DCIT, Kota V. M/S CHAMBEL FERTILIZERS & CHEMICALS LTD., Kota

MA 25/JPR/2012

• Counselvise Citation: [2014] 124 COUNSELVISE.COM (IT) 2346 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: P J PARDIWALA SMT RITY G P DAS; M L PATOD

Judgement Text

1 IN THE INCOMETAX APPELLATE TRIBUNAL JAIPUR BENCH: JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. MEENA) M.A. NO. 25/JP/2012 (ARISING OUT OF ITA NO. 268/JP/2010) ASSESSMENT YEAR 2006-07 THE D.C.I.T. VS. M/S CHAMBAL FERTILIZERS & CIRCLE-2, KOTA. CHEMICALS LTD., GADEPAN, DISTRICT- KOTA. PAN:AAACC 9762 A (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI SUBHASH CHANDRA RESPONDENT BY : SHRI P.J. PARDIWALA, SMT. RITY G.P. DAS & SHRI M.L. PATODI. DATE OF HEARING : 25/07/2014 DATE OF PRONOUNCEMENT : 08/08/2014. O R D E R PER T.R. MEENA, A.M. IN THIS CASE, COORDINATE B BENCH OF ITAT, JAIPUR IN ITA NO. 268/JP/2010 A.Y. 2006-07 HAD PASSED ORDER ON 31/10/ 201. THE REVENUE HAS FILED THIS M.A. ON THE FOLLOWING GROUNDS: THE AUXILIARY OIL PUMPS (AOP) WERE PROCURED IN THE Y EAR 2000 IN PACKAGE UNDER THE EXPANSION PROJECT. THE COST OF MEC HANICAL SALE OF THE IMPORTED AUXILIARY OIL PUMP WAS RS. 21,42,684/- PER SEAL. THE OEM FOR THESE PUMPS WAS M/S TAIKOKIKAI, JAPAN . 2 IN COURSE OF TIME THESE, AOPS WERE ALSO DEVELOPED IN DIGENOUSLY. WE HAVE PROCURED FOUR INDIGENOUS PUMPS (ALONGWITH SEAL) FROM M/S SHILPA TRADE LINKS (P) LTD. AGAINST PURCHASE ORDER N O. 45495 DATED 27/11/2002 WHICH WERE RECEIVED IN THE PLANT ON 05/03 /2003 UNDER INVOICE NO. 443 DATED 21/02/2003. THE TOTAL INVOICE VALUE WAS RS. 93,441/- FOR FOUR PUMPS (I.E. RS. 23,352/- PER PUMP ). ONE SUCH PUMP WAS SUCCESSFULLY INSTALLED IN UREA-II PLANT ON 27/01/2006 IN PLACE OF IMPORTED PUMP AND WAS OPERATING SMOOTHLY. THE COST OF IMPORTED MECHANICAL SEALS OF THE IMPORTE D AOPS IS ROUGHLY HUNDRED TIMES THE COST OF COMPLETE INDIGENO US PUMP (INCLUDING SEAL). AS THESE IMPORTED PUMPS WERE LYING IN THE STORES AT THE CLOSING OF THE YEAR, THE VALUATION OF THE SAME WAS TO BE MADE AS PER THE ACCOUNTING POLICIES FOLLOWED CONSISTENTLY I. E. AT MONTHLY WEIGHTED AVERAGE COST OR NET REALIZABLE VALUE, WHICHE VER IS LOWER. HENCE, THE COST OF TWO IMPORTED MECHANICAL SEAL OF A OPS HAS BEEN REDUCED TO RS. 46,704/- AND DIFFERENCE OF RS. 42,38 ,664/- WAS CHARGED TO PROFIT AND LOSS ACCOUNT IN THE ASSESSMEN T YEAR 2006-07. FURTHER, I HUMBLY REPRODUCED THE PARA NO. 8.7 ON PA GE NO. 28 OF THE ITA NO. 268/JP/2010 OF THE ORDER DATED 31/10/20 11: PARA 8.7 ON PAGE NO. 28 :- FROM THE ABOVE NOTE, IT IS CLEAR THAT THE COST OF INDIGENOUS PUMPS WAS LESS AS APPARENT FROM P URCHASE ORDER DATED 27/11/2002. FROM THIS, IT IS NOT CLEAR THAT T HE PUMPS HAVE BECOME OBSOLETE DURING THE YEAR UNDER REFERENCE. IT IS NOT THE CASE OF THE ASSESSEE THAT SUCH PUMPS HAVE BEEN DISCARDE D DURING THE YEAR UNDER REFERENCE. THE ASSESSEE CANNOT BE GIVEN A CHOICE OF ADJUSTING THE BUSINESS LOSS. IT IS THAT THERE IS LO SS ON ACCOUNT OF REVALUATION BUT SUCH LOSS WAS EVIDENT IN THE EARLIER YEARS. WE, THEREFORE, RECORD THE FINDINGS THAT THE LOSS WILL BE ALLOWABLE AS AND WHEN THE PUMPS ARE TREATED AS SCRAP OR ARE SOLD. THER EFORE, THE DISALLOWANCE OF LOSS OF RS. 42,38,664/- DOES NOT REL ATE TO THE YEAR UNDER CONSIDERABLE AND THEREFORE, THE A.O. WAS JUSTI FIED IN DELETING THE DISALLOWANCE. 3 THE ABOVE NOTED DECISION IN PARA NO. 8.7 ON THE PAGE NO. 28 OF THE ITA ORDER DATED 31/10/2011 OF THE HONBLE ITAT BENC H IS HAVING DEFINITELY SOME CONTRADICTION OR DISCREPANCY IN THE ORDER. IT IS NOT CRYSTAL CLEAR AS TO WHETHER HONBLE ITAT BENCH HAS AC CEPTED THE SEVENTY GROUND OF THE APPEAL OF THE DEPARTMENT AND HAS CONFIRMED THE DISALLOWANCE OF LOSS OF RS. 42,38,664/- WHICH WAS MADE BY THE A.O. ON ACCOUNT OF REVALUATION OF INVENTORY OF TWO I MPORTED PUMPS IN THE ASSESSMENT ORDER DATED 31/12/2008 OR HAS UPH ELD THE FINDING OF THE LEARNED CIT(A) WHO HAS DELETED THE DISALLOWAN CE OF LOSS OF RS. 42,38,664/- MADE BY THE A.O. ON ACCOUNT OF REVA LUATION OF INVENTORY OF TWO IMPORTED PUMPS IN HIS ORDER DATED 2 2/12/2009. SO IT IS NOT CRYSTAL CLEAR FINDING OF THE TRIBUNAL AS TO WHETHER THE SEVENTH GROUND OF APPEAL OF THE REVENUE IS ACCEPTED OR NOT ACCEPTED IN ITS DECISION DATED 31/10/2011 IN ITS OR DER IN ITA NO. 268/JP/2010. THERE LIES AMBIGUITY IN AFORESAID FINDI NG OF THE HONBLE ITAT BENCH. IT IS, THEREFORE, REQUESTED TO HONBLE ITAT BENCH, J AIPUR THAT THE MISCELLANEOUS APPLICATION U/S 254(2) OF THE ACT FOR RECTIFICATION OF ITS ORDER NO. 268/JP/2010 (A.Y. 2006-07) DATED 31/10/20 11 PASSED BY THE HONBLE ITAT, JAIPUR BENCH MAY KINDLY BE ACCEPTE D. 2. IT IS REQUESTED BY THE REVENUE THAT, IT IS APPA RENT MISTAKE ON RECORD AND IS RECTIFIABLE U/S 254(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), WHEREAS THE LEARNED A.R. FOR THE ASSESSE E ARGUED THAT IT IS CLEAR FROM THE HONBLE ITATS ORDER AND THERE IS NO AMBIGU ITY IN THE ORDER OF THE BENCH. THEREFORE, THE SAME MAY BE DISMISSED. 3. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE COORDINATE BENCH HAD DEC IDED THIS ISSUE AGAINST THE ASSESSMENT IN PARA NO. 8.7 ON PAGE NO. 28 OF ITS ORDER. 4 THEREFORE, THERE IS NO AMBIGUITY IN THE ORDER OF THE COORDINATE BENCH DATED 31/10/2011. THEREFORE, WE DISMISS THE REVENUE S M.A.. 4. IN THE RESULT, REVENUES MISCELLANEOUS APPLICATI ON IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/08/2014. SD/- SD/- (R.P. TOLANI) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR, DATED : 08 TH AUGUST, 2014 * RANJAN COPY FORWARDED TO :- 1. THE DCIT, CIRCLE-2, KOTA. 2. M/S CHAMBAL FERTILIZERS & CHEMICALS LTD., KOTA. 3. THE CIT (A) 4. THE CIT 5. THE D/R GUARD FILE (M.A. NO. 25/JP/2012) BY ORDER, AR ITAT JAIPUR.