Beekay Steel Industries Ltd., Kolkata V. PCIT-1, Kolkata, Kolkata

ITA 954/KOL/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1950 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K SRIHARI
• Section: 43B; 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SHRI S.S.GODARA, JM & HONBLE SHRI M.BALAGANESH, AM] I.T.A NO. 954/KOL/201 7 ASSESSMENT YEAR : 2012-1 3 M/S BEEKAY STEEL INDUSTRIES LTD. -VS- PR. CIT- 1, KOLKATA [PAN: AABCB 3205 A] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUBASH AGARWA L, ADVOCATE FOR THE RESPONDENT : SHRI P.K. SRIHARI, C IT DR DATE OF HEARING : 13.11.2018 DATE OF PRONOUNCEMENT : 20.11.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA [IN SHORT THE LD CIT] IN MEMO NO. PR. CIT- 1/KOL/REVISION U/S 263/ 2016-17/13877-80 DATED 22.0 2.2017 AGAINST THE ORDER PASSED BY JCIT, RANGE-3, KOLKATA [ IN SHORT THE LD AO] UN DER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30.03.201 5 FOR THE ASSESSMENT YEAR 2012-13. 2. THE ONLY EFFECTIVE ISSUE IN THIS APPEAL IS AS TO WHETHER THE LD. ADMINISTRATIVE CIT WAS JUSTIFIED IN INVOKING REVISIONAL JURISDICTION U /S 263 OF THE ACT, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.954/KOL/2017 M/S BEEKAY STEEL INDUSTRIES LTD. A.YR.2012-13 2 3. THE BRIEF FACTS OF THIS APPEAL ARE THAT THE ASSE SSEE IS A PUBLIC LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF IRON AND STEEL PRODUCTS AND ALSO DERIVING INCOME FROM RENTING ACTIVITIES. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2012- 13 WAS FILED DECLARING TOTAL INCOME OF RS. 24,49,87 ,560/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.03.2015 DETER MINING TOTAL INCOME OF THE ASSESSEE AT RS. 41,52,13,220/- AFTER MAKING CERTAIN ADDITION S AND DISALLOWANCES. THIS ASSESSMENT WAS SOUGHT TO BE REVISED BY THE LD. CIT BY INVOKING REVISIONAL JURISDICTION U/S 263 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAD MADE PR OVISION FOR EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS TO THE TUNE OF RS. 5,74,21, 924/- AND THAT AS PER THE TAX AUDIT REPORT OF THE ASSESSEE, A SUM OF RS. 30,45,000/- ON LY WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT AN D ACCORDINGLY, THE REMAINING SUM OF RS. 5,43,76,924/- OUGHT TO HAVE BEEN DISALLOWED U/S 43B OF THE ACT BY THE LD. AO. THE LD. CIT OBSERVED THAT NO ENQUIRY WAS MADE BY THE LD . AO IN THIS REGARD AND HENCE TREATED THE ORDER OF THE LD. AO AS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF REVENUE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THA T THE ASSESSEE HAD MADE PROVISION FOR EXCISE DUTY OR CLOSING STOCK OF FINISHED GOODS IN RESPECT OF ITS VARIOUS DIVISIONS AS UNDER: JAMSHEDPUR DIVISION RS. 6,35,878/- STRUCTURAL DIVISION RS. 2,84,03,950/- SPECIAL DIVISION RS. 57,47,452/- CHENGALPET DIVISION RS. 1,54,35,922/- RADICE DIVISION RS. 29,64,356/- VENKATESH DIVISION RS. 42,34,366/- TOTAL RS. 5,74,21,924/- 3 ITA NO.954/KOL/2017 M/S BEEKAY STEEL INDUSTRIES LTD. A.YR.2012-13 3 THIS PROVISION FOR EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS WAS DEBITED IN THE PROFIT AND LOSS ACCOUNT AND CLAIMED AS DEDUCTION AN D CORRESPONDINGLY THE SAME WAS ALSO INCLUDED BY THE ASSESSEE COMPANY IN THE VALUATION O F CLOSING STOCK OF FINISHED GOODS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 145A OF T HE ACT, ON WHICH FACT THERE IS NO DISPUTE. THE TAX AUDITOR IN THE TAX AUDIT REPORT HA D OBSERVED THAT A SUM OF RS. 30,45,000/- WAS PAID AS EXCISE DUTY ON SALES BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. IN THIS REGARD, THE L D. AR PLACED ON RECORD THE CENTRAL EXCISE RETURNS WHEREIN, IT IS EVIDENT THAT JAMSHEDP UR UNIT WAS ENGAGED ONLY IN JOB WORK ACTIVITIES AND ACCORDINGLY DEPRIVED OF ENJOYIN G OF THE BENEFIT OF INPUT CREDIT ON PURCHASES FOR ADJUSTMENT TOWARDS EXCISE DUTY PAYABL E ON SALE OF FINISHED GOODS. IT IS NOT IN DISPUTE THAT THE ASSESSEE MAINTAINS DIVISION WIS E DETAILS OF INPUT CREDIT AND DIVISION WISE DETAILS OF EXCISE DUTY PAYABLE ON SALES. FROM THE SAID EXCISE RETURNS, WE FIND THAT THE TOTAL EXCISE DUTY PAYABLE ON CLOSING STOCK OF F INISHED GOODS IN THE SUM OF RS. 5,74,21,924/- MINUS SUMS PAID TO THE EXTENT OF RS. 30,45,000/- I.E. RS. 5,43,76,924/- GOT ADJUSTED WITH AVAILABLE INPUT CREDIT IN THE RESPECT IVE DIVISIONS WHICH EFFECTIVELY TANTAMOUNT TO CONSTRUCTIVE PAYMENT MADE BY THE ASSE SSEE IN THE NEXT FINANCIAL YEAR BUT BEFORE THE DUE DATE OF FILING RETURN OF INCOME U/S 139(1) OF THE ACT. THE DETAILS OF THE INPUT CREDITS ADJUSTED WITH EXCISE DUTY PAYABLE ON SALES IN THE SUBSEQUENT FINANCIAL YEAR WHICH IS WELL BEFORE THE DUE DATE OF FILING OF RETU RN OF INCOME U/S 139(1) OF THE ACT, THEREBY ELIGIBLE FOR DEDUCTION U/S 43B OF THE ACT A RE AS UNDER: DIVISION DATE AMOUNT I) STRUCTURAL DIVISION 30.04.2012 RS. 1,29,66,452/ - 31.05.2012 RS. 99,04,498/- 30.06.2012 RS. 1,01,53,156/- TOTAL RS. 3,30,24.106/- II) SPECIAL DIVISION 30.04.2012 RS. 46,46,054/- 31.05.2012 RS. 53,71,506/- TOTAL RS. 1,00,17,560/- 4 ITA NO.954/KOL/2017 M/S BEEKAY STEEL INDUSTRIES LTD. A.YR.2012-13 4 III) CHENGALPET DIVISION 30.04.2012 RS. 59,43,360/ - 31.05.2012 RS. 63,30.807/- 30.06.2012 RS. 68,35,032/- TOTAL RS. 1,91,09,199/- IV) RADICE DIVISION 30.04.2012 RS. 35,79,703/- V) VENKATESH DIVISION 30.04.2012 RS. 29,85,577/- 31.05.2012 RS. 29,43,525/- TOTAL RS. 51,29,102/- GRAND TOTAL RS. 7,08,59,670/- 4.1. THE ASSESSEE EXPLAINED BEFORE THE LD. CIT THAT THE EXCISE DUTY LIABILITY ARISES ONLY ON REMOVAL OF FINISHED GOODS FROM THE FACTORY OR WARE HOUSE OF THE ASSESSEE. HOWEVER, AS PER THE PROVISIONS OF SECTION 145A OF THE INCOME TA X ACT, 1961, THE EXCISE DUTY COMPONENT ON CLOSING STOCK OF FINISHED GOODS IS REQ UIRED TO BE PROVIDED FOR INCLUSION IN THE VALUATION OF CLOSING STOCK OF FINISHED GOODS TH EREBY MAKING IT REVENUE NEUTRAL. THE ASSESSEE SOUGHT TO EXPLAIN THAT THIS EXCISE DUTY PR OVISION ON CLOSING STOCK OF FINISHED GOODS GETS EFFECTIVELY ADJUSTED WITH THE AVAILABLE INPUT CREDIT IN THE SUBSEQUENT YEAR BEFORE US DUE DATE OF FILING OF RETURN OF INCOME UN DER 139(1) OF THE ACT. WE FIND THAT THESE FACTS ARE NOT PROPERLY APPRECIATED BY THE LD. CIT AND WE HOLD THAT THE LD. CIT HAD ERRONEOUSLY INVOKED REVISIONARY JURISDICTION IN THE INSTANT CASE AS THERE IS ABSOLUTELY NO ERROR IN THE ORDER OF THE LD. AO OR ANY PREJUDICE T HAT IS CAUSED TO THE INTEREST OF THE REVENUE IN THE INSTANT CASE. FROM THE FACTS AND EVIDENCES A VAILABLE ON RECORD, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 43B OF THE A CT IN RESPECT OF PROVISION FOR EXCISE DUTY ON CLOSING STOCK OF FINISHED GOODS. 4.2. WE ALSO FIND THAT THE LD. CIT ERRED IN CONCLUD ING THAT NO ENQUIRY WAS MADE WITH REGARD TO THIS EXCISE DUTY COMPONENT ON VALUATION O F CLOSING STOCK BY THE LD. AO. WE FIND FROM PAGES 95 TO 98 OF THE PAPER BOOK FILED BY THE ASSESSEE BEFORE US CONTAINS QUESTIONNAIRE DATED 11.11.2014 ISSUED TOGETHER WITH THE NOTICE U/S 142(1) OF THE ACT 5 ITA NO.954/KOL/2017 M/S BEEKAY STEEL INDUSTRIES LTD. A.YR.2012-13 5 WHEREIN, THE LD. AO HAD SOUGHT FOR CALCULATION OF V ALUATION OF CLOSING STOCK DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THIS HAS BEEN DUL Y REPLIED BY THE ASSESSEE VIDE LETTER DATED 13.02.2015 WHEREIN IT WAS SUBSEQUENTLY BROUGH T TO THE NOTICE OF THE LD. AO THAT THE FINISHED GOODS ARE INCLUSIVE OF EXCISE DUTY. THE EN TIRE CALCULATION OF CLOSING STOCK OF FINISHED GOODS TOGETHER WITH OTHER CLOSING STOCK DE TAILS WERE ALSO FURNISHED AS ANNEXURE III OF THE SAID LETTER DATED 13.02.2015. THE LD. AO WAS CONVINCED ON THE SAID WORKINGS AND THE CALCULATIONS GIVEN BY THE ASSESSEE AND ACCORDIN GLY DEEMED IT FIT NOT TO MAKE ANY ADDITION OR DISALLOWANCE U/S 43B ON THE IMPUGNED IS SUE. THIS, IN OUR CONSIDERED OPINION, CANNOT BE TERMED AS ERRONEOUS ACTION ON THE PART OF THE LD .AO. SINCE ADEQUATE ENQUIRIES WERE DULY MADE BY THE LD. AO IN THE ASSESSMENT PROC EEDINGS THUS, THERE IS NO QUESTION OF INVOKING REVISIONARY JURISDICTION U/S 263 OF THE AC T BY THE LD. CIT. 5. IN VIEW OF THE AFORESAID FINDINGS IN THE FACTS A ND CIRCUMSTANCES OF THE CASE, WE HAVE NO HESITATION IN QUASHING THE REVISION PROCEEDINGS U/S 263 OF THE ACT OF THE LD. CIT. ACCORDINGLY , GROUNDS RAISED BY THE ASSESSEE ARE AL LOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 20.11.2018 SD/- SD/- [S.S. GODARA] [ M .BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 20.11.2018 SB, SR. PS 6 ITA NO.954/KOL/2017 M/S BEEKAY STEEL INDUSTRIES LTD. A.YR.2012-13 6 COPY OF THE ORDER FORWARDED TO: 1. M/S BEEKAY STEEL INDUSTRIES LTD., 4 TH FLOOR, LANDSDOWNE TOWER, 2/1A, SARAT BOSE ROAD, KOLKATA-700020. 2. PR. CIT-1, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRIN GHEE SQUARE, KOLKATA-700069 3..C.I.T.(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSISTANT REGISTRAR ITAT , KOLKATA BENCHES