SUDITI INDUSTRIES LTD, NAVI MUMBAI v. ACIT 10(3), MUMBAI

ITA 474/MUM/2010 | 2006-2007
Pronouncement Date: 09-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 47419914 RSA 2010
Assessee PAN AADCS0967L
Bench Mumbai
Appeal Number ITA 474/MUM/2010
Duration Of Justice 1 year(s) 9 month(s) 19 day(s)
Appellant SUDITI INDUSTRIES LTD, NAVI MUMBAI
Respondent ACIT 10(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 09-11-2011
Date Of Final Hearing 03-11-2011
Next Hearing Date 03-11-2011
Assessment Year 2006-2007
Appeal Filed On 20-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI P.M. JAGTAP (ACCOUNTANT MEMBER) ITA NO.474/MUM/2010 ASSESSMENT YEAR-2006-07 M/S. SUDITI INDUSTRIES LTD. C-253/254 TTC INDUSTRIAL AREA MIDC PAWANE VILLAGE NAVI MUMBAI-400 705 PAN-AADCS 0967L VS. THE ACIT 10(3) AAYAKAR BHAVAN MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ANIL CHATURVEDI RESPONDENT BY: SHRI SHANTAM BOSE DATE OF HEARING :3.11.2011 DATE OF PRONOUNCEMENT: O R D E R PER B.R. MITTAL JM : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT Y EAR 2006-07 AGAINST ORDER OF LD. CIT(A) DT.3.11.2009. 2. GROUND NO. 1 OF THE APPEAL IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN LAW AND ON MERIT IN UPHOLDING THE ACTION O F AO IN REJECTING THE CLAIM OF THE APPELLANT FOR PAYMENT OF EMPLOYEES CON TRIBUTION OF EMPLOYEES STATE INSURANCE SCHEME (ESIC) AMOUNTING TO RS. 32 038/- WHICH WERE PAID BEFORE THE PRESCRIBED DUE DATE (BEI NG 21 ST OF SUCCEEDING MONTH) BY ERRONEOUSLY HOLDING THAT THE S AME WERE PAID AFTER THE PRESCRIBED DUE DATE. 3. THE ASSESSING OFFICER HAS STATED THAT ASSESSEE F AILED TO PAY ESIC PAYMENT AGGREGATING TO RS. 32 038/- ON DUE DATE. T HE AO IN THE ASSESSMENT ORDER HAS GIVEN A CHART STATING THE DATE OF PAYMENT AND ALSO MENTIONING DUE ITA NO. 474/M/10 2 DATE OF THE SAID ESIC DUES. THEREFORE AO DISALLOW ED THE SAID SUM OF RS. 32 038/-. 4. THE LD. CIT(A) HAS CONFIRMED THE ACTION OF AO ST ATING THAT ASSESSEE HAS MADE PAYMENT (15 TH OF THE MONTH BUT AVAILING THE GRACE PERIOD WHICH I S NOT AVAILABLE FOR ESIC PAYMENTS). HENCE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 5. THE LD. AR REFERRED TO PAGE-58 OF THE PAPER BOOK AND SUBMITTED THAT ALL THE PAYMENTS AGGREGATING TO RS. 32 038/- WERE P AID BEFORE THE DUE DATE OF PAYMENT. HE REFERRED TO PAGE-1 OF ASSESSMENT OR DER WHICH CONTAINS THE CHART GIVING THE DETAILS OF DUE DATE FOR PAYMENT AN D STATING ACTUAL DATE OF PAYMENT BY AO AND SUBMITTED THAT AO HAS CONSIDERED THE DUE DATE AS 15 TH OF THE MONTH. HE FURTHER SUBMITTED THAT AO HAS CONSID ERED THE DATE OF ACTUAL PAYMENT AS THE DATE ON WHICH CHEQUE WAS REALIZED BY THE CONCERNED ESIC AUTHORITY. THE LD. AR SUBMITTED THAT ESIC PAYMENT I S TO BE PAID ON OR BEFORE 21 ST OF THE SUCCEEDING MONTH AND ALSO SUBMITTED THAT AL L THE PAYMENTS WERE MADE BEFORE 21 ST OF THE SUCCEEDING MONTH BUT THE CHEQUE WAS REALIZE D LATER ON. THEREFORE AO WAS NOT JUSTIFIED TO CONSIDER TH E DATE OF REALIZATION OF THE CHEQUE AS ACTUAL DATE OF PAYMENT. THE LD. DEPARTME NTAL REPRESENTATIVE HAS NOT DISPUTED THE ABOVE SUBMISSION OF ASSESSEE. 6. ON CONSIDERATION OF THE SUBMISSION OF LD. REPRES ENTATIVES OF THE PARTIES AND AFTER CONSIDERING THE DETAILS AS CONTAI NED AT PAGE-58 OF THE PAPER BOOK WHICH IS ALSO REPRODUCED HEREIN BELOW WE FIND THAT THERE IS MERIT IN THE CONTENTION OF AR. MON TH OF DEDUCTION AMOUNT DEDUCTED (EMPLOYEE CONTBN) DUE DATE FOR PAYMENT ACTUAL DATE OF PAYMENT DATE OF REALIZATION APRIL - 05 2687.00 21.5.05 19.5.05 8.6.05 MAY - 05 2525.00 21.6.06 20.6.05 7.7.05 JUNE - 05 2464.00 21.7.05 14.7.05 25.7.05 JULY - 05 2580.00 21.8.05 17.8.05 26.8.05 ITA NO. 474/M/10 3 AUG - 05 2539.00 21.9.05 15.9.05 1.10.05 SEP. - 05 2615.00 21.10.05 15.10.05 2.11.05 OCT.05 2598.00 21.11.05 14.11.05 28.11.05 NOV.05 2775.00 21.12.05 15.12.05 2.1.06 DEC - 05 2785.00 21.0.05 13.1.06 31.1.06 JAN - 06 2850.00 21.2.06 17.2.06 14.3.06 FEB - 06 2827.00 21.3.06 4.3.06 31.3.06 MARCH - 06 2793.00 21.4.06 13.4.06 27.4.06 32038.00 7. WE OBSERVE THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED TO CONSIDER THE DATE OF REALIZATION OF CHEQUE AS ACTUAL DATE OF PAYMENT AND ALSO WAS NOT JUSTIFIED TO CONSIDER THE DUE DATE FOR PAYMENT OF E SIC DATE AS 15 TH OF SUCCEEDING MONTH. AS PER ESIC ACT THE DUE DATE OF PAYMENT IS 21 ST OF SUCCEEDING MONTH. IN VIEW OF ABOVE WE DELETE THE SAID DISALLOWANCE OF RS. 32 038/- BY ALLOWING GROUND NO. 1 TAKEN BY ASSESSEE . 8. GROUND NO. 2 OF APPEAL IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN LAW AND ON MERIT IN UPHOLDING THE ACTION OF AO IN REJECTING THE CLAIM OF DEDUCTION OF RS. 1 38 43 370/- AS INTEREST U/S. 43B OF THE I.T. ACT 1961 BEING THE PAYMENT MADE UNDER ONE TIME SETTLEMENT WITH THE BANK IGNORING THE EXPLANATIONS OF THE ASSESSEE AND THE D ECIDED CASE LAW CITED BY ASSESSEE. 7. IT IS A FACT THAT THIS GROUND HAS BEEN TAKEN BY A SSESSEE BEFORE LD. CIT(A) AND THERE IS NO SUCH DISCUSSION IN THE ASSES SMENT ORDER. IT IS OBSERVED THAT ASSESSEE STATED BEFORE THE FIRST APPE LLATE AUTHORITY THAT IN TERMS OF ONE TIME SETTLEMENT ENTERED WITH VYSYA BAN K DURING THE CURRENT ASSESSMENT YEAR I.E. 2006-07 THE ASSESSEE PAID A S UM OF RS. 1 38 43 370/- AS FULL AND FINAL PAYMENT AGAINST BALANCE OF RS. 3 53 59 344/-. THE LD. CIT(A) HAS STATED THAT SETTLEMENT DOES NOT SHOW THE APPROPRIATION OF AMOUNT ITA NO. 474/M/10 4 PAID. ON BEHALF OF ASSESSEE IT WAS CONTENDED THAT AMOUNT PAID BE CONSIDERED AS PAYMENT OF INTEREST AND THEREFORE BE ALLOWED AS DEDUCTION U/S. 43B FOR THE AMOUNT PROVIDED IN ASSESSMENT YEAR 2002 -03 OF RS. 88 74 016/- WHICH WAS DISALLOWED U/S. 43B AS IT WAS NOT PAID IN THAT YEAR. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF LD. AR. LD. CIT(A ) STATED THAT ASSESSEE CONTENDED THAT PAYMENT DURING THE YEAR INCLUDED INT EREST COMPONENT OF RS. 88 74 016/- IN RESPECT OF ASSESSMENT YEAR 2002-03 B UT ASSESSEE COULD NOT FURNISH ANY EVIDENCE REGARDING ITS CLAIM THAT THE P AYMENT MADE BY IT DURING THE YEAR WAS ON ACCOUNT OF INTEREST. THE LD. CIT(A ) FURTHER STATED THAT THE BASIS OF WORKING BY BANK TO ARRIVE AT THE AMOUNT PA ID BY ASSESSEE HAS NOT BEEN GIVEN. THEREFORE ASSESSEE HAS FAILED TO DISC HARGE THE ONUS THAT THE AMOUNT PAID BY IT DURING THE YEAR WAS IN EXCESS THE QUANTUM OF PRINCIPAL IF ANY. THE LD. CIT(A) FURTHER STATED THAT WHILE FIL ING RETURN OF INCOME NO SUCH FACT WAS MENTIONED NOR DEDUCTION WAS CLAIMED. HE OB SERVED THAT EVEN BEFORE AO NO SUCH ISSUE WAS RAISED AS IS EVIDENT FROM THE ASSESSMENT ORDER. THE LD. CIT(A) HELD THAT ASSESSEE FAILED TO PROVIDE WOR KING OF PRINCIPAL AND INTEREST AS PER ITS OWN BOOKS FROM THE PERIOD LOAN WAS TAKEN TILL ONE TIME SETTLEMENT (OTS) REACHED. THEREFORE LD. CIT(A) RE JECTED THE CLAIM OF ASSESSEE. HENCE ASSESSEE IS IN FURTHER APPEAL BEFO RE TRIBUNAL. 8. DURING THE COURSE OF HEARING LD. AR REITERATED THE ABOVE FACTS. HE SUBMITTED THAT THERE WAS A MEMORANDUM OF UNDERSTAND ING ENTERED INTO WITH ING VYSYA BANK AND REFERRED TO PAGE 84 TO 86 OF THE PAPER BOOK WHICH IS A COPY OF MEMORANDUM OF UNDERSTANDING DT. 27.12.2002. HE FURTHER SUBMITTED THAT ASSESSEE PAID PAYMENTS AND REFERRED TO PAGE 87 OF THE PAPER BOOK. HE SUBMITTED THAT DURING THE ASSESSMENT YEAR UNDER CON SIDERATION ASSESSEE PAID A SUM OF RS. 1 38 43 370/- AS FULL AND FINAL P AYMENT AGAINST TOTAL PAYMENT OF OF RS. 3 53 59 344/-. THE LD. AR REFERRE D TO PAGE 88 OF THE PAPER BOOK AND SUBMITTED THAT IT IS NO-DUES-CERTIFICATE ISSUED BY ING VYSYA BANK. THE LD. AR SUBMITTED THAT INTEREST OF RS. 88 74 016 /- WAS DISALLOWED IN ASSESSMENT YEAR 2002-03 AND SUBMITTED A COPY OF ASS ESSMENT ORDER TO SUBSTANTIATE HIS SUBMISSION. HOWEVER LD. AR INSPI TE OF SPECIFIC QUERIES FROM ITA NO. 474/M/10 5 THE BENCH COULD NOT GIVE ANY EVIDENCE THAT THE SAID SUM OF RS. 1 38 43 370/- PAID BY ASSESSEE INCLUDES HOW MUCH INTEREST COMPONE NT. THE LD. AR ALSO COULD NOT PRODUCE ANY EVIDENCE THAT THE SAID PAYMEN T AGGREGATING TO RS. 1 38 43 370/- INCLUDES ANY INTEREST COMPONENT. THE MEMORANDUM OF UNDERSTANDING REFERRED TO ITS LD. AR COPY PLACED AT PAGE 84 TO 86 IS DT. 27.12.2002. HOWEVER DURING THE COURSE OF HEARING IT WAS SUBMITTED THAT ASSESSEE HAS MADE THE PAYMENT OF RS. 1 38 43 370/- AGAINST THE TOTAL PAYMENT DUE OF RS. 3 53 59 344/- IN FULL AND FINAL PAYMENT PURSUANT OTS ENTERED INTO IN THIS YEAR. BUT NO DOCUMENT COULD B E FILED BY ASSESSEE TO SUBSTANTIATE THE SAME. BESIDES ON PERUSAL OF PAGE 35 OF THE COPY OF ANNUAL REPORT FOR FINANCIAL YEAR 2005-06 WE OBSERVE FROM CLAUSE (E) WHICH IS A PART OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES TO THE ACCOUNT IT IS STATED THAT ING VYSYA BANK GIVEN NO DUES CERTIFICATE AND HAS REL EASED THE CHARGE ON THE ASSET AFTER ASSESSEE COMPANY HAS TAKEN CREDIT FOR THE WAIVER OF INTEREST AND PART OF THE PRINCIPAL DEBT AMOUNTING TO RS. 2 15 15 974/- IN THE ACCOUNTS. THE ABOVE CLAUSE (E) OF ANNUAL REPORT INDICATES THA T ASSESSEE GOT WAIVER OF INTEREST WHILE ENTERING INTO A ONE TIME SETTLEMENT WITH ING VYSYA BANK. IT IS ALSO A FACT THAT WHEN BANKS AND/OR FINANCIAL INSTIT UTIONS GIVE RELIEF TO THE BORROWERS BY ENTERING INTO A ONE TIME SETTLEMENT G ENERALLY PRINCIPAL AMOUNT OF LOAN IS RESCHEDULED AND INTEREST AMOUNT IS WAIVE D. IT APPEARS THAT ASSESSEE HAS ALSO GOT BENEFIT BY WAY OF WAIVER OF I NTEREST. DURING THE COURSE OF HEARING LD. AR REFERRED ASSESSMENT ORDER FOR AS SESSMENT YEAR 2002-03 AND SUBMITTED THAT INTEREST OF RS. 88 74 016/- WHIC H WAS DUE AND PAYABLE ON THE LOAN TAKEN BY ASSESSEE FROM BANK WAS DISALLOWED BECAUSE IT WAS NOT PAID IN THAT YEAR AND THEREFORE THE SAID AMOUNT BE ALLOW ED ATLEAST WHICH WAS PAID BY ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSI DERATION. HOWEVER LD. AR COULD NOT PRODUCE ANY DOCUMENT/EVIDENCE THAT PAY MENT OF RS. 1 38 43 370/- PAID BY ASSESSEE IN THE ASSESSMENT YE AR UNDER CONSIDERATION INCLUDES INTEREST OF RS. 88 74 016/- WHICH WAS DUE AND PAYABLE IN ASSESSMENT YEAR 2002-03 AND WERE DISALLOWED IN THAT ASSESSMENT YEAR. ON THE CONTRARY AS MENTIONED HEREINABOVE ASSESSEE ENTERED INTO A M EMORANDUM OF UNDERSTANDING WITH BANK IN ASSESSMENT YEAR 2003-04 AND GOT RELIEF FROM ITA NO. 474/M/10 6 BANK. IT IS ALSO OBSERVE THAT IN THE ASSESSMENT YEA R UNDER CONSIDERATION ALSO ASSESSEE GOT WAIVER OF INTEREST FROM BANK AND A PAR T OF PRINCIPAL AMOUNT AGGREGATING TO RS. 2 15 15 974/-. THEREFORE IT IS PRESUMED THAT ASSESSEE GOT RELIEF OF INTEREST BY WAIVER AND THEREFORE CLAIM OF ASSESSEE MADE IN ASSESSMENT YEAR UNDER CONSIDERATION OF RS. 1 38 43 370/- U/S. 43B OF THE ACT IS NOT CORRECT. DURING THE COURSE OF HEARING LD. AR COULD NOT GIVE ANY BREAK- UP OF AMOUNT OF RS. 1 38 43 370/- AS ARRIVED AT WHI LE MAKING PAYMENT TO BANK IN FULL AND FINAL SETTLEMENT AND SUBMITTED THA T ASSESSEE WAS NOT PROVIDED SUCH DETAILS BY BANK. THE SAID CONTENTION OF LD. AR CANNOT BE ACCEPTED BECAUSE WHEN BANKS AND FINANCIAL INSTITUTI ONS ENTERED INTO ONE TIME SETTLEMENT BY GIVING RELIEF AND CONCESSIONS TO BORROWER DETAILS ARE GIVEN AS TO HOW WAIVER OF AMOUNT IS AGREED TO AND H OW MUCH AMOUNT ASSESSEE IS REQUIRED TO PAY IN FULL AND FINAL SETTL EMENT. WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE DOES NOT WANT TO GIVE THE BREAK-UP OF SAID AMOUNT OF RS. 1 38 43 370/- AND THEREFORE WE PRESUM E THAT SAID AMOUNT PAID BY ASSESSEE IS NOT COMPRISES OF ANY INTEREST COMPON ENT. HENCE CLAIM OF ASSESSEE IS NOT LEGAL AND THE SAME IS THEREFORE REJ ECTED. 9. IN VIEW OF ABOVE FACTS AND ABSENCE OF ANY DOCUME NT ON RECORD TO ESTABLISH THE SAID PAYMENT OF RS. 1 38 43 370/- INC LUDES THE PART OF INTEREST COMPONENT OF RS. 88 74 016/- AS CLAIMED WE UPHOLD THE ORDER OF LD. CIT(A) BY REJECTING THE GROUND OF APPEAL TAKEN BY ASSESSEE . 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED ON THIS 9 TH DAY OF NOVEMBER 2011 SD/- SD/- ( P.M. JAGTAP) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9 TH NOVEMBER 2011 RJ ITA NO. 474/M/10 7 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI