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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: SHRI RAJPAL YADAV & SHRI N.K. BILLAIYA
ITA No.2623/Ahd/2015 A.Y. 2012-13 Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No.2623/Ahd/2015 Assessment Year: 2012-13 Dy. Commissioner of Income Tax, vs. Gujarat Gas Financial Services Ltd., Gandhinagar Circle, 2, Shantisadan Society, Gandhinagar. Near Parimal Garden, Ellisbridge, Ahmedabad. [PAN – AAACG 5584 E] (Appellant) (Respondent) Appellant by : Shri O.P. Pathak, Joint CIT Respondent by : Shri S.N. Soparkar with Parin Shah Date of hearing : 27.11.2017 Date of pronouncement : 18.12.2017 O R D E R PER N.K. BILLAIYA, ACCOUNTANT MEMBER This appeal by the Revenue is preferred against the order of CIT(A)-2, Ahmedabad dated 30.06.2015 pertaining to assessment year 2012-13.
The only grievance of the Revenue is that the CIT(A) erred in deleting the addition of Rs.32,86,103/- made by the Assessing Officer on account of disallowance under section 40A(2)(a) read with section 40A(2)(b) of the Income Tax Act, 1961 (‘the Act’ hereinafter) in respect of the service charges paid to Gujarat Gas Company Limited.
At the very outset, the learned counsel for the assessee stated that the issue is now well settled in favour of the assessee and against the Revenue by the order of the Hon’ble High Court of Gujarat in assessee’s own case in Tax Appal No.428 of 2015.
Learned Departmental Representative fairly conceded to this.
We have carefully considered the orders of the authorities below quashing the issue. We find that the Hon’ble jurisdictional High Court of Gujarat in assessee’s own
ITA No.2623/Ahd/2015 A.Y. 2012-13 Page 2 of 3 case in Tax Appeal No.428 of 2015 was seized with the following substantial question of law:-
“Whether the Appellate Tribunal has substantially erred in law in deleting the addition of Rs.7.70 crores made on account of disallowance u/s.40A(2)(b) r.w.s. 40A(2)(a) of the Act, without properly appreciating the facts of the case and the material brought on record?”
The relevant finding of Hon’ble High Court reads as under :-
“10. We have heard learned Advocates appearing for the parties. 11. It would thus be clear from the above observations of the Hon’ble Supreme Court that the principle of res judicata does not apply to income tax proceedings and each assessment year is considered as a separate unit. Still, however, the Hon’ble Supreme Court has held that in absence of any material or substantial change justifying the revenue to take a different view than the view it had taken in the preceding assessment years, it should not have reopened the issue in the subsequent assessment year. In the case on hand also, there cannot be any avil that, strictly speaking, the principle of res judicata is applicable to income tax proceedings. Still, however, the revenue had allowed deduction of service charges from the income to assess the income tax of the respondent in the preceding year. In absence of any material change, it could not have disallowed the claim of service charges under section 40(A) of the Act. In the backdrop of these facts, the arguments canvassed by learned Senior Counsel Mr. M.R. Bhatt cannot be countenanced. 14. We are in agreement with the observations made by the Tribunal as well as the ratio laid down by the coordinate Bench of this Court in the case of (1) Commissioner of Income Tax-I vs. Enviro Control Associated (P) Ltd., as reported at (2014) 43 Taxmann.com 291 (Gujarat); (2) Commissioner of Income Tax-III vs. Ashok J Patel, as reported at (2014) 43 Taxmann.com 227 (Gujarat) and (3) Commissioner of Income Tax vs. Indo Saudi Services (Travel) P. Ltd. as reported as (2009) 310 ITR 306 (Bom). 15. It is pertinent to note that so far as the Circular dated 6.7.1968 is concerned, it makes clear that the provisions under section 40A(2) and particularly with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds it that one of them is trying to evade payment of tax. 16. Considering the overall facts of the case and the ratio laid down by the Hon’ble Apex Court, we are of the opinion that the appeals are meritless and the same deserve to be dismissed and accordingly dismissed.”
ITA No.2623/Ahd/2015 A.Y. 2012-13 Page 3 of 3 7. Respectfully following the judgement of the Hon’ble jurisdictional High Court of Gujarat (supra), we do not find any error or infirmity in the findings of the CIT(A). Appeal filed by the Revenue is accordingly dismissed.
In the result, appeal is dismissed. (Order pronounced in the open Court on this 18th day of December, 2017)
Sd/- Sd/- Rajpal Yadav N.K. Billaiya (Judicial Member) (Accountant Member) Ahmedabad, the 18th day of December, 2017 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order E COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad