Mato Industries, New Delhi vs Assessee

01.03.2012 in appeal no. 121 / 2011-012 for assessment year 2007-

08. 2 ITA NO. 2904/ Del/2012

2. Although the assessee has raised as many as 6 grounds in

this appeal but except following grounds, other grounds have not

pressed and therefore ground no. (i), (ii), (iv), (vi) are dismissed as

not pressed and remaining ground no. (iii) and (v) read as under :-

"(iii) Whether on the facts and in the circumstances of the case and in law, the Ld. Assessing Officer was justified in applying the provisions of section 145A of the Income-tax Act, 1961 when the trading addition has been made by applying G.P. on estimated sales?

(v) Whether the provisions of section 40(a)(ia) applying to payments made to residents during the year or the amounts standing as payable in the Balance Sheet?

The Ld. Assessing Officer has applied the provisions of section 40(a)(ia) to the amounts which have been paid during the year."

3. Briefly stated, the facts giving rise to the present appeal are that

the assessee is a partnership concern, deriving income from

manufacturing excisable auto part bushes and engaged in trading of

the same goods. The assessee has filed its Income Tax Return for

the year under consideration on 1.11.2007 declaring an income of

Rs. 6,89,863/- . Subsequently, the case was selected for scrutiny

and during the course of assessment proceedings, the assessing

officer raised various issues and made certain additions in regard to 3 ITA NO. 2904/ Del/2012

the trading addition, under valuation of closing stock, addition u/s

145(A) of the Act , professional charges, ISO certificate expenses,

telephone expenses, car expenses, excess depreciation claimed on

the subsidy amount and finalise the assessment at total income of

Rs. 10,38,180/- as against the aforesaid return income.

4. Being aggrieved by the above assessment order the

assessee preferred appeal before CIT(A) it was partly allowed

deleting the certain additions but the assessee was again aggrieved

by the impugned order of the First Appellate Authority i.e. CIT(A)

which upheld the additions made by AO u/s 145A of the Act and u/s

40(a)(ia) of the Act with the grounds as reproduced above and

pressed by the assessee before this tribunal.

5. Ground no. (iii) :- The Ld. Counsel of the assessee

submitted that the issue is covered in favour of the assessee by the

decision of Hon'ble High Court of Delhi in the case of CIT Vs. SVP

Industries Ltd. in ITA No. 495/ 2013 dated 03.09.2014. The Ld. DR

fairly accepted , the issue is squarely covered in favour of the

assessee by the said decision of Hon'ble High Court. 4 ITA NO. 2904/ Del/2012

From perusal of the decision of Hon'ble High Court (Supra) we

note that the issue has been decided against the revenue in favour of

the assessee with following observations and conclusion :-

"10. Commissioner of Income Tax (Appeals), on examination of the issue, had rightly held that a sper the respondent-Assessee, the excise duty was payable at the time of removal of goods and not at the time of manufacture and on the last date of the accounting year, the goods were lying in the bonded warehouse and the duty would be payable only at the time of unbonding. Thus, the contention of the respondent- Assessee was that neither excise duty was paid nor the duty was incurred. Further, the duty had not been included and did not form part of the cost as it was not claimed in the profit and loss account. The Commissioner of Income Tax (Appeals) therefore deleted the addition.

11. The Tribunal has affirmed the aforesaid finding and dismissed the appeal of the Revenue. There is nothing on record to show that the Revenue in the appeal preferred before the Tribunal had raised the contention that the excise duty had, in fact, become payable and had been incurred in terms of the Excise Act or the applicable rules.

12. In these circumstances, we have to hold that the decision of the Tribunal is correct and accordingly, substantial question of law mentioned above, is answered in favour of the respondent- Assessee and against the appellant-Revenue.

The appeal is accordingly disposed of. There will be no order as to costs."

5 ITA NO. 2904/ Del/2012 In view of the above, we are inclined to hold that the issue of

disallowance u/s 145 A of the act is squarely covered in favour of the

Assessee and the addition made by the AO u/s 145A of the Act is

deserve to be deleted, accordingly, ground no. (iii) of the assessee

is allowed.

6. Ground no. V :- Apropos , this ground of the assessee, the

Ld. Counsel of the assessee submitted that the Assessing Officer has

applied the provisions of Section 40 (a) (ia) of the Act to the amounts

which have been paid during the year . The Ld. Counsel, further,

pointed out that the Assessing Officer invoked provisions of Section

40 (a) (ia) of the Act for disallowing the amount of Rs. 23,100/- paid to

Shri Narender Kumar Jain on account of professional charges and

also disallowed amount of Rs. 23,248/- paid to SVP system

management for ISO certificate expenses by holding that as per

provision of section 194 J of the Act. The assessee was required to

deduct TDS at the specified rates but the assessee failed to deduct

any TDS on these payments. The Ld. Departmental Representative

pointed out the assessee did not raise this ground before CIT(A).

Therefore, the same cannot be considered that at this stage. The Ld. 6 ITA NO. 2904/ Del/2012

Counsel of the assessee submitted that this ground has raised

before CIT(A) by way of application dated 25.08.2011 but it was not

addressed and adjudicated at the time of passing the impugned

order. The Ld. Departmental Representative (DR) replied that if it is

found just and proper that the department has no serious objection is

this limited issue is restored to the file of the CIT(A) for proper

adjudication.

7. On careful consideration on above submissions of both the

sides, we note that the Ld. DR has not disputed filing of application

dated 25.08 2011 before CIT(A) raising additional ground which

includes the issue of disallowance u/s 40(a) (ia) of the Act which has

not been addressed and adjudicated. Thus, we find at appropriate to

restore the issue to the file of CIT(A) for proper adjudication as the

Assessing Officer has made certain disallowances by invoking

provisions of Section 40 (a) (ia) of the Act.

8. Accordingly, ground no. (v) of the Assessee is deem to be

allowed for statistical purposes by restoring the issue to the file of

First Appellate Authority i.e. CIT(A) for proper adjudication as per

provisions of the Act.

7 ITA NO. 2904/ Del/2012

9. In the result, appeal of the assessee is allowed on ground no.

(iii) and deem to be allowed for statistical purposes on ground no. (v).

We may also point out that other grounds of the assessee have

already been dismissed as not pressed.

Order pronounced in open court on 2nd March, 2015.

Sd/- Sd/- (G.D.Agarwal) (C.M.Garg) Vice President Judicial Member

Dated 2nd March 2015 B.Rukhaiyar

Copy forwarded to 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), New Delhi.

AR,ITAT NEW DELHI.