M/S. Hindustan Organics Chemicals Ltd v. Gangapurwala Anda. M. Badar, Jj

Shridhar Sutar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 552 OF 2015 WITHINCOME TAX APPEAL NO. 605 OF 2015WITH INCOME TAX APPEAL NO. 607 OF 2015 The Pr. Commissioner of Income Tax-4Versus M/s. Hindustan Organics Chemicals Ltd. … Appellant … Respondent ….. Mr. A. R. Malhotra a/w Mr. N. A. Kazi, for the Appellant.Mr. K. Gopal a/w Mr. Jitendra Singh, for the Respondent. ….. CORAM :S. V. GANGAPURWALA ANDA. M. BADAR, JJ. DATE : 25th JULY, 2017 P. C. : 1.The present appeals pertain to the assessment year 1999- 2000, 2004-2005 and 2003-2004, respectively. 2.The appeals filed by the Revenue are dismissed by theTribunal. 3.The appeals are filed on following grounds. 2 Income Tax Appeal No. 552 of 2015 is filed on followingquestions of law. (i)“whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal was justified indeleting the addition of 2% of the total value of rawmaterials, stores and spares in closing stock made u/s145A of the Income Tax Act, 1961 on account of directexpenses like freight, storage, etc. ?”case and in law, the Hon'ble Tribunal was justified indeleting the addition of 2% of the total value of rawmaterials, stores and spares in closing stock made u/s145A of the Income Tax Act, 1961 on account of directexpenses like freight, storage, etc. ?” (ii) “Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.30,87,586/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?”case and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.30,87,586/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?” (iii) “Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal was justified indeleting the addition of excise duty not included in thevalue of the closing stock thereby violating theprovisions of section 145A ?”case and in law, the Hon'ble Tribunal was justified indeleting the addition of excise duty not included in thevalue of the closing stock thereby violating theprovisions of section 145A ?” Income Tax Appeal No. 605 of 2015 is filed on followingquestions of law. Shridhar Sutar 3 29-itxa-552.15+.doc (i)“Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal was justified indeleting the addition of 2% of the total value of rawmaterials, stores and spares in closing stock made u/s145A of the Income Tax Act, 1961 on account of directexpenses like freight, storage, etc. ?”case and in law, the Hon'ble Tribunal was justified indeleting the addition of 2% of the total value of rawmaterials, stores and spares in closing stock made u/s145A of the Income Tax Act, 1961 on account of directexpenses like freight, storage, etc. ?” (ii) “Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.2,50,39,240/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?”case and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.2,50,39,240/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?” (ii) “Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.2,50,39,240/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?”case and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.2,50,39,240/- by relyingon the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?” Income Tax Appeal No. 607 of 2015 is filed on followingquestion of law. (i)“Whether, on the facts and in the circumstances of thecase and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.76,17,656/- by relyingof the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?”case and in law, the Hon'ble Tribunal is right inallowing the claim of the Assessee on account ofdelayed payments of P.F. And ESIC of employees'contribution amounting to Rs.76,17,656/- by relyingof the decision of Hon'ble Bombay High Court inAssessee's own case for A.Y. 2006-07 reported in 366ITR 1 ?” Shridhar Sutar 429-itxa-552.15+.doc 4.Mr. Malhotra, learned Counsel for the Appellant strenuouslycontends that two contradictory reports submitted by theAssessing Officer, wherein, in one report it was stated that theprovision for excise duty was made in the closing stock, and inother, it was also stated that the impact of non provision of exciseduty on profit of the company is nil. According to the learnedCounsel, the Commissioner (Appeals) and the Tribunal, havemainly relied on the fact that the assessee is a Public SectorCompany undertaking, whose accounts are audited by theauditors of the Comptroller & Auditor General of India. However,no effective finding could be arrived at as to whether the exciseduty was included in the closing stock. In absence of the same,Tribunal could not have deleted the addition of excise duty.Learned Counsel further submits that the Tribunal was notjustified in deleting the addition of 2% of the total value of theraw materials, stores and spares in closing stock made underSection 145A of the Income Tax Act, 1961 (for short 'the Act').The Tribunal could not have allowed the claim of the assessee onaccount of delayed payment of PF and for delayed payment ofESIC of employees' contribution. 529-itxa-552.15+.doc 5.Learned Counsel for the respondent supports the order andsubmits that as far as first two issues in Appeal No. 552 of 2015are concerned, the same are covered by the Judgment of thisCourt in the assessee's own case for the assessment year 2008-2009 bearing Income Tax Appeal No. 1574 of 2013 dated 8[th]September, 2015 and as far as the question with regard to theinclusion of the excise duty in the closing stock is concerned, theaccounting is done as per Section 145A of the Act and the auditwas done and the auditor also stated that the impact of tax is nil. 6.We have considered the submissions. 7.As far as first two issues in Appeal No.552 of 2015 areconcerned, the same are covered by the order of this Court in theassessee's own case for the assessment year 2008-2009 in IncomeTax Appeal No. 1574 of 2013 dated 8[th] September, 2015. Saidquestions are decided against the Revenue and in favour of theassessee. The same questions are raised in Appeal Nos. 605 of2015 and 607 of 2015. 8.As far as the order of Tribunal, deleting the addition ofexcise duty is concerned, the same appears to be on the basis of 29-itxa-552.15+.doc 6.We have considered the submissions. 7.As far as first two issues in Appeal No.552 of 2015 areconcerned, the same are covered by the order of this Court in theassessee's own case for the assessment year 2008-2009 in IncomeTax Appeal No. 1574 of 2013 dated 8[th] September, 2015. Saidquestions are decided against the Revenue and in favour of theassessee. The same questions are raised in Appeal Nos. 605 of2015 and 607 of 2015. 8.As far as the order of Tribunal, deleting the addition ofexcise duty is concerned, the same appears to be on the basis of 29-itxa-552.15+.doc report of the Comptroller & Auditor General of India. The apecialaudit was done under Section 142(2A) of the Act. The specialauditor in his report also stated that the tax impact is nil. TheTribunal has considered the tax report. The tax audit report of thestatutory auditor and the audit report of the Comptroller &Auditor General of India shows that the impact of inclusion ofexcise duty in the value of closing stock stands nil. 9.In view of the above finding of facts, no substantial questionof law arises in these appeals. These appeals, as such, aredismissed. No costs. (A. M. BADAR, J.) (S. V. GANGAPURWALA, J.)