The ITO, Ward-4(4), Ahmedabad v. Maruti Glaze Tiles Ltd.,, Ahmedabad

ITA 2762/AHD/2007 | 2003-2004
Pronouncement Date: 24-05-2010 | Result: Dismissed

Appeal Details

RSA Number 276220514 RSA 2007
Assessee PAN AABCM0574F
Bench Ahmedabad
Appeal Number ITA 2762/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 5 day(s)
Appellant The ITO, Ward-4(4), Ahmedabad
Respondent Maruti Glaze Tiles Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 24-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 24-05-2010
Date Of Final Hearing 24-05-2010
Next Hearing Date 24-05-2010
Assessment Year 2003-2004
Appeal Filed On 19-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' [BEFORE SHRI BHAVNESH SAINI JM & SHRI A N PAHUJA AM ] ITA NO.2762/AHD/2007 (ASSESSMENT YEAR:-2003-04) INCOME-TAX OFFICER WARD- 4(4) 1 ST FLOOR NAVJIVAN TRUST BUILDING NAVJIVAN PO AHMEDABAD V/S MARUTI GLAZE TILES LTD. 4 RUKSHMANI VALLABH SOCIETY OPP. YOGASHRAM SOCIETY SHREYAS TEKRA AHMEDABAD [PAN : AABCM 0574 F] [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI C K MISHRA SR. DR ASSESSEE BY:- NONE O R D E R A N PAHUJA: THIS APPEAL BY THE REVENUE AGAINST AN ORDER DATED 13-04-2007 OF THE LD. CIT(APPEALS)-VIII AHMEDABAD RAISES THE FOLLOWING GROUNDS: 1 THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF T HE CASE IN DELETING THE ADDITION OF RS.26 61 329/- MADE U/S 37(1) OF THE AC T BEING PAID TO GEB AS A PENALTY FOR THEFT OF POWER @ 2.5 TIMES OF REGU LAR RATE. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3 IT IS THEREFORE PRAYED THAT THE ORDER OF THE LD . CIT(A) MAY BE CANCELLED AND THAT OF THE AO MAY BE RESTORED TO THE ABOVE EXTENT. 2 AT THE OUTSET NONE APPEARED ON BEHALF OF THE ASS ESSEE WHILE THE BENCH REJECTED THE REQUEST DATED 17.5.2010 FOR ADJOURNMENT AND PROCEEDED TO DISPOSE OF THE APPEAL AFTER HEARING TH E LEARNED DEPARTMENTAL REPRESENTATIVE. 3 FACTS IN BRIEF AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING NIL INCOME FILED ON 29.11.2003 BY THE ASSESSEE ENG AGED IN THE MANUFACTURING OF GLAZED TILES AFTER BEING PROCESSE D U/S 143(1) OF ITA NO.2762/AHD/2007 FOR AY 2003-04 MARUTI GLAZE TILES LTD. 2 THE INCOME-TAX ACT 1961[HEREINAFTER REFERRED TO AS THE ACT] WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE ACT ON 24.11.2004. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASS ESSEE DEBITED A SUM OF RS.44 35 540/- TOWARDS PAYMENT OF SUPPLEMENT ARY BILL FOR ELECTRICITY. IN A NOTE FORMING PART OF THE ACCOUNTS ANNEXED TO THE AUDIT REPORT IN FORM 3CD THE AUDITOR VIDE NOTE NO . 7 STATED THAT THE COMPANY HAVE BEEN SERVED WITH THE SUPPLEMENTARY BIL L OF RS.59 85 212/- DATED 07.07.2003 FOR ALLEGED THEFT O F POWER. THE COMPANY HAS REPRESENTED BEFORE APPELLATE COMMITTEE OF GUJARAT ELECTRICITY BOARD. THE APPELLATE COMMITTEE OF GUJAR AT ELECTRIC BOARD HAS REDUCED THE AMOUNT PAYABLE TO RS.44 35 540/-. T HE COMPANY HAS PAID RS.11 97 060/-THERE AGAINST. PROVISION HAS BEEN MADE FOR THE BALANCE AMOUNTS OF RS.32 38 480/- BY DEBITING T HE PROFIT AND LOSS ACCOUNT.' TO A QUERY BY THE AO THE ASSESSEE S UBMITTED VIDE LETTER DATED 27.2.2006 THAT SINCE METER OF GEB WAS NOT WORKING PROPERLY IT RAISED AN ADDITIONAL BILL OF RS.44 35 540/-. NO WHERE IN THE BILL GEB STATED THE PENALTY HAS BEEN LEVIED. IT WAS POINTED OUT THAT WHENEVER GEB ISSUED ADDITIONAL BILL TO ANY PER SON ADDITIONAL BILL WAS WORKED OUT BY AS UNDER:- (A) NET CHARGEABLE UNIT X NORMAL PER UNIT RATE AND (B) NET CHARGEABLE UNIT X HIGHER PER UNIT RATE (I.E . 2.5. TIMES OF REGULAR RATE) 3.1 IT WAS FURTHER STATED THAT AMOUNT OF RS.26 61 414 HAD BEEN WORKED OUT CONSIDERING HIGHER PER UNIT RATE FOR NET CHARGEABLE UNITS CONSIDERED IN ADDITIONAL BILLS AND THE SAID AMOUNT WAS NOT A PENALTY. SINCE PAYMENT MADE BY ASSESSEE WAS NOT IN VIOLATION OF ANY LAW AND WAS COMPENSATORY IN NATURE IT WAS ALLOWABLE B USINESS EXPENDITURE THE ASSESSEE PLEADED. HOWEVER THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THE DETAILED WORKING OF ITA NO.2762/AHD/2007 FOR AY 2003-04 MARUTI GLAZE TILES LTD. 3 CONSUMPTION OF ELECTRICITY SHOWED THAT THE GEB QUA NTIFIED THE ACTUAL UNITS AT 343454 UNITS AND MULTIPLIED THIS BY RS.3.80 WHICH WAS THE REGULAR RATE. THE REGULAR RATE HAD BEEN FURTHER INCREASED BY 2.5 TIME S AS A PENALTY FOR THE THEFT OF POWER. ACCORDINGLY THE 2.5 TIMES CHARGE WAS CONSID ERED PENAL IN NATURE BY THE AO RESULTING IN ADDITION OF RS.26 61 329/-. 4 ON APPEAL THE LEARNED CIT(A) DELETED THE ADDITIO N WITH THE FOLLOWING OBSERVATIONS:- 2.2 BEFORE ME IT WAS CONTENDED THAT THERE WAS PRO BLEM IN THE METER READING AND THERE HAS BEEN ALSO WIRING DEFECTS. THE OFFICIALS OF GEB SUSPECTED EXTRA CONSUMPTION AND HENCE APPLYING THE FORMULA CONTAINED IN THE ACT AND RULES RAISED DEMAND FOR EXTRA CONSUMPT ION. THE DEMAND WAS REDUCED BY THE APPELLATE COMMITTEE IN THIS REGA RD AND THE EXPENDITURE THERE ON WAS PROVIDED IN THE BOOKS. WHE N IT WAS SPECIFICALLY ASKED WHETHER THERE WAS DEFECT IN THE METER IT WAS FURTHER STATED THAT THE GEB RAISED DEMAND FOR THE ALLEGED EXCESS CONSUMPTIO N OF ELECTRICITY BY WAY OF ESTIMATE AND THE SAME WAS ON MAXIMUM LOAD AV AILABLE ON POWER FACTOR. AGAINST THIS ESTIMATED DEMAND THE APPELLAN T TOOK THE MATTER TO THE APPELLATE FORUM WHO REDUCED THE EXCESS CONSUMPTION AND THE CORRESPONDING DEMAND. THUS IT WAS CONTENDED THAT T HE AMOUNT IN QUESTION WAS ON ACCOUNT OF ESTIMATED CONSUMPTION OF ELECTRICITY AND IN ANY CASE IT WAS A POWER BILL BEING BUSINESS EXPENDITURE AND NOT BY WAY OF PENALTY FOR THEFT OF ENERGY. THE PAYMENT FOR AN INP UT WAS ALLOWABLE. IN ANY CASE THE SAID LEVY WAS BY GUESS WORK AS THE ACTUAL CONSUMPTION MAY NOT BE SO HIGH. IN ORDER TO ENSURE CONTINUED SUPPLY OF ELECTRICITY THE DEMAND WAS ULTIMATELY PAID AND IN THE CIRCUMSTANCES THE SA ID EXPENDITURE CANNOT BE HIT BY EXPLANATION TO SECTION 37(1). 2.3 ON PERUSAL OF THE ASSESSMENT ORDER AND THE RELE VANT SUBMISSIONS OF THE APPELLANT I FIND THAT THE SAID AMOUNT DISAL LOWED DID NOT REPRESENT ANY PENALTY LEVIED BUT ONLY A HIGHER LEVY AS PER TH E RULES OF GEB. THE SAME BEING ON ESTIMATE AND OUTGO BEING ON ACCOUNT O F ELECTRICITY BILL THOUGH AT A HIGHER RATE CANNOT BE TERMED AS A LEVY FOR INFRACTION OF LAW. IT IS ONLY AN EXPENDITURE CONNECTED WITH THE NORMAL BUSIN ESS OPERATIONS OWING TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE AND IN THE ABSENCE OF ANY OTHER EVIDENCE AGAINST THE APPELLANT THERE IS NOTHING TO HOLD THAT THERE WAS INFRACTION OF LAW. IN THAT VIEW OF THE MA TTER THE ADDITION IS DIRECTED TO BE DELETED. ITA NO.2762/AHD/2007 FOR AY 2003-04 MARUTI GLAZE TILES LTD. 4 5. THE REVENUE IS NOW IN APPEAL BEFORE US AGAI NST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LEARNED DR MERELY S UPPORTED THE ORDER OF THE AO. 6 WE HAVE HEARD THE LEARNED DR AND GONE THROUGH TH E FACTS OF THE CASE. THE AO MADE THE ADDITION TREATING THE AMOUNT RAISED IN ADDITIONAL BILLS PENAL IN NATURE WHILE THE LEARNED CIT(A) CONCLUDED THAT THE SAID AMOUNT DID NOT REPRESENT ANY PENALTY LEVIED BUT ONLY A HIGHER LEVY AS PER THE RULES OF GEB. THE SAME BEING ON EST IMATE AND OUTGO BEING ON ACCOUNT OF ELECTRICITY BILL THOUGH AT A HIGHER RATE COULD NOT BE TERMED AS A LEVY FOR INFRACTION OF LAW THE LD. CIT(A) OBSERVED. ACCORDI NGLY THE LD. CIT(A) DELETED THE DISALLOWANCE. THE REVENUE HAVE NOT PLACED BEFORE U S ANY MATERIAL CONTROVERTING THESE FINDINGS OF THE LD. CIT(A). WE ARE OF THE OPI NION THAT INFRACTION OF LAW ALONE IS NOT A NORMAL INCIDENCE OF THE BUSINESS. IN THE I NSTANT CASE THE LD. CIT(A) CONCLUDED THAT THE AFORESAID AMOUNT WAS NOT ON ACCO UNT OF ANY INFRACTION OF LAW BUT WAS AN EXPENDITURE CONNECTED WITH THE NORMAL BU SINESS OPERATIONS OWING TO CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE. IN THESE CIRCUMSTANCES AND IN THE ABSENCE OF ANY MATERIAL BEFORE US FOR TAKI NG A DIFFERENT VIEW IN THE MATTER WE ARE NOT INCLINED TO INTERFERE. THUS GROUND NO. 1 IN THE APPEAL IS DISMISSED. 7. GROUND NOS. 2 & 3 BEING GENERAL IN NATURE DO N OT REQUIRE ANY SEPARATE ADJUDICATION AND ARE THEREFORE DISMISSED . 8 IN THE RESULT APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 24 -05 -2010 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 24-05-2010 COPY OF THE ORDER FORWARDED TO : ITA NO.2762/AHD/2007 FOR AY 2003-04 MARUTI GLAZE TILES LTD. 5 1. MARUTI GLAZE TILES LTD. 4 RUKSHMANI VALLABH SO CIETY OPP. YOGASHRAM SOCIETY SHREYAS TEKRA AHMEDABAD 2. THE ITO WARD-4(4) AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-VIII AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD