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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI
Before: SH. VIJAY PAL RAO & SH. O.P. KANT
Appellant by Smt. Anima Barnwal, Sr. DR Respondent by Sh. B.S., Sawhney, CA Date of hearing 23.12.2015 Date of pronouncement 24.02.2016 ORDER PER O.P. KANT, A.M.: This appeal by the Revenue is directed against the order dated 01.08.2012 of ld. CIT(A)-XI, New Delhi, passed for the assessment year 2004-05. The grounds of appeal raised by the Revenue are as under:
1. In the facts and circumstanced of the case, the ld. Cit(A) erred in deleting the addition of Rs. 84,90,628/- made by the Assessing Officer on accounts of “Refunds/Claims.”
2. The appellant craves, leave or reserving the right to amend modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.”
2. The facts in brief are that the original return of income was filed on 28.10.2004 declaring total income of Rs. 48,50,895/-. The Assessment under Section 143(2) of the Income-tax Act, 1961 (for short “the Act”) was completed on 13.12.2006 at a total income of Rs. 93,83,000/- under normal provisions of the Act and under Section 115JB was computed at Rs. 5,65,12,680/-. As the tax payable under Section 115JB of the Act was more than the tax payable under normal provisions of the Act, the tax demand was raised as per the provisions of the 115JB of the Act. Subsequently, a notice under Section 148 of the Act was issued on 29.03.2011 after recording reasons for reopening of assessment. In the course of re-assessment proceedings, the ground of reopening related to not adding excise duty to total turnover was found to be explained and accepted by the Assessing Officer. However, in respect of the another issue of income of Rs. 84,90,628/- accrued on account of refund/claim, the Assessing Officer stated that the assessee failed to substantiate its claim with any supporting documentary evidence and, therefore, he added the said amount as income of the assessee. Aggrieved, the assessee filed an appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee narreted the entire procedure of making entries in respect of ‘DEPB’, ‘insurance claim’, ‘excise duty recoverable’ etc. and submitted that once income already credited at the stage of receivable, the assessee was not required to again include the said income on realization. The ld. CIT(A) accepted the submissions of the assessee and allowed the ground of the assessee. Aggrieved, the Revenue is before us.
3. Ld. Sr. DR relying upon the order of the Assessing Officer submitted that the income was not correctly shown by the assessee, whereas the ld. AR relied CIT(A) and submitted that the income was duly declared as per law of consistent method of accounting in respect of refund/claim.
We have heard the rival submissions and perused the material on record. The addition of Rs. 84,90,638/- was consisting of DEPB receivables of Rs. 33,24,812/-, DEPB in hand Rs. 46,20,807/- and excise duty on export of refundable of Rs. 6,59,677/-. There was negative balance of Rs. 91,806/- and Rs. 22,862/- in respect of claim from insurance recoverable and others respectively. The assessee in its submission before the ld. CIT(A) has fully narreted the entries passed in respect of refund/claim. In our opinion, as per the accounting method followed, the assessee has already shown the income in respect of the refunds and claims at the stage of accrual and, therefore, the same cannot be again added, in view of the consistent method of accounting followed by the assessee in respect thereof. The relevant findings of the ld. CIT(A) are as under: “The appellant had shown the refund claims in the previous year amounting to Rs.2,03,52,148/- and the difference of the previous year and the current year was what the AO added back. The AO in the order has not stated whether this was an amount which should have been shown as the appellant’s income and was not shown as such or this was a deduction wrongly claimed by the appellant. The appellant has not debited this amount to the P&L a/c, and had not claimed this as a deduction. Therefore the AO could not have added back an amount which was never claimed as a deduction. The appellant states that the amount of Rs.1, 18,61,520/- has already been accounted for as its income on accrual basis. Since this amount has already been accounted for as the income of the appellant, therefore, addition of this account again does not arise. The appellant stated that the refund claim amounting to Rs.1,18,61,520/- which has been shown as an asset in the balance sheet consisted of the following:- S. No. Particulars As on As on Increase/decrease 31.03.2004 31.03.2003 1. DEPB Receivables 94,37,056 61,12,244 33,24,812 2. DEPB in Hand 57,80,482 11,59,675 46,20,807 3. Insurance Claim 32,852 1,24,658 -91,806 recoverable 4. Excise Duty on 51,01,758 44,42,081 6,59,677 Export Refundable 5. Others 0 22,862 -22,862 Total 2,03,52,148 1,18,61,520 84,90,628 The DEPB was an incentive given by the Central Govt. against exports made by the entrepreneur, DEPB license could be for payment of customs duty or could be sold in the open market. The appellant stated that the following entries are passed against export sales during the month. Dr. DEPB Receivable (with account of DEPB due) Cr. DEPB Income (with account of DEPB due) The above entries are passed on completion of export sales as the income gets accrued at that time. The amounts are shown as income on accrual basis. The appellant states that it has been consistently following this method of accounting. The addition of Rs. 84,90,628/- is therefore deleted. The ground of appeal
is ruled in favour of the appellant.”
5. In our opinion, the finding of the ld. CIT(A) on the issue in dispute are well reasoned and no interference is required. Accordingly, we dismiss the ground of the appeal.
6. In the result, the appeal filed by the Revenue is dismissed. The decision is pronounced in the open court on 24th February, 2016.