DCIT, Circle - 4, Kolkata, Kolkata v. V. N. Enterprises Ltd, Kolkata

ITA 1778/KOL/2008 | 2004-2005
Pronouncement Date: 25-03-2011 | Result: Dismissed

Appeal Details

RSA Number 177823514 RSA 2008
Assessee PAN AAACV8991L
Bench Kolkata
Appeal Number ITA 1778/KOL/2008
Duration Of Justice 2 year(s) 6 month(s) 12 day(s)
Appellant DCIT, Circle - 4, Kolkata, Kolkata
Respondent V. N. Enterprises Ltd, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-03-2011
Date Of Final Hearing 17-03-2011
Next Hearing Date 17-03-2011
Assessment Year 2004-2005
Appeal Filed On 12-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH-A: KO LKATA ( ) . . . . ! ! ! ! ) [BEFORE HONBLE SHRI B.R. MITTAL J.M. & HONBLE SH RI C.D. RAO A.M] ' ' ' ' /I.T.A. NO. 1778/KOL./2008 #$ #$ #$ #$ %& %& %& %& /ASSESSMENT YEAR : 2004-2005 DEPUTY COMMISSIONER OF INCOME TAX -VS.- V.N. ENTERPRISES LTD. CIRCLE-4 KOLKATA KOLKATA (PAN : AAACV 8991 L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMANT SINHA D.R. RESPONDENT BY : SHRI M.P. THARD A.R. ' ' ' ' /O R D E R PER SHRI B. R. MITTAL JUDICIAL MEMBER / . . : THIS IS AN APPEAL OF THE DEPARTMENT FOR THE ASSESS MENT YEAR 2004-05 FILED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-I V KOLKATA DATED 03.07.2008 ON THE FOLLOWING GROUNDS :- (1) THAT ORDER OF LD. CIT(A.) IS BAD IN LAW HENCE NOT ACCEPTABLE. (2) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE LD. CIT(A.) HAD ERRED IN DELETING THE DISALLOWANCE OF CLAIM OF BUSI NESS LOSS TO THE TUNE OF RS.2 04 94 278/- MADE BY THE AO BASED ON THE FACTS THAT THERE WAS NO EXPORT OR ALLIED ACTIVITIES AND NO EARNING OF FOREI GN EXCHANGE. LD. CIT(A.) HAD FAILED TO APPRECIATE THAT PROVISIONS OF SEC. 11 5 IS NOT APPLICABLE IN THIS INSTANT CASE. (3) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE LD. CIT(A.) HAD ERRED IN DELETING DISALLOWANCE OF BUSINESS LOSS TO THE TUNE OF RS.12 76 000/- MADE BY THE AO BASED ON THE FACT THA T DURING THE PERIOD IN QUESTION THE ASSESSEE DID NOT MAKE ANY SINGLE SALE. SINCE THERE WAS NO ITA NO.1778/KOL.2008 2 SALE QUESTION OF ANY LOSS DOES NOT ARISE. MOREOVER THE ASSESSEE COULD NOT SUBSTANTIATE THE PURCHASE IN SPITE OF HAVING A STO CK OF RS.3.12 CRORE WHERE THERE WAS NO SALE. 2. IT IS RELEVANT TO STATE THAT THIS APPEAL WAS DEC IDED BY THE TRIBUNAL VIDE ORDER DATED 23.01.2009. HOWEVER THE DEPARTMENT FILED AN APPLIC ATION UNDER SECTION 254(2) OF THE INCOME TAX ACT STATING THAT GROUND NO. 3 AS MENTIONED HER EINABOVE WAS NOT DECIDED BY THE TRIBUNAL. THE TRIBUNAL AFTER CONSIDERING ITS AFORESAID ORDER DATED 23.01.2009 AGREED THAT THERE WAS A MISTAKE AS THE TRIBUNAL HAD NOT ADJUDICATED GROUND NO. 3 OF THE APPEAL WHILE PASSING ITS ORDER DATED 23.01.2009. HENCE THE TRIBUNAL ALLOWED THE M ISCELLANEOUS APPLICATION OF THE DEPARTMENT BEING M.A. NO. 101/KOL./2009 VIDE ITS OR DER DATED 19.03.2010 TO CONSIDER GROUND NO. 3 OF THE APPEAL. 3. AT THE TIME OF HEARING THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THERE WAS NO BUSINESS CARRIED ON BY THE ASSESSEE IN THE ASSESSME NT YEAR UNDER CONSIDERATION AND THE ASSESSEE FILED ITS RETURN DISCLOSING LOSS OF RS.2 17 70 273/ - AND THE ASSESSING OFFICER DISALLOWED THE SAME. THE LD. D.R. SUBMITTED THAT IN THE RETURN FIL ED THE LOSS DECLARED BY THE ASSESSEE INCLUDED THE SAID SUM OF RS.12 76 000/- TOWARDS ESTABLISHMEN T AND ADMINISTRATIVE EXPENSES. THE LD. D.R. SUBMITTED THAT THE LD. CIT(APPEALS) HAS ALLOWE D THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAD NOT CLOSED ITS BUSINESS AND M ERELY THE ASSESSEE COULD NOT MAKE ANY EXPORT DURING THE RELEVANT ASSESSMENT YEAR DUE TO POLITICA L UNREST IN IRAQ. HE SUBMITTED THAT THE ACTION OF THE ASSESSING OFFICER BE CONFIRMED BY REVERSING THE ORDER OF THE LD. CIT(APPEALS). 4. ON THE OTHER HAND THE LD. AUTHORIZED REPRESENTA TIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. CIT(APPEALS). HE SUBMITTED THAT THE ASSE SSEE INCURRED AN AMOUNT OF RS.12 76 000/- AS EXPENDITURE TOWARDS ESTABLISHMENT AND OTHER MISC ELLANEOUS EXPENSES IN CONNECTION WITH ITS BUSINESS. ON A QUERY FROM THE BENCH THE LD. A.R. F ILED THE DETAILS OF THE BREAK-UP OF THE EXPENSES AGGREGATING RS.2 17 77 881/- WHICH WAS CL AIMED UNDER THE HEAD OPERATING EXPENSES. HE SUBMITTED THAT THERE WAS THE CLAIM OF RS.2 04 94 273/- UNDER THE HEAD LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION AND THE BALANCE AM OUNT OF RS.12 76 000/- IS THE EXPENDITURE INCURRED TOWARDS ESTABLISHMENT AND MISCELLANEOUS EX PENSES. THE LD. A.R. SUBMITTED THAT THE TRIBUNAL VIDE ITS EARLIER ORDER DATED 23.01.2009 HA S HELD THAT THE ASSESSEE HAD NOT STOPPED ITS EXPORT BUSINESS AND THERE COULD BE NO EXPORT ACTIVI TY IN THE ASSESSMENT YEAR UNDER ITA NO.1778/KOL.2008 3 CONSIDERATION DUE TO WAR BROKE OUT IN IRAQ. HE SUB MITTED THAT THE SAID EXPENDITURE WAS INCURRED BY THE ASSESSEE IN CONNECTION WITH ITS BUSINESS WH ICH WAS IN DORMANT IN THE ASSESSMENT YEAR UNDER CONSIDERATION BUT THE ASSESSEE HAD NOT STOPP ED ITS BUSINESS. HE SUBMITTED THAT THE ORDER OF THE LD. CIT(APPEALS) BE CONFIRMED. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW. AT THE OUT SET WE STATE THAT THE DEPARTMENT WHILE FILING THE APPEAL SHOULD HAVE ENCLOSED A STATEMENT OF FACT S WHILE TAKING GROUND NO. 3 OF THE APPEAL TO DISPUTE THE SUM OF RS.12 76 000/- AS ALLOWED BY THE LD. CIT(APPEALS). ON PERUSAL OF THE ORDER OF LD. CIT(APPEALS) WE OBSERVE THAT THERE IS NO ME NTION OF SUCH FIGURE IN HIS ORDER. THE ASSESSING OFFICER HAS ALSO NOT SPECIFICALLY DISALLO WED THE SUM OF RS.12 76 000/-. 6. BE THAT AS IT MAY WE HAVE PERUSED THE DETAILS O F THE BREAK-UP OF THE EXPENSES AGGREGATING RS.12 76 000/- AS CLAIMED BY THE ASSESS EE IN ITS COMPUTATION OF INCOME FILED ALONGWITH THE RETURN DECLARING LOSS OF RS.2 17 77 8 81/- WHICH INTER ALIA INCLUDES LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION OF RS.2 04 94 273/-. AS MENTIONED HEREINABOVE WE HAVE HELD VIDE OUR EARLIER ORDER DATED 23.01.2009 THAT THE SA ID FOREIGN EXCHANGE LOSS HAD ARISEN TO THE ASSESSEE AS A BUSINESS LOSS AND THE SAME HAD RIGHTL Y BEEN ALLOWED BY THE LD. CIT(APPEALS). ACCORDINGLY GROUNDS NO. 1 & 2 OF THE APPEAL WERE R EJECTED BY THE TRIBUNAL. 7. SINCE WE HAVE ALREADY HELD THAT THE ASSESSEE HAD NOT CLOSED ITS BUSINESS AND HAVE GIVEN A FINDING THAT IN THE SUCCEEDING ASSESSMENT YEAR TO THE ASSESSMENT YEAR UNDER CONSIDERATION THERE WERE EXPORTS TO THE EXTENT OF RS.17 11 25 866 /- AND IN THE ASSESSMENT YEAR UNDER CONSIDERATION NO EXPORT COULD TAKE PLACE DUE TO PO LITICAL UNREST IN IRAQ WE AGREE WITH THE LD. CIT(APPEALS) THAT THE ASSESSEE WAS REQUIRED TO MAIN TAIN ITS BUSINESS ESTABLISHMENT AND TO MEET THE EXPENSES ON ACCOUNT OF ESTABLISHMENT AND ADMINI STRATIVE EXPENSES. SINCE THE DEPARTMENT HAS NOT DISPUTED THE GENUINENESS OF THE CLAIM OF TH E ASSESSEE THE DETAILS OF WHICH ARE PLACED ON RECORD AS ALSO FILED BY THE ASSESSEE ALONGWITH THE RETURN WE HOLD THAT THERE IS NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS). A CCORDINGLY WE UPHOLD THE ORDER OF LD. CIT(APPEALS) AND REJECT GROUND NO. 3 OF THE APPEAL TAKEN BY THE DEPARTMENT. ITA NO.1778/KOL.2008 4 8. THIS ORDER BE READ ALONGWITH OUR EARLIER ORDER D ATED 23.01.2009 AND THE ORDER DATED 19.03.2010 IN M.A. NO. 101/KOL./2009. 9. IN THE RESULT THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.03. 2011. SD/- SD/- [C. D. RAO ( . . )] [ B.R . MITTAL / . . ] ACCOUNTANT MEMBER/ ! ! ! ! JUDICIAL MEMBER/ ] DATED : 25/ 03/ 2011 COPY OF THE ORDER FORWARDED TO: 1. M/S. V.N. ENTERPRISES LTD. 6 OLD POST OFFICE STRE ET 4 TH FLOOR KOLKATA-1. 2 DCIT CIRCLE-4 KOLKATA P-7 CHOWRINGHEE SQUARE K OLKATA- 69. 3. CIT(A)- KOLKATA 4. CIT- KOLKATA 5. DR KOLKATA BENCHES KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR I.T.A.T. KOLKATA. LAHA SR. P.S.