M/s. ABG INFRALOGISTICS LTD, MUMBAI v. DCIT CENT. CIR. - 36, MUMBAI

ITA 3690/MUM/2008 | 2003-2004
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 369019914 RSA 2008
Assessee PAN AAACA3293L
Bench Mumbai
Appeal Number ITA 3690/MUM/2008
Duration Of Justice 1 year(s) 11 month(s) 4 day(s)
Appellant M/s. ABG INFRALOGISTICS LTD, MUMBAI
Respondent DCIT CENT. CIR. - 36, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 30-04-2010
Date Of Final Hearing 25-03-2010
Next Hearing Date 25-03-2010
Assessment Year 2003-2004
Appeal Filed On 26-05-2008
Judgment Text
ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH MUMBAI BEFORE SHRI N V VASUDEVAN AND SHRI PRAMOD KUMAR ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 ABG INFRALOGISTICS LIMITED .APPELLANT 5 TH FLOOR BHUPATI CHAMBERS 13 MATHEWS ROAD MUMBAI 400 004 PAN : AAACA3293L VS. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 36 MUMBAI 400 020 . RESPONDEN T APPELLANT BY : SMT AARTI VISSANJI RESPONDENT BY : SHRI S K PAHWA O R D E R PER PRAMOD KUMAR: 1. BY WAY OF THIS APPEAL THE TAXPAYER HAS CHALLENG ED THE LEGALITY OF ORDER DATED 26 TH MARCH 2008 PASSED BY THE LEARNED COMMISSIONER UND ER SECTION 263 OF THE INCOME TAX ACT 1961 FOR THE AS SESSMENT YEAR 2003- 04 ON THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX (CIT) ERR ED IN HOLDING THAT THE ASSESSMENT ORDER DATED 29 TH DECEMBER 2006 PASSED BY THE DEPUTY ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 2 OF 8 COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 36 MUMB AI IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND CON SEQUENTLY IN ASSUMING JURISDICTION UNDER SECTION 263 OF THE INCOME TAX AC T 1961 (THE ACT) IN RESPECT OF THE FOLLOWING ITEMS: A. DEDUCTION OF RS 18 06 89 953 UNDER SECTION 80 IA OF THE ACT. B. EXCESS SET OFF FOR UNABSORBED DEPRECIATION OF RS 3 89 350 C. PRIOR PERIOD EXPENDITURE OF RS 6 94 816 D. EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND OF R S 7 21 916. 2. THE LEARNED CIT FAILED TO APPRECIATE THAT NONE O F THE CONDITIONS PRECEDENTS ENGRAFTED IN SECTION 263 CONSTITUTING TH E JURISDICTIONAL CONDITIONS ARE SATISFIED IN THE APPELLANTS CASE A ND CONSEQUENTLY TRAVELLED BEYOND THE OPERATIVE REALM AND SPHERE IN CLOTHING HIMSELF WITH COMPETENCY UNDER SECTION 263. 2. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS A LSO THE APPLICABLE LEGAL POSITION. 3. AS FAR AS THE DEDUCTION OF RS 18 06 89 953 UNDER SECTION 80 IA IS CONCERNED THE MATERIAL FACTS ARE LIKE THIS. IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE ASSESSEE WAS GRANTED THE SAID DEDU CTION. LEARNED CIT HOWEVER WAS OF THE VIEW THAT THE SAID DEDUCTION WA S NOT ADMISSIBLE IN THE CASE OF THE ASSESSEE. WHEN THE ASSESSEE WAS CAL LED UPON TO SHOW CAUSE AS TO WHY THE ASSESSMENT ORDER NOT BE SUBJECT ED TO REVISION PROCEEDINGS AND THE DEDUCTION UNDER SECTION 80 IA NOT BE WITHDRAWN ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 3 OF 8 THE ASSESSEE MADE SUBMISSIONS ON MERITS OF THE CLAI M AND ALSO SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE E BY DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. WHILE HE DID TAKE NOTE OF THE FACT THAT ON THE MATERIALLY IDENTICAL FACTS OF THE CASE TRIBUNA L HAS GRANTED THE DEDUCTION UNDER 80IA TO THE ASSESSEE THE CIT DID N OT FOLLOW THE TRIBUNAL ORDER FOR THE REASON THAT WHILE ORIGINALLY TRIBUNAL HAD DISMISSED THE CLAIM THE ORDER SO DISMISSING THE DEDUCTION WAS RE CALLED BY THE TRIBUNAL AND THEN THE MATTER WAS DECIDED IN FAVOUR OF THE AS SESSEE A COURSE OF ACTION WHICH WAS CHALLENGED BY THE ASSESSING OFFICE R IN A WRIT PETITION BEFORE THE HONBLE BOMBAY HIGH COURT. THE CIT ALSO NOTED THAT IN ANY EVENT EVEN ON MERITS DECISION OF THE TRIBUNAL HAS NOT BEEN ACCEPTED BY THE TAX AUTHORITIES AND THE SAME IN CHALLENGED IN A PPEAL BEFORE THE HONBLE BOMBAY HIGH COURT. THE CIT THEN PROCEEDED T O SET OUT ELABORATE ANALYSIS OF REASONS WHY THIS DEDUCTION IS NOT ADMI SSIBLE AND ON THE BASIS OF SAID REASONING PROCEEDED TO DISALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80IA AMOUNTING TO RS18 06 89 953. 4. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE IS SUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY HONBLE BOMBAY HIGH COURT S JUDGMENT DATED 15 TH FEBRUARY 2010 IN ASSESSEES OWN CASE. IN THIS VIE W OF THE MATTER THE GRANT OF DEDUCTION UNDER SECTION 80 IA CANNOT BE SA ID TO BE ERRONEOUS AT ALL. FOR THIS SHORT REASON ALONE LEARNED COMMISSIO NER CLEARLY ERRED IN ASSUMING REVISION JURISDICTION IN RESPECT OF GRANT OF DEDUCTION UNDER ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 4 OF 8 SECTION 80 IA. THE DEDUCTION WAS RIGHTLY GRANTED BY THE ASSESSING OFFICER AND NO INTERFERENCE WAS CALLED FOR IN THE SAID ACTI ON. 5. AS FOR THE GRANT OF EXCESS SET OFF OF DEPRECIATI ON OF RS 3 89 350 IT IS ENOUGH TO TAKE NOTE OF THE FACT THAT WHILE THE ASSE SSING OFFICER HAD DETERMINED ADMISSIBLE DEDUCTION UNDER SECTION 80IA AT RS 20 45 43 376 THE ACTUAL DEDUCTION GRANTED BY HIM BEING RESTRICT ED TO THE GROSS TOTAL INCOME WAS ONLY RS 18 06 89 593. EVEN IF GROSS TOT AL INCOME WAS TO GO UP BY ANY AMOUNT LESS THAN RS 3 89 350 IT WOULD HAVE BEEN TAX NEUTRAL INASMUCH AS THE INCREASE IN GROSS TOTAL INCOME WOUL D HAVE BEEN ACCOMPANIED BY THE CORRESPONDING INCREASE IN ADMISS IBLE DEDUCTION UNDER SECTION 80IA. THESE FACTS ARE NOT IN DISPUTE BY THE COMMISSIONER OR EVEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE BEFORE US. IN THESE CIRCUMSTANCES EVEN IF THERE IS INDEED AN ERROR IN ALLOWING SET OFF OF DEPRECIATION IN EXCESS BY RS 3 89 350 THERE IS OBV IOUSLY NO PREJUDICE TO THE INTERESTS OF THE REVENUE. WE ARE THEREFORE UN ABLE TO APPROVE THE ASSESSMENT ORDER BEING SUBJECTED TO REVISION PROCEE DINGS ON THIS COUNT AS WELL. 6. THE NEXT GROUND ON WHICH LEARNED COMMISSIONER HA S EXERCISED HIS POWERS UNDER SECTION 263 IS THAT THE ORDER OF THE A SSESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AS THE ASSESSING OFFICER HAD ALLOWED DEDUCTION OF RS 6 94 816 IN RES PECT OF PRIOR PERIOD ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 5 OF 8 EXPENSES. AS REGARDS THIS ISSUE IT HAS BEEN THE C ONTENTION OF THE ASSESSEE THAT THE LIABILITY CRYSTALLIZED IN THE CUR RENT YEAR AS THE LANDLORD HAD RAISED THE RELEVANT BILLS ONLY DURING THE CURRE NT YEAR EVEN THOUGH ELECTRICITY EXPENSES ALSO PERTAINED TO THE PERIOD P RIOR TO THIS YEAR. WITHOUT REJECTING THIS FACTUAL CONTENTION ON MERITS THE COMMISSIONER HAS HELD THAT THE ASSESSEES CONTENTION IS NOT IN CONFORMITY WITH THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND SINCE THE EXPENSES PERTAINED TO THE EARLIER YEARS THE SAME CANNOT BE ALLOWED AS DEDUCTION IN THE YEAR UNDER CONSIDERATION. THIS APPROACH IS HOWEVER ERRONEOUS INASMUCH AS IN OUR CONSIDERED VIEW ONCE IT IS NOT IN DISPUTE THAT THE LIABILITY TO PAY HAS CRYSTALLIZED IN THE RELEVANT P REVIOUS YEAR EVEN IF THE EXPENSES MAY PERTAIN TO AN EARLIER ACCOUNTING PERIO D AND UNLESS THOSE EXPENSES HAVE NOT ALREADY BEEN CLAIMED AS A DEDUCTI ON BY WAY OF A PROVISION FOR LIABILITY THESE EXPENSES ARE TO BE A LLOWED AS A DEDUCTION. THE ASSESSEE DID MAKE A CLAIM THAT THE LIABILITY TO PAY CRYSTALLIZED IN THE RELEVANT PREVIOUS YEAR AND THE SAID CLAIM WAS NOT R EJECTED OR EVEN DOUBTED. UNDER THESE CIRCUMSTANCES ASSESSING OFFIC ER CANNOT BE SAID TO HAVE BEEN IN ERROR IN ALLOWING THE DEDUCTION ON ACC OUNT OF PRIOR PERIOD EXPENSES. THE COMMISSIONER THUS ERRED ON REVISING T HE ASSESSMENT ORDER FOR THIS REASON ALSO. 7. FINALLY THE IMPUGNED REVISION ORDER ALSO HOLDS THAT THE DELAYED PAYMENTS OF EMPLOYEES CONTRIBUTION TO PROVIDENT FU ND ARE REQUIRED TO BE ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 6 OF 8 TREATED AS INCOME FROM OTHER SOURCES AND SHOULD B E CONSIDERED FOR DISALLOWANCE UNDER SECTION 43 B. 8. LEARNED REPRESENTATIVES HOWEVER FAIRLY AGREE T HAT THE SAID ISSUE IS ALSO NOW COVERED IN FAVOUR OF THE ASSESSEE. IN THE CASE OF CIT VS AIMIL LTD & ORS (35 DTR 68) HONBLE DELHI HIGH COURT HAS HELD THAT DISALLOWANCE UNDER SECTION 43 B CANNOT BE RESORTED TO IN A SITUATION IN WHICH THE ASSESSEE HAS MADE DELAYED PAYMENTS OF THE EMPLOYEES CONTRIBUTION OF PROVIDENT FUND AS LONG AS THESE PA YMENTS HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN. 9. RESPECTFULLY FOLLOWING THE ESTEEMED VIEWS OF HON BLE DELHI HIGH COURT WE HOLD THAT THE ORDER OF THE ASSESSING OFFI CER WAS IN CONFORMITY WITH THE LAW ON THIS COUNT AS WELL. LEARNED COMMISS IONER CLEARLY ERRED IN INVOKING HIS JURISDICTION UNDER SECTION 263 TO RECT IFY A NON EXISTENT ERROR. 10. FOR THE REASONS SET OUT ABOVE WE ARE OF THE CO NSIDERED VIEW THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS NOT ERRON EOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. LEARNED COMMISSIONE R THUS ERRED IN PASSING THE IMPUGNED REVISION ORDER. WE HEREBY VACA TE THE IMPUGNED REVISION ORDER. ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 7 OF 8 11. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCE D IN THE OPEN COURT TODAY ON 30 TH DAY OF APRIL 2010 SD/- SD/- ( N V VASUDEVAN) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 30 TH DAY OF APRIL 2010. COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT MUMBAI 4. THE COMMISSIONER (APPEALS) MUMBAI 5. DEPARTMENTAL REPRESENTATIVE - BENCH MUMB AI 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI ITA NO. 3690/MUM/08 ASSESSMENT YEAR 2003-04 PAGE 8 OF 8 DATE INITIAL 1. DRAFT DICTATED ON 23.4.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26.4.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 26.4.2010 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 26.4.2010 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.4.2010 SR.PS/PS 6. DATE OF PRONOUNCEMENT 30.4.2010 SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER