The ITO,S.K. Ward-3,, Himatnagar v. M/s. Pooja Tyre Marketing, Sabarkantha

ITA 569/AHD/2011 | 2005-2006
Pronouncement Date: 30-12-2011 | Result: Dismissed

Appeal Details

RSA Number 56920514 RSA 2011
Assessee PAN AABFP9200G
Bench Ahmedabad
Appeal Number ITA 569/AHD/2011
Duration Of Justice 10 month(s) 4 day(s)
Appellant The ITO,S.K. Ward-3,, Himatnagar
Respondent M/s. Pooja Tyre Marketing, Sabarkantha
Appeal Type Income Tax Appeal
Pronouncement Date 30-12-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-12-2011
Date Of Final Hearing 30-12-2011
Next Hearing Date 30-12-2011
Assessment Year 2005-2006
Appeal Filed On 24-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD .. !' #$ # % BEFORE SHRI MUKUL KR.SHRAWAT JUDICIAL MEMBER AND SHRI B.P.JAIN ACCOUNTANT MEMBER ./ I.T.A. NO.569/AHD/2011 ( ' ' ' ' ' ' ' ' / / / / ASSESSMENT YEAR : 2005-06) INCOME TAX OFFICER S.K.WARD-3 HIMATNAGAR ' ' ' ' / VS. M/S.POOJA TYRE MARKETING AAKAR COMPLEX OPP. VYAPAR BHAVAN HIMATNAGAR ( #$ ./ ) ./ PAN/GIR NO. : AABFP 9200 G ( (* / // / APPELLANT ) .. ( + (*/ RESPONDENT ) (* - #/ APPELLANT BY : SHRI AWIJIT RAKSHIT SR.D.R. + (* . - # / RESPONDENT BY : SHRI S.N. DIVATIA A.R. '/ . 0$/ // / DATE OF HEARING : 30/12/2011 12' . 0$ / DATE OF PRONOUNCEMENT : 30/12/2011 #3/ O R D E R PER SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VIII AHMEDA BAD DATED 07/12/2010 PASSED FOR A.Y. 2005-06 AND THE GROUNDS RAISED ARE AS FOLLOWS:- 1.1. THE CIT(A)-VIII AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7 25 206/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF BAD DEBTS ITA NO .569/AHD/2011 ITO VS. POOJA TYRE MARKETING ASST.YEAR - 2005-06 - 2 - WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER . 1.2. IN DOING SO THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE CONDITION LAID DOWN IN SE CTION 36(1)(VII) OF THE ACT WERE NOT FULFILLED IN THIS CA SE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.73 123/- MADE BY THE A.O. U/S.40 (B) OF THE ACT WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND THE MATERIAL BROUGHT ON RECORD BY THE ASSESSING OFFICER. 2. APROPOS TO GROUND NOS.1 & 2 THE ASSESSEE-FIRM IS STATED TO BE IN THE BUSINESS OF TRADING OF TYRES & TUBES. IT WAS N OTED BY THE ASSESSING OFFICER VIDE AN ORDER DATED 01/02/2010 PASSED U/S. 143(3) R.W.S. 147 OF THE I.T.ACT THAT THE ASSESSEE HAD DEBITED A SUM OF RS.7 25 206/- AS BAD DEBTS. ACCORDING TO ASSESSING OFFICER NO PROOF WA S FILED TO DEMONSTRATE THAT THOSE DEBTS HAD REALLY BECOME BAD. IN COMPLIA NCE OF SHOW-CAUSE NOTICE THE ASSESSEE HAS FURNISHED A LIST OF BAD DE BTS WRITTEN OFF DURING THE YEAR IN THE BOOKS OF ACCOUNT. AS MANY AS 42 PARTIE S WERE LISTED AND IT WAS INFORMED THAT SOME OF THE DEBTORS HAVE DIED SO ME COULD NOT BE TRACED AT THEIR ADDRESSES. IT WAS ALSO INFORMED TH AT EFFORTS WERE MADE BUT DEBTS COULD NOT BE RECOVERED. SINCE THE DEBIT ENT RIES WERE OUTSTANDING FOR MORE THAN THREE YEARS IN THE PAST THEREFORE IT WAS DECIDED TO WRITE OFF THE AMOUNTS WHICH WERE OTHERWISE PETTY IN NATURE. THE ASSESSING OFFICER WAS NOT CONVINCED AND FOLLOWING THE DECISIO N OF HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF DHALL ENTERPRISES & ENGINEERS PVT. LTD. VS. CIT REPORTED AS (2007)295 ITR 481(GUJ.) :: (20 07)207 CTR 729 (GUJ.) THE CLAIM WAS DISALLOWED. THE MATTER WAS C ARRIED BEFORE THE FIRST APPELLATE AUTHORITY. ITA NO .569/AHD/2011 ITO VS. POOJA TYRE MARKETING ASST.YEAR - 2005-06 - 3 - 3. THE LD.CIT(A) HAS FOLLOWED THE DECISION OF HONB LE APEX COURT PRONOUNCED IN THE CASE OF TRF LTD. VS. CIT [2010] 323 ITR 397 (SC) AND REVERSED THE ACTION OF THE ASSESSING OFFICER. 4. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES THE PRESENT LEGAL POSITION IS THAT ON THE FACTS AS DISCUSSED HEREINAB OVE THE ISSUE STOOD CLEARLY COVERED BY THE DECISION OF THE HON'BLE APEX COURT PRONOUNCED IN THE CASE OF TRF LTD. VS. CIT [SUPRA]. WE FIND NO F ALLACY IN THE VIEW TAKEN BY THE LEARNED CIT(APPEALS). THIS GROUND OF THE REVENUE IS DISMISSED. 5. APROPOS TO GROUND NO.2 IT WAS NOTED BY THE ASSE SSING OFFICER THAT ON A DEPOSIT OF RS.17 LACS WITH CEAT LTD. THE ASSESSEE HAS EARNED INTEREST OF RS.1 36 573/-. ACCORDING TO ASSESSING OFFICER THE INTEREST INCOME WAS INCOME FROM OTHER SOURCES AND NOT UNDE R THE HEAD BUSINESS INCOME. THEREFORE WHILE COMPUTING THE PROFIT FOR THE PURPOSE OF CALCULATION OF ELIGIBILITY OF REMUNERAT ION TO PARTNERS THE IMPUGNED AMOUNT OF INTEREST WAS EXCLUDED. CONSEQUE NT THEREUPON THE BOOK PROFIT FOR THE PURPOSE OF REMUNERATION TO PA RTNERS HAD GONE DOWN AND THE ELIGIBILITY CRITERIA OF THE AMOUNT WAS WORK ED OUT AGAIN BY THE ASSESSING OFFICER AND HELD THAT EXCESSIVE REMUNERAT ION TO BE DISALLOWED. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY. 6. THE LEARNED CIT(APPEALS) HAS CONSIDERED THE FACT S ACCORDING TO WHICH INTEREST OF RS.1 73 954/- HAD THREE COMPONENT S AND THE BIFURCATION WAS AS UNDER:- ITA NO .569/AHD/2011 ITO VS. POOJA TYRE MARKETING ASST.YEAR - 2005-06 - 4 - [A] INTEREST OF DEPOSIT OF CEAT LTD. RS.1 36 573/- [B] INTEREST OF DEPOSIT WITH HIMATNAGAR NAG.SAHAKARI BANK LTD. RS. 32 896/- [C] OTHER INTEREST RS.1 73 954/- 6.1. IT WAS HELD THAT THE INTEREST RECEIVED FROM CE AT LTD. AND INTEREST RECEIVED ON FDR WHICH WAS MADE TO AVAIL THE OVER-DR AFT FACILITIES WERE NOTHING BUT INCOME FROM BUSINESS AND PROFESSION THEREFORE TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING TH E BOOK PROFIT TO CALCULATE THE ELIGIBLE AMOUNT TO GRANT REMUNERATION TO PARTNERS U/S.40(B) OF THE I.T.ACT. HOWEVER THE LEARNED CIT(APPEALS) HAS HELD THAT AS FAR AS THE INTEREST OF RS.4 485/- IS CONCERNED THE SAM E WAS RIGHTLY EXCLUDED BEING THE INCOME FORM OTHER SOURCES. 7. ON THE DATE OF HEARING FROM THE SIDE OF THE RE VENUE LD.SR.DR MR.AWIJIT RAKSHIT APPEARED. FROM THE SIDE OF THE R ESPONDENT-ASSESSEE LD.AR MR. S.N.DIVATIA HAVE APPEARED AND RELIED ON T HE FOLLOWING TWO ORDERS:- SL.NO(S) DECISION IN THE CASE OF REPORTED IN 1. ALLEN CAREER INSTITUTION VS. ADDL.CIT ITAT B BENCH (2010) 37 DTR (JP) (TRIB) 379 FOR A.Y. 2005-06 IN ITA NO.414/JP/2009 ORDER DT. 26/02/2010 2. S.P.EQUIPMENT & SERVICES VS. ASST.CIT ITAT JAIPUR A BENCH (2010) 128 TTJ (JP) 68 : (2010) 36 SOT 325:: (2010) ITA NO .569/AHD/2011 ITO VS. POOJA TYRE MARKETING ASST.YEAR - 2005-06 - 5 - 33 DTR 265 IN ITA NO.464/JP/2007 FOR A.Y.2003-04 ORDER DT.30/09/2009 7. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE HAVE NOTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRADING OF TYRES AND TUBES AND HENCE TO RUN THE SAID BUSINESS HE WAS REQUIRED TO DEPOSIT A SUM OF RS.17 LACS WITH M/S.CEAT LTD. AND THE SAID DEPOSIT WAS FOUND TO BE DEALER DEPOSIT. THE SAID DEPOSIT WAS INTRICATELY LINKED WITH THE D EALERSHIP OF CEAT LTD. ENJOYED BY THE ASSESSEE. IT WAS ALSO FOUND THAT TH ERE WAS A DEALERSHIP AGREEMENT AND AS PER THE TERMS OF THE SAID AGREEMEN T THE ASSESSEE WAS ENTITLED TO RECEIVE AN INTEREST ON THE IMPUGNED DE ALERSHIP DEPOSIT. DUE TO THIS FACTUAL POSITION WE HEREBY ENDORSE THE VIE W TAKEN BY THE LEARNED CIT(APPEALS) THAT THE INCOME EARNED WAS UNDER THE H EAD BUSINESS AND PROFESSION. 8. LIKEWISE FDR WAS MADE TO AVAIL THE OVER-DRAFT F ACILITY WITH THE BANK. IT WAS CORRECTLY HELD THAT THE OVER-DRAFT FA CILITY WAS REQUIRED TO RUN THE BUSINESS AND TO AVAIL THAT FACILITY THE AS SESSEE HAD TO MAKE A FDR WITH THE SAID BANK. DUE TO THIS REASON ACCORDING TO US THE LEARNED CIT(APPEALS) HAS RIGHTLY HELD THAT THE INTEREST WAS NOTHING BUT PART AND PARCEL OF THE BUSINESS INCOME OF THE ASSESSEE. THI S GROUND OF THE REVENUE IS THEREFORE DISMISSED. ITA NO .569/AHD/2011 ITO VS. POOJA TYRE MARKETING ASST.YEAR - 2005-06 - 6 - 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISS ED. #3 $# 4 ' 5 ! THIS ORDER IS PRONOUNCED IN OPEN COURT ON 30/ 12 /2011 SD/- SD/- ( .. !' ) ( ) #$ ( B.P. JAIN ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER 60..' .'../ T.C. NAIR SR. PS #3 . +7 8#7' #3 . +7 8#7' #3 . +7 8#7' #3 . +7 8#7'/ COPY OF THE ORDER FORWARDED TO : 1. (* / THE APPELLANT 2. + (* / THE RESPONDENT. 3. 9 / CONCERNED CIT 4. 9() / THE CIT(A)-VIII AHMEDABAD 5. 7<5 +' / DR ITAT AHMEDABAD 6. 5= >/ / GUARD FILE. #3' #3' #3' #3' / BY ORDER 7 + //TRUE COPY// ? ?? ?/ // / ( DY./ASSTT.REGISTRAR) / ITAT AHMEDABAD 1. DATE OF DICTATION.. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER