ACIT, Circle-14(2) TDS, Hyderabad V. M/s. Margadarsi Chit Fund Pvt.Ltd., Hyderabad

ITA 925/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66281 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K A SAI PRASAD
• Assessee Lawyers: NIVEDITA BISWAS
• Keywords: Corroborative evidences
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.569/HYD/2012 ASSESSMENT YEAR : 1996-97 SPM INSTRUMENT INDIA PVT. LTD., HYDERABAD. .... APPELLANT PAN/GIR S-55 VS. JCIT, RANGE-3(1), HYDERABAD. RESPONDENT APPELLANT BY : SHRI K.A. SAI PRASAD RESPONDENT BY : SMT. NIVEDITA BISWAS DATE OF HEARING : 27-08-2012 DATE OF PRONOUNCEMENT : 21-09-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 28-3-2002 OF CIT (A)-IV, HYDERABAD PASS ED IN APPEAL NO. 376/JC/SR-4/CIT(A) IV/2001-02 AND IT PERTAINS T O THE ASSESSMENT YEAR 1996-97. 2. AFTER BEING RECALLED THIS APPEAL IS REHEARD FOR DECIDING THE FOLLOWING THREE GROUNDS:- 5. THE CIT (A) ERRED IN NOT DIRECTING THE AO TO D EDUCT CHIT DIVIDEND OF RS.59,700/- AGAINST CHIT LOSS OF R S.70,000 THUS NOT REDUCING THE ELIGIBLE PROFITS FOR COMPUTIN G DEDUCTION U/S 80HHC AND 80HHE OF THE ACT. 2 ITA NO. 569 OF 2002 SPM INSTRUMENT INDIA PVT. LTD., HYD. 6. THE CIT (A) ERRED AND DISALLOWING RS.4,07,405/- CLAIMED BY THE APPELLANT AS PART OF OPENING STOCK O F FINISHED GOODS AS ON 1 ST APRIL, 1995 AND SOLD IN THE PREVIOUS YEAR ENDED 31 ST MARCH, 1996. 7. THE CIT (A) ERRED IN INCLUDING EXCISE DUTY AND S ALES TAX COLLECTIONS OF RS.31,35,989/- AS PART OF TOTAL TURNOVER (DENOMINATOR) WHILE CALCULATING DEDUCTION U/S 80HHC AND 80HHE OF THE ACT. AT THE OUTSET, THE LEARNED AR SUBMITTED THAT HE DOE S NOT WANT TO PRESS GROUND NO.7. HENCE, GROUND NO.7 IS DISMISSED AS NOT PRESSED. 3. SO FAR AS GROUND NO.5 IS CONCERNED, LD. DR RAISE D A PRELIMINARY OBJECTION THAT SINCE THE ASSESSEE HAS N OT RAISED ANY GROUND IN THIS RESPECT BEFORE THE CIT (A) AND SINCE THIS ISSUE DOES NOT ARISE OUT OF THE ORDER OF CIT (A), THE GRO UND RAISED BY THE ASSESSEE FOR THE FIRST TIME CANNOT BE ENTERTAIN ED. 4. THE LD. AR FAIRLY SUBMITTED THAT SPECIFIC GROUN D ON THIS ISSUE WAS NOT RAISED BEFORE THE CIT (A). WE ALSO F IND FROM THE GROUNDS OF APPEAL FILED ALONG WITH MEMORANDUM OF AP PEAL BEFORE CIT (A) NO SUCH GROUND WAS RAISED BEFORE CIT (A). CONSIDERING THE FACT THAT THIS GROUND WAS NOT RAISED BEFORE THE CIT (A) AND THE ISSUE DOES NOT ARISE OUT OF THE ORDER OF THE CI T (A) WE ARE NOT INCLINED TO ENTERTAIN THIS GROUND RAISED FOR THE FI RST TIME BEFORE US. THE GROUND RAISED BY THE ASSESSEE IS THEREFORE DISMISSED. 5. GROUND NO.6 RELATE TO DISALLOWANCE OF DEDUCTION OF OPENING STOCK OF RS.4,07,405 FROM THE PROFIT. 6. BRIEFLY THE FACTS ARE IN COURSE OF THE ASSESSMEN T PROCEEDING THE ASSESSEE SUBMITTED A LETTER BEFORE THE AO CLAIM ING CERTAIN ADDITIONAL DEDUCTIONS FROM PROFIT. ONE OF THEM BEI NG AN AMOUNT 3 ITA NO. 569 OF 2002 SPM INSTRUMENT INDIA PVT. LTD., HYD. OF RS.4,07,405 BEING THE CLOSING STOCK DISCLOSED UN DER VDIS 1997 FOR THE YEAR ENDED ON 31-3-1995 AND TREATED AS OPENING STOCK FOR THE ASSESSMENT YEAR 1996-97. THE AO FOUN D THAT IN COURSE OF ASSESSMENT PROCEEDING FOR THE ASSESSMENT YEAR 1995- 96 WHEN THE ASSESSING OFFICER NOTICED DIFFERENCE IN THE QUANTITY OF CLOSING STOCK OF FINISHED GOODS SHOWN IN THE AUDITE D ACCOUNTS AND THE RG-I REGISTER THE ASSESSEE OPTED FOR VDIS AND D ISCLOSED AN AMOUNT OF RS.4,07,405 TOWARDS CLOSING STOCK OF FINI SHED GOODS AS ON 31-3-1995 AS PER THE RG-I REGISTER MAINTAINED FO R CENTRAL EXCISE PURPOSE. THE AO THEREFORE DID NOT ACCEPT TH E CLAIM OF THE ASSESSEE SINCE THE ASSESSEE HAS NOT DECLARED ANY EX CESS SALE FOR THE ASSESSMENT YEAR UNDER DISPUTE. THERE IS ALSO N O DIFFERENCE BETWEEN THE RG-I REGISTER AND THE BOOKS OF ACCOUNTS FOR THE ASSESSMENT YEAR 2006-07 WITH REGARD TO SALES AND NU MBER OF ITEMS PRODUCED. DIFFERENCE IS ONLY WITH REGARD TO THE VALUATION OF STOCK. WHILE THE ASSESSEE HAS SHOWN IT AS FINISHED GOODS IN THE CLOSING STOCK, IN RG-I REGISTER, WHEREAS HE HAS SHO WN IT AS WORK IN PROGRESS IN THE BOOKS OF ACCOUNTS IN THE ASST. Y EAR 1995-96. ON THE AFORESAID FINDING THE AO DISALLOWED THE ADDI TIONAL CLAIM OF DEDUCTION OF RS.4,07,405.00. 7. THE ASSESSEE CHALLENGED THE DISALLOWANCE BY FILI NG AN APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A) THE ASSESSE E CONTENDED THAT SINCE THE AO IN AN EARLIER PREVIOUS YEAR DISA LLOWED ASSESSEES CLAIM TO TREAT THE GOODS AS PER RG-1 REG ISTER AS PART OF WORK IN PROGRESS THE ASSESSEE TAKING ADVANTAGE OF VDIS DECLARED THE STOCK LYING IN RG-1 REGISTER AS PART O F THE CLOSING STOCK. HOWEVER, THE STOCKS WERE SOLD IN THE ASSESS MENT YEAR 1996-97 AND OFFERED FOR TAXATION. 8. THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO MATERIALS ON RECORD SUSTAINED THE DISALLOWANCE 4 ITA NO. 569 OF 2002 SPM INSTRUMENT INDIA PVT. LTD., HYD. BY OBSERVING THAT CLOSING STOCK DECLARED UNDER VDIS WAS SOLD IN THE ASST. YEAR 1996-97 AND SALES WERE INCORPORATED IN THE P & L A/C. THE CIT (A) HELD THAT IN ABSENCE OF SUCH PRO OF IF ASSESSEES CLAIM WILL BE ALLOWED THEN THERE WILL BE UNDERSTAT EMENT OF INCOME FOR THE ASSESSMENT YEAR UNDER DISPUTE. THE FINDING OF THE CIT (A) IS EXTRACTED HEREUNDER:- THE AO EXAMINED THE APPELLANTS CONTENTION AND FOUN D THAT THERE IS A VARIATION IN THE VALUATION OF THE C LOSING STOCK AND NOT IN THE QUANTITIES AFFECTED. THE APPE LLANT CLASSIFIED THE FINISHED GOODS IN THE RG-1 REGISTER AS WORK- IN-PROGRESS. AFTER THE AO NOTICED THE DISCREPANCY IN ADOPTION OF THE VALUATION, THE APPELLANT OPTED FOR VDIS. NO EVIDENCE WAS FURNISHED BEFORE THE ASSESSING OFFICER OR DURING THE APPEAL PROCEEDINGS TO SUBSTANTIATE THAT THE ADDITIONAL CLOSING STOCK DISCLOSED UNDER VDIS IS SO LD FOR 96-97 AND THE SALES ARE INCORPORATED IN THE PROFIT & LOSS ACCOUNT. IN THE ABSENCE OF SUCH PROOF, ADOPTING TH E DISCLOSURE OF THE PREVIOUS YEAR AS THE OPENING STOC K OF THIS YEAR WOULD NULLIFY THE DISCLOSURE MADE BY THE APPEL LANT. IN OTHER WORDS, THE INCOME OF THE YEAR 96-97 WOULD BE UNDERSTATED IF THE SET OFF OF THE STOCK VALUE UNDER VDIS IS CONSIDERED FOR THIS YEAR. THE APPELLANT FAILED TO ESTABLISH THAT THE CLOSING STOCK VALUE ADOPTED IS PROPERLY INCORPORATED IN THE BOOKS OF ACCOUNT AND THE SALES REFLECTED IN THE P & L ACCOUNT. IN THE ABSENCE OF SATISFACTORY EVIDENCE, THE APPELLANTS CLAIM IS NOT ACCEPTABLE. THE AOS ACTION IS CORRECT AS PER LAW AND HENCE UPHELD. THIS GROUND OF APPEAL FAILS AND IS R EJECTED. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS A FACT THAT THE ASSESSEES ACCOUN TS ARE AUDITED AND PROFIT HAS BEEN SHOWN ON THE BASIS OF THE SALES RECORDED IN THE BOOKS OF ACCOUNTS. THEREFORE, IT IS FOR THE AS SESSEE TO PROVE 5 ITA NO. 569 OF 2002 SPM INSTRUMENT INDIA PVT. LTD., HYD. WITH STRONG SUPPORTING EVIDENCE THAT THE ADDITIONAL CLOSING STOCK DISCLOSED UNDER VDIS WAS SOLD DURING THE ASSESSMENT YEAR 1996- 97 AND WAS PART OF THE SALES SHOWN IN THE P & L A/C AND THEREFORE SHOULD BE REDUCED FROM THE PROFIT DECLARED FOR THE ASSESSMENT EAR. THE LEARNED AR HAS NOT PRODUCED ANY EVIDENCE TO DEMONSTRATE THIS FACT BEFORE US. IN THE AFORESAID CIRCUMSTANCES, WE UPHOLD THE FINDING OF THE CIT (A). THE GROUND R AISED BY THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21 -9-2012. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 21 ST SEPT. 2012. COPY TO:- 1) SPM INSTRUMENT INDIA (P) LTD., 7-1-27/1, 1 ST FLOOR, SRINIVASA COMPLEX, AMEERPET, HYDERABAD. 2) DCIT, RANGE-3(1), HYDERABAD. 3) THE CIT(A)-IV, HYDERABAD 4) CIT CONCERNED, HYDERABAD. 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERA BAD. JMR* 6 ITA NO. 569 OF 2002 SPM INSTRUMENT INDIA PVT. LTD., HYD.