M/s. Poona Shims Pvt. Ltd., Pune v. ITO, Pune

ITA 442/PUN/2008 | 2004-2005
Pronouncement Date: 08-12-2010 | Result: Allowed

Appeal Details

RSA Number 44224514 RSA 2008
Assessee PAN AABCP0311R
Bench Pune
Appeal Number ITA 442/PUN/2008
Duration Of Justice 2 year(s) 8 month(s) 14 day(s)
Appellant M/s. Poona Shims Pvt. Ltd., Pune
Respondent ITO, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 08-12-2010
Assessment Year 2004-2005
Appeal Filed On 25-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 442/PN/08 (ASSTT. YEAR 2004-05) M/S. POONA SHIMS PVT. LTD. 39/39 DARSHANGAD PRABHAT ROAD LANE NO. 9 C PUNE-411004 PAN NO. AABCP0311R .... APPELLANT VS. ITO (TECH)-II PUNE . RESPONDENT APPELLANT BY : SHRI SUNIL PATHAK RESPONDENT BY : SHRI PANKAJ GARG ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT(A)-II PUNE DATED 17/01/2008 FOR THE ASSESSMENT YEAR 2004-0 5 AND THE GROUNDS RAISED ARE AS UNDER:- 1] THE LEARNED CIT(A) ERRED IN CONFIRMING AN ADDIT ION OF RS. 88 08 322/- ON ACCOUNT OF REDUCTION IN LIABILITY BE CAUSE THE ASSESSEE AGREED TO PREPAY THE SALES TAX DEFERRAL LI ABILITY WHICH WAS PAYABLE OVER THE YEARS IN ONE LUMPSUM. 2] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE ABO VE AMOUNT WAS TAXABLE U/S. 28(IV) WITHOUT APPRECIATING THAT THE P ROVISIONS OF THE SAID SUB SECTION WERE NOT AT ALL APPLICABLE TO THE PRESENT CASE. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE ABOVE AMOUNT OF RS. 88 08 322/- WAS REPRESENTING THE DIFFERENCE ON ACCOUNT OF REPAYMENT OF THE LOAN LIABILITY PAYABLE OVER THE YE ARS AT ITS NET PRESENT VALUE IN THIS YEAR AND ACCORDINGLY IN COMM ERCIAL TERMS THERE WAS NO GAIN TO THE ASSESSEE AND HENCE THE AD DITION IS NOT JUSTIFIED. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE SALES TAX DEFERRAL WAS TREATED AS LOAN BY SICOM AND THE REDUCTION IN T HE SAID LOAN LIABILITY WAS NOT TAXABLE AS A REVENUE RECEIPT AND WAS A CAPITAL RECEIPT EXEMPT FROM TAX. 5] WITHOUT PREJUDICE TO THE ABOVE GROUNDS THE ASSE SSEE SUBMITTED THAT IN CASE IT IS HELD THAT THE CESSATION OF LOAN LIABILITY WAS ON CAPITAL ACCOUNT BUT ON REVENUE ACCOUNT IT IS SUBMI TTED THAT THE GAIN ARISING ON ACCOUNT OF CESSATION OF SALES TAX L IABILITY WAS CAPITAL ITA NO. 442/PN/08 A.Y 2004-05 PAGE 2 OF 2 IN NATURE BECAUSE THE SUBSIDY IN THE FORM OF DEFERM ENT OF PAYMENT OF SALES TAX WAS GIVEN FOR SETTING UP A UNIT IN BAC KWARD AREA. 2. DURING THE PROCEEDINGS BEFORE THE TRIBUNAL LD. COUN SEL REFERRED TO THE GROUNDS RAISED IN HIS APPEAL AND MENTIONED THAT THE I SSUE IN THE GROUNDS REVOLVE AROUND THE CIT(A)S DECISION IN CONFIRMING THE ADDITI ON OF RS. 88 08 322/- ON ACCOUNT OF REDUCTION OF LIABILITIES BECAUSE THE ASSE SSEE AGREES TO PREPAY THE SALES TAX DEFERRAL LIABILITY WHICH IS OTHERWISE PAYABL E OVER THE YEARS IN ONE LUMPSUM. FURTHER THE LD. COUNSEL MENTIONED THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE SPECIAL BENCH DECISION IN THE C ASE OF SULZER INDIA LTD. VIDE ITA NO. 2944 & 2871/MUM/2007 FOR THE ASSESSMENT YEA R 2003-04 AND OTHERS. 3. FURTHER BOTH THE PARTIES CONCURRED TO OUR PROPOSAL TO SEND THE APPEAL TO THE FILES OF THE A.O FOR EXAMINING THE FACTS OF THE ASSESSEES CASE IN THE LIGHT OF THE RATIO OF THE SAID SPECIAL BENCH DECISION. ACCORDI NGLY WE SET ASIDE THIS APPEAL WITH ALL ITS GROUNDS TO THE FILES OF THE A.O FOR DECIDING THE ISSUE AFRESH AFTER STRICTLY ADHERING TO THE RATIO LAID DOWN BY THE S PECIAL BENCH IN THE CASE OF SULZER INDIA LTD. (SUPRA). A.O SHALL GRANT REASONABLE O PPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE ESTABLISHED PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY ALL THE GROUNDS OF THE APPEAL ARE SET ASIDE. 4. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 08 TH DECEMBER 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 08 TH DECEMBER 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO (TECH)-II PUNE 3. CIT(A)-II PUNE 4. CIT-II PUNE 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE