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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI B.R.BASKARAN, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri Ajit Kumar Jain & Ms. Radhika Thakkar Department by: Shri Manjunatha Swamy सुनवाई क" तार"ख / Date of Hearing: 04.04.2016 घोषणा क" तार"ख /Date of Pronouncement:15.07.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:
This is an appeal filed against the order dated Nil received by the assessee on 13.03.2014 passed by the Commissioner of Income Tax - 3, Mumbai [hereinafter referred to as the “CIT”] relevant to the A.Y.2008-09. A.Y.2008-09
The assessee has raised the following grounds:-
“1. The learned CIT erred in concluding that the learned Assessing Officer (learned AO) had not applied his mind and had failed to make enquiry with respect to the allowability of the claim for provision for discount of Rs.1,05,94,855/-, without considering the fact that this issue was examined and adjudicated by the learned AO during the course of the assessment proceedings, thereby exceeding his jurisdiction under the provisions Section 263 of the Act.
2. The learned CIT erred in disallowing the provision for discount of Rs.1,05,94,855/- under the provisions of Section 37(1) of the Act.
3. The learned CIT erred in disallowing the provision for leave encashment of Rs.18,81,377/- under Section 43B of the Act, although the validity of the said provision has been struck down by the Calcutta High Court in the case of Exide Industries Ltd. & Anr (292 ITR 470) and is now pending before the Honourable Supreme Court.”
The brief facts of the case are that the regular assessment of the A.Y.2008-09 was completed on 10.02.2012 u/s.143(3) of the Income Tax Act, 1961 ( in short “the Act”) determining total income to the tune of Rs.11,04,65,510/- as against declared total income of Rs.54,80,768/-. The Commissioner of Income Tax perused the record of the assessment year of 2008-09 and came to know that the assessee company had debited the Profit & Loss Account with an amount of Rs.1,82,76,000/- towards discount and rebate under the head ‘Operating and other expenses (Sch-17)’, which included an amount A.Y.2008-09 of Rs.1,05,94,855/-, being provision made for discounts on products sold during the year. The provision was made and the actual amount was not paid. The Assessing Officer did not assess the said aspect of the assessment. It was also found that the assessee made the provision of leave encashment of Rs.18,81,377/- (as per annexure – 9 to tax audit report) which was not paid before the due date of filing of return and was of the view that the said amount was disallowable u/s.43B of the Act and required to be assess as income. Since both the aspects were not examined by the Assessing Officer, therefore by providing an opportunity of being heard to the assessee, the CIT directed the Assessing Officer to re-examine the above said issues in the interest of justice. Feeling aggrieved the assessee has filed the present appeal before us.
ISSUE NO.1 TO 3:-
All the issues are interconnected therefore are being taken up together for adjudication. Moreover these issues only lead to the controversy in connection with taken up the matter by the CIT in view of the provision u/s.263 of the Act. We have heard the arguments advanced by the learned representative of the parties and perused the record carefully. The learned representative of the assessee has argued that an amount of Rs.1,82,76,000/- was debited to the Profit & Loss account towards discount and rebate and which includes an amount of Rs.1,05,94,855/- being provision made towards scheme of A.Y.2008-09 discounts and the said scheme was invoked by issuance of credit notes and this fact was examined by the Assessing Officer, therefore, the order u/s.263 of the Act is wrong against law and facts and is liable to be set aside. It is also argued that the assessee made the provision for leave encashment of Rs.18,81,377/- during the financial year 2007-08 in accordance with law and specifically in view of the law settled in Calcutta High Court decision in the case of Exide Industries Ltd. Vs. UOI 292 ITR 470, therefore, the order u/s.263 in question is wrong against law and facts and is liable to be set aside. On the other hand the learned department has strongly relied upon the order passed by the CIT in question.
Keeping in view of the argument advanced by the parties and perusing the record carefully, it came into notice that the assessment for the A.Y.2008-09 of the assessee was completed vide order dated 10.02.2012. On appraisal of the said order we found that the Assessing Officer did not consider the provision for discount of an amount of Rs.1,82,76,000/- which includes an amount of Rs.1,05,94,855/- being provision made towards scheme of discount. It also appears on record that the provision for leave encashment of Rs.18,81,377/- was not discussed and considered by the Assessing Officer in his order dated 10.02.2012. Whether the claim of the assessee is justifiable or not is not at all discussed by the Assessing Officer on the above said points i.e. on the point of discount and A.Y.2008-09 rebate and on the point of leave encashment. In the similar situation the Hon’ble Income Tax Appellate Tribunal, Mumbai has passed the order in case of Horizon Investment Co. Ltd. in and in case of Arvee International Vs. Addl. CIT Rg 19(1) [2006] 101 ITD 495(Mum)[2006] 8 SOT 452 (Mum). It is categorically held in the above mentioned law that the assessment order passed by the Assessing Officer without due application of mind was not only erroneous but also prejudicial to interest of revenue within the meaning of section 263 of the Act. The facts and circumstances of the present case are quite similar with the above mentioned law relied by the learned representative of the department. In view of the law mentioned above, we are of the view that the CIT has passed the order u/s.263 of the Act in question correctly and judiciously which does not require to be interfere with at this appellate stage, therefore, the present appeal is ordered to be dismissed.
In result the appeal filed by the assessee is hereby dismissed.
Order pronounced in the open court on 15th July, 2016. (B.R.BASKARAN) (AMARJIT SINGH) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated :15th July, 2016 MP MP MP MP A.Y.2008-09