Hotline Electromnics Ltd., New Delhi v. DCIT, New Delhi

ITA 2635/DEL/2010 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 263520114 RSA 2010
Assessee PAN AAACH7522H
Bench Delhi
Appeal Number ITA 2635/DEL/2010
Duration Of Justice 7 month(s) 26 day(s)
Appellant Hotline Electromnics Ltd., New Delhi
Respondent DCIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 28-01-2011
Date Of Final Hearing 24-01-2011
Next Hearing Date 24-01-2011
Assessment Year 2005-2006
Appeal Filed On 02-06-2010
Judgment Text
ITA NO. 2635/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2635/DEL/2010 A.Y. : 2005-06 HOTLINE ELECTRONICS LTD. 52A OKHLA INDUSTRIAL ESTATE PHASE-III NEW DELHI 110 020 (PAN/GIR NO. : AAACH7522H) VS. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 12(1) NEW DELHI (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. S.K. JAIN CA DEPARTMENT BY : SMT. MONA MOHANTY SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 6.4.20 10 PERTAINING TO ASSESSMENT YEAR 2005-06. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ACTED ARBITRARILY IN MAKING AN ADDITION OF ` 5027731/- UNDER SECTION 41(1) OF THE INCOME TAX ACT. 3. IN THIS CASE THE ASSESSING OFFICER NOTED THA T ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF ADVANCES RECEIVED FROM CUSTOMERS AND ALSO FURNISH THE DETAILS AS TO WHEN SUCH ADVANCES HAD BEEN LIQUIDATED. FROM THE DETAILS THE ASSESSING OFFICER NOTED THAT T HERE WERE SEVERAL ADVANCES WHICH TILL DATE HAD NOT BEEN LIQUIDATED. ASSESSEE EXPLAINED THAT THESE AMOUNTS WERE NOT IN THE NATURE OF ADVANC E BUT IN THE ITA NO. 2635/DEL/2010 2 NATURE OF CREDIT BALANCE WHICH HAVE ARISEN ON ACCOU NT OF CREDIT NOTE ISSUED WITH REGARD TO THE RATE DIFFERENCE DIFFEREN CE IN CALCULATION OF RAW MATERIAL COST OR SALES RETURN. ASSESSING OFFIC ER WAS NOT SATISFIED. HE PROCEEDED TO HOLD THAT THE THERE IS CESSATION OF LIABILITY AND HE ADDED THE ENTIRE SUM OF ` 5027731/- AS REVENUE RECE IPT AND ADDED THEM IN THE ASSESSEES INCOME. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THAT ADDITION WAS RIGHTLY MADE U/S 41(1) OF THE IT ACT. 5. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PRODUCED AND THE PRECEDENT RELIED UPON. WE FIND TH AT THE CREDITORS AS NOTED BY THE ASSESSING OFFICER ARE THE ENTITIES WIT H WHOM THE ASSESSEE HAD DEALINGS EARLIER AND THE BALANCES ARE OUTSTANDING. THESE BALANCES HAVE NOTE BEEN WRITTEN OFF IN THE ASSESSEES BOOK. SECTION 41(1) OF THE IT ACT POSTULATES THAT: 41. (1) WHERE AN ALLOWANCE OR DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS EXPENDITUR E OR TRADING LIABILITY INCURRED BY THE ASSESSEE (HEREINAFTER REFER RED TO AS THE FIRST- MENTIONED PERSON) AND SUBSEQUENTLY DURING ANY PREVIO US YEAR ( A ) THE FIRST-MENTIONED PERSON HAS OBTAINED WHETHER IN CASH OR IN ANY OTHER MANNER WHATSOEVER ANY AMOUNT IN RESPECT OF S UCH LOSS OR EXPENDITURE OR SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY B Y WAY OF REMISSION OR CESSATION THEREOF THE AMOUNT OBTAINED B Y SUCH PERSON OR THE VALUE OF BENEFIT ACCRUING TO HIM SHALL BE DEEME D TO BE PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS THE INCOME OF THAT PREVIOUS YEAR WHETHER THE BUSINESS OR PROFESSION IN RESPECT OF WHICH THE ALLOWANCE OR DE DUCTION HAS BEEN MADE IS IN EXISTENCE IN THAT YEAR OR NOT; OR ITA NO. 2635/DEL/2010 3 7. FROM THE ABOVE IT IS CLEAR THAT ACT POSTULATES TH ERE SHOULD BE BENEFIT OBTAINED BY THE ASSESSEE BY WAY OF REMISSION OR CESSATION OF LIABILITY. IN THIS CASE WE NOTE THAT THERE IS NO DOCUMENT ON RECORD WHICH PROVE THAT THERE IS ACTUAL REMISSION AND CESSA TION OF THE LIABILITY. IT IS NOT THE CASE THAT ASSESSING OFFICER HAS ISS UED NOTICES TO THE CREDITORS AND THEY HAVE DECLINED THAT THEY HAVE PAI D SAID AMOUNT. UNDER THE CIRCUMSTANCES WHEN ASSESSING OFFICER HA S NOT BROUGHT ABOUT ANY COGENT BASIS AND THESE AMOUNTS HAVE NOT BE EN WRITTEN OFF IN THE BOOKS OF ACCOUNTS WE DO NOT FIND ANY REASON TO HOLD THAT THE AMOUNT IS LIABLE TO BE ADDED U/S 41(1) OF THE IT ACT . 8. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN DISALLOWING ` 2 10 70 0/- OUT OF FEE PAID TO ROC. 9. ON THIS ISSUE ASSESSING OFFICER NOTED THAT ASSE SSEE HAS SPENT ` 21.0700/- ON ACCOUNT OF FEE PAID TO ROC FOR INCREAS E IN AUTHORIZED SHARE CAPITAL. ASSESSING OFFICER HELD THAT THE EXPENDITURE IS CLEARLY IN CAPITAL NATURE. FOR THIS PURPOSE HE PLACED RELI ANCE UPON HONBLE APEX COURT IN THE CASE OF PUNJAB STATE INDUSTRIAL DE VELOPMENT CORPORATION LTD. VS. C.I.T. 225 ITR 792 (SC) AND BR OOKE BOND INDIA LTD. VS. C.I.T. 225 ITR 798. 10. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION. 11. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BE FORE US. 12. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE HON BLE APEX COURT ITA NO. 2635/DEL/2010 4 DECISION REFERRED ABOVE. HENCE WE UPHOLD THE ORDE R OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE AGAINST THE ASSESSEE. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/01/2011. SD/- SD/- [ [[ [RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV RAJPAL YADAV] ]] ] [SHAMIM [SHAMIM [SHAMIM [SHAMIM YAHYA] YAHYA] YAHYA] YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 28/01/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES