Asst. Comm.of Income-tax, Circle-10, Pune V. Udit Packaging Pvt. Ltd., Pune

ITA 1272/PUN/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2041 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 10-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER, AND SHRI R.S.PADVEKAR, JUDICIAL MEMBER. ITA.NO.1272/PN/2011 (ASSTT. YEAR : 2004-05) ACIT, CIRCLE-10, PUNE. .. APPELLANT VS. M/S.UDIT PACKAGING PVT. LTD., GAT NO.1415, VILLAGE SHIKRAPUR, PUNE NAGAR ROAD, PUNE 412208. .. RESPONDENT PAN: AAACU2205Q ASSESSEE BY : SHRI KISHOR PHADKE DEPARTMENT BY : MS.ANN KAPTHUAMA DATE OF HEARING : 12.02.2013 DATE OF PRONOUNCEMENT : 25.02.2013 ORDER PER R.S.PADVEKAR, JM : IN THIS APPEAL, THE REVENUE HAS CHALLENGED THE IMP UGNED ORDER OF THE LD.CIT(A)-V, PUNE, DATED 18.07.2011 FOR THE A.Y. 2004-05. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPE AL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN ALLOWING CLAIM OF THE EXPENDITURE O F RS.2,56,892/- INCURRED FOR OBTAINING ISO CERTIFICAT ION AS REVENUE EXPENDITURE WHEN IT IS CLEARLY IN THE NATURE OF CA PITAL EXPENDITURE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) ERRED IN ALLOWING THE CLAIM OF DEPRECIATION OF RS.1,93,656/- ON VEHICLE REGISTERED IN THE NAME OF THE DIRECTORS OF THE COMPANY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF CL AIM U/S.80IB(3) OF THE ACT ON LABOUR CHARGES AMOUNTING TO RS.6,05,996/- AND SUNDRY BALANCES WRITTEN BACK OF RS.6,85,546/-. 2. WE HAVE HEARD THE PARTIES. SO FAR AS THE FIRST GROUND IS CONCERNED, WE FIND THAT ISSUE IS SQUARELY COVERED B Y THE DECISION OF THE ITAT DELHI BENCH IN THE CASE OF CLIMATE SYSTEMS INDIA LTD. (2010) 2 2 ITR (TRIB) 168 (DEL). IN THE CASE OF CLIMATE SYS TEMS INDIA LTD., (SUPRA), IT IS HELD THAT EXPENDITURE INCURRED FOR G ETTING ISO CERTIFICATION IS IN THE NATURE OF REVENUE EXPENDITU RE. RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF CLIMATE SYSTE MS INDIA LTD. (SUPRA), ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. GROUND NO.1 IS DISMISSED. 3. GROUND NO.2 IS IN RESPECT OF THE DISALLOWANCE OF DEPRECIATION OF RS.1,96,656/- ON THE VEHICLE REGISTERED IN THE NAME S OF DIRECTORS OF THE COMPANY. WE FIND THAT THE LD. CIT(A) HAS FOLLO WED THE DECISION OF THE ITAT, PUNE BENCH, IN THE CASE OF SMASH ELECTRIC ALS ITA.NO.1394/PN/2006 DATED 29.08.2008. WE, THEREFOR E, FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) ON THE ISSUE OF DEPRECIATION AND ACCORDINGLY, GROUND NO.2 IS DISMIS SED. 4. SO FAR AS GROUND NO.3 IS CONCERNED, THE REVENUE HAS AGGRIEVED FOR DELETING THE DISALLOWANCE OF CLAIM U/S.80IB(3) OF THE ACT ON THE LABOUR CHARGES AMOUNTING TO RS.6,05,996/- AND SUNDR Y BALANCES WRITTEN BACK OF RS.6,85,546/-. IN THIS CASE, THE R EVENUE HAS NOT CHALLENGED THE ELIGIBILITY OF THE ASSESSEE FOR CLAI MING DEDUCTION U/S.80IB(3) OF THE ACT. THE ONLY LIMITED CONTROVER SY IS IN RESPECT OF THE LABOUR CHARGES RECEIVED BY THE ASSESSEE OF RS.6 ,05,996/- WHICH WERE DECLINED BY THE ASSESSING OFFICER TO BE TREATE D AS PART OF THE ELIGIBLE PROFIT. AS INTERPRETED BY THE ASSESSING O FFICER, THE ASSESSEE IS ENTITLED TO THE DEDUCTION @ 80% OF THE ELIGIBLE PRO FITS WHICH IS DERIVED FROM THE INDUSTRIAL UNDERTAKING WHICH IS ENGAGED IN MANUFACTURE OR PRODUCTION OF ARTICLES OR THINGS. IN THE OPINION O F THE ASSESSING OFFICER, THE LABOUR CHARGES RECEIVED BY THE ASSESSE E CANNOT BE TREATED AS INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. HE THEREFORE, DECLINED TO CONSIDER THE SAME AS PART OF THE ELIGIB LE PROFIT. THE LD. CIT(A) ALLOWED THE ASSESSEES CLAIM FOLLOWING HIS D ECISION IN ASSESSEES OWN CASE FOR THE A.Y. 2003-04 BY THE LD.CIT(A)-III, PUNE, ORDER DATED 29.03.2006. THE LD. COUNSEL MADE A STATEMENT AT BA R THAT THE REVENUE HAS NOT CHALLENGED THE SAID ORDER. OTHERWI SE ALSO, IN OUR OPINION, THE INTERPRETATION GIVEN BY THE ASSESSING OFFICER TO THE EXPRESSION DERIVED FROM IS TOTALLY MISPLACED. AD MITTEDLY, THE LABOUR 3 CHARGES RECEIVED BY THE ASSESSEE ARE FROM THE ACTIV ITY OF THE MANUFACTURING AND THIS IMPORTANT FACTUAL ASPECT HAS NOT BEEN CONTROVERTED BEFORE US. WE, THEREFORE, CONFIRM THE ORDER OF THE LD. CIT(A) ON THE ISSUE OF CONSIDERATION OF THE LABOUR CHARGES AS PART OF THE ELIGIBLE PROFIT. SO FAR AS THE ISSUE OF SUNDRY BALANCES WRITTEN OFF OF RS.6,85,546/-, NOTHING IS CLEAR FROM THE ORDERS OF BOTH THE AUTHORITIES BELOW IN RESPECT OF THE NATURE OF THE BALANCES WRIT TEN OFF. WHETHER THE SAME ARE ON THE REVENUE ACCOUNT OR CAPITAL ACCO UNT, WHICH HAVE ALREADY BEEN CONSIDERED WHILE COMPUTING THE PROFIT OF THE ASSESSEE, THE SAME ARE TO BE CONSIDERED FOR THE PURPOSE OF WO RKING OUT THE DEDUCTION U/S.80IB(3). WE, THEREFORE, WITH THE CON SENT OF BOTH THE PARTIES, RESTORE THE ISSUE OF SUNDRY BALANCES WRITT EN OFF TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION IN THE LIGHT OF OUR ABOVE OBSERVATION. IN THE RESULT, GROUND NO.3 OF THE REV ENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSING OF FICER SHOULD GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER T HE PRINCIPLES OF NATURAL JUSTICE. 5. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF FEBRUARY, 2013. SD/- SD/- ( G.S.PANNU ) ( R.S.PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER GSPS PUNE, DATED THE 25 TH FEBRUARY, 2013 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE ACIT, CIRCLE-10, PUNE. 3. THE CIT(A)-V, PUNE. 4. THE CIT-V, PUNE. 5. THE DR A BENCH, PUNE. 6. GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE.