M/s. The India Cements Ltd., CHENNAI V. DCIT, CHENNAI

ITA 841/CHNY/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4640 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 28-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 143(3); 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B. BEDI, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 841/MDS/2009 ASSESSMENT YEARS 2004-05 M/S THE INDIA CEMENTS LTD NO. 827, ANNA SALAI CHENNAI 600 002. (PAN NO. AAACT 1728 P) VS. THE D.C.I.T COMPANY CIRCLE II(3), CHENNAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SAROJ KUMAR PARIDA DEPARTMENT BY : SHRI SHAJI P. JACOB, SR. DR O R D E R PER N.S. SAINI, A.M :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. CIT, CHENNAI-I DATED 31.03.2009 F OR ASSESSMENT YEAR 2004-05. PAGE 2 OF 6 I.T.A. NO. 841MDS/2009 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE COMMISSIONER OF INCOME TAX I S CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE . 2.1 THE COMMISSIONER OF INCOME TAX ERRED IN SETTING ASIDE THE ISSUE OF EXCLUSION OF RS.3,35,24,771/- BEIN G THE AMOUNT TRANSFERRED FROM DEFERRED INCOME (RESERVE ) TO PROFIT AND LOSS ACCOUNT WITHOUT APPRECIATING THE DETAILED EXPLANATION GIVEN BY THE ASSESSEE. 2.2 THE CIT OUGHT TO HAVE APPRECIATED THAT THESE REPRESENTED BALANCE SHEET ENTRIES AND DOES NOT AFFE CT THE TAXABLE INCOME OF THE ASSESSEE AND HENCE CANNOT BE CONSIDERED AS PREJUDICIAL TO THE INTEREST OF THE REV ENUE. 3.1 THE COMMISSIONER OF INCOME TAX ERRED IN SETTING ASIDE THE CLAIM FOR DEDUCTION OF RS.536 LAKHS FOR BE ING CONSIDERED U/S.35DDA WITHOUT APPRECIATING THE EXPLANATION OF THE ASSESSEE THAT THE SAID SUM REPRESENTS GRATUITY LIABILITY OF THE RETIRED EMPLOYE ES ALLOWABLE UNDER SECTION 37 OF THE INCOME TAX ACT. 3.2 THE CIT OUGHT TO HAVE APPRECIATED THAT THIS AMOUNTS REPRESENTED GRATUITY LIABILITY PAYABLE TO RETIRED PERSONS AND HENCE WILL NOT ATTRACT THE PROVISIONS OF SEC 35DDA. PAGE 3 OF 6 I.T.A. NO. 841MDS/2009 4.1 THE COMMISSIONER OF INCOME TAX ERRED IN SETTIN G ASIDE COMPUTATION OF DISALLOWANCE UNDER SECTION 43B T O THE FILES OF THE ASSESSING OFF1CER. 4.2. THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THE COMPUTATION OF THE ASSESSEE WHICH WA S IN ACCORDANCE WITH THE PROVISIONS OF SECTION 43B. T HE ASSESSEE HAD CLAIMED DEDUCTION OF INTEREST PAYABLE T O FINANCIAL INSTITUTIONS ONLY TO THE EXTENT OF AMOUNT ACTUALLY PAID. 5.1. THE COMMISSIONER OF INCOME TAX ERRED IN SETTIN G ASIDE THE ISSUE OF REVALUATION OF THE FIXED ASSETS AN D REDUCTION OF CAPITAL WORKING PROGRESS AGAINST REVALUATION RESERVE ACCOUNT. 5.2 THE CIT OUGHT TO HAVE APPRECIATED THAT THESE WE RE PURELY BOOK ENTRIES PERTAINING TO BALANCE SHEET ITEM S AND WILL IN NO WAY AFFECT THE COMPUTATION OF TAXABL E INCOME. THEREFORE THE ISSUE IS NOT PREJUDICIAL TO THE INTEREST OF THE 6.1. THE COMMISSIONER OF INCOME TAX ERRED IN SETTIN G ASIDE THE ISSUE OF CLAIMING OF LOSS OF RS.6,80, 92, 998/ - ON THE BASIS OF ACTUAL SALE CONSIDERATION REALIZED I N THE CASE OF ASSETS REQUIRED TO BE SOLD UNDER CORPORATE D EBT RESTRUCTURING. PAGE 4 OF 6 I.T.A. NO. 841MDS/2009 6.2 THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT THE ENTIRE FACTS ON THE SALE TRANSACTION HAS BEEN FURNISHED TO THE CIT AND HENCE HE ERRED IN SETTING ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. 7.1 THE COMMISSIONER OF INCOME TAX ERRED IN SETTI NG ASIDE THE TREATMENT OF THE AMOUNT RECEIVED ON ASSIGNMENT OF SALES-TAX DEFERRED LIABILITY. 7.2 THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT THESE ENTRIES ARISING FROM THE AMALGAMATION OF M/S. VISAKA CEMENT WERE SUBSEQUENTLY INCLUDED IN THE SCHEME AND APPROVED BY THE MADRAS HIGH COURT. HENCE, THE COMMISSIONER OF INCOME TAX ERRED IN SETTING ASIDE THE ISSUE TO THE ASSESSING OFFICER FOR FURTHER INVESTIGATION. 7.3 THE COMMISSIONER OF INCOME TAX OUGHT TO HAVE APPRECIATED THAT THE AMOUNT OF RS. 10.5 CRORES DEPOSITED WITH THE HIGH COURT IN CONNECTION WITH T HE SALES TAX DEFERRAL CASE WAS NOT CLAIMED AS DEDUCTION . ALL THE FACTS HAVE BEEN FURNISHED TO THE CIT AND HE NCE HE OUGHT NOT TO HAVE SET ASIDE THE ISSUE FOR FURTHER ENQUIRIES. THIS ISSUE IS NOT PREJUDICIAL TO THE INTER EST OF THE REVENUE. PAGE 5 OF 6 I.T.A. NO. 841MDS/2009 8. THE COMMISSIONER OF INCOME TAX, IN SPITE OF THE COMPLETE EXPLANATION WITH THE RELEVANT PAPERS AND DOCUMENTS, GIVEN BY THE ASSESSEE HAS SET ASIDE THE ABOVE ISSUE ONLY ON THE BASIS OF THE SUSPICION AND SURMISES. HE HAS DIRECTED THE ASSESSING OFFICER TO M AKE FURTHER ROVING ENQUIRY EVEN THOUGH THE ASSESSEE HAD FURNISHED COMPLETE EXPLANATION FOR ALL THE TRANSACTI ON. 9. THE COMMISSIONER OF INCOME TAX ERRED IN ASSUMING JURISDICTION U/S.263 IN RESPECT OF THIS ISSUE, WHICH H AVE BEEN ACCEPTED IN THE ASSESSMENT UNDER SECTION 143(3) MERELY BECAUSE; THE DECISION OF THE ASSESSING OFFICE R IS NOT INCONSONANCE WITH THE VIEW OF THE CIT. 10. THE ORDER OF THE COMMISSIONER OF INCOME TAX MA Y BE SET ASIDE AS BEING WITHOUT JURISDICTION. 3. AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSE SSEE SUBMITTED THAT PURSUANT TO THE ORDER PASSED U/S 264 OF THE IN COME-TAX ACT, 1961 [IN SHORT, THE ACT] ON 31.3.2009 BY THE LD. CI T, THE ASSESSING OFFICER MADE ASSESSMENT AND WITH RESPECT TO CERTAIN ADDITIONS MADE BY THE ASSESSING OFFICER, THE ASSESSEE FILED A PPEAL BEFORE THE LD. CIT AND WAS GRANTED RELIEF FOR THE SAME. THERE FORE, HE SUBMITTED THAT THE PRESENT APPEAL MAY BE DISMISSED AS HAVING BECOME INFRUCTUOUS. PAGE 6 OF 6 I.T.A. NO. 841MDS/2009 4. IN VIEW OF THE ABOVE SUBMISSIONS OF THE LD. A.R. OF THE ASSESSEE, THE APPEAL OF THE ASSESSEE IS DISMISSED. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURTS IMMEDIATELY AF TER THE CONCLUSION OF HEARING ON 27-07-2011. SD/- S D/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 27 TH JULY, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE