M/s. Kashmir Udyog, Jammu V. The Addl.Commissioner of Income-tax, Jammu

ITA 124/ASR/2011

• Counselvise Citation: 12420914 RSA 2011
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S K BANSAL
• Section: 43B; 234B; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.124(ASR)/2011 ASSESSMENT YEAR:2006-07 PAN :AADFK9880Y M/S. KASHMIR UDYOG VS. THE ADDL. COMMR. OF INCOME- TAX, PHASE-1, INDUSTRIAL AREA, RANGE-1, JAMMU. GANGYAL, JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.S.K. BANSAL, ADV. RESPONDENT BY:SH. TARSEM LAL, DR DATE OF HEARING: 08/08/2012 DATE OF PRONOUNCEMENT:21/08/2012 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISE FROM THE IMPUGNE D ORDER OF THE CIT(A), JAMMU, DATED 15.02.2011 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1. THAT THE ORDER UNDER APPEAL IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW, IN NOT ACC EPTING THE CONTENTION OF THE APPELLANT THAT TO THE PAYMENTS MA DE TO THE SICOP, PROVISIONS OF SECTION 40(A)(IA) OF THE INCOM E TAX ACT ARE NOT ATTRACTED AS NO SERVICES ARE PROVIDED BY SI COP AND THE ITA NO.124(ASR)/2011 2 DISALLOWANCE MADE OF RS.11,19,975/- U/S 40(A)(IA) O F THE INCOME-TAX ACT IS NOT SUSTAINABLE IN LAW. 3. THAT THE CIT(A) HAS ALSO ERRED IN LAW, IN NOT AC CEPTING THE ALTERNATE SUBMISSION OF THE APPELLANT THAT ASSUMING BUT NOT ADMITTING THAT PROVISIONS OF SECTION 40(A)(IA) ARE ATTRACTED TO THE PAYMENTS MADE TO SICOP, EVEN THEN THE AMOUNT OF RS.11,19,975/- DISALLOWED SHOULD HAVE BEEN TREATED AS PART OF PROFITS AND GAINS OF THE BUSINESS OR PROFESSION AND DEDUCTION U/S 80IB OF THE INCOME TAX ACT SHOULD HAVE BEEN ALLOWED . 4. THAT THE DEMAND CREATED ON ACCOUNT OF INTEREST U /S 234B RELATING TO AMOUNT OF RS.11,19,975/- DISALLOWED U/S 40(A)(IA) IS CONTESTED AS INTEREST HAS WRONGLY BEEN CHARGED U/S 234B. 5. THAT THE APPELLANT RESERVES THE RIGHT TO ADD, AM END ALTER OR MODIFY ANY/ALL GROUND(S) OF APPEAL EITHER BEFORE OR DURING THE HEARING OF APPEAL. 3. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE, SH. S.K. BANSAL, ADVOCATE, STATED THAT THE ISSUE INVOLVED IN THE PRESENT APPEAL HAS ALREADY BEEN ADJUDICATED AND DECIDED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF THE ITAT, AMRITSAR BENCH, IN THE CASE O F DCIT,CIR.1, JAMMU VS. M/S. SINGLA CABALES, JAMMU, IN ITA NO.147(ASR)/2012 FOR THE A.Y. 2009- 10, DATED 01.06.2012. HE ALSO DREW OUR ATTENTION TO PARA 10 (PAGE 7) OF THE SAID ORDER AND STATED THAT IN VIEW OF ORDER DATED 0 1.06.2012 PASSED BY THIS BENCH, THE APPEAL FILED BY THE REVENUE MAY BE DISMI SSED. 4. ON THE OTHER HAND, THE LD. DR, RELIED UPON THE O RDER OF THE CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. AS REGARDS THE PAYMENT OF SERVICE CHARGES TO SICOP, JAMMU, THE SAME IS ITA NO.124(ASR)/2011 3 NOT DENIED AND M/S. SICOP JAMMU, WHEN MAKES PAYMENT S TO THE ASSESSEE FOR THE PURCHASES MADE ON BEHALF OF OTHER DEPARTMEN TS, IT DEDUCTS SERVICE CHARGES OUT OF THE SAME, CANNOT ALTER APPLICABILI TY OF TDS PROVISIONS TO SUCH SERVICE CHARGES AND THEREFORE, TDS PROVISIONS ARE CLEARLY APPLICABLE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) IN THIS RESPECT, WHO HAS RIGHTLY MADE THE DISALLOWANCE. THUS, GROUND NO.2 OF THE ASS ESSEE IS DISMISSED. 6. AS REGARDS GROUND NO.3, THE LD. COUNSEL FOR THE ASSESSEE, SH. S.K. BANSAL, HAS PLACED ON RECORD, THE DECISION OF THE I TAT, AMRITSAR BENCH, IN THE CASE OF DCIT,CIR.1, JAMMU VS. M/S. SINGLA CABA LES, JAMMU, IN ITA NO.147(ASR)/2012 FOR THE A.Y. 2009-10, DATED 01.06. 2012, WHERE ON IDENTICAL ISSUE, ITAT, AMRITSAR BENCH, FOLLOWING TH E DECISION OF M/S. SUN PHARMACEUTICALS, IN ITA NO.184(ASR)/2009, DATED 11. 06.2010 FOR THE ASSESSMENT YEAR 2005-06 HAVE HELD THAT DEDUCTION U NDER SECTION 80IB OF THE ACT, IS ALLOWABLE ON THE AMOUNT OF ENHANCED INCOME IN VIEW OF THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT AND ACCO RDINGLY THE AO WAS DIRECTED TO ALLOW DEDUCTION U/S 80IB OF THE ACT BEI NG ENHANCEMENT OF INCOME DUE TO DISALLOWANCE U/S 40(A)(IA) OF THE AC T. THE RELEVANT AND OPERATIVE PART OF THE DECISION OF THE ITAT IN THE C ASE OF M/S. SUN PHARMACEUTICALS (SUPRA) IS REPRODUCED HEREUNDER FOR THE SAKE OF CLARITY WHICH HAS BEEN REPRODUCED BY THE CIT(A) IN HIS ORDE R ALSO.: ITA NO.124(ASR)/2011 4 38 AS REGARDS TO THE ADDITIONAL GROUND NOS.1, 2 AN D 3 CLAIMING CONSEQUENTIAL THE HIGHER DEDUCTION UNDER S ECTION 80IB ON ACCOUNT OF DISALLOWANCE OF REMUNERATION UNDER SE CTION 40(B) AMOUNTING TO RS.33,20,15,856/-, DISALLOWANCE UNDER SECTION 43B AMOUNTING TO RS.18,46,427/- AND DISALLO WANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.4,80,301/- FOR CONTRIBUTION OF DEDUCTION UNDER SECTION 80IB. THE LEARNED D.R. RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 39. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY EXAMINED THE RECORDS. WE FIND THAT S ECTION 80AB STATES IN CLEAR TERMS AS UNDER:- SECTION 80AB. WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOW ED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEAD ING C.- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN RESPEC T OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION WHIC H IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NO TWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTION, THE AMO UNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASS ESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME. 40. UNDER THE CIRCUMSTANCES TO THE EXTENT DISALLOWA NCE AND/OR THE ADDITIONS ARE MADE, WHICH ARE SUBJECT MA TTER OF ADDITIONAL GROUND, ORIGINAL PROFIT TO THE APPELLANT WOULD STAND ENHANCED OR EVEN ON THIS PROFIT WOULD GET DEDUCTION UNDER SECTION 80IB. ACCORDINGLY, THE ADDITIONS AMOUNTS (RS.32,20,15,856/-, RS.18,46,427/- AND RS.4,80,301/ -) ARE INCLUDED IN THE GROSS TOTAL INCOME, CONSEQUENTLY DE DUCTION UNDER SECTION 80IB IS ALLOWABLE ON SUCH HIGHER AMOU NT. HENCE, THESE ADDITIONAL GROUNDS OF APPEALS ARE ALLO WED SUBJECT TO THE PROVISIONS OF SECTION 70A(2) READ WITH SECTI ON 80AB AND 80B(5) OF THE I.T. ACT. ITA NO.124(ASR)/2011 5 6.1. IN VIEW OF OUR DECISION IN THE CASE OF DCIT,C IR.1, JAMMU VS. M/S. SINGLA CABALES, JAMMU (SUPRA), THE AO IS DIRECTED T O ALLOW DEDUCTION U/S 80IB ON THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THUS, GROUND NO.3 OF THE ASSESSEE IS ALLOWED. 7. AS REGARDS GROUND NO.4 RELATING TO CHARGING OF I NTEREST U/S 234B OF THE ACT, THE SAME IS MANDATORY AND CONSEQUENTIAL IN NATURE. 8. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE AND THER EFORE, REQUIRE NO ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.124(ASR)/2011 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST AUGUST, 2012. SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: AUGUST, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S./ KASHMIR UDYOG, JMMU 2. THE ADDL. CIT, R-1, JAMMU 3. THE CIT(A) 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER