Trio Elevators Company (India) Ltd., Ahmedabad V. The Dy.CIT.,Circle-4(1)(2), Ahmedabad

ITA 952/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8274 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Depreciation; Retrospective amendment; Bad and doubtful debts; Revised return
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 952/AHD/2015 (ASSESSMENT YEAR: 2010-11) TRIO ELEVATORS COMPANY (INDIA) LTD., 404, SHIVAM COMPLEX, BHUYANGDEV CROSS ROAD, SOLA ROAD, GHATLODIYA, AHMEDABAD APPELLANT VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), AHMEDABAD RESPONDENT PAN: AACCT4923E /BY ASSESSEE : SHRI S. N. SOPARKAR, A.R. /BY REVENUE : SHRI V. K. SINGH, SR. D.R. /DATE OF HEARING : 10.10.2017 /DATE OF PRONOUNCEMENT : 12.10.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 ARISES AGAINST THE CIT(A)-8, AHMEDABADS ORDER DATED 21.01.2015 IN CAS E NO. CIT(A)-XIV/187/12- 13, CIT(A)-I/219/13-14, IN PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH SIDES. CASE FILE PERUSED. 2. THE ASSESSEES FIRST SUBSTANTIVE GROUND PLEADS T HAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING ITS C LAIM OF PROVISION FOR DOUBTFUL DEBTS OF RS.24,31,091/- AND THAT PERTAINING TO DOUB TFUL ADVANCES OF RS.2,15,496/- ITA NO. 952/AHD/15 [TRIO ELEVATORS CO. (INDIA) LTD . VS. DCIT] A.Y. 2010-11 - 2 - AFTER CONCLUDING THAT THE SAME ARE NOT ADMISSIBLE B EING MERE PROVISIONS INSTEAD OF ACTUAL EXPENSES. BOTH PARTIES TAKE US TO A CO-ORDI NATE BENCH ORDER IN ASSESSEES CASE ITSELF ITA NO.291/AHD/2015 DATED 22.09.2017 IN ASSESSMENT YEAR 2011-12 REMITTING THE VERY ISSUE BACK TO THE ASSESSING OFFI CER TO BE DECIDED IN LIGHT OF HONBLE JURISDICTIONAL HIGH COURTS FULL BENCH DECI SION IN TAX APPEAL NO. 749 OF 2012 CIT VS. VODAFONE ESSAR GUJARAT LTD. IT FURTHE R EMERGES THAT THEIR LORDSHIPS FULL BENCH DECISION IN THE MEAN TIME HAS SETTLED TH E ISSUE IN ABOVE CASE IN ORDER DATED 28.08.2017 READING AS UNDER: 3. THE QUESTION WAS ANSWERED BY THE LARGER BENCH I N FOLLOWING MANNER: 23. BY WAY OF CULMINATION OF ABOVE JUDICIAL PRONOU NCEMENTS AND STATUTORY PROVISIONS, THE SITUATION THAT ARISES IS THAT PRIOR TO THE INTRODUCTION OF CLAUSE(I) TO THE EXPLANATION TO SECTION 115JB, AS HELD BY THE SUPREME COURT IN CASE OF HCL COMNET SYSTEMS AND SERVICES LTD.(SUPRA), THE TH EN EXISTING CLAUSE (C) DID NOT COVER A CASE WHERE THE ASSESSEE MADE A PROVISIO N FOR BAD OR DOUBTFUL DEBT. WITH INSERTION OF CLAUSE (I) TO THE EXPLANATION WIT H RETROSPECTIVE EFFECT, ANY AMOUNT OR AMOUNTS SET ASIDE FOR PROVISION FOR DIMIN UTION IN THE VALUE OF THE ASSET MADE BY THE ASSESSEE, WOULD BE ADDED BACK FOR COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT. HOWEVER, IF THIS WAS NOT A MERE PROVISION MADE BY THE ASSESSEE BY MERELY DEBITING T HE PROFIT AND LOSS ACCOUNT AND CREDITING THE PROVISION FOR BAD AND DOUBTFUL DE BT, BUT BY SIMULTANEOUSLY OBLITERATING SUCH PROVISION FROM ITS ACCOUNTS BY RE DUCING THE CORRESPONDING AMOUNT FROM THE LOANS AND ADVANCES ON THE ASSET SID E OF THE BALANCE SHEET AND CONSEQUENTLY, AT THE END OF THE YEAR SHOWING THE LO ANS AND ADVANCES ON THE ASSET ASIDE OF THE BALANCE SHEET AS NET OF THE PROV ISION FOR BAD DEBT, IT WOULD AMOUNT TO A WRITE OFF AND SUCH ACTUAL WRITE OFF WOU LD NOT BE HIT BY CLAUSE (I) OF THE EXPLANATION TO SECTION 115JB. THE JUDGMENT IN C ASE OF DEEPAK NITRITE LIMITED(SUPRA) FELL IN THE FORMER CATEGORY WHEREAS FROM THE BRIEF DISCUSSION AVAILABLE IN THE JUDGMENT IT APPEARS THAT CASE OF I NDIAN PETROCHEMICALS CORPORATION LTD. (SUPRA), FELL IN THE LATER CATEGOR Y. 4. ACCORDINGLY, THIS TAX APPEAL HAS BEEN PLACED BEF ORE US FOR FINAL DISPOSAL IN TERMS OF THE OPINION OF THE LARGER BENCH. THE RELE VANT FACTS EMERGING FROM THE RECORD, AS STATED BY THE TRIBUNAL IN THE IMPUGNED J UDGMENT, ARE AS UNDER:- IT IS A FACT THAT THE ASSESSEE HAD MADE PROVISION FOR BAD AND DOUBTFUL DEBTS AND HE SAME HAS BEEN CHARGED TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH 2003. IN THE BALANCE SHEET AS ON 31 ST MARCH 2003 OF THE ASSESSEE, IT CAN BE SEEN THAT THE PROVISION OF BAD AND DOUBTFUL DEBTS HAS BEEN REDUCED FROM THE GROSS DEBTORS AND NET SUNDRY DEBTO RS ARE SHOWN AS ASSET IN THE BALANCE SHEET. THUS THE PROVISION FOR BAD AND DOUBTFUL DEBTS CANNOT BE TERMED AS A PROVISION FOR LIABILITY BUT IS IN THE N ATURE OF DIMINUTION IN THE VALUE OF ASSET. ITA NO. 952/AHD/15 [TRIO ELEVATORS CO. (INDIA) LTD . VS. DCIT] A.Y. 2010-11 - 3 - 5. IN VIEW OF SUCH FACTS, APPLYING THE FINDINGS OF THE LARGER BENCH, THE QUESTION IS ANSWERED AGAINST THE REVENUE. TAX APPEAL IS DISMIS SED. 3. THE REVENUE FAILS TO REBUT ALL THESE DEVELOPMENT S. WE THEREFORE REMIT THE INSTANT ISSUE AS WELL BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION AS PER LAW AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO ASSESSEE. THIS FIRST SUBSTANTIVE GROUND IS THEREFORE TAKEN AS ACCEPTED FOR STATISTIC AL PURPOSES. 4. THE ASSESSEES SECOND SUBSTANTIVE GROUND SEEKS T O REVERSE BOTH THE LOWER AUTHORITIES ACTION DISALLOWING ITS CONTRIBUTION TO WARDS ESI/PF AMOUNTING TO RS.531/- ON ACCOUNT OF THE SAME BEING DEPOSITED WEL L AFTER THE DUE DATE. THE ASSESSEE IS FAIR ENOUGH DURING THE COURSE OF HEARIN G THAT HONBLE JURISDICTIONAL HIGH COURTS DECISION IN GUJARAT STATE ROAD TRANSPORT CO RPORATION CASE (2014) 41 TAXMANN.COM 100 (GUJ) HAS DECIDED THE ISSUE IN REVE NUES FAVOUR. WE THEREFORE REJECT THIS SECOND SUBSTANTIVE GROUND. 5. THE ASSESSEES THIRD SUBSTANTIVE GROUND READS TH AT THE CIT(A) HAS ERRED IN NOT ADMITTING ITS ADDITIONAL SUBSTANTIVE GROUND RAI SED IN COURSE OF LOWER APPELLATE PROCEEDINGS SEEKING TO CLAIM DEPRECIATION OF RS.1,5 6,17,576/- U/S. 32(1) OF THE ACT ON GOODWILL OF RS.6,24,70,303/- AS REFLECTED IN SCH EDULE 3 OF ITS AUDITED BALANCE SHEET AS ON 31.03.2010. WE NOTICE FROM CIT(A)S OR DER PARA 13 THAT HE HAS REJECTED ASSESSEES INSTANT ADDITIONAL GROUND MAINL Y FOR THE REASON THAT THE SAME WAS NOT RAISED IN ITS RETURN OF INCOME. IT IS NO M ORE IN DISPUTE THAT APPRECIATION ON GOODWILL IS VERY MUCH ALLOWABLE AS PER HONBLE APEX COURTS JUDGMENT IN SMIFS SECURITIES LTD. CASE 348 ITR 302 (SC). LEARNED DEP ARTMENTAL REPRESENTATIVE FAILS TO REBUT THE FACT THAT ASSESSEES AUDITED BALANCE S HEET DULY REVEALS THE RELEVANT FIGURE IN SCHEDULE 3. WE THEREFORE ACCEPT THE INST ANT SUBSTANTIVE GROUND IN PRINCIPLE BY QUOTING HONBLE APEX COURTS JUDGMENT IN GOETZE (INDIA) LTD. CASE (2006) 284 ITR 323 (SC) THAT THIS TRIBUNAL AS WELL AS ALL APPELLATE AUTHORITIES IN THE ACT DO HAVE JURISDICTION TO ENTERTAIN SUCH A PLEA W ITHOUT EVEN FILING OF A REVISED RETURN. WE DIRECT THE ASSESSING OFFICER TO FINALIZ E NECESSARY FACTUAL VERIFICATION. IT ALSO EMERGES THAT THE ABOVE CO-ORDINATE BENCH DECIS ION HAS ALREADY ITA NO. 952/AHD/15 [TRIO ELEVATORS CO. (INDIA) LTD . VS. DCIT] A.Y. 2010-11 - 4 - ACCEPTED SIMILAR CLAIM IN SUCCEEDING ASSESSMENT YEA R. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW ASSESSEES INSTANT CL AIM AFTER FINALIZING THE ABOVE VERIFICATION. 6. THIS ASSESSEES APPEAL IS THEREFORE PARTLY ACCE PTED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF OCTOBER, 2017.] SD/- SD/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 12/10/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--, , /0 / DR, ITAT, AHMEDABAD 1 +23 45 / GUARD FILE. BY ORDER / , // , /0