M/s United Millennium Breweries Ltd., Srikakulam v. The Commissioner of Income Tax-2, Vinkonda

ITA 443/VIZ/2010 | 2007-2008
Pronouncement Date: 24-01-2011 | Result: Allowed

Appeal Details

RSA Number 44325314 RSA 2010
Bench Visakhapatnam
Appeal Number ITA 443/VIZ/2010
Duration Of Justice 4 month(s) 22 day(s)
Appellant M/s United Millennium Breweries Ltd., Srikakulam
Respondent The Commissioner of Income Tax-2, Vinkonda
Appeal Type Income Tax Appeal
Pronouncement Date 24-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 24-01-2011
Assessment Year 2007-2008
Appeal Filed On 02-09-2010
Judgment Text
ITA 443/V/2010 UNITED MILLENNIUM BREWERIES LTD. SKLM IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 443/ VIZAG/ 20 10 ASSESSMENT YEAR : 2007 - 08 M/S. UNITED MILLEN NIUM BREWERIES LTD. SRIKAKULAM CIT - 2 VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) PAN NO.AABCG 4480G APPELLANT BY: SHRI Y.A. RAO CA RESPONDENT BY: SHRI TH.L. PETER CIT(DR) ORDER PER SHRI S.K. YADAV JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED B Y THE ASSESSEE AGAINST THE ORDER OF THE CIT PASSED U/S 263 SETTING ASIDE THE ASSESSMENT ORDER HAVING OBSERVED THAT IT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS INVI TED OUR ATTENTION TO THE SHOW CAUSE NOTICE ISSUED BY THE CIT BEFORE INITIATING THE PROCEEDINGS U/S 263 OF THE I.T. ACT. THE CIT HAS RAISED CERTAIN POINTS WITH REGARD TO WHICH THE A.O. HAS NOT MADE ANY DISCUSSION IN HIS ORDER. THE CITS FIRST OBJECTION IS THAT THE ASSESSEE HAS NOT DEDUCTED THE TDS ON THE PAYMENT OF THE DEL - CREDRE COMMISSION OF RS.71 25 995/ - FREIGHT OF RS.1 04 65 614/ - AUDIT FEE OF RS.6 00 000/ - SECURITY SERVICE CHARGES OF RS.5 56 918/ - MARKETING AND SERVICE CHARGES OF RS.2 01 22 395/ - . THIS OBJECTION WAS METED OUT BY THE ASSESSEE IN HIS REPLY WITH THE SUBMISSIONS THAT ON THESE PAYMENTS THE TDS WAS DULY DEDUCTED AND REMITTED TO THE DEPARTMENT. IN SUPPORT OF THESE FACTS COPY OF THE CHALLANS FOR TDS REMITTANCE WAS PRODUCED BEFORE THE CIT. THE CIT HAS NOT DISPUTED THESE FACTS BEFORE SETTING ASIDE THE ORDER OF THE AO ON THIS ISSUE. ITA 443/V/2010 UNITED MILLENNIUM BREWERIES LTD. SKLM 2 3 . THE SECOND OBJECTION OF THE CIT WAS WITH REGARD TO THE DISALLOWANCE OF PROPORTIONATE INTEREST OF RS.2 42 20 000/ - ON THE FUNDS DIVERTED FOR INVESTMENT I N M/S. MILLENNIUM BREWERIES LIMITED. IN THIS REGARD CIT OBSERVED THAT THE A.O. OUGHT TO HAVE DISALLOWED THE ACTUAL INTEREST ATTRIBUTABLE TO DIVERSION OF FUNDS AS PER THE PROVISIONS OF SECTION 14A OF THE I.T. ACT. THIS OBJECTION WAS REPLIED BY THE ASSESS EE WITH THE SUBMISSION THAT THE A.O. HAD DISALLOWED THE SAID AMOUNT WHICH IS EXACTLY INTEREST ATTRIBUTABLE ON THE INVESTMENT. THIS ISSUE WAS EXAMINED AND DISCUSSED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. IN SUPPORT OF THESE CONTENTIONS THE LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ORDER OF THE A.O. 4 . THE NEXT OBJECTION OF THE CIT WITH REGARD TO THE PURCHASE OF THE RAW MATERIALS WORTH RS.3 38 25 757/ - FROM MBI T AND UB ASSOCIATED CONCERN OF THE ASSESSEES. IN THIS REGARD TH E LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THESE PURCHASES WERE MADE AT THE MARKET RATE PREVAILING AT THAT TIME. COPIES OF THE INVOICES OF MBI L AND UBL SUPPLIED TO OTHERS FOR THE SAME MATERIALS WERE PRODUCED BEFORE HIM FOR HIS PERUSAL. THE COPY OF THE SAME IS ALSO PLACED ON RECORD BEFORE US AT PAGE NO.44 TO 47 OF THE COMPILATION. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT IT IS NOT NECESSARY FOR THE ASSESSING OFFICER TO DISCUSS EACH AND EVERY ISSUE ON WHICH HE W AS CONVINCED WITH THE E VIDENCE PLACED BEFORE HIM. 5 . NEXT OBJECTION OF THE CIT IS THAT THE ASSESSEE HAS CLAIMED CASH DISCOUNT OF RS.1 00 41 627/ - WHICH NEEDS TO BE DISALLOWED AS THE ENTIRE SALES WERE TAKEN PLACE WITH APBCL ONLY. THIS OBJECTION WAS ALSO DULY REPLIED BY THE ASSE SSEE WITH THE CONTENTION THAT THE TERM CASH DISCOUNT IS USED BY APBCL IN ITS RATE CONTRACT AGREEMENT. ACCORDINGLY PAYMENT FOR THE STOCK SUPPLIED TO APBCL WILL BE PAID BY THEM ONLY BY 45 DAYS OF THEIR DISPATCH. HOWEVER IF THE ASSESSEE NEEDS PAYMENTS W ITHIN 45 DAYS THE APBCL HAS GIVEN THE ASSESSEE AN OPTION OF CLAIMING THE AMOUNT BY OFFERING CASH DISCOUNT. THE ASSESSEE HAS OPTED FOR THIS OPTION TO EASE ITS WORKING CAPITAL ITA 443/V/2010 UNITED MILLENNIUM BREWERIES LTD. SKLM 3 PRESSURE. THE CASH DISCOUNT IS DEDUCTED BY THE APBCL WHILE PAYING THE AMOUNT EV ERY TIME. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THIS ISSUE WAS ALSO EXAMINED AND DISCUSSED BY THE ASSESSING OFFICER IN HIS ORDER. SINCE THE A.O. HAS EXAMINED THESE ISSUES AND TAKEN A PARTICULAR VIEW THE ORDER OF THE ASSESSING OFFICER CANNOT BE REVERSED FOR THE SIMPLE REASON THAT CIT DID NOT AGREE WITH THE VIEW TAKEN BY THE A.O. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT CIT HAS RAISED THE OBJECTIONS MERELY BASED ON CONJECTURES AND SURMISES WITHOUT BRINGING ANYTHING ON RECORD THAT THE ASSESSING OFFICER HAS NOT APPL IED ITS MIND NOR DID HE EXAMINE THE ISSUE. THEREFORE THE INITIATION OF PROCEEDING UNDER SECTION 263 IS NOT PROPER. 6 . THE LD. D.R. ON THE OTHER HAND HAS SUBMITTED THAT CIT HAS EXAMINED THE ASSESSMENT ORDER AND WHEN HE WAS NOT CONVINCED WITH THE MODE OF ADJUDICATION OF THE ISSUE H E INITIATED ACTION U/S 263 AND REVISED THE ASSESSMENT ORDER. 7 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDER OF THE AUTHORITIES BELOW WE FIND THAT ASSESSING OFFI CER HAS DISCUSSED THE ISSUE OF TRADE DISCOUNT AND DISALLOWANCE OF PROPORTION ATE INTEREST AMOUNTING TO RS.2 42 20 000/ - IN HIS ORDER IN DETAIL. THE CIT HAS NOT BROUGHT OUT ANYTHING ON RECORD TO SUBSTANTIATE THAT THE ADJUDICATION OF THE ASSESSING OFFICER OF THESE ISSUES ARE PERVERSE OR AGAINST THE ALL CANONS OF LAW. THEREFORE WE FIND NO JUSTIFICATION IN THE REVISIONAL ORDER OF THE CIT ON THESE ISSUES. SO FAR AS OTHER ISSUES I.E. DEDUCTION OF TDS AND PURCHASE OF RAW MATERIALS FROM THE ASSOCIATED CONCERN AR E CONCERNED WE FIND THAT BEFORE THE CIT IN REPLY TO SHOW CAUSE NOTICE ASSESSEE HAS FURNISHED THE RELEVANT EVIDENCE TO PROVE THAT TDS WAS DEDUCTED ON THE DISPUTED PAYMENTS AND THE PURCHASES WERE MADE FROM THE ASSOCIATED CONCERN AT THE MARKET RATE. IN THE ORDER PASSED BY THE CIT NOTHING HAS BEEN BORNE OUT THAT THE PROPER INFORMATION WERE NOT PLACED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS TAKEN A VIEW WHICH IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. SINCE NOTHING HAS BE EN BORNE OUT FROM THE ORDER OF THE CIT ITA 443/V/2010 UNITED MILLENNIUM BREWERIES LTD. SKLM 4 THAT ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE WE FIND NO MERIT IN HIS ORDER. WE THEREFORE SET ASIDE THE ORDER OF THE CIT. 8 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED. P RONOUNCED IN THE OPEN COURT ON 24.1 .20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM DATED 24 TH JANUARY 20 1 1 COPY TO 1 M/S. ROWE & PAL CHARTERED ACCOUNTANTS 14 - 36 - 1 KRISHNANAGAR VISAKHAPATNAM 2 ACIT - IV(1) VISAKHAPATNAM 3 THE CI T VISAKHAPATNAM 4 THE CIT (A) VISAKHAPATNAM 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM