Balmukund Sizers Pvt.Ltd, Surat v. The Dy.CIT., Circle-1,, Surat

ITA 3659/AHD/2007 | 2004-2005
Pronouncement Date: 28-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 365920514 RSA 2007
Assessee PAN AAACB9719L
Bench Ahmedabad
Appeal Number ITA 3659/AHD/2007
Duration Of Justice 2 year(s) 8 month(s) 17 day(s)
Appellant Balmukund Sizers Pvt.Ltd, Surat
Respondent The Dy.CIT., Circle-1,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2004-2005
Appeal Filed On 10-09-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.3659/AHD/2007 ASSESSMENT YEAR: 2004-05 DATE OF HEARING:20.5.10 DRAFTED:25.5.10 BALMUKUND SIZERS PVT. LTD. BLOCK NO.111 MOTA BORSARA TAL. MANGROL SURAT PAN NO.AAACB9719L V/S . DY. COMMISSIONER OF INCOME-TAX CIRCLE-1 SURT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI GAPNESH SHETH AR RESPONDENT BY:- SHRI SANJEEV KASHYAP SR-DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- THIS IS AN APPEAL FILED BY THE ASSESSEE RAISING FO LLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.14 25 828/- (VALUE OF STOCK PLUS PROFIT) FOR ALL EGED SALE OF FINISHED STOCK. 2. EVEN OTHERWISE THE LEARNED COMMISSIONER OF INCO ME-TAX(APPEALS) OUGHT TO HAVE RESTRICTED THE ADDITION TO RS.1 29 62 0/- AS ASSESSEE HAS ALREADY SHOWN RS.12 62 072/- AS OTHER INCOME ON A CCOUNT OF CLAIM RECEIVED IN RESPECT OF GOODS RETURNED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN ITA NO.3659/AHD/2007 A.Y. 2004-05 BALMUKUND SIZERS PVT. LTD. V. DCIT CIR-1 SRT PAGE 2 CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.5 59 707/- FOR ALLEGED SALE OF CHEMICAL STOCK. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING DISALLOWANCE OF RS.3 50 753/- ON ACCOUNT OF ALLEGED MANUFACTURING AND OPERATING EXPENSES. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED DIN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING CLAIM OF DEPRECIATION OF RS.13 62 476/-. 2. IN ADDITION TO THIS ASSESSEE HAS RAISED FOLLOWI NG ADDITIONAL GROUND:- ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED ASSESSING OFFICER HAS ERRED IN INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T. ACT. 1961 3. AFTER DISCUSSING THE ISSUE OF ADDITIONAL GROUND WITH BOTH LD. AR AND LD. SR-DR. WE ADMIT THE SAME IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CORPORATION V. CIT (1998) 229 ITR 383 (SC). LD. SR-DR POINTED OUT THAT THE ISSUE HAS NOT BEEN CONSIDERED BY LD. CIT(APPEALS) THEREFORE HE SHOULD GET AN OPPORTUNITY TO CONSIDER THE SAME. HE REFERRED TO THE DECISION OF HONBLE MADHYA PRADE SH HIGH COURT IN THE CASE OF CIT V. TOLARAM HASSUAL (2008) 298 ITR 22 (MP) FOR THE PROPOSITION THAT IF ADDITIONAL GROUND IS ADMITTED THEN THE MATTER SHOUL D BE REMITTED BACK TO LD. CIT(APPEALS) FOR ADJUDICATING THE SAME. 4. LD. AR FOR THE ASSESSEE SUBMITTED THAT IN CASE A DDITIONAL GROUND IS ALLOWED IN FAVOUR OF THE ASSESSEE THEN ADDITIONS CO NTAINED IN GROUND NO.2 3 AND 4 CANNOT BE SUSTAINED. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE RESTO RE THE MATTER TO THE FILE OF LD. CIT(APPEALS) FOR ADJUDICATION IN RESPECT OF REJECTION OF THE BOOKS AND ESTIMATION OF PROFITS TO THE FILE OF LD. CIT(APPEAL S). ITA NO.3659/AHD/2007 A.Y. 2004-05 BALMUKUND SIZERS PVT. LTD. V. DCIT CIR-1 SRT PAGE 3 6. ACCORDINGLY GROUND NO.1 2 AND 3 ARE ALSO RESTO RED TO THE FILE OF LD. CIT(APPEALS) FOR DECIDING AFRESH AFTER THE DECISION IN RESPECT OF ADDITIONAL GROUND AFTER HEARING ASSESSEE AND ASSESSING OFFICER . 7. GROUND NO.4 RELATES TO ADDITION IN RESPECT OF MA NUFACTURING OPERATIVE EXPENSES. THE CLAIM OF THE ASSESSEE IS THAT THIS E XPENDITURE WAS INCURRED WHEN THERE WAS LULL IN THE BUSINESS. 8. ON THE OTHER HAND LD. SR-DR POINTED OUT THAT TH E ASSESSEE HAD NOT PURCHASED ANY GOODS. THERE WAS NO OPENING STOCK. T HERE WAS NO PURCHASE AND NO MANUFACTURING ACTIVITY. THE ONLY EXPLANATIO N GIVEN BY THE ASSESSEE WAS THAT ASSESSEE HAS INTENTION TO RUN THE MACHINES AND THEREFORE PURCHASED COAL WORTH OF RS.21 063/- AND HAD INCURRED ELECTRIC EXPENSES AT RS.3 21 577/-. THUS EVEN THOUGH FACTORY DID NOT WORK AND MACHINE DID NOT RUN STILL THERE WAS MINIMUM ELECTRIC POWER CONSUMPTION FOR WHICH EXPEND ITURE IS REQUIRED TO BE ALLOWED. LD. CIT(APPEALS) HELD THAT MACHINE COULD NOT RUN AS THERE WAS NO BUSINESS ACTIVITY DURING THE YEAR AND THEREFORE AT BEST IT COULD BE A PRE- OPERATIVE EXPENDITURE. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS OF THE P ARTIES WE DISMISS THIS GROUND OF THE ASSESSEE. ONCE BUSINESS HAS NOT STAR ED THEN THERE IS NO QUESTION OF ALLOWING EXPENDITURE. WE AGREE WITH LD. CIT(APPEALS) THAT IT WAS ONLY A PRE-OPERATIVE EXPENDITURE. THE ARGUMENT OF LD. AR THAT THERE WAS LULL IN THE BUSINESS CANNOT BE ACCEPTED BECAUSE ASSESSEE HAS NOT AT ALL STARTED ANY MANUFACTURING OR BUSINESS ACTIVITY. THE CONCEPT OF LULL OF THE BUSINESS WOULD COME ONLY WHEN THE ASSESSEE IS ALREADY IN THE BUSINESS AND FOR CERTAIN REASONS BEYOND HIS CONTROL HE HAD TO STOP MANUFACT URING ACTIVITY AND WAIT FOR SOME OPPORTUNE TIME TO START AFRESH. ONCE ASSESSEE HAS NOT YET ENTERED INTO BUSINESS ACTIVITY CLAIM OF EXPENDITURE CANNOT BE A LLOWED. IT IS THE PRE- OPERATIVE EXPENDITURE AND THEREFORE CANNOT BE CONSI DERED AT THIS STAGE. ITA NO.3659/AHD/2007 A.Y. 2004-05 BALMUKUND SIZERS PVT. LTD. V. DCIT CIR-1 SRT PAGE 4 10. GROUND NO.5 RELATES TO DEPRECIATION OF RS.13 62 476/-. 11. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IALS ON RECORD. FOR THE REASON THAT ASSESSEE HAS NOT YET STARTED BUSINE SS ACTIVITY IT CANNOT BE SAID THAT PLANT AND MACHINERY HAVE BEEN PUT TO USE. THEREFORE THE CLAIM OF DEPRECIATION WILL ALSO NOT BE ADMITTED. WE UPHOLD THE ORDER OF LD. CIT(APPEALS) AND THIS GROUND OF ASSESSEES APPEAL I S ALSO DISMISSED. 12. IN THE RESULT APPEAL FILED BY ASSESSEE IS PARTLY A LLOWED BUT FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 28/05/2010 SD/- SD/- (T.K.SHARMA) (D. C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I SURAT 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD