ACIT, CHENNAI V. M/s. Pleasant Foods Ltd., CHENNAI

ITA 968/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51887 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A. NO. 968/MDS/2011 (ASSESSMENT YEAR : 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(2), CHENNAI 600 034. (APPELLANT) V. M/S PLEASANT FOODS LTD., NO.125, ORAKKADU VILLAGE, VIA SOLAVARAM, CHENNAI 600 067. PAN : AAACP5521C (RESPONDENT) APPELLANT BY : SHRI ANIRUDH RAI, CIT-DR RESPONDENT BY : SHRI B.S . PURSHOTHAM, C.A. SHRI N. DEVANATHAN, ADVOCATE DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 12.09.2011 O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE, FOR ASSESSMENT YEAR 20 06-07, IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX (APPEALS)-V, CHENNAI, DATED 22.3.2011. I.T.A. NO. 968/MDS/2011 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE- COMPANY, WHO IS A MANUFACTURER OF SUGAR BOILED CONF ECTIONERY ON CONTRACT BASIS WITH M/S NESTLE INDIA LTD., FILED IT S RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 28.11.2006, DECLARING A TOTAL INCOME OF ` 1,32,86,770/-. A COPY OF LEDGER ACCOUNT AND A COP Y OF AGREEMENT WERE PRODUCED WHEN CALLED FOR AND IT WAS FOUND THAT THERE ARE 88 NUMBERS OF AIR INFORMATION AVAILABLE IN THE CASE, A RE RELATED TO CONTRACT RECEIPTS TOTALLING TO ` 2,02,02,857/- SINCE THESE PAYMENTS WERE FROM THE CONTRACTEE COMPANY, AS PER THE TDS CE RTIFICATES. THE ASSESSEE HAS DISCLOSED AN AMOUNT OF ` 3,98,50,973/- AS AGAINST TOTAL RECEIPTS AS PER TDS CERTIFICATES FOUND TO BE ` 4,17,07,687/-. THUS, THERE IS A DIFFERENCE OF ` 18,56,714/-. THE EXPLANATION OF THE ASSESSEE WAS THAT THE CONTRACTOR USED TO DEDUCT TAX SUCH AMOUNT OF EXPENDITURE WHICH IS REIMBURSABLE TO THE ASSESSEE. IT WAS EXPLAINED THAT THE JOB CHARGES RECEIVED WERE ACCOUNTED FOR AN D CLAIMED RECOVERABLE BY CREDITING UNDER THE HEAD OTHER INCO ME. SUCH A CLAIM RECOVERABLE CREDITED IS ` 4,10,919/- WHICH IS THE AMOUNT DEBITED IN P&L ACCOUNT ALSO. EVEN THEREAFTER, THER E IS A DIFFERENCE OF I.T.A. NO. 968/MDS/2011 3 ` 14,45,795/-. THIS AMOUNT WAS ADDED TO THE ASSESSE ES TOTAL INCOME FOR WHICH THE ASSESSEE HAD NO EXPLANATION. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE CIT(APPEALS) WHO HAS DELETED A MAJOR PORTION OF ` 11,92,394/- OUT OF THE TOTAL ADDITION OF ` 14,45,795/-. NOW, THE REVENUE HAS CHALLENGED THE MAJOR DELETION BY FILING THIS APPEAL BEFORE US. 4. IT WAS ARGUED BY LEARNED D.R. THAT THE A.O. HAS ADDED THIS AMOUNT ON ACCOUNT OF UNDERSTATEMENT OF JOB RECEIPTS FROM M/S NESTLE INDIA LTD. WHICH WERE NOT SUBSTANTIATED INSOFAR AS THAT THIS AMOUNT SAID TO HAVE BEEN REIMBURSED BY M/S NESTLE INDIA LT D. ON ACCOUNT OF FUEL CHARGES WAS NOT CLAIMED AS EXPENSES. 5. PER CONTRA, THE LEARNED A.R. HAS RELIED ON THE O RDER OF LD. CIT(APPEALS). 6. AFTER CONSIDERING RIVAL CONTENTIONS, PARTICULARL Y THE ASSESSMENT ORDER AND THE CLAIMS MADE FOR EXPENDITURE BY THE AS SESSEE, WE FIND THAT CIT(APPEALS) IS NOT JUSTIFIED IN COMING TO THE CONCLUSION THAT THE TOTAL INCOME IS NOT IMPACTED ANY WAY. WHEN THE ASS ESSEE HAD ITSELF I.T.A. NO. 968/MDS/2011 4 ADMITTED THAT THE REIMBURSEMENT INCLUDED IN THE TDS CERTIFICATE WAS NOT OFFERED AS INCOME, IT IS NOT CLEAR AS TO WHETHE R THE REIMBURSEMENT EXPENSES WERE CLAIMED OR NOT IN THE PROFIT AND LOSS ACCOUNT. THE ACCOUNTING SYSTEM ADOPTED BY THE ASSESSEE IN THIS R EGARD SEEMS TO BE CONFUSING. THERE WAS A SEPARATE ACCOUNT, NAMELY , CLAIMS RECOVERABLE IN RESPECT OF WHICH THE ASSESSEE HAD A DMITTED REIMBURSEMENT AS INCOME AND CLAIMED THE SAME AS EXP ENDITURE. THEN, WHY A SIMILAR METHOD WAS NOT FOLLOWED FOR THI S REIMBURSEMENT OF FUEL CHARGES? THE CLAIM OF THE ASSESSEE REGARDI NG TOTAL INCOME WAS OF ` 11,92,394/-, WHEREAS THE A.O. ADDED THE DIFFERENCE IN RECEIPTS BETWEEN TDS CERTIFICATE AND INCOME OFFERED . THERE IS NO PROOF REGARDING THE FINDING THAT NESTLE INDIA LTD. HAD DEDUCTED TAX ON EXPENSES REIMBURSED BY THEM. WE HAVE SEEN THE CHAR T DRAWN BY THE CIT(APPEALS) AT PAGES 2 AND 3 OF HIS ORDER. BUT, W E ARE UNABLE TO INFER WHETHER TDS WAS DEDUCTED ON REIMBURSED EXPENS ES OR OTHERWISE. SINCE A PROPER VERIFICATION OF THE FACT S HAS NOT BEEN DONE, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE NEEDS TO BE RESTORED TO THE FILE OF THE A.O. FOR FURTHER VERIFICATION OF EX ACT POSITION OF THIS CLAIM OF THE ASSESSEE. THEREFORE, AFTER SETTING ASIDE TH E FINDINGS OF LD. I.T.A. NO. 968/MDS/2011 5 CIT(APPEALS), WE REMIT BACK THE ISSUE TO THE FILE O F THE A.O. WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER GIVING O PPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSES ONLY. THE ORDER WAS PRONOUNCED IN THE COURT ON 12 TH SEPTEMBER, 2011. SD/- SD/- (DR. O.K. NARAYANAN) (HARI OM MARATHA) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 12 TH SEPTEMBER, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-V, CHENNAI-34 (4) CIT, CHENNAI-III, CHENNAI (5) D.R. (6) GUARD FILE