ANTHEA AROMATICS P. LTD, NAVI MUMBAI V. ITO 8(1)(1), MUMBAI

ITA 839/MUM/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9131 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PURSHOTTAM KUMAR
• Assessee Lawyers: ALOK K SAXSENA
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 14A; 115JB

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM & SHRI SHAKTIJIT DEY, JM ITA NO.839/MUM/2016 : ASST.YEAR 2011-2012 M/S.ANTHEA AROMATICS PRIVATE LIMITED R-81/82 TTC INDUSTRIAL AREA RABALE, NAVI MUMBAI 400 701. PAN : AAACA6031G. / VS. THE INCOME TAX OFFICER WARD 8(1)(1) MUMBAI. ( / APPELLANT) ( / RESPONDENT) APPELLANT BY : SHRI ALOK K.SAXSENA RESPONDENT BY : SHRI PURSHOTTAM KUMAR / DATE OF HEARING : 24.08.2017 / DATE OF PRONOUNCEMENT : 03.10.2017 / O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 30.11.2015 AND PERTAINS TO ASSESSMENT YEAR 2011-2012. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THE LEARNED CIT(A) HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE WHILE CONFIRMING THE DISALLOWANCE OF RS.2,38,892/- U/S 14A R.W.R 8D OF THE INCOME TAX ACT, 1961 TO THE BOOK PROFITS U/S 115JB OF INCOME TAX ACT, 1961. 2. THE LEARNED CIT(A) HAS ERRED IN LAW, FACTS AND CIRCUMSTANCES OF THE CASE BY CONFIRMING THE CLOSING STOCK OF FINISHED GOODS AS UNDERVALUED RESULTING IN ADDITION OF UNDERVALUATION AMOUNT OF RS.2,84,127/- TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.839/MUM/2016. M/S.ANTHEA AROMATICS PRIVATE LIMITED. 2 3. YOUR APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND, DELETE AND / OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING. 4. PRAYER : THE APPELLANT PRAYS YOUR HONOUR FOR ALLOWING THE APPEAL. 3. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND. HOWEVER, LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING THE ADDITIONAL GROUND. ACCORDINGLY THE ADDITIONAL GROUND IS DISMISSED AS NOT PRESSED. 4. APROPOS GROUND NO.1 4.1 ON THIS ISSUE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THIS GROUND IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE SPECIAL BENCH OF THE TRIBUNAL DECISION IN THE CASE OF ACIT V. VIREET INVESTMENT (P.) LTD. [(2017) 82 TAXMANN.COM 415 (DELHI TRIB.) (SB)]. 4.2 PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT DISPUTE THIS PROPOSITION THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH AS ABOVE. 4.3 WE FIND THAT THIS ISSUE WAS CONSIDERED BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE MENTIONED ABOVE. THE FACTS AND THE EXPOSITION FROM THE SPECIAL BENCH READ AS UNDER:- FACTS THE ASSESSING OFFICER WHILE COMPUTING BOOK PROFIT UNDER SECTION 115JB MADE ADDITION ON ACCOUNT OF DISALLOWANCE ITA NO.839/MUM/2016. M/S.ANTHEA AROMATICS PRIVATE LIMITED. 3 UNDER SECTION 14A IN RESPECT OF DIVIDEND INCOME AND LONG TERM CAPITAL GAIN CLAIMED AS EXEMPT UNDER SECTION 10(38). THE ASSESSEE SUBMITTED THAT AS PER CLAUSE (R) OF EXPLANATION T TO SECTION 115JB(2) ONLY EXPENDITURE RELATING TO INCOME OTHER THAN INCOME ASSESSABLE UNDER SECTION 10(38) WAS TO BE ADDED WHILE CALCULATING BOOK PROFIT UNDER SECTION 115JB. THE REVENUE CONTENDED THAT DISALLOWANCE CALCULATED UNDER SECTION 14A READ WITH RULE 8D SHOULD BE IPSO FACTO INCORPORATED IN CLAUSE (F) OF EXPLANATION 1 TO SECTION 115JB(2) WHILE COMPUTING BOOK PROFIT UNDER MAT PROVISIONS. HELD COMPUTATION UNDER CLAUSE (1) OF EXPLANATION 1 TO SECTION 115JB(2) IS TO BE MADE WITHOUT RESORTING TO COMPUTATION AS CONTEMPLATED UNDER SECTION 14A READ WITH RULE 8D. 4.4 SINCE THE HONBLE SPECIAL BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, WE HOLD THAT COMPUTATION OF THE BOOK PROFIT U/S 115JB HAS TO BE DONE WITHOUT RESORTING TO DISALLOWANCE U/S 14A READ WITH RULE 8D. 5. APROPOS GROUND NO.2 5.1 ON THIS ISSUE THE ASSESSMENT ORDER, THE ASSESSING OFFICER MENTIONED THAT ASSESSEE-COMPANY WAS REQUESTED TO SUBMIT THE DETAILS OF THE VALUATION OF THE CLOSING STOCK ALONG WITH NECESSARY SUPPORTING EVIDENCES IN FAVOUR OF VALUATION OF THE CLOSING STOCK. ACCORDING TO THE A.O. SUPPORTING EVIDENCES WERE NOT FURNISHED BY THE ASSESSEE. THE A.O. FOUND OUT THAT THE CLOSING STOCK OF THE FINISHED PRODUCT WAS TAKEN EVEN BELOW THE VALUE OF THE OPENING STOCK. ACCORDING TO THE A.O. THE VALUE OF THE CLOSING STOCK WAS UNDERVALUED ITA NO.839/MUM/2016. M/S.ANTHEA AROMATICS PRIVATE LIMITED. 4 FOR AN AMOUNT OF RS.2,84,127 AS COMPARED TO DIE VALUE OF THE ITEMS TAKEN FOR VALUATION OF THE OPENING STOCK. SINCE NO SATISFACTORY EXPLANATION WAS PROVIDED AT THE TIME OF ASSESSMENT, THEREFORE, AN ADDITION OF RS.2,84,127 MADE BY THE A.O. ON ACCOUNT OF UNDER VALUATION OF THE CLOSING STOCK. 5.2 UPON ASSESSEES APPEAL, LEARNED CIT(A) NOTED THE ASSESSEES SUBMISSIONS AND HIS ADJUDICATION AS UNDER:- DURING APPELLATE PROCEEDINGS, IT WAS SUBMITTED THAT THE VALUE OF THE CLOSING STOCK WAS LOWER AS COMPARED TO THE OPENING STOCK DUE TO THE DECREASE IN THE VALUE OF RAW MATERIAL RATE PER UNIT. IT WAS ALSO SUBMITTED THAT DURING THE YEAR UNDER CONSIDERATION, THE TURNOVER OF THE APPELLANT COMPANY HAS SIGNIFICANTLY INCREASED, AS A RESULT OVERHEAD EXPENSES PER UNIT WERE DECREASED. THE DETAIL OF RAW MATERIAL CONSUMED AND OVERHEAD EXPENSES INCURRED WAS FURNISHED AS ANNEXURE B OF THE WRITTEN SUBMISSION WHICH IS REPRODUCED AS UNDER:- PARTICULARS A.Y.2010 - 11 RATE P.U. A.Y.2011 - 21 RATE P.U. RAW MATERIAL CONSUMED 899.00 799.14 99.86 OVERHEAD 1807.00 1241.86 565.14 665.00 ACSANTOL RAW MATERIAL CONSUMED 612.00 655.25 (43.25) OVERHEAD 994.00 690.73 303.27 260.02 TCD KETONE RAW MATERIAL CONSUMED 205 273.28 (68.28) OVERHEAD 854 690.73 163.27 94.99 ITA NO.839/MUM/2016. M/S.ANTHEA AROMATICS PRIVATE LIMITED. 5 FLORETHER RAW MATERIAL CONSUMED 426.00 249.28 176.72 - OVERHEAD 574.00 460.69 113.31 290.03 ISOLONIFOLANON RAW MATERIAL CONSUMED 141.00 202.08 (61.08) OVERHEAD 433.00 290.91 142.09 81.01 FROM THE PERUSAL OF DETAILS FILED IT IS EVIDENT THAT AS FAR AS RAW MATERIAL CONSUMPTION IS CONCERNED THERE WAS INCREASE IN THE VALUE OF RAW MATERIAL PER UNIT IN CASE OF ACSANTOL, TCD KETONE AND ISOLONGIFOLANON WHEREAS THERE WAS DECREASE IN VALUE OF SHANOL AND FLORETHER. AS FAR AS OVERHEAD EXPENSES WERE CONCERNED, THERE WAS DECREASE TREND OF OVERHEAD EXPENSES RATE PER UNIT. BUT DURING APPELLATE PROCEEDINGS, THE INVENTORY OF CLOSING STOCK AND OPENING STOCK ON THE BASIS OF WHICH VALUATION MADE WAS NOT FURNISHED. WITHOUT COMPLETE DETAILS IT WAS NOT POSSIBLE TO ASCERTAIN THE QUANTITY OF RAW MATERIAL AND FINISHED GOODS AVAILABLE IN OPENING STOCK AND CLOSING STOCK. THE SUBMISSION OF THE APPELLANT WAS ALSO NOT SUPPORTED WITH THE HELP OF PURCHASE BILLS. IT WAS NOT EXPLAINED HOW THE VALUATION WAS DONE AND WHAT WAS THE BASIS OF TAKING THE VALUE OF THE CLOSING STOCK. SINCE THE SUBMISSIONS OF THE APPELLANT WERE NOT SUPPORTED WITH CONCRETE DOCUMENTARY EVIDENCES, THEREFORE APPEAL OF THE APPELLANT ON THIS GROUND IS DISMISSED. 5.3 UPON CAREFUL CONSIDERATION, WE FIND THAT TO THE NECESSARY DETAILS PERTAINING TO THE VALUATION OF CLOSING STOCK WAS NOT FURNISHED BEFORE THE ASSESSING OFFICER. THIS LED TO THE ADDITION BY THE ASSESSING OFFICER. SOME ITA NO.839/MUM/2016. M/S.ANTHEA AROMATICS PRIVATE LIMITED. 6 DETAILS WERE SUBMITTED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) DID NOT PROPERLY ADJUDICATE THE ISSUE ON THE GROUND THAT SOME MORE DETAILS ARE REQUIRED. IN OUR CONSIDERED OPINION, THE INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IS REMITTED TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE AFRESH AFTER TAKING INTO ACCOUNT THE SUBMISSIONS BEING MADE BY THE ASSESSEE. NEEDLESS TO ADD, THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 3 RD DAY OF OCTOBER, 2017. SD/- SD/- ( SHAKTIJIT DEY ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 03.10.2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.