Adani Wilmar Ltd, Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 865/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0684 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 21-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Onus to prove; Revenue expenditure
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJI T SINGH, ACCOUNTANT MEMBER ADANI WILMAR LTD, FORTUNE HOUSE, NR. NAVRANGPURA RLY CROSSING, NAVRANGPURA, AHMEDABAD PAN: AABCA8056D (APPELLANT) VS THE DCIT, CIRCLE - 1, AHMEDABAD (RESPONDENT) REVENUE BY : MS. RICHA RASTOGI , SR. D . R. ASSESSEE BY: MS. IRA KAPOOR , A.R. DATE OF HEARING : 01 - 08 - 2 016 DATE OF PRONOUNCEMENT : 18 - 08 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSES SEE S APPEAL FOR A.Y. 2006 - 07 , AR I SES FROM ORDER OF THE CIT(A) - VI, AHMEDABAD DATED 25 - 01 - 2011 IN APPEAL NO. CIT(A) - VI/DCIT.CIR.1/ 37 0/09 - 10 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 865 / A HD/20 11 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 865 /AHD /2011 A.Y. 2006 - 07 PAGE NO ADANI WILMAR LTD . VS. DCIT 2 2. THE ASSESSEE S FIRST SUBSTA NTIVE GROUND CHALLENGES THE CIT(A) S ORDER AFFIRMING ASSESSING OFFICER S FINDINGS DISALLOWING PRIOR PERIOD EXPENDITURE OF RS. 39,80,296/ - . WE NOTICE THAT IT HAD DEBITED A TOTAL AMOUNT OF R S. 43,88,767/ - . THE ASSESSING OFFICER SOUGHT TO DISALLOW TH E SAME FOR THE REASON THAT THE SAME PERTAINED TO EARLIER ASSESSMENT YEAR. THE ASSESSEE FILED ITS SUBMISSIONS ON 05 - 11 - 2009 INTER ALIA ATTACHING DETAILS ALONG WITH NECESSARY BILLS AND VOUCHERS. ITS PRIMARY PLEA WAS THAT THE CORRESPONDING LIABILITY STOOD CRYSTALL IZED AND PAID IN THE RELEVANT PREVIOUS YEAR ONLY. THE ASSESSEE SUBMITTED THAT THERE WAS NO TAX IMPACT IN VOLVED SINCE THE SAME WAS OTHER WISE ALLOWABLE AS E LIGIBLE DEDUCTION IN THE NATURE OF REVENUE EXPENDITURE. IT FURTHER HIGHLIGHTED TO HAVE NETTED OFF PRI OR PERIOD EXPENDITURE AGAINST PRIOR PERIOD INCOME RESULTING INTO LATTER EXCESS FIGU R E OF RS. 2,66,528/ - . THE ASSESSING OFFICER DECLINED THE SAME IN ASSESS MENT ORDER DATED 29 - 12 - 2009 BY HOLDING THAT THE RELEVANT DETAILS OF THE PRIOR PERIOD EXPENSES IN QUES TION HAD NOT BEEN MADE AVAILABLE IN THE COURSE OF SCRUTINY. HE FURTHER WAS OF THE VIEW THAT THERE WAS NO SUPPORTIVE EVIDENCE OF THE IMPUGNED EXPENSES TO HAVE BEEN CRYSTALLIZED IN THE RELEVANT PREVIOUS YEAR. HOWEVER, HE ACCEPTED ASSESSEE S CASE QUA PRIOR PERIOD EXPENDITURE OF RS. 4,08,47/ - SHOWN IN THE AUDIT REPORT OF SUCCEEDING ASSESSMENT YEAR 2007 - 08. THIS RESULTED IN THE IMPUGNED DISALLOWANCE OF RS. 39,80,296/ - BEING MADE IN ASSESSEE S HANDS. THE CIT(A) UPHOLDS ASSESSING OFFICER S ACTION AS UNDER: - I.T.A NO. 865 /AHD /2011 A.Y. 2006 - 07 PAGE NO ADANI WILMAR LTD . VS. DCIT 3 6.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER AND APPELLANT'S SUBMISSION. PRIOR PERIOD EXPENSES ARE ALLOWABLE IN THE YEAR IN WHICH THE SAME ARE CRYSTALLIZED. AS PER THE ASSESSING OFFICER'S ORDER, HE ALLOWED OPPORTUNITIES TO THE APPELL ANT TO GIVE DETAILS OF PRIOR PERIOD EXPENSES AND TO PROVE AS TO HOW THESE EXPENSES WERE CRYSTALLIZED DURING THE YEAR. APPELLANT HAS NOT GIVEN DETAILS TO THE AO. HOWEVER APPELLANT SUBMITTED THAT IT HAS PROVIDED COMPLETE DETAILS ALONG WITH ITS SUBMISSI ON TO THE ASSESSING OFFICER. ON GOING THROUGH THE DETAILS OF PRIOR PERIOD EXPENSES, IT IS SEEN THAT THE MAJOR PAYMENT IS GIVEN TO DECORATORS FOR FUNCTION ORGANIZED BY IT. SINCE DETAILS OF FUNCTION ARE NOT GIVEN, IT CANNOT BE SA ID THAT THE PRIOR PERIOD EXPENSES G OT CRYSTALLIZED DURING THE YEAR. IN RESPECT OF OT HER EXPENSES ALSO IT CANNOT BE SAID THAT THE SAME WERE CRYSTALLIZED DURING THE YEAR. AUDITOR OF THE APPELLANT CERTIFIED THAT THE EXPENSES ARE RELATING TO PRIOR PERIOD AND ACCORDINGLY ONUS WAS ON THE APPELLAN T TO PROVE THAT THESE ARE NOT PRIOR PERIOD EXPENSES. IN THE ABSENCE OF THIS HEAVY BURDEN OF PROOF, IT CANNOT BE SAID THAT CURRENT YEAR'S EXPENSES WERE CLAIMED AS PRIOR PERIOD EXPENSES. IT IS NOT AT ALL IN DISPUTE THAT ONLY THOSE EXPENSES WHICH WERE CRYSTAL LISED DURING THE CURRENT YEAR ARE ALLOWABLE BUT ONUS TO PROVE THAT PRIOR PERIOD EXPENSES WERE CRYSTALLISED DURING THE YEAR IS ON THE APPELLANT BECAUSE APPELLANT HAS THE DETAILS AND NOT THE DEPARTMENT. SINCE APPELLANT HAS NOT ESTABLISHED THAT THESE EXPENSES WERE CRYSTALLIZED DURING THE YEAR, THE SAME CANNOT BE ALLOWED IN THIS YEAR. THE DECISIONS RELIED UPON BY THE APPELLANT CLEARLY INDICATE THAT ONLY THOSE EXPENSES WHICH ARE CRYSTALLISED DURING THE YEAR ARE TO BE ALLOWED. THEREFORE THERE IS NO DISPUTE OVER THIS. APPELLANT'S ARGUMENT OF REDUCING PRIOR PERIOD INCOME FROM THESE EXPENSES IS NOT CORRECT BECAUSE THE NATURE OF INCOME AND EXPENSES ARE DIFFERENT AND THE SAME CANNOT BE NETTED. WHILE GOING THROUGH THE DETAILS OF PRIOR PERIOD INCOME IT IS SEEN THAT SUB STANTIA L PART IS ON ACCOUNT OF EXCISE REFUND WHICH HAS NOTHING TO DO WITH PRIOR PERIOD EXPENSES AS MENTIONED BY THE APPELLANT. WHEREAS ONLY CURRENT YEAR'S EXPENSE ARE ALLOWED UNDER SECTION 37 (1) OF IT ACT, PRIOR PERIOD EXPENSES NOT CRYSTALLISED DURING THE YEAR ARE NOT ALLOWABLE. IN ABSENCE OF NECESSARY DETAILS AND EVIDENCES, THE PRIOR PERIOD EXPENSES ARE NOT ALLOWABLE AND SIMILARLY THESE CANNOT BE SET OFF AGAINST PRIOR PERIOD INCOM E. THIS GROUND IS THEREFORE REJECTED. I.T.A NO. 865 /AHD /2011 A.Y. 2006 - 07 PAGE NO ADANI WILMAR LTD . VS. DCIT 4 3. WE HAVE HEARD BOTH THE PARITIES. CASE FILE PERUSED. BOTH THE LD. REPRESENTATIVES REITERATE THEIR RESPECTIVE PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED DISALLOWANCE. WE REPEAT THAT MAIN REASON ADOPTED BY THE ASSESSING OFFICER AS WELL AS THE CIT(A) IS THAT OF LACK OF EVIDENCE ON A SSESSEE S PART IN PROVING THE IMPUGNED EXPENSES OF EARLIER ASSESSMENT YEAR TO HAVE BEEN CRYSTALLIZED IN THE IMPUGNED ASSESSMENT YEAR. WE NOTICE THAT PAGE 50 OF THE PAPER BOOK CONTAINS ALL DETAILS OF ASSESSEE S NETTING EXERCISE AS WELL AS RELEVANT HEAD OF E XPENSES. THIS FOLLOWS THE RELEVANT BILLS AND VOUCHERS FROM PAGE 58 TO 90. WE TRIED FOR A SAMPLE CHECK AS WELL. PAGE 61 IS A CORRESPONDENCE DATED 27 - 10 - 2005 REGARDING PAYMENT OF RS . 1,56,154/ - TO M/S PARKER OIL E NTERPRISE PERTAINING TO ASSESSMENT YEAR 200 2 - 03. THE SAME WAS ULTIMATELY FINALIZED ON 08 - 11 - 2005 IN THE RELEVANT PREVIOUS YEAR ONLY. ALL THESE DETAILS FORM PART OF T H E CASE RECORD RIGHT FROM THE SCRUTINY TILL THE INSTANT PROCEEDINGS. IT IS EVIDENT TO US THAT THE ASSESSEE ALREADY ASSESSED AT MAXIMUM RA TE. A PERUSAL OF THE CASE FILE FURTHER REVEALS THAT AN IDENTICAL ISSUE CAME UP BEFORE A CO - ORATE BENCH OF THIS TRIBUNAL IN ITA 3268/AHD/2010 ADANI EXPORTS LTD. VS. DCIT DECIDED ON 25 - 10 - 2013 WHEREIN SIMILAR NETTING EXERCISE WAS ACCEPTED. LD. DEPARTMENTAL REPRESENTATIVE FAILS TO POINT OUT ANY EXCEPTION THERETO. WE ACCORDINGLY ACCEPT ASSESSEE S ARGUMENTS FORMING SUBJECT MATTE R OF THIS FIRST SUBSTANTIVE GROUND. 4. THE ASSES SEE S NEXT SUBSTAN T I VE GROUND CHALLENGING DISALLOWANCE OF RS. 18,34,795/ - MADE BY BOTH THE LOWER AUTHORITIES ON ACCOUNT OF ITS DELAY OF PAYMENT OF EMPLOYEES CONTRIBUTION TO I.T.A NO. 865 /AHD /2011 A.Y. 2006 - 07 PAGE NO ADANI WILMAR LTD . VS. DCIT 5 PF/ESI. LEARNED COUNSEL IS FAIR ENOUGH IN POINTING OUT THAT HON BLE JURISDICTIONAL HIGH COURT IN GUJARAT STATE ROAD TRANSPORT CORPORATION CASE 360 ITR 170 HAS ALR EADY ADJUDICATED THIS ISSUE IN REVENUE S FAVOUR. WE APPRECIATE THIS FAIR STAND TO UPHOLD THE IMPUGNED DISALLOWANCE. THIS SECOND SUBSTANTIVE GROUND FAILS. 5. THE ASSESSEE S THIRD SUBSTANTIVE GROUND PLEADS THAT THE CIT(A) OUGHT TO HAVE HELD THAT SECTION 1 4A DISALLOWANCE IS NOT TO BE ADDED FOR COMPUTING BOOK PRO FITS U/S. 115JB OF THE ACT. LEARNED COUNSEL STATES AT THE BAR THAT THE ASSESSEE DOES NOT PRESS FOR THIS THIRD SUBSTANTIVE GROUND. THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 6. THIS ASSESSE E S APPEAL PARTLY SUCCEEDS . ORDER PR ONOUNCED IN THE OPEN C OURT ON 18 - 08 - 201 6 SD/ - SD/ - ( AMARJ I T SINGH ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 18 /08 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T.A NO. 865 /AHD /2011 A.Y. 2006 - 07 PAGE NO ADANI WILMAR LTD . VS. DCIT 6 BY ORDER/ , / ,