ITO, Baddi V. M/s Swastik Wire Products, Solan

ITA 1304/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0684 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1304/CHD/2012 (ASSESSMENT YEAR : 2009-10) THE INCOME TAX OFFICER, VS. M/S SWASTIK WIRE PROD UCTS, BADDI, (H.P.) PLOT NO.65, EPIP, PHASE-I, JHARMAJRI BADDI, DISTT. SOLAN. PAN: ABGFS3429J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AKHILESH GUPTA, DR RESPONDENT BY : NONE DATE OF HEARING : 19.02.2013 DATE OF PRONOUNCEMENT : 28.02.2013 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SHIMLA DATED 14.09.2012 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN ALLOWING CLAIM OF DEDUCTION U/S 80IC OF TH E ACT AS SO CALLED MANUFACTURING OF WIRE FROM THICKER GAUZE TO THINNER GAUZE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FURTHER ERRED IN DELETING ADDITION OF RS.20,71,675/ - MADE BY THE A.O. ON THE GROUND THAT THE ASSESSEE FIRM HAD D EBITED LESS MANUFACTURING EXPENSES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE MANUFACTURING OF ENAMELED COPPER WIRE. THE MANUFAC TURING PROCESS 2 UNDERTAKEN BY THE ASSESSEE INVOLVES DRAWING OF COPP ER WIRE WHICH AFTER THE DRAWING, IS ANNEALED AND ENAMELED. THE ASSESSE E HAD CLAIMED DEDUCTION UNDER SECTION 80IC OF THE ACT AGAINST PRO FITS EARNED FROM SUCH MANUFACTURING PROCESS. THE ASSESSING OFFICER DISAL LOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF COLLECT OR OF CENTRAL EXCISE VS. TECHNO WELD INDUSTRIES 2003 (155) ELT 209 (SC). 4. THE CIT (APPEALS) ALLOWED THE CLAIM OF THE ASSES SEE IN VIEW OF THE ORDER OF THE TRIBUNAL PASSED IN THE CASE OF VARIOUS ASSESSEES. 5. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CI T (APPEALS). DESPITE SERVICE OF NOTICE NONE APPEARED FOR THE ASS ESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT. SHRI AKHILE SH GUPTA PUT IN APPEARANCE ON BEHALF OF THE REVENUE-APPLICANT AND P UT FORWARD HIS CONTENTION. 6. WE FIND THAT THE ISSUE HAS BEEN DELIBERATED UPON BY THE TRIBUNAL EXTENSIVELY VIS--VIS ITS CLAIM OF DEDUCTI ON U/S 80IC OF THE ACT IN RESPECT OF THE MANUFACTURING ACTIVITIES CARRIED ON BY IT. THE TRIBUNAL VIDE PARA 18 AT PAGE 37 OF THE ORDER A LLOWED THE CLAIM OF THE ASSESSEE. THE TRIBUNAL ALSO ADDRESSED THE R ATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CCE VS. TECHNOWELD IND USTRIES LTD.[2003(155) ELT 209] AND THE ISSUE ARISING IN TH E PRESENT APPEAL. THE CIT (APPEALS) IN THE PRESENT APPEAL HAS ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE ORDER OF THE TR IBUNAL. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE IN AGREE MENT WITH THE ORDER OF THE CIT (APPEALS). FOLLOWING THE RATIO LA ID DOWN BY THE TRIBUNAL IN ASSESSEES OWN CASE WE UPHOLD THE ORDER OF THE CIT (APPEALS) AND DISMISS THE GROUND OF APPEAL RAISED B Y THE REVENUE. 3 7. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO T HE FACTS IN THE CASE BEFORE THE TRIBUNAL AND FOLLOWING THE PARITY OF REA SONING WE UPHOLD THE ORDER OF THE CIT (APPEALS) AND DISMISS GROUND NO.1 RAISED BY THE REVENUE. 8. THE ISSUE IN GROUND NO.2 RAISED BY THE REVENUE I S AGAINST DELETION OF ADDITION OF RS.20,71,675/-. THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD EF FECTED TOTAL SALES OF RS.19.36 CRORES AS AGAINST SALES OF RS.5.83 CRORES IN THE PRECEDING YEAR. THE MANUFACTURING EXPENSES WERE FOUND TO BE ON THE LESSER SIDE BY THE ASSESSING OFFICER AS COMPARED TO THE EARLIER YEAR. CONSEQUENTLY, THE ASSESSING OFFICER HELD THE ASSESSEE TO HAVE UNDERST ATED THE EXPENSES BY RS.20,71,675/- AND THE ELIGIBLE PROFITS OF THE ASSE SSEE WERE THUS REDUCED BY RS.20,71,675/- AND ADDITION TO THAT EFFECT WAS M ADE AS INCOME OF THE ASSESSEE. 9. THE CIT (APPEALS) VIDE PARA 6 OBSERVED AS UNDER: 6. IT IS NOTED THAT THE IMPUGNED ADDITION HAS BEEN MAD E BY THE A.O. WITHOUT EVEN ISSUING ANY SHOW CAUSE NOTICE AND WITH OUT AFFORDING ANY OPPORTUNITY TO THE ASSESSEE TO EXPLAIN ITS EXPENSES . IT IS ALSO NOTED THAT THE REQUISITE INFORMATION, DETAILS AND DOCUMENTS WERE D ULY PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE ADM ITTEDLY VERIFIED BY THE A.O. BOOKS OF ACCOUNTS WERE PRODUCE D WHICH WERE ADMITTEDLY TEST CHECKED BY THE A.O. NOWHERE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAD THE A.O. POINTED OUT ANY SHORTCOMIN GS IN THE ACCOUNTS OF THE ASSESSEE OR EXPRESSED HIS DISSATISFACTION WITH THE ASSESSEE' S BUSINESS RESULTS. THEREFORE THE ADDITION OF RS.20,71,675/- ON ACCOUNT OF PERCENTAGE METHOD (% OF THE MANUFACTURING EXPENSES TO THE GROSS SALES) HAS CERTAINLY BEEN MADE IN AN ARBITRARY MANNER. THE ADDITION SO MADE WITHOUT C ONDUCTING ANY ENQUIRY, AND WITHOUT BRINGING ANY CONCRETE FINDING ON RECORD REGARDING THE SUPPRESSION OF EXPENSES IS NOT FOUND SUSTAINABLE. THE SAID ADDITION IS, THEREFORE, DIRECTED TO BE DELETED. 10. THE LEARNED D.R. FOR THE REVENUE HAS FAILED TO CONTROVERT THE FINDING OF THE CIT (APPEALS). THE ASSESSING OFFICE R HAD MADE THE ADDITION ON MERE SURMISES AND WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. IN TH E ENTIRETY OF THE FACTS 4 AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE AFORESAID ADDITION MADE BY THE ASSESSING OFFICER. UPHOLDING THE ORDER OF THE CIT (APPEALS) WE DISMISS THE GROUND NO.2 RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH DAY OF FEBRUARY, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28 TH FEBRUARY, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH