The DCIT Circle 3(1), Hyderabad V. M/s. Sheetal Refineries P. Ltd, Hyderabad

ITA 999/HYD/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66170 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Court: TRIBUNAL
• Department Lawyers: K VISWANATHAM
• Assessee Lawyers: K NEERAJA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.999/HYD/2011 ASSESSMENT YEAR : 2007-08 DCIT, CIR-3(1), HYDERABAD. .... APPELLANT VS. M/S. SHEETAL REFINERIES (P) LTD., HYDERABAD. RESPONDENT PAN: AAGCS 2477 Q APPELLANT BY : SHRI K. VISWANATHAM RESPONDENT BY : SMT. K. NEERAJA DATE OF HEARING : 17-07-2012 DATE OF PRONOUNCEMENT : 24-08-2012 ORDER PER SAKTIJIT DEY, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER DATED 31-03-2011 OF CIT (A)-IV, HYDERABAD PAS SED IN ITA NO.320/DCIT 3(1)/CIT(A)-IV/09-10 AND IT PERTAINS TO THE ASSESSMENT YEAR 2007-08. 2. THOUGH THE REVENUE HAS RAISED FOUR GROUNDS, GROU ND NOS. 2 AND 3 ARE THE EFFECTIVE GROUNDS WHICH READ AS FOLLO WS:- 2. THE CIT (A)-IV, HYDERABAD OUGHT TO HAVE UPHELD THE ADDITION MADE BY THE AO ON ACCOUNT SECTION 40(A)(IA ) FOR RS.5,50,000/- AS THE ASSESSEE FAILED TO DEDUCT TAX AT 2 ITA NO. 999 OF 2011 M/S. SHEETAL REFINERIES (P) LTD., HYD. SOURCE WITHIN THE DUE DATE ON THE RENT CREDITED IN T HE BOOKS OF ACCOUNT. 3. THE CIT (A) HYDERABAD OUGHT TO HAVE UPHELD THE ADDITION MADE BY THE AO ON ACCOUNT OF SHORTAGE ON D ELIVERY FOR RS.8,66,018/- AS THE SAME IS INCURRED DUE TO TH E LAPSE ON THE PART OF THE ASSESSEE COMPANY. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELE TION OF RS.5,50,000/- WHICH WAS ADDED BY THE AO U/S 40 (A)( IA) OF THE ACT. 3. BRIEFLY THE FACTS ARE, THE ASSESSEE DURING THE F INANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR PAID AN AMOUNT OF R S.5,50,000/- TOWARDS RENT TO SMT.SUMITRABAI JUGAL KISHORE AGARWA L. THE ASSESSEE WHILE MAKING PAYMENT, DEDUCTED TAX AT SOUR CE AND PAID TDS AMOUNT TO THE GOVERNMENT A/C ON 12-6-2007. THE AO DISALLOWED THE PAYMENT OF RENT OF RS.5,50,000/- BY APPLYING THE PROVISIONS OF SECTION 40A(IA) ON THE GROUND THAT TH E ASSESSEE HAS NOT PAID THE TAX DEDUCTED AT SOURCE WITHIN THE PERI OD PRESCRIBED UNDER THE ACT. THE ASSESSEE CHALLENGED THE ADDITION ON APPEAL BEFORE THE CIT (A). BEFORE THE CIT (A), THE ASSESS EE CONTENDED THAT THE ENTIRE RENT OF RS.5,50,000/- WAS PAID ON 31-3-2007 AND TDS WAS DEDUCTED THEREON AND THE TDS AMOUNT WAS ALS O PAID BEFORE THE DUE DATE OF FILING OF RETURN FOR THE REL EVANT ASSESSMENT YEAR. THE ASSESSEE THEREFORE CONTENDED THAT THE TD S HAVING BEEN PAID BEFORE DUE DATE OF FILING OF THE RETURN N O DISALLOWANCE COULD BE MADE U/S 40A(IA) OF THE ACT. THE CIT (A) AFTER CONSIDERING THE CONTENTIONS RAISED BY THE ASSESSEE AND ALSO RELYING UPON TWO DECISIONS OF ITAT, MUMBAI BENCH HE LD THAT THE TDS HAVING BEEN PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, 3 ITA NO. 999 OF 2011 M/S. SHEETAL REFINERIES (P) LTD., HYD. NO DISALLOWANCE COULD BE MADE U/S 40A(IA) IN VIEW O F CLAUSE (A) OF PROVISO TO SECTION 40A(IA) OF THE ACT. 4. WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE M ATERIAL ON RECORD. IT IS CLEAR FROM THE PROVISO TO SECTION 40 A(IA) THAT IF THE TAX DEDUCTED AT SOURCE IS PAID BEFORE THE DUE DATE OF FILING OF RETURN, THEN NO DISALLOWANCE COULD BE MADE U/S 40A( IA). AS HAS BEEN HELD BY THE ITAT, MUMABI BENCH WHICH HAS BEEN RELIED UPON BY THE CIT (A), THE AFORESAID PROVISO BEING CL ARIFICATORY IN NATURE WILL APPLY RETROSPECTIVELY. THE ASSESSEE HA VING PAID THE TDS AMOUNT BEFORE DUE DATE OF FILING OF THE RETURN, THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) IN DELETING T HE ADDITION OF RS.5,50,000/-. WE THEREFORE REJECT THE GROUND RAIS ED BY THE REVENUE. 5. GROUND NO.3 RELATES TO THE ADDITION MADE ON ACCO UNT OF SHORTAGE ON DELIVERY FOR AN AMOUNT OF RS.8,06,018 W HICH WAS DELETED BY THE CIT (A). BRIEFLY, THE FACTS ARE FRO M THE ACCOUNTS OF THE ASSESSEE, THE AO FOUND THAT AN AMOUNT OF RS. 8,06,018 HAS BEEN DEBITED TOWARDS SHORTAGE ON DELIVERY. THE AO DISALLOWED THE CLAIM ON THE REASONING THAT THE ASSESSEE HAD RE CEIVED FULL CONSIDERATION FOR THE GOODS DELIVERED AND HE CANNOT CLAIM A DEDUCTION FOR GOODS WHICH HE COULD NOT DELIVER. TH E ASSESSEE CHALLENGED THE ADDITION BEFORE THE CIT (A) CONTENDI NG THAT THE ASSESSEE MANUFACTURES VARIOUS TYPES OF OILS WHICH A RE SUPPLIED IN TANKERS WHEN THE TANKER LEAVES THE OFFICE PREMISES, IT IS WEIGHED. THE TANKER IS AGAIN WEIGHED BY THE PARTIES WHEN IT REACHES THEM SINCE THERE IS SOME LEAKAGE OF OIL DURING TRANSPOR TATION, BESIDES THERE BEING CERTAIN QUALITY OR RATE DIFFERENCE, SHO RTAGE IN WEIGHT IS DEBITED TO SHORTAGE ON DELIVERY ACCOUNT. THAT A PART, THE TERMS OF SUPPLY OF OIL AND PAYMENTS TO BE MADE DIFFER FR OM PARTY TO PARTY. AN AVERAGE OF 15 DAYS CREDIT IS GIVEN AND I F THE PAYMENT 4 ITA NO. 999 OF 2011 M/S. SHEETAL REFINERIES (P) LTD., HYD. IS RECEIVED BEFORE THAT DISCOUNT IS ALSO ALLOWED AG AINST SALES. THEREFORE IN ORDER TO ASCERTAIN THE SHORTAGE, RATE DIFFERENCE, AMOUNT OF DISCOUNT TO BE ALLOWED TO THE PARTIES, SE PARATE ACCOUNTS ARE OPENED. THE ASSESSEE CONTENDED THAT T HIS BEING IN THE NATURE OF BUSINESS LOSS SHOULD HAVE BEEN ALLOWE D. THE CIT (A) AFTER CONSIDERING THE CONTENTIONS RAISED BY THE ASSESSEE FOUND THAT THE AO HAS NOT DISALLOWED THE EXPENDITUR E CLAIMED ON ACCOUNT OF SHORTAGE DUE TO ANY DOUBT OR UNREASONAB LENESS OF THE CLAIM. THE AO HAS SIMPLY DISALLOWED THE CLAIM ON T HE GROUND THAT THE SHORTAGE WAS ON ACCOUNT OF LAPSE ON THE PART OF THE ASSESSEE. THE CIT (A) ALSO FOUND THAT THE CLAIM MADE TOWARDS SHORTAGE IS NOT EXCESSIVE IN COMPARISON TO THE PAST ASSESSMENT YEAR. HE THEREFORE ALLOWED THE CLAIM OF SHORTAGE. 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE MATERIALS ON RECORD. WE FIND THAT IDENTICAL ISSUE ALSO AROSE FOR ASSESSMENT YEAR 2008-09 IN ITA NO.1707/HYD/2011. THE ITAT, H YDERABAD BENCH UPHELD THE CIT (A)S FINDING BY OBSERVING IN THE FOLLOWING MANNER:- WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS THE ORDERS OF THE AUT HORITIES BELOW. WE FIND THAT THE CIT (A) DELETED THE ADDITI ON MADE BY THE AO ON ACCOUNT OF SHORTAGE ON DELIVERY OF OIL S, AFTER OBTAINING THE DETAILS REGARDING SHORTAGE AND EXAMIN ING THE SAME. THE CATEGORICAL FINDING OF THE CIT (A) IN TH IS REGARD IS THAT THE AO HAS NOT DOUBTED THAT THERE WERE SHOR TAGES ON DELIVERY OR THAT SUCH SHORTAGE WAS UNREASONABLE AND EXCESSIVE. THE CIT (A) FURTHER OBSERVED THAT SINCE IT WAS OCCURRING T ON ACCOUNT OF LEAKAGE ETC., THE ASSESSE E COULD NOT HAVE RECEIVED ANY CONSIDERATION TO THE EXTENT O F SUCH SHORTAGE. BESIDES, IT IS ALSO SEEN THAT THE SHORTA GE SHOWN DURING THE YEAR IS NOT EXCESSIVE AS COMPARED TO THE PAST 5 ITA NO. 999 OF 2011 M/S. SHEETAL REFINERIES (P) LTD., HYD. RECORD OF THE APPELLANT IN THIS REGARD. HE ALSO OB SERVED THAT FROM THE PURCHASE RECEIPTS OF THE RESPECTIVE P ARTIES ALSO IT IS EVIDENT THAT THE APPELLANT WAS PAID ONLY AFTER MAKING DEDUCTION TOWARDS SUCH SHORTAGES, DISCOUNT E TC. WE FIND THAT THE ASSESSEE ESTABLISHED BEFORE THE CI T (A) THAT THE CLAIM MADE BY7 IT IS GENUINE BY WAY OF DOCUMENTARY EVIDENCE. IN OUR CONSIDERED VIEW, THE FINDINGS GIVEN BY THE CIT (A) WHILE DELETING THE AD DITION ARE PROPER, THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT (A) AND ACCORDINGLY, THE ORDER OF THE CIT (A) IS HEREBY UPHELD ON THIS COUNT DISMISSING THE G ROUND RAISED BY THE REVENUE. SINCE THE ISSUE IS COVERED BY THE AFORESAID FINDIN G OF THE CO- ORDINATE BENCH OF THE TRIBUNAL, WE FOLLOW THE SAME AND REJECT THE GROUND RAISED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 24- 8-2012. SD/- S D/- (D. KARUNAKARA RAO) ACCOUNTANT MEMBER (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED THE 24 TH AUGUST, 2012. COPY TO:- 1) DCIT, CIRCLE-3(1), HYDERABAD. 2) M/S. SHEETAL REFINERIES PVT. LTD., GAGANPAHAD, R R DISTRICT. 3) THE CIT (A)-IV, HYDERABAD 4) THE CIT CONCERNED, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABA D. JMR* 6 ITA NO. 999 OF 2011 M/S. SHEETAL REFINERIES (P) LTD., HYD.