Income Tax Appellate Tribunal - Mumbai
Colour Chem Ltd ( Now Known As Clariant ... vs Department Of Income Tax on 28 November, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH: MUMBAI
BEFORE SHRI P M JAGTAP, ACCOUNTANT MEMBER
AND SHRI R S PADVEKAR, JUDICIAL MEMBER
ITA No 1183/Mum/2009
(Assessment Year: 2002-03)
DCIT-1(1), Vs M/s Colour Chem Ltd (Now known
Room No 579, as Clariant Chemicals (India) Ltd),
Aayakar Bhavan, Ravindra Annexe, 194, Churchgate
Mumbai-400 020 Reclamation,
Mumbai -400 020
PAN: AAACC 5602 P
Appellant Respondent
Appellant by: Shri Virendra Ojha
Respondent by: Shri Farook Irani
ORDER
PER P M JAGTAP, ACCOUNTANT MEMBER
This appeal is preferred by the revenue against the order of Learned CIT (A) -I Mumbai dated 28.11.2008 and in the solitary ground raised therein, the revenue has challenged the action of the Learned CIT (A) in deleting the addition of Rs 47,38,741/- made by the Assessing Officer on account of disallowance of assessee's claim for deduction towards leave encashment on payment basis.
2. The assessee in the present case is a company which filed its return of income for the year under consideration on 20.10.2002 declaring a total income of Rs 12,23,61,990/-. The said return was subsequently revised by the assessee-company and in the assessment originally completed u/s 143(3) vide an order dated 23.3.2005, the total income of the assessee-company was determined by the Assessing Officer at Rs 11,34,50,360/-. Subsequently, it was noticed by the Assessing Officer from the note attached to the computation of total income that deduction claimed by the assessee on account of Leave Encashment amounting to Rs 47,38,741/- on payment basis was allowed in the assessment completed u/s 143(3). He also noted that provision for the said amount was made by the assessee in the 2 ITA 1183/M/2009 M/s Colour Chem Ltd Now known as Clariant Chemicals (India) Ltd earlier years, which was already allowed as deduction in the assessments completed for the said years. According to the Assessing Officer, the subsequent payment made on account of leave encashment in the year under consideration therefore was required to be adjusted against the provision created in the earlier years in view of Explanation 3B to section 43B and since no such adjustment was made in the assessment completed u/s 143(3) while allowing assessee's claim for deduction on account of leave encashment on payment basis, the Assessing Officer was of the opinion that there was under assessment of assessee's income to the extent of Rs 47,38,741/-. He, therefore, reopened the said assessment by issuing notice u/s 148 after recording the reasons. In the reassessment completed u/s 147 r w s 143(3) the amount of Rs 47,38,741/- was added by the Assessing Officer to the total income of the assessee by disallowing its claim for deduction on account of leave encashment on payment basis holding that deduction for the said amount was already allowed to the assessee in the earlier years on the basis of provisions made.
3. Against the order passed by the Assessing Officer u/s 143(3) r.w.s. 147, an appeal was preferred by the assessee before the Learned CIT (A) and it was submitted on its behalf before Learned CIT (A) that the provision made on account of leave encashment in the earlier years, in fact, had been disallowed and added back in the computation of income and, therefore, there was no question of adjustment of any provision against the actual payment of leave encashment made in the year under consideration. This contention of the assessee was found acceptable by the Learned CIT (A) and he deleted the addition of Rs 47,38,741/- made by the Assessing Officer holding the same to be unfounded. Aggrieved by this relief allowed to the assessee by the Learned CIT (A), the revenue has preferred this appeal before the Tribunal.
4. We have heard the arguments of both the sides and also perused the relevant material on record. The Learned Counsel for the assessee at the outset has submitted that although the Learned CIT (A) has deleted the addition of Rs 47,38,741/- made by the Assessing Officer on the ground that the said amount was not allowed to the assessee in earlier years on the basis of provisions made, the 3 ITA 1183/M/2009 M/s Colour Chem Ltd Now known as Clariant Chemicals (India) Ltd assessee is not in possession of the relevant documentary evidence to establish that the provision made for leave encashment in the earlier years had been disallowed and added back in the computation of total income. He has urged that this matter may, therefore, be sent back to the Assessing Officer to verify the factual position from the relevant record. As the Learned Departmental Representative has no serious objection in this regard, we set aside the impugned order of Learned CIT (A) on this issue and restore the matter to the file of the Assessing Officer to decide the same afresh after verifying the factual position from the relevant record. If it is found on verification that the provision on account of leave encashment in the earlier years was disallowed and added back to the total income of the assessee, the Assessing Officer is directed to allow the claim of the assessee for deduction on account of leave encashment on payment basis to that extent.
5. In the result, the appeal of the revenue is treated as allowed for statistical purposes.
Order Pronounced in the Open Court today on the 6th day of January 2010.
Sd/- Sd/-
(R S PADVEKAR) (P M JAGTAP)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Date: 6th January 2010
Copy to:-
1) The Appellant.
2) The Respondent.
3) The CIT (A) -I Mumbai.
4) The CIT-I, Mumbai.
5) The D.R. "C", Bench, ITAT, Mumbai.
By order
/ / True Copy / /
Asstt. Registrar
Chavan* I.T.A.T., Mumbai
4 ITA 1183/M/2009
M/s Colour Chem Ltd
Now known as Clariant Chemicals (India) Ltd
Sr.N. Episode of an order Date Initials Concerned
1 Draft dictated on 21.12.09 Sr.PS
2 Draft placed before author 22.12.09 Sr.PS
3 Draft proposed & placed before the second Member JM/AM
4 Draft discussed/approved by Second Member JM/AM
5 Approved Draft comes to the Sr.PS Sr.PS
6 Kept for pronouncement on Sr.PS
7 File sent to the Bench Clerk Sr.PS
8 Date on which file goes to the Head Clerk
9 Date of dispatch of Order