Anupam Industries, Nani Daman V. The Income tax Officer, Vapi Ward-4, Daman

ITA 1618/AHD/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1280 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 01-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 13-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALBINUS TIRKEY
• Keywords: Business income; Permanent establishment; Non-deduction of tax
• Section: 80HHC; 80IB; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMADABAD , BEFORE: SHRI KUL BHARAT, JUDICIAL MEMBER SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO. 1618/AHD/2011 ASSESSMENT YEAR :2006-07 M/S. ANUPAM INDUSTRIES 21/4, A & E BUILDING, KACHIGAM ROAD, RINGWADA, NANI DAMAN V/S . ITO, VAPI, WARD-4, DAMAN PAN NO. AAIFA9717G (APPELLANT) .. (RESPONDENT) /BY ASSESSEE SHRI TUSHAR HEMANI, A.R. BY REVENUE SHRI ALBINUS TIRKEY, SR. D.R. /DATE OF HEARING 01.09.2015 /DATE OF PRONOUNCEMENT 24.09.2015 O R D E R PER :KUL BHARAT, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VALSAD, DATED 23.02.2011 PERTAINING TO ASSESSMENT Y EARS 2006-07. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: THIS IS AN APPEAL AGAINST THE ORDER PASSED U/S. 25 0 BY THE CIT APPEALS-VALSAD, WHO HAS ERRED IN: 1. CONSIDERING INCOME BY WAY OF SALE OF LICENSE OF RS.23,410/- AS INCOME FROM OTHER SOURCES, AND NOT ALLOWING AS A DEDUCTION U/S80- IB IN RESPECT OF THE SAME. 2. MAKING DIS-ALLOWANCE OF RS.16,41,861/- U/S 40A(I A) AS UNDER: ITA NO. 1618/AHD/11A.Y. 06-07 (M/S. ANUPAM INDUSTRI ES VS. ITO) PAGE 2 * FOR NON-DEDUCTION OF TDS FROM PAYMENTS TO AGENTS OF NON RESIDENT SHIPPING COMPANIES RS.15,22,148/-. * FOR NON DEDUCTION OF TDS FROM PAYMENTS OF COMMISS ION TO FOREIGN PARTIES RS.1,09,513/-. * FOR NOT DEPOSITING TAX DEDUCTED TO THE CREDIT OF THE GOVERNMENT BEFORE THE DUE DATE RS.10,200/-. ASSESSING THE ABOVE DIS-ALLOWANCE OF RS.16,41,861/- U/S.40A(IA) AS INCOME FROM OTHER SOURCES WHEN THE PROVISION OF T HIS SECTION ARE FOR ASSESSING BUSINESS INCOME. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT U/S.143(3) OF TH E INCOME TAX ACT, 1961, HEREINAFTER REFERRED TO AS THE ACT WAS FRAMED VID E ORDER DATED 26.12.2008. THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT MADE DISALLOWANCE OF RS.16,41,861/- BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT FOR NON- DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS.23,410/- FOR SALE OF DEPB LICENSE AND ALSO THE I NTEREST RECEIVED OF RS.1,31,158/-. 3. THE ASSESSEE AGGRIEVED BY THIS ASSESSMENT ORDER PREFERRED THE APPEAL BEFORE THE CIT(A) WHO AFTER CONSIDERING THE SUBMISS IONS DISMISSED THE APPEAL. 4. NOW THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF LD.CIT(A). 5. APROPOS TO GROUND NO.1, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT UNDER THE INSTRUCTION OF HIS CLIENT DUE TO SMALLNESS OF A MOUNT INVOLVED IN THE GROUND, HE IS NOT PRESSING THIS GROUND. HOWEVER, SAME IS W ITHOUT PREJUDICE TO THE ASSESSEES RIGHT INSTEAD OF ANY OTHER ASSESSMENT YE ARS. LD. D.R. HAS NOT OBJECTION. AFTER HEARING BOTH THE PARTIES, THE GRO UND IS DISMISSED AS NOT PRESSED DUE TO SMALLNESS OF AMOUNT WITHOUT PREJUDICE TO THE RIGHT OF ASSESSEE FOR CHALLENGING THE SIMILAR ISSUE ARISING IN ANY OTHER ASSESSMENT YEAR. GROUND NO.1 IS DISMISSED AS NOT PRESSED. ITA NO. 1618/AHD/11A.Y. 06-07 (M/S. ANUPAM INDUSTRI ES VS. ITO) PAGE 3 6. GROUND NO.2 IS AGAINST THE DISALLOWANCE OF RS.16 ,1,861/- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) FOR NON-DEDUCTION O F TAX AT SOURCE/NON DEPOSITING DEDUCTED TAX TO THE CREDIT OF THE GOVERN MENT BEFORE THE DUE DATE. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASS ESSING OFFICER HAS MADE DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HE SUBMITTED THAT THE DISALLOWANCE IS MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THE DISALLOWANCE IS MADE FOR NON-DEDUCTION OF TAX AT SOURCE. HE SUBMITTED THAT UPON DISALLOWANCE MADE U /S. 40(A)(IA), THE ASSESSING OFFICER HAS ADDED THE SAME TO THE INCOME OF ASSESSE E FROM INCOME FROM OTHER SOURCES. HE SUBMITTED THAT MERELY FOR WANT OF DED UCTION OF TAX AT SOURCE, THE CHARACTERISTIC OF RECEIPTS WOULD NOT CHANGE AND SUC H RECEIPTS SHALL BE ELIGIBLE FOR DEDUCTION U/S. 80-IB. TO BUTTRESS THIS CONTENT ION, LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISIONS OF THE CO-ORDI NATE BENCH OF THIS TRIBUNAL IN CASE OF ITO VS. M/S. AJANTA PACKAGING OIDC IN ITA N O.1641/AHD/2009 FOR A.Y.2006-07, M/S. RAMESH INDUSTRIES VS. ITO, IN ITA NO.3131/AHD/2008, ITO VS. M/S.RAMESH INDUSTRIES IN ITA NO.3148/AHD/2008 A ND ALSO IN ASSESSEES OWN CASE IN ITA NO.3571/AHD/2008 FOR A.Y. 2005-06. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT LD. CIT(A) HAS WRONGLY RECO RDED THE FACT THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE IN A.Y. 2005- 06. IN FACT, THE ISSUE HAD BEEN DECIDED IN FAVOUR OF ASSESSEE BY CO-ORDINATE B ENCH OF THIS TRIBUNAL IN ITA NO. 3571/AHD/2008. ON THE CONTRARY, LD. D.R. H AS SUPPORTED THE ORDER OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER HAS RECORDED IN T HE ORDER THAT ASSESSEE HAD MADE PAYMENTS TO M/S. MAERSK INDIA LTD. RS.11,90,94 6/- AND P & O NEDLLOYD PVT. LTD. RS.3,31,202/-. THE ASSESSEE HAD NOT DEDU CTED TAX ON THE PAYMENTS MADE. HOWEVER, THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A) PERTAINING TO THE A.Y. 2005-06. THE ASSESSING OFFI CER DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE ON THE GROUND THAT THE R EVENUE HAD FILED THE APPEAL ITA NO. 1618/AHD/11A.Y. 06-07 (M/S. ANUPAM INDUSTRI ES VS. ITO) PAGE 4 AGAINST THE APPELLATE ORDER OF LD.CIT(A) PERTAINING TO THE A.Y. 2005-06. THE COUNSEL FOR THE ASSESSEE HAD FILED THE COPY OF THE ORDER OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 357 1/AHD/2008, WHEREIN THE FINDING OF LD.CIT(A) HAS BEEN CONFIRMED. UNDER THE SE FACTS, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) WAS NOT JUSTIFIED I N DISMISSING THE GROUND OF APPEAL OF THE ASSESSEE. IT APPEARS THAT THE LD. CI T(A) HAS MISREAD THE ORDER OF THE TRIBUNAL. THE TRIBUNAL IN ITA NO.3571/AHD/2008 IN PARA 7 HAD DECIDED THE ISSUE AS UNDER: 7. AS REGARDS GROUND NO.3 RELATING TO DEDUCTION U/ S.80IB(10) OF THE ACT ON AMOUNT OF RS.18,28,862/- ON ACCOUNT OF PAYMENTS REL ATING TO CLEARING AND FORWARDING CHARGES, DISALLOWED IN TERMS OF PROVISIONS OF SEC.4 0(A)(IA) OF THE ACT, THE A.O. AFTER DISALLOWING THESE CLAIMS, ASSESSED THE SAME UNDER T HE HEAD INCOME FROM OTHER SOURCES. CONSEQUENTLY, THE AO DID NOT ALLOW DEDUC TION U/S.80IB OF THE ACT ON THE SAID AMOUNT. ON APPEAL, THE LD. CIT(A) HELD THAT D EDUCTION U/S 80IB OF THE ACT HAS TO BE GRANTED ON THE COMPUTED INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. ANY ADDITION/DISALLOWANCE DOES NOT LOOSE THE CHARACTERI STIC OF BEING DERIVED FROM THE INDUSTRIAL UNDERTAKING AS ITS ORIGINAL SOURCE. ACCO RDINGLY, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. BEFORE US, THE ID. DR COULD NOT POINT PUT ANY INFIRMITY IN THESE FINDINGS OF THE ID. CIT(A). HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.HMT LTD., 203 ITR 811(KAR) HELD THAT FOR THE PURPOSES O F SECTION 80J AND 80HH OF THE ACT, PROFITS ANDGAINS OF NEW UNDERTAKINGS ARE HOT COMMER CIAL PROFITS BUT ONLY SUCH PROFITS AS ARE COMPUTED IN THE MANNER LAID DOWN UNDER THE A CT IN PURSUANCE OF SECTION 80AB, AS IF EACH UNDERTAKING WAS A SEPARATE ASSESSEE. WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE KOMAL EXPORTS VS ACIT, 19 SOT 602 (DEL.) IN THE CONTEXT OF PROVISIONS OF SEC 80HHC OF THEACT HELD AS UNDER:- '11. IN THE INSTANT CASE, WE FOUND FROMTHE RECORD T HAT THE TAX PAYER IS AN EXPORTER AND HAD FILED A RETURN AT LOSS OF RS.47,27,650/-. THE T AX PAYER BEING EXPORTER IS ELIGIBLE TO CLAIM DEDUCTION U/S80HHC SUBJECT TO THE CONDITIONS STIPULATED IN THE SAID SECTION. SINCE THE DEDUCTION UNDER CHAPTER VI-A IS ADMISSIBL E ONLY WHEN THERE IS POSITIVE GROSS TOTAL INCOME, THE TAX PAYER OBVIOUSLY COULD N OT HAVE CLAIMED DEDUCTION UNDER SECTION 80HHC WHILE FILING THE RETURN OR BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT IS SEEN THAT AS AGAINST THE LOSS RETURNED AT RS.47,27,650/- ASSESSMENT HAS BEEN MADE AS POSITIVE INCOME OF RS.3 3,37,050/-. THEREFORE, THE CLAIM OF THE TAX PAYER REGARDING THE DEDUCTION UNDER SECT ION 80HHC NEEDS TO BE RE- COMPUTED WITH REFERENCE TO THE FINALLY ASSESSED INC OME. WE DIRECT ACCORDINGLY. 7.1 SIMILAR VIEW WAS TAKEN BY THE ITAT, MUMBAI BENC H IN THE CASE OF M/S. ZENITH RUBBER & PLASTIC WORK, 35 TTJ 259. 7.2 ON A SIMILAR ISSUE IN THE CONTEXT OF CLAIM FOR DEDUCTION U/S80HHC OF THE ACTIN THE ADDITIONS TO THE INCOME MADE BY THE AO, HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT(A) VS. BAWA SKIN COMPANY, 294 ITR 537 (PUNJAB & HARYANA) HELD THAT IF THE PROFITS SO ARRIVED AT BY THE ASSESSING OFFICER ARE RELATED TO THE BUSINESS OF THE ASSESSEE WHICH IS ENGAGED IN TH E BUSINESS OF EXPORT OUT OF INDIA OF ITA NO. 1618/AHD/11A.Y. 06-07 (M/S. ANUPAM INDUSTRI ES VS. ITO) PAGE 5 ANY GOODS OR MERCHANDISE TO WHICH SECTION 80HHC IS APPLICABLE, THEN THE APPELLANT IS COMPLETELY JUSTIFIED TO MAKE THE CLAIM OF DEDUCT ION OF SUCH PROFITS AS DETERMINED BY THE ASSESSING OFFICER. 8. IN VIEW OF THE FOREGOING AND IN THE LIGHT OF AFO RESAID DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). THEREFORE, GROUND NO.3 IS DISMISSE D. THEREFORE, TAKING THE CONSISTENT VIEW, WE HEREBY DI RECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE. THIS GROUND OF ASSESSEES APPEAL IN RESPECT OF PAYMENTS MADE TO M/S. MAERSK INDIA LTD. RS.11,90,94 6/- AND P & O NEDLLOYD PVT. LTD. RS.3,31,202/- IS ALLOWED. IN RESPECT OF OTHER DISALLOWANCE MADE U/S.40(A)(IA), THE DISALLOWANCE MADE BY ASSESSING O FFICER WAS WITH REGARD TO NON-DEDUCTION OF TAX AT SOURCE AND IN RESPECT OF CO MMISSION OF RS.42,248/- AND RS.67,265/- PAID TO SONEX REALTY AND NATIONAL PRODU CTS RESPECTIVELY, THE CONTENTION BEFORE THE ASSESSING OFFICER WAS THAT TH E ENTITIES DO NOT HAVE PERMANENT ESTABLISHMENT IN INDIA. THEREFORE, THE A SSESSEE WAS NOT REQUIRED TO DEDUCT TAX. LD. COUNSEL FOR THE ASSESSEE EVEN SUBM ITTED THAT OTHERWISE ALSO IN VIEW OF DECISION OF CO-ORDINATE BENCH IN ITA NO.164 1/AHD/2009, THE ASSESSING OFFICER OUGHT NOT HAVE DISALLOWED. ON THE CONTRARY , LD. DR SUPPORTED THE ORDER OF AUTHORITES BELOW. THE CO-ORDINATE BENCH IN ITA NO.1641/AHD/09 IN PARA 11 HAS DECIDED THIS ISSUE AS UNDER: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERU SED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW A ND THE TRIBUNAL DECISION CITED BY THE LD. A.R. OF THE ASSESSEE. WE FIND THAT THIS ISS UE HAS BEEN DECIDED BY THE TRIBUNAL AT PARA 10 OF THE TRIBUNAL ORDER, WHICH IS REPRODUCED BELOW: '10. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSE D THE MATERIAL ON RECORD. THE ISSUE IS DIRECTLY COVERED IN FAVOUR OF THE ASSE SSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S CHIRAG PLAST IN ITA NO.2415/AHD/2009 ASST. YEAR 2006-07 PRONOUNCED ON 23 RD OCTOBER, 2009 WHEREIN WAS HELD AS UNDER :- '5. REGARDING GROUND NO. 2, WE ARE OF THE CONSIDERE D VIEW THAT EVEN IF ADDITION IS SUSTAINED, THEN ASSESSEE WOULD BE ENTIT LED TO DEDUCTION UNDER SECTION 80IB AS IT WOULD BE ONLY THE BUSINESS PROFIT. SECTION 40(A)(IA) FALLS IN CHAPTER (IV) AND UNDER 'THE HEAD COMPUTATION OF BUSINESS INCOME.' ANY ADDITION PROPOSED BY THE ASSE SSING OFFICER BY INVOKING A PROVISION FALLING IN CHAPTER (IV) UNDER THE 'HEAD COMPUTATION OF BUSINESS INCOME, PARTICULARLY BETWEE N SECTION 28 TO 43D, WOULD BE MADE UNDER THE 'HEAD INCOME FROM BUSI NESS AND PROFESSION' AND NOT UNDER THE HEAD 'INCOME FROM OTH ER SOURCES', ITA NO. 1618/AHD/11A.Y. 06-07 (M/S. ANUPAM INDUSTRI ES VS. ITO) PAGE 6 UNLESS SPECIFICALLY SO PROVIDED. ACCORDINGLY, THOUG H PROPOSED BY THE ASSESSING OFFICER ON THE GROUND THAT TDS HAS NOT BE EN PAID TO THE ACCOUNT OF THE CENTRAL GOVERNMENT WITHIN TIME IS IN ORDER, BUT ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80I B THEREON AS IT WOULD BE ONLY A PAN OF BUSINESS PROFIT. THE ARGUMEN T OF THE LEARNED DR THAT ASSESSEE MAY CLAIM BENEFIT AGAIN ON PAYMENT BASIS IS PREMATURE AND ACADEMIC AS THERE ARE ENOUGH LEGAL RE COURSES OPEN TO PREVENT SUCH CLAIMS. AS A RESULT WE DO NOT FIND ANY FORCE IN THIS GROUND RAISED BY THE REVENUE. THE SAME IS DISMISSED.' SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE ARE T HE SAME, FOLLOWING ABOVE DECISION WE, UPHOLD THE ORDER OF ID. CIT(A) AND DIS MISS THE GROUND RAISED BY THE REVENUE.' 12. SINCE IN THE PRESENT CASE, THIS ISSUE IS SQUARE LY COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL DECISION, WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE ALSO BECAUSE NO CONTRARY DECIS ION HAS BEEN BROUGHT TO OUR NOTICE. THESE GROUNDS OF THE REVENUE ARE ALSO REJEC TED. THEREFORE, TAKING THE CONSISTENT VIEW, ASSESSING OF FICER IS DIRECTED TO DELETE THE DISALLOWANCE. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24/09/2015 SD/- SD/- ( MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. ! '# $ / CONCERNED CIT 4. $ - / CIT (A) 5. %&'(('# , '# , ! / DR, ITAT, AHMEDABAD 6. '+,-. / GUARD FILE. BY ORDER/ , //TRUE COPY// / '# , !