M/s. Mysore Sales International Ltd., Bangalore v. CIT, Bangalore

ITA 1402/BANG/2010 | 2006-2007
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 140221114 RSA 2010
Assessee PAN AADCM6234C
Bench Bangalore
Appeal Number ITA 1402/BANG/2010
Duration Of Justice 1 year(s) 3 month(s) 22 day(s)
Appellant M/s. Mysore Sales International Ltd., Bangalore
Respondent CIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-03-2012
Date Of Final Hearing 22-03-2012
Next Hearing Date 22-03-2012
Assessment Year 2006-2007
Appeal Filed On 08-12-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SHRI GEORGE GEORGE K JUDICIAL MEMBER A ND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NO.1402(BANG)/2010 (ASSESSMENT YEAR: 2006-07) M/S.MYSORE SALES INTERNATIONAL LTD. 36 CUNNINGHAM ROAD BANGALORE - 1. PAN:AADCM 6234C VS. APPELLANT COMMISSIONER OF INCOME - TAX(LTU) BANGALORE. RESPONDENT O R D E R PER GEORGE GEORGE K JM: THIS APPEAL INSTITUTED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(LTU) BANGALORE DATED 30-9-20 10 PASSED U/S 263 OF THE INCOME-TAX ACT 1961 [HEREINAFTER RE FERRED TO AS 'THE ACT']. THE RELEVANT ASSESSMENT YEAR IS 2006-0 7. THERE IS A DELAY OF 4 DAYS IN FILING OF THE APPEAL. THE ASSE SSEE-COMPANY HAD FILED A PETITION FOR CONDONING THE DELAY ALONG WITH AFFIDAVIT OF THE GENERAL MANAGER STATING THEREIN REASONS FOR DELAY IN FILING OF THE APPEAL. WE HAVE PERUSED THE PETITION AND THE APPELLANT BY: SHRI ASHOK KULKARNI ADVOCATE . RESPONDENT BY : SHRI S.K.AMBASTHA CIT - I. DATE OF HEARING: 22 - 03 - 2012 DATE OF PRONOUNCEMENT: 30 - 03 - 2012 ITA 1402(BANG)/2010 PAGE 2 AFFIDAVIT FILED. WE ARE OF THE VIEW THAT THERE IS A REASONABLE AND JUSTIFIABLE CAUSE FOR 4 DAYS DELAY IN FILING OF THE APPEAL. HENCE WE CONDONE THE DELAY AND PROCEED TO DISPOSE OF THE MATTER ON MERITS. 2. THE RELEVANT GROUNDS READ AS FOLLOWS: THE ORDER OF THE LEARNED COMMISSIONER IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. HAVING REGARD TO THE PROVISIONS OF LAW AND THE CONCEPT OF THE METHOD OF ACCOUNTING AND THE MODE OF DETERMINATION OF THE LEAVE ENCASHMENT ALLOWANCE THE AMOUNT WAS ALLOWABLE AS DEDUCTION U/S 37 OF THE ACT. 3. THE ORDER OF THE ASSESSMENT WHICH IS THE SUBJECT MATTER OF REVISION THE ORDER WAS PERFECTLY IN ACCORDANCE WITH LAW AND DID NOT SUFFER FROM ANY ERROR AS IT FOLLOWED THE BINDING DECISION OF THE KARNATAKA HIGH COURT IN M/S.EXIDE INDUSTRIES LTD. AND SUPREME COURT IN BEML. 4. THE POWER OF THE COMMISSIONER U/S 263 MUST BE EXAMINED WITH REFERENCE TO THE STATE OF LAW ON THE DATE ON WHICH THE ORDER WHICH IS THE SUBJECT MATTER OF REVISION IS PASSED. IF ON THAT DAY IT WA S NOT ERRONEOUS OR PREJUDICIAL TO THE INTEREST OF THE REVENUE IT COULD NOT HAPPEN TO BE SO BECAUSE OF SUBSEQUENT EVENT. 5. THE APPELLANT CRAVES LEAVES TO ADD TO DELETE FROM OR AMEND THE GROUNDS OF APPEAL. 3. BRIEFLY STATED FACTS OF THE CASE ARE AS FOLLOW: THE ASSESSEE IS A FULLY OWNED COMPANY OF THE GOVERNMENT OF KARNATAKA. IT IS ENGAGED IN THE BUSINESS OF TRADING ITEMS LIKE CONSUMER AND INDUSTRIAL PRODUCTS LIQUOR AIR AND B US TICKETS ETC. RETURN OF INCOME FOR THE CONCERNED YEAR WAS FI LED ON 30-11-2006 DECLARING INCOME OF `50 81 68 273/-. REVISED RETURN OF INCOME WAS FILED ON 14-2-2008 DECLARING TAXABLE INCOME OF ITA 1402(BANG)/2010 PAGE 3 ` 45 52 92 086/-. THE ASSESSMENT WAS COMPLETED U/S 14 3(3) ON 29-10-2008 DETERMINING THE INCOME AT ` 46 08 63 020/-. SUBSEQUENTLY NOTICE WAS ISSUED FOR INITIATING PROC EEDINGS U/S 263. THE REVISIONARY JURISDICTION WAS INITIATED BY THE CIT FOR THE FOLLOWING REASONS: A) UNPAID LEAVE ENCASHMENT IS TO BE DISALLOWED AS PER THE PROVISIONS OF SEC.43B(F) B) INTEREST PAYABLE U/S 244A ON REFUND FOR THE PERIOD FROM THE DUE DATE TO THE DATE OF FILING OF REVISED RETURN WHICH NEEDS TO BE EXCLUDED FOR THE REASON THAT THE DELAY IS ATTRIBUTABLE TO ASSESSEE AND NO INTEREST IS PAYABLE. 4. THE ASSESSEE FILED WRITTEN OBJECTIONS BEFORE THE CIT WHICH READS AS FOLLOWS: 1. IN SO FAR AS THE LEAVE ENCASHMENT BALANCE OF ` 14 53 596/- IT MAY BE NOTED THAT THE APPEAL FILED BY THE DEPARTMENT AGAINST THE DECISION OF KOLKATTA HIGH COURT IS STILL PENDING WITH SUPREME COURT. 2. REGARDING INTEREST PAYABLE ON THE REFUND IT IS SUBMITTED THAT THE COMPANY HAS FILED THE INCOME TAX RETURN ON OR BEFORE DUE DATE. 3. AS THE CBDT HAD NOTIFIED THE INTRODUCTION OF E - FILING OF RETURNS FOR CORPORATES FOR THE FIRST TIME FOR AY 2006-07 THERE WAS AN EXTENSION OF TIME TO FILE THE RETURNS UPTO 30-11-2006. THERE IS NO DELAY AND THE RETURN IS FILED BEFORE THE DUE DATE AS SUCH THE QUESTION OF INVOKING SECTION 244A OF THE INCOME-TAX ACT DOES NOT ARISE. THE CIT ACCEPTED THE ASSESSEES CONTENTION WITH REF ERENCE TO THE ISSUE OF INTEREST PAYABLE U/S 244A OF THE ACT F OR THE PERIOD FROM THE DUE DATE OF FILING OF RETURN TO THE DATE O F FILING OF REVISED RETURN AND DROPPED THE PROCEEDINGS U/S 263 OF THE ACT. THE CIT HOWEVER REJECTED THE ASSESSEES CONTENTIO N WITH ITA 1402(BANG)/2010 PAGE 4 REFERENCE TO THE ISSUE OF DISALLOWANCE OF UNPAID LE AVE ENCASHMENT BY INVOKING THE PROVISIONS OF SEC.43B(F) OF THE ACT. THE RELEVANT OBSERVATION OF THE CIT READS AS FOLLOW S: I HAVE CONSIDERED THE ARGUMENTS PUT FORWARD BY THE ASSESSEES REPRESENTATIVE. WITH REGARD TO THE ISSUE OF LEAVE ENCASHMENT IT IS SEEN THAT THE OPERATION OF T HE DECISION OF THE HONBLE KOLKATA HIGH COURT REFERRED TO BY THE ASSESSEE IN THE CASE OF M/S.EXIDE INDUSTRIES LT D. & ANR. IN SUPPORT OF ITS CASE HAS BEEN STAYED BY THE HONBLE SUPREME COURT. THE HONBLE SUPREME COURT HA S OBSERVED WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD DURING THE PENDENCY OF THIS CIVIL APPEAL PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS IN VIEW OF THE ABOVE THE ORDER DATED 29-10-08 IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN THE LIGHT OF THE FINDINGS OF THE HONBLE SUPREME CO URT. THE ASSESSING OFFICER IS DIRECTED TO ADD BACK TO TH E TOTAL INCOME A SUM OF `14 53 596/- BEING ENCASHMENT OF EARNED LEAVE NOT PAID BY THE DUE DATE U/S 43B. 5. THE ASSESSEE-COMPANY BEING AGGRIEVED IS IN A PPEAL BEFORE US. LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE CIT HAS ERRED IN INVOKING THE REVISIONARY JURISDICT ION U/S 263 OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSMENT ORDE R WAS PERFECTLY IN ACCORDANCE WITH LAW AND DOES NOT SUFFE R FROM ANY ERROR AS IT WAS IN TUNE WITH THE JUDGMENT OF THE HO NBLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UNION OF INDIA (164 TAXMAN 9(CAL). IT WAS SUBMITTED THAT THE OBSERVATION OF THE CIT THAT HONBLE SUPREME COURT H AS STAYED THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT IS NOT JUSTIFIED SINCE THE APEX COURTS OBSERVATION IN THE LAST PARA GRAPH OF ITS ITA 1402(BANG)/2010 PAGE 5 JUDGMENT IS CONFINED TO THE ASSESSEE IN THAT CASE. THEREFORE IT WAS SUBMITTED THAT FOUNDATION FOR INVOKING THE JURI SDICTION U/S 263 HAS LOST ITS SUBSTRATUM. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AO HAS NOT NOTICE D CLAUSE (F) TO SEC.43B AND THE ASSESSMENT ORDER HAVING ALLOWED UNPAID LEAVE ENCASHMENT AS ALLOWABLE DEDUCTION IS AN ORDE R WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. IT WAS SUBMITTED THAT THE CIT IS CORRECT IN CONCLUDING THA T HONBLE CALCUTTA HIGH COURT JUDGMENT IN THE CASE OF EXIDE INDUSTRIES (SUPRA) IS STAYED BY THE HONBLE APEX COURT. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ASSESSMENT ORDER IS SILENT ON THE PROVISIONS OF SECTION 43B(F) AND HAS BLINDLY ALLOWE D UNPAID PORTION OF LEAVE ENCASHMENT AS AN ALLOWABLE DEDUCTI ON. THERE HAS BEEN NO PROPER INQUIRY CONDUCTED BY THE AO. THE RE IS NO DISCUSSION IN THE ASSESSMENT ORDER WHETHER UNPAID P ORTION OF THE LEAVE ENCASHMENT IS AN ALLOWABLE DEDUCTION. TH E HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. NAMDARI SEEDS (2011)(64 DTR (KAR) 153 HAS OBSERVED THUS: HENCE THERE WERE NO TWO VIEWS AVAILABLE TO THE AO AND EVEN IF SO IT IS NOT STATED IN THE ORDER AS TO WHAT ARE THOSE TWO VIEWS AND AS TO HOW HE INTENDS TO ADOPT ONE OUT OF THESE TWO VIEWS THEREFORE THE CI T IS RIGHT IN PASSING THE REVISIONAL ORDER UNDER S.26 3. 6.1 THE RECENT JUDGMENT OF THE HONBLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS. M/S.INFOSYS TECHNOLOGIES LTD. (NO.2) (2012) 341 ITR 293 (KARN) HAS HELD AS FOLLOWS: ITA 1402(BANG)/2010 PAGE 6 THE ASSESSING AUTHORITY PERFORMS A QUASI-JUDICIAL FUNCTION AND THE REASONS FOR HIS CONCLUSIONS AND FINDINGS SHOULD BE FORTHCOMING IN THE ASSESSMENT ORDER. THOUGH IT IS URGED ON BEHALF OF THE ASSESSEE BY ITS LEARNED COUNSEL THAT REASONS SHOULD BE SPELT OU T ONLY IN A SITUATION WHERE THE ASSESSING AUTHORITY PASSES AN ORDER AGAINST THE ASSESSEE OR ADVERSE TO THE INTERESTS OF THE ASSESSEE AND NO NEED FOR THE ASSESSING AUTHORITY TO SPELL OUT REASONS WHEN THE ORDER IS ACCEPTING THE CLAIM OF THE ASSESSEE AND TH E LEARNED COUNSEL SUBMIT THAT THIS IS THE LEGAL POSIT ION ON AUTHORITY WE ARE AFRAID THAT TO ACCEPT A SUBMISSION OF THIS NATURE WOULD BE TO GIVE A FREE HAND TO THE ASSESSING AUTHORITY JUST TO PASS ORDER S WITHOUT REASONING AND TO SPELL OUT REASONS ONLY IN A SITUATION WHERE THE FINDING IS TO BE AGAINST THE ASSESSEE OR ANY CLAIM PUT FORTH BY THE ASSESSEE IS DENIED. WE ARE OF THE CLEAR OPINION THAT THERE CANNOT BE ANY DICHOTOMY OF THIS NATURE AS EVERY CONCLUSION AN D FINDING BY THE ASSESSING AUTHORITY SHOULD BE SUPPORTED BY REASONS HOWEVER BRIEF IT MAY BE AND IN A SITUATION WHERE IT IS ONLY A QUESTION OF COMPUTATION OF IN ACCORDANCE WITH THE RELEVANT ARTICLES OF A DOUBLE TAXATION AVOIDANCE AGREEMENT AND THAT SHOULD BE CLEARLY INDICATED IN THE ORDER O F THE ASSESSING AUTHORITY WHETHER OR NOT THE ASSESSE E HAD GIVEN PARTICULARS OR DETAILS OF IT. IT IS THE D UTY OF THE ASSESSING AUTHORITY TO DO THAT AND IF THE ASSESSING AUTHORITY HAD FAILED IN THAT MORE SO IN EXTENDING A TAX RELIEF TO THE ASSESSEE THE ORDER DEFINITELY CONSTITUTES AN ORDER NOT MERELY ERRONEOU S BUT ALSO PREJUDICIAL TO THE INTERESTS OF THE REVENU E AND THEREFORE WHILE THE COMMISSIONER WAS JUSTIFIE D IN EXERCISING THE JURISDICTION UNDER SECTION 263 OF THE ACT THE TRIBUNAL WAS DEFINITELY NOT JUSTIFIED IN INTERFERING WITH THIS ORDER OF THE COMMISSIONER IN ITS APPELLATE JURISDICTION. IN THE INSTANT CASE THERE IS NO DISCUSSION AT ALL IN THE ASSESSMENT ORDER WHY THE UNPAID LEAVE ENCASHMENT IS ALLOWED AS DEDUCTION. PRIMA FACIE WE FEEL THE AO HAS NOT NOTED THE RELEVANT STATUTORY PROVISIONS VIZ. 43B(F). IT IS A SETTLED LAW NON-CONSIDERATION OF MANDATORY PROVISIONS OF LAW IN AN ORDER ITA 1402(BANG)/2010 PAGE 7 WILL LEAD THE SAME TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. 6.2 WE ARE OF THE OPINION THAT THE CIT IS JUSTIF IED IN STATING THAT THE HONBLE SUPREME COURT HAS STAYED T HE OPERATION OF THE JUDGMENT OF THE HONBLE CALCUTTA H IGH COURT IN THE CASE OF EXIDE INDUSTRIES (SUPRA) WHICH HAS STRU CK DOWN CLAUSE (F) TO SEC. 43B. THE HONBLE SUPREME COURT WHILE ADMITTING THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT OF THE HONBLE CALCUTTA HIGH COURT OBSERVED THUS: WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD DURING THE PENDENCY OF THIS CIVIL APPEAL PAY TAX A S IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SA ME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RE TURNS FROM A READING OF THE ABOVE HONBLE SUPREME COURT ORDER IT IS CLEAR THAT SEC.43B(F) IS IN THE STATUTE BOOK DURING THE PENDENCY OF THE CIVIL APPEAL. IT CANNOT BE SAID TH AT SEC.43B(F) IS IN RESPECT OF ONLY THOSE ASSESSEES BEFORE THE SU PREME COURT. THE ORDER OF THE HONBLE SUPREME COURT CANNOT BE IN TERPRETED TO MEAN THAT THE PARTIES BEFORE THE HONBLE SUPREME COURT ALONE NEED TO TAKE NOTE OF THE PROVISIONS OF SEC.43 B(F) OF THE ACT. IN LIGHT OF THE AFORESAID REASONING WE ARE O F THE OPINION THAT THE CIT IS JUSTIFIED IN INVOKING THE REVISIONA RY JURISDICTION U/S 263 OF THE ACT AND ACCORDINGLY UPHOLD HIS ORDER . ITA 1402(BANG)/2010 PAGE 8 7. IN THE RESULT THE ASSESSEES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH 2012. SD/- SD/- (JASON P. BOAZ) ACCOUNTANT MEMBER (GEORGE GEORGE K) JUDICIAL MEMBER EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE