M/s Bright Enterprises Pvt. Ltd, Jalandhar V. The Dy. Commissioner of Income-tax, Jalandhar

MA 09/ASR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7895 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Set aside
• Section: 192

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, AMRITSAR (VIRTUAL COURT) BEFORE: SHRI. N.K.SAINI, VICE PRESIDENT AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER MISC. APPLICATION NO. 9/ASR/2019 (IN ITA NO. 354 /ASR/2014) ASSESSMENT YEAR : 2010-11 M/S BRIGHT ENTERPRISES PVT. LTD. MBD HOUSE, RAILWAY ROAD, JALANDHAR THE DCIT, CENTRAL CIRCLE-II JALANDHAR ./ PAN NO. AAACB9469K / APPELLANT / RESPONDENT / ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE / REVENUE BY : SHRI CHARAN DAS, SR. DR #/ DATE OF HEARING : 17/08/2020 #/ DATE OF PRONOUNCEMENT : 17/08/2020 / // / ORDER PER N.K. SAINI, VICE PRESIDENT THIS MISC. APPLICATION ARISING OUT OF THE ORDER DT. 17/ 01/2019 IN ITA NO. 354/ASR/2014 FOR THE A.Y. 2010-11, HAS BEEN FILED BY T HE ASSESSEE. IN THIS MISC. APPLICATION THE ASSESSEE STATED AS UNDER : 1. THAT THE ABOVE SAID APPEAL WAS HEARD AT 'CAMP BENCH ' OF THE HON'BLE ITAT AT JALANDHAR AND THE ORDER HAS BEEN PASSED BY THE HON'BLE BENCH VIDE ORDER, DATED 17.01.2019. 2. THAT THE FINDING OF THE HON'BLE BENCH HAVE BEEN GIV EN IN PARA 15. AT PAGES 17 TO 20 OF THE ORDER OF THE HON'BLE BENCH. 3. THAT IN THE SAID APPEAL, THE ISSUE WAS THAT ASSESSI NG OFFICER HAD DISALLOWED 10% OF THE EXPENSES AS CLAIMED BY THE AS SESSEE AND FOR WHICH THE ADDITION OF RS. 92,92,170/- WAS MADE AND THE SAID A DDITION WAS SUSTAINED BY THE WORTHY CIT(A), BUT, IT WAS DELETED BY THE HON'BLE I TAT. THEREAFTER, IN THE APPEAL OF THE DEPARTMENT, TO THE HON'BLE HIGH COURT, SUCH ISS UE WAS REMANDED BACK TO THE HON'BLE ITAT, AMRITSAR BENCH, AMRITSAR. 2 4. THAT NOW THE HON'BLE BENCH AFTER CONSIDERING THE PA ST HISTORY OF THE CASE AND OF THE SUCCEEDING YEARS, HAS GIVEN A FINDING AT PAGE 19, IN 5TH LINE AS UNDER:- 'WE, THEREFORE, ARE OF THE VIEW THAT IN SUCH TYPE O F CASES EXPENSES CAN BE ALLOWED BY CONSIDERING THE PAST HISTORY AS WELL AS THE AVERAGE OF EXPENSES INCURRED IN THE SUCCEEDING YEAR. IN OUR OPINION, IT WILL BE FAIR AND REASONABLE TO ESTIMATE THE EXPENSES ON ACCOUNT OF MAGAZINES & JOU RNALS @ 10% OF TOTAL OPERATING REVENUE. WE, THEREFORE, DIRECT THE AO TO MODIFY HIS ORDER AND MADE THE DISALLOWANCE AS PER ABOVE DIRECTIONS I.E. THE D ISALLOWANCE CAN BE MADE TO THE EXTENT OF THE EXPENSES EXCEEDING 10% OF THE TOT AL OPERATING REVENUE.' 5. THE CHART OF THE TOTAL REVENUE FOR ASSTT. YEAR 2010 -11 IS THERE AT PAGE 14 OF THE ORDER OF HON'BLE BENCH AND THE HON'BLE BENCH HA S GIVEN A FINDING THAT THE EXPENDITURE ON ACCOUNT OF MAGAZINE/JOURNAL IS ALLOW ABLE TO THE EXTENT OF 10% OF THE TOTAL OPERATING REVENUE AND IF IT IS MORE THAN 10% THEN THAT WOULD BE DISALLOWED. 6. NOW, IN THE PRESENT CASE, SINCE THE EXPENDITURE IS TO THE TUNE OF RS. 9,29,21,703/- AND IT IS 15.47% OF THE TOTAL OPERATI NG REVENUE AND, THUS, AS PER THE ORDERS OF THE HON'BLE BENCH OF THE ITAT, 5.47% OF T OTAL REVENUE OF RS. 60,05,39,382/-, COMES TO RS. 3,28,49,504/- FOR THE PURPOSES OF DISALLOWANCE, AGAINST THE DISALLOWANCE OF RS. 92,92,170/- AS MADE BY THE ASSESSING OFFICER. 7. IT IS AN ACCEPTED FACT THAT THE HON'BLE BENCH HA VE NO POWER OF ENHANCEMENT AND BY WAY OF THIS OBSERVATION, THERE I S ENHANCEMENT OF ADDITION AND, WHICH IS NOT JUSTIFIED SINCE THE HON' BLE BENCH DOES NOT HAVE POWER TO ENHANCE ANY ADDITION. THIS VIEW IS SU PPORTED BY THE JUDGMENT OF APEX COURT IN THE CASE OF MCORP GLOBAL (P) LTD. VS CIT AS REPORTED IN [2009] 178 TAXMAN 347 (SC), IN WHICH, I T HAS BEEN HELD AS UNDER:- 'SECTION 254 OF THE INCOME -TAX ACT, 1961- APPELLAT E TRIBUNAL-POWERS OF - WHETHER TRIBUNAL CAN TAKE BACK BENEFIT GRANTED TO ASSESSEE BY ASSESSING OFFICER-HELD, NO.' 8. SIMILAR VIEW HAS BEEN HELD BY THE HON'BLE SUPREM E COURT IN THE CASE OF HUKUMCHAND MILLS LTD. VS CIT AS REPORTED IN [1967] 63 ITR 0232, IN WHICH, IT HAS BEEN HELD AS UNDER:- 'WORDS & PHRASES-'PASS SUCH ORDERS AS THE TRIBUNAL THINKS FIT-IN S. 33(4) OF 1922 ACT- INCLUDE ALL THE POWERS (EXCEPT POSSIBLY THE POWER O F ENHANCEMENT) WHICH ARE CONFERRED UPON THE AAC BY S. 31-THE WORD 'THEREON' OF COURSE, RESTRICTS THE JURISDICTION OF THE TRIBUNAL TO THE SUBJECT-MATTER OF APPEAL.' 9. IN VIEW OF ABOVE SAID FACTUAL FACTS AND CIRCUMST ANCES OF THE CASE LAW AND SUBJECT, THE FINDING OF THE HON'BLE BENCH ABOUT THE RESTRICTION OF THE DISALLOWANCE TO THE EXTENT OF 10% OF THE TOTAL OPERATING REVENUE IS CORRECT, BUT THE DIRECTIONS GIVEN TO ASSESSING OFFIC ER TO MODIFY HIS ORDER SHOULD BE SUBSTITUTED TO CONFINED THE ADDITION MADE BY HIM. T HEREFORE, SINCE THIS BEING MISTAKE APPARENT FROM RECORD AND AS PER LAW BE AMEN DED BY PASSING A SUITABLE ORDER AS THE HON'BLE BENCH MAY DEEM FIT. 3 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE CONTENTS OF THE AFORESAID APPLICATION AND FURTHER SUBMITT ED THAT DUE TO DIRECTIONS GIVEN BY THE ITAT WHILE ESTIMATING THE EXPENSES ON ACCOUNT OF M AGAZINES &JOURNALS@ 10% OF TOTAL OPERATING REVENUE, THE DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION WAS ENHANCED EVEN WHEN THE DEPARTMENT WAS NOT IN APPEAL. IT W AS FURTHER SUBMITTED THAT THE ITAT HAS NO POWER TO ENHANCE INCOME / DISALLOWANCE AS PER THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE FOLLOWING CASES: MCORP GLOBAL (P.) LTD. VS. CIT, GHAZIABAD )2009) 178 TAXMAN 347 (SC) HUKUMCHAND MILLS LTD. VS. CIT (1967) 63 ITR 0232 (SC) IT WAS FURTHER SUBMITTED THAT AS THE MISTAKE IS APPARE NT FROM RECORD, SO THIS HAS TO BE RECTIFIED UNDER SECTION 254 OF THE ACT. 3. IN HIS RIVAL SUBMISSION THE LD. DR SUBMITTED THAT T HE ITAT HAS THE POWER TO ENHANCE OR REDUCE THE ADDITION SO THERE IS NO MISTAKE AP PARENT FROM THE RECORD AND THE ACCEPTANCE OF THE MA WOULD RESULT INTO ILLOGICAL A ND ERRONEOUS REVISED ORDER. THE RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON'BLE KARNA TAKA HIGH COURT IN THE CASE OF FIDELITY BUSINESS SERVICES INDIA PVT. LTD. VS. AC IT (2018) 169 DTR 0073 (KAR). 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE ONLY FILED APPEAL AGAINST THE DISALLOWANCE MADE BY THE A.O. AT RS. 92,92,170/- BEING 10% OF THE EXPENSES CLAIMED BY THE ASSESSEE. SIMILAR APPEAL WAS FILED BY THE ASSESSEE IN ITA NO. 126/ASR/2015 FOR THE A.Y. 2012-13 AND WHILE DISPOSING OF THE APPEALS FOR BOTH AS SESSMENT YEAS I.E; A.Y. 2010- 11(YEAR UNDER CONSIDERATION) AND A.Y. 2012-13, THE ITAT HAS GIVEN THE DIRECTION TO THE A.O. TO COMPUTE THE DISALLOWANCE BY ESTIMATING THE EXP ENSES ON ACCOUNT OF MAGAZINES AND JOURNALS @ 10% OF TOTAL OPERATING REVENU E WHICH RESULTED IN THE ENHANCEMENT OF DISALLOWANCE FOR THE YEAR UNDER CONSIDERATI ON TO RS. 3,28,67,765/- FROM RS. 92,92,170/- MADE BY THE A.O. AS REGARDS TO POWER OF THE TRIBUNAL TO ENHANCE THE 4 DISALLOWANCE / INCOME THE HON'BLE APEX COURT IN THE CAS E OF HUKUMCHAND MILLS LTD. VS. CIT (1967) 63 ITR 232 HELD AS UNDER: THE POWERS OF THE APPELLATE TRIBUNAL IN DELAING W ITH APPEALS ARE EXPRESSED IN SECTION 33(4) OF THE INCOME TAX ACT IN THE WIDEST P OSSIBLE TERMS. THE WORD THEREON IN SECTION 33(4) RESTRICTS THE JURISDICTI ON OF THE TRIBUNAL TO THE SUBJECT MATTER OF THE APPEAL. THE WORDS PASS SUCH ORDER AS THE TRIBUNAL THINKS FIT INCLUDE ALL THE POWERS (EXCEPT POSSIBLY THE POWER OF ENHANC EMENT) WHICH ARE CONFERRED ON THE APPELLATE ASSISTANT COMMISSIONER BY SECTION 31. CONSEQUENTLY, THE TRIBUNAL HAS AUTHORITY UNDER SECTION 33 TO DIRECT T HE APPELLATE ASSISTANT COMMISSIONER OR THE INCOME-TAX OFFICER TO HOLD A FU RTHER ENQUIRY AND DISPOSE OF THE CASE ON THE BASIS OF SUCH ENQUIRY. THE AFORESAID ORDER WAS FOLLOWED IN THE CASE OF MCORP GLOBAL (P.) LTD. VS. CIT, GHAZIABAD (2009) 178 TAXMAN 347 (SC) WHEREIN THEIR LORDS HIP HELD IN PARA 6 AS UNDER: IN THE CASE OF HUKUMCHAND MILLS LTD. VS. CIT [196 7] 63 ITR 232 THIS COURT HAS HELD THAT UNDER SECTION 33(4) OF THE INCOME-TAX ACT, 192 2 EQUIVALENT TO SECTION 254(1) OF THE 1961 ACT, THE TRIBUNAL WAS NOT AUTHORIZED TO TAKE BACK THE BENEFIT GRANTED TO THE ASSESSEE BY THE ASSESSING OFFICER. THE TRIBUN AL HAS NO POWER TO ENHANCE THE ASSESSMENT. APPLYING THE RATIO OF THE SAID JUDG MENT TO THE PRESENT CASE, WE ARE OF THE VIEW THAT, IN THIS CASE, THE ASSESSING OF FICER HAD GRANTED DEPRECIATION IN RESPECT OF 42,000 BOTTLES OUT OF THE TOTAL NUMBE R OF BOTTLES (5,46,000), BY REASON OF THE IMPUGNED JUDGMENT. THAT BENEFIT IS SOUGHT TO BE TAKEN AWAY BY THE DEPARTMENT, WHICH IS NOT PERMISSIBLE IN LAW. THIS I S THE INFIRMITY IN THE IMPUGNED JUDGMENT OF THE HIGH COURT AND THE TRIBUNAL. 5. IN THE PRESENT CASE ALSO BY THE DIRECTION OF THE I TAT VIDE THE AFORESAID REFERRED TO ORDER DT. 17/01/2019, THE DISALLOWANCE WAS ENHANCED RES ULTING INTO ENHANCED ASSESSMENT WHICH IS NOT PERMISSIBLE, THEREFORE WE MODI FY THE SAID ORDER DT. 17/01/2019 IN ITA NO. 354/ASR/2014 TO THIS EXTENT THAT FOR THE A.Y. 2010-11 THE DISALLOWANCE TO BE MADE, MAY NOT EXCEED THE DISALLOWANCE WHICH HAS BEEN MA DE BY THE A.O. AT RS. 92,92,170/-. 5.1 AS REGARDS TO THE JUDGMENT OF THE HON'BLE KARNATAKA HIGH COURT RELIED BY THE LD. SR. DR IN THE CASE OF FIDELITY BUSINESS SERVICES INDIA PVT. LTD. VS. ACIT (2018) 169 DTR 0073 IS CONCERNED, IN THE SAID CASE THE ISSUE WAS SET ASIDE BY THE ITAT TO THE A.O. FOR FRESH ENQUIRY INTO THE ASPECT OF THE SUBJECT MATTER, WHICH WA S WITHIN THE JURISDICTION OF THE ITAT. HOWEVER, IN THE PRESENT CASE NO SUCH DIRECTION TO M AKE FRESH ENQUIRY WAS GIVEN TO THE A.O. RATHER THE DISALLOWANCE DIRECTED TO BE MADE, WAS HIGHER THAN THE DISALLOWANCE MADE BY THE A.O. WHICH RESULTED INTO THE E NHANCEMENT. THE SAID 5 DIRECTION OF ENHANCED ASSESSMENT IS BEYOND THE POWERS O F THE TRIBUNAL, AS PER THE RATIO LAID DOWN BY THE HON'BLE APEX COURT IN THE AFORESAID R EFERRED TO CASES OF HUKUMCHAND MILLS LTD. VS. CIT (1967) 63 ITR 232 AND MCORP GLOBA L (P.) LTD. VS. CIT, GHAZIABAD (2009) 178 TAXMAN 347. THEREFORE THE CASE RELIED BY THE DEPA RTMENT IS DISTINGUISHABLE ON FACTS OF THE PRESENT CASE. 6. IN THE RESULT MISC. APPLICATION OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON 17/08/2020 SD/- SD/- (N.K. CHOUDHRY) (N.K. SAINI) JUDICIAL MEMBER VICE PRESIDENT DATED : 17/08/2020 AG ,-, / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. THE CIT(A) 5. DR, ITAT, AMRITSAR 6. GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR