The DCIT, Ahmedabad Circle-1,, Ahmedabad v. Aryaman Spinners Pvt.Ltd.,, Ahmedabad

ITA 2317/AHD/2007 | 2003-2004
Pronouncement Date: 28-04-2010 | Result: Dismissed

Appeal Details

RSA Number 231720514 RSA 2007
Assessee PAN AABCA8482G
Bench Ahmedabad
Appeal Number ITA 2317/AHD/2007
Duration Of Justice 2 year(s) 10 month(s) 28 day(s)
Appellant The DCIT, Ahmedabad Circle-1,, Ahmedabad
Respondent Aryaman Spinners Pvt.Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 28-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-04-2010
Date Of Final Hearing 28-04-2010
Next Hearing Date 28-04-2010
Assessment Year 2003-2004
Appeal Filed On 31-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 28.04.10 DRAFTED ON:28.04.10 ITA NO.2317/AHD/2007 ASSESSMENT YEAR : 2003-2004 DCIT CIRCLE-1 3 RD FLOOR JITENDRA CHAMBERS R.B.I. LANE ASHRAM ROAD AHMEDABAD. VS. ARYMAN SPINNERS PVT. LTD. H.P.HOUSE ELLISBRIDGE AHMEDABAD. PAN/GIR NO. : AABCA 8482 G (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI B.S.SADHU CIT RESPONDENT BY: SHRI S.N.SOPARKAR A.R. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-V AHME DABAD DATED 14.03.2007. 2. GROUND NO.1 OF THE APPEAL READS AS UNDER:- 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN DIRECTI NG TO DELETE THE ADDITION MADE OF RS.1 08 16 965/- OUT OF POWER AND FUEL/DIESEL CHARGES. 3. THE FACTS OF THE CASE ARE THAT DURING THE ASSESS MENT PROCEEDINGS IT WAS OBSERVED BY THE A O THAT THERE WAS DISPROPORTIONATE INCREASE IN POWER & FUEL AND DIESEL FOR D G SET EXPENSES AS COMPARED TO THE SAME IN THE ASSESSMENT YEAR 1999-2000. THE A O HAS NOTED THAT F OR THE ASSESSMENT MADE IN THE ASSESSMENT YEAR 1999-2000 DISALLOWANCES OF DIRE CT EXPENSES WAS MADE AS - 2 - DURING THE SEARCH PROCEEDING IN THE ASSESSEE COMPAN Y ON 9-9-1998 UNACCOUNTED PRODUCTION AND SALES WERE FOUND. NO EVI DENCE WAS FOUND DURING THE SEARCH FOR INCURRING DIRECT EXPENSES OVER AND A BOVE LOSS DEBITED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE. HE ALSO NOTED THA T IN THE ASSESSMENT MADE IN THE YEAR 1999-2000 DIRECT EXPENSES PROPORTIONATE TO UNACCOUNTED PRODUCTION HAVE BEEN DISALLOWED WHICH WAS UPHELD BY THE LEARNE D CIT(A)-II AHMEDABAD. HE NOTED THAT SIMILAR ADDITIONS WERE MADE IN THE EA RLIER TWO YEARS TAKING THE BASE OF ASSESSMENT YEAR 1999-2000. THE DISALLOWANCE OF EXPENSES MADE IN THE ASSESSMENT YEAR 2000-2001 WAS DELETED BY THE LEARNE D CIT(A)-I AHMEDABAD WHOSE ORDER WAS NOT ACCEPTED BY THE DEPARTMENT AND APPEAL AGAINST THE SAID ORDER WAS FILED BEFORE THE TRIBUNAL. THE LEARNED AS SESSING OFFICER NOTED THAT TOTAL EXPENDITURE CLAIMED WAS RS.1 88 65 339 OUT OF WHICH ONLY RS.79 85 680/- WAS PAID TO GEB AND BALANCE OF RS.1 08 79 659/- IS FOR DIESEL FOR DG SET. THEREFORE IN ORDER TO MAINTAIN CONSISTENT STAND OF THE REVENUE ON THE SAME BASIS OF REASONING GIVEN IN THE IMMEDIATELY TWO AS SESSMENT YEARS 1999-2000 DISPROPORTIONATE INCREASE IN DIRECT EXPENSES AS COM PARED TO ASSESSMENT YEAR 1999-2000 ARE COMPUTED AND DISALLOWED. ACCORDINGLY DISALLOWANCE OF RS.1 08 79 659/- WAS MADE BY THE A O. 4. IN APPEAL BEFORE THE LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER:- 4.2. I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E ABOVE SUBMISSIONS. I FIND THAT THE ENTIRE BASIS FOR DISAL LOWANCE IS THE METHOD ADOPTED BY THE A.O.IN A.Y.1999-2000. HOWEVER FOR THE VARIOUS YEARS UPTO A.Y.2002-2003 THE SAME BASIS ADOPTED HAS NOT BEEN APPROVED IN THE APPELLATE PROCEEDINGS AND CIT(A)HAS DELETED THOSE ADDITIONS. I ALSO APPRECIAT E THAT THE APPELLANT HAS BETTED YIELD WHICH IS 89% AS COMPARED TO 70% IN A.Y. 2002-2003 AND 40% IN A.Y. 2001-2002. THAT A PART THE MACHINERY IS VERY OLD AND IT REQUIRES MORE CONS UMPTION OF POWER. THIS FACT IS FURTHER SUPPORTED BY THE OBSERV ATION OF THE A.O. THAT LARGE REPAIR EXPENSES ARE INCURRED BY THE APPELLANT. IN VIEW OF THIS THE EXPLANATION OF THE ASSESSEE CAN NOT BE RULED OUT. THE ADDITION MADE IS ACCORDINGLY DELETED AS HE LD IN EARLIER YEARS BY RESPECTIVE CIT(A)S. - 3 - 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FILED COPY OF ORDER OF THE TRIBUNAL IN THE CASE OF ONE OF ITS GRO UP CONCERNED SHREENATH SPINNERS PVT. LTD. IN ITA NO.2199/AHD/2004 FOR ASSE SSMENT YEAR 2001-02 DATED 7.12.2007 AND SUBMITTED THAT SIMILAR ADDITION WAS MADE BY THE LEARNED ASSESSING OFFICER WHICH WAS DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHICH ORDER WAS CONFIRMED BY THE TRIBU NAL IN THE SECOND APPEAL FILED BY THE REVENUE AND THE APPEAL OF THE REVENUE WAS DISMISSED. THEREFORE FOLLOWING THE SAME THE APPEAL OF THE REVENUE SHOULD BE DISMISSED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. BOTH THE PARTIES AGREED THAT SIMILAR ISSUE HAS COME UP BEFORE THE TRIBUNAL IN THE CASE OF ONE OF THE GROUP COMPANIES M/S. SHREENATH SPINNERS PVT. LTD. I N ITA NO.2199/AHD/2004 FOR ASSESSMENT YEAR 2001-02 DATED 7.12.2007 AND THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE AND CONFIRMED THE ORDER O F THE LEARNED CIT(A). THE TRIBUNAL WHILE DOING SO OBSERVED TO QUOTE AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. WE FIND THAT SIMILAR ISSUE HAS COME UP BEFORE THE TRIB UNAL IN THE ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2000-01. THE TRIBUNAL HAS DISMISSED THE APPEAL OF THE REVENUE AND CONFIRM ED THE ORDER OF THE LEARNED CIT(A). THE TRIBUNAL WHILE DOING SO OBS ERVED TO QUOTE AS UNDER: 4.1 WHILE THE REVENUES CASE IS ONE OF THE INABILI TY OF THE ASSESSEE TO EXPLAIN THE SAID INCREASE RECKO NED WITH REFERENCE TO THE EXPENDITURE INCURRED UNDER TH E SAID HEAD IN THE PRECEDING YEAR THE ASSESSEES CAS E IS THAT THERE IS NO SCOPE FOR DISALLOWANCE OF THE POWE R EXPENDITURE THE SAME BEING ONLY PAID TO THE GOVERNMENT SO THAT THERE IS NO DOUBT AS TO ITS GENUINENESS. THE VARIOUS OF THE POWER EXPENDITURE COULD BE FOR ON VARIETY OF REASONS AND THERE IS NO PRESUMPTION OF THE UNIFORMITY OF THE SAME ACROSS DIFFERENT YEARS. THE TOTAL EXPENDITURE WE FIND IS NOT - 4 - ONLY TOWARD THE POWER CHARGES PAID TO THE ELECTRICI TY BOARD I.E. A GOVERNMENT ORGANIZATION BUT ALSO INCLUDES DIESEL EXPENSES FOR D.G. SET WHICH IN FA CT HAVE BEEN BOOKED UNDER A SEPARATE HEAD OF ACCOUNT. ALSO THE CONSUMPTION OF ENERGY HAS A RELATIONSHIP WHICH MAY NOT BE LINEAR WITH THE PRODUCTION WHICH ASPECT HAS ALSO BEEN EXAMINED AND WOULD THEREFORE MERIT CONSIDERATION. THE ISSUE THEREFORE IS ONE O F FACTUAL DETERMINATION RATHER THAN ONE OF LAW BEIN G THE VALIDITY OF THE ASSESSEES CLAIM FOR EXPENDITURE U/ S. 37(1) OF THE ACT IN GIVEN FACTS AND CIRCUMSTANCES O F THE CASE. IN THE INSTANT YEAR ALSO WE FIND THAT THE A O FOUND THAT PROPORTIONATE EXPENDITURE INCURRED BY THE ASSESSEE ON ELECTRICITY WAS HIGHER THAN THAT INCURRED IN THE AS SESSMENT YEAR 1999-2000. GENUINENESS OF THE EXPENDITURE INCU RRED IS NOT IN DOUBT. THERE IS NO MATERIAL BROUGHT ON RECOR D BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS MADE UNACCOUN TED PURCHASES OF RAW MATERIALS OR HAS MADE UNACCOUNTED SALES DURING THE YEAR UNDER CONSIDERATION. THUS THE FACT S IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THE FACTS OF THE ASSESSMENT YEAR 2000-01. THE LEARNED DR COULD NOT SHOW ANY GOO D REASON FOR NOT FOLLOWING THE ORDER OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2000-01. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE FOLLOWING THE DECISION O F THE TRIBUNAL IN THE ASSESSMENT YEAR 2000-01 WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUND OF APP EAL OF THE REVENUE. 7. IN THE INSTANT CASE ALSO WE FIND THAT THE A O FOUND THAT PROPORTIONATE EXPENDITURE INCURRED BY THE ASSESSEE ON ELECTRICITY WAS HIGHER THAN THAT INCURRED IN THE ASSESSMENT YEAR 1999-2000 . GENUINENESS OF THE EXPENDITURE INCURRED IS NOT IN DOUBT. THERE IS NO M ATERIAL BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE ASSESSEE HAS MADE UNAC COUNTED PURCHASES OF RAW MATERIALS OR HAS MADE UNACCOUNTED SALES DURING THE YEAR UNDER CONSIDERATION. THUS THE FACTS IN THE CASE OF THE ASSESSEE ARE IDE NTICAL TO THE FACTS OF M/S. SHREENATH SPINNERS PVT. LTD. IN THE ASSESSMENT YEAR 2001-02. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT SHOW ANY GOOD REASON FOR NOT FOLLOWING THE ABOVE QUOTED ORDER OF THE TRIBUNAL. IN THE ABOV E FACTS AND CIRCUMSTANCES OF - 5 - THE CASE FOLLOWING THE ABOVE QUOTED ORDER OF THE T RIBUNAL WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE H EARING IN THE PRESENCE OF THE PARTIES ON 28 TH DAY OF APRIL 2010. SD/- SD/- ( MAHAVIR SINGH) ( N.S. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; ON THIS 28 TH DAY OF APRIL 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-V AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 28.04.2010 ---------------- --- 2. DRAFT PLACED BEFORE AUTHORITY 28.04.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 28.04.2010 ---------- --------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 29.04.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 29.04.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON ---------------- --- ----------------- 7. FILE SENT TO THE BENCH CLERK ---------------- -------------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------