Kloeckner Desma Machinery Pvt.Ltd.,, Ahmedabad v. The ACIT.,(OSD)-I,, Ahmedabad

ITA 2599/AHD/2009 | 2006-2007
Pronouncement Date: 08-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 259920514 RSA 2009
Assessee PAN AAACK8768N
Bench Ahmedabad
Appeal Number ITA 2599/AHD/2009
Duration Of Justice 1 year(s) 9 month(s) 22 day(s)
Appellant Kloeckner Desma Machinery Pvt.Ltd.,, Ahmedabad
Respondent The ACIT.,(OSD)-I,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 08-07-2011
Date Of Final Hearing 05-07-2011
Next Hearing Date 05-07-2011
Assessment Year 2006-2007
Appeal Filed On 16-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL VP AND BHAVNESH SAINI JM) ITA NO.2599/AHD/2009 A. Y.: 2006-07 KLOECKNER DESMA MACHINERY PVT. LTD. 53 MADHUBAN NR. MADALPUR UNDERBRIDGE AHMEDABAD 380 006 VS THE A. C. I. (OSD)-1 RANGE-4 NAVJIVAN TRUST BUILDING ASHRAM ROAD AHMEDABAD PA NO. AAACK 8768 N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI M. J. SHAH AR RESPONDENT BY SHRI J. P. JANGID SR. DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI II AHMEDABAD DATED 28-07-2009 FOR ASSESSMENT YEAR 2006-07 ON TH E FOLLOWING GROUNDS: 1. YOUR APPELLANT BEING AGGRIEVED BY THE ORDER PAS SED BY LEARNED C. I. T. (APPEALS)-VIII AHMEDABAD DATED 28.07.2009 PRESENTS THIS APPEAL ON FOLLOWING GROUN DS. 2. THE LEARNED C. I. T. (APPEALS)-VIII HAS ERRED IN MAKING DISALLOWANCE OF PRIOR PERIOD EXPENSE OF RS.3 16 443 /- (DEPRECIATION OF RS.78 788/- AND OTHER EXPENSES OF RS.2 37 655) BEING THOUGH EXPLAINED. THE DISALLOWAN CE MADE BE DELETED. 3. THE LEARNED C. I. T. (APPEALS)-VIII HAS ERRED IN MAKING DISALLOWANCE OF SUNDRY BALANCE WRITTEN OFF OF ITA NO.2599/AHD/2009 KLOECKNER DESMA MACHIENRY PVT. LTD. VS ACIT (OSD)-I RANGE-4 AHMEDABAD 2 RS.3 05 410/- BEING THOUGH EXPLAINED. THE DISALLOWA NCE MADE BE DELETED. 4. THE LEARNED C.I. T. (APPEALS)-VIII HAS ERRED IN MAKING DISALLOWANCE OF DEDUCTION U/S 80-IB ON BUSINESS INC OME OF RS.34 92 774/- (DUTY DRAW BACK OF RS.13 07 874/- ) AND ADVANCE LICENSE INCENTIVE OF RS.21 84 900/-) BEING THOUGH EXPLAINED. THE DISALLOWANCE MADE BE DELETED. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUND NO.1 IS GENERAL AND NO RELIEF IS CALLED FOR. THE SA ME IS ACCORDINGLY DISMISSED. 4. ON GROUND NO.2 THE ASSESSEE CONCEDED BEFORE TH E AO THAT DEPRECIATION AMOUNTING TO RS.78 788/- WAS DISALLOWA BLE DURING THE RELEVANT PERIOD. FURTHER RS.2 37 655/- COULD NOT B E PROVIDED DUE TO ERROR OR OMISSION IN THE PREVIOUS YEAR. THEREFORE SAME WAS CLAIMED IN THE ASSESSMENT YEAR UNDER APPEAL. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION. T HE LEARNED CIT(A) ALSO CONFIRMED THE ADDITION BECAUSE THE ASSE SSEE CONCEDED TO THE DISALLOWANCE OF DEPRECIATION AND FURTHER NOT HING WAS BROUGHT ON RECORD TO SHOW THAT THESE ITEMS GOT MATURED DURI NG THE RELEVANT FINANCIAL YEAR. ON CONSIDERATION OF THESE FACTS WE DO NOT FIND ANY MERIT IN GROUND NO.2 OF THE APPEAL OF THE ASSESSEE. FOR CLAIM OF DEPRECIATION THE ASSESSEE AGREED TO THE ADDITION BE FORE THE AO AND FOR OTHER EXPENSES IT WAS ADMITTED THAT DUE TO ERRO R OR OMISSION THOUGH THE EXPENSES ARE RELATED TO PREVIOUS YEAR I T HAS NOT BEEN ITA NO.2599/AHD/2009 KLOECKNER DESMA MACHIENRY PVT. LTD. VS ACIT (OSD)-I RANGE-4 AHMEDABAD 3 PROVIDED IN THE BOOKS OF ACCOUNT. VIRTUALLY THE AS SESSEE CONCEDED BOTH THE ADDITION BEFORE THE AUTHORITIES BELOW AND NO EVIDENCE WAS FILED TO EXPLAIN THE SAME. IT IS SETTLED LAW THAT A S THE ASSESSMENT IS MADE ON AGREED BASIC; THE ASSESSEE CANNOT APPEAL AG AINST SUCH ORDER. WE RELY UPON THE DECISION OF THE HONBLE KER ALA HIGH COURT IN THE CASE OF CIT VS VAMADEVAN BHANU 330 ITR 559 AN D THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF JIVATLAL PURTAPSHI 65 ITR 261. SINCE THE ASSESSEE CONCEDED TO THE DISALLOWANCE OF DEPRECIATION AND NOTHING WAS PRODUC ED BEFORE THE AUTHORITIES BELOW AS TO HOW THE CLAIM OF OTHER EXPE NSES WERE JUSTIFIED IN THE ASSESSMENT YEAR UNDER APPEAL THEREFORE THI S GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5. ON GROUND NO.3 THE ASSESSEE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN DISALLOWING SUNDRY BALANCE WRITTE N OFF OF RS.3 05 410/-. THE LEARNED CIT(A) REPRODUCED THE DE TAILS OF THE AMOUNT WRITTEN OFF IN PARA 8.2 OF THE APPELLATE ORD ER AND NOTED IN PARA 8.5 THAT AS REGARDS SR. NO.3 TO 20 IT WAS SEE N THAT THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS LAID DOWN IN SECTI ON 36(1) (VII) OF THE IT ACT THAT SUCH DEBTS BECAME BAD DURING THE RELEVANT PERIOD. THE LEARNED CIT(A) FOLLOWING THE DECISION OF THE HONBL E GUJARAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES & ENGINEERS PVT. LTD. 295 ITR 481 DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIR MED THE ADDITION. THE LEARNED COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE DETAILS OF THE BAD DEBT WAS PROVIDED TO THE AO AND IT WAS ALSO EXPLAINED THAT UNDER COMPELLING REASONS THE AMOUNTS WERE WRITTEN OFF AS IRRECOVERABLE IN THE ACCOUNTS OF THE ASSESSEE AS PER AMENDED ITA NO.2599/AHD/2009 KLOECKNER DESMA MACHIENRY PVT. LTD. VS ACIT (OSD)-I RANGE-4 AHMEDABAD 4 PROVISIONS OF LAW. THEREFORE THE ADDITION SHOULD H AVE BEEN DELETED. HE HAS RELIED UPON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF T. R. F. LTD. 323 ITR 397 IN WHICH IT WAS H ELD AS UNDER: THIS POSITION IN LAW IS WELL-SETTLED. AFTER 1 ST APRIL 1989 IT IS NOT NECESSARY FOR THE ASSESSEE TO ESTABLISH THAT THE DEBT IN FACT HAS BECOME IRRECOVERABLE. IT IS ENOU GH IF THE BAD DEBT IS WRITTEN OFF AS IRRECOVERABLE IN THE ACC OUNTS OF THE ASSESSEE. HOWEVER IN THE PRESENT CASE THE ASS ESSING OFFICER HAS NOT EXAMINED WHETHER THE DEBT HAS IN F ACT BEEN WRITTEN OFF IN ACCOUNTS OF THE ASSESSEE. WHEN BAD DEBT OCCURS THE BAD DEBT ACCOUNT IS DEBITED AND TH E CUSTOMERS ACCOUNT IS CREDITED THUS CLOSING THE A CCOUNT OF THE CUSTOMER. IN THE CASE OF COMPANIES THE PROV ISION IS DEDUCTED FROM SUNDRY DEBTORS. AS STATED ABOVE THE ASSESSING OFFICER HAS NOT EXAMINED WHETHER IN FACT THE BAD DEBT OR PART THEREOF IS WRITTEN OFF IN THE ACCO UNTS OF THE ASSESSEE. THIS EXERCISE HAS NOT BEEN UNDERTAKEN BY THE ASSESSING OFFICER. HENCE THE MATTER IS REMITTED TO THE ASSESSING OFFICER FOR DE NOVO CONSIDERATION OF THE ABOVE- MENTIONED ASPECT ONLY AND THAT TOO ONLY TO THE EXTE NT OF THE WRITE OFF. 6. ON CONSIDERATION OF THE ABOVE FACTS WE ARE OF TH E VIEW THAT THE ADDITION IS CLEARLY UNJUSTIFIED. THE ASSESSEE FULFI LLED THE CONDITIONS OF SECTION 36(1) (VII) OF THE IT ACT. THE DETAILS ARE NOTED IN THE ASSESSMENT ORDER IN WHICH THE AO NOTED THE BRIEF RE ASONS FOR WRITING OFF THE AMOUNTS AS IRRECOVERABLE. THE ISSUE IS THE REFORE COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONB LE SUPREME COURT IN THE CASE OF T. R. F. LTD. (SUPRA). THE LEARNED C OUNSEL FOR THE ASSESSEE THEREFORE RIGHTLY CONTENDED THAT THE DEC ISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF DHALL ENT ERPRISES & ENGINEERS PVT. LTD. (SUPRA) WOULD NOT APPLY AGAINST THE ABOVE ITA NO.2599/AHD/2009 KLOECKNER DESMA MACHIENRY PVT. LTD. VS ACIT (OSD)-I RANGE-4 AHMEDABAD 5 DECISION OF THE HONBLE SUPREME COURT. WE ACCORDING LY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDI TION OF RS.3 05 410/-. GROUND NO.3 OF THE APPEAL OF THE ASS ESSEE IS ALLOWED. 7. ON GROUND NO.4 THE LEARNED CIT(A) NOTED THAT DU TY DRAW BACK AND ADVANCE LICENSE INCENTIVE THOUGH ESSENTIALLY AN EXPORT INCENTIVE BUT THESE ARE NOT DERIVED FROM THE INDUSTRIAL UNDER TAKING AS ENVISAGED U/S 80 IB OF THE IT ACT. THEREFORE THE A O RIGHTLY EXCLUDED THE SAME WHILE WORKING OUT THE DEDUCTION U/S 80 IB OF THE IT ACT. THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE IS SUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS CIT 317 ITR 218 IN WHICH IT WAS HELD THAT DUTY DRAW BACK RECEIPT AND DEPB BENEFITS DID NOT F ALL PART OF NET PROFIT OF ELIGIBLE INDUSTRIAL UNDERTAKINGS F OR THE PURPOSE OF DEDUCTION U/S 80 IB OF THE IT ACT. BY FOLLOWING THE SAME DECISION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LE ARNED CIT(A) IN CONFIRMING THE ADDITION. WE ACCORDINGLY DO NOT FIN D ANY MERIT IN GROUND NO.4 OF THE APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08-07-2011 SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 08-07-2011 LAKSHMIKANT/- ITA NO.2599/AHD/2009 KLOECKNER DESMA MACHIENRY PVT. LTD. VS ACIT (OSD)-I RANGE-4 AHMEDABAD 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD