M/S PUNJAB AGRO INDUSTRIES CORPORATION LTD.,CHANDIGARH vs. ACIT, CHANDIGARH

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ITA 782/CHANDI/2009Status: DisposedITAT Chandigarh05 April 2018AY 2006-074 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal found that the issues were covered by its previous decision in the assessee's own case for other assessment years. The Tribunal had previously held that since the assessee followed a cash system of accounting for receipts, related expenditures could not be allowed on an accrual basis.

What were the facts?

The assessee appealed against the CIT(A)'s orders upholding additions to its income. The grounds of appeal related to the disallowance of business expenses, including interest paid to the State Government, and the calculation of book profit under Section 115JB.

What were the issues?

Whether interest paid to the State Government is an admissible deduction when the assessee follows a cash system of accounting for receipts but claims expenses on an accrual basis. The issue also involved the calculation of book profit under Section 115JB.

Which sections of the Income-tax Act were involved?

Section 145,Section 115JB,Section 36(1)(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI SANJAY GARG & DR. B.R.R. KUMAR

For Respondent: Smt. Anita Sinha, CIT-DR
Hearing: 05.04.2018Pronounced: 05.04.2018

Per Sanjay Garg, Judicial Member:

The captioned appeals have been preferred by the assessee

against the separate orders of the Commissioner of Income Tax

[hereinafter referred to as CIT(A)]-Chandigarh dated 26.09.2009 &

28.11.2008 respectively.

ITA Nos.782 & 5/Chd/2009- Punjab Agro Industries Corpn Ltd, Chandigarh 2

2.

At the outset, Ld. Counsel for the assessee submitted that

identical grounds have been taken in both the appeals. For the sake

of convenience, the grounds have been taken from ITA No.

782/Chd/2009, which read as under:- 1. That the Ld. CIT(A) has erred in law and on facts in upholding addition of Rs. 198275/-. The judgement reported in 286 ITR has been misplaced.

2.

That the Ld. authorities below have completely ignored or intestinally by passed to take cognizance of the nature of the business of appellant and thereby upholding the disallowance of business expenses including interest of Rs. 1,14,00,000/- paid to State Government Expenses as well as interest are clearly an admissible deduction.

3.

The addition sustained are against the statutory provision of section 36(12) of the Income-tax Act, 1961.

3.

The Ld. Counsel for the assessee, Shri Maninder Arora has

been fair enough to state at bar that all the issues taken vide above

grounds of appeal are squarely covered by the decision of the

Tribunal vide common order dated 22.9.2016 in appeals relating to

the assessment years 2008-09 and 2010-11 (ITA Nos. 782/Chd/2011,

55 & 849/|Chd/2013) in the own case of the assessee.

4.

We have gone through the order of the Tribunal dated

22.9.2016 and find that the issue relating to the disallowance of

interest which has been paid to Punjab Government has been dealt

with by the Tribunal in paras 4 to 6 of the order and the Tribunal in

para 6 of the order, decided the issue against the assessee, observing

as under:-

ITA Nos.782 & 5/Chd/2009- Punjab Agro Industries Corpn Ltd, Chandigarh 3

“6. After considering rival submissions, we are not inclined to interfere with the impugned order. The Ld. Counsel of the assessee admitted that assessee is a company who is following cash system of accounting in respect of receipts from various projects. He has also admitted that related expenditures are, however, claimed deduction on accrual basis. The provisions of section 145 (1) of the Act are, therefore, clearly applicable in the case of the assessee because income under the head ‘profit and gains of business or profession’ is to be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The assessee is following cash system of accounting regularly in respect of all the interest amount, therefore, the related expenditure cannot be allowed on accrual basis.”

5.

Further, the issue regarding the calculation of book profit u/s

115JB of the Act has been discussed by the Tribunal in paras 6(i) to

7, which for the sake of reference are reproduced as under:-

“6(i) Further, as regards calculation of book profit u/s 115JB, the Ld. CIT(Appeals) has given same reasoning and confirmed the addition. During the course of arguments, Ld. Counsel for the assessee was not able to point out any infirmity in the order of Ld. CIT(Appeals) in dismissing the appeal of the assessee. 7 Since assessee’s counsel is not able to make out any case for the assessee, therefore, we do not propose to interfere with the orders of the authorities below. The appeal of the assessee, therefore, stands dismissed.”

ITA Nos.782 & 5/Chd/2009- Punjab Agro Industries Corpn Ltd, Chandigarh 4

6.

In view of this, since the Ld. Counsel for the assessee has fairly admitted that the issues are covered by the aforesaid decision of the Tribunal against the assessee, hence, both the appeals filed by the assessee are hereby dismissed. Order pronounced in the Open Court.

Sd/- Sd/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 05.04.2018 Rkk Copy to: • The Appellant • The Respondent • The CIT • The CIT(A) • The DR

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