN REDUCED FROM THE TAXABLE INCOME . HE FURTHER REFERRED TO THE SCHEDULE 13 OF THE BALANCE SHEET WHEREIN THE PROVISION FOR SALES RETURN HAS BEEN DEBITED TO THE EXPENSES AND NOT NO. 28 PAGE NO. 107 OF THE BALANCE SHEET WHEN THE PROVISION OF SALES RETURN HAS BEEN WORKED OUT . THEREFORE, IN VIEW OF THE ABOVE FACTS IT SUBMITTED THAT THERE IS NO ERROR IN THE ORDER OF THE LD. CIT (A) IN ALLOWING THE CLAIM OF THE ASSESSEE, WHICH IS BASED ON THE CONSISTENT POLICY BEING FOLLOWED BY THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS OF THE LOWER AUTHORITIES . THE LD. CIT APPEAL HAS DEALT WITH ABOVE ISSUE AT P ARA NO. 7.3 OF HIS ORDER AS UNDER: PAGE 3 OF 4 7.3 . I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MADE BY THE LD. AR AND HAVE GONE THROUGH THE ASSESSMENT ORDER. THE AO HAS POINTED OUT DIFFERENCE IN COMPARISON OF THE PRESENTATION OF ACCOUNTS FOR THE ASSESSMENT YEAR 200 8 09 IN THE ANNUAL ACCOUNT REPORTS FOR AND ASSESSMENT YEAR 2009 10 AND ALSO OBSERVED THAT THE AMOUNT HAS BEEN DEBITED FOR THE UTILISATION OF PROVISION FOR SALES RETURN FOR ASSESSMENT YEAR 2008 09. THAT IS WHY HE MADE ADDITION OF RS. 1 403 2185/ BEIN G THE SUM UTILIZED DURING THE YEAR UNDER CONSIDERATION. IN REGARD TO THE ABOUT THE APPELLANT COMPANY HAS SUBMITTED THAT THE AO NEVER ASKED THE APPELLANT COMPANY TO CLARIFY THE POSITION. IT HAS BEEN SUBMITTED BY THE APPELLANT THAT IT WAS DUE TO RE - GROUPINGS FROM RECLASSIFICATION OF CONCERNED THE DATA FOR THE ASSESSMENT YEAR 2009 10 IN THE ANNUAL ACCOUNTS REPORT. FURTHER, IT IS STATED THAT THE PROVISION OF RUPEES ON 168 8151 IS THAT OF PROVISION CREATED AND UTILIZED DURING THE YEAR THAT IS PROVISION CREATED OF RS. 1 479 1579/ MINUS PROVISION UTILIZED OF RS. 3 103428/ (AFTER ADJUSTING OPENING BALANCE OF RS. 1 21347/ ) THE DETAILED SUBMISSION HAS BEEN MADE BEFORE ME IN THE FORM OF TABLE WHICH IS GIVEN IN PARA NO. 7 POINTS OF THE INSTANT ORDER WHICH CLARIFIES THE DIFFERENCES . AS POINTED OUT BY THE AO. IS FURTHER THE APPELLANT COMPANY IS SUBMITTED THAT IT IS WRONG INTERPRETATION ON THE PART OF THE AO AND IT DOES NOT AT ALL OF ACT, THE TAX REVENUE FOR THE REASON THAT THE APPELLANT COMPANY DEBITED RS. 2 633183/B ASS AND THE SAME WAS ADDED BACK IN THE FORM OF PROVISION FOR SALES RETURN OF RS. 1 6656 5367/BASS MINUS PROVISION UTILIZED OF RS. 1 403 2184/ WHILE COMPUTING THE TAXABLE INCOME . IT IS OBSERVED THAT IN THE PROFIT AND LOSS ACCOUNT, THE APPELLANT HAS DEBITE D RS. 2 633183/ AND IN THE COMPUTATION OF TAXABLE INCOME . IT IS ADDED BACK RS. 1 665 6367/ ON ACCOUNT OF PROVISION FOR SALES RETURN AND DEDUCTED PROVISION FOR SALES RETURN UTILIZED AMOUNTING TO RS. 1 403 2184/ . IN THIS MANNER THE APPELLANT HAS ADDED B ACK NET AMOUNT OF RS. 2 633183/ (RS. 1 6665 367/ - RS . 1 403 2184/ - = RS . 2 633183/ ) . THE APPELLANT IS CONTENDED THAT IN THIS MANNER SALES RETURN AMOUNTING TO RS. 2 633183 DEBITED IN THE PROFIT AND LOSS ACCOUNT GETS NEUTRALIZED AND DOES NOT AT ALL AFFECT TAX REVENUE . SINCE THE APPELLANT COMPANY HAS DEBITED RS. 2 633183/BASH IN THE PROFIT AND LOSS ACCOUNT AND ADDED BACK IN PAGE 4 OF 4 OTHER FORM IT DOES NOT AFFECT THE TAX REVENUE IN ANY MANNER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS ISSUE, AND IN ACCORDANCE WITH DISCUSSION ABOUT, ADDITION OR DISALLOWANCE OF RS. 1 403 2185/ - ON ACCOUNT OF PROVISION FOR SALES RETURN IS HEREBY DIRECTED TO BE DELETED. 7. LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY INFIRMITY IN THE ORDER OF THE LORD 1 ST APPELLATE AUTHORITY . FURTHER, THE ASSESSEE IS FOLLOWING THIS PRACTICE OF MAKING PROVISION OF THE SALES RETURN CONSISTENTLY BASED ON THE PAST EXPERIENCE. THEREFORE ACCORDING TO THE PROVISIONS OF ACCOUNTING STANDARD 29 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA NOTIFIED BY THE MINISTRY OF CORPORATE AFFAIRS ALSO REQUIRES THE ASSESSEE TO PROVIDE FOR SUCH CONTINGENCY IN ITS BOOKS OF ACCOUNT. THEREFORE, IT IS A MANDATE OF LAW. IT IS NOT THE CLAIM OF THE REVENUE THAT THE PROVISION MADE BY THE ASSESSEE IS WITHOUT ANY BASIS OR IS INCORRECT. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY IN DELETING THE DISALLOWANCE OF RS. 14032185/ ON ACCOUNT OF PROVISION FOR SALES RETURN. IN THE RESULT GROUND NO. 1 OF THE APPEAL OF THE REVENUE, CONTESTING THE ABOVE DISALLOWANCE DELETED BY THE LD. FIRST APPELLATE AUTHORITY IS DISMISSED. 8. IN THE RESULT APPEAL FILED BY THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 1 0 / 0 4 / 2017 . - S D / - - S D / - ( H.S. SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 0 / 0 4 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI