AIMCO PRESTICIDES LTD, MUMBAI V. ITO 10(1)(1), MUMBAI

ITA 9211/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2871 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 29-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 31-12-2010
• Court: TRIBUNAL
• Department Lawyers: A RAMACHANDRAN
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO.9211/M/2010 (ASSESSMENT YEAR: 2007 - 2008 ) AMICO PESTICIDES LTD., AKHAND JYOTI, 8 TH ROAD, SANTACRUZ (E), MUMBAI 400 056. / VS. ACIT 10(1), MUMBAI. ./ PAN : AACA3365K ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIPUL JOSHI / RESPONDENT BY : SHRI A. RAMACHANDRAN, DR / DATE OF HEARING : 29.08.2016 / DATE OF PRONOUNCEMENT : 05 .10 .2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 31.12.2010 IS AGAINST THE ORDER OF THE CIT (A) - 21, MUMBAI DATED 16.9.2010 FOR THE ASSESSMENT YEAR 2007 - 08. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. LD CIT (A) ERRED IN DISALLOWING RS. 13,69,834/ - BEING 15% OF FREIGHT AND FORWARDING CHARGES OF RS. 91,32,227/ - ON AD - HOC BASIS. 2. DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND EMPLOYEES STATE INSURANCE SCHEME OF RS. 1,56,315/ - DEPOSITED WITH CONCERNED AUTHORITIES BEFORE DUE DATE OF FILING OF RETURN OF INCOME. A. THE LD CIT (A) ERRED IN NOT FOLLOWING THE SUPREME COURT JUDGMENT AND DISALLOWED ESIC CONTRIBUTION AND THE PF CONTRIBUTION DEDUCTED BY THE ASSESSEE COMPANY FROM ITS EMPLOYEES AND DEPOSITED WITH THE CONCERNED AUTHORITIES BEFORE DUE DATE OF FILING OF RETURN OF INCOME. B. THE LD CIT (A) HOWEVER FAILED TO APPRECIATE THAT THE EMPLOYEES CONTRIBUTION TO THE BUSINESS OF THE ASSESSEE AND HENCE, THE SAME OUGHT TO HAVE BEEN ALLOWED IN FULL. 2. IN THE ABOVE GROUNDS, ASSESSEE IS AGGRIEVED AGAINST THE CONFIRMING OF THE ADDITION O F RS. 13,69,834/ - BEING 15% OF THE FREIGHT AND FORWARDING CHARGES ON AD - HOC BASIS. FURTHER, ASSESSEE ALSO AGGRIEVED AGAINST THE DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND (PF) AND EMPLOYEES STATE INSURANCE SCHEME (ESIC). 2 3. REFERRING TO T HE FIRST ISSUE , RELATING TO THE DISALLOWANCE OF RS.13,69,834/ - , LD COUNSEL FOR THE ASSESSEE NARRATED THE FACTS THAT THE ASSESSEE CONSISTENTLY CLAIMING THE PAYMENT FREIGHT AND FORWARDING CHARGES AND NO DISALLOWANCE WAS MADE IN THE EARLIER ASSESSMENT YEARS. IN THE AY UNDER CONSIDERATION, OUT OF THE TOTAL CLAIM OF RS. 91.32 LAKHS, ON CLUMSY GROUNDS, ASSESSING OFFICER DISALLOWED 15% OF THE SAME ON AD - HOC BASIS. IT IS THE REASONING OF THE AO THAT T HE SAID PAYMENT CONSTITUTES PAYMENT ON HIGHER SIDE. BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT REJECTED AND THE PROVISIONS OF SECTION 145(3) OF THE ACT ARE NOT INVOKED. NO SHOW CAUSE NOTICE WAS GIVEN BY THE AO BEFORE SUCH DISALLOWANCE IS MADE (PARA 4.2 OF THE CIT (A)S ORDER IS RELEVANT IN THIS REGARD). MATTER TRAVELLED TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONFIRMED THE DISALLOWANCE AS PER THE DISCUSSION GIVEN IN PARA 4.3 OF HIS ORDER. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, B RINGING OUR ATTENTION TO THE SAID PARA 4.3 OF THE CIT (A)S ORDER , LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT (A) REJECTED THE ARGUMENTS OF THE ASSESSEE THAT THE BOOKS OF ACCOUNTS AND THE TRANSACTIONS OF THESE PAYMENTS WERE ADDED AS PER THE PROVISIONS OF THE ACT. CONFIRMING OF THE SAID DISALLOWA NCE ON AD - HOC BASIS IS UNSUPPORTED BY ANY INCRIMINATING MATERIAL AGAINST THE ASSESSEE. 6. AFTER HEARING BOTH THE PARTIES, WE FIND, THE DECISION GIVEN BY THE CIT (A) IN PARA 4.3 OF HIS ORDER IS FAIR AND REASONABLE. THERE IS NO DISPUTE ON THE FACT THAT THIS IS A CASE OF AD - HOC DISALLOWANCE. NO ASSESSMENT SHOULD BE MADE BASED ON AD - HOCISM, MORESO, WHEN THE ACCOUNTS ARE AUDITED BY THE STATUTORY AUDITORS AND THE BOOKS OF ACCOUNTS ARE COMPLETE AND ACCURATE. AO HAS NOT FOUND ANY MISTAKE WHATSOEVER IN THE BOOKS OF ACCOUNTS ON THIS ISSUE OF F R E I G H T AND FORWARDING CHARGES. THE VAGARIES IN SALES AND THE TURNOVER IS COMMON IN ANY BUSINESS IF THE SAID CHARGES HAVE REDUCED, IT WILL HAVE DIRECT AND DEFINITE IMPACT ON THE SALES. AS SUCH, THERE IS NO BASIS FOR AD - HOCISM AN D ALSO FOR ADOPTING THE FIXED PERCENTAGE OF 15% IN THIS CASE. THIS KIND OF PAYMENTS IS NOT NEW TO THIS BUSINESS. ASSESSEE IS 3 CONSISTENTLY INCURRING SUCH EXPENDITURE OVER THE YEARS. ASSESSING OFFICER WAS ALSO REGULARLY ACCEPTING THE CLAIM OF THE ASSESSEE I N O T H E R A S S E S S M E N T S I N T H I S C A S E O F A S S E S S E E . THEREFORE, WE ALLOW THE ARGUMENTS OF THE ASSESSEE AND THE RELEVANT GROUNDS ARE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND NO.1 IS ALLOWED . 7. REGARDING GROUND NO.2 , RELATING TO PAYMENT OF PF AND ESIC, IT IS AN UNDISPUTED FACT THAT THE PAYM ENTS ARE MADE BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. CONSIDERING THE SETTLED POSITION ON THE ISSUE IN VIEW OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD [2014] 366 ITR 1 (BOM.), WHIC H IS RELEVANT FOR THE PROPOSITION THAT BY VIRTUE OF THE DELETION OF THE PROVISO OF SECTION 43B OF THE ACT, THE PAYMENTS MADE UP TO THE DUE DATE FOR FILING OF THE RETURN OF INCOME ARE OUTSIDE THE DISALLOWANCE U/S 43B OF THE ACT . CONSIDERING THE SAME, WE DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOLLOWING THE SAID RATIO LAID DOWN IN THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT. ACCORDINGLY, GROUND NO.2 RAISED BY THE ASSESSEE IS ALLOWED . 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOU NCED IN THE OPEN COURT ON 0 5 T H OCTO BER, 2016. S D / - S D / - ( SAKTIJIT DEY ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 0 5 .10 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI