M/S ANKUR MINING P. LTD., Jaipur V. DCIT, Jaipur

ITA 114/JPR/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62026 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 01-05-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 02-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: P C PARWAL CAAR
• Keywords: Business income; Onus to prove
• Section: 143(3); 80IB; 147; 148; 56; 154

Judgement Text

1 IN THE INCOME TAX APPELLATE T RIBUNAL JAIPUR BENCHE S B, JAIPUR BEFORE S/SHRI R.K. GUPTA, JM AND SANJAY ARORA, AM I.T.A NO. 114/JP/2012 ASSESSMENT YEAR: 2002-03 ANKUR MINING (P) LTD. 1, GEHLOT BHAWAN, NEW COLONY ROAD, JAIPUR [PAN: AACCA 9684 R] VS THE DY. CIT , CIRCLE- 2, JAIPUR (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI P.C. PARWAL , CA-AR REVENUE BY SHRI D.K.MEENA , JR. DR DATE OF HEARING 01/05/2012 DATE OF PRONOUNCEMENT 31/05/2012 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, JAIPUR (CI T (A) FOR SHORT) DATED 01-11-2011, DISMISSING THE ASSESSEE'S APPEAL CONTESTING ITS ASS ESSMENT U/S. 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAF TER) DATED 30-11-2009 FOR THE ASSESSMENT YEAR (A.Y.) 2002-03. 2. THE FIRST QUESTION ARISING IN THIS APPEAL BY THE ASSESSEE IS THE EXIGIBILITY TO AND/OR THE TREATMENT OF CERTAIN SUMS FORMING PART OF THE A SSESSEE'S PROFIT AND LOSS ACCOUNT FOR THE RELEVANT PREVIOUS YEAR IN COMPUTING DEDUCTION U/S. 80IB OF THE ACT. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SCREENING AND CRUSHING O F LIME STONE, LEADING TO THE MANUFACTURE OF GITTIES (OF SPECIFIC SIZE) FOR USE I N STEEL PLANTS. THE ASSESSEE THOUGH HAS RAISED A PRELIMINARY GROUND IMPUGNING THE VALIDITY OF NOTICE U/S. 148 OF THE ACT, BUT THE 2 SAME, AFTER STATING ITS CASE AND INITIAL ARGUMENTS, WAS AGREED TO BE NOT PRESSED BY THE LD. AR OF THE ASSESSEE. THE ASSESSEE'S GROUND NO. 1 IS ACCORDINGLY DISMISSED AS NOT PRESSED. THE CASE LAW RELIED ON BY THE ASSESSEE VIDE PAGES 2 AND 3 OF ITS WRITTEN SUBMISSIONS, VIZ. CIT VS. KELVINATOR INDIA LTD ., 320 ITR 561 (SC); BERGERS PAINTS INDIA LTD. VS. ACIT , 322 ITR 369 (CAL.); CIT VS. E.I.D. PARRY LTD ., 216 ITR 489 (MAD.); AND ANIL GUPTA VS. ASSESSING OFFICER , 96 TTJ 798 (DEL.), WERE ACCORDINGLY NOT REFERRED TO BY HIM, BEING UNNECESSARY. LIKEWISE, THE DECISION RELIED UPON BY THE REVENUE IN THE CASE OF CIT VS. S.M. OVERSEAS (P.) LTD ., 335 ITR 281 (P&H) WOULD BE OF NO CONSEQUENCE. 3. ON QUANTUM, THE FIRST ISSUE CONCERNS THE EXCLUSI ON BY THE REVENUE OF THE MISCELLANEOUS RECEIPTS IN THE SUM OF RS. 3,10,708/- IN WORKING OUT THE DEDUCTION U/S. 80IB OF THE ACT. THE SAME, AS EXPLAINED BY THE ASSE SSEE, PERTAINS TO ITS CRUSHING DIVISION I (THE OTHER ELIGIBLE UNIT U/S. 80IB BEING THE CR USHING DIVISION-II), IN RESPECT OF THE SALE OF RESIDUARY ITEMS AND RECEIPTS OF MISCELLANEOUS NA TURE RELATING TO ITS MANUFACTURING ACTIVITY. THE SAME BEING INTRINSICALLY CONNECTED WI TH ITS MANUFACTURING ACTIVITIES WOULD QUALIFY FOR DEDUCTION U/S. 80IB OF THE ACT (REFER P B PGS. 15 16). THERE IS IN OUR CLEAR VIEW NO REASON FOR THE SAME BEING NOT ELIGIBLE FOR DEDUCTION AS A PART OF INCOME DERIVED FROM THE RELEVANT INDUSTRIAL UNDERTAKING. HOWEVER, WE FIND THAT THE REVENUES DENIAL (OF DEDUCTION U/S. 80IB THERE-AGAINST) IS NOT ON THE GR OUND OF PRINCIPLE, BUT ON FACT/S; THE ASSESSEE BEING UNABLE TO LEAD ANY EVIDENCE TO EXHIB IT THAT IT IS INDEED SO, I.E., TO SUBSTANTIATE ITS CLAIM OF THE RECEIPT BEING INTRINS ICALLY RELATED OR INCIDENTAL TO ITS MANUFACTURING ACTIVITY (REFER PAGE 5 OF THE ASSESSM ENT ORDER). WITHOUT DOUBT, THE PROPOSITION AND THE CONCOMITANT (AFORE-STATED) VIEW EXPRESSED BY US IS ONLY ON THE ASSUMPTION OF CERTAIN FACTS, WHICH WOULD REQUIRE DE TERMINATION, I.E., FOR THE SAID VIEW TO BE APPLIED. THE ASSESSEE FAILED TO IMPROVE ITS CASE IN ANY MANNER EVEN BEFORE THE FIRST APPELLATE AUTHORITY (REFER PARA 5.1 OF THE IMPUGNED ORDER). THERE IS, AS SUCH, NO INFIRMITY ATTENDING THE ORDERS OF THE AUTHORITIES BELOW; THE ONUS TO PROVE ITS RETURN AND THE CLAIMS PREFERRED THEREBY BEING ONLY ON THE ASSESSEE, WHILE IN THE INSTANT CASE ALL IT HAS DONE IS TO MAKE BALD ASSERTION/S, UNSUPPORTED BY ANY EVIDENCE, WHICH WE SUPPOSE SHOULD BE 3 AVAILABLE IN ABUNDANCE. EVEN BEFORE US, THE ASSESSE E HAS ONLY REITERATED ITS STAND WITHOUT ANY SUBSTANTIATION, EVEN AS THE LAW ITSELF PRECLUDE S OR PLACES RESTRICTION ON THE ADMISSION OF MATERIAL AT THIS STAGE. WE DECIDE ACCORDINGLY. 4. THE NEXT ISSUE BEING AGITATED BY THE ASSESSEE (P ER ITS GD. # 2B) IS IN RESPECT OF ALLOCATION OF HEAD OFFICE (H.O. FOR SHORT) EXPENS ES, INCURRED AT RS. 29.22 LACS , AGAINST INCOME OF ITS ELIGIBLE UNITS. THE ASSESSEE CLAIMS T HIS SUM AGAINST THE H.O. INCOME, REFLECTED AT RS. 28,78,970/- , AND WHICH WAS OBSERVED TO BE IN THE NATURE OF MIS CELLANEOUS INCOME, VIZ. BANK INTEREST ON FDRS (RS. 10.40 LACS) AND DIVIDEND (RS. 17.44 LACS) IN THE MAIN, AND WHICH WAS, RATHER, ASSESSABLE U/S. 56 OF THE ACT AS INCOME FROM OTHER SOURCES. THERE IS NO QUESTION OF THE ASSESSEE HAVING INCURRE D ANY EXPENDITURE THERE-AGAINST, MUCH LESS SUBSTANTIAL, AS CLAIMED. THE HO FUNCTIONS ONLY FOR AND TOWARD SERVICING THE DIFFERENT OPERATIONAL UNITS, SO THAT ITS ENTIRE EXPENDITURE W OULD BE REQUIRED TO BE ALLOCATED THERETO, ALBEIT ON SOME BASIS/CRITERION. THE ASSESSING OFFIC ER (A.O.), THEREFORE, ALLOWED A SUM OF RS. 2.00 LACS AS A REASONABLE DEDUCTION AGAINST THE SAID INCOME, SO THAT BALANCE EXPENDITURE OF RS. 27.22 LACS WOULD STAND TO BE ALL OCATED AND, THUS, REDUCED FROM THE ELIGIBLE PROFITS. BEFORE THE FIRST APPELLATE AUTHOR ITY, THE ASSESSEE'S CASE WAS THAT IT HAD BEEN ALLOWED AN EXPENDITURE OF RS. 2.00 LACS FOR AS SESSMENT YEAR 2001-02 AGAINST THE MISCELLANEOUS INCOME OF RS. 10.13 LACS. PROPORTIONA TE DISALLOWANCE FOR THE CURRENT YEAR MAY THUS BE DIRECTED; THE ASSESSEE HAVING DISCLOSED AN INCOME OF RS. 28.79 LACS. THE SAME DID NOT FIND FAVOUR WITH THE LD. CIT(A) ON THE BASIS THAT THE INCOME UNDER REFERENCE IS PRINCIPALLY AN INVESTMENT INCOME, WHICH FLOWS IN CONSEQUENCE TO THE INVESTMENT, AND DOES NOT BY ITS VERY NATURE REQUIRE ANY DIRECT OUTG O. THE AO IN HIS VIEW HAD BEEN IN FACT MOST REASONABLE IN HAVING ALLOWED EXPENDITURE AT RS . 2.00 LACS, ON THE BASIS THAT THE POSSIBILITY OF HAVING SOME NOMINAL EXPENDITURE IN I TS RESPECT CANNOT THOUGH BE RULED OUT, SO THAT NO CASE FOR ANY FURTHER RELIEF WAS MADE OUT . AGGRIEVED, THE ASSESSEE IS IN APPEAL. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE PRIMARY FACTS ARE UNDISPUTED, WITH THE LD. AR MAKING LIKE SUBMISS IONS BEFORE US. THE REVENUES ARGUMENT IS UNEXCEPTIONAL; THE ASSESSE HAVING FAILE D TO EXHIBIT INCURRING ANY DIRECT COSTS 4 AGAINST THE EARNING OF THE HO INCOME, SO THAT ONLY A CASE OF HAVING INCURRED SOME NOMINAL EXPENDITURE THERE-AGAINST OBTAINS. IN FACT, TO BE FAIR WE FIND THAT THE ASSESSEE DOES NOT SERIOUSLY DISPUTE THE SAME; HAVING ITSELF CONCEDED TO ITS CLAIM FOR DEDUCTION U/S. 80IB BEING WITHDRAWN (TO THE EXTENT OF RS. 7,86,342 /-) ON BEING SHOW CAUSED U/S. 154 OF THE ACT IN ITS RESPECT, AND ONLY ON THAT BASIS. EV EN WITH REGARD TO ITS CLAIM FOR SET OFF OF EXPENDITURE QUA HO INCOME, IT MAKES OUT A CLAIM ONLY WITH REFERENC E TO THE PRECEDING YEAR, THOUGH WE MAY CLARIFY THAT IT HAS NOT BEEN AB LE TO SHOW US ANY FINDING BY THE REVENUE AS REGARDS INCURRING OF THE INDIRECT EXPEND ITURE IN A DIRECT PROPORTION OF INCOME, WHICH, IF SO, WOULD RATHER MAKE IT A DIRECT EXPENDI TURE, I.E., BY DEFINITION. SO, HOWEVER, ON THE BENCH FINDING THE ASSESSEE'S CHALLENGE TO IT S ASSESSMENT ON THE GROUND OF ASSUMPTION OF JURISDICTION U/S. 147 OF THE ACT, AT LEAST IN-SO-FAR AS THE DEDUCTION U/S. 80IB ON RS. 7.86 LACS IS CONCERNED, AS VALIDLY MADE; THE ORDER DROPPING PROCEEDINGS U/S. 154 HAVING BEEN PASSED BEYOND THE TIME OF LIMITATION, W HILE, ON THE OTHER HAND, THE ASSESSEE DID NOT HAVE MUCH OF A CASE ON MERITS, THE PARTIES CONCEDED THEIR RESPECTIVE STANDS. THAT IS, THE ASSESSEE QUA THE SAID CHALLENGE (PER ITS GROUND NO. 1) AND THE REVENUE QUA INSISTENCE ON RESTRICTING THE SET OFF OF HO EXPENSE S AT RS. 2.00 LACS, IN FAVOUR OF IT BEING ALLOWED A PROPORTIONATE CLAIM VIS-A-VIS THE MISCELL ANEOUS INCOME. THE ASSESSEE CLAIMS TO HAVE BEEN ALLOWED THE SAID HO EXPENDITURE AT 20% FO R THE IMMEDIATELY PRECEDING YEAR. IF SO, WHICH WOULD BE CONFIRMED BY THE AO, THE ASSESSE E SHALL BE ALLOWED PROPORTIONATE CLAIM, I.E., AT 20% OF THE HO INCOME ASSESSED FOR T HE CURRENT YEAR, WHETHER AS BUSINESS INCOME OR AS INCOME FROM OTHER SOURCES. RESULTANTLY , ONLY THE BALANCE (SAY, 80%), OF THE IMPUGNED EXPENDITURE SHALL BE ADJUSTED AGAINST THE PROFITS OF THE ASSESSEES UNDERTAKINGS. WE MAY AT THE SAME TIME CLARIFY THAT WE DIRECT SO N OT ON THE BASIS OF ANY FINDING/S OF FACT; WE HAVING RATHER OURSELVES CLEARLY STATED OF THE ASSESSEE'S CLAIM AS BEING VALID ONLY IN TERMS OF SOME NOMINAL, INDIRECT EXPENDITURE, TO WHICH BY DEFINITION NO FIXED RATIO OR PERCENTAGE CAN BE ASSIGNED AS SUCH. FURTHER, THE BA SIS OF OUR PRESENT DECISION BEING A CONCESSION BY BOTH THE PARTIES, THE SAME COULD NOT THUS FORM A BASIS FOR ANY DECISION IN THE MATTER FOR ANY OTHER YEAR. WE DECIDE ACCORDINGL Y. 5 6. IN THE RESULT, THE ASSESSEE'S APPEAL IS PART LY ALLOWED. SD/- SD/- (R.K. GUPTA) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: JAIPUR, DATED: MAY 31, 2012 *MISHRA COPY TO: 1. M/S. ANKUR MINING (P) LTD., JAIPUR 2. THE DCIT, CIRCLE- 2, JAIPUR 3. THE CIT (APPEALS)-I, JAIPUR 4. THE CIT CONCERNED 5. THE D.R., I.T.A.T. 6. GUARD FILE (ITA NO.114/JP/2012) BY ORDER (ASSISTANT REGIST RAR) ITAT, JAIPUR BENCHES