DCIT, New Delhi v. M/s. Siel Ltd., New Delhi

ITA 261/DEL/2010 | 2006-2007
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 26120114 RSA 2010
Assessee PAN AAACS4902Q
Bench Delhi
Appeal Number ITA 261/DEL/2010
Duration Of Justice 4 month(s) 12 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Siel Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 31-05-2010
Assessment Year 2006-2007
Appeal Filed On 18-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI C.L.SETHI JM AND SHRI R.C.SHARMA AM ITA NO.261/DEL/2010 ASSESSMENT YEAR : 2006-07 DY.COMMISSIONER OF INCOME TAX (LTU) NEW DELHI. VS. M/S SIEL LIMITED (PRESENTLY KNOWN AS MAWANA SUGAR LTD.) 5 TH FLOOR KIRTI MAHAL 19 RAJENDRA PLACE NEW DELHI 110 008. PAN NO.AAACS4902Q. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GAJANAND MEENA CIT-DR. RESPONDENT BY : SHRI TARANDEEP SINGH CA. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 25.9.2009 FOR THE AY 2006-07 IN THE MATTER OF ORDE R PASSED BY THE AO U/S 154/143(3) OF THE IT ACT. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT THERE WAS A SCRUTINY ASSESSMENT U/S 143(3) WHE REIN ADDITION WAS MADE ON ACCOUNT OF EXCISE DUTY REIMBURSEMENT TO M/S TECUMSE H PRODUCTS INDIA LTD. AMOUNTING TO RS.2.92 CRORES. THEREAFTER ASSESSEE FILED AN APPLICATION U/S 154 ALLEGING THAT ADDITION OF EXCISE DUTY REIMBURSEMENT WAS A MISTAKE APPARENT FROM RECORD. CONTENTION OF ASSESSEE WAS THAT THE COMPAN Y HAD TRANSFERRED ITS BUSINESS OF MANUFACTURING COMPRESSORS TO TECUMSEH PRODUCTS I NDIA LTD. (TPIL) AS ON 31.3.1997. THE COMPANY HAD UNDERTAKEN TO REIMBURSE ANY LIABILITY WHICH MAY ARISE IN RESPECT OF PERIOD UPTO 31.3.1997 AS PER AG REEMENT. DURING THE YEAR ENDED 31.3.2005 THE COMPANY HAS REIMBURSED LIABILITY OF RS.392 LAKHS BEING THE DEMAND RAISED BY EXCISE DEPARTMENT AGAINST THE TPIL IN RES PECT OF THE PERIOD FROM AUGUST 1990 TO APRIL 1992. THE COMPANY HAD DEBITED TO ITS P & L ACCOUNT FOR ITA-261/DEL/2010 2 THE YEAR ENDED 31.3.2005 AN AMOUNT OF RS.90 LAKHS A ND BALANCE AMOUNT OF RS.302 LAKHS WAS INCLUDED UNDER THE HEAD LOANS AND ADVANC ES RECOVERABLE IN CASH OR KIND OR FOR VALUE TO BE RECEIVED. IT WAS FURTHER CONTE NDED WHILE ADDING THE EXCISE DUTY THE AO HAS WRONGLY ASSUMED THAT AMOUNT OF RS.392 LA KHS HAS BEEN DEBITED TO P & L ACCOUNT DURING THE YEAR AND THAT HE HAD UNDERSTOO D THE TERM PREVIOUS YEAR USED IN NOTES TO ACCOUNTS FOR THE YEAR ENDED 31.3.2 006 HAVING THE SAME MEANING AS GIVEN IN INCOME TAX ACT WHEREAS REFERENCE WAS TO THE PRECEDING YEAR I.E. YEAR ENDED 31.3.2005. AMOUNT OF EXCISE DUTY REIMBURSED WAS NEITHER DEBITED IN THE PROFIT & LOSS ACCOUNT NOR CLAIMED AS DEDUCTION IN T HE COMPUTATION OF INCOME THEREFORE ADDING THIS AMOUNT TO THE RETURNED INCOME AMOUNTS TO MISTAKE APPARENT FROM RECORD. HOWEVER THE AO DECLINED ASSESSEES C LAIM BY OBSERVING THAT THERE WAS NO MISTAKE APPARENT IN THE ORDER U/S 143(3). 3. BY THE IMPUGNED ORDER CIT(A) HELD THAT THE AO W AS NOT JUSTIFIED IN ADDING THE AMOUNT OF RS.3.92 CRORES ON ACCOUNT OF E XCISE DUTY REIMBURSEMENT SINCE IT WAS NOT CLAIMED IN PROFIT & LOSS ACCOUNT. ACCORDINGLY THE SAME WAS TREATED AS A MISTAKE APPARENT IN THE ORDER U/S 143( 3) OF THE ACT AGAINST WHICH REVENUE IS IN FURTHER APPEAL BEFORE US. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS CAREFU LLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT IN ASSESSME NT ORDER FRAMED U/S 143(3) THE AO HAS ADDED AN AMOUNT OF RS.392 LAKHS ON ACCOUNT O F EXCISE DUTY REIMBURSEMENT BY TAKING COGNIZANCE OF NOTE NO.7E OF SCHEDULE 13 OF THE ACCOUNTS BY ALLEGING THAT THE REIMBURSEMENT HAS NO BUSINESS CONNECTION WITH ASSESSEES BUSINESS DURING THE YEAR UNDER CONSIDERATION. FROM THE RECORD WE FOUND THAT ASSESSEE HAS DEBITED RS.90 LAKHS IN THE PROFIT & LO SS ACCOUNT FOR THE YEAR ENDING 31 ST MARCH 2005 RELEVANT TO THE AY 2005-06 AND FOLLOWI NG NOTE WAS APPENDED AS NOTES TO ACCOUNT IN SCHEDULE-13 AT ITEM (F) WHICH R EADS AS UNDER:- (F) THE COMPANY HAS PROVIDED BANK GUARANTEES AGGRE GATING RS.1260 LACS TO TECUMSEH PRODUCTS INDIA LTD. (TPIL) TO WHOM IT ITA-261/DEL/2010 3 HAD SOLD THE COMPRESSOR BUSINESS IN A PREVIOUS YEAR FOR ANY LOSS DAMAGE CLAIM ACTION SUIT ETC. ARISING FROM VARI OUS REPRESENTATIONS/BREACH OF REPRESENTATIONS INCLUDING FOR CONTINGENT LIABILITIES EXISTING AS AT MARCH 31 1997 OR PRIOR TO MARCH 31 1997 WHICH TPIL MAY EVENTUALLY BE LIABLE TO PAY. DURING THE YEAR TPIL HAS RECEIVED EXCISE DEMANDS AGGREGATING TO RS.392 L ACS (INCLUDING INTEREST OF RS.225 LACS) FOR THE PERIOD AUGUST 1990 TO APRIL 1992 WHICH HAS SINCE BEEN PAID BY IT TO THE CONCERNED AU THORITIES. AMOUNTS SO PAID HAVE BEEN REIMBURSED BY THE COMPANY TO TPIL. BASED ON LEGAL ADVICE THE COMPANY HAS ACCOUNTED FO R THE MAXIMUM POSSIBLE EXPOSURE OF RS.90 LACS IN THIS REGARD IN T HE PROFIT AND LOSS ACCOUNT. THE BALANCE AMOUNT OF RS.302 LACS HAS BEE N INCLUDED UNDER LOANS AND ADVANCES RECOVERABLE IN CASH OR KI ND OR FOR VALUE TO BE RECEIVED IN SCHEDULE 6. 5. HOWEVER WHILE PASSING SCRUTINY ASSESSMENT ORDER DATED 16.12.2008 THE AO HAS REPRODUCED SCHEDULE-13 OF THE AUDIT REPORT F OR THE ASSESSMENT YEAR UNDER CONSIDERATION AND DISALLOWED THE AMOUNT OF RS.3.92 CRORES. SCHEDULE-13 READS AS UNDER:- IN THE PREVIOUS YEAR TPIL HAD RECEIVED EXCISE DEM ANDS AGGREGATING TO RS.392 LACS (INCLUDING INTEREST OF R S.224 LACS) FOR THE PERIOD OF AUGUST 1990 TO APRIL 1992 WHICH WAS PAID BY IT TO THE CONCERNED AUTHORITIES. AMOUNT SO PAID WERE REIMBUR SED BY THE COMPANY TO TPIL. BASED ON LEGAL ADVICE THE COMPAN Y HAD ACCOUNTED OR THE MAXIMUM POSSIBLE EXPOSURE OF RS.90 LACS IN THIS REGARD IN THE P & L ACCOUNT IN THE PREVIOUS YEAR AN D THE BALANCE AMOUNT OF RS.302 LACS HAS BEEN INCLUDED UNDER LOAN S AND ADVANCES RECOVERABLE IN CASH OR KIND OR FOR VALUE TO BE RECE IVED IN SCHEDULE 6. FROM THE ABOVE THE AO OBSERVED THAT THE ASSESSEE CO MPANY HAS SOLD ITS COMPRESSOR BUSINESS TO TECUMSEH PRODUCTS INDIA LTD. (TPIL) IN FINANCIAL YEAR 1996-97 RELEVANT TO A.Y. 1997-98. T PIL HAS PAID EXCISE DEMAND OF RS.392 LACS WHICH WAS REIMBURSED B Y THE ASSESSEE COMPANY. THIS REIMBURSEMENT HAS NO CONNECTION WITH THE ASSESSEES BUSINESS DURING THE YEAR UNDER CONSIDERA TION. THE ASSESSEE WAS THEREFORE ASKED TO EXPLAIN AS TO WHY T HE SAME BE NOT DISALLOWED. NO DETAILS WERE FILED ON THIS ISSUE. HENCE THE SAME IS DISALLOWED AND ADDED BACK. ITA-261/DEL/2010 4 6. IT IS CLEAR FROM THE ABOVE THAT NOWHERE THE AO H AS STATED THAT THE SAID AMOUNT OF EXCISE DUTY HAS BEEN CLAIMED AS DEDUCTION BY THE ASSESSEE EITHER IN THE PROFIT & LOSS ACCOUNT OR IN THE COMPUTATION OF INCO ME. THERE WAS CLAIM OF RS.90 LAKHS FOR SUCH REIMBURSEMENT IN THE EARLIER AY 2005 -06 AND NOT IN THE AY 2006- 07 WHICH IS UNDER CONSIDERATION. SINCE THE AMOUNT WAS NEITHER CLAIMED IN THE PROFIT & LOSS ACCOUNT NOR IN THE COMPUTATION OF INC OME FOR ANY EXCISE DUTY DEMAND DURING THE AY 2006-07 UNDER CONSIDERATION T HE DISALLOWANCE OF SAME WAS A MISTAKE APPARENT FROM RECORD. ACCORDINGLY W E DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR HOLDING THAT DISALLOWANCE O F RS.392 LAKHS ON ACCOUNT OF EXCISE DUTY REIMBURSEMENT WAS A MISTAKE APPARENT FR OM RECORD. 7. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 31 ST MAY 2010. SD/- SD/- (C.L.SETHI) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.05.2010. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR ITA-261/DEL/2010 5