Krishna Kumar Aggarwal,, New Delhi v. DCIT, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH D DELHI ] BEFORE SHRI R. P. TOLANI JM & SHRI K. D. R ANJAN AM MISC. APP. NO. 495 (DEL) OF 2009. [ IN I. T. APPEAL NO. 2334 (DEL) OF 2007 ]. ASSESSMENT YEAR : 2004-05. SHRI KRISHNA KUMAR AGGARWAL DY. C OMMISSIONER OF INCOME-TAX A-37/2 MAYAPURI INDL. AREA PHASE-I VS. C I R C L E : 27 (1) N E W D E L H I. N E W D E L H I. P A N / G I R NO. AAE PA 1542 K. ( APPLICANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ASHOK KHANDELWAL C. A.; DEPARTMENT BY : SHRI N. K. CHAND SR. D. R .; O R D E R. PER K. D. RANJAN AM : THIS MISC. APPLICATION BY THE ASSESSEE HAS BEEN FI LED AGAINST THE ORDER DATED 19TH JUNE 2009 PASSED BY THE ITAT FOR ASSESSMENT YEAR 2 004-05. 2. THE FIRST ISSUE TAKEN IN THE MISC. APPLICATION R ELATES TO CONFIRMING THE ADDITION ON ACCOUNT OF SALE OF SCRAP AMOUNTING TO RS.3 54 014/- . IT HAS BEEN SUBMITTED THAT DURING THE COURSE OF HEARING OF THE APPEAL BY THE TRIBUNAL IT WAS SUBMITTED THAT THE ASSESSEE HAD SHOWN THE VALUE OF SCRAP IN THE CLOSING STOCK AS PER DETA ILS GIVEN ON PAGE 50 - 51 OF THE PAPER BOOK. IT HAD ALSO BEEN STATED THAT THE OBSERVATIONS OF TH E LD. CIT (APPEALS) THAT THERE WAS NO CLOSING 2 MISC. APP. NO. 495 (DEL) OF 2009. STOCK OF SCRAP WAS FACTUALLY INCORRECT. FURTHER IT HAS BEEN CONTENDED THAT HON'BLE JUDICIAL MEMBER WHO WAS CONDUCTING THE BENCH NOTED THE FACT S AND HAS OBSERVED DURING THE COURSE OF HEARING THAT THE SCRAP HAS BEEN SHOWN IN THE CLO SING STOCK AND THE DEPARTMENT HAS NOT OBJECTED THE VALUE OF SCRAP SHOWN AND THE TRADING R ESULTS WERE BETTER IN PRECEDING YEARS AS SUCH NO ADDITION IN THIS YEAR IS CALLED FOR. HOWEV ER THE TRIBUNAL HAS CONFIRMED THE DISALLOWANCE KEEPING IN VIEW THE ORDER OF THE TRIBU NAL IN ASSESSEES OWN CASE. RELIANCE HAS BEEN PLACED ON THE DECISION OF HON'BLE APEX COURT I N THE CASE OF HONDA SIEL POWER PRODUCT LTD. VS. CIT IN CIVIL APPEAL NO. 5412 OF 2007. 3. DURING THE COURSE OF HEARING OF MISCELLANEOUS AP PLICATION SIMILAR ARGUMENTS HAVE BEEN ADVANCED. WE HAVE GONE THROUGH THE DETAILS OF CLOSING STOCK PLACED AT PAGES 50 AND 51. THE ASSESSEE HAS ADMITTED 635 KGS. OF SCRAP VALUED AT RS.635/-. THE ASSESSING OFFICER HAD MADE ADDITION BY ESTIMATING 0.2 PER CENT OF SALES O N ACCOUNT OF SCRAP GENERATED DURING THE YEAR UNDER CONSIDERATION. IN ASSESSMENT YEARS 2002 -03 AND 2003-04 THE TRIBUNAL HAS UPHELD THE ESTIMATION OF DISALLOWANCE AT 0.2 PER CENT OF T HE SALES WHEN THERE WAS FALL IN THE GP RATE FROM 18.41 PER CENT TO 16.85 PER CENT. WHILE CONFI RMING THE DISALLOWANCE FOR THE YEAR UNDER CONSIDERATION FOLLOWING THE ORDER FOR ASSESSMENT YE ARS 2002-03 AND 2003-04 IT HAS BEEN OBSERVED THAT THE GP RATE IN THE YEAR UNDER CONSIDE RATION WAS 17.2 PER CENT AS AGAINST 15.42 PER CENT IN ASSESSMENT YEAR 2003-04. IN ASSESSMENT YEAR 2002-03 THE GP RATE WAS 18.85 PER CENT AS COMPARED TO 14.41 PER CENT IN THE IMMEDIATE LY PRECEDING YEAR. SINCE THE TRIBUNAL UPHELD THE ADDITION IN AY 2002-03 AND 2003-04 ON AC COUNT OF SCRAP GENERATION THE ADDITION ON ACCOUNT OF SCRAP GENERATION WAS CONFIRMED AS GP RATE OF 17.2 PER CENT WAS STILL LOWER THAN THE GROSS PROFIT RATE OF 18.41 PER CENT IN AY 2002- 03. THE TRIBUNAL HAS SUSTAINED THE ADDITION IN AY 2004-05 COMPARING THE GP RATE IN AY 2002-03. THE ASSESSEE HAD ADMITTED THE CLOSING STOCK OF SCRAP GENERATION ONLY AT RS.63 5/- WHICH IS A MEAGER AMOUNT. THE CONTENTION OF THE ASSESSEE THAT THE LD. JUDICIAL ME MBER HAS NOTED THE FACTS AND THE ACCOUNTANT MEMBER WHO HAS AUTHORED THE ORDER HAS CONTRARY DE CISION IS NOT SUPPORTED BY ANY EVIDENCE. AS A MATTER OF FACT THE DECISION IS RENDERED BY THE BENCH AND NOT BY INDIVIDUAL MEMBER. BOTH THE MEMBER RECORD PROCEEDINGS AND BASED ON THE FACT S OF A PARTICULAR CASE DECISION IS RENDERED. HENCE THE CONTENTION RAISED BY THE ASSESS EE IS REJECTED. SINCE THE ASSESSEE HAD DISCLOSED A NOMINAL AMOUNT OF RS.635/- AS CLOSING S TOCK OF SCRAP WHICH IS MEAGER AMOUNT AS COMPARED TO ADDITIONS MADE IN ASSESSMENT YEARS 2002 -03 AND 2003-04 WHICH HAVE BEEN 3 MISC. APP. NO. 495 (DEL) OF 2009. UPHELD BY THE TRIBUNAL. HENCE THERE IS NO MISTAKE APPARENT FROM RECORD TO BE RECTIFIED UNDER SECTION 254(2) OF THE ACT. THE ASSESSEE IN THE PRE TEXT OF RECTIFICATION WANTS TO GET THE ORDER REVIEWED WHICH IS NOT PERMISSIBLE IN LAW. THEREFO RE IN OUR CONSIDERED OPINION THERE IS NO MISTAKE APPARENT FROM RECORD TO BE RECTIFIED ON THE ISSUE OF CLOSING STOCK OF SCRAP GENERATED. HENCE THIS GROUND RAISED IN MA IS DISMISSED. 4. THE NEXT ISSUE FOR CONSIDERATION RELATES TO NOT ALLOWING THE NETTING OF INTEREST RECEIVED ON FDRS. AGAINST INTEREST PAID BY THE ASSESSEE AND ASSESSMENT OF INTEREST INCOME UNDER THE HEAD OTHER SOURCES. IT HAS BEEN SUBMITTED THAT DUR ING THE COURSE OF HEARING OF THE PRESENT MA THAT THE GROUNDS WERE NOT ARGUED AND IT WAS OBSERV ED BY THE BENCH THAT THE MATTER WILL BE RESTORED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO EXAMINE THE CASE IN THE LIGHT OF DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI RAM HONDA POWER EQUIP. 289 ITR 475 (DEL). HOWEVER THE MATTER HAS BEEN DECIDED ON MERITS RATHER THAN SETTING ASIDE THE MATTER TO THE ASSESSING OFFICER. IT HAS BEEN SUBMITTED THAT IN EARLIER ASSESSMENT YEARS I.E. 2002-03 AND 2003-04 THE MATTE R WAS RESTORED BACK TO THE ASSESSING OFFICER FOR DETERMINATION OF THE ISSUE AFRESH AND THEREFORE GROUND NOS. 2 AND 3 RAISED BY THE ASSESSEE SHOULD BE RESTORED TO THE FILE OF ASSESSIN G OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES. FROM THE ASSESS MENT ORDER WE FIND THAT THE ASSESSING OFFICER HAS TREATED THE INTEREST ON FDRS. AMOUNTING TO RS.15 98 691/- AS INCOME FROM OTHER SOURCES. THE ASSESSING OFFICER HAS ALSO NOTED THAT THE ASSESSEE HAS NOT PAID ANY INTEREST TO BANK ON MONEY TAKEN ON LOAN WHICH HAS BEEN INVESTE D IN FDRS. HOWEVER FROM THE ORDER OF THE ASSESSING OFFICER WE FIND THAT THE ASSESSEE HA S NOT EXAMINED THE NATURE OF INTEREST IN THE LIGHT OF DECISION OF HON'BLE DELHI HIGH COURT IN TH E CASE OF SHRI RAM HONDA POWER EQUIP. (SUPRA). IN ASSESSMENT YEARS 2002-03 AND 2003-04 I N ITA. NO. 1187 AND 3992 (DEL) OF 2006 DATED 28/03/2008 THE TRIBUNAL HAS RESTORED THE MATT ER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO DECIDE THE ISSUE AFRESH IN THE LI GHT OF JUDGEMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHRI RAM HONDA POWER EQUIP. (SUPRA) AND THE DECISION BY HON'BLE SUPREME COURT IN THE CASE OF V.P. GOPINATHAN 248 IT R 489 (SC). THOUGH IN DECISION DATED 16/09/2009 THE TRIBUNAL HAS DECIDED THE ISSUE IN TH E LIGHT OF OBSERVATIONS MADE BY THE ASSESSING OFFICER AS WELL AS THE LD. CIT (APPEALS) HOWEVER SINCE THE ASSESSING OFFICER HAS NOT 4 MISC. APP. NO. 495 (DEL) OF 2009. EXAMINED THE NATURE INTEREST INCOME AS WELL AS THE CLAIM OF ASSESSEE FOR NETTING OF INTEREST IN THE LIGHT OF DECISION OF HON'BLE DELHI HIGH COURT I N THE CASE OF SHRI RAM HONDA EQUIP(SUPRA) AS THE DECISION WAS NOT AVAILABLE BEFO RE THE AO AS ON THE DATE WHEN THE ASSESSMENT WAS MADE WE FEEL IT PROPER TO RECALL TH E ISSUE AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIONS TO EXA MINE THE NATURE OF INTEREST FROM FDRS. WHETHER IT IS ASSESSABLE UNDER THE HEAD BUSINESS OR OTHER SOURCES IN THE LIGHT OF DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF SHRI RAM )( SUPRA) AND HE WILL ALSO DECIDE THE ISSUE OF NETTING OF INTEREST IN THE LIGHT OF DECISION OF HON'BLE DELHI HIGH COURT. ACCORDINGLY THE GROUND NOS. 2 AND 3 RAISED BY THE ASSESSEE ARE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. 6. IN THE RESULT THE MISC. APPLICATION FILED BY TH E ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON : 29TH JANUARY 2010. SD/- SD/- [ R. P. TOLANI ] [ K. D. RANJ AN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29TH JANUARY 2010. *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPLICANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS) 5. DR ITAT NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR ITAT. 5 MISC. APP. NO. 495 (DEL) OF 2009.