Lanco Industries Ltd., Srikalahasti V. Addl. Commissioner of Income Tax, Tirupathi

MA 133/HYD/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6952 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 04-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: S RAMA RAO
• Keywords: Retrospective amendment; Bad and doubtful debts
• Section: 234B; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER M.A. NO. 133/HYD/2011 ARISING OUT OF I.T.A. NO. 419/HYD/2007 (ASSESSMENT YEAR 2004-05) M/S. LANCO INDUSTRIES LTD. SRIKALAHASTHI PAN: AAACL4108M V ADDL. CIT, TIRUPATI APPELLANT RESPONDENT APPELLANT BY: SHRI S. RAMA RAO RESPONDENT BY: SHRI T. DIWAKAR PRASAD DATE OF HEARING: 26.08.2011 DATE OF PRONOUNCEMENT: O R D E R PER AKBER BASHA, AM: THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASS ESSEE AGAINST THE CONSOLIDATED ORDER OF THIS TRIBUNAL IN I.T.A. NO. 419/HYD/2007 DATED 8.10.2010. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE FILED THE APPEAL WHEREIN SIX GROUNDS WERE RAISED. THE SAID APPEAL WAS DECIDED BY THIS TRIBUNAL VIDE ITS C ONSOLIDATED ORDER 8.10.2010. THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT IN GROUND NO. 2 THE ASSESSEE CONTEND ED THAT THE PROVISION FOR GRATUITY AMOUNTING TO RS. 14,65,517 I S ALLOWABLE AS A DEDUCTION. THIS TRIBUNAL RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHE R THE PROVISION IS MADE ON THE ACTUAL CALCULATION. NOW THE ASSESSE E SUBMITS THAT IF THE TRIBUNAL IS OF THE VIEW THAT THE AMOUNT PROVIDED AS PER ACTUARIAL VALUATION IS TO BE ALLOWED, THE TRIBUNAL MAY GIVE A CLEAR DIRECTION TO THIS EFFECT TO THE ASSESSING OFF ICER. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE VALUATION M.A. NO. 133/HYD/2011 M/S. LANCO INDUSTRIES LTD. ==================== 2 WAS MADE BASED ON SALARY AND IN ACCORDANCE WITH THE GENERAL ACTUAL VALUATION AND EVEN IF THERE WERE ANY DIFFERE NCE, THE AMOUNT TO BE ARRIVED AT IN ACCORDANCE WITH THE ACTU ARIAL VALUATION WOULD BECOME ELIGIBLE FOR DEDUCTION. ACCO RDINGLY THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ITAT MAY PASS APPROPRIATE ORDER MODIFYING DIRECTION TO THE A SSESSING OFFICER AND THE ASSESSING OFFICER MAY BE DIRECTED T O ALLOW THE AMOUNT OF THE PROVISION WORKED OUT IN ACCORDANCE WI TH THE ACTUARIAL VALUATION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT DURING THE APPELLATE PROCEEDINGS THE ASSESSEE ALSO CONTESTED THE CHARGE OF INTEREST U/S. 234B AND 234C OF THE AC T. THERE ARE TWO DIFFERENT ISSUES IN THIS GROUND OF APPEAL (A) WHETHER INTEREST U/S. 234B AND 234C AT ALL ARE CHARGEABLE O R NOT WHERE THE INCOME IS DETERMINED IN ACCORDANCE WITH THE PRO VISIONS OF SECTION 115JB OF THE ACT AND (B) WHERE AN ISSUE WAS DECIDED BY THE SUPREME COURT AND AN AMENDMENT IS MADE IN THE A CT WITH RETROSPECTIVE EFFECT, WHETHER INTEREST U/S. 234B AN D 234C ARISING ON ACCOUNT OF THE AMENDMENT MADE WITH RETROSPECTIVE EFFECT CAN BE CHARGED OR NOT. THE FIRST IS DECIDED BY THE ITAT. HOWEVER, THE SECOND PART OF THE ISSUE WHETHER THE I NTEREST WITH REGARD TO THE ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF PROVISION FOR BAD AND DOUBTFUL DEBTS OF RS. 7,06 ,72,223 WHICH IS CONFIRMED BY THE ITAT BECAUSE OF THE AMENDMENT T O THE FINANCE ACT, 2009 MADE WITH RETROSPECTIVE EFFECT FR OM 1.4.2001 CAN BE CHARGED OR NOT WAS NOT DECIDED BY THE TRIBUN AL. ACCORDINGLY THE LEARNED COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE TRIBUNAL MAY PASS APPROPRIATE ORDER WITH REGARD TO CHARGING OF INTEREST IN RESPECT OF THE TAX ARISING ON THE AD DITION OF RS. 7,06,72,223 MADE TO THE BOOK PROFIT. 4. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIAL AVAILABLE ON RECORD. GROUND NO. 2 OF THE ASSESSEE IN M.A. NO. 133/HYD/2011 M/S. LANCO INDUSTRIES LTD. ==================== 3 THE APPEAL PROCEEDINGS IS WITH REGARD TO PROVISION FOR GRATUITY AMOUNTING TO RS. 14,65,517 AND WHETHER THE SAME HAS TO BE ADDED BACK TO THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT FOR THE PURPOSE OF BOOK PROFIT U/S. 115JB O F THE ACT. RELYING ON THE DECISION OF ITAT IN THE CASE OF ITO VS. JONES LANG LASALLE PROPERTY CONSULTANTS (INDAI) LTD. (201 0) 39 DTR (TRIB) 230 HELD THAT THE PAYMENT OF GRATUITY BEING AN ASCERTAINED LIABILITY AND THE SAME IS NOT TO BE ADDED TO THE NE T PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT. THE TRIBUNAL REJEC TED THE VIEW TAKEN BY THE CIT(A) AND RIGHTLY DIRECTED THE ASSESS ING OFFICER FOR FRESH CONSIDERATION WITH A DIRECTION TO THE ASSESSE E TO PROVE BEFORE THE ASSESSING OFFICER THAT THE PROVISION FOR GRATUITY IS BASED ON ACTUARIAL CALCULATIONS. WE DO NOT FIND AN Y MISTAKE APPARENT FROM THE ORDER OF THIS TRIBUNAL. ACCORDIN GLY THIS GROUND RAISED BY THE ASSESSEE IN THE MA IS REJECTED. 5. THE SECOND ISSUE RELATES TO CHARGING OF INTEREST U/S. 234B AND 234C OF THE ACT. WE FIND, THIS BENCH OF THE TR IBUNAL HAD RIGHTLY GIVEN A FINDING THAT THE LOWER AUTHORITIES ARE RIGHT IN CHARGING INTEREST U/S. 234B AND 234C OF THE ACT BY FOLLOWING THE DECISION OF THE SPECIAL BENCH IN THE CASE OF ASHIMA SYNTEX LTD. (117 ITD 1). THIS FINDING COVERS BOTH THE ISSUES C ONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE. HENCE WE DO NOT FIND ANY MISTAKE APPARENT FROM THE RECORD AS PER SECTION 254 (2) OF THE ACT. 6. IN THE RESULT, THE MA FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH SEPTEMBER, 2011. SD/ - (G.C. GUPTA) VICE PRESIDENT SD/ - (AKBER BASHA) ACCOUNTANT MEMBER HYDERABAD, DATED 9 TH SEPTEMBER, 2011 TPRAO M.A. NO. 133/HYD/2011 M/S. LANCO INDUSTRIES LTD. ==================== 4 COPY FORWARDED TO: 1. M/S. LANCO INDUSTRIES LTD., RACHAGUNNERI VILLAGE , SRIKALAHASTHI MANDAL, CHITTOOR DISTRICT, AP. 2. THE ADDL. CIT, RANGE-2, TIRUPATI 3. THE CIT(A), TIRUPATI 4 THE CIT, TIRUPATI 5. THE DR A BENCH, ITAT, HYDERABAD