DCIT, Circle - 10, Kolkata, Kolkata v. Almatis ACC Limited, Kolkata

ITA 841/KOL/2011 | 2003-2004
Pronouncement Date: 29-11-2011

Appeal Details

RSA Number 84123514 RSA 2011
Assessee PAN AACCA2120N
Bench Kolkata
Appeal Number ITA 841/KOL/2011
Duration Of Justice 5 month(s) 28 day(s)
Appellant DCIT, Circle - 10, Kolkata, Kolkata
Respondent Almatis ACC Limited, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2011
Appeal Filed By Department
Bench Allotted B
Tribunal Order Date 29-11-2011
Assessment Year 2003-2004
Appeal Filed On 01-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BEN CH B KOLKATA [ () ! . .. .#$ #$#$ #$. .. . %& ] ]] ] [BEFORE SRI N.VIJAYAKUMARAN JM & SRI C. D. RA O AM] !( / I.T.A NO. 841/(KOL) OF 2011 )* + / ASSESSMENT YEAR : 2003-04 DCIT CIRCLE-10 - - ALMATIS ACC LIMITED KOLKATA -VERSUS- (PREVIOUSLY KNOWN AS ALCOA ACC INDUSTRIAL CHEMICALS LTD) (PAN : AACCA 2120 N) (./ / APPELLANT ) ( 01./ /RESPONDENT) ./ 2 3 %/ FOR THE APPELLANT: SHRI S.K.ROY 01./ 2 3 %/ FOR THE RESPONDENT: SHRI R.BOTHRA 4 2 $& /DATE OF HEARING : 29.11.2011. 5+ 2 $& /DATE OF PRONOUNCEMENT : 29.11.2011. %6 / ORDER ( (( ( . .. .#$ #$#$ #$. .. . ) )) ) %& PER SHRI C.D.RAO AM THE ABOVE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. C.I.T.(A)-XXXII KOLKATA DATED 22.12.2010 PERTAININ G TO ASSESSMENT YEAR 2003-04. 2. THE ONLY ISSUE RAISED IN THIS APPEAL BY THE REV ENUE IS RELATING TO DELETION OF ADDITION OF RS.14 90 000/- ON ACCOUNT OF LOSS ON PE RFORMANCE GUARANTEE TREATING THE SAME AS REVENUE LOSS INSTEAD OF CAPITAL LOSS. 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT WHILE DOING THE SCRUTINY ASSESSMENT ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF RS.14 90 000/- BY OBSERVING AS UNDER :- 2. LOSS ON PERFORMANCE GUARANTEE : DURING THE INSTANT ASSESSMENT YEAR THE ASSESSEE HA S CLAIMED A SUM OF RS. 14 90 000/- AS LOSS ON PERFORMANCE GUARANTEE. IT HA S CLAIMED THAT CERTAIN MATERIALS WERE SOLD TO M/S.VISHWAKARMA REFRACTORIES LTD AND S ARVESH REFRACTORIES (P)LTD FOR PROMOTION OF INFILCAST TECHNOLOGY IN INDIA AND SINC E THE TECHNOLOGY WAS NOT COMMERCIALLY SUCCESSFUL AND HENCE THE AMOUNT DUE FR OM THEM WAS NOT RECOVERED FROM THE SAID TWO PARTIES. THE ASSESSEE HAD GIVEN ASSURA NCE TO THE SAID PARTIES REGARDING THE PERFORMANCE OF THE MATERIALS. THE LOSS THEREBY OCC URRED WAS CLAIMED AS LOSS ON PERFORMANCE GUARANTEE. 2 2 THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED IN VIE W OF THE FACT THAT THE SAME IS CAPITAL LOSS IN NATURE. THE HONBLE SUPREME COURT H AS HELD IN HASHIMARA INDUSTRIES LTD -VS- CIT {230 ITR 927] THAT WHERE AN ASSESSEE L OOSES THE DEPOSIT GIVEN FOR OBTAINING LICENSE FOR USE OF PROPERTY FOR BUSINESS DUE TO HIS INABILITY TO RECOVER THE SAME AT THE TERMINATION OF THE LEASE THE LOSS IS C APITAL IN NATURE AS THE PROPERTY IN CONSIDERATION IS A CAPITAL ASSET. THE HONBLE KOLKATA HIGH COURT IN THE EASE OF KANOR IA CHEMICALS & INDUSTRIES LTD -VSCIT [78 TAXMAN 455] HAS SIMILARLY HELD THAT WHERE AN ASSESSEE HAS INCURRED EXPENDITURE IN CONNECTION WITH A NEW PROJE CT WHICH WAS ULTIMATELY ABANDONED THE SAID LOSS IS CAPITAL IN NATURE. IN THE INSTANT CASE MATERIALS SOLD FOR PROMOTION O F INFILCAST TECHNOLOGY WAS TOWARDS A NEW PROIECT AS THE SAID TECHNOLOGY COULD NOT BE COMMERCIALLY VIABLE THE ABANDONMENT OF THE SAME HAS TO BE EQUATED WITH CAPI TAL LOSS IN VIEW OF THE JUDICIAL PRONOUNCEMENTS DISCUSSED (SUPRA). IN THE RESULT THE CLAIM OF LOSS OF RS. 14 90 000 - IS THEREFORE ADDED BACK AS CAPITAL IN NATURE. 3.1. ON APPEAL THE LD. CIT(A) DELETED THE SAM E BY OBSERVING AS UNDER :- I DO NOT FIND THE VIEW TAKEN BY THE AO ON THIS ISS UE TO BE A CORRECT ON THE FACTS OF THE CASE. THERE IS NO DENIAL OF THE FACT THAT THE AMOUN T OF GOODS SOLD FOR PROMOTING INFILCAST TECHNOLOGY INCLUDING THE IMPUGNED AMOUNT OF RS.14 90 000/- WAS INCLUDED IN THE AMOUNT OF TOTAL SALES AS PER ASSESSEES PROF IT AND LOSS ACCOUNT FOR THE RELEVANT YEAR. SINCE THE IMPUGNED AMOUNT OF RS.14 90 000/- W AS A TRADING ACCOUNT ITEM LOSS ARISING DUE TO NON RECEIPT OF PART CONSIDERATION OF SUCH SALES HAS TO BE TREATED AS REVENUE LOSS AND NOT A CAPITAL LOSS. FURTHER SINCE THE AMOUNT OF RS.14 90 000/- IS ALREADY INCLUDED IN THE AMOUNT OF SALES OF THE ASSE SSEE IT HAS ALREADY BEEN CONSIDERED FOR COMPUTING THE INCOME OF THE ASSESSEE FOR THE RE LEVANT YEAR AND A DISALLOWANCE AND CONSEQUENT ADDING BACK OF THAT AMOUNT TO ASSESSEES INCOME WOULD RESULT IN DOUBLE TAXATION OF THE SAME AMOUNT. IN THE LIGHT OF THE ABOVE DISCUSSION THE DISALLOWANCE OF THE LOSS OF RS.14 90 000/- BY THE AO IS FOUND TO BE WRONGLY MAD E. THEREFORE THE SAME IS DELETED AND THIS GROUND IS ALLOWED. 4. AT THE TIME OF HEARING THE LD. DR APPEARING ON BEHALF OF THE REVENUE RELIED ON THE ORDERS OF ASSESSING OFFICER. 5. ON THE OTHER HAND THE LD. COUNSEL APPEARING ON BEHALF OF ASSESSEE RELIED ON THE ORDERS OF THE LD. CIT(A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CARE FUL PERUSAL OF MATERIALS AVAILABLE ON RECORD IT IS OBSERVED THAT THERE IS NO EVIDENCE ON RECORD TO THE FACT THAT THE AMOUNT OF GOODS SOLD FOR PROMOTING INFILCAST TECHNOLOGY IN CLUDING THE IMPUGNED AMOUNT OF RS.14 90 000/- WAS INCLUDED IN THE AMOUNT OF TOTAL SALES AS PER ASSESSEES PROFIT AND LOSS ACCOUNT FOR THE RELEVANT YEAR. THE LD.CIT(A) B EFORE COMING THE ABOVE FINDINGS 3 3 HAS NEITHER CALLED FOR THE REMAND REPORT FROM AO NO R MENTIONED THE YEAR IN WHICH THE SAID AMOUNT OF RS.14 90 000/- HAS BEEN INCLUDED IN THE SALES OF ASSESSEE. THEREFORE IN THE INTEREST OF JUSTICE WE CONSIDER IT TO SET AS IDE THE ORDERS OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF AO TO VERIFY WHET HER THE SAID AMOUNT HAS ALREADY BEEN INCLUDED IN THE SALES OF ASSESSEE COMPANY OR NOT. I F THE SAME HAS BEEN TAKEN BY ASSESSEE IN ITS SALES THEN NO DISALLOWANCE IS REQUI RED IN THE ASSESSMENT YEAR UNDER DISPUTE. WE ORDER ACCORDINGLY. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. 7 8 9: !;&2 <=% % !> ? : @ A %6 &% B : CD %6 &% B : CD %6 &% B : CD %6 &% B : CD ORDER PRONOUNCED IN THE OPEN COURT ON 29.11.2011. SD/- SD/- ) ) ) ) N.VIJAYAKUMARAN JUDICIAL MEMBER . .. .#$ #$#$ #$. .. . %& %& %& %& C.D.RAO ACCOUNTANT MEMBER. ( (( ($& $& $& $&) )) ) DATE: 29.11.2011. %6 2 0)) E%+8- COPY OF THE ORDER FORWARDED TO: 1. ALMATIS ACC LIMITED (PREVIOUSLY KNOWN AS ALCOA ACC INDUSTRIAL CHEMICALS LTD. BOMBAY MUTUAL BUILDING 1 ST FLOOR 9 BRABOURNE ROAD KOLKATA-700001. . 2 THE D.C.I.T. CIRCLE-10 KOLKATA 3. THE CIT 4. THE CIT(A)-XXXII KOLKATA. 5. DR KOLKATA BENCHES KOLKATA 1 0)/ TRUE COPY %6/ BY ORDER DEPUTY /ASST. REGISTRAR ITAT KOLKATA BENCHES R.G.(.P.S.)