The. ACIT,Vapi Circle, Vapi V. Standard Oil & Greases, SILVASSA

ITA 1584/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94344 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VILAS SHINDE
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: S H RI G. D. AGRAWAL , VICE PRESIDENT AND SHR I S. S. GODARA , JUDICIAL MEMBER ACIT, VAPI CIRCLE, VAPI (APPELLANT) V S STANDARD OIL & GREASES, PLOT NO. 83/1 & 2, VILLANG KHADOLI, SILVASSA - 396230 PAN: AAUFS930K (RESPONDENT) REVENUE BY : S H RI VILAS SHINDE , SR. D . R. ASSE SSEE BY: S H RI MANISH J. SHAH, A.R. DATE OF HEARING : 20 - 08 - 2 015 DATE OF PRONOUNCEMENT : 04 - 09 - 2 015 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - I T A NO . 1584 / A HD/20 11 A S SESSMENT YEAR 200 8 - 09 I . T.A NO. 1584 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. STANDARD OIL & GREASES 2 THIS REVENUE S APPEAL FOR A. Y. 2008 - 09 , AR ISES FROM ORDER OF THE CIT(A) VALSAD DATED 27 - 01 - 2011 IN APPEAL NO. CIT(A)/VLS/ 10 - 11 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE REVENUE S FIRST SUBSTANTIVE GROUND CHALLENGES THE CIT(A) S ORDER HOLDING ASSESSEE S INCOME FROM SCRAP SALES OF RS. 1,98,072/ - TO BE ELIGIBLE FOR SECTION 80IB DEDUCTION. ITS CASE IS THAT THE SAME HAS NO DIRECT OR IMMEDIATE NEXUS WITH THE MANUFACTURING ACTIVITY IN QUESTION. 3. THE ASSESSEE - FIRM MANUFACTURES VARIOUS K INDS OF LUBRICANTS AND GREASES. ITS MANUFACTURING IS IN SILVASA, DADRA NAGAR AND HAVELI (UT). IT IS ALREADY ELIGIBLE FOR SECTION 80IB DEDUCTION. THE ASSESSING OFFICER NOTICED IMPUGNED SCRAP SALES OF RS. 1,89,072/ - IN SCRUTINY. HE OBSERVED IN ASSESSMENT ORDER DATED 22 - 0 - 2010 THAT THE S A ME COULD NOT TO HAVE BEEN DERIVED FROM MANUFACTURING ACTIVITY IN QUESTION. THE ASSESSEE S CASE WAS THAT ITS SCRAP HAD BEEN GENERATED AND AROSE FROM MANUFACTURING ONLY SO AS TO FORM PART AND PARCEL THEREOF. THE ASSESSING OFFICER WAS OF THE I . T.A NO. 1584 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. STANDARD OIL & GREASES 3 VIEW THAT THIS SCRAP IN QUESTION HAD ARISEN FROM SALE OF SOLD UNUSABLE PRODUCTS/MATERIALS AND IT WAS ONLY INCIDENTAL TO MANUFACTURING AND NOT DERIVED THEREFROM. HE QUOTED TRIBUNAL S ORDER IN ASSESSEE S OWN CASE PERTAINING TO THE PRE CEDING ASSESSMENT YEAR ON THE VERY ISSUE AND HELD ITS SCRAP SAL ES IN QUESTION TO BE NOT ELIGIBLE FOR SECTION 80IB DEDUCTION. 4. THE CIT(A) HAS ACCEPTED ASSESSEE S CORRESPONDING GROUND IN VIEW OF THE CASE LAW DCIT VS. HARJIVANDAS JUTHABAI ZAVERI (2002) 2 58 ITR 785 (GUJ) HOLDING THAT SCRAP SALES DO HAVE A DIRECT NEXUS WITH MANUFACTURING ACTIVITY IN QUESTION . 5. HEARD BOTH SIDES. RECORDS PERUSED. THE REVENUE S ONLY ARGUMENT IS IN TUNE WITH THE ASSESSING OFFICER S FINDINGS NARRATED HEREINABOVE THAT THE IMPUGNED SCRAP SALES CANNOT BE HELD TO HAVE BEEN DERIVED FROM ASSSESSEE S MANUFACTURING ACTIVITY AS PER THE TRIBUNAL S ORDER IN ITA 3096/AHD/2007 IN ITS OWN CASE PERTAINING TO THE PRECEDING ASSESSMENT YEAR. THE ASSESSEE SUPPORTS THE CIT(A) ORDER I . T.A NO. 1584 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. STANDARD OIL & GREASES 4 UNDER CH ALLENGE. IT IS EVIDENT TO US FROM THE STATEMENT OF FACTS AT PAGE NO. 2 THAT THE CO - ORDINATE WHILST DECIDING THE VERY ISSUE AGAINST THE ASSESSEE HAD PLACED RELIANCE UPON THE DECISION OF D.P. AGRAWAL VS. CIT 272 ITR 118 (MP). THE HON BLE JURISDICTIONAL HIG H COURT IN HARJIVANDAS ZAVERI CASE (SUPRA) HAS ADJUDICATED THIS VERY SUBSTANTIAL QUESTION IN ASSSESEE S FAVOUR. THE SAME VIEW IS REITERATED IN A RECENT DECISION (2014) 42 TAXMANN. 403 (GUJ) CIT VS. JIKAR A SAIYED. BOTH VIEWS HOLD THAT INCOME ARISING FRO M SALE OF SCRAP IS ELIGIBLE FOR SECTION 80IB DEDUCTION AS DERIVED FROM THE MANUFACTURING ACTIVITY IN QUESTION. WE FOLLOW THE HON BLE JURISDICTIONAL HIGH COURT AGAINST THAT OF THE LEARNED CO - ORDINATE BENCH AND REJECT THE REVENUE S FIRST SUBSTANTIVE GROUND. 6. THIS LEAVES US WITH THE REVENUE S SECOND SUBSTANTIVE GROUND SEEKING TO RESTORE SEC. 80IB DISALLOWANCE QUA INCOME FROM EXCHANGE RATE DIFFERENCE OF RS. 66,05,498/ - . ITS CASE IS THAT THE SAME DOES NOT HAVE ANY DIRECT OR IMMEDIATE NEXUS WITH THE MANUFA CTURING ACTIVITY IN QUESTION. THE COMMISSIONER OF INCOME TAX(A) HOLDS THAT THIS GAIN IS I . T.A NO. 1584 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. STANDARD OIL & GREASES 5 DIRECTLY RELATED TO SALE/EXPORT OF GOODS OF ASSESSEE S INDUSTRIAL U NDERTAKING. WE FIND THAT THE HON BLE JURISDICTIONAL HIGH COURT IN (2015) 55 TAXMANN.COM 198 CIT VS. DEVERSONS INDUSTRIES LTD. HAS CONSIDERED HON BLE APEX COURT DECISION IN LIBERTY INDIA VS. CIT (2009) 317 ITR 218 (SC) AND HOLDS THAT SUCH AN EXCHANGE RATE GAIN IS DERIVED FROM INDUSTRIAL UNDERTAKING IN QUESTION. THE REVENUE DOES NOT QUOTE AN Y CASE LAW T O THE CONTRARY. ITS SECOND GROUND ALSO FAILS. 7. THIS REVENUE S APPEAL IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 04 - 0 9 - 2015 SD/ - SD/ - ( G.D. AGRAWAL ) ( S. S. GODARA ) VICE PRESIDENT JUDICIAL MEMBER AHME DABAD : DATED 04 /0 9 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I . T.A NO. 1584 /AHD/20 11 A.Y. 2008 - 09 PAGE NO ACIT VS. STANDARD OIL & GREASES 6 BY ORDER/ , / ,