Power Systems, Kolkata V. DCIT, Circle - 50, Kolkata, Kolkata

ITA 987/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62117 (ITAT-KOLKATA)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 07-07-2011
• Court: TRIBUNAL
• Department Lawyers: K R MONDAL
• Assessee Lawyers: M TIWARI
• Keywords: Cost of acquisition
• Section: 40A(3); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , /AND , . !' . #$ ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM ] % % % % / I.T.A NO. 987/KOL/2011 &' () &' () &' () &' ()/ // / ASSESSMENT YEAR: 2007-08 POWER SYSTEMS (PAN: AAGFP4761R) VS. DEPUTY COMMIS SIONER OF INCOME-TAX, CIRCLE-50, KOLKATA. (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 08.06.2012 DATE OF PRONOUNCEMENT: 08.06.2012 FOR THE APPELLANT: SHRI M. TIWARI FOR THE RESPONDENT: SHRI K. R. MONDAL #/ / ORDER IMMEDIATELY UPON CONCLUSION OF HEARING OF THIS APPE AL ON 8 TH JUNE, 2012, THE BENCH PASSED THE FOLLOWING ORDER: 8 TH JUNE, 2012 (I) GROUND NOS. 1, 11 AND 12 ASSESSEES COUNSEL CONCEDE D THAT THESE DO NOT REQUIRE ANY ADJUDICATION. (II) GROUND NOS. 4 & 10 ARE NOT PRESSED, HENCE DISMISSED AS NOT PRESSED. DR NOT OBJECTED. (III) GROUND NOSA. 2, 3, 5, 6, 7 AND 8 PERTAINS TO DISALL OWANCE U/S. 40(A)(IA) OF THE ACT AND ARE COVERED BY SPL. BENCH DECISION IN THE CASE OF MERILYN SHIPPING & TRANSPORTERS OF VISAKHAPATNAM BENCH. HENCE, THESE GROUNDS ARE ALLO WED IN PRINCIPLE BUT FOR VERIFICATION SENT BACK TO AO. (IV) GROUND NO. 9 PERTAINS TO DISALLOWANCE U/S. 40(A)(3) IS DISMISSED. THE ASSESSEE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT. DETAILED ORDER WILL FOLLOW. IN ACCORDANCE WITH THE ABOVE, THE REASONED ORDER IS NOW SET OUT AS FOLLOWS: PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO. 145/CIT(A)-XXXII/09-10/CIR-50/KOL DATED 24.02.2011. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-50, KOLKATA U/S. 143(3) OF THE INCOME-TAX AC T, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2007-08 VIDE HIS ORDER D ATED 21.12.2009. 2. AT THE OUT SET LD. COUNSEL FOR THE ASSESSEE CONC EDED THAT GROUND NOS. 1, 11 AND 12 DO NOT REQUIRE ANY ADJUDICATION, HENCE THEY ARE UNADJU DICATED. 2 ITA 987/K/2011 POWER SYSTEMS A.Y. 07-08 3. GROUND NOS. 4 AND 10 ARE NOT PRESSED, HENCE DISM ISSED AS NOT PRESSED. 4. GROUND NOS. 2, 3, 5, 6, 7 AND 8 PERTAINS TO DISA LLOWANCE MADE BY AO U/S. 40(A)(IA) OF THE ACT AS THE ASSESSEE FAILED TO DEDUCT TDS ON ERECTIO N AND COMMISSIONING CHARGES, LEGAL CHARGES, EQUIPMENT CHARGES, CUSTOMER MEET EXPENSES, DRAWINGS AND DESIGN, INDUSTRIAL TRADE FAIR EXPENSES. LD. COUNSEL FOR THE ASSESSEE FILED FOLLO WING DETAILS IN RESPECT TO AMOUNT PAID DURING THE YEAR IN RESPECT OF THE ABOVE EXPENSES AND ONLY ONE EXPENSES WITH RESPECT TO EQUIPMENT CHARGES WAS OUTSTANDING AS ON 31.03.2007. THE DETA ILS OF DISALLOWANCE U/S. 40(A)(IA) OF THE ACT ARE IN RESPECT OF FOLLOWING: EXPENSES PAGE NO. O F BOOK BOOK AMOUNT INCURRED DURING THE F.Y. 2006-07 (IN RS.) (A) AMOUNT PAID DURING THE FY 2006-07 (IN RS.) (B) AMOUNT OUTSTANDING AS ON 31.03.2007 (IN RS.) (C= A-B) (A)ERECTION & COMMISSIONING CHARGES B)LEGAL CHARGES C)EQUIPMENT CHARGES DCUSTOMER MEET EXPENSES E)DRAWING & DESIGNS F)INDUSTRIAL TRADE FAIR EXPENSES 42,43,44,45 49 47, 48 50 51 52 TOTAL 13,04,706 28,220 4,20,942 1,55,000 1,36,000 1,11,142 21,56,010 13,04,706 28,220 3,11,850 1,55,000 1,36,000 1,11,142 20,46,918 NIL NIL 1,09,092 NIL MIL NIL 1.09.092 LD. COUNSEL FOR THE ASSESSEE STATED THAT NOW THE IS SUE IN RESPECT OF ERECTION AND COMMISSIONING CHARGES, LEGAL CHARGES, CUSTOMER MEET EXPENSES, DRA WINGS AND DESIGN EXPENSES AND INDUSTRIAL TRADE FAIR EXPENSES ARE COVERED BY THE DECISION OF SPECIAL BENCH OF VISHAKAPATNAM BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (VISAKHAPATNAM)(SB) REPORTED IN (2012) 136 ITD 23 (SB), WHEREIN THE ISSUE IS AS REG ARDS TO THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT HAS NOT TO BE MADE IN CASE THE EXPENDITURE IS P AID DURING THE YEAR HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF TH E MAJORITY VIEW IS AS UNDER: I AM OF THE FIRM VIEW THAT SECTION 40(A)(IA) OF TH E ACT IS APPLICABLE ONLY TO EXPENDITURE WHICH IS PAYABLE AS ON 31 ST MARCH OF EVERY YEAR AND CANNOT BE INVOKED TO DISALLOW THE AMOUNTS WHICH HAVE ALREADY BEEN PAID DURING THE PREVIOUS YEAR, WITHOUT DEDUCTING TAX AT SOURCE. LD. COUNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT I N RESPECT TO EQUIPMENT CHARGES OF RS.1,09,092/- OUT OF TOTAL EXPENSES OF RS.4,20,942/ - REMAINS UNPAID AS ON 31.3.2007. HENCE, QUA THAT DISALLOWANCE CAN BE CONSIDERED AND HE CONC EDED THIS POSITION. WE FIND THAT EXCEPT THE AMOUNT OF RS.1,09,092/- IN RESPECT TO EQUIPMENT CHA RGES THE ISSUES ARE COVERED BY THE DECISION OF MERILYN SHIPPING & TRANSPORTS (SUPRA). THIS FAC T WAS CONFRONTED TO LD. SR. DR, WHO CONCEDED THE POSITION THAT THE ISSUE IS COVERED BY SPECIAL BENCH, CITED SUPRA AS THE REVENUE WANTS TO KEEP THE ISSUE ALIVE HE RELIED ON THE ORDE R OF AO. IN VIEW OF THE ABOVE, WE FIND THAT EXCEPT THE AMOUNT OF RS.1,09,092/- THE ENTIRE ISSUE IS COVERED BY THE DECISION OF MERILYN SHIPPING & TRANSPORTS (SUPRA). RESPECTFULLY FOLLOW ING THE SAME, WE DELETE THE DISALLOWANCES 3 ITA 987/K/2011 POWER SYSTEMS A.Y. 07-08 MADE BY AO AND CONFIRMED BY CIT(A) EXCEPT THE AMOUN T OF RS.1,09,092/-. AO WILL RECOMPUTE THE INCOME ACCORDINGLY. THESE GROUNDS OF ASSESSEE S APPEAL ARE PARTLY ALLOWED AS INDICATED ABOVE. 5. COMING TO NEXT ISSUE RAISED BY WAY OF GROUND NO. 9 IS AS REGARDS TO DISALLOWANCE OF PURCHASE COST BY INVOKING THE PROVISION OF SECTION 40A(3) OF THE ACT AT RS.47,726/-. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTI CED THAT THE ASSESSEE HAS MADE CASH PURCHASE OF RS.2,38,631/- IN VIOLATION OF PROVISION S OF SECTION 40A(3) OF THE ACT AND THE ASSESSEE COULD NOT EXPLAIN THAT THE ASSESSEES CASE FALLS UNDER RULE 6D OF I. T. RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES). HENCE TH E AO DISALLOWED 20% OF THE TOTAL CASH PURCHASES AT RS.47,726/-. AGGRIEVED, ASSESSEE PREF ERRED APPEAL BEFORE CIT(A). EVEN BEFORE CIT(A) ASSESSEE COULD NOT SUBSTANTIATE ITS C LAIM THAT ITS CASE FALLS UNDER ANY OF THE EXCEPTION. ON QUERY FROM THE BENCH EVEN THE LD. CO UNSEL FOR THE ASSESSEE FAIRLY CONCEDED THAT ITS CASE DOES NOT FALL UNDER ANY OF THE EXCEP TION AS PROVIDED UNDER RULE 6D OF THE RULES. SINCE ASSESSEES CASE IS SQUARELY COVERED U/S. 40A(3) OF THE ACT THE DISALLOWANCE MADE BY AO IS CONFIRMED. THIS GROUND OF APPEAL OF ASSESEE IS DISMISSED. 6. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART 7. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- . !' !'!' !' . #$ , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( '$ '$ '$ '$) )) ) DATED : 8TH JUNE, 2012 01 &23 4 JD.(SR.P.S.) #/ 5 - 6#(7- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT POWER SYSTEMS, 735/2, LAKE TOWN, BLOCK -A, KOLKATA-700 089 2 -.+, / RESPONDENT DCIT, CIRCLE-50, KOLKATA. 3 . /& ( )/ THE CIT(A), KOLKATA 4. 5. /& / CIT KOLKATA => -& / DR, KOLKATA BENCHES, KOLKATA . -/ TRUE COPY, #/&?/ BY ORDER, 3 /ASSTT. REGISTRAR . `