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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
Before: SHRI S.V. MEHROTRA : & SHRI KULDIP SINGH:
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “H” NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI KULDIP SINGH: JUDICIAL MEMBER 2552 & 2553/Del/2012 Asstt. Yrs: 2004-05, 2006-07 & 2007-08 Western India Shipyard Ltd., Vs. Income-tax Officer, Prabhakar Murmugao Harbour Ward-18(3), New Delhi Vasco, Goa. PAN: AAACW 0117 B ( Appellant ) (Respondent) Appellant by : Shri V.V. Kale CA Respondent by : Mrs. Paramita M Biswas CIT(DR) Date of hearing : 29/02/2016. Date of order : 08/03/2016. O R D E R PER S.V. MEHROTRA, A.M:
These are assessee’s appeals against different orders of ld. CIT(A)- XXI, New Delhi, relating to A.Ys. 2004-05, 2006-07 and 2007-08. All the appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.
Brief facts of the case are that the assessee, in the relevant assessment years under consideration, was engaged in the business of ship repair of its clients. The AO had made different disallowances in all the three years under consideration. The assessee’s appeal was dismissed for AY 2004-05
2 ITA 2551, 2552 & 2553/Del/2012 and partly allowed for AY 2006-07 and 2007-08. Being aggrieved the assessee is in appeal before us for all the three years under consideration.
First we take up AY 2004-05.
Sole effective ground raised is as under: “The additions made on account of disallowance of depreciation of Rs. 8,66,000/- are not justified and are not in line with facts of the case and tax provisions.
Brief facts are that the assessee had filed return of income declaring loss of Rs. 38,68,52,104/-. In course of assessment proceedings , in order to verify the depreciation claimed by assessee, the AO required the assessee to file 4 top purchase bills for addition in assets. He has observed that assessee did not file evidence for addition of following top 3 assets: S. No. Date Addition Depreciation 1 1.4.2003 14,00,000/- 3,50,000/- 2 1.4.2003 17,00,000/- 4,25,000/- 3 31.3.2004 7,28,000/- 91,000/- 8,66,000/-
As the assessee failed to furnish the relevant evidence, the AO disallowed the assessee’s claim of depreciation of Rs. 8,66,000/-.
Before ld. CIT(A) the assessee had filed written submissions on which remand report was called for by ld. CIT(A). Ld. CIT(A) has observed that in the remand report AO had attached a copy of order-sheet entry wherein vide entry dated 28.12.2006, ld. authorized representative of the assessee had agreed for the disallowance of depreciation amounting to Rs. 8,66,000/-.
3 ITA 2551, 2552 & 2553/Del/2012 8. Ld. counsel for the assessee submitted that assessee is in possession of all the original invoices and these should have been admitted as additional evidence by ld. CIT(A).
We have considered the submissions of both the parties and have perused the record of the case. Ld. counsel submitted that the shares in the assessee company are held by various public sector undertakings. Before ld. CIT(A) the assessee had, inter alia, submitted that it was engaged in the business of ship repair and as registered office of the company was shifted from Delhi to Goa and, accordingly, all the records were also shifted to Goa. Therefore, all the invoices regarding additions to the fixed assets were kept with the assessee company in Goa and were received in the office exactly on the same date on which the assessment order was passed by the AO. Under such circumstances, the invoices filed by assessee before ld. CIT(A) should have been admitted.
Be that as it may, we restore this matter to the file of ld. AO to examine purchase invoices to be produced by assessee before him and if the same are found to be in order, then AO will allow the assessee’s claim for depreciation. We order accordingly.
In the result, assessee’s appeal is allowed for statistical purposes.
In the result is allowed for statistical purposes.
ITA no. 2552/Del/2012 (AY: 2006-07):
Sole effective ground raised is as under:
4 ITA 2551, 2552 & 2553/Del/2012 “The additions made of leave encashment expenses Rs. 1699606/-, provision for bonus Rs. 957107/-, VAT Rs. 4812269/-, Unconfirmed sundry creditors Rs. 3359061/- are not justified and are not in line with facts of thecase and tax provisions”.
The assessee had filed revised return of income on 15.2.2007 declaring total loss of Rs. 95,60,975/-. The assessment was completed at a total income of Rs. 12,67,068/- after making following additions:
Leave encashment Rs. 16,99,606/- Provision for bonus Rs. 9,57,107 Value added tax (VAT) Rs. 48,12,269/- Unconfirmed sundry creditor balance Rs. 33,59,061
Ld. CIT(A) partly allowed the assessee’s appeal.
Being aggrieved the assessee is in appeal before us.
Brief facts apropos disallowance of leave encashment expenses are that AO made addition of Rs. 16,99,606/- towards leave encashment expenses, which had not been paid during the year as per the requirement of section 43B.
Ld. CIT(A) confirmed the addition, inter alia, observing that vide letter dated 23.12.2008 the assessee itself offered this amount for taxation. Ld. CIT(A) further observed that as per the provision of section 246(1), assessee can file appeal if it is aggrieved by action of AO as per provision of the Act but in the present case assessee had agreed for this addition.
5 ITA 2551, 2552 & 2553/Del/2012 19. Ld. counsel submitted that addition had been made on the basis of tax audit report, which was finalized on 2.9.2006, whereas the return of income was filed on 30.10.2006. He referred to Annexure 1 of the paper book, filed in the course of hearing, wherein the statement of total income is contained and pointed out that assessee wrongly mentioned bonus as against leave encashment in the said computation. He submitted that the amount paid up to due date of filing of return has to be allowed.
We have considered the submissions of both the parties. As far as ld. CIT(A)’s observations based on provisions of section 246(1) are concerned, we do not find any merit in the same because, in any view of the matter, a wrong concession by assessee’s representative on law cannot bind assessee. There is no estoppel against law. There cannot be any dispute with the submission of ld. counsel for the assessee that to the extent the liability towards leave encashment has been discharged up to 30.10.2006, the same has to be allowed to assessee. However, the main grievance of assessee appears to be that once it had made the disallowance in statement of total income filed by it, no separate disallowance could be made by AO again on the basis of non-payment of the dues towards leave encashment as it would amount to double disallowance.
We are of the opinion that the facts need to be examined by AO and to the extent the payment has been made up to 30.10.2006, the same is to be allowed and the balance is to be disallowed if assessee has not suo moto disallowed while computing its income.
6 ITA 2551, 2552 & 2553/Del/2012 22. Apropos addition of Rs. 9,57,107/-, on account of provision for bonus on the ground of disallowance u/s 43B on account of non-payment, which were confirmed by ld. CIT(A), the submission is that the bonus payment of Rs. 26 lacs were fully paid between the period of tax audit report and date of filing of income-tax return.
Having heard both the parties, we restore this issue also to the file of AO to examine the assessee’s claim regarding entire bonus amount of Rs. 26 lacs being fully paid by it before the due date of filing of return. In case the claim is found to be correct, then no addition is called for.
Apropos the issue relating to addition on account of value added tax (VAT), the assessee’s claim was disallowed by AO and the action of AO has been confirmed by ld. CIT(A). The assessee’s claim is that no VAT amount was routed through the revenue account./ VAT on sales was being shown as VAT liability in balance sheet and VAT on purchases was adjusted against VAT liability. Therefore, no disallowance could be made on account of non- payment of VAT u/s 43B as assessee had not claimed this expenditure.
Ld. DR submitted that in view of the decision of Hon’ble Supreme Court in CIT Vs. Chowringhee sales Bureau Pvt. Ltd., VAT, whether routed through P&L a/c or not, is to be treated as trading receipt and, accordingly, it could be allowed as deduction u/s 43B if the payment was made else it is to be added to assessee’s total income.
7 ITA 2551, 2552 & 2553/Del/2012 26. Having heard both the parties, we find considerable force in the submission of ld. DR that merely because the assessee had routed a trading receipt through balance-sheet, will not change the true nature of receipt in assessee’s hands and, therefore, if the assessee failed to deposit the VAT in time, in terms of section 43B, then the disallowance is called for. Accordingly, this ground is dismissed.
Brief facts apropos the addition made of Rs. 33,59,061/- on account of unconfirmed sundry creditor balance of M. Pallonji & Co., are that outstanding balance in respect of M. Pallonji & Co. as on 31.3.2006 was shown at Rs. 1,56,15,445/- and in AY 2005-06 at Rs. 1,22,56,384/-. As the assessee failed to furnish the confirmation from the creditor the AO made the addition of Rs. 33,59,061/-.
Ld. CIT(A) upheld the addition as similar addition took place in AY 2005-06, which was not challenged by assessee before ld. CIT(A).
Ld. counsel submitted that during assessment proceedings the assessee had produced copy of ledger, related bills and payment proof before AO. However, since confirmation was not available, the case being before the High Court, the assessee could not produce the confirmation. However, the assessee had produced copy of High Court’s order before ld. CIT(A) confirming the amount outstanding in the books of a/c of the parties and assessee. Ld. counsel submitted that since the identity of sundry creditor was established and difference in balance was properly explained and, therefore, there was no reason to disallow and add back the amount to the assessee’s income.
Ld. counsel further submitted that copy of reconciliation statement with the party’s acknowledgment and confirmation was filed. Copy of 8 ITA 2551, 2552 & 2553/Del/2012 settlement/ agreement executed before Hon’ble High Court was also filed. Ld. counsel referred to these documents in the paper book.
Ld. DR submitted that the matter may be restored back to the file of AO for examining these details.
We have considered the submissions of both the parties and have perused the record of the case. The identity of party cannot be in dispute because the dispute was lying before Hon’ble High Court, in which the dispute was settled on the basis of consent terms agreed before the Hon’ble High Court of Bombay in company’s petition no. 3 of 2009, a copy of which has been filed in paper book. Under such circumstances, when the difference in balance was also duly explained by assessee by filing the reconciliation statement, a copy of which has been filed in paper book, there was no reason to make the addition on account of unconfirmed creditors. In view of above, this ground is allowed.
In the result, assessee’s appeal is partly allowed. for AY 2007-08:
Sole effective ground raised is as under:
“The additions made on account of Value Added Tax (VAT) Rs. 45,01,200/-, Unconfirmed balance of sundry creditors Rs. 1,13,80,341/- are not justified and are not in line with facts of the case and tax provisions”.
Apropos addition on account of nonpayment of VAT, the AO made the addition of Rs. 45,01,200/- on account of nonpayment of VAT upto the filing of income-tax return. In appeal, ld. CIT(A) confirmed the action of AO by observing that VAT. In AY 2007-08 we have rejected the assessee’s claim by observing that if the assessee failed to deposit the VAT in time, in 9 ITA 2551, 2552 & 2553/Del/2012 terms of section 43B, then the disallowance was called for. For the very same reasons herein also we find no force in the submission of assessee. Ground is dismissed.
Apropos addition of Rs. 1,13,80,341/- on account of Unconfirmed balance of sundry creditors, we find that the AO made addition on account of difference in balance of M. Pallonji & Co. for the year ended 31.3.2007 and 31.3.2006. While dealing with assessee’s appeal for AY 2006-07 we have allowed assessee’s claim on this count by observing that since the difference in balance was also duly explained by assessee by filing the reconciliation statement, there was no reason to make the addition on account of unconfirmed creditors. Therefore, for the very same reasons herein also we allow the claim of assessee on this count.
In the result, assessee’s appeal is partly allowed.
In the result, & 2553/Del/2012 are partly allowed. Order pronouncement in open court on 08/03/2016.