THE DHARMAPURI DISTRICT CO OPERATIVE MILK PRODUCERS UNION LTD, KRISHNAGIRI V. ADDL CIT RANGE 1, SALEM

ITA 1585/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0651 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 10-05-2018
• Court: TRIBUNAL

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH, CHENNAI , . , BEFORE SHRI JOGINDER SINGH, VICE PRESIDENT AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1585/CHNY/2016 ( / ASSESSMENT YEAR: 2003-04) M/S. UCAL FUEL SYSTEMS LTD., RAHEJA TOWERS DELTA WING UNIT, 705, 7 TH FLOOR, 177, ANNA SALAI, CHENNAI 600 002. VS THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI. PAN: AAACU0541K ( /APPELLANT) ( /RESPONDENT) /APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE /RESPONDENT BY : SHRI S. NATARAJA, JCIT /DATE OF HEARING : 03.12.2018 /DATE OF PRONOUNCEMENT : 04.12.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-11, CHENNAI DATED 30.03.2016 IN ITA NO.177/2015-16/CIT(A)-11 FOR THE ASSESSMENT YEAR 2003-04 PASSED U/S.250(6) R.W.S. 143(3) & 254 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN ITS APPEAL HOWEVER THE CRUXES OF THE ISSUES ARE THAT:- 2 ITA NO. 1585/CHNY/2016 (I) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO BY RESTRICTING THE CLAIM OF DEDUCTION U/S.80HHC OF THE ACT. (II) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD.AO AMOUNTING TO RS.2,66,62,467/- TOWARDS DISALLOWANCE OF PROVISION FOR REPLACEMENT OF DEFECTIVE O RINGS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AUTOMOTIVE COMPONENTS LIKE CARBURETORS, FUEL PUMPS, AIR SUCTION VALVES, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2003-04 ON 01.12.2003 DECLARING TOTAL INCOME OF RS.33,79,83,399/-. THEREAFTER THE CASE WAS TAKEN UP FOR SCRUTINY AND CERTAIN ADDITIONS WERE MADE AND THE ASSESSEE CARRIED THE MATTER ON APPEAL, SUBSEQUENTLY THE TRIBUNAL REMITTED THE MATTER BACK TO THE FILE OF LD.AO. THEREAFTER ON APPEAL THE LD.CIT(A) HELD THE ISSUE IN FAVOUR OF THE REVENUE, AGGRIEVED BY WHICH THE ASSESSEE IS NOW IN APPEAL BEFORE US. 4. AT THE OUTSET THE LD.AR SUBMITTED THAT WITH RESPECT TO THE ISSUE REGARDING 80HHC OF THE ACT, THE LD.REVENUE AUTHORITIES DID NOT 3 ITA NO. 1585/CHNY/2016 CONSIDER THE FIRST PROVISO TO SECTION 80HHC(3)(A)(B)(C) OF THE ACT WHEREIN IT WAS SPECIFICALLY STATED AS FOLLOWS: PROVIDED THAT THE PROFITS COMPUTED UNDER CLAUSE (A) OR CLAUSE (B) OR CLAUSE (C) OF THIS SUB-SECTION SHALL BE FURTHER INCREASED BY THE AMOUNT WHICH BEARS TO NINETY PER CENT OF ANY SUM REFERRED TO IN CLAUSE (IIIA) (NOT BEING PROFITS ON SALE OF A LICENCE ACQUIRED FROM ANY OTHER PERSON), AND CLAUSES (IIIB) AND (IIIC) OF SECTION 28, THE SAME PROPORTION AS THE EXPORT TURNOVER BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE ASSESSEE. THE LD.AR FURTHER RELIED IN THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE M/S. AVANI EXPORTS AND OTHERS VS. CIT AND OTHERS REPORTED IN 348 ITR 391 WHICH WAS NOT CONSIDERED BY THE LD.REVENUE AUTHORITIES WHILE DECIDING THE ISSUE. IT WAS THEREFORE PLEADED THAT THE MATTER MAY BE REMITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. 5. SIMILARLY THE LD.AR SUBMITTED BEFORE US THAT WITH RESPECT TO THE ISSUE OF PROVISION FOR REPLACEMENT OF DEFECTIVE O RINGS, THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY IN ORDER TO PRESENT BEFORE THE REVENUE THE CORRECT COMPUTATION FOR ARRIVING AT THE ACCURATE PROVISION FOR REPLACEMENT OF DEFECTIVE O RINGS TO BE CLAIMED AS DEDUCTION. THE LD.DR DID NOT EXPRESS SERIOUS OBJECTION FOR THE SAME. 6. AFTER HEARING BOTH SIDES, IN THE INTEREST OF JUSTICE, WE ARE OF THE CONSIDERED VIEW THAT THE MATTER IS REQUIRED TO BE RE-EXAMINED BY THE LD.AO AND THE ASSESSEE SHOULD BE PROVIDED WITH ONE MORE OPPORTUNITY 4 ITA NO. 1585/CHNY/2016 TO PRESENT THE ENTIRE FACTS AND THE LEGAL MATRIX BEFORE THE REVENUE BECAUSE AS STATED BY THE LD.AR THE RELEVANT PROVISIONS OF THE STATUTE AND DECISION OF THE HONBLE GUJARAT HIGH COURT CITED HEREIN ABOVE WERE NOT CONSIDERED BY THE LD.REVENUE AUTHORITIES WHILE ARRIVING AT THEIR DECISION. FURTHER THE ASSESSEE HAS ALSO NOT FURNISHED THE APPROPRIATE COMPUTATION WITH RESPECT TO THE CLAIM OF DEDUCTION ON ACCOUNT OF PROVISION FOR REPLACEMENT OF DEFECTIVE O RINGS. ACCORDINGLY WE HEREBY REMIT BACK THE MATTER TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATION. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 4 TH DECEMBER, 2018 AT CHENNAI. SD/- SD/- /CHENNAI, /DATED 4 TH DECEMBER, 2018 RSR /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( ) /CIT(A) 4. /CIT 5. /DR 6. /GF ( ) (JOGINDER SINGH) / VICE PRESIDENT ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER