Income Tax Appellate Tribunal - Ahmedabad
Gujarat Borosil Ltd.,, Bharuch vs Department Of Income Tax on 3 May, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, AHMEDABAD
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'डी' अहमदाबाद
(BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARAT, J.M.)
( ी अ नल चतव
ु द
, लेखा सद!य एवं ी कुल भारत, या यक सद!य के सम% ।)
ITA No. 1931/Ahd/2012
(Assessment Year: 2009-10)
Deputy Commissioner of Income Vs. Gujarat Borosil Limited,
Tax, Bharuch Circle, Bharuch Village - Govali, Tal.
Jhagadia, Ankleshwar
Rajpipla Road, Dist.
Bharuch 393110
PAN No. AAACG8440M
(Appellant) (Respondent)
Appellant by : Shri Keyur Patel, Sr. D.R.
Respondent by : Shri Sunil Talati, A.R.
Date of hearing : 07-04-2016
Date of Pronouncement : 03-05-2016
(आदे श)/ORDER
PER ANIL CHATURVEDI, ACCOUNTANT MEMBER
This appeal filed by Revenue is against the order of CIT(A)-VI, Baroda, dated 27.02.2012 for the assessment year 2009-10.
2. The relevant facts as culled out from the materials on record are as under:
3. The assessee is a company stated to be engaged in the business of manufacturing of glass sheets. The assessee electronically filed its return of ITA No.1931/Ahd/12 A.Y. 2009-10 (DCIT vs. Gujarat Borosil Ltd.) 2 income for A.Y. 2009-10 on 26.09.2009 declaring total income at Rs.9,53,12,992/-. The case was selected for scrutiny and thereafter, the assessment was framed u/s.143(3) of the Act vide order dated 28.12.2011 and the total income was determined at Rs.14,56,32,809/-. Aggrieved by the order of Assessing Officer, Assessee carried the matter before the ld. CIT(A) who vide order dated 27.06.2012 (in Appeal No. CAB/(A)VI-467/11-12) granted partial relief to the assessee. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us and has raised the following ground :
"1. On the facts and in the circumstances of the case and in law.
(i) the Ld. CIT(A) erred in law in deleting the disallowance of Rs.4,04,19,672/- u/s 43B of the Act disregarding the fact the assessee was following the mercantile system of accounting and assessee had claimed deduction u/s 43B of the Act without treating the same as actual liability in its books of account on the ground that liability gets accrued on getting notice of demand from the concerned authorities."
4. During the course of assessment proceedings, A.O. noticed that assessee had claimed Excise Duty of Rs.4,04,19,762/- which included payments for various periods prior to the impugned assessment year and demand was shown as recoverable in the Balance Sheet. The A.O. was therefore of the view that Excise Duty liability did not accrue during the year and since, assessee was following mercantile system of accounting, deduction u/s.43B of the Act was allowable in the year of payment if the liability accrued during the previous year. He also noted that on similar facts in asseessee's own case for A.Y. 2008-09 the deduction u/s.43B of the Act was disallowed by his predecessor. He therefore disallowed Res.4,04,19,762/- u/s.43B of the Act.
5. Aggrieved by the order of A.O., assessee carried the matter before ld. CIT(A) who deleted the addition by holding as under:
ITA No.1931/Ahd/12 A.Y. 2009-10 (DCIT vs. Gujarat Borosil Ltd.) 3"5.2 I have considered the facts of the case as well as the observation of the AO and the arguments put forth by the AR of the appellant. On the basis of decisions of Hon'ble Supreme Court in the cases of Kedarnath Jute Mfg. Co. 82 ITR 363 and CIT v/s Bharat Carbon & Ribbon Mfg. Co. Pvt. Ltd. 239 ITR 505 it is very clear that in the case of appellant excise duty liability accrued when the demand for the same was raised by the concerned officer notwithstanding the fact that the liability was disputed by the appellant. It is also clear from the decision in the case of CIT v/s Bharat Carbon & Ribbon Mfg.Co.Pvt.Ltd. 239 ITR 505 that treatment given in the books of account of the appellant is not relevant for allowability of deduction under IT Act. In fact, facts of the case of the appellant are identical to those in the case of CIT v/s Bharat Carbon & Ribbon Mfg.Co.Pvt.Ltd. referred to above. Since the appellant has paid amount of Rs.4,04,19,672/- towards excise duty during the year it was entitled to deduction of the said amount u/s 43B of the IT Act. Disallowance of Rs.4,04,19,672/- made by the AO is hereby deleted."
6. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us.
6.1 Before us, ld. D.R. supported the order of A.O. Ld. A.R. on the other hand reiterated the submissions made before the A.O. and ld. CIT(A) and further submitted that on identical facts in assessee's own case for A.Y. 2008-09, Revenue had preferred appeal before the Tribunal. The Tribunal vide its order dated 07.12.2015 in ITA No.2463/Ahd/2012 dismissed the appeal of Revenue. He pointed to the relevant finding of Tribunal. He therefore submitted that since the A.O. has also admitted that the facts of the case in the year under appeal are identical that of A.Ys. 2008-09 and since for A.Y. 2008-09, the matter has already been decided in favour of assessee, no interference to the order of ld. CIT(A) is called for. He thus supported the order of ld. CIT(A).
7. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to deleting the disallowance made u/s.43B of the Act. We find that ld. CIT(A) while deciding the issue in favour of assessee has given a finding that the amount of excise duty paid by the assessee was eligible for deduction in view of the decisions cited in his order. We also find that A.O. in his order has noted that the facts in the impugned year are ITA No.1931/Ahd/12 A.Y. 2009-10 (DCIT vs. Gujarat Borosil Ltd.) 4 similar to that of A.Y. 2008-09. We further find that the Co-ordinate Bench in assessee's own case for A.Y. 2008-09, while deciding the appeal of Revenue has decided the issue in favour of assessee by holding as under:
"3.4 We have considered the rival submissions and perused the material on record. We find that a refund of Rs.3.71crore was adjusted against the demand raised of Rs.4.55crore by the Excise Department which means that the demand raised by the department stands discharged to the extent of Rs.3.71 crore. We note that the order passed by the CIT(A) had taken into consideration all the issues raised concerning the all the material aspects of the case and clear cut finding was given that assessee was entitled to the said deduction u/s.43B of the Act on the payment basis and further held that the demand raised was not on account of penalty as claimed by the A.O.but was a routine demand. We are in full agreement with CIT(A) on this point. The assessee has also given note in the "notes to accounts" to the annual account mentioning the facts qua the said demand raised by the Excise Department and adjustment of refund of Rs.3.71Crore against that demand though not accounted for in the books of accounts. The Hon'ble Supreme Court in the case of CIT vs. Bharat Carbon And Ribbon Manufacturing Co. Pvt. Ltd. (1999) 239 ITR 505 while following its earlier decision in case of Kedarnath Jute Manufacturing Co. Ltd. vs. CIT 82 ITR 363 has held that the liability accrues over the accounting period because of the Demand notices issued by the excise department and obligation to pay excise duty arose on that stage. The court further held that raising of the dispute by the assessee by filing writ petition for quashing of deduction of that liability would not be a ground for holding that liability to pay excise duty as per demand notice was not incurred. The Court also referred to the decision of Kedarnath Jute to hold that irrespective of the fact that the liability was not accounted for in the books, it was deductible under mercantile system of accounting when liability has accrued. Therefore, once the company makes the payment, whether under protest or otherwise, by debting Profit & Loss account or by showing in the Balance Sheet or as contingent liability the same will be available as deduction u/s43B on making payment. Further, in the case of Glaxo Smithline Consumer Healthcare Ltd.ITA No.343/Chandigarh/2005, the five members Special Bench of ITAT, Chandigarh, it
has been held that the Section 43B is not restrictive of prohibiting section by the Revenue but it is equally an enabling provision under which deductions are allowed on the payment of duties and taxes. In other words, the provision of Section 43B overrides the method of accounting consistently followed and provides for the deduction of statutory liabilities in the year of payment irrespective of the year in which the liability is incurred. The case of the assessee is squarely covered by the ratio laid down in the various decisions discussed above and by respectfully following these decisions, we dismiss the appeal of the Revenue on this point."
7.1 Before us, Revenue has not placed any contrary binding decision in its support. We therefore relying on the decision of the Co-ordinate Bench in ITA No.1931/Ahd/12 A.Y. 2009-10 (DCIT vs. Gujarat Borosil Ltd.) 5 assessee's own case for A.Y. 2008-09, find no reason to interfere with the order of ld. CIT(A). Thus, this ground of Revenue is dismissed.
8. In the result, the appeal of Revenue is dismissed.
Order pronounced in Open Court on - 04 - 2016.
Sd/- Sd/-
(KUL BHARAT) (ANIL CHATURVEDI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated /04/2016
S K Sinha
Order Pronounced on 03/05/2016
Sd/- Sd/-
SKY AC
(JM) (AM)
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad
1.Date of dictation 07.04.2016
2.Date on which the typed draft is placed before the Other Member 12-04-2016
3.Date on which the approved draft comes to the Sr.P.S./P.S.
4.Date on which the fair order is placed before the Dictating Member for pronouncement
5.Date on which the fair order comes back to the Sr.P.S./P.S
6.Date on which the file goes to the Bench Clerk
7.Date on which the file goes to the Head Clerk.............
8.The date on which the file goes to the Asstt. Registrar for signature on the order........................
9.Date of Despatch of the Order............