M/s. Gujarat Urja Vikas Nigam Board., Baroda V. The Dy.CIT.,Circle-1(1), Baroda

ITA 996/AHD/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5792 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-05-2017
• Assessment Year: 1998-1999
• Appeal Filed On: 05-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: J P SHAH
• Keywords: Depreciation; Business expenditure; Initiation of penalty proceedings
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, VICE PRESIDENT & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.996/AHD/2011 ( / ASSESSMENT YEAR : 1998-99 ) GUJARAT URJA VIKAS NIGAM LTD. (ERSTWHILE GUJARAT ELECTRICITY BOARD) SARDAR PATEL VIDYUT BHAVAN RACE COURSE CIRCLE, BARODA / VS. THE ASST.CIT CIRCLE-1(1) BARODA !% ./ ./ PAN/GIR NO. : AAACG 8540 BN ( %( / APPELLANT ) .. ( )%( / RESPONDENT ) %(* / APPELLANT BY : SHRI J.P.SHAH, AR )%(+* / RESPONDENT BY : SHRI R.I. PATEL, CIT-DR ,+ / DATE OF HEARING 30/05/2017 -./+ / DATE OF PRONOUNCEMENT 31/05/2017 / O R D E R PER PRADIP KUMAR KEDIA, AM: THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, BAROD A [CIT(A) IN SHORT] DATED 17/01/2011 FOR THE ASSESSMENT YEAR (AY) 1998-99. ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER:- 01. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF 9,10,80,852/- ON ACCOUNT OF NON-RECONCILIATION OF PROVISION FOR GRAT UITY DESPITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 2.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF 5,06,818/- ON ACCOUNT OF UNPAID SALES TAX UNDER SECTION 43B OF TH E IT ACT DESPITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 3.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AND ON FACTS IN SETTING ASIDE THE DISALLOWANCE OF 89,13,462/- ON ACCOUNT OF UNPAID BONUS UNDER SECTION 43B OF THE IT ACT DESPITE THE FACT THAT ALL THE FACTS NECESSARY FOR DECIDING THE ISSUE WERE SUBMITTED AT THE TIME OF HEARING OF THE APPEAL. 4.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND ON FACTS HAS CONFIRMED THE DISALLOWANCE OF PRIO R PERIOD EXPENSES AMOUNTING TO 53,53,28,278/- WITHOUT APPRECIATING THE FACT THAT THE ENTIRE EXPENDITURE WAS CRYSTALLIZED DURING THE YEAR . 4.1. THE LEARNED COMMISSIONER (APPEALS) OUGHT TO H AVE APPRECIATED THAT ON EXACTLY IDENTICAL FACT THE HONBLE ITAT IN THE APPELLANTS OWN CASE FOR THE ASST.YEAR 1997-98 HAS SET ASIDE THE IS SUE FOR RE- VERIFICATION. 5.0 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN LAW AND ON FACTS HAS DISMISSED THE GROUND RELATING TO T HE INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE I.T.ACT. 6.0 THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, DE LETE OR MODIFY AND OF THE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TI ME OF HEARING OF THIS APPEAL. ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 3 - 3. THE ASSESSEE HAS RAISED CERTAIN GRIEVANCES AS PER GROUND NOS.1 TO 3 AGAINST THE ORDER OF THE CIT(A) AS NOTED ABOVE. TH ESE GROUNDS CONCERN CERTAIN DISALLOWANCES BY THE ASSESSING OFFICER (AO) WHICH WERE ASSAILED BEFORE THE CIT(A). ON GOING THROUGH THE ORDER OF T HE CIT(A), WE NOTICE THAT THE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE SUBJECT TO VERIFICATION OF ATTENDANT FACTS GOVERNING THE ISSUES INVOLVED AS PER THESE GROUNDS. WE FIND THAT THE ACTION OF THE CIT(A) IS JUST AND P ROPER AS WARRANTED IN THE CIRCUMSTANCES OF THE CASE AND CANNOT BE FAULTED . THUS, WE DO NOT SEE ANY MERIT IN THE GRIEVANCES RAISED BY THE ASSESSEE AS PER GROUND NOS.1 TO 3 OF ITS APPEAL. RESULTANTLY, GROUND NOS.1, 2 & 3 ARE DISMISSED. 4. GROUND NO.4 CONCERNS DISALLOWANCE OF PRIOR PERIO D EXPENSES OF RS.53,53,28,278/-. IN THE COURSE OF HEARING, THE L D.AR FOR THE ASSESSEE MR.J.P.SHAH SUBMITTED THAT THE ASSESSEE HAS CREDITE D PRIOR PERIOD INCOME OF RS.68,45,01,805/- IN ITS PROFIT & LOSS ACCOUNT C ONCERNING THE EARLIER YEARS. LIKEWISE, TOTAL PRIOR PERIOD EXPENSES OF RS .1,21,98,30,083/- CONNECTED TO EARLIER YEARS HAVE BEEN DEBITED DURING THE YEAR. RESULTANTLY, THE ASSESSEE HAS CLAIMED NET PRIOR PER IOD EXPENSES OF RS.53,53,28,278/- AS ITS BUSINESS EXPENSES. THE LD .AR FOR THE ASSESSEE SUBMITTED THAT THE BREAK-UP OF THE PRIOR PERIOD EXP ENSES HAVE BEEN PROVIDED TO THE AO WHICH HAS BEEN RECORDED IN PARA- 8 OF ITS ASSESSMENT ORDER. HE CONTENDED THAT THE AO HAS WRONGLY DISALL OWED THE NET PRIOR ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 4 - PERIOD EXPENSES OF RS.53.53 CRORES AS STATED EARLIE R ON THE PREMISE THAT THE ASSESSEE HAS FAILED TO FURNISH PROPER REPLY IN SUPPORT OF ITS CLAIM. THE LD.AR SUBMITTED THAT THE CIT(A) HAS ALSO REJECTED T HE PRIOR PERIOD EXPENSES CLAIMED BY THE ASSESSEE ON WRONG APPRECIAT ION OF FACTS AND CIRCUMSTANCES BY A VERY BRIEF AND CRYPTIC ORDER. T HE LD.AR REFERRED TO THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF PR.CIT VS. ADANI ENTERPRISES LTD. IN TAX APPEAL NO.573 OF 2016 ORDER DATED 20/07/2016 FOR THE PROPOSITION THAT WHEN THE EXPEND ITURE OF SUCH NATURE HAVING NEXUS TO EARLIER YEAR IS A SMALL FRACTION OF THE TOTAL TRANSACTION AS IN CASE OF ASSESSEE AND WHEN THE ASSESSEE IS SUSCEP TIBLE TO TAX AT THE SAME RATE IN THE PRESENT YEAR VIS--VIS EARLIER YEARS, THE CLAIM OF THE ASSESSEE OUGHT NOT TO BE REJECTED. THE LD.AR VEHEMENTLY SUB MITTED THAT THE ASSESSEE IS A PUBLIC SECTOR UNDERTAKING AND ITS ACC OUNTS ARE SUBJECTED TO AUDIT AND REVIEW BY THE CAG. THEREFORE, THE BONAFI DES OF THE EXPENDITURE PER SE CANNOT BE DISPUTED. THE LIMITED DISPUTE IS THE ACCEPTABILITY OF EXPENSES QUA THE CURRENT YEAR INCOME. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE ISSUE REQUIRES ADJU DICATION IN THE LIGHT OF THE DECISION OF THE HONBLE GUJARAT HIGH COURT(SUPR A). THE LD.AR NEXT SUBMITTED THAT SIMILAR ISSUE AROSE IN ASSESSEES OW N CASE IN ITA NO.3796/AHD/202 RELEVANT TO AY 1997-98 ORDER DATED 26/06/2009 WHERE THE ISSUE WAS SET ASIDE TO THE FILE OF AO ADOPTING COMMON SENSE APPROACH. THE LD.AR ACCORDINGLY PLEADED FOR SUITAB LE RELIEF. ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 5 - 5. THE LD.DR FOR THE REVENUE MR.R.I.PATEL, ON THE O THER HAND, RELIED UPON THE ORDER OF AUTHORITIES BELOW AND IN FURTHERA NCE SUBMITTED THAT THE FACTUAL DETAILS CONCERNING THE EXPENSES CLAIMED REQ UIRES TO BE VERIFIED WHICH HAS NOT BEEN PLACED ON RECORD BEFORE THE LOWE R AUTHORITIES. 6. WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS AN D PERUSED THE ORDERS OF THE AUTHORITIES AS WELL THE CASE-LAWS REF ERRED. THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF PRIOR PERIOD EXPEN SES OF RS.53.53CRORES AS PER GROUND NO.4 OF ITS APPEAL. THE DISALLOWANCE HAS BEEN MADE ON THE GROUND THAT THE EXPENSES UNDER VARIOUS HEADS AS NOTED IN THE ASSESSMENT ORDER PERTAINED TO EARLIER YEARS AND THE ASSESSEE WHICH IS FOLLOWING SYSTEM OF ACCOUNTING SHOULD HAVE MADE PRO VISION FOR EXPENSES IN THOSE RESPECTIVE YEARS AND CLAIMED THEM AS DEDUC TION. WE HAVE GONE THROUGH THE BREAK-UP OF THE EXPENSES AS NOTED IN PA RA-8 OF THE ASSESSMENT ORDER AND OBSERVE THAT CERTAIN EXPENSES DECLARED UN DER THE HEAD OTHER ADJUSTMENTS RS.30.75 CRORES; OTHER CHARGES RS.79. 34 LAKHS; DEPRECIATION UNDER PROVIDED RS.7.86 CRORES ETC. A RE OSTENSIBLY VAGUE AND DOES NOT INDICATE THE NATURE OF CLAIM WITH SUFF ICIENT PARTICULARITY OBSCURE. WE SIMULTANEOUSLY NOTE THAT ASSESSEE IS A STATE GOVERNMENT UNDERTAKING AND ITS ACCOUNTS ARE SUBJECTED TO REVIE W BY CAG AND THEREFORE IT CANNOT BE POSTULATED THAT THERE WAS AN Y DELIBERATENESS IN NOT FURNISHING RELEVANT DETAILS BEFORE THE REVENUE AUTH ORITIES. THE ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 6 - BONAFIDES OF THE ASSESSEE IS ALSO AUGMENTED BY THE FACTS THAT THE ASSESSEE HAS REPORTED STAGGERING CARRY FORWARD LOSS ES IN ITS RETURNED INCOME. THUS, THERE IS NO IMMEDIATE TAX ADVANTAGE ACCRUED TO THE ASSESSEE BY THE CLAIM OF IMPUGNED PRIOR PERIOD EXPE NSES PER SE . WE THEREFORE DEEM IT EXPEDIENT TO RESTORE THE ISSUE BA CK TO THE FILE OF AO FOR EXAMINING THE ISSUE DE NOVO AFTER VERIFYING FACTS AS MAY BE CONSIDERED NECESSARY AND EXPEDIENT IN ACCORDANCE WITH LAW. THE AO SHALL BEAR IN MIND THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIG H COURT IN THE CASE OF ADANI ENTERPRISES LTD. (SUPRA) WHILE ADJUDICATIN G THE ISSUE. NEEDLESS TO SAY, REASONABLE OPPORTUNITY SHALL BE PROVIDED T O THE ASSESSEE WHILE ADJUDICATING THE ISSUE. HENCE, ALL THE CONTENTIONS OF THE ASSESSEE ARE KEPT OPEN. THE ISSUE RAISED AS PER GROUND NO.4 IS THUS SET ASIDE TO THE FILE OF AO IN TERMS OF DIRECTIONS NOTED ABOVE. AS A RESULT , GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUND NO.5 CONCERNS INITIATION OF PENALTY PROCE EDINGS WHICH IS PRE-MATURE AND DOES NOT CALL FOR ANY SEPARATE ADJUD ICATION AND ACCORDINGLY DISMISSED. 8. GROUND NO.6 IS GENERAL IN NATURE DOES NOT REQUIR E ANY ADJUDICATION. ITA NO. 996/AHD /2011 GUJARAT URJA VIKAS NIGAM LTD. VS. ACIT ASST.YEAR 1998-99 - 7 - 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 31 / 0 5 /201 7 SD/- SD/- ( ..) ( ) ! ( R.P. TOLANI ) ( PR ADIP KUMAR KEDIA ) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; DATED 31 / 05 /2017 3..,.4../ T.C. NAIR, SR. PS !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. %( / THE APPELLANT 2. )%( / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-I, BARODA 5. 9:;4467 , 67/ , 5 / DR, ITAT, AHMEDABAD 6. ;=, / GUARD FILE. / BY ORDER, )94 //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 30.5.17 (DICTATION-PAD 16- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30.5.2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.31.5.17 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 31.5.17 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER