The DCIT, Bharuch Circle,, Bharuch v. Enviro Technology Ltd.,, Ankleshwar

ITA 425/AHD/2007 | 1998-1999
Pronouncement Date: 13-08-2010 | Result: Dismissed

Appeal Details

RSA Number 42520514 RSA 2007
Assessee PAN AAACE4126G
Bench Ahmedabad
Appeal Number ITA 425/AHD/2007
Duration Of Justice 3 year(s) 6 month(s) 15 day(s)
Appellant The DCIT, Bharuch Circle,, Bharuch
Respondent Enviro Technology Ltd.,, Ankleshwar
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 13-08-2010
Date Of Final Hearing 12-08-2010
Next Hearing Date 12-08-2010
Assessment Year 1998-1999
Appeal Filed On 29-01-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH AHMEDABAD BENCH A AA A BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI BHAVNESH BHAVNESH BHAVNESH BHAVNESH SAINI SAINI SAINI SAINI JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER AND AND AND AND SHRI SHRI SHRI SHRI N.S.SAINI N.S.SAINI N.S.SAINI N.S.SAINI ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER DATE OF HEARING :12-8-2010 DRAFTED ON:12-8-201 0 ITA NO. 425 /AHD/ 2007 ASSESSMENT YEAR : 1998-99 AND HEARING : DRAFTED O N C.O. NO. 62 /AHD/ 2007 ARISING OUT OF ITA.NO.425/AHD/2007 ASSESSMENT YEAR : 1998-99 DEPUTY COMMISSIONER OF INCOME TAX BHARUCH CIRCLE INCOME TAX OFFICE BHARUCH. VS. ENVIRO TECHNOLOGY LTD. 117-118 G.I.D.C. ANKLESHWAR. PAN/GIR NO. : AAACE 4126 G (A PPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI R.K.DHANESTA D.R. RESPONDENT BY: SHRI S.N. SOPARKAR SR.ADV. O R D E R O R D E R O R D E R O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI BARODA DATED 30-11-2006 WHEREAS CROSS OBJECTION IS FILED B Y THE ASSESSEE. 2. THE SOLE GROUND OF APPEAL OF THE REVENUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISA LLOWANCE MADE BY LEARNED ASSESSING OFFICER UNDER SECTION43B BEING THE SUM OF `13 55 817/- PAYABLE TO GIDC AS WATER CHARGES CLEAR LY COVERED UNDER SECTION 43B OF THE ACT. - 2 - 3. THE BRIEF FACTS OF THE CASE ARE THAT THE LEARNED ASSESSING OFFICER OBSERVED FROM THE TAX AUDIT REPORT THAT ASS ESSEE HAD DEBITED `.21 27 150/-. TOWARDS WATER CHARGES PAYABL E TO GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION AND AGAINST THAT THE COMPANY HAS MADE PAYMENT OF `.7 71 333/- IN APRIL AND MAY 1 998. THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT ACCO RDING TO THE PROVISIONS OF SECTION 43B OF THE I.T. ACT 1961 ANY SUM PAYABLE BYWAY OF TAX DUTY CESS OR FEES BY WHATEVER NAME C ALLED UNDER ANY LAW SHALL BE ALLOWABLE DEDUCTION ONLY IF THE PA YMENT WAS MADE IN THE RELEVANT PREVIOUS YEAR OR ON OR BEFORE THE D UE DATE OF FURNISHING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. ACCORDING TO THE LEARNED ASSESSING OFFICER WATER CH ARGES PAYABLE ARE IN THE NATURE OF TAX IMPOSED BY STATUTORY AUTHO RITIES AND AS `.13 55 817/- WAS UNPAID WATER CHARGES THE SAME WAS NOT ALLOWABLE IN VIEW OF SECTION 43B OF THE I.T.ACT 196 1. ACCORDINGLY HE DISALLOWED DEDUCTION FOR THE SAME IN COMPUTING THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) THE ASSESSEE CONTENDED THAT GUJARAT INDUS TRIAL DEVELOPMENT CORPORATION ANKLESHWAR RAISED A DEMAND BILL ON 9-4- 1998 RELATING TO MARCH 1998 FOR `.21 27 510/- TOWAR DS WATER CHARGES. THE ASSESSEE PAID `.7 71 333/- IN APRIL A ND MAY 1998. IT WAS VEHEMENTLY STATED THAT WATER CHARGES PAYABLE IS NOT IN THE NATURE OF TAX DUTY CESS OR FEES AND SO DOES NOT FA LL WITHIN THE PURVIEW OF SECTION43B OF THE I.T. ACT. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANCE BY OBSERVING AS UNDER :- 8. I HAVE GONE THROUGH THE ARGUMENTS SUBMISSIONS AND OBSERVATIONS OF THE APPELLANT AND LEARNED ASSESSING OFFICER. IT HAS BEEN REMARKED BY THE LEARNED ASSESSING OFFIC ER THAT - 3 - AGAINST CLAUSE NO.7 OF THE TAX AUDIT REPORT MEANT F OR ANY TAX DUTY OR OTHER SUM DEBITED TO PROFIT AND LOSS A CCOUNT BUT NOT PAID DURING THE YEAR I.E. RELEVANT TO SECTION 4 3B AMOUNT OF `.21 27 517/- WAS INDICATED. FURTHER THE LEARNED ASSESSING OFFICER OPINED THAT THIS AMOUNT WAS IN TH E NATURE OF TAXES AND SO IT IS COVERED UNDER SECTION 43B OF THE I.T. ACT 1961. AFTER GOING THROUGH THE SUBMISSIONS AND T HE PROVISIONS OF SEC.43B OF THE ACT I AM OF THE CONSI DERED VIEW THAT THE WATER CHARGES PAYABLE ARE NOTHING BUT ROUT INE BUSINESS EXPENDITURE AND DOES NOT PARTAKE CHARACTER OF TAX DUTY CESS OR FEES. THE WATER CHARGES ARE RAISED T HROUGH THE BILLS AGAINST THE ACTUAL USAGE OF WATER AND ARE NOT IMPOSITION BY STATE TO RAISE THE REVENUE. IT HAS BEEN HELD IN THE CASE OF OM PRAKASH AGRAWAL VS. GIRI RAJ KISHORI (1987) 165 ITR 376 (SC) THAT MARKET CESS IS NOT COVERED UNDER SECTION 43B.FURTHER EVEN MANDI FEES WAS NOT HELD TO BE FALL ING UNDER THE PURVIEW OF SECTION 43B IN THE CASE OF CIT VS. D INESH GORDHANLAL 135 CTR 481 (MP) ON THE GROUND THAT THE MANDI FEE IS PAID BY TRADER WHO ENJOYS THE FACILITY OF MA NDI AND MERELY BECAUSE THERE IS COMPULSION FOR PAYMENT OF F EES SAME CANNOT BE TAKEN TO TAX AS THE SAME IS COLLECTE D FOR THE SERVICES RENDERED. THE WATER CHARGES ARE CLEARLY IN CONNECTION WITH THE USAGE OF WATER FOR APPELLANTS BUSINESS AND IN CASE THERE IS NO USAGE THERE WOULD BE NO W ATER CHARGES FOR SOME FIXED CHARGES. MERELY BECAUSE THE AUDITOR HAS INDICATED THE FIGURE OF WATER CHARGES PAYABLE A GAINST CLAUSE NO.7 IT DOES NOT BRING THIS EXPENDITURE WIT HIN THE AMBIT OF SECTION 43B OF THE ACT. IN MY VIEW THE LE ARNED ASSESSING OFFICER IS NOT JUSTIFIED IN DISALLOWING T HE EXPENDITURE UNDER SECTION 43B.SINCE THE ASSESSEE HA S BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING THE WATE R CHARGES PAYABLE IN THE RELEVANT FINANCIAL YEAR IS A ACCRUE D LIABILITY AND THUS THE DISALLOWANCE OF `.13 55 817/- IS DELE TED. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS DEBITED `.21 27 150/- IN ITS PROFIT AND LOSS ACCOUNT AS WATER SUPPLY CHARGES AND OUT OF THE AFORESAID SUM `.13 55 817/- WAS NOT PAID TO THE GUJ ARAT INDUSTRIAL DEVELOPMENT CORPORATION WITHIN THE TIME ALLOWED UND ER SECTION 139(1) OF THE ACT. THE LEARNED ASSESSING OFFICER WA S OF THE OPINION THAT THE AFORESAID AMOUNT IS TAX WITHIN THE MEANING OF SECTION 43B OF THE ACT AND THEREFORE HE ADDED THE SAME TO THE INCOME OF THE ASSESSEE BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. - 4 - 7. ON APPEAL LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HELD THAT WATER SUPPLY CHARGES PAYABLE TO GUJARAT I NDUSTRIAL DEVELOPMENT CORPORATION WAS A CHARGE FOR USE OF WAT ER AND WAS NOT A TAX DUTY FEE OR CESS AND THEREFORE OUTSIDE THE AMBIT OF PROVISIONS OF SECTION43B OF THE ACT AND THEREFORE DELETED THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER. 8. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTATIV E RELIED UPON THE ORDER OF THE LEARNED ASSESSING OFFICER. 9. ON THE OTHER HAND THE LEARNED AUTHORISED REPRESE NTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) AND RELIED UPON THE DECISION O F THE HON'BLE SUPREME COURT IN THE CASE OF C.I.T. VS. MCDOWELL AN D CO. LTD.(NO.1) (2009) 314 ITR 167 (SC). 10. WE FIND THAT IN THE ORDER OF ASSESSMENT THE LEA RNED ASSESSING OFFICER HAS STATED THAT CESS LEVIABLE BY A LOCAL AUTHORITY IS COVERED BY THE PROVISIONS OF SECTION 43B OF THE ACT. FURTHER THE LEARNED ASSESSING OFFICER HAS OBSERVED THAT GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION IS A LOCAL AUTHORITY. THER EFORE THE LEARNED ASSESSING OFFICER CONCLUDED THAT WATER CHAR GES PAYABLE WAS A CESS WITHIN THE MEANING OF SECTION 43B OF THE ACT AND HE ALSO OBSERVED THAT THE TAX AUDITOR OF THE ASSESSEE COMPANY HAS ALSO STATED THAT THE AMOUNT IN QUESTION IN CLAUSE N O.7 WHICH RELATES TO THE AMOUNT COVERED BY PROVISION OF SECTI ON 43B OF THE ACT. IN OUR CONSIDERED VIEW THE OPINION OF THE TAX AUDITOR IS NEITHER BINDING ON THE LEARNED ASSESSING OFFICER NOR THE AS SESSEE. THE LEARNED ASSESSING OFFICER SHOULD MAKE THE ASSESSMEN T AS PER THE PROVISIONS OF LAW AND NOT MERELY ON THE BASIS OF TH E OPINION OF THE AUDITOR. IN THE INSTANT CASE THE LEARNED COMMISSIO NER OF INCOME TAX (APPEALS) HAS FOUND THAT WATER WAS SUPPLIED BY THE GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION TO THE ASSESSEE AND DEPENDING - 5 - UPON THE VOLUME OF WATER SUPPLIED TO THE ASSESSEE I N A PARTICULAR MONTH CHARGES FOR WATER SUPPLY WAS BILLED BY THE G UJARAT INDUSTRIAL DEVELOPMENT CORPORATION ON THE ASSESSEE. WE FIND THAT NO MATERIAL WAS BROUGHT IN THE ORDER OF ASSESSMENT OR BEFORE US BY THE REVENUE TO SHOW THAT THE AMOUNT BILLED BY THE G UJARAT INDUSTRIAL DEVELOPMENT CORPORATION ON THE ASSESSEE WAS IN THE NATURE OF CESS AND NOT A CHARGE FOR ACTUAL SUPPLY O F WATER LIKE ELECTRICITY CHARGES COLLECTED FOR SUPPLY OF ELECTRI CITY. IN ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD WE DO NO T FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS). IT IS CONFIRMED. THE GROUND OF APPEAL O F THE REVENUE IS DISMISSED. 11. IN THE CROSS OBJECTION THE ASSESSEE HAS RAISED FOLLOWING GROUND OF CROSS OBJECTION:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE RESPONDENT SUBMITS THAT NO PROCEEDINGS CAN BE INITIATED UNDER SECTION 147 OF THE INCOME TAX ACT 1961 SINCE THERE WAS NO FAILURE AT THE PART OF THE RESPONDENT IN DISCLOSING FULLY AND TRULY ALL THE MATERIAL FACTS N ECESSARY FOR COMPLETING THE ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE RESPONDENT SUBMITS THAT COMPLETE DETAIL S WERE CALLED FOR BY THE ASSESSING OFFICER DURING THE COUR SE OF ASSESSMENT PROCEEDINGS VIDE QUESTION NO.12 TO THE L ETTER DATED 27 TH JULY 2000 AND THE DEDUCTION AMOUNTING TO `.13 55 817/- WAS ALLOWED TOWARDS WATER CHARGES PAY ABLE ONLY AFTER CONSIDERING THE SAID DETAILS/INFORMATION . 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE RESPONDENT SUBMITS THAT THE ASSESSING O FFICER INITIATED PROCEEDINGS UNDER SECTION 147 BY REFORMIN G THE OPINION WITHOUT BRINGING ON RECORD ANY ADDITIONAL E VIDENCE ON RECORD OR POINTING OUT ANY FAILURE ON THE PART O F THE RESPONDENT IN DISCLOSING FULLY AND TRULY ALL THE MA TERIAL FACTS NECESSARY FOR COMPLETING THE ASSESSMENT PROCEEDINGS . 12. AT THE TIME OF THE HEARING THE LEARNED AUTHORIS ED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT HE IS NOT PRESSING - 6 - THE CROSS OBJECTION FILED. THEREFORE CROSS OBJECTI ON OF THE ASSESSEE IS DISMISSED. 13. IN THE RESULT THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 13 TH DAY OF AUGUST 2010. SD/- SD/- (BHAVNESH SAINI) ( N.S. SAINI ) JUDICIAL MEMBER AC COUNTANT MEMBER AHMEDABAD; ON THIS 13 TH DAY OF AUGUST 2010 PATKI COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)- 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 12-8-2010 --------------- ---- 2. DRAFT PLACED BEFORE AUTHORITY 13-8-2010 ------ ------------- 3. DRAFT PROPOSED & PLACED 13-8-2010 ------------ ------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 13-8-2010 ----------- -------- JM/AM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 13-8-2010 --------- ----------- 6. KEPT FOR PRONOUNCEMENT ON 13-8-2010 ----------- --------- 7. FILE SENT TO THE BENCH CLERK -------------- -- ------------------ 8. DATE ON WHICH FILE GOES TO THE --------------- -------------------- 9. DATE OF DISPATCH OF ORDER --------------- ---- -----------------