MAHINDRA SONA LTD, MUMBAI V. ITO WD 2(2)(4), MUMBAI

ITA 1537/MUM/2010

• Counselvise Citation: 153719914 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 30-11-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 26-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: PRASAD BAPAT
• Section: 80HHC

Judgement Text

ITA NO.1537 OF 2010 MAHINDRA SONA LTD MUMBAI PAGE 1 OF 2 IN THE INCOME TAX APPELLATE TRIBUNAL 'J' BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1537/MUM/2010 (ASSESSMENT YEAR: 2003-04) M/S MAHINDRA SONA LTD INCOME TAX OFFICER GATEWAY BLDG, WARD 2(2)4 APOLLO BUNDER ROOM NO.545 MUMBAI 400001 VS AAYKAR BHAVAN MK RD PAN AAACM 3524 A MUMBAI 400020 APPELLANT RESPONDENT APPELLANT BY: SHRI PRASAD BAPAT RESPONDENT BY: SHRI D.S.SUNDER SINGH, DR DATE OF HEARING: 30/11/2011 DATE OF PRONOUNCEMENT: 30/11/2011 O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE ASSESSEE AGAINST THE ORDERS OF T HE CIT (A)-5 MUMBAI DATED 21.12.2009. WE HAVE HEARD THE LEARNED COUNSEL AND THE LEARNED DEPARTMENTAL REPRESENTATIVE. 2. IN THE COURSE OF SUBMISSIONS, THE LEARNED COUNSEL DID NOT PRESS GROUND NO.1 PERTAINING TO REDUCTION OF 90% MI SCELLANEOUS INCOME FROM PROFITS OF BUSINESS IN COMPUTING THE DE DUCTION UNDER SECTION 80HHC. ACCORDINGLY THE GROUND IS TREATED AS WITHDRAWN. 3. GROUND NO.2 PERTAINS TO THE ISSUE OF REDUCING 90% O F SCRAP SALE OF `. 34,17,633/- FROM THE PROFITS OF BUSINESS IN COMPUTI NG DEDUCTION UNDER SECTION 80HHC. BRIEFLY STATED, THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF AUTO COMPONENTS AND IN THAT PROCESS SCRAP GENERATION IS INEVITABLE AND PART OF NORMAL PROCESS. THEREFORE, THE ASSESSEE INCLUDED THE SALE OF SCRAP AS PROFIT WHILE COMPUTING THE DEDUCTION UNDER SECTION 80HHC. THE AS SESSING ITA NO.1537 OF 2010 MAHINDRA SONA LTD MUMBAI PAGE 2 OF 2 OFFICER EXCLUDED THE SAME AT 90% INVOKING THE EXPLA NATION (BAA) TO SECTION.80HHC WHILE COMPUTING THE PROFITS OF THE BU SINESS. THE CIT (A) UPHELD THE SAME. 4. AT THE OUTSET IT WAS SUBMITTED THAT THIS ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATED BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2004-05 AND 2005-06 IN ITA NOS.2416 & 2417/MUM/2010 DATED 9.2.2011 WHEREIN ON THE SAME IS SUE IT WAS HELD AS UNDER: 2.2.2 WE HAVE. THE SCRAP GENERATION IS PART OF THE MANUFACTURING ACTIVITY AND THEREFORE INCOME ARISING FROM SCRAP SALES IS THE OPERATION INCOME FROM THE UNDERTAKING. THEREFORE, IN OUR VIEW THE SCRAP SALE HAS TO BE TREATED AS PART OF THE BUSINESS PROFIT AND 90% O F THE SAME IS NOT REQUIRED TO BE EXCLUDED AS PER EXPLANAT ION (BAA).. WE HOLD ACCORDINGLY. 5. RESPECTFULLY FOLLOWING THE ABOVE, WE HOLD THAT SALE OF SCRAP IS TO BE TREATED AS OPERATIONAL INCOME AND THE ASSESSI NG OFFICER IS DIRECTED TO WORK OUT THE DEDUCTION U/S 80HHC ACCORD INGLY. GROUND.2 IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2011. SD/- SD/- (D.K.AGARWAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER VNODAN/SPS MUMBAI, DATED 30 TH NOVEMBER, 2011. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI