ACIT., Khandwa V. M/s Chhaganlal Kishanlal & Co, Bhrhanpur

ITA 839/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4031 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V J BORICHA
• Assessee Lawyers: S N AGRAWAL
• Keywords: Business expenditure; Rectification of order
• Section: 154; 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.839/IND/2017 ASSESSMENT YEAR: 2011-12 ACIT KHANDWA / VS. M/S. CHHAGANLAL KISHANLAL & CO. BAHADARPUR ROAD, BURHANPUR (M.P.) ( REVENUE ) ( RE SPONDENT ) PAN: AACFC0854C REVENUE BY SHRI V. J. BORICHA, SR. DR RESPONDENT BY SHRI S.N. AGRAWAL & PANKAJ MOGRA, CAS DATE OF HEARING: 24.01.2019 DATE OF PRONOUNCEMENT: 06.02.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL BY REVENUE PERTAINING TO A.Y. 2011-12 IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INC OME TAX(APPEALS)-II INDORE, (IN SHORT CIT(A)), DATED 20 .09.2017 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON M/S. CHHAGANLAL KISHANLAL & CO. ITANO.839/IND/2017 2 07.03.2016 BY ACIT, KHANDWA. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DISALLOWANC E OF RS.6,82,415/- IN RESPECT OF THE DIVERSION OF TAX. 2. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE THAT ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE TRADING OF P.P. BALES, COTTON SEEDS AND ALL TYPES OF GRAINS. INCOM E OF RS.9,77,070/- DECLARED IN E-RETURN OF INCOME FILED O N 28.09.2011. NOTICE U/S 143(2) OF THE ACT WAS DULY SE RVED UPON THE ASSESSEE. THE ASSESSEE FIRM PAID AN AMOUNT OF DIVERSION TAX OF RS.6,82,415/- AND CLAIMED THE DEDUCT ION FOR THE SAME ON PAYMENT BASIS. THE CLAIM OF THE ASSESSE E WAS DULY ACCEPTED IN THE REGULAR ASSESSMENT PROCEEDING . SUBSEQUENTLY, NOTICE ISSUED U/S 154 OF THE INCOME TA X ACT FOR DISALLOWANCE OF DIVERSION TAX. IN THE RECTIFICATIO N ORDER, THE LEARNED ASSESSING OFFICER DISALLOWED THE DIVERSION TAX BUT ALSO ACCEPTED THAT THE AMOUNT OF DIVERSION TAX WAS PAID FOR THE LAND USED FOR THE PURPOSE OF BUSINESS AND NOT IN RESPECT OF AGRICULTURAL LAND. HENCE, THE APPELLANT AR GUED THAT IN ANY CASE, THE AMOUNT OF DIVERSION TAX WAS AN ALLOWABLE DEDUCTION. M/S. CHHAGANLAL KISHANLAL & CO. ITANO.839/IND/2017 3 3. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A) AND ALLOWED. 4. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE R ECORD PLACED BEFORE US. SOLE GRIEVANCE OF THE REVENUE IS AGAI NST THE ORDER OF LD. CIT(A) DELETING DISALLOWANCE OF RS.6,82,415/- IN RESPECT OF DIVERSION TAX CLAIMED AS AN EXPENDITURE BY THE ASSESSEE. IN THE REGULAR ASSESSMEN T PROCEEDINGS U/S 143(3) OF THE ACT, ASSESSEES CLAIM O F THE EXPENDITURE OF RS.6,82,415/- WAS ALLOWED AS A BUSINESS EXPENDITURE BUT SUBSEQUENTLY LD. AO PASSED AN ORDER U/ S 154 OF THE ACT DISALLOWING THE DIVERSION TAX OF RS.6,82,415/-. WE FIND THAT THE LD. CIT(A) HAS DELETE D THE DISALLOWANCE OF DIVERSION TAX OF RS.6,82,415/- OBSERV ING AS FOLLOWS: GROUND NO.1 & 2 4.0 THESE GROUNDS OF APPEAL ARE WITH REGARD TO ADDITION OF RS.6,82,415/- ON ACCOUNT OF DISALLOWANCE OF DIVE RSION OF TAX. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE APPELLANT IN THI S M/S. CHHAGANLAL KISHANLAL & CO. ITANO.839/IND/2017 4 REGARD. 4.1 THE APPELLANT FIRM HAD PAID THE AMOUNT OF DIVERSION TAX OF RS 6,82,415/- AND CLAIMED THE DEDUCTION FOR THE SAME ON PAYMENT BASIS THE AMOUNT OF DIVERSION TAX W AS PAYABLE ANNUALLY AND THE SAME WAS ALLOWABLE AS BUSINESS EXPENDITURE. THE CLAIM OF THE APPELLANT WA S DULY ACCEPTED IN THE REGULAR ASSESSMENT PROCEEDING. THE NOTICE AS ISSUED U / S 154 OF THE INCOME TAX ACT FO R DISALLOWANCE OF DIVERSION TAX AND THE SAME WAS ALSO DISALLOWED. IN THE RECTIFICATION ORDER, THE ASSESSI NG OFFICER HAD ACCEPTED THAT THE AMOUNT OF DIVERSION TAX WAS PAID FOR THE LAND USED FOR THE PURPOSE OF BUSINESS AND N OT IN RESPECT OF AGRICULTURAL LAND. HENCE, THE APPELLANT ARGUED THAT IN ANY CASE, THE AMOUNT OF DIVERSION TAX WAS A N ALLOWABLE DEDUCTION. 4.2 THE APPELLANT HAS FURTHER ARGUED THAT THE CLAIM OF DEDUCTION OF DIVERSION TAX ON PAYMENT BASIS WAS ALSO ALLOWABLE EVEN U/ S 43 B OF THE INCOME TAX ACT. HENCE, AS PER THE APPELLANT THE CLAIM OF DEDUCTION OF DIVERSI ON TAX WAS LEGAL AND PROPER AND FOR THE PURPOSE OF BUSINES S ONLY. 4.3 THE APPELLANT HAS RELIED ON THE FOLLOWING DECISIONS:- S. N. NAME OF DECISION CITATION O1. CIT V/ S. RELIANCE INDUSTRIES LTD. 48 TAXMANN.COM 362 (BOMBAY) 02. KESHARWANI ZARDA BHANDAR V I S CIT 349 ITR 519 (ALL) 03 KS.VENKATESH V/S DCIT 63 TAXMANN.COM 343 (KAR) 04. CIT V/ S INDIA NIPPON ELECTRICALS LTD 302 ITR 49 (MADRAS) 4 THIS IS A FACT IN THIS CASE THAT THE DIVERSION OF TAX HAD BEEN ALLOWED BY THE AO U/S 143(3) OF THE IT ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ALTER THE OBJECTION WAS RAISED BY THE AUDIT PARTY, THE AO DISALLOWED TH E SAID M/S. CHHAGANLAL KISHANLAL & CO. ITANO.839/IND/2017 5 DIVERSION AMOUNT AND ADDED BACK TO THE APPELLANT'S INCOME. I HAVE CAREFULLY GONE THROUGH THE ABOVE CITED DECISIONS. IN ALL THE ABOVE JUDICIAL DECISIONS THE APPEAL HAD BEEN ALLOWED BY THE JUDICIAL AUTHORITIES' U/ S154 OF THE IT ACT IN FAVOUR OF THE APPELLANT AND GIVEN RELIEF TO THE APPELLANT. SO, IN THE LIGHT OF THE ABOVE JUDICIAL D ECISIONS, I DONT AGREE WITH THE FINDINGS OF THE AO AND ACCORDI NGLY THESE GROUNDS OF APPEAL ARE ALLOWED. 7. THE ABOVE FINDING ON FACT OF THE LD. CIT(A) ALONG W ITH RELIANCE PLACE ON VARIOUS JUDGMENTS APPEARING PARA 4.3 IN THE ORDER OF LD. CIT(A) GOES UNCONTROVERTED BY THE REVENUE AUTHORITIES. WE ARE THEREFORE INCLINED TO HOLD THAT TH E ALLEGED AMOUNT OF RS.6,82,415/- HAS BEEN RIGHTLY CLAIM ED AS BUSINESS EXPENDITURE. NO INTERFERENCE IS CALLED FO R IN THE FINDING OF LD. CIT(A). THE GROUND OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMIS SED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 06 .02. 2019. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 06/02/2019 CTX? P.S/. . . M/S. CHHAGANLAL KISHANLAL & CO. ITANO.839/IND/2017 6 COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR