ACIT Cir.-1,, Nashik v. Taparia Tools Ltd.,, Nashik

ITA 440/PUN/2005 | 1998-1999
Pronouncement Date: 27-07-2011 | Result: Dismissed

Appeal Details

RSA Number 44024514 RSA 2005
Assessee PAN AAACT4711A
Bench Pune
Appeal Number ITA 440/PUN/2005
Duration Of Justice 6 year(s) 5 month(s) 15 day(s)
Appellant ACIT Cir.-1,, Nashik
Respondent Taparia Tools Ltd.,, Nashik
Appeal Type Income Tax Appeal
Pronouncement Date 27-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-07-2011
Date Of Final Hearing 19-07-2011
Next Hearing Date 19-07-2011
Assessment Year 1998-1999
Appeal Filed On 11-02-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI G.S. PANNU (AM) ITA NO. 440/PN/2005 (ASSTT. YEAR : 1998-99) A SSISTANT COMMISSIONER OF INCOME TAX ... APPELLANT CIRCLE 1 GADKARI CHOWK OLD AGRA ROAD NASHIK V. TAPARIA TOOLS LTD. RESPONDENT 52 MIDC SATPUR NASHIK PAN. AAACT4711A APPELLANT BY : SHRI HARESHWAR SHARMA RESPONDENT BY : SHRI NIKHIL PATHAK ORDER PER I.C. SUDHIR JM THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER ON THE GROUND THAT THE LD CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80 IA TO THE TUNE OF RS.13 50 000/- CLAIMED BY THE ASSESSEE IN RESPEC T OF ITS PROFITS FROM GOA UNIT. 2. IN SUPPORT OF THE GROUND THE LD. D.R. SUBMITTED THAT THE A.O NOTICED THAT THE ASSESSEE COMPANY HAS SHOWN RS. 75 LAKHS AS UNSECURED LOAN IN THE BALANCE SHEET FOR ITS GOA UNIT WITHOUT CONSIDERING THE INTEREST OF RS. 13 50 000/- ON THIS BORROWED CAPITAL FOR WOR KING OUT THE PROFIT OF GOA UNIT FOR COMPUTING THE DEDUCTION U/S. 80IA OF T HE ACT. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD THAT IT WAS MERE MISTAKE IN THE ACCOUNTS SHOWING THE LOAN IN THE BALANCE SHEET OF G OA UNIT WAS NOT CONVINCING. THE A.O WAS THUS JUSTIFIED IN COMING TO THE CONCLUSION THAT THE INTEREST PERTAINING TO LOAN OF RS. 75 LAKHS I.E . RS. 13 50 000/- SHOULD BE REDUCED FROM THE PROFIT OF THE GOA UNIT FOR COM PUTING THE DEDUCTION U/S. 80 IA. THE LD. D.R. SUBMITTED THAT THE LD CIT (A) WITHOUT EXAMINING ITA . NO 440/PN/2005 TAPARIA TOOLS LTD. A.Y 1998-99 PAGE OF 4 2 THE PURPOSE OF SECTION 80 IA (5) HAS ACCEPTED THE EXPLANATION OF THE ASSESSEE IGNORING THIS MATERIAL FACT THAT NASIK UNI T OF THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80 IA. THE LD. D.R. PO INTED OUT FURTHER THAT THE ASSESSEE HAS ADMITTED THE INVESTMENT OF RS. 57. 46 LAKHS IN GOA UNIT TRANSFERRED FROM NASIK UNIT. 3. THE LD. A.R ON THE OTHER HAND TRIED TO JUSTIFY THE FIRST APPELLATE ORDER. HE SUBMITTED THAT WHEN THE ASSESSEE CAME TO KNOW ABOUT THE MISTAKE IN THE ACCOUNT IN SHOWING THE LOANS IN THE BALANCE SHEET OF GOA UNIT IT WAS CORRECTED WELL BEFORE FILING THE RETUR N OF INCOME IN RESPONSE TO NOTICE ISSUED U/S. 148 OF THE ACT. HE SUBMITTED THAT ACTUAL FUNDS OF RS. 75 LAKHS WAS NEVER TRANSFERRED EITHER IN CASH/C HEQUE/D.D/BANK TRANSFER TO GOA UNIT AND THUS MERE PASSING JOURNAL ENTRY AT THE YEAR END ON 31 ST MARCH 1997 AND CORRECTED ON 1 ST APRIL 1998 IS NOT SUFFICIENT TO PROVE THAT RS. 75 LAKHS ARE UTILIZED BY GOA UNIT WHEN IN REALITY ACTUAL MONEY/FUNDS ARE NOT TRANSFERRED TO GOA UNIT. HE SU BMITTED THAT THE INVESTMENT IN GOA UNIT WAS MADE BY THE ASSESSEE OUT OF ITS SELF GENERATED FUNDS FROM PROFIT MAKING UNIT AT NASIK. THE CASH FLOW STATEMENT WAS ALSO DRAWN AND SUBMITTED TO THE A.O I NDICATING THAT THE FUNDS COLLECTED THROUGH DEBENTURE WERE NOT UTILIZED FOR THE GOA UNIT. THE LD. A.R. SUBMITTED THAT THE DETAILS OF UTILIZATION OF FUNDS RAISED THROUGH DEBENTURES ISSUED WHICH WAS ALREADY ON RECORD WERE NOT CONSIDERED BY THE A.O. THE LD. A.R PLACED RELIANCE ON THE FOLLOW ING DECISIONS : I) DCW LTD. VS. ACIT (2010) 132 TTJ 442 ( BOM) II) NATIONAL FERTILIZERS LTD. 193 CTR (AAA) 498 4. CONSIDERING THE ABOVE SUBMISSIONS AS WELL AS THE ORDERS OF THE AUTHORITIES BELOW WE FIND THAT THE LD CIT(A) HAD I NVITED COMMENTS OF THE A.O ON THE EXPLANATION OF THE ASSESSEE AND AFTER BE ING SATISFIED WITH THE ITA . NO 440/PN/2005 TAPARIA TOOLS LTD. A.Y 1998-99 PAGE OF 4 3 SUBMISSIONS OF THE ASSESSEE THE LD CIT(A) HAS DELE TED THE ADDITION. TWO QUESTIONS WERE INVOLVED BEFORE THE AUTHORITIES BELO W. FIRSTLY THE ACCEPTABILITY OF THE EXPLANATION OF THE ASSESSEE RE GARDING INVESTMENT IN ELIGIBLE UNIT I.E. GOA UNIT AND SECONDLY ACCEPTABI LITY OF THE EXPLANATION OF THE ASSESSEE REGARDING THE CLAIMED MISTAKE IN THE A CCOUNTS PERTAINING TO EARLIER YEAR WHEREIN CORRECTION ENTRY WAS PASSED AT A LATER PERIOD. SO FAR AS THE FIRST QUESTION IS CONCERNED THE EXPLANATION OF THE ASSESSEE REMAINED THAT THE TOTAL VALUE OF NSED ISSUED IN A.Y . 1996-97 WAS RS. 495 LAKHS. OUT OF THE SAID AMOUNT RS. 272.25 LAKHS WA S PAID AS UPFRONT FEES BACK. THE BALANCE AMOUNT OF RS. 2.22 CRORES WAS AD VANCED TO AKAI IMPEX AS INTEREST BEARING LOAN. THEREFORE THERE WAS NO BALANCE AVAILABLE WITH THE ASSESSEE OUT OF DEBENTURE FUNDS FOR UTILIZATION TOWARDS GOA UNIT. IT WAS EXPLAINED THAT THE ASSESSEE START ED RECEIVING BACK LOAN FROM AKAI IMPEX FROM 2.8.96. BY THIS DATE INVESTM ENT OF RS. 57.46 LAKHS WERE ALREADY MADE BY ASSESSEE AT GOA UNIT. T HIS SHOWS THE INVESTMENT IN GOA UNITS UPTO RS. 51.46 LAKHS WERE N OT OUT OF DEBENTURE FUND. GOA UNIT STARTED PRODUCTION FROM 9.8.1996 E XPLAINED THE ASSESSEE. IN SUPPORT OF ABOVE IT WAS EXPLAINED THROUGH LEDGE R ACCOUNT THAT AS PER BANK EXTRACTS RS. 41 07 820/- WAS ALREADY SPENT TO WARDS GOA UNIT FROM 4.3.96 TO 31.3.96 AND RS. 13 26 355/- FROM 1.4.96 T O 5.6.96 TOTALLING TO RS.54 34 175/-. THIS EXPLAINS THAT THE DEBENTURE REPAYMENT BY APEX IMPEX AFTER 5.9.96 CANNOT BE STATED TO HAVE BEEN US ED FOR GOA UNIT PRIOR TO THE REPAYMENT FROM AKAI IMPEX. A COUNTER CONFIR MATION FROM AKAI IMPEX REGARDING REPAYMENT OF LOAN WAS ALREADY FILED BY THE ASSESSEE IN SUPPORT OF THE ABOVE CLAIM. THESE EXPLANATIONS HAV E NOT BEEN REBUTTED BY THE A.O. THUS WE DO NOT FIND INFIRMITY IN THE FINDING OF THE LD CIT(A) THAT THE ASSESSEE WAS ABLE TO EXPLAIN THE INVESTMEN T MADE IN THE ELIGIBLE UNIT. ON 2 ND QUESTION THE EXPLANATION OF THE ASSESSEE REMAINED THAT ACTUAL FUNDS OF RS. 75 LAKHS WERE NEVER TRANSFERRED TO GOA UNIT. MERE ITA . NO 440/PN/2005 TAPARIA TOOLS LTD. A.Y 1998-99 PAGE OF 4 4 PASSING OF JOURNAL ENTRY AT YEAR END ON 31 ST MARCH 1997 AND CORRECTED ON 1 ST APRIL 1998 WAS NOT SUFFICIENT TO PROVE THAT RS. 75 LAKHS ARE UTILIZED BY GOA UNIT . IT WAS EXPLAINED THAT THE CORRECTION OF JOURNAL ENTRY PASSED ON 1.4.1998 HAS BEEN CERTIFIED BY THE AUDITOR VIDE AUD ITED BALANCE SHEET FOR A.Y. 1999-2000 ON 27.7.99 WHICH AUTHENTICATE THAT T HE CORRECTIVE ENTRIES WERE PASSED PRIOR TO ISSUE OF NOTICE U/S. 148. UND ER THESE CIRCUMSTANCES ESPECIALLY WHEN THE MAIN ISSUE I.E. INVESTMENT IN ELIGIBLE UNITS HAS BEEN EXPLAINED BY THE ASSESSEE THE LD CI T(A) IN OUR VIEW HAS RIGHTLY COME TO THE CONCLUSION THAT HE IS HAVING NO DOUBT THAT ANY MISTAKE IN THE ACCOUNTS WHICH HAS BEEN CORRECTED S UBSEQUENTLY AND THAT TOO BEFORE ISSUE OF NOTICE U/S. 148 CAN BE TAKEN A S AN EXCUSE FOR DENYING DEDUCTION U/S. 80 IA TO THE ELIGIBLE UNIT IN SPITE OF THE FULFILLMENT OF ALL THE REQUIRED CONDITIONS. WE THUS DO NOT FIND INF IRMITIES IN THE FIRST APPELLATE ORDER ON THE ISSUE. THE GROUND IS REJECT ED. 5. CONSEQUENTLY THE APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2011. SD/- SD/- ( G.S.P ANNU ) ACCOUNTANT MEMBER ( I.C. SUDHIR ) JUDICIAL MEMBER PUNE DATED THE 27TH JULY 2011 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT -I NASHIK 4. THE CIT(A)- I NASHIK 5. THE D.R. B BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE