DCIT, New Delhi v. M/s Delhi State Indl. Development Corporation Ltd.,, Nederland

ITA 4570/DEL/2013 | 2005-2006
Pronouncement Date: 21-11-2014 | Result: Dismissed

Appeal Details

RSA Number 457020114 RSA 2013
Assessee PAN AAACD1257F
Bench Delhi
Appeal Number ITA 4570/DEL/2013
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant DCIT, New Delhi
Respondent M/s Delhi State Indl. Development Corporation Ltd.,, Nederland
Appeal Type Income Tax Appeal
Pronouncement Date 21-11-2014
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 21-11-2014
Date Of Final Hearing 18-11-2014
Next Hearing Date 18-11-2014
Assessment Year 2005-2006
Appeal Filed On 02-08-2013
Judgment Text
IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : B : NEW DELHI BEFORE SHRI J.S. REDDY ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K. JUDICIAL MEMBER ITA NO . 4570 / DEL / 201 3 ASSESSMENT YEAR : 200 5 - 0 6 DCIT CIRCLE 10(1) NEW DELHI. VS. M/S DELHI STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. N - 36 BOMBAY LIFE BUILDING CONNAUGHT PLACE NEW DELHI. (PAN AAACD 1257 F ) (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI PARMINDER KAUR SR.D.R. RESPONDENT BY: SHRI R.S. SINGVI C.A. ORDER PER SHRI GEORGE GEORGE K J M : 1. TH IS APPEAL AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE CIT (A) S ORDER DATED 29 . 05 .201 3 . THE RELEVANT ASSESSMENT YEAR IS 200 5 - 0 6 . 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS: 1. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS.70 63 292/ - MADE BY THE ASSESSING OFFICER ON AC COUNT OF PRIOR PERIOD EXPENSES? ITA NO. 4570 /DEL /201 3 ASSESSMENT YEAR : 200 5 - 200 6 2 2. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS.27 32 717/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN SALE AMOUNT SHOWN IN THE PROFI T & LOSS ACCOUNT AND AS DECLARED IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS? 3. THE FACTS WITH REFERENCE TO FIRST GROUND ARE AS FOLLOWS. IN THE REA SSESSMENT U/S 143 R.W.S. 147 OF THE I.T. ACT AO DISALLOWE D A SUM OF RS.70 63 292/ - STATING THAT THE SAME TO BE PRIOR PERIOD EXPENSES NOT RELEVANT TO THE CONCERNED ASSESSMENT. THE RELEVANT OBSERVATION OF THE ASSESSING OFFICER WHILE MAKING THE DISALLOWANCE READS AS FOLLOWS: 2.1 THE CONTENTION OF THE ASSESSEE HAS BEEN EXAMINED BUT IT IS FOUND THAT THE ASSESSEE COULD NOT EXPLAIN THAT HOW UNDER MERCANTILE ACCOUNTING SYSTEM THE EXPENDITURE WHICH APPARENTLY PERTAINS TO PRIOR PERIOD ARE ADMISSIBLE. AS PER THE ACCEPTED ACCOUNTING POLICY UNDER MERCANTILE SYSTEM OF ACCOUNT ING ONLY SUCH EXPENSES ARE ALLOWABLE AS DEDUCTION WHICH ARE RELEVANT TO THE YEAR. SINCE THE EXPENDITURE ARE NOT RELEVANT TO THE YEAR AND APPARENTLY PERTAIN TO EARLIER YEARS THE SAME ARE HEREBY DISALLOWED AND ADDITION OF RS.70 63 292/ - IS HEREBY MADE. (ADDITION OF RS.70 63 292/ 4. ON FURTHER APPEAL THE CIT(A) DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. LD. D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER. LD. A .R. REITERATED THE SUBMISSION MADE BEFORE THE INCOME TAX AUTHORITIES. 5. WE HAVE HEARD RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) HAS CATEGORICALLY FOUND THAT THE IMPUGNED EXPENSES WERE REVENUE IN ITA NO. 4570 /DEL /201 3 ASSESSMENT YEAR : 200 5 - 200 6 3 NATURE AND SAME HAD CRYSTALLIZED IN T HE CURRENT ASSESSMENT YEAR WHEN THE DESIGNATED AUTHORITIES APPROVED THE SAID EXPENDITURE. IT WAS ALSO FOUND BY THE CIT(A) THAT THIS SYSTEM OF AMOUNTING WAS FOLLOWED BY THE ASSESSEE FOR THE PAST ASSESSMENT YEAR BOTH IN RESPECT OF INCOME AS WELL AS EXPENSE S ALSO. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS: DECISION (AT PAGE 12) I H AV E CAR E FULL Y CONSIDE R ED THE FACTS OF T HE CASE A ND SUB MISSION OF TH E AP PELLANT . T HE APP E LL ANT IS A GO V ERNMENT OF D E LH I U ND E RTAKIN G A N D T HE R E IS NO DISPUTE THAT APPELL ANT I S FOL L O WI NG MERCA NT I L E SY ST E M OF A CCO U NT I N G. IT W AS CONTENTED THAT T H E CLA I M O F PRIOR PERIOD EX PENSE S I S ON THE BASI S O F L I A B ILIT Y CRYSTA LL IZED DURING THE Y EAR AND AS SUCH T HE CONCEPT OF PRIOR PERIOD IS NOT RELE VANT PARTICULARL Y WHE N THE C LAIM IS IN ACCO RD A NCE WITH S Y STEM OF ACCOUNTING BEI NG REGULAR L Y F O LL OWED B Y THE APPE LL A NT . IT WAS F UR THER SUBMITTED THAT THE CL A IM O F INCOME O R EXPENSES ARE ACCOUNTED FOR ON T HE B ASIS O F LIABILIT Y CRYSTA LLIZ E D DURING THE Y E A R AND AS SUCH SAME IS PERMISS I BLE D E D UCTION UN DER T HE L AW . IT W AS CONTENDED THAT IN CASE OF GOVERNMENT OF DELHI UNDERTAKING I N CO M E OR E XPEN SE S ARE ACCOUNTED FOR AS AND WHEN SAM E A R E A PPRO V ED B Y D ES I G N A TED A UTHORITIES A ND SA ME S Y STEM I S BEING FO LL OWED IN RESPECT OF INCOME AND EX PENS ES BOTH . M Y A TT E NTI ON WAS DRA W N TO THE DE T AILS OF PRIOR P E RIOD I NC O ME AN D EX P E NS E S A S PER S CH E DUL E OF THE AUDITED BALANCE SHEET AS PER WHICH A LL THESE EX PENSES ARE OF RE V ENUE NATUR E A ND CORRECTNESS AND ELIGIBILITY OF THE C LAIM HAS NO T BEEN DISPUTED E V EN B Y TH E ASS ESSING OFFI CER AS ONL Y GROUND O F DISA LL OW ANCE IS THAT THE C LAIM I S PER TA IN I N G TO PRIOR PERIOD . I T IS F URTHER NOTED TH A T THE ASSE SS IN G OF F I CER H AS ONL Y DISALLOWED NET C LAIM OF PRIOR PERI OD EXPENSES AFTER ADJUST I NG PRI OR PERIO D I N C OME AND AS SUCH ASSESSING O F FICER HIM S ELF H AS PARTIALL Y ACCEPTED CL A IM OF P RIO R P ERIOD EXPENSES AND DISA LL OWANCE I S ONL Y IN RESPECT OF NET CLA I M AS P E R DET A I LS GI V EN I N S CHEDULE OF THE BALANCE SHEET . IT HAS TO BE APPRECIATED THAT IN CASE OF G OVER N MENT UN DERT A KINGS ITA NO. 4570 /DEL /201 3 ASSESSMENT YEAR : 200 5 - 200 6 4 THERE IS A CODE OF OFFIC E MANAGEMENT AND S Y STEM OF SUP E R V ISION A ND RE G UL A TION AND AS SUCH IT IS NOT PERMISS IBL E TO ' BOOK ANY INCOME OR EXPENSES WI THOUT PROPER APPROVAL AND RECOGNIZATION. T HE RE IS A MERIT IN THE CONTENTION OF THE APPELLANT TH A T ADJUSTMENT O F PRIOR PERIOD INCOME AND EXPENSE S ARE ACCOUNT E D FOR AS AND W HEN INCOM E OR LIABILITY IS APPROVED AND CR Y STALLIZED . THE REFERENC E T O DE C I S ION O F ITAT IN THE CAS E OF RITES LTD . IS ALSO RE L EVANT . FURTHER PRINCIPLE LAID DO W N B Y DELHI HIGH COURT IN THE CASE OF CIT VS. EXXON MOBIL LUBRI CANT PVT. LTD. 328 ITR 17 (DEL.) AND GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES VS. CIT 213 ITR 525 ALSO SUPPORT THE CLAIM OF THE APPELLANT. IT IS FURTHER NOTED THAT THE CLAIM OF PRIOR PERIOD EXPENSES WERE ACCEPTED IN THE OR IGINAL ASSESSMENT PASSED U/S. 143(3) AND EVEN IN THE IMPUGNED REASSESSMENT THE ASSESSING OFFICER HAS NOT DISPUTED THE CORRECTNESS OF THE LIABILITY OR THE FACT THAT SAME HAD CRYSTALLIZED DURING THE YEAR OR THAT THERE IS ANY CHANGE 'IN THE SYSTEM OF ACCOUNT ING. IN FACT THE APPELLANT COMPANY HAS POSITIVE INCOME IN THE PRECEDING SUBSEQUENT YEARS AND AS SUCH THERE IS NO ADVANTAGE TO THE APPELLANT OR ANY LOSS THE REVENUE FOR CLAIMING SUCH EXPENES IN THE YEAR UNDER REFERENCE. TAKING INTO CONSIDERATION FACTS OF THE CASE NATURE OF THE CLAIM AND PAST HISTORY OF THE CASE AND RELEVANT LEGAL PRECEDENTS THERE IS NO LEGAL OR FACTUAL BASIS FOR ANY DISALLOWANCE. FURTHER ASSESSING OFFICER HAS NOT MADE OUT ANY CASE FOR DISALLOWANCE AND ONLY GROUND FOR REOPENING AND CONS EQUENTIAL DISALLOWANCE IS ON THE BASIS OF USE OF TERM PRIOR PERIOD WHICH IN ITSELF IS NOT A VALID BASIS FOR DISALLOWANCE WHEN THE CLAIM IS ON THE BASIS OF LIABILITY CRYSTALLIZED DURING THE YEAR. AS PER THE ABOVE DISCUSSION THERE IS NO JUSTIFICATION FOR D ISALLOWANCE OF RS.70 63 292/ - ......... (PAGE 13 OF CIT(A) . 6. THIS FINDING OF THE CIT(A) HAS NOT BEEN DISPELLED BY THE REVENUE BY PLACING ANY MATERIAL /DOCUMENT ON RECORD. HENCE WE HOLD THAT THE ORDER OF THE CIT(A) ON THIS ISSUE IS CORRECT AND IN ACCORD ANCE WITH AND WE CONFIRM THE SAME . IT IS ORDERED ACCORDINGLY. ITA NO. 4570 /DEL /201 3 ASSESSMENT YEAR : 200 5 - 200 6 5 7 . THE FACTS WITH REFERENCE TO SECOND GROUND ARE AS FOLLOWS. T HE ASSESSING OFFICER IN COURSE OF ASSESSMENT PROCEEDING NOTICED THAT THERE WAS DIFFERENCE OF RS.27 32 717/ - ON ACCOUNT OF INCOME CREDIT IN THE P&L ACCOUNT AND DETAILED FILED BY THE ASSESSEE REFLECTING THE SALE RECEIPTS. THE AO HELD THAT ASSESSEE DECLARED LESS SALE IN THE P&L ACCOUNT AND ADDED THE DIFFERENCE OF RS.27 32 717/ - TO INCOME . 8. ON FURTHER APPEAL THE CIT(A) DELETED THE ADDITION MADE. THE RELEVANT FINDING OF THE CIT(A) READS AS FOLLOWS. THE ASSESSING OFFICER HAS ALSO ADDED RS.27 32 717 / - AS DIFFERENCE BETWEEN THE SALES REFLECTED IN THE BALANCE SHEET A ND THE SALES SHO W N AS PER SUBMISSION FILED BY THE APPELLANT . IT WAS MENT IONED B Y THE ASS E SS ING O FF ICER THAT APPELLANT HAS DECLARED LESS SALES OF RS.27 32 717 / - IN THI S P&L ACC OUNT THEREFORE THE DIFFERENTIAL AMOUNT OF SALES WAS ADDED AS INCOM E O F THE A PPELL A NT . DURIN G THE COUR S E OF . ASSESSMENT PROCEEDINGS AS WELL AS A PPELL A TE PR O CEEDIN G S IT W AS S UBMITT E D BY THE APPELLANT THAT THE AMOUNT OF RS.2 7 32 717 / - WAS NO T P A R T OF THE TUR NOVER AND TH E SAME IS SHOWN UNDER THE SCHEDUL E 'O THE R INCOME ' OF THE BALAN CE S HE E T . THE APPELLANT HAS FILED COPY OF THE SCHEDUL E ' P ' AND ' 0 ' OF THE BALAN CE SHEET WHEREIN THIS INCOME HAS BEEN SHOWN AS OTHER INCOME RECEIVED FROM SERVICE CHARGE S AND HAS BEEN SHOWN UNDER THE HEAD ' O THER INCOME ' . THE APPELLANT HAS ALSO FILED RECONCILIATION OF THE DIFF E R E NT IA L SA L ES AND H A S S TATED THAT TH E DIFFER E N C E WAS PERTAIN ING TO THE SALE OF EMPT Y CARTONS SALE OF INTERNET SURFING AND SALE OF SCRAP AND DISCOUNT ALLOWED AND SAME HAS BEEN SHOWN UNDER THE HEAD ' OTHER INCOME ' BY THE APPELLANT . INSTEAD OF SHOWING SALES OF THESE MISCELLANEOUS INCOME UNDER THE HEAD SALES THE APPEL LANT HAD SHOWN UNDER DIFFERENT HEADS . HENCE THERE IS NO DIFFERENCE IN THE SALES SHO W N B Y THE APPELLANT IN THE P&L ACCOUNT AND HAS D E C LAR E D IN THE WRITTEN SUBMISSION . THEREFORE THE ADDITION MADE BY THE ASSESSIN G O FFI C ER WAS NOT JUSTIFIED AND SAME IS DELET ED . 9. REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. ITA NO. 4570 /DEL /201 3 ASSESSMENT YEAR : 200 5 - 200 6 6 10 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE AVAILABLE MATERIAL. THE ASSESSEE HAS FILED THE RECONCILIATION STATEMENT. T HE CIT(A) NOTICED THAT CERTAIN MISCELLANEOUS INCOME WHICH OUGHT HAVE BEEN CREDITING UNDER THE HEAD SALE WERE CREDITED UNDER THE HEAD OTHER INCOME . THE CIT(A) CATEGORICALLY FOUND THAT THERE IS NO DIFFERENCE IN THE SALE SHOWN BY THE ASSESSEE IN THE P&L ACCOUNT AND THAT WAS DECLARED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING. SINCE THE REVENUE HAS NOT CONTROVERTED THIS FACTUAL FINDING OF THE CIT(A) WE AFFIRM THE VIEW OF THE CIT(A) AND REJECT THE SECOND GROUND OF THE REVENUE. 1 1 . IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED AS INDICATED ABOVE. TH E DECIS ION WAS PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER 201 4 . SD/ - SD/ - ( J.S. REDDY ) (GEORGE GEORGE K.) A CCOUNTANT MEMBER J UDICIAL MEMBER DATED: 21 ST NOVEMBER 201 4 . AKS/ - COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR ITAT NEW DELHI