DCIT, Parwanoo V. M/s J.B. Contractor & Cable, Solan

ITA 1201/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2475 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-03-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 15-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: ADITYA KUMAR
• Keywords: Business income
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B,CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIA L MEMBER ITA NO. 1201/CHD/2012 ASSESSMENT YEAR:2009-10 THE DCIT, CIRCLE, V M/S J.B.CONDUCT ORS & CABLES, PARWANOO. VILLAGE KIRPALPUR, KALKA ROAD, NALAGARH, DISTT. SOLAN (HP). PAN NO. AABFJ-0572D (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI MANJIT SINGH ASSESSEE BY : SHRI ADITYA KUMAR DATE OF HEARING : 19.06.2013 DATE OF PRONOUNCEMENT : 26.6.2013 O R D E R PER SUSHMA CHOWLA, JM THE REVENUE HAS FILED THE APPEAL AGAINST THE ORDER OF CIT(A), DATED 13.08.2012 RELATING TO ASSESSMENT YEAR 2009-1 0 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD . CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION CLAIMED UNDER SECTION 80IC A MOUNTING TO RS. 99,63,438/-. 2. THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM O F THE ASSESSEE ON ACCOUNT OF PROCESSING CHARGES FOR GETTING THE WORK DONE BY M/S MEGNA WIRES PVT LTD. FOR THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM O F THE ASSESSEE AGAINST INCOME UNDER THE HEAD 'REBATE AND DISCOUNT AND INTEREST FROM PARTIES' WHICH WAS DISALLOWED BY THE A.O. FOR CLAIMING DEDUCTION U/S 80IC. 2 4. IT IS PRAYED THAT THE ORDER OF THE LD CIT(A) BE SET-ASIDE AND THAT OF THE A.O. RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD ANY OTHER GROU ND OF APPEAL WHICH MAY ARISE AT THE TIME OF HEARING. 3. THE LD. AR FOR THE ASSESSEE AT THE OUTSET POINTE D OUT THAT THE ISSUE RAISED VIDE GROUND NO.1 IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN EARLIER YEARS. 4. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON TH E ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE RAISED VIDE GROUND NO.1 IS AGAINST THE OR DER OF CIT(APPEALS) ALLOWING DEDUCTION CLAIMED U/S 80IC OF THE ACT. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF INSULAT ED WIRES AND STRIPS OF COPPER AND ALUMINUM. THE ASSESSEE HAD CL AIMED DEDUCTION U/S 80IC OF THE ACT ON SUCH DRAWING OF WIRES. SIMI LAR DEDUCTION WAS CLAIMED BY THE ASSESSEE IN ASSESSMENT YEARS 200 5-06 TO 2008-09 WHICH WAS NOT ALLOWED BY THE AO FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF M/S COLLEC TOR OF CENTRAL EXCISE V TECHNOWELD INDUSTRIES LTD. DATED 27.03.200 3 AND REPORTED IN (2003) 155-ELT-229(S.C). HOWEVER, THE CHANDIGAR H BENCH OF TRIBUNAL IN ITA NO. 215/CHD/2009 RELATING TO A.Y. 2 005-06, VIDE ORDER DATED 30.11.2009 ALLOWED THE CLAIM OF THE ASS ESSEE. THE AO, DURING THE PROCEEDINGS RELATING TO THE CAPTIONED AS SESSMENT YEAR ADMITTED THAT THE TRIBUNAL HAD ALLOWED THE CLAIM OF THE ASSESSEE SINCE THE REFERENCE BEFORE HON'BLE HIGH COURT OF HI MACHAL PRADESH ON THE SAID ISSUE WAS PENDING, DISALLOWED THE DEDUC TION CLAIMED U/S 80IC OF THE ACT. THE CIT(APPEALS), IN TURN FOLLOWI NG THE ORDER OF THE TRIBUNAL (SUPRA) IN ASSESSEE'S OWN CASE ALLOWED THE CLAIM OF THE 3 ASSESSEE. WE FIND THAT THE ISSUE RAISED VIDE GROUN D NO.1 BY THE REVENUE IS SQUARELY COVERED BY THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF TRIBUNAL IN ASSESSEE'S OWN CASE RELATING TO ASSESSMENT YEAR 2005-06 (SUPRA) WHEREIN VIDE ORDER DATED 30.11.2009, TRIBUNAL HAD HELD THE ASSESSEE TO BE IN VOLVED IN MANUFACTURING PROCESS AGAINST WHICH DEDUCTION U/S 8 0IC OF THE ACT WAS ALLOWABLE. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN ASSESSEE'S OWN CASE FOR THE OTHER YEARS ALSO. FOLL OWING THE PARITY OF REASONING, WE HOLD THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION U/S 80IC OF THE ACT. UPHOLDING THE ORDER OF THE CIT(APPEALS), WE DISMISS THE GROUND NO.1 RAISED BY THE REVENUE. 6. THE ISSUE IN GROUND NO.2 RAISED BY THE REVENUE I S AGAINST THE ORDER OF THE CIT(APPEALS) IN HOLDING THAT NO DISALL OWANCE U/S 80IC OF THE ACT IS WARRANTED ON ACCOUNT OF PROCESSING CH ARGES PAID FOR GETTING THE WORK DONE FROM M/S MEGNA WIRES (P) LTD. THE ASSESSEE HAD GOT SOME JOB OF WIRE DRAWING AMOUNTING TO RS.40 9,508/- DONE FROM M/S MEGNA WIRES (P) LTD. THE EXPLANATION OF T HE ASSESSEE BEFORE THE AO WAS THAT ONLY PART OF PROCESS I.E. DR AWING WAS GOT DONE FROM THE SAID PARTY BUT THE INSULATION PROCESS WAS CARRIED OUT BY THE ASSESSEE ITSELF. THE AO, HOWEVER DENIED THE DEDUCTION U/S 80IC OF THE ACT ON THIS ASSIGNMENT. HOWEVER, NO SE PARATE ADDITION WAS MADE TO THE RETURNED INCOME AS THE ENTIRE DEDUC TION CLAIMED U/S 80IC OF THE ACT WAS DENIED BY THE AO. 7. THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESS EE OBSERVING AS UNDER : 6.2 THE APPELLANT'S CONTENTION HAS BEEN CONSIDERED AND IS FOUND TO BE CORRECT. THE A.O. HAS DULY MENTIONED THAT THE APPEL LANT PAID PROCESSING CHARGES TO M/S MAGNA WIRES (P) LTD. THE GENUINENESS OF THE SAID EXPENSES HAS NOT BEEN 4 DOUBTED BY THE LD. A.O. HE HAS SIMPLY MISLED HIMSEL F INTO MISTAKING THE SAID EXPENDITURE FOR INCOME AND THEN BY REFUSING DEDUCTI ON U/S 80IC ON THE SAME. THERE IS NO GROUND FOR MAKING ANY ADDITION ON ACCOU NT OF EXPENDITURE CLAIMED BY THE APPELLANT AS THE SAME IS NOT THE SUBJECT MAT TER OF CLAIM FOR DEDUCTION U/S 80IC OF THE ACT. THE DISALLOWANCE ON THE SAID HEAD MADE BY THE ID. A.O. IS ACCORDINGLY DELETED. THE APPELLANT SUCCEEDS ON THIS GROUND OF APPEAL. 8. WE ARE IN CONFORMITY WITH THE OBSERVATIONS OF CI T(APPEALS) VIDE PARA 6.2 THAT THERE IS NO GROUND FOR MAKING AN Y ADDITION ON ACCOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE BY W AY OF PROCESSING CHARGES PAID TO M/S MEGNA WIRES (P) LTD., AS THE SA ME WAS NOT THE SUBJECT MATTER OF CLAIM OF DEDUCTION U/S 80IC OF TH E ACT. UPHOLDING THE ORDER OF CIT(APPEALS), WE DISMISS THE GROUND OF APPEAL RAISED BY THE REVENUE. 9. THE ISSUE IN GROUND NO.3 RAISED BY THE REVENUE I S AGAINST THE ALLOWANCE OF CLAIM OF DEDUCTION U/S 80IC OF THE ACT ON REBATE AND DISCOUNT AND INTEREST FROM PARTIES. 10. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD DECLARED INTEREST FROM PARTIES (CUSTOMERS) AT RS.13 2,410/- AND REBATE AND DISCOUNT AT RS.28,75,313/- AND HAD CLAIMED DEDU CTION U/S 80IC OF THE ACT AGAINST THE SAID RECEIPTS. THE EXPLANAT ION OF THE ASSESSEE THAT THE INTEREST ON DELAYED PAYMENTS PARTAKE THE C HARACTER OF SALES AND HENCE PART OF SALES, WAS REJECTED BY THE AO AND DEDUCTION U/S 80IC OF THE ACT WAS DENIED. SIMILARLY, DEDUCTION O N REBATES AND DISCOUNTS WAS ALSO NOT ALLOWED BY ASSESSING OFFICER TO THE ASSESSEE IN VIEW OF THE FIRST DEGREE TEST LAID DOWN BY THE H ON'BLE SUPREME COURT IN LIBERTY INDIA V CIT 317 ITR 218 (S.C). 11. THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSES SEE OBSERVING 5 AS UNDER : 5.4 THE APPELLANT'S SUBMISSIONS HAVE BEEN CAREFULL Y CONSIDERED VIS--VIS THE FACTS OF THE CASE AND ALSO THE DECISION OF HON'BLE SUPREME COURT SUPRA. IT IS SEEN THAT THE REBATE/DISCOUNT RECEIVED BY THE APPELLANT IS DIRECTLY RELATABLE TO ITS PURCHASES AND COULD HAVE BEEN PRESENTED IN THE TRAD ING/ MANUFACTURING ACCOUNT BY WAY OF BOOKING OF NET AMOUNT OF PURCHASES. HERE THE REBATE RECEIVED IS NOT IN THE NATURE OF RECEIPT SO AS TO BELONG TO THE CATEGO RY OF ANCILLARY PROFIT. THESE RECEIPTS ARE INTRINSIC TO THE MAIN BUSINESS ACTIVIT Y OF THE APPELLANT AND, THEREFORE, QUALIFY FOR DEDUCTION U/S 80IC OF THE AC T. ACCORDINGLY THE SAME IS DIRECTED TO BE ALLOWED. 12. THE CLAIM OF THE ASSESSEE BEFORE US WAS THAT TH E REBATE AND DISCOUNT WAS ON THE PURCHASES WHICH WAS SEPARATELY SHOWN IN THE PROFIT & LOSS ACCOUNT WHEREAS THE SAME COULD HAVE B EEN DEBITED TO THE PURCHASE ACCOUNT AND THE NET AMOUNT COULD HAVE BEEN SHOWN AS PURCHASES. THE INTEREST ON DELAYED PAYMENTS WAS CL AIMED TO BE LINKED TO THE SALES AND HENCE, PART OF SALES ON WHI CH DEDUCTION U/S 80IC OF THE ACT WAS TO BE ALLOWED. 13. THE LD. DR PLACED RELIANCE ON THE ORDER OF THE AO. 14. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING VIDE GROUND NO.3 IS IN RELATION T O CLAIM OF DEDUCTION U/S 80IC OF THE ACT ON REBATE AND DISCOUN T AND INTEREST RECEIVED FROM CUSTOMERS. WE ARE IN CONFORMITY WITH THE ORDER OF CIT(APPEALS) THAT BOTH THE RECEIPTS ARE INTRINSICAL LY LINKED TO THE BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE AND FO LLOWING THE FIRST DEGREE TEST LAID DOWN BY THE HON'BLE SUPREME COURT IN LIBERTY INDIA V CIT (SUPRA) PARTAKE THE NATURE OF BUSINESS RECEIP TS IN HANDS OF THE ASSESSEE ON WHICH THE ASSESSEE IS ENTITLED TO CLAIM OF DEDUCTION U/S 80IC OF THE ACT. THE REBATE AND DISCOUNT WAS RECEI VED BY THE ASSESSEE ON THE PURCHASES MADE BY IT AND THE INTERE ST FROM CUSTOMERS 6 WAS RECEIVED ON DELAYED PAYMENTS AND BOTH BEING IN THE NATURE OF BUSINESS RECEIPTS, DIRECTLY LINKED TO THE BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE ARE ENTITLED TO THE CLAIM OF DEDUCT ION U/S 80IC OF THE ACT. UPHOLDING THE ORDER OF CIT(APPEALS), WE DISMI SS THE GROUND OF APPEAL NO.3 RAISED BY THE REVENUE. 15. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 26 TH DAY OF JUNE, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH JUNE,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH