ASSISTANT COMMISSIONER OF INCOME TAX , JHUNJHUNU V. SHASHI KANT KHETAN, JHUNJHUNU

ITA 926/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2152 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SEEMA MEENA
• Keywords: Tax effect
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK L NL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA- @ ITA NO. 926/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2012-13 THE DCIT, CIRCLE, JHUNJHUNU. CUKE VS. SHRI SHASHI KANT KHETAN, H-3, INDRA NAGAR, JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AEHPK0657G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VIJAY GOYAL (C.A.) & SHRI GULSHAN AGARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. SEEMA MEENA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/02/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 06/02/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 19.09.2017 OF CIT (A), JAIPUR FOR THE ASSESSMENT YE AR 2012-13. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 20,62,004 /- MADE BY THE AO U/S 40(A)(IA) OF THE ACT ON THE BASIS OF NON-DED UCTION OF TDS WHILE MAKING PAYMENT OF INTEREST TO NBFIS. ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 2 (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 7,40,870/ - MADE BY THE AO ON ACCOUNT OF PROPORTIONATE OF INTEREST ON BORRO WED FUNDS ALLEGED TO HAVE BEEN UTILIZED FOR MAKING INVESTMENT IN NON- BUSINESS ASSETS. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ENTIRE ADDITION ON ACCOU NT OF ADDITION MADE U/S 2(22)(E) AMOUNTING TO RS. 4,54,752/-. (IV) THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D, WITHDRAW OR INSERT ANY GROUND OR GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESS EE HAS RAISED AN OBJECTION OF MAINTAINABILITY OF THE APPEAL OF THE R EVENUE DUE TO THE TAX EFFECT NOT EXCEEDING RS. 10 LACS AS PER THE CBDT CI RCLE NO. 21 OF 2015 DATED 10.12.2015. THE LD. AR HAS SUBMITTED THAT THE GRIEVANCE OF THE REVENUE IN THE APPEAL COMPRISING OF THREE ADDITIONS DELETED BY THE LD. CIT(A) COME TO RS. 32,57,626/- AND THEREFORE, THE T AX ON THE SAID AMOUNT @ 30% COMES TO RS. 9,77,288/-. HENCE, THE LD . AR HAS SUBMITTED THAT THE PRESENT APPEAL IS NOT MAINTAINAB LE AND LIABLE TO BE DISMISSED IN LIMINE DUE TO LOW TAX EFFECT. 3. ON THE OTHER HAND, LD. DR HAS SUBMITTED THAT THE TOTAL TAX ON THIS AMOUNT OF RS. 32,57,626/- COME TO RS. 10,06,607/-. THE LD. DR HAS SUBMITTED THAT THIS AMOUNT OF TOTAL TAX INCLUDES ED UCATION CESS AND HIGHER EDUCATION CESS. TO COUNTER THIS SUBMISSION, THE LD. AR OF THE ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 3 ASSESSEE HAS POINTED THE TAX DOES NOT INCLUDE THE E DUCATION CESS IN VIEW OF THE VARIOUS DECISIONS OF THE TRIBUNAL. HE H AS REFERRED TO THE VARIOUS DECISION OF THE TRIBUNAL AS UNDER:- ACIT VS. M/S SHIV EDIBLES LTD. IN MA NO. 95/JP/2017 DY. CIT VS. SHRI YUVRAJ SINGH IN ITA NO. 408/LKW/20 11 DCIT VS. M/S DONE BELL ELECTRONICS INDIA LTD. IN IT A NO. 2480/MUM/2012 ACIT VS. M/S DALLAS FINANCE LTD. IN ITA NO. 3946/DE L/2010 ITO VS SRI P. PRASEN KUMAR IN M.A. NO. 35/HYD/2017 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOT THAT UNDI SPUTEDLY THE TAX EFFECT IN THIS APPEAL OF THE REVENUE EXCLUDING THE EDUCATION CESS IS RS. 9,77,288. THE DETAILS OF THE COMPUTATION OF TAX AND EDUCATION CESS ARE AS UNDER:- S.NO. PARTICULARS AMOUNT TAX, SURCHARGE AND CESS TAX EFFECT IF EDUCATION CESS IS NOT CONSIDERED 1. GROUND NO. 1 2062004 2. GR OUND NO. 2 740870 3. GROUND NO. 3 454752 TOTAL 32,57,626 32,57,626 TAX @ 30% 9,77,288 9,77,288 SURCHARGE NIL NIL EDUCATION CESS 2% OF 19,546 ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 4 INCOME TAX SECONDARY AND HIGHER EDUCATION OF INCOME TAX CESS IS 1% 9,773 TOTAL 10,06,607 9,77,288 THE DETAILS OF THE TOTAL AMOUNT INVOLVED IN THE REV ENUES APPEAL AND COMPUTATION OF TAX AS WELL AS EDUCATION CESS ARE NO T IN DISPUTE. THE ONLY CONTENTION OF LD. DR ON THIS POINT IS THAT THE TAX INCLUDES THE EDUCATION CESS AND THEREFORE, WHEN THE TOTAL DEMAND IN THE CASE IS MORE THAN RS. 10 LACS THEN, IT CANNOT BE CONSIDERED AS LOW TAX FOR THE PURPOSE OF MAINTAINABILITY OF THE APPEAL OF THE REV ENUE. WE DO NOT AGREE WITH THE CONTENTION OF THE LD. DR THAT EDUCAT ION CESS SHALL BE PART OF THE TAX FOR THE PURPOSE OF LIMIT OF TAX EFFECT A S PER THE CIRCULAR NO. 21 OF 2015. THE DEFINITION OF TAX HAS BEEN PROVIDED U/S 2(43) AS UNDER:- [(43 ) 'TAX' 72 IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON TH E 1ST DAY OF APRIL, 1965, AND ANY SUBSEQUENT ASSESSMENT YEAR MEANS INCOME- TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT, AND IN RELATION TO ANY OTHER ASSESSMENT YEAR INCOME - TAX AND SUPER- TAX CHARGEABLE UNDER THE PROVISIONS OF THIS ACT PRI OR TO THE AFORESAID DATE 74 [AND IN RELATION TO THE ASSESSMENT YEAR COMMENCING ON THE 1ST DAY OF APRIL, 2006, AND ANY S UBSEQUENT ASSESSMENT YEAR INCLUDES THE FRINGE BENEFIT TAX PAY ABLE ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 5 UNDER SECTION 115WA ] ;] THUS, IT IS CLEAR THAT AS PER THE DEFINITION PROVID ED U/S 2(43) OF THE ACT THE TERM TAX MEANS INCOME TAX CHARGEABLE UNDER THE PROVISIONS OF THE ACT COMPRISING OF INCOME TAX AND SUPER TAX AS WELL FRINGE BENEFIT OF TAX. THEREFORE, THE DEFINITION OF TAX DOES NOT INCLUDE E DUCATION CESS IN ITS AMBIT AND ACCORDINGLY FOR THE PURPOSE OF DETERMININ G THE MAINTAINABILITY OF THE REVENUES APPEAL THE TAX HAS TO BE COMPUTED ONLY THE INCOME TAX, SUPER TAX, FRINGE TAX BUT NOT EDUCA TION CESS. THE COORDINATE BENCH OF THIS TRIBUNAL IN CASE OF ACIT V S. M/S SHIV EDIBLES LTD. (SUPRA) AS CONSIDERED THIS ISSUE IN PARA 2 TO 3 AS UNDER:- 2. THE LD DR RELIED ON THE SUBMISSIONS MADE IN THE MISC. APPLICATION. WHILE THE LD. AR OF THE ASSESSEE HAS S UBMITTED AS UNDER: 1. IN THE MA FILED BY THE DEPARTMENT, IT IS STATED THAT THE ID. CIT(A) DELETED THE ADDITIONS OF RS.29,71,662/- ON W HICH, THE TAX @ OF 30% INCLUDING EDUCATION CESS & SHEC @ OF 3% AND SURCHARGE @ 10%, CAME TO RS.10,10,068/-. ACCORDINGLY, THE TAX ON THE DISPUTED ADDITIONS WAS MORE THAN RS.10 LAKHS AND HENCE THE HONORABLE ITAT HAS MISTAKENLY RELIED UPON THE CBDT CIRCULAR. IN THIS CONNECTION IT IS SUBMITTED AS UNDER: 2. AT THE OUTSET IT IS SUBMITTED THAT THE ABOVE APP EAL IS FILED BY THE DEPARTMENT IS COVERED BY THE CBDT CIRCULAR B EING A LOW TAX EFFECT, AS PER THE FOLLOWING CALCULATION: PARTICULARS AMOUNT (IN RS.) ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 6 TOTAL ADDITIONS: I. TRADING ADDITION 24,75,535/- II. REPAIR WORK EXPENSES 2,58,966/- III. ADDITION U/S 40(A)(IA) 2,37,161/- TOTAL ADDITIONS 29,71,662/- TAX ON TOTAL ADDITIONS @ 30% 8,91,499/- SURCHARGE @ 10% 89,150/- 9,80,649/- EC & SHEC @ 3% 29,419/- TOTAL TAX 10,10,068/- 3. AS PER THE CBDT CIRCULAR, THE DEPARTMENT SHOULD NOT FILE AN APPEAL WHERE THE TAX EFFECT INVOLVED IS BELOW RS.10 LAKHS. THEREFORE, THE ONLY QUESTION TO BE DECIDED IS WHETH ER THE TAX EFFECT INCLUDES INCOME TAX ONLY OR INCLUDES SUR CHARGE AND EDUCATION CESS ALSO. IN THIS CASE, THE TAX EFFE CT INCLUDING THE SAME STANDS AT RS.10,10,068/-. HOWEVE R, AT THE SAME TIME, EXCLUDING THE SURCHARGE AND CESS, TH E AMOUNT OF INCOME TAX ONLY AT THE RATE OF 30% STANDS AT RS.8,91,499/- WHICH IS FAR BELOW RS.10 LAKHS. 4. COVERED ISSUE: THIS CONTROVERSY IS ALREADY COVER ED AND THIS HONBLE BENCH HAS TAKEN A VIEW THAT FOR THE PURPOSE S OF COMPUTING TAX EFFECT, THE AMOUNT OF EDUCATION CESS SHOULD NOT BE CONSIDERED. 4.1 IN THE CASE OF ACIT V/S MOHAMMAD MIYAN IN ITA N O. 171/JP/2012 VIDE ORDER DATED 25.04.2017 (DPB 1-4), IT WAS CONTENDED THAT BEFORE INCLUDING THE AMOUNT OF EC & SHEC ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 7 OF RS. 19,733/-, THE TAX CAME TO RS.9,86,629/- WHIC H WAS BELOW THE LIMIT. ACCEPTING THE CONTENTION, THE HON BLE JAIPUR ITAT HELD THAT 6. THE REVENUE HAS NOT GIVEN ANY OTHER COMPUTATIO N, THEREFORE IN VIEW OF THIS COMPUTATION, WE DISMISS T HE APPEAL OF THE REVENUE AS NOT MAINTAINABLE AS EVEN I F THE SURCHARGE IS INCLUDED THEN ALSO THE TAX EFFECT REMA INS LESSER THAN THE PRESCRIBED LIMIT I.E. RS. 9,86,629/ -. 5. OTHER DIRECT DECISIONS: 5.1 IN THE CASES OF DCIT V/S DOME BELL ELECTRONICS INDIA LTD. IN ITA NO. 2480/MUM/201 2 VIDE ORDER DATED 22.07.2016 (DPB 5-9) AND DCIT V/S SHRI YUVRAJ SINGH IN ITA NO. 408/LKW/2011 VIDE ORDER DATED 23.1 2.2013 (DPB 10-13), IT HAS BEEN HELD THAT FOR THE PURPOSE OF COMPUTING TAX EFFECT FOR THE PURPOSES OF THE CIRCUL AR, SHOULD NOT INCLUDE THE SURCHARGE AND CESS. 5.2 ALSO THE HONBLE DELHI ITAT IN THE CASE OF ACIT V/S DALLAS FINANCE LTD. IN ITA NO. 3946/DEL/2010 VIDE THEIR OR DER DATED 07.04.2017 AT PARA 7 (DPB 14-22), HELD THAT 7. SO, RESPECTFULLY FOLLOWING THE AFORESAID VIEW OF THE COORDINATE BENCH, WE DO NOT SEE MERIT IN THIS CONTENTION OF THE ID. DR THAT THE SURCHARGE AND THE CESS IS A PART OF THE TAX. 5.3 IN THE CASES OF ACIT V/S R. VISWANATHAN IN ITA NO. 30/MDS/2011 AND ITO VS. P. PRASEN KUMAR IN ITA NO. 418/HYDERABAD/2014 WHEREIN, IT HAS BEEN HELD THAT SURCHARGE AND EDUCATION CESS SHOULD NOT BE INCLUDED WHILE CALCULATING THE TAX EFFECT. THIS CASE HAS RECENTLY BEEN FOLLOWED IN ITO VS. M/S.SAROJBEN G. SHAH IN MA NO.89/AHD/2016 VIDE ORDER DATED 06/01/2017. 5.4 LATEST IN THE CASE OF ITO VS. LAMBA CELEBRATIO NS RESORT IN MA NO. 45/CHD./2016 DATED 19.05.2017, ITO VS. SHRI ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 8 VISHWESHAR SAHAKARI PATPEDHI MARYADIT IN ITA NO. 3929/MUM./2016 DATED 19.04.2017, ITO VS. PATTEBOINA MAHESWARA RAO IN ITA NO. 29/VIZ./2013 DATED 03.05.2 017, ITO VS P.PRASEN KUMAR IN MA NO. 63/HYD./2016 DATED 07.12.2016, ITO VS. SMT. PARULBEN JAYANTIBHAI PATEL IN 320/AHD/2014 VIDE ORDER DATED 12.04.2017 AND DCIT V S. M/S. TILAKNAGAR INDUSTRIES LTD IN ITA NO.2506/MUM/2 015 VIDE ORDER DATED 31.05.2017 5.5 RECENTLY IN ITO VS. SHRI K. VIVEKANANDAN IN M.P . NO.220/MDS/2016 VIDE ORDER/ DATED 15.03.2017, THE M A FILED BY THE DEPARTMENT HAS BEEN REJECTED AND THE C ASE OF CI1 V. K. SRINIVASAN (1972) 83 ITR 346 WAS ALSO DISTINGUISHED. 5.6 ALSO KINDLY REFER DALMIA CEMENT (BHARAT) LTD. V /S CIT (2013) 263 CTR 0308 (DE) THOUGH RENDERED IN THE CONTEXT OF SEC. 43B YET IS RELEVANT BECAUSE IT HAS HELD THAT TAX DO ES NOT INCLUDE CESS AND SURCHARGE. THUS, THE TAX EFFECT HAVING BEEN BELOW RS.10 LAKHS , THE HONBLE ITAT HAS RIGHTLY HELD T THE MA OF THE DEPAR TMENT WAS NOT MAINTAINABLE. 6. IN ANY CASE, IF THERE IS A CONTRARY VIEW, THE IS SUE BECOMES DEBATABLE WHEN RECTIFICATION IS PERMISSIBLE. OTHERW ISE ALSO IT IS A CASE OF REVIEW WHICH IS NOT PERMISSIBLE WITHIN THE NARROW SCOPE OF THE POWERS CONFERRED UPON THE ITAT U/S 254(2) OF THE ACT. THE PRESENT MISCELLANEOUS APPLIC ATION FILED BY THE REVENUE, IS AN ATTEMPT TO PRAY FOR REV IEW UNDER THE GRAB OF RECTIFICATION. KINDLY REFER ITO V/S ITA T (1987) 168 ITR 0809 (RAJ) AND 82 ITR 50 (SC). ACCORDINGLY THE APPEAL OF THE REVENUE KINDLY BE DISMISSED. THE LD AR OF THE ASSESSEE HAS RELIED ON THE FOLLOWI NG CASE LAWS: (I) ITO VS. SHRI K. VIVEKANANDAN IN ITA NO. 1256/MD S/2012 VIDE ORDER DATED 15.03.2017. ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 9 (II) ITO VS LAMBA CELEBRATIONS RESORT IN MA NO. 45/ CHD./2016 DATED 19.05.2017 (III) ITO VS SHRI VISHWESHAR SAHAKARI PATPEDHI MARY ADIT IN ITA NO. 3929/MUM./2016 DATED 19.04.2017 (IV) ITO VS PATTEBOINA MAHESWARA RAO IN ITA NO. 29/ VIZ./2013 DATED 03.05.2017 (V) ITO VS P.PRASEN KUMAR IN MA NO. 63/HYD./2016 DA TED 07.12.2016. 3. AFTER HEARING BOTH THE SIDES, THE BENCH FIND THA T THE TAX EFFECT INCLUDING THE SURCHARGE ALSO COME BELOW THE THRESHOLD LIMIT OF RS. 10.00 LACS. CONSIDERING THESE FACTS, THE BEN CH FIND NO MERIT IN THIS M.A. OF THE REVENUE AND THE SAME IS HEREBY DISMISSED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WHEN THE TAX EFFECT EXCLUDING EDUCATION CESS IS LESS THAN RS. 10 LACS THEN, THE APPEAL OF THE REVENUE IS NOT MAINTAINABLE IN VIEW OF THE C BDT CIRCULAR NO. 21 OF 2015. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/02/2018 SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06/02/2018. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO. 926/JP/2017 DCIT V SHRI SHASHI KANT KHETAN 10 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE, JHUNJHUNU. 2. IZR;FKHZ@ THE RESPONDENT- SHRI SHASHI KANT KHETAN, JHUNJHUNU. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 926/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR