DCIT, Chandigarh V. M/s Ansysco, Chandigarh

ITA 1106/CHANDI/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2446 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-12-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 12-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: RAJESH S ATHAVALE
• Keywords: Depreciation; Capital expenditure

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 1106/CHD/2014 ASSESSMENT YEAR: 2011-12 DCIT VS. ANSYSCO CIRCLE 1(1), SCO 74-75 CHANDIGARH SECTOR 8-C CHANDIGARH PAN NO. AACFA7228C (APPELLANT) (RESPONDENT) APPELLANT BY : SH. S.K. MITTAL RESPONDENT BY : SH. RAJESH S. ATHAVALE DATE OF HEARING : 28/12/2015 DATE OF PRONOUNCEMENT : 07/01/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF LD. CIT(A). CHANDIGARH, DT. 30/09/2014. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 2. IN VIEW OF THE FACTS AND THE CIRCUMSTANCES OF TH E CASE, WHETHER CIT(A) WAS CORRECT IN ALLOWING DEDUCTION U/S 80IC ON THE I NCOME ENHANCED BY WAY OF CAPITALIZATION OF REPAIR EXPENDITURE WHEN THE CLAIM OF DEDUCTION U/S 80IC ITSELF IS NOT MAINTAINABLE IN THE CASE OF THE ASSESSEE. 3. IN VIEW OF THE FACTS AND THE CIRCUMSTANCES OF TH E CASE, WHETHER CIT(A) WAS CORRECT IN ALLOWING DEDUCTION U/S 80IC WITHOUT APPRECIATING THE FACT THAT:- 3.1 THE ASSESSEE WAS SIMPLY UNDERTAKING PACKAGING O F DGX COMPOUND, STANDARDIZATION OF COOLANT AND FORMULATION OF PVC. 3.2 IN THE PROCESS UNDERTAKEN BY IT, THERE IS NO CH ANGE IN THE PRODUCT AND THE ACTIVITY OF THE ASSESSEE DOES NOT FALL WITHIN THE P ARAMETERS OF THE DEFINITION OF WORD MANUFACTURE. 4. IN VIEW OF THE FACTS AND THE CIRCUMSTANCES OF TH E CASE, WHETHER CIT(A) WAS CORRECT IN ALLOWING DEDUCTION U/S 80IC ON INCOM E FROM JOB WORK MORE SO WHEN THE ACTIVITY BEING CARRIED OUT BY THE ASSESSEE WAS NOTHING BUT PACKAGING. 2 5. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE, WHETHER CIT(A) WAS CORRECT IN ALLOWING DEDUCTION U/S 80IC ON OTHER IN COME SUCH AS SCRAP SALE AND INSURANCE CLAIM, WHEN THESE INCOME WERE NOT DERIV ED, IN TRUE SENSE, FROM THE BUSINESS OF THE ELIGIBLE UNDERTAKING. 3. IN GROUND NO. 2, THE REVENUE HAS AGITATED AGAINS T THE ALLOWANCE OF DEDUCTION U/S 80IC ON THE INCOME ENHANCED ON ACCOUN T OF CAPITALIZATION OF REPAIR EXPENDITURE. 4. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE HAD CLAIMED EXPENSES OF RS. 1,95,157/- AS REPAIR OF BUILDING. L D. AO TREATED THE SAME AS CAPITAL EXPENDITURE AND AFTER ALLOWING DEPRECIATION OF RS. 14,637/- ON THE SAME, MADE AN ADDITION OF RS. 1,80,520/- TO THE INCOME OF THE ASSESSEE. BEFORE THE LD. CIT(A), THE ASSESSEE AGITATED AGAINST THE ADDITION MADE, WHICH WAS ALLOWED BY THE LD. CIT(A), WHO HELD THE EXPENSES TO BE REVENUE IN NATURE. 5. AGGRIEVED BY THE SAME, THE ASSESSEE FILED THE PR ESENT APPEAL BEFORE US. 6. WE FIND THAT THE GROUND RAISED BEFORE US IS NOT AGAINST THE TREATMENT OF THE IMPUGNED EXPENSES AS REVENUE IN NATURE. LD. DR ADMITTED THAT THIS GROUND OF APPEAL WAS WRONGLY RAISED. WE FIND THAT NO GRIEV ANCE ARISES TO THE REVENUE FROM THE GROUND RAISED AND THE SAME IS THEREFORE TR EATED AS DISMISSED. 7. IN GROUND NO. 3, THE REVENUE HAS AGITATED THE AL LOWANCE OF DEDUCTION U/S 80IC TO THE ASSESSEE ON MANUFACTURING ACTIVITY UNDERTAKEN BY IT. 8. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SELLING OF COOLANT, P VC COMPOUND, DGX AND CAR CARE PRODUCTS. THE MANUFACTURING FACILITY OF THE AS SESSEE IS LOCATED AT PARWANOO AND IN THE YEAR 2003 THE ASSESSEE UNDERTOO K SUBSTANTIAL EXPANSION OF ITS MANUFACTURING FACILITIES MAKING IT ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 80IC OF THE ACT. THIS IS THE EIGHT YEAR OF CLAIM OF THE ASSESSEE. DURING ASSESSMENT 3 PROCEEDINGS THE AO DISCUSSED THE MANUFACTURING ACTI VITIES IN RESPECT OF VARIOUS PRODUCTS MADE BY THE ASSESSEE AND DISALLOWED THE EN TIRE DEDUCTION U/S 80IC CLAIMED BY THE ASSESSEE BY HOLDING THAT THE ASSESSE E WAS NOT ENGAGED IN ANY MANUFACTURING ACTIVITY. THE RELEVANT FINDINGS OF TH E A.O. ARE REPRODUCE IN PARA 3.1.3 OF THE CIT(A) ORDER. LD. CIT(A) ALLOWED THE A SSESSEES APPEAL BY FOLLOWING HIS DECISION IN THE ASSESEES OWN CASE IN AY 2008-09 . 9. AGGRIEVED BY THE SAME THE REVENUE FILED THE PRES ENT APPEAL BEFORE US. 10. BEFORE US LD. AR ARGUED THAT IN ALL EARLIER YEA RS THE CLAIM OF THE ASSESSEE HAD BEEN ALLOWED EITHER BY THE AO OR THE FIRST APPE LLATE AUTHORITY AND FURTHER UPHELD BY THE ITAT. LD. AR STATED THAT DEDUCTION FO R THE FIRST TIME WAS CLAIMED IN AY 2004-05 (FY 2003-04 ) AND WAS DULY ACCEPTED BY T HE AO. LD. AR FURTHER STATED THAT IN AY 2008-09, 09-10, & 10-11, THE CLAI M U/S 80IC HAD BEEN DENIED TO THE ASSESSEE IN ASSESSMENT BUT IN ALL THE YEARS THE ISSUE HAD BEEN DECIDED IN THE ASSESSEES FAVOUR BOTH BY THE LD. CIT(A) AND THE HO NBLE ITAT. LD. AR THEREFORE STATED THAT THERE WAS NO BASIS FOR MAKING THE DISAL LOWANCE IN THE IMPUGNED YEAR. 11. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AO. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDER OF THE AUTHORITIES BELOW AS ALSO THE DOCUMENTS PLACED BEFO RE US. 13. WE FIND THAT THIS ISSUE HAS ALREADY BEEN DECIDE D BY THE HONBLE ITAT IN FAVOUR OF THE ASSESSEE IN AY 2008-09, 2009-10 AND 2 010-11. THE HONBLE ITAT IN ITS ORDER FOR AY 2009-10 IN THE ASSESSEES CASE IN ITAT NO. 910/CHD/2012, HELD AS FOLLOWS IN PARA 9-10 OF ITS ORDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE MANUFACTURE AND SALE OF COOLENT AND PVC COMPOUND AND CAR CARE PRODUCTS. THE MANUFACTURING UNIT OF THE ASSESSEE IS LOCATED AT PA RWANOO, HIMACHAL PRADESH. THE ASSESSEE HAD CLAIMED DEDUCTI ON UNDER SECTION 80IC OF THE ACT ON ACCOUNT OF INCOME EARNED 4 FROM CARRYING ON ITS MANUFACTURING ACTIVITIES AND A LSO FROM JOB WORK. THIS THE FIFTH YEAR OF CLAIM OF DEDUCTION UN DER SECTION 80IC OF THE ACT. THE FIRST YEAR OF CLAIM OF THE AS SESSEE VIS-- VIS DEDUCTION UNDER SECTION 80IC OF THE ACT WAS ASS ESSMENT YEAR 2005-06. THE ASSESSING OFFICER HAD ALLOWED TH E CLAIM OF THE ASSESSEE BY HOLDING THE ASSESSEE TO BE ELIGIBLE FOR EXEMPTION UNDER SECTION 80IC OF THE ACT IN RELATION TO THE INCOME EARNED FROM CARRYING ON ITS MANUFACTURING AC TIVITIES. HOWEVER, THE CLAIM OF THE ASSESSEE VIS--VIS ON ACC OUNT OF UNDER SECTION 80IC OF THE ACT ON JOB WORK WAS DISAL LOWED BY THE ASSESSING OFFICER, AGAINST WHICH THE ASSESSEE W ENT IN APPEAL BEFORE THE TRIBUNAL. THE APPEAL OF THE ASSE SSEE IN ITA NO.883/CHD/2006 RELATING TO ASSESSMENT YEAR 2005-06 WAS ALLOWED BY THE TRIBUNAL VIDE ORDER DATED 17.9.2009 UNDER WHICH THE MANUFACTURING PROCESS UNDERTAKEN BY THE A SSESSEE WAS CONSIDERED IN PARAS 11 AND 12 AND VIDE PARA 13 IT WAS HELD THAT THE ACTIVITY IN RELATION TO DGX AMOUNTS T O MANUFACTURING AND THEREFORE, THE RESULTANT INCOME E ARNED BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER SECTI ON 80IC OF THE ACT. THE TRIBUNAL ALSO VIDE PARA 6 OBSERVED TH AT THE ASSESSEE HAD CLARIFIED THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN RESPECT OF MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSESSEE. THE CLAIM OF THE ASSES SEE OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN RELATION TO INCOME EARNED FROM UNDERTAKING JOB WORK FOR SUPPLYING DGX CARTRIDGE WAS HELD TO BE ALLOWABLE. FURTHER THE TRIBUNAL I N ITA NO.120/CHD/2011 AND ITA NO.255/CHD/2011 RELATING TO ASSESSMENT YEAR 2007-08 IN CROSS APPEALS FILED BY T HE ASSESSEE AND REVENUE, VIDE ORDER DATED 21.6.2011 HAD ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BO TH ON JOB WORK CHARGES AND PART OF OTHER INCOME. THE TRIBUNAL IN ITA NO. 532/CHD/2012 RELATING TO ASSESSMENT YEAR 2008-09 VI DE ORDER DATED 30.07.2012 IN THE APPEAL FILED BY THE REVENUE HAD FURTHER ALLOWED THE CLAIM OF DEDUCTION UNDER SECTIO N 80IC OF THE ACT BOTH ON MANUFACTURING, JOB WORK CHARGES AND PART OF OTHER INCOME. 10. WE FIND THAT IN THE PRESENT APPEAL BEFORE US TH E FIRST ISSUE RAISED BY THE ASSESSING OFFICER WAS IN RESPEC T OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE PROF ITS EARNED BY THE ASSESSEE FROM CARRYING ON ITS MANUFACTURING ACTIVITIES. IN VIEW OF THE CLAIM OF THE ASSESSEE BEING ALLOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE STAND OF THE ASSESS ING OFFICER IN THE PRESENT YEAR IN THE ABSENCE OF ANY CHANGE IN THE FACT SITUATION. WE ARE IN AGREEMENT WITH THE ORDER OF T HE CIT (APPEALS) IN THIS REGARD. IN VIEW OF THE CLAIM OF THE ASSESSEE HAVING BEEN AL LOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE APPEAL FILED BY THE REVENUE IN THE ABSENCE OF ANY CHANGE IN THE FACT SITUATION. 14. THIS GROUND OF APPEAL RAISED BY THE REVENUE IS THEREFORE DISMISSED. 15. GROUND NO. 4 & 5 RAISED BY THE REVENUE IS AGAIN ST THE ALLOWANCE OF DEDUCTION U/S 80IC ON INCOME FROM JOB WORK, SCRAP S ALE, AND INSURANCE CLAIM. 5 16. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE AO DENIED THE ASSESSEE DEDUCTION U/S 80IC ON THE JOB WORK INCOME EARNED BY HOLDING THAT IT DID NOT INVOLVE ANY MANUFACTURING ACTIVITY AS NO NEW ARTICL E OR THING WAS PRODUCED. FURTHER 80IC CLAIMED ON OTHER INCOME WHICH INCLUDED INTEREST INCOME, INSURANCE CLAIM, SCRAP SALE AND PROFIT ON FIXED ASS ETS, WAS ALSO DENIED SINCE THEY COULD NOT BE SAID TO BE DERIVED FROM INDUSTRIAL U NDERTAKING OF THE ASSESSEE. LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE WITH R ESPECT TO DEDUCTION CLAIMED ON JOB WORK INCOME, INSURANCE CLAIM AND SCRAP SALE, FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE IN EARLIER YEARS. 17. AGGRIEVED BY THE SAME THE REVENUE FILED THE PRE SENT APPEAL BEFORE US. 18. BEFORE US LD. AR CONTENDED THAT THIS ISSUE HAD BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN EARLIER YEARS BY THE HONBLE ITAT I N ASSESSES OWN CASE. 19. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AO. 20. WE HAVE HEARD THE RIVAL SUBMISSION AND CAREFULL Y PERUSED THE MATERIAL AVAILABLE ON RECORD. 21. WE FIND THAT DISALLOWANCE OF DEDUCTION U/S 80IC ON JOB WORK INCOME WAS FOR THE FIRST TIME MADE IN ASSESSMENT YEAR 2005-06 WHICH WAS ALLOWED IN APPEAL BEFORE THE TRIBUNAL IN ITA NO. 883/CHD/2006 VIDE OR DER DT. 17/09/2009. IN THE IMPUGNED ORDER THE MANUFACTURING PROCESS UNDERTAKEN BY THE ASSESSEE WAS CONSIDERED IN PARA 11 & 12 AND VIDE PARA 13 IT WAS HELD THAT THE ACTIVITY IN RELATION TO DGX AMOUNTS TO MANUFACTURING AND THEREF ORE THE RESULTANT INCOME EARNED BY THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U NDER SECTION 80IC OF THE ACT. FURTHER THE TRIBUNAL IN ITA NO.120/CHD/2011 AND ITA NO.255/CHD/2011 RELATING TO ASSESSMENT YEAR 2007-08 IN CROSS APPEALS FILED BY T HE ASSESSEE AND REVENUE, VIDE ORDER DATED 21.6.2011 HAD ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON JOB WORK CHARGES. FURTHER DEDUCT ION U/S 80IC WAS ALSO 6 ALLOWED ON INSURANCE CLAIM RECEIVED AND SCRAP SALE, HOLDING THE SAME TO BE DIRECTLY ATTRIBUTABLE TO THE ACTIVITIES OF THE BUSI NESS UNIT. FURTHER THE TRIBUNAL IN ITA NO. 532/CHD/2012 RELATING TO ASSESSMENT YEAR 20 08-09 VIDE ORDER DATED 30.07.2012 IN THE APPEAL FILED BY THE REVENUE ALLOW ED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BOTH ON MANUFACTURING , JOB WORK CHARGES, INSURANCE CLAIM AND SCRAP SALE. 22. IN VIEW OF THE CLAIM OF THE ASSESSEE HAVING BEE N ALLOWED FROM YEAR TO YEAR WE FIND NO MERIT IN THE APPEAL FILED BY THE RE VENUE. 23. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IS THEREFORE DISMISSED. 24. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/01/2016 SD/- SD/- (H.L. KARWA) (ANNAPURNA MEHROTRA) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 07/01/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR