ALMONARD P. LTD, MUMBAI v. ADDI CIT 6(1), MUMBAI

CO 183/MUM/2010 | 2006-2007
Pronouncement Date: 13-10-2010

Appeal Details

RSA Number 18319923 RSA 2010
Assessee PAN INAIR1930P
Bench Mumbai
Appeal Number CO 183/MUM/2010
Duration Of Justice 19 day(s)
Appellant ALMONARD P. LTD, MUMBAI
Respondent ADDI CIT 6(1), MUMBAI
Appeal Type Cross Objection
Pronouncement Date 13-10-2010
Appeal Filed By Assessee
Bench Allotted G
Tribunal Order Date 13-10-2010
Date Of Final Hearing 07-10-2010
Next Hearing Date 07-10-2010
Assessment Year 2006-2007
Appeal Filed On 24-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G MUMBAI BEFORE SHRI R.K.PANDA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 876/MUM/2010 (ASSESSMENT YEAR -2003-04) DCIT CIRCLE 6(1) R NO.506 5 TH FL AAYAKAR BHAVAN 4 TH FL M K MARG MUMBAI-400020 APPELLANT VS ALMONARD P LTD 305 3 RD FL. KAKAD CHAMBERS 132 DR.A B ROAD WORLI MUMBAI-400018 PAN:AAHP11233L .RESPONDENT CROSS-OBJECTION NO.183/MUM/2010 ALMONARD P LTD .CROSS-OBJECTOR V/S DCIT CIRCLE 6(1) R NO.506 5 TH FL R ESPONDENT ASSESSEE BY : SHRI GOPI SRINIVAS RAO REVENUE BY : SHRI MAYUR A SHAH O R D E R PER VIJAY PAL RAO JM THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION TH ERETO BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DAT ED ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 2 30.11.2009 OF CIT(A)-14 MUMBAI FOR THE ASSESSMENT YEAR 2006-07. ITA NO. 876/MUM/2010 (BY REVENUE) 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE IN REGARD TO ADJUSTMENT U/S 145A OF THE ACT WITHOUT CONSIDERING THE FACTUAL POSITION OF THE CASE IN THE ORDER OF THE ASSESSMENT 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING TO COMPUTE INTEREST U/S 234C AS PER INCOME SHOWN IN TH E REVISED RETURN AND NOT AS PER ORIGINAL RETURN IGNOR ING THE BASIC FACT OF CLAIM OF DEDUCTION U/S 40(A)(IA) FOR RS.2 46 91 233/- DISALLOWED FOR THE AY 2005-06 IN T HE REVISED RETURN FOR AY 2006-07 WHICH WAS DULY CONSIDERED AND GIVEN EFFECT FOR THE AY 2005-06 VID E ORDER DATED 2.07.2008 U/S 154 OF THE ACT IN CONSIDERATION OF AMENDMENT IN SECTION 40(A)(IA) WIT H RETROSPECTIVE EFFECT 3. GROUND NO.1 REGARDING VALUATION OF STOCK. WE HA VE HEARD THE LEARNED DR AND THE LEARNED AR OF THE ASSE SSEE AND CONSIDERED THE RELEVANT RECORD. AT THE OUTSET WE NOTE THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S MA HALAXMI GLASS WORKS P LTD REPORTED IN (2009) 318 ITR 116( BOM) WHEREIN THIS ISSUE HAS BEEN DECIDED BY THE HIGH CO URT IN PARAGRAPHS 2 TO 4 AS UNDER : ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 3 2. THIS QUESTION HAS BEEN DEALT WITH AND ANSWERED BY THE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MAHAVIR ALLUMINIUM LTD. REPORTED IN (2008) 297 ITR 77 (DELHI). THIS QUESTION CONCERNS T HE METHOD OF VALUATION OF INVENTORY AS CONTEMPLATED BY SECTION 145A OF THE INCOME TAX ACT. IN THE CASE BEFORE THE DELHI HIGH COURT THE ASSESSING OFFICER CONTENDED THAT SECTION 145A DID NOT PERMIT THE ASSESSEE TO MAKE A CHANGE IN THE VALUATION OF THE OPENING STOCK AS ON 1.4.1998 THOUGH IT PERMITTED A CHANGE IN THE CLOSING STOCK AS ON 31.3.1999. THE QUESTION BEFORE THE DELHI HIGH COURT WAS THAT THE ADJUSTMENT OF EXCISE DUTY COULD BE MADE IN THE OPENING STOCK ALSO. IN THIS CONNECTION RELYING UPO N THE DECISION OF PRIVY COUNCIL IN THE CASE OF CIT VS . AHMEDABAD NEW COTTON MILLS CO. LTD. REPORTED IN AIR 1930 PC 56 THE DELHI HIGH COURT TOOK A VIEW THAT T O GIVE EFFECT TO SECTION 145A IF THERE IS ANY CHANGE IN THE CLOSING STOCK AT THE END OF THE YEAR THEN THERE MUST NECESSARILY BE A CORRESPONDING ADJUSTMENT MADE IN THE OPENING STOCK OF THAT YEAR. IT HAS BEEN HELD THAT THIS WOULD NOT AMOUNT TO GIVE DOUBLE BENEFIT TO THE ASSESSEE AND WOULD BE NECESSARY TO COMPUTE THE TRUE AND CORRECT PROFIT FOR THE PURPOSE OF ASSESSMENT. 3. WE MAY REPRODUCE HERE THE RELEVANT OBSERVATION IN THE JUDGMENT OF THE PRIVY COUNCIL IN THE CASE OF CIT VS. AHMEDABAD NEW COTTON MILLS CO. LTD. WHICH WAS RELIED UPON BY THE DELHI HIGH COURT AND WHICH IS AS UNDER (PAGE 56). 'IF THE METHOD OF ALTERING BOTH VALUATION IS NOT ADOPTED IT IS PERFECTLY PLAIN THAT THE PROFIT WHICH IS BROUGHT FORWARD IS NOT THE REAL ONE. IT MAY BE MORE OR IT MAY BE LESS BUT IT HAS NO RELATION TO THE TRUE PROFIT IF THE STOCK IS VALUED ON ONE BASIS WHEN IT GOES OU T WITHOUT CONSIDERING THE VALUE OF THE STOCK WHEN IT COMES IN. WHEN THEREFORE THERE IS UNDER VALUATION AT ONE END THE EFFECT IS TO CAUSE BOTH A SMALLER DEBI T IN RESPECT OF THE STOCK INTRODUCED INTO THE NEXT ACCOU NT AND A LARGER SUM FOR PROFITS REALISED BY THE SALE CHANGE IN MARKET VALUE BEING IMMEDIATELY REFLECTED IN THE PRICE OBTAINED FOR THE GOODS THAT ARE SOLD; IN THESE CIRCUMSTANCES TO CONTEND THAT THERE SHOULD BE UNDER VALUATION AT ONE END AND NOT AT THE OTHER IS TO ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 4 RAISE AN ARGUMENT WHICH THEIR LORDSHIPS CANNOT ACCEPT'. 4. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONIN G AND THE FINDING GIVEN BY THE DELHI HIGH COURT. 4. RESPECTFULLY FOLLOWING THE ORDER OF THE JURISDIC TIONAL HIGH COURT (SUPRA) WE FIND NO ERROR OR ILLEGALITY IN T HE ORDER OF THE LEARNED CIT(A) QUA THIS ISSUE. THEREFORE WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUND NO.1 RAISED BY THE REVENUE. 5. GROUND NO.2 REGARDING LEVY IF INTEREST U/S 234C AS PER THE INCOME RETURNED IN THE ORIGINAL INCOME OR IN TH E REVISED RETURN OF INCOME. 6. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEAR NED AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT RECORD. THE CIT(A) HAS DEALT WITH THIS ISSUE IN PARAGRAPHS 7 AN D 8 AS UNDER : 7. IN RESPECT OF GROUND NO 2.I.E. INCORRECT COMPUTATION OF INTEREST U/S 234C THE SUBMISSIONS MADE ARE AS UNDER : THE APPELLANT FILED A RETURN OF INCOME DECLARING TO TAL INCOME AT RS.5 23 90 180/-. ON THE BASIS OF THE SAI D RETURN THE INTEREST UNDER SECTION 234C WAS COMPUTE D AT RS.5 98 457/-. THE APPELLANT THEREAFTER FILED A REVISED RETURN OF INCOME DECLARING TOTAL INCOME AT RS.2 76 98 956/-. ON THE BASIS OF THE SAID RETURN THE INTEREST U/S 234C WAS COMPUTED AT RS.3 066/-. THE REVISED RETURN WAS VALID ONE AS THE SAME WAS FILED WITHIN THE TIME LIMIT REQUIRED UNDER THE ACT. A COP Y OF THE ORIGINAL RETURN AND REVISED RETURN ARE ENCLOSED . ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 5 ALSO FIND A COPY OF COMPUTATION OF TOTAL INCOME AS PER ORIGINAL RETURN AND THE REVISED RETURN ARE ENCLOSED . ALSO FIND A COPY OF COMPUTATION OF TOTAL INCOME AS PER ORIGINAL RETURN AND THE REVISED RETURN. THE AO IS REQUIRED TO WORK OUT THE INTEREST U/S 234C ON THE BASIS OF THE RETURN OF INCOME. HENCE THE AO IS REQUIRED TO COMPUTE THE SAID INTEREST AS PER THE REVISED RETURN. IT IS THEREFORE PLEADED THAT THE A O BE DIRECTED TO COMPUTE THE INTEREST U/S 234C AT ` .3066/- AS PER THE REVISED RETURN OF INCOME; 8. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS CAREFULLY AND PERUSED THE ORDER OF THE ASSESSING OFFICER. I FIND THAT THE APPELLANT HAS FILED VALID REVISED RETURN AND THE SAME HAS BEEN ACCEPTED BY THE ASSESSING OFFICER. THEREFORE THE AO IS DIRECTED TO COMPUTE INTEREST U/S 234C AS PER INCOME SHOWN IN THE REVISED RETURN NOT AS PER THE ORIGINAL RETURN 7. IT IS EVIDENT FROM THE ABOVE FINDINGS OF THE L EARNED CIT(A) THAT THE REVISED RETURN WAS VALID AND FILED WITHIN THE TIME LIMIT. SINCE THE REVISED RETURN WAS DULY ACC EPTED BY THE AO AND THE ASSESSMENT WAS ALSO MADE AS PER THE REVI SED RETURN THEREFORE THE INTEREST U/S 234C HAS TO BE CALCULATED /WORKED OUT ON THE BASIS OF REVISED RETURNED INCOME . ACCORDINGLY WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A). THE GROUND NO.2 IS ALSO DISMISSED. 8. THE APPEAL BY THE REVENUE IS DISMISSED. CROSS-OBJECTION NO.183/MUM/2010 (BY ASSESSEE) 9. GROUNDS RAISED BY THE ASSESSEE IN THE CROSS-OBJ ECTION ARE AS UNDER : ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 6 1. WITHOUT PREJUDICE TO THE FACT THAT THE CIT(A) WAS JUSTIFIED IN DIRECTING THE ADDITION U/S 145A OF THE ACT TO BE DELETED IN CASE THE DEPARTMENTS APPEAL ON THIS GROUND IS ALLOWED IT IS PRAYED THAT THE AO BE DIRECTED TO ALLOW THE SET OFF THE TAXES AND DUTIES ON THE OPENING STOCK OF GOODS QUANTIFIED BY THE ASESEE E AT RS.57 76 936 WHILE COMPUTING THE ADJUSTMENT U/S 145A OF THE ACT; 2. THE APPELLANT CRAVES LEAVE TO AMEND ALTER OR MODIFY THE ABOVE GROUNDS OF CROSS OBJECTIONS OR TO FILE FRESH GROUNDS OF CROSS OBJECTIONS IF FOUND NECESSAR Y 10. SINCE THE CROSS-OBJECTION IS ONLY IN SUPPORT OF THE CIT(A)S ORDER AND NO NEW ISSUE HAS BEEN RAISED. IN VIEW OF OUR FINDINGS IN THE REVENUES APPEAL THE CROSS-OBJ ECTION BECOMES INFRUCTUOUS. ACCORDINGLY THE CROSS-OBJECT ION IS DISMISSED AS INFRUCTUOUS. 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS-OBJECTION ALSO STANDS DISM ISSED. PRONOUNCED IN THE OPEN COURT ON 13.10.2010 SD SD (R.K.PANDA) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 13 TH OCT 2010 SRL:71010 COPY TO: ITA NO. 876/MUM/2010 C- O NO.183/MUM/2010 7 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI