Gaurav Industries, Ahmedabad V. The Income tax Officer, Ward-3(4), Ahmedabad

ITA 1054/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8756 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-03-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 12-03-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: KEDAR LADDHA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.1054/AHD/2007 A. Y.: 2003-04 M/S. GAURAV INDUSTRIES, C-1/1212, 1213, PHASE IV, GIDC ESTATE, NARODA, AHMEDABAD 382 330 PA NO. AAAFG 8259 P VS THE INCOME TAX OFFICER, WARD 3(4), AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI KEDAR LADDHA, AR RESPONDENT BY SHRI M. C. PANDIT, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)- VII, AHMEDABAD DAT ED 12-12-2006 FOR ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIALS AVAILABLE ON RECORD. 3. THE ASSESSEE RAISED SEVERAL GROUNDS OF APPEAL. H OWEVER, ONLY TWO ISSUES ARISE OUT OF THE ENTIRE GROUNDS OF APPEAL I. E. DEDUCTION U/S 80 HHC AND 80 IB OF THE IT ACT. 4. ON DEDUCTION U/S 80 HHC OF THE IT ACT, AO FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE SAID PROVI SION AMOUNTING TO RS.2,49,486/-. AFTER APPLYING THE AMENDED PROVISION S OF SECTION 80 HHC (3) OF THE IT ACT AND THE DECISION OF THE HONBLE S UPREME COURT IN THE CASE OF IPCA LABORATORIES LTD. 266 ITR 581 (SC), T HE AO RECOMPUTED THE DEDUCTION U/S 80 HHC OF THE IT ACT IN A SUM OF RS.5 2,013/- AND BALANCE ITA NO.1054/AHD/2007 M/S. GAURAV INDUSTRIES, 2 OF RS.1,97,473/- WAS DISALLOWED. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE NOTED THAT THE AO HAS C OMPUTED THE DEDUCTION U/S 80 HHC OF THE IT ACT WHILE CONSIDERIN G NEGATIVE INCOME AS HAS BEEN SETTLED BY THE HONBLE SUPREME COURT IN TH E CASE OF IPCA LABORATORIES (SUPRA). THE APPEAL OF THE ASSESSEE WA S ACCORDINGLY DISMISSED. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED HIS SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LEARNED DR R ELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THE APPEAL OF THE ASSESSEE ON THIS ISSUE. THE AO HAS CO RRECTLY APPLIED THE PRINCIPLE LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF IPCA LABORATORIES (SUPRA) IN THE LIGHT OF THE AMENDED PR OVISIONS OF SECTION 80 HHC OF THE IT ACT WHILE CALCULATING THE DEDUCTION U NDER THE ABOVE PROVISIONS. WE, THEREFORE, DO NOT FIND ANY ERROR IN THE ORDERS OF THE AUTHORITIES BELOW. WE CONFIRM THEIR FINDINGS AND DI SMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 7. ON SECOND ISSUE WITH REGARD TO DEDUCTION U/S 80 IB OF THE IT ACT, THE AO WHILE COMPUTING DEDUCTION U/S 80 IB OF THE I T ACT, HAS EXCLUDED DEPB INCENTIVES. WHEN DEPB INCOME IS REDUCED FROM T HE PROFIT OF THE BUSINESS, THE INCOME OF THE INDIVIDUAL UNIT WILL BE NEGATIVE. THEREFORE, THE AO HAS NOT ALLOWED ANY DEDUCTION U/S 80 IB OF T HE IT ACT. THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE A SSESSEE NOTED THAT THE AO WAS JUSTIFIED IN EXCLUDING DEPB INCOME FROM THE PROFIT OF THE BUSINESS FOR CALCULATING DEDUCTION U/S 80 IB OF THE IT ACT. THIS GROUND OF APPEAL WAS ACCORDINGLY DISMISSED. 8. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FILED A CHART TO SHOW DIFFERENT ITA NO.1054/AHD/2007 M/S. GAURAV INDUSTRIES, 3 HEADS ON WHICH DEDUCTION HAS BEEN MADE FOR THE PURP OSE OF CONSIDERING DEDUCTION U/S 80 IB OF THE ACT. ULTIMATELY ALL THE HEADS PERTAIN TO EXPORT INCENTIVE. 9. IN THIS VIEW OF THE MATTER, WE ARE OF THE VIEW T HAT THE ISSUE IS SQUARELY COVERED AGAINST OF THE ASSESSEE BY THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF LIBERTY INDIA LTD. VS CIT 317 ITR 218 (SC) IN WHICH IT WAS HELD THAT DUTY DRAW BACK RECEIPTS AND DEPB BENEFITS DO NOT FORM PART OF THE NET PROFIT OF ELIGIBLE INDUSTR IAL UNDERTAKINGS FOR THE PURPOSE OF DEDUCTION U/S 80 I/80 IA/80 IB OF THE IT ACT. CONSIDERING THE EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE ABOVE DECISION, IT IS CLEAR THAT THE AUTHORITIES BELOW HAVE RIGHTLY DISAL LOWED THE CLAIM OF THE ASSESSEE U/S 80IB OF THE IT ACT BECAUSE IF THE DEPB INCENTIVES ARE EXCLUDED, THE INCOME OF THE ASSESSEE INDUSTRIAL UNI T WOULD BE ADMITTEDLY NEGATIVE. ON NEGATIVE FIGURE NO DEDUCTION IS ELIGIB LE U/S 80 IB OF THE ACT. AS A RESULT, THERE IS NO MERIT IN THIS GROUND OF AP PEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 10. AS A RESULT, THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED ON 22-03-2010. SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22-03-2010 LAKSHMIKANT/- ITA NO.1054/AHD/2007 M/S. GAURAV INDUSTRIES, 4 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 D Y. REGISTRAR, ITAT, AHMEDABAD