M/s. Natasha Industries, Nani Daman V. The ACIT.,Vapi Circle, Vapi

CO 262/AHD/2010

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8632 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 16-08-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, JM AND SHRI A. MOHA N ALANKAMONY, AM) ITA NO.1565/AHD/2010(AY- 2006-07 THE A. C. I. T., VAPI CIRCLE-2, VAPI, ROOM NO. 303, SHIVAM COMMERCIAL COMPLEX, N. H. NO.8, VAPI 396 195 VS NATASHA INDUSTRIES, G-5/F-5, CHIRAG UDYOG BHAVAN, 8/9, GOLDEN INDUSTRIAL ESTATE, DABHEL, NANI DAMAN P. A. NO. AACFN 6285 E (APPELLANT) (RESPONDENT) C. O. NO.262/AHD/2010 (IN ITA NO.1565/AHD/2010 (AY- 2006-07) NATASHA INDUSTRIES, G-5/F-5, CHIRAG UDYOG BHAVAN, 8/9, GOLDEN INDUSTRIAL ESTATE, DABHEL, NANI DAMAN P. A. NO. AACFN 6285 E VS THE A. C. I. T., VAPI CIRCLE- 2, VAPI, ROOM NO. 303, SHIVAM COMMERCIAL COMPLEX, N. H. NO.8, VAPI 396 195 (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY SHRI D. K. SINGH, SR. DR ASSESSEE BY WRITTEN SUBMISSION DATE OF HEARING: 08-05-2013 DATE OF PRONOUNCEMENT: 21-06-2013 O R D E R PER A. MOHAN ALANKAMONY: THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARE FILED AGGRI EVED BY THE ORDER OF THE LEARNED CIT(A), VALSAD DATED 27-01-2010, FOR TH E ASSESSMENT YEAR ITA NO.1565/AHD/2010 & CO NO.262/AHD/2010 (AY-2006- 07) NATASHA INDUSTRIES 2 2006-07 IN APPEAL NO. CIT(A)/VLS/431/08-09 PASSED U /S 250 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961. BOTH TH E APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE WER E HEARD TOGETHER AND THE SAME ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL OF THE REVENUE IN I TA NO.1565/AHD/2010. THE SOLE EFFECTIVE GROUND RAISED BY THE REVENUE IS REPRODUCED HEREIN UNDER FOR REFERENCE:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT ACTIVITY OF THE AS SESSEE IS MANUFACTURING AND CLAIM OF RS.25,02,165/- IS ELIGIB LE FOR THE BENEFIT OF DEDUCTION U/S 80 IB OF THE I. T. ACT. 3. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURE, ASSEMBLING AND TRADING OF COMPUTER SYSTEMS, PERIPHERALS AND ALLIED PRODUCTS F ILED ITS RETURN OF INCOME FOR AY 2006-07 ON 19-10-2006 DECLARING TOTAL INCOME OF RS.94,12,986/-. THE CASE WAS SELECTED FOR SCRUTINY AND FINALLY, THE LEARNED AO PASSED ASSESSMENT ORDER ON 29-12-2008 U/ S 143(3) OF THE ACT DETERMINING THE GROSS TOTAL INCOME OF THE ASSE SSEE AT RS.1,36,14,830/- WHEREIN THE LEARNED AO DISALLOWED THE CLAIM OF THE ASSESSEE U/S 80 IB FOR A SUM OF RS.25,02,165/- AND MADE AN ADDITION OF RS.1,16,99,682/- ON ACCOUNT OF UNEXPLAINED CASH CRE DIT. 3.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LEARNED CIT(A) AND THE LEARNED CIT(A) FOLLOWING THE ORDER O F THE ITAT AHMEDABAD BENCH IN ASSESSEES OWN CASE IN ITA NO.33 51/AHD/2008 FOR AY 2005-06 DATED 05-06-2009, VIDE HIS ORDER DAT ED 27-01-2010 ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS U NDER IN PARA 7.3 OF HIS ORDER AS UNDER:- ITA NO.1565/AHD/2010 & CO NO.262/AHD/2010 (AY-2006- 07) NATASHA INDUSTRIES 3 7.3 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. I HAVE ALSO CONSIDERED THE FINDINGS GIVEN IN THE ASSESSMENT ORD ER AND REMAND REPORT AS WELL AS THE SUBMISSIONS OF THE APPELLANT FIRM. ON PERUSAL OF THE ABOVE-MENTIONED DETAILS AND DOCUMENTS, I FIND F ORCE IN THE CONTENTION OF THE APPELLANT THAT THE ACTIVITY UNDER TAKEN BY THE APPELLANT IS CHARACTERIZED AS MANUFACTURING AS IT TRANSFORMS THE RAW MATERIAL IN TO A DISTINCT COMMERCIALLY VIABLE PRODUCT. EVEN OTH ERWISE, THE ISSUE AT LENGTH HAS BEEN DEALT WITH BY THE HONBLE ITAT IN T HE APPELLANTS OWN CASE IN ASSTT. YEAR 2005-06 ORDER NO. ITA NO.3351/A HD/2008 DATED 05-06-2009, WHERE IS SIC IN THE DEDUCTION U/S. 80 I B HAS BEEN ALLOWED. SINCE THE AO HAS NOT DISPUTED THE FACT THE SAME NAT URE OF ACTIVITY IS BEING CARRIED OUT BY THE APPELLANT IN THE YEAR UNDE R REFERENCE, I AM INCLINED TO FOLLOW THE DECISION OF ITAT BENCH D, AHMEDABAD, IN APPELLANTS OWN CASE. EVEN OTHERWISE, IT IS A SETTL ED POSITION THAT ORDERS PASSED BY THE JURISDICTIONAL TRIBUNAL ARE BINDING A LL REVENUE AUTHORITIES FUNCTIONING UNDER THE JURISDICTION OF THE TRIBUNAL. I, AM, THEREFORE INCLINED TO AGREE WITH THE CONTENT ION OF THE APPELLANT THAT DEDUCTION OF RS.25,02,165/- US. 80 I B CANNOT BE DENIED TO BE THE APPELLANT FIRM. THE AO IS DIRECTED TO ALL OW DEDUCTION U/S. 80 IB OF RS.25,02,165/- CLAIMED BY THE APPELLANT FIRM. THUS, THE APPELLANTS GROUNDS NO.1.2, 1.3 AND 1.4 ARE ALLOWED . AGAINST THIS FINDINGS OF THE LEARNED CIT(A), THE RE VENUE IS NOW IN APPEAL BEFORE US. 4. THE LEARNED DR SUPPORTED THE ORDER OF THE LEARNE D AO AND PRAYED HIS ORDER MAY BE SUSTAINED. THE ASSESSEE IN ITS WRI TTEN SUBMISSIONS CONTENDED THAT THIS ISSUE IS COVERED IN ITS FAVOUR BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR S 2005-06 IN ITA NO. 3351/AHD/2008 DATED 05/06/2009 AND 2007-08 IN I TA NO. 247/AHD/2010 DATED 20/05/2011. IN SUPPORT OF HIS CO NTENTION THE ASSESSEE POINTED OUT PAPER BOOK PAGES 1 TO 13. IT W AS FURTHER STATED THAT THE DEPARTMENTAL APPEAL AGAINST THE ORDER OF T HE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-0 6 HAS ALSO BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE HONBLE GU JARAT HIGH COURT VIDE ORDER DATED 13-06-2011 (PAPER BOOK PAGE 14 TO 16) IN TAX APPEAL NO. 12 OF 2010 TREATING THE ACTIVITY UNDERTAKEN BY THE ASSESSEE AS IN THE NATURE OF MANUFACTURE. ITA NO.1565/AHD/2010 & CO NO.262/AHD/2010 (AY-2006- 07) NATASHA INDUSTRIES 4 5. WE HAVE HEARD THE LEARNED DR, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIALS PROD UCED BEFORE US. ON OUR PERUSAL WE FIND THAT THE LEARNED CIT(A) ON PROP ER APPRECIATION OF THE FACTS OF THE PRESENT CASE HAS JUDICIOUSLY DELETED T HE ADDITION MADE BY THE LEARNED AO ON ACCOUNT OF DISALLOWANCE OF THE AS SESSEES CLAIM OF RS.25,02,165/- U/S 80 IB OF THE ACT. HENCE, NO INT ERFERENCE IS REQUIRED IN HIS ORDER. ACCORDINGLY, WE UPHOLD HIS ORDER AND DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 7. IN THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE FOLLOWING SOLE EFFECTIVE GROUND:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSESSIN G OFFICER IN REDUCING FOLLOWING INCOMES FROM THE PROFIT OF UNDER TAKING WHILE CALCULATING THE DECEPTION U/S. 80 IB OF THE ACT. PARTICULARS AMOUNT(RS.) DIVIDEND 30,000 INTEREST MARGIN MONEY DEPOSIT 3,10,639 CLAIM RECEIVED AGAINST DAMAGED GOODS FROM TRANSPORTERS 89,190 SUNDRY BALANCE WRITTEN BACK 1,90,124 TOTAL 6,19,953 THE LEARNED AO HAD DISALLOWED THE AFORESAID AMOUNT OF RS.6,19,953/- RELYING ON THE DECISION RENDERED BY THE HONBLE APE X COURT IN THE CASE OF PANDIAN CHEMICALS LTD. REPORTED IN 262 ITR 278 ( SC), CIT VS. STEERLING FOODS (1999) 237 ITR 579 AS WELL AS DECIS ION OF ITAT A BENCH DATED 31.-5-2006 IN ITA NOS. 131 AND 132/AHD/2004 I N THE CASES OF NEPTUNE STEEL PROCESSORS AND AURO STAMPING P. LTD. TREATING THE SAME ITA NO.1565/AHD/2010 & CO NO.262/AHD/2010 (AY-2006- 07) NATASHA INDUSTRIES 5 AS INCOME NOT DERIVED FROM INDUSTRIAL UNDERTAKING A ND HENCE TO BE EXCLUDED FROM THE TOTAL INCOME WHILE COMPUTING DED UCTION U/S 80 IB OF THE ACT. ON APPEAL, THE LEARNED CIT(A) UPHELD THE A SSESSMENT ORDER ON THIS ISSUE. 8. THE ASSESSEES COUNSEL IN HIS WRITTEN SUBMISSION DATED 06/05/2013 HAS STATED THAT THE ASSESSEE IS NOT PRES SING ITEMS NO. 1, 2 AND 3 OF ITS FIRST GROUND AND THE ISSUE RELATED TO ITEM NO.4 OF THE GROUND I.E. SUNDRY BALANCE WRITTEN BACK IS DECIDED BY THE ITAT AHMEDABAD B BENCH IN FAVOUR OF THE ASSESSEE IN THE CASE OF INOX INDIA LTD. IN ITA NO.756/AHD/2001 ORDER DATED 23-01-2009 (PAPER BOOK PAGE 30 PARA 10). 9. ON PERUSAL OF THE RECORDS, WE FIND THAT ITAT B BENCH AHMEDABAD WHILE DECIDING THE SAME ISSUE IN THE CASE OF INOX INDIA LTD. (SUPRA) HAS HELD AS UNDER: 10. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUBMI SSIONS, FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS DECISIONS, WE ARE OF THE OPINION THAT SO FAR AS INCOME FROM OPERATIONS AND LIABILITY BAL. WRITTEN BACK ARE CONCERNED, THE SAME BEING RELATED TO BUSINESS TRANS ACTIONS ARE TO BE CONSIDERED AS DERIVED FROM INDUSTRIAL UNDERTAKING AND, THEREFORE, ARE ENTITLED TO DEDUCTION U/S. 80 IA OF THE ACT. 10. THE LEARNED DR COULD NOT CONTROVERT TO THE ARGU MENTS OF THE ASSESSEE THROUGH ITS WRITTEN SUBMISSION. BY FOLLOW ING THE AFORESAID ORDER OF OUR CO-ORDINATE BENCH IN THE CASE OF INOX INDIA LTD. (SUPRA) WE HEREBY SET ASIDE THE ORDER OF THE LEARNED CIT(A) TO THE EXTENT CONFIRMING THE ADDITION OF RS.1,90,124/- MADE BY THE LEARNED A O ON ACCOUNT OF SUNDRY BALANCE WRITTEN BACK AND DIRECT THE LEARNED AO TO DELETE THE ADDITION. ACCORDINGLY, THE CROSS OBJECTION OF THE A SSESSEE IS PARTLY ALLOWED. ITA NO.1565/AHD/2010 & CO NO.262/AHD/2010 (AY-2006- 07) NATASHA INDUSTRIES 6 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/2013 SD/- SD/- (MUKUL KR. SHRAWAT) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: DIRECT ON COMPUTER 06-07-13 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 07-05-13 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. 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 ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: