DCIT, Circle - 3, Kolkata, Kolkata v. M/s. Advance Steel Tubes Ltd., Uttar Pradesh

ITA 529/KOL/2010 | 2006-2007
Pronouncement Date: 21-05-2010

Appeal Details

RSA Number 52923514 RSA 2010
Bench Kolkata
Appeal Number ITA 529/KOL/2010
Duration Of Justice 2 month(s) 6 day(s)
Appellant DCIT, Circle - 3, Kolkata, Kolkata
Respondent M/s. Advance Steel Tubes Ltd., Uttar Pradesh
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 21-05-2010
Assessment Year 2006-2007
Appeal Filed On 15-03-2010
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : KOLKATA [ BEFORE SRI D.K. TYAGI J.M. & SHRI B.C. MEENA A.M. ] I.T.A.NO. 529 (KOL) OF 2010 ASSESSMENT YEAR 2006-07 DY. COMMISSIONER OF INCOME-TAX -VS- M/S. AD VANCE STEEL TUBES LTD. CIRCLE-3 KOLKATA. GAZIABAD(UP). (PAN-AACCA6756B) ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SMT. JYOTI KUMARI RESPONDENT BY : SRI S.BANDYOPADHYAY O R D E R PER SRI B.C.MEENA A.M. : THE APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 15.12.2009 OF C.I.T.(A)- I KOLKATA PERTAINING TO ASSESSMENT YEAR 2006-07. THE FIRST GROUND RAISED IN THIS APPEAL BY THE R EVENUE READS AS UNDER :- 1. THE LD. CIT(A) ERRED IN DELETING THE ADDITION IN RESPEC T OF CLAIM AND SHORTAGE CONSIDERING THE WHOLE CLAIM IS COVERED BY SEC. 80IB. 2. THE ASSESSEE-COMPANY CLAIMED EXPENSES OF RS.28 78 380/ - UNDER THE HEAD CLAIM & SHORTAGE. DURING COURSE OF ASSESSMENT PRO CEEDINGS THE A.O. REQUIRED THE ASSESSEE TO SUBMIT VERIFIABLE EVIDENCE TO SU BSTANTIATE SUCH CLAIM BUT THE ASSESSEE COULD NOT PRODUCE ANY DOCUMENT FROM ITS DEBTORS CORROBORATING THE CLAIM OF SHORTAGE MADE IN THE ACCOUNTS . SOME COPIES OF SELF-MADE VOUCHERS WERE PRODUCED BEFORE THE A.O. THE A .O. REJECTED THESE SELF-MADE DOCUMENTS IN THE ABSENCE OF RELATED CONFIRMATION S FROM THE DEBTORS. ACCORDING TO HIM THEREFORE THE CLAIM IN ITS ENTIRET Y APPEARED TO BE BOGUS. HOWEVER OUT OF THE TOTAL CLAIM OF RS.28 78 380/- TH E A.O. ALLOWED A SUM OF RS.13 75 958/- ON ACCOUNT OF ITS JAMMU UNIT AND THE BALANCE SUM OF RS.15 02 422/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSE E. 3. THE ASSESSEE CAME IN APPEAL BEFORE THE C.I.T.(A) AND CO NTENDED THAT FROM THE CORRESPONDENCES THE ASSESSEE ANTICIPATED FURTH ER CLAIM AND THUS CLAIMED SHORTAGE OF RS.15 02 422/- AS BUSINESS LOSS. FURTHER THE A.O. HIMSELF HAS ACCEPTED THAT THE MATERIALS SUPPLIED BY THE AS SESSEE DURING THE 2 YEAR UNDER APPEAL WERE NOT UPTO THE STANDARD AND THA T IS WHY HE HAS ALLOWED CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.13 75 958/-. THE REFORE THE A.O. ERRED IN DISALLOWING THE BALANCE LOSS OF RS.15 02 422/-. RELIANC E IN THIS CONNECTION WAS PLACED ON THE DECISIONS IN THE CASES OF MA SHREQUE BANK VS. DDIT [18 SOT 233] AND JIBANRAM SHEWDUTT RAY [279 ITR 512]. ALTERNATIVELY IT WAS ARGUED BY THE ASSESSEE THAT WHEN ANY DISALLOWANCE IS MADE TO COMPUTE THE TAXABLE ON HIGHER FIGURE DEDUCTION U/S. 80-IB HAS TO BE ALLOWED FROM SUCH COMPUTED BUSINESS INCOME. THE C.I.T.(A) CONSIDERING TH E SUBMISSIONS OF THE ASSESSEE HELD THAT THERE ARE REASONS IN FAVOUR OF T HE ASSESSEE TO GET DEDUCTION OF RS.28 78 380/- AS CLAIMED BY THE ASSESSEE IN ITS ACCOUNT UNDER THE HEAD CLAIM & SHORTAGE. HE THEREFORE DELETED THE DISALLOWANCE OF RS. 15 02 422/- MADE BY THE A.O. IN THIS RESPECT. 4. AT THE TIME OF HEARING BEFORE US THE LD. DEPARTMENT AL REPRESENTATIVE SUPPORTED THE ORDER OF THE A.O. HE FURTHER SUBMITTED TH AT DESPITE SEVERAL OPPORTUNITIES PROVIDED TO THE ASSESSEE THE ASSESSEE FA ILED TO PRODUCE ANY VERIFIABLE EVIDENCE EXCEPT SOME SELF-MADE DOCUMENTS TO PR OVE THE LOSS CLAIMED BY THE ASSESSEE AS ITS BUSINESS LOSS. THEREFORE T HE A.O. AFTER VERIFICATION OF THE EVIDENCE MADE AVAILABLE TO HIM FOUND THE LO SS OF RS.13 75 958/- OUT OF THE TOTAL LOSS OF RS.28 78 380/- IN RESP ECT OF ITS JAMMU UNIT TO BE ACCEPTABLE AND THE BALANCE LOSS OF RS.15 02 422 /- CLAIMED AS SHORTAGE WAS RIGHTLY DISALLOWED. THE C.I.T.(A) WITHOUT APPREC IATING THE OBSERVATION OF THE A.O. AND SIMPLY CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE MADE BEFORE HIM HAS WRONGLY ALLOWED THE CLAIM OF THE ASSESSEE AND THEREFORE THE SAME SHOULD BE QUASHED. 5. THE ASSESSEES LEARNED COUNSEL ON THE OTHER HAND R ELIED ON THE ORDER OF THE C.I.T.(A). THE ASSESSEE ALSO FILED A PAPER BOOK CONTAINING INTER ALIA THE COPIES OF THE FOLLOWING DOCUMENTS :- A) AUDITED ACCOUNTS ALONG WITH TAX AUDIT REPORT & REPORT U/S. 80 -IB B) DETAILS OF CLAIM & SHORTAGE PARTY-WISE 3 C) LETTER DATED 30/6/2008 ADDRESSED TO A.O. ENCLOSING T HEREWITH SEVERAL DOCUMENTS IN RESPECT OF TOTAL CLAIM AND SHORTAGE DEBITED IN ITS P/L ACCOUNT. D) STATEMENT OF AMOUNT DEDUCTED BY THE PARTIES TOWARDS CLAIM & SHORTAGE. ON PERUSAL OF THESE DOCUMENTS WE FIND THAT THE ASSESSEE GAVE DETAILS IN SUPPORT OF ITS CLAIM & SHORTAGE AMOUNTING TO RS.28 78 380/- DEBITED IN ITS P/L ACCOUNT AT PAGES 142 & 143 OF THE PAPER BOOK. WE ALSO FIND THAT THE A.O. HIMSELF HAS NOTED THAT THE MATERIALS SUPPLIED BY THE ASSES SEE TO THE PARTIES WERE NOT UPTO THE STANDARD AND THEREFORE HE ALLOWED A PART OF THE LOSS AMOUNTING TO RS.13 75 958/-OUT OF THE TOTAL LOSS ANTICIPATE D BY THE ASSESSEE OF RS.28 78 380/- AND DEBITED TO ITS P/L ACCOUNT. IN OUR OPINION THEREFORE THE A.O. WITHOUT APPRECIATING THE DETAILS FILED BY THE ASSESS EE IN SUPPORT OF ITS CLAIM HAS DISBELIEVED THE LOSS CLAIMED BY THE ASSESSEE ON C ONJECTURE. THAT BEING SO WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE C.I.T.(A) ON THIS ISSUE AND THEREFORE THE DELETION OF DISALLOWANCE OF RS.15 02 422/- IS UPHE LD. 6. THE SECOND GROUND OF THE REVENUE READS AS UNDER :- 2. THE ORDER OF THE CIT(A) IS ERRONEOUS DUE TO THE DE LETION OF ADDITION IN RESPECT OF DEPRECIATION WITHOUT VERIFYING TWO SETS OF INFORMATION. 7. THE ASSESSEE CLAIMED DEPRECIATION OF RS.1 83 305/- ON A 500 KVA DG SET. ON VERIFICATION OF THE DETAILS THE A.O. FOUND THAT THE SAID MACHINE WAS RECEIVED BY THE ASSESSEE ON 30/3/2006 AND NATURALLY IT WOULD TAKE A FEW MORE DAYS TO INSTALL AND MAKE USE OF SUCH DG SET WHICH IN NO WAY CAN BE WITHIN 31/3/2006. HE THEREFORE DISALLOWED THE DEPRECIATION C LAIMED BY THE ASSESSEE. 8. BEFORE THE C.I.T.(A) THE ASSESSEE SUBMITTED THAT THE D G SET IN FACT WAS PURCHASED BY THE ASSESSEE ON 27/3/2006 AND THE SAME WAS P UT TO USE IN THE FACTORY ON 29/3/2006 AFTER BEING CERTIFIED BY THE WOR KS MANAGER. IT WAS FURTHER SUBMITTED THAT AFTER THE INSERTION OF BLOCK ASSET IN THE STATUTE SUCH CONDITION OF USE IS NOT NECESSARY. IN SUPPORT OF THE SUBMISSIONS THE A SSESSEE 4 RELIED ON SEVERAL JUDICIAL PRONOUNCEMENTS AS INDICATED IN TH E APPELLATE ORDER. THE C.I.T.(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE AND THE CASE LAWS RELIED UPON HELD THAT THE DEPRECIATION HAS RIGHTLY BE EN CLAIMED BY THE ASSESSEE. HE THEREFORE DELETED THE DISALLOWANCE MADE BY THE A.O. 9. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE A.O. DISALLOWED THE ASSESSEES CLAIM OF DEPRECIATION ON DG SET ON THE GROUND THAT THE SAME WAS RECEIVED BY THE ASSESSEE ON 30/3/2006 AND NATURALLY IT WOULD TAKE A FEW MORE DAYS TO INSTALL AND MAK E USE OF SUCH DG SET WHICH IN NO WAY CAN BE WITHIN 31/3/2006. IN THE PA PER BOOK AT PAGES 220 TO 224 THE ASSESSEE HAS FILED COPY OF ITS LETTER ADDRESSED TO TIL LTD. DATED 11/2/2006 PLACING ORDER FOR ONE 500 KVA DIESEL GENERATOR SET INVOICE-CUM- CHALLAN ISSUED BY TIL LTD. INDICATING DESPATCH OF THE MACH INE ON 27/3/2006 THROUGH TRANSPORT CORPN. OF INDIA LTD. AND CERTIFICATION T HEREON BY THE WORKS MANAGER OF THE ASSESSEE-COMPANY TO THE EFFECT THAT THE SAID MACHINE WAS PUT TO USE IN PRODUCTION FROM 28/3/2006 CONSIGNMENT NOTE ISS UED BY TRANSPORTER (TCI LTD.) ETC. ON THE FACE OF THESE DOCUM ENTS WE FIND THAT THE OBSERVATION OF THE A.O. THAT DG SET WAS RECEIVED BY THE ASSESSEE ON 30/3/2006 HAS NO BASIS MORE SO WHEN HE HAS NOT BROUG HT ON RECORD ANY EVIDENCE TO ESTABLISH HIS SAID OBSERVATION AND ALSO HIS PRE SUMPTION THAT THE MACHINE COULD NOT HAVE BEEN PUT TO USE BEFORE 31/3/200 6. EVEN OTHERWISE ALSO THE DEPRECIATION CLAIMED BY THE ASSESSEE IS ALLOWABLE. A CCORDING TO A.O. THE ASSESSEE RECEIVED THE MACHINE ON 30/3/2006 I.E. JUST BEFORE THE END OF THE RELEVANT FINANCIAL YEAR. QUESTION IS ACTIVE VIS--VIS PAS SIVE USER. THERE IS NO REQUIREMENT IN SEC. 32 THAT THE ASSETS SHOULD BE OWN ED AND USED FOR THE WHOLE OF PREVIOUS YEAR IN QUESTION. WIDER MEANING OF THE WO RD USED WILL INCLUDE CASES WHERE AN ASSET IS KEPT READY FOR USE. IN THIS CONNECTION WE MAY REFER TO THE DECISION IN THE CASE OF CIT VS. GEO TEC H CONSTRUCTION CORPN. [244 ITR 452 (KER)] WHEREIN HONBLE KERALA HIGH COURT HELD AS UNDER :- THE ASSESSEE PURCHASED TWO TIPPERS ON MARCH 29 1986 AND CLAIMED DEPRECIATION ALLOWANCE FOR THE ASSESSMENT YEAR 1986-87 ON THE SAME. THE ASSESSING OFFICER DID NOT ALLOW DEPRECIATION ON T HE GROUND THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO SHOW THAT THEY WERE PUT TO USE BEFORE MARCH 31 1986. ON APPEAL THE TRIBUNAL HELD THAT EVEN IF 5 THERE WAS NO ACTUAL USER THE FACT THAT THEY WERE KEPT R EADY FOR USE WOULD BE ENOUGH FOR GRANT OF DEPRECIATION ON THE PRINCIPLE OF PASSIVE USER OF THE ASSET. ACCORDINGLY THE CLAIM OF DEPRECIATION WAS ALLOWED. IN VIEW OF THE ABOVE WE FIND NO JUSTIFICATION IN A.O.S DISALLOW ING THE CLAIM OF DEPRECIATION CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEAR UNDER APPEAL ON D.G. SET PURCHASED AND PUT TO USE BEFORE THE END OF TH E RELEVANT FINANCIAL YEAR. THE ORDER OF THE C.I.T.(A) ON THIS ISSUE IS THEREFORE UPHELD. 10. THE LAST GROUND OF THE REVENUES APPEAL READS AS UNDER :- 3. THE ORDER OF THE CIT(A) IS ERRONEOUS IN ALLOWING THE D EPOSIT OF EMPLOYEES PROVIDENT FUND BEYOND THE GRACE PERIOD. 11. THE A.O. DISALLOWED AND ADDED A SUM OF RS.92 976/- BEING THE EMPLOYEES CONTRIBUTION TO P.F. FOR THE MONTH OF JULY 200 5 AS THE SAME WAS BELATEDLY DEPOSITED ON 22/8/2005 WHICH WAS BEYOND THE TIME LIMIT PRESCRIBED U/S. 36(1)(VA) READ WITH SEC. 2(24)(X) OF THE ACT. THE C.I.T.(A) DELETED THE ADDITION HOLDING THAT THE ASSESSEE DEPOSITED THE EMPLOYEES CONTRIBUTION TO P.F. WITHIN THE STATUTORY TIME OF FILING OF I.T. RETURN. 12. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON SEVERAL DECISIONS OF HONBLE COURTS INCLUDING ONE OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF SABARI ENTERPRISE [298 ITR 141] DULY CONFIRMED BY THE HON BLE SUPREME COURT REPORTED IN 319 I.T.R. 306 IN THE CASE OF ALOM EXT RUSION LTD. [319 ITR 306 (SC)]. IN OUR CONSIDERED OPINION THE FACTS IN THE CASE OF ALOM EXTRUSION LTD. (SUPRA) WERE DIFFERENT THAT THOSE IN THE CASE OF THE A SSESSEE BEFORE US. THEREFORE THE RATIO OF THE SAID DECISION OF HONBLE SUPREME COURT IS NOT APPLICABLE TO THIS CASE. HOWEVER WE FIND THAT THE ISSUE IS COVERED BY THE SPECIAL BENCH DECISION OF I.T.A.T. KOLKATA IN THE CASE OF I.T .C. LTD. REPORTED IN 112 ITD 57 (KOL-SB) WHEREIN IT HAS BEEN HELD THAT EMPLO YEES CONTRIBUTION TO PROVIDENT AND PENSION FUND ETC. IS DEDUCTIBLE ONLY IF PA YMENT IS MADE BEFORE THE DUE DATE AS PRESCRIBED IN THE RESPECTIVE ACT RULE ORDER OR NOTIFICATION GOVERNING SUCH FUNDS OR WITHIN GRACE PERIOD ALLO WED THEREUNDER. IN THE CASE BEFORE US THE EMPLOYEES CONTRIBUTION TO P.F . FOR THE MONTH OF JULY 2005 WAS BEYOND THE TIME LIMIT PRESCRIBED U/S. 36(1)(V A) R.W.S. 2(24)(X) OF THE ACT AND ALSO BEYOND THE GRACE PERIOD ALLOWED THER EUNDER. IN THAT VIEW 6 OF THE MATTER RESPECTFULLY FOLLOWING THE AFORESAID SPECIAL BEN CH DECISION WE ALLOW THE GROUND OF THE REVENUE IN THIS REGARD AND ADDIT ION MADE BY THE A.O. IS SUSTAINED. 12. IN THE RESULT THE REVENUES APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE COURT ON 21.5.10. SD/- SD/- [D.K. TYAGI] [B.C. MEENA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21-05-2010 COPY FORWARDED TO : 1. M/S.ADVANCE STEEL TUBES LTD. 45/3 INDUSTRIAL AREA SITE-4 SAHIBABAD GAZIABAD (UP). 2. D.C.I.T. CIRCLE-3 KOLKATA. 3. C.I.T.(A)- I KOLKATA. (4) CIT KOL- 5. THE DEPARTMENTAL REPRESENTATIVE ITAT KOLKATA. TRUE COPY BY ORDER [DKP] DY. REGISTRAR.