GANGA INTERNATIONAL, MUMBAI V. ITO 15(2)(4), MUMBAI

CO 95/MUM/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8548 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 18-03-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V H JARIWALA
• Keywords: Reopening of assessment; Business income; Difference of opinion; Change of opinion
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.K.GUPTA, JM & SHRI B.RAMAKOTAIAH , AM ITA NO. 5746 /MUM/20 11 ( ASSESSMENT YEAR :200 5 - 200 6 ) ITO 15(2)(4), MUMBAI - 7 VS. M/S GANGA INTERNATIONAL, 316, HIGHWAY COMMERCE CENTRE,J.N. OF I .B. PATEL ROAD &W.E. HIGHWAY, OPP. H.P PETROL PUMP, GOREGAON(E) , MUMBAI - 400 063. PAN NO. : A AFFG 1274 K ( APP ELLANT ) .. ( RESPONDENT ) AND C.O. NO. 95 /MUM/20 1 2 ( ASSESSMENT YEAR :200 5 - 200 6 ) M/S GANGA INTERNATIONAL, 316, HIGHWAY COMMERCE CENTRE,J.N. OF I.B. PATEL ROAD &W.E. HIGHWAY, OPP. H.P PETROL PUMP, GOREGAON(E), MUMBAI - 400 063. VS. ITO 15(2)(4), MUMBAI - 7 PAN NO. : AAACW 5862 D ( APP ELLANT ) .. ( RESPONDENT ) REVENUE BY : MR. PAVAN VED ASSESSEE BY : MR. V.H.JARIWALA DATE OF HEARING : 19 TH MACH, 2013 DATE OF PRONOUNCEMENT : 05/04/2013 O R D E R PER SHRI R.K.GUPTA, JM : THE DEPARTMENT HAS FILED APPEAL I.E. ITA NO. 5746/MUM/2011 AGAINST THE ORDER OF LEARNED CIT(A) FOR THE ASSESSMENT YEAR 2005 - 06, WHEREAS THE ASS ESSEE HAS FILED CROSS OBJECTION I.E. CONO. 95/MUM/2012 FOR THE SAME ASSESSMENT YEAR. ITA NO . 5746 / 201 1 &CO NO.95/2012 2 2 . SINCE COMMON ISSUES ARE INVOLVED IN BOTH THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE, BOTH THE C ASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . IN APPEAL OF THE DEPARTMENT I.E. ITA NO. 5746 /MUM/2011 , THE DEPARTMENT IS OBJECTING IN DELETING THE ADDITION MADE BY THE AO OF RS. 25,60,180/ - ON ACCOUNT OF DISALLOWANCE OF PART OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IB(4) OF THE ACT, BEING NOT ALLOWABLE EXPENDITURE ADDED UNDER SECTION 40(A)(IA) OF THE ACT. 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143(3) BY WHICH DEDUCTION UNDER SECTION 80IB WAS ALLOWED ON THE AMOUNT OF RS. 25,60,180/ - ON WHICH NO TDS WAS DEDUCTED BY THE ASSESSEE. THE AO ORIGINALLY ALLOWED THIS CLAIM AS THE ASSESSEE HIMSELF DISALLOWED AS TDS WAS NOT DEDUCTED, HOWEVER, DEDUCTION WAS CLAIMED UNDER SECTION 80I B AS AFTER DISALLOWING THE EXPENDITURE THE DEDUCTION IS ALLOWABLE ON TOTAL GROSS INCOME. THEREAFTER ASSESSMENT UNDER SECTION 147/148 WAS REOPENED BY OBSERVING THAT DEDUCTION UNDER SECTION 80IB IS NOT ALLOWABLE ON THE AMOUNT OF DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, IT WAS OBSERVED BY THE AO THAT TO T HIS EXTENT INCOME H AS ESCAPED ASSESSMENT. THEREAFTER ASSESSMENT WAS REOPENED AND THE IMPUGNED ADDITION WAS MADE. 5 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A), WHO REJECTED THE LEGAL GROUNDS IN RESPECT OF REOPENING OF THE ASSESSMENT, ITA NO . 5746 / 201 1 &CO NO.95/2012 3 HOWEVER, ALLOWED THE ISSUE ON MERIT FOLLOWING THE DECISION OF AHMEDABAD BENCH IN THE CASE OF CIT VS. M/S 1UP CLOTHING CO , PASSED IN ITA NO.3352/AHD/2008 , VIDE ORDER DATED 12 - 12 - 2008 , WHICH WAS CONFIRMED BY THE HONBLE GUJARAT HIGH COURT PASSED IN TAX APPEAL NO. 13 82 OF 2009, VIDE ORDER DATED 1 - 3 - 2011 , BY WHICH IT WAS HELD THAT EXPENDITUR E DISALLOWED IN TERMS OF SECTION 40(A)(IA) OF THE ACT IS ALLOWABLE FOR DEDUCTION UNDER SECTION 80IB . 6 . NOW, THE DEPARTMENT IS IN APPEAL HERE BEFORE THE TRIBUNAL AGAINST ALLOWING DEDUCTION UNDER SECTION 80IB, WHEREAS THE ASSESSEE IS IN CROSS OBJECTION CHALLENGING THE REOPENING OF THE ASSESSMENT. 7 . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THERE IS NO MERIT IN THE APPEAL OF THE DEP ARTMENT, WHEREAS THE ASSESSEE DESERVES TO SUCCEED IN ITS CROSS OBJECTION. THE AO SPECIFICALLY MENTIONED THAT THE DEDUCTION IS ALLOWABLE IN RESPECT TO DISALLOWANCE UNDER SECTION 40(A )( IA ) OF THE ACT. THE AO HAS OBSERVED IN HIS ORDER THAT AS PER ITEMS IN THE REPORT OF AUDITOR IN FORM 3CD UNDER SECTION 44AB, THE BUSINESS INCOME IS COMPUTED AT RS.40,84,160/ - , WHICH HAS BEEN CLAIMED AS DEDUCTION UNDER SECTION 80IB AND ACCORDINGLY, THE DEDUCTION WAS ALLOWED. FROM THIS OBSERVATION OF THE LEARNED AO, WHO PASSED ASS ESSMENT ORIGINALLY, IT IS CLEAR THAT THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB ON THE AMOUNT OF RS. 15,24,080/ - AS PER PROFIT AND LOSS ACCOUNT AND AT RS. 25,60,180/ - DISALLOWED BY THE ASSESSEE HIMSELF IN TERMS OF SECTION ITA NO . 5746 / 201 1 &CO NO.95/2012 4 40(A)(IA). IN THIS WAY, THE T OTAL BUSINESS INCOME WAS COMPUTED AT RS. 40,84,160/ - AND DEDUCTION ON THAT AMOUNT WAS CLAIMED, WHICH THE AO HAS ALLOWED AFTER SATISFYING THAT ON BUSINESS INCOME DEDUCTION UNDER SECTION 80IB IS ALLOWABLE IN FULL. THE LEARNED CIT(A) BY OBSERVING THAT THE REOP ENING WAS NOT ON ACCOUNT OF CHANGE OF OPINION , THEREFORE, THE REOPENING OF ASSESSMENT WAS CONFIRMED. 8 . IN OUR VIEW, THIS IS A CLEAR CU T CASE OF CHANGE OF OPINION AS ONE AO HAS ALLOWED DEDUCTION BY CONSIDERING THE FACT THAT DISALLOWANCE OF EXPENDITURE UN DER SECTION 40(A ) ( IA) HAS BEEN MADE BY ASSESSEE HIMSELF AND, THEREFORE, BUSINESS INCOME WAS INCREASED AND ON BUSINESS INCOME, THE DEDUCTION IS ALLOWABLE. THEREFORE, IN OUR VIEW, THE REOPENING OF THE ASSESSMENT WAS BAD IN LAW. ACCORDINGLY, WE QUASH THE REAS SESSMENT AS THE REOPENING WAS BAD IN LAW. 9 . EVEN , ON MERIT ALSO, IT IS SEEN THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN CASE OF M/S 1UP CLOTHING CO (SUPRA) . IN THIS CASE, IT HAS BEEN HELD THAT DEDUCTION ON THE AMOUNT OF EXPENDITURE DISALLOWED IN TERMS OF SECTION 40(A)(IA) IS ALLOWABLE AS THE DISALLOWANCE ON EXPENDITURE IS PART OF BUSINESS ACTIVITY AND, THEREFORE, THE BUSINESS PROFIT INCREASED AND ON INCREASED BUSINESS PROFIT DEDUCTION IS ALLOWABLE. LEARNED CIT(A) HAS FOLLOWED THIS DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN CASE OF M/S 1UP CLOTHING CO (SUPRA) , WHICH HAS BEEN CONFIRMED BY THE HON BLE GUJARAT HIGH COURT. THEREFORE, WE SEE NO INFIRMITY IN THE FINDINGS OF THE ITA NO . 5746 / 201 1 &CO NO.95/2012 5 LEARNED CIT(A) ON MERIT. ACCO RDINGLY, THE ORDER OF THE LEARNED CIT(A) ON MERIT IS HEREBY CONFIRMED. 10 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CRO SS OBJECTION FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF APR. . 2013 . SD/ - SD/ - ( B.RAMAKOTAIAH ) ( R.K.GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED : 05/04 /2013 . PKM , PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - X, MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI