ADDL CIT RG 14(1), MUMBAI v. KAMALA OVERSEAS, MUMBAI

ITA 5077/MUM/2009 | 2006-2007
Pronouncement Date: 13-08-2010 | Result: Allowed

Appeal Details

RSA Number 507719914 RSA 2009
Assessee PAN AADFK2426M
Bench Mumbai
Appeal Number ITA 5077/MUM/2009
Duration Of Justice 11 month(s) 5 day(s)
Appellant ADDL CIT RG 14(1), MUMBAI
Respondent KAMALA OVERSEAS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 13-08-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 13-08-2010
Assessment Year 2006-2007
Appeal Filed On 07-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI. BEFORE S/SHRI S.V.MEHROTRA AM & VIJAY PAL RAO JM I.T.A NO. 5077/MUM/2009 ASSESSMENT YEAR: 2006-07 THE ADDL. CIT RANGE 14(1) V. KAMALA OVERSEAS EARNEST HOUSE 2 ND FLOOR 101 NIRANJA LST FLOOR MARINE MUMBAI. DRIVE ROAD MUMBAI. PA NO.AADFK 2426 M (APPELLANT) (RESPONDENT) APPELLANT BY: DR HARGOVIND RESPONDENT BY : SHRI VIJAY MEHTA O R D E R PER S.V.MEHROTRA AM THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 26.6.2009 OF LD CIT (A)-XIV MUMBAI FOR THE ASSESSMENT YEAR 2006-07. GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT (A) ERRED IN DELETING THE ADDITION OF RS.30 12 363/- ON ACCOUNT OF SALE OF DEPB LICENSE. THE LD CIT (A) HAS FAILED TO APPRECIATE THAT 1(A) TILL A.Y. 2005-06 THE ASSESSEE HAS BEEN SHOWI NG INCOME FROM DEPB LICENSE WHEN THE LICENSES WERE PHYSICALLY RECEIVED. IN THE YEAR OF SALE THE PROFIT OR LOSS WAS SEPARATELY CREDITED OR DEBITED DEPENDING ON SAL E VALUE BEING MORE OR LESS THAN FACE VALUE. 1(B) FROM A.Y. 2006-07 IT CHANGED THE METHOD OF ACC OUNTING AND STARTED SHOWING THE INCOME ON THE BASIS OF LICENSES SOLD U/ S.28(IIID) OF THE I.T.ACT. THE INCOME AS PER EARLIER METHOD OF ACCOUNTING OF RS.37 07 481/- HAS NOT BEEN CREDITED AS PER PARA 11(B) OF THE TAX AUDIT REPORT. THE ASSESSEE HAS SHOWN AN INCOME OF RS..5 08 579/- (SALE PROCEEDS OF LICENCE OF FACE VALUE RS.6 95 118/-) SHOWN BY THE ASSESSEE. THEREFORE THE CHANGE OF ME THOD HAS RESULTED IN INCOME REDUCTION OF RS.30 12 363/- (37 07 481 6 95 118). 1(C) IF THE LICENSE ARE TAXED ON ACCRUAL BASIS WORK ED OUT ON THE BASIS OF EXPORT MADE DURING THE YEAR IRRESPECTIVE OF THE YEAR IN WH ICH THE LICENSES WERE ACTUALLY RECEIVED OR SOLD THE AMOUNT COMES TO RS.36 43 738/ - AND IN THAT CASE THE INCOME SHOWN IS LESS BY RS.29 48 620 (36 43 738 6 95 118). 2 2. FOR THESE AND OTHER REASONS THAT MAY BE URGED AT THE TIME OF HEARING IT IS REQUESTED THAT THE ORDER OF THE CIT (A) BE QUASHED AND THAT OF THE AO RESTORED. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE FIRM IN TH E RELEVANT ASSESSMENT YEAR CARRIED ON THE BUSINESS AS EXPORTER OF PHARMACEUTICAL PRODU CTS. IT HAD FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS.1 18 69 643/-. THE ASSES SING OFFICER NOTICED THAT TILL A.Y. 2005-06 THE ASSESSEE HAD BEEN SHOWING INCOME FROM DEPB LICENSES WHEN THE LICENCES WERE PHYSICALLY RECEIVED. IN THE YEAR OF SALE THE PROFIT OR LOSS WAS SEPARATELY CREDITED OR DEBITED DEPENDING ON SALE VALUE BEING MORE OR LE SS THAN FACE VALUE. HOWEVER FROM A.Y. 2006-07 THE ASSESSEE CHANGED ITS METHOD OF AC COUNTING AND STARTED SHOWING INCOME ON THE BASIS OF LICENCES SOLD U/S.28(IIID) O F THE I.T.ACT. HE NOTED VARIOUS DISCREPANCIES ON ACCOUNT OF THE SAME AND AFTER DETA ILED DISCUSSION MADE A PROTECTIVE ADDITION OF RS.30 12 363/-. 3. THE CIT (A) WHILE PARTLY ALLOWING THE ASSESSEE S APPEAL DELETED THE ADDITION OBSERVING THAT THE AO WAS NOT JUSTIFIED IN MAKING T HE ADDITION OF RS.30 12 363/- BY IGNORING THE METHOD OF ACCOUNTING FOLLOWED BY THE A SSESSEE AS PER THE DECISION FOR A.Y. 2003-04 TAKEN BY THE DEPARTMENT BOTH BY THE AO AN D THE CIT(A). 4. AFTER HEARING BOTH THE SIDES WE ARE OF THE OPIN ION THAT THE MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISSUE AS PER THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE C ASE OF CIT V. KALPATARU COLOURS AND CHEMICALS ( INCOME TAX APPEAL (LODG.) NO.2887 OF 20 09) ORDER DATED 28/29.6.2010. WE THEREFORE SET ASIDE THE ORDER O F THE CIT (A) AND RESTORE THE MATTER BACK TO THE FILE OF THE AO TO REDECIDE THE ISSUE AF RESH IN VIEW OF THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF KALPATARU COLOURS AND CHEMICALS (SUPRA). 5. IN THE RESULT APPEAL FILED BY THE REVENUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 13 TH AUGUST 2010 SD/- (VIJAY PAL RAO) (JUDICIAL MEMBER) SD/- (S.V. MEHROTRA) (ACCOUNTANT MEMBER) MUMBAI DATED 13 TH AUGUST 2010 3 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-XIV MUMBA I 4. COMMISSIONER OF INCOME TAX-14 MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH A MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI 4