Ocimum Bio Solutions India Limited , Hyderabad v. Income Tax Officer, Ward-16(1), Hyderabad

ITA 2090/Hyd/2018 | 2014-2015
Pronouncement Date: 11-05-2021 | Result: Allowed

Appeal Details

RSA Number 209022514 RSA 2018
Assessee PAN AAACO4095L
Bench Hyderabad
Appeal Number ITA 2090/Hyd/2018
Duration Of Justice 2 year(s) 6 month(s) 11 day(s)
Appellant Ocimum Bio Solutions India Limited , Hyderabad
Respondent Income Tax Officer, Ward-16(1), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 11-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB-A
Tribunal Order Date 11-05-2021
Last Hearing Date 05-04-2019
First Hearing Date 24-02-2021
Assessment Year 2014-2015
Appeal Filed On 31-10-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU ACCOUNTANT MEMBER I.T.A. NO. 2090/HYD/2018 ASSESSMENT YEAR: 2014-15 OCIMUM BIO SOLUTIONS INDIA LIMITED HYDERABAD [PAN: AAACO4095L] VS INCOME TAX OFFICER WARD-16(1) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P.MURALI MOHANA RAO AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY DR DATE OF HEARING : 24-02-2021 DATE OF PRONOUNCEMENT : 11-05-2021 O R D E R PER S.S.GODARA J.M. : THIS ASSESSEES APPEAL FOR AY.2014-15 ARISES FROM TH E CIT(A)-4 HYDERABADS ORDER DATED 18-06-2018 PASSED IN CASE NO.0394 / 2016-17 / ITO WD-16(1) / CIT(A)-4 / HYD / 18-19 INVOLVING PROCEEDINGS U/S.143(3) OF THE INCOME TAX A CT 1961 [IN SHORT THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES FIRST AND FOREMOST SUBSTANTIVE GROUN D SEEKS TO REVERSE BOTH THE LOWER AUTHORITIES ACTION DIS ALLOWING ITS PRIOR PERIOD EXPENDITURE OF RS.47 50 000/- ON THE GROUND THAT THE SAME DOES NOT PERTAIN TO THE IMPUGNED ASSESSMENT ITA NO. 2090/HYD/2018 :- 2 -: YEAR. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS AS UNDER: 7. THE GROUND NOS.7 AND 8 ARE WITH REGARD TO DISAL LOWING THE EXPENDITURE OF RS.48 50 000/- AS THEY ARE PRIOR PER IOD ITEMS. 7.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS WI TH REGARD TO ABOVE GROUNDS THE AO OBSERVED FROM THE P&L ACCOUNT THAT THE ASSESSEE DEBITED AN AMOUNT OF RS. 47 50 000/ - TOWA RDS PRIOR PERIOD EXPENDITURE. AS THIS EXPENDITURE RELATES TO EARLIER YEAR AND WAS NOT INCURRED DURING THE RELEVANT PREVIOUS YEAR I.E. F.Y. 2013-14 THE AMOUNT OF RS. 47 50 000/- WAS DISALLOWED. 7.2 DURING THE COURSE OF APPEAL PROCEEDINGS WITH R EGARD TO ABOVE GROUNDS THE APPELLANT COMPANY SUBMITTED AS UNDER: 'DURING THE YEAR UNDER CONSIDERATION THE APPELLANT COMPANY HAS DEBITED AN AMOUNT OF RS. 47 50 000/- TOWARDS PRIOR PERIOD EXPENSES WHICH WAS INCURRED BY THE APPELLANT DURING THE COUR SE OF ITS BUSINESS. HOWEVER THE ASSESSING OFFICER HAS DISALL OWED THE SAID EXPENSES STATING THE SAME TO BE NOT ALLOWABLE AS TH E SAME 'WERE INCURRED IN PREVIOUS YEARS AND NOT IN THE CURRENT Y EAR. IN THIS REGARD IT IS SUBMITTED THAT THE APPELLANT HAS INCURRED AN EXPENDITURE OF RS. 47 50 000/- WHICH WAS CRYSTALLIS ED IN THE PRESENT ASSESSMENT YEAR AND HENCE THE APPELLANT HAS ACCORDI NGLY CLAIMED DEDUCTION U/S. 37(1) OF THE ACT. FURTHER IT IS SUB MITTED THAT THE SAID EXPENDITURE IS INCURRED BY THE APPELLANT 'WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE SAID EXPENDITURE OF RS . 47 50 000/- WAS INCURRED FOR FUNCTIONING OF ITS OPERATIONS AND ACCORDINGLY CLAIMED BY THE ASSESSEE AS DEDUCTION U/S 37(1) OF THE ACT. IN SUPPORT OF ABOVE EXTRACT OF SECTION 37 OF THE ACT IS PRODUCED BELOW: 37. (1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF T HE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTING THE INC OME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR P ROFESSION. EXPLANATION 1. - FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR ANY PUR POSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS OR P ROFESSION AND NO DEDUCTION OR ALLOWANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. ITA NO. 2090/HYD/2018 :- 3 -: EXPLANATION 2. - FOR THE REMOVAL OF DOUBTS IT IS H EREBY DECLARED THAT FOR THE PURPOSE OF SUB-SECTION (1) ANY EXPENDITURE INCURRED BY AN ASSESSEE ON THE ACTIVITIES RELATING TO CORPORATE SO CIAL RESPONSIBILITY REFERRED TO IN SECTION 135 OF THE COMPANIES ACT 20 13 (18 OF 2013) SHALL NOT BE DEEMED TO BE AN EXPENDITURE INCURRED B Y THE ASSESSEE FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. FROM THE ABOVE IT IS REITERATED THAT ANY EXPENDITU RE NOT BEING CAPITAL IN NATURE AND NOT BEING EXPENDITURE U/S 30 TO 36 OF THE ACT WHICH IS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS SHALL BE CLAIMED AS DEDUCTION U/S. 37 OF THE ACT. IN THE PRE SENT CASE THE APPELLANT COMPANY HAS INCURRED AN EXPENDITURE OF RS . 47 50 000/- WHICH WAS CRYSTALLIZED IN THE YEAR UNDER CONSIDERAT ION AND WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. AS THE SAID EXPENDITURE OF RS. 47 50 000/- WAS LAID OUT WH OLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS THE SAME I S ELIGIBLE TO BE CLAIMED AS DEDUCTION U/S 37(1) OF THE ACT AND ACCOR DINGLY CLAIMED BY THE ASSESSEE. IN VIEW OF THE FACTS AND CIRCUMSTANCES SUBMITTED AB OVE IT IS REQUESTED BEFORE THE HAN. COMMISSIONER OF INCOME TA X (APPEALS) TO KINDLY DELETE THE DISALLOWANCE OF RS. 47 50 000/- M ADE BY THE ASSESSING OFFICER FOR THE YEAR UNDER CONSIDERATION . 7.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDE R AND SUBMISSIONS OF THE APPELLANT. ON VERIFICATION OF TH E DETAILS FILED BY THE APPELLANT IT WAS OBSERVED AT SINCE THE EXPENSES AR E PRELIMINARY EXPENSES AND THEY ARE TO BE CAPITALIZED. THEREFORE THE ADDITION MADE BY THE AO IS HEREBY CONFIRMED. 3. LEARNED DEPARTMENTAL REPRESENTATIVES VEHEMENT CONTENTION DURING THE COURSE OF HEARING IS THAT BOTH THE LOWER AUTHORITIES HAVE RIGHTLY DISALLOWED THE ASSESSEES IM PUGNED PRIOR PERIOD EXPENDITURE CLAIM FOR THE PRECISE REASO N THAT THE SAME OUGHT TO HAVE BEEN CLAIMED IN THE RELEVANT PREVIO US YEAR IN WHICH THE SAME WAS INCURRED. THE ASSESSEES CASE ON THE OTHER HAND IS THAT IT CLAIMED THE INSTANT HEAD OF EXPENDI TURE ONLY IN THE YEAR OF CRYSTALISATION I.E. AY.2014-15 THAN THE EARLIER CORRESPONDING ASSESSMENT YEAR(S). IT IS AN AD MITTED FACT THAT THE ASSESSING OFFICERS AS WELL AS THE CIT(A)S DE TAILED DISCUSSIONS HAVE BEEN FAIR ENOUGH IN NOT DISPUTING TH IS ITA NO. 2090/HYD/2018 :- 4 -: CLINCHING CRYSTALISATION ASPECT. COUPLED WITH THIS TH E ASSESSEE HAS BEEN ASSESSED AT THE SAME RATE ALL ALONG. THE HON BLE GUJARAT HIGH COURTS DECISION IN PCIT VS. ADANI ENTERP RISES LTD. (TAX APPEAL NO.566 OF 2016) HOLDS THAT THE IMPUGN ED PRIOR PERIOD EXPENDITURE DISALLOWANCE IN SUCH A CAS E OUGHT NOT TO BE MADE AS IT IS A REVENUE NEUTRAL INSTANCE ONLY. W E ADOPT THE SAME REASONING HEREIN AS WELL AND DIRECT THE ASSE SSING OFFICER TO DELETE THE IMPUGNED DISALLOWANCE. THE ASSE SSEES FORMER SUBSTANTIVE GROUND IS ACCEPTED THEREFORE. 4. NEXT COMES SECTION 36(1)(VA) EMPLOYEES PROVIDENT F UND DISALLOWANCE OF RS.6 22 182/- MADE IN BOTH THE LOWER PROCEEDINGS. THE ASSESSEES ONLY CASE AS PER ITS CO MPUTATION IN PG.2 OF THE PAPER BOOK IS THAT IT HAD SUO MOTU DISALLOWED THE VERY EXPENDITURE IN THE CORRESPONDING COMPUTATION WHI CH RENDERS IT AS AN INSTANCE OF DOUBLE ADDITION OF THE CLA IM. WE DIRECT THE ASSESSING OFFICER TO DELETE THE SAME THEREFOR E. NO OTHER GROUND HAS BEEN PRESSED BEFORE US. 5. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD DATED: 11-05-2021 TNMM ITA NO. 2090/HYD/2018 :- 5 -: COPY TO : 1.OCIMUM BIO SOLUTIONS INDIA LIMITED C/O. P.MURALI & CO. CHARTERED ACCOUNTANTS 6-3-655/2/3 1 ST FLOOR SOMAJIGUDA HYDERABAD. 2.THE INCOME TAX OFFICER WARD-16(1) HYDERABAD. 3.CIT(APPEALS)-4 HYDERABAD. 4.PR.CIT-4 HYDERABAD. 5.D.R. ITAT HYDERABAD. 6.GUARD FILE.