ACIT CEN CIR 41, MUMBAI v. SOLAR PACKAGING P. LTD, MUMBAI

ITA 3623/MUM/2009 | 2001-2002
Pronouncement Date: 28-05-2010 | Result: Dismissed

Appeal Details

RSA Number 362319914 RSA 2009
Assessee PAN AAACS7342G
Bench Mumbai
Appeal Number ITA 3623/MUM/2009
Duration Of Justice 11 month(s) 25 day(s)
Appellant ACIT CEN CIR 41, MUMBAI
Respondent SOLAR PACKAGING P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted J
Tribunal Order Date 28-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2001-2002
Appeal Filed On 03-06-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI B. RAMAKOT AIAH (AM) SL.NO. ITA NO. APPELLANT RESPONDENT A.Y. 1. 3623/MUM/2009 ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-41 ROOM NO.655 6 TH FLOOR. AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. M/S.SOLAR PACKAGING PVT. LTD. KORES HOUSE PLOT NO. 10 OFF DR. E. MOSES ROAD WORLI MUMBAI-18 P.A. NO.(AAACS 7342 G) 2001-02 2. 3624/MUM/2009 -DO- -DO- 2002-03 3. 3625/MUM/2009 -DO- -DO- 2003-04 4. 3626/MUM/2009 -DO- -DO- 2004-05 5. 3627/MUM/2009 -DO- -DO- 2005-06 6. 3628/MUM/2009 -DO- -DO- 2006-07 7. 3629/MUM/2009 -DO- -DO- 2007-08 DEPARTMENT BY : SHRI S .K. PAHWA ASSESSEE BY : SHRI A.K . GHOSH O R D E R PER BENCH. THESE BUNCH OF APPEALS PREFERRED BY THE REVENUE ARE DI RECTED AGAINST THE COMMON ORDER DATED 13.3.2009 FOR THE ASSES SMENT YEARS 2001-02 2002-03 2004-05 2005-06 2006-07 AND 20 07-08 AND DATED 19.3.2009 FOR ASSESSMENT YEAR 2003-04 PASSED BY THE LD. CIT(A). SINCE THE FACTS ARE IDENTICAL AND ISSUE INVOLVE D IN ALL THESE SEVEN APPEALS IS COMMON THE SAME ARE BEING DISPOSED OF B Y THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 2 2. FOR THE SAKE OF BREVITY THE FACTS OF THE CASE EXTRACTE D FROM ITA NO.3623/M/2009 FOR ASSESSMENT YEAR 2001-02 ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURING OF TW CARBON. A SEARCH ACTION U/S.132 OF THE I.T. ACT 1961(THE ACT) WAS CARRI ED OUT IN THE BUSINESS PREMISES OF M/S. KORES (INDIA) LTD. AT KORES HOUSE WORLI MUMBAI ON 19.9.2006 ALONG WITH ITS ASSOCIATE COMPANIES I NCLUDING THE ASSESSEE. IN RESPONSE TO NOTICE ISSUED U/S.153A THE ASSESSEE FI LED RETURN DECLARING LOSS OF RS.10 52 826/-. DURING THE COUR SE OF ASSESSMENT PROCEEDING IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT IN THE ANNUAL REPORT OF THE COMPANY THE AUDITOR VIDE HIS NOTES ON ACCOUNTS HAS MENTIONED THAT INTER CORPORATE DEPOSITS AMOUNTING TO RS.111.07 LAKHS HAS BEEN GIVEN TO CERTAIN BODIES CORPORATE. THEY HAVE FAILED TO HONOR THE CHEQUE ON D UE DATE. THE COMPANY HAS FILLED WINDING UP PETITION BEFORE THE COUR T WHICH HAS BEEN REJECTED. THE COMPANY HAS PREFERRED APPEAL AGAINST THE ORDER. INTEREST THEREON SINCE 1997-98 ONWARDS AMOUNTING TO RS.1 09 50 823/- AND FOR THE YEAR RS.27 32 180/- WHICH WILL BE ACCOUNTED FOR ON RECEIPT BASIS. ACCORDING TO THE ASSESSING O FFICER THE COMPANY HAS NOT SHOWN THE AFORESAID INTEREST ACCRUED FROM INTER CORPORATE DEPOSITS(ICD) EVEN THOUGH THE COMPANY IS FOL LOWING MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSING OFFICER FURTH ER OBSERVED THAT ON VERIFICATION OF SCHEDULE P TO THE BA LANCE SHEET IT ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 3 CAN BE SEEN THAT THE ASSESSEE HAS SHOWN RECEIPTS OF INTEREST O F RS.7 68 000/- ON ICD. HOWEVER THE INCOME ACCRUED ON IC D AT RS.2732180/- HAS NOT BEEN MADE PART OF IT. THIS CLEARL Y SHOWS THAT THE ASSESSEE HAS SPARINGLY NOT INCLUDED THE RECEIPT OF INTE REST ON CERTAIN ICDS. THE ASSESSING OFFICER WHILE RELYING ON THE DECISION IN STATE BANK OF TRAVANCORE VS. CIT (158 ITR 102(SC)) AN D OTHER DECISIONS WAS OF THE VIEW THAT THE INTEREST AMOUNT OF RS .27 32 180/- ACCRUED ON ICDS HAS TO BE ADDED TO THE TOTAL INCOME OF T HE ASSESSEE . THE ASSESSING OFFICER FURTHER OBSERVED THAT ON VERIFICATI ON OF RECORDS IT IS SEEN THAT ADDITIONS TO THE TOTAL INCOME OF THE ASSESSEE WERE MADE ON IDENTICAL ISSUE FOR THE ASSESSMENT YEARS 1997-98 AND 199 8-99. THE ASSESSEE HAS SUCCEED IN APPEAL BEFORE THE LD. CIT(A) AN D THE ITAT. HOWEVER THE DEPARTMENT HAS PREFERRED APPEALS U /S.260A ON THE IDENTICAL ISSUE BEFORE THE HIGH COURT. IN THE LIGH T OF THE ABOVE THE ASSESSEE WAS ASKED TO SHOW CAUSE AS TO WHY AN ADDITION OF RS.27 32 180/- SHOULD NOT BE MADE ON ACCOUNT OF INTEREST ACCRUED ON ICDS. THE ASSESSEE WHILE RELYING ON THE ORDER OF THE TRI BUNAL ON THE SAME GROUNDS AND FACTS FOR THE ASSESSMENT YEARS 1997-98- AN D 1998- 99 SUBMITTED THAT NO INTEREST HAS BEEN RECEIVED BY THE COMPANY IN ANY OF THE ASSESSMENT YEARS TILL DATE THEREFORE THE SAI D INTEREST CANNOT BE ADDED. HOWEVER THE ASSESSING OFFICER KEEPING IN VIEW OF FOREGOING OBSERVATIONS AFTER INVOKING THE PROVISIONS OF SECTION 145(3) ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 4 OF THE ACT WAS OF THE VIEW THAT THE INTEREST ACCRUED W AS REQUIRED TO BE ADDED TO THE TOTAL INCOME AND ACCORDINGLY HE ADDED RS.27 32 180/- BEING ACCRUED INTEREST TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER AFTER MAKING SOME OTHER DISALLOWANCE AND AFTER ALLOWING CARRY FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION FOR ASSESSME NT YEAR 2000-01 COMPLETED THE ASSESSMENT AT AN INCOME OF RS.2 11 700/- VIDE ORDER DATED 22.12.2008 PASSED U/S. 143(3) R.W.S. 153A OF THE ACT. 3. ON APPEAL BEFORE THE LD. CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT THE ISSUE STOOD ALREADY DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL FOR THE ASSESSMENT YEARS 1997-98 AN D 1998- 99 AND ALSO FOR THE ASSESSMENT YEAR 2002-03 THEREFORE THERE WAS NO JUSTIFICATION TO MAKE ADDITION ON ACCOUNT OF ACCRUED INTE REST. THE LD. CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL WHEREIN THE TRIBUNAL AFTER DISTINGUISHING THE DECISION IN THE CASE OF STATE BANK OF TRAVANCORE (SUPRA) HELD THAT THE ADDITION MADE BY THE ASSESSING OFF ICER IS NOT SUSTAINABLE DELETED THE ADDITION MADE BY THE ASSESSING O FFICER . 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US TAKING COMMON GROUND OF APPEAL EXCEP T THE DIFFERENCE IN THE AMOUNT OF ADDITION OF INTEREST FOR ALL THE ABOVE ASSESSMENT YEARS AS UNDER :- ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 5 (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETI NG THE ADDITION OF RS.27 32 180/- MADE ON ACCOUNT OF INTER EST ACCRUED TO THE ASSESSEE ON INTER-CORPORATE DEPOSITS IGNORING THE FACT THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING REGULARLY AND IN T ERMS OF PROVISIONS OF SECTION 209(3) OF COMPANIES ACT T HE ASSESSEE COMPANY WAS REQUIRED TO MAINTAIN ITS BOOKS OF ACCOUNT ON ACCRUAL BASIS. 5. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER THE LD. CIT(A) WAS N OT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . HE THEREFORE SUBMITS THAT THE ADDITION MADE BY THE ASSESSING OFFICER BE RESTORED. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) SUBMITS THAT THE ISSUE ST ANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE IN DCIT VS. M/S. SOLAR PACKAGING (P) LTD. AND V ICE VERSA IN ITA NO.5099 & 5100/MUM/2000 AND ITA NOS.5107/ & 5108 /MUM/2000 FOR THE ASSESSMENT YEARS 1997-98 & 1998-99 ORDER DATED 9.2.2005 WHEREIN THE TRIBUNAL ON SIMILAR FACTS AND CIRCUMSTANCES UPHELD THE ORDER OF THE LD. CIT(A) IN DELETING THE SIMILAR ADDI TION MADE BY THE ASSESSING OFFICER. HE FURTHER SUBMITS THAT THE SAID ORDER H AS BEEN FOLLOWED BY THE TRIBUNAL IN THE APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2002-03. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDERS OF THE TRIBUNAL. HE FURTHER SUBMITS THAT NO CONTRARY ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 6 MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AND THE A DDITION WAS MADE MERELY ON THE BASIS OF EARLIER ASSESSMENT ORDER THE REFORE IN VIEW OF THE TRIBUNALS ORDER THE ASSESSING OFFICER WAS N OT JUSTIFIED IN MAKING THE IMPUGNED ADDITION. HE THEREFORE SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE ADDITION BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS ARE NOT IN DISPUTE. WE FURTHER FIND MERIT IN THE PL EA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEARS 1997-98 AND 1998-99 SUPRA AFTER CONSIDERI NG THE NOTIFICATION NO.S.O.69(E) DATED 25.1.1996 REPORTED I N (1996) 218 ITR 1 (ST.) DISTINGUISHED THE DECISION IN THE CASE OF STATE BANK OF TRAVANCORE VS. CIT (1986) 158 ITR 102(SC) FOLLOWED T HE DECISION IN THE CASE OF GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 2 25 ITR 746(SC) AND UPHELD THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION MADE ON ACCOUNT OF INTEREST ON ICD. WE FURTHER FIND THAT FOR THE ASSESSMENT YEAR 2002-03 THE TRIBUNAL WHILE FOLLOWING ITS EARLIE R ORDER (SUPRA) CONFIRMED THE ORDER OF THE LD. CIT(A) IN DELETING TH E ADDITION MADE BY THE ASSESSING OFFICER VIDE ORDER IN ACIT VS. SOLAR PACKAG ING PVT. LTD. IN ITA NO.4576/M/05 DATED 13.5.2008. IN THE ABSENCE O F ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENU E WE ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 7 RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBU NAL HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF INTEREST OF RS.27 32 180/- AND ACCORDINGLY WE ARE INCLINED TO UPHOL D THE ORDER OF THE LD. CIT(A) IN DELETING THE SAME. THE COMMON GROU ND TAKEN BY THE REVENUE FOR THE ASSESSMENT YEARS 2001-02 TO 2007-08 IS T HEREFORE REJECTED. 8. IN THE RESULT REVENUES APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.5.2010. SD/- SD/- (B. RAMAKOTAIAH) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 28.5.2010. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. ITA NO.3623 29/M/09 A.Y:01-02 TO 07-08 8 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 19.5.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 20.5.10 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 28.5.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 31.5.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER