The ACIT,Vapi Circle, Vapi V. Prima Fruit Products, Nani Daman

ITA 1636/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0408 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-02-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 17-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDEY
• Assessee Lawyers: PF JAIN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD C BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTA NT MEMBER ASSISTANT COMMISSIONER OF INCOME TAX VAPI CIRCLE, VAPI (APPELLANT) VS PRIMA FRUIT PRODUCTS PROP. PRIMA FAMILY TRUST 55/A, PANCHAL UDYOG NAGAR BHIMPORE, NANI DAMAN PAN:AAATP7074R (RESPONDENT) REVENUE BY: SRI A.K.PANDEY, SR. D.R. ASSESSEE BY: SRI P.F. JAIN DATE OF HEARING : 11-3-2013 DATE OF PRONOUNCEMENT : 22-3-2013 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE REVENUES APPEAL AGAINST THE ORDER OF LD. CIT(A), VALSAD DATED 11-12-2009. 2. GROUND NO. 1 TAKEN BY THE REVENUE READS AS UNDER :- ITA NO.1636/AHD/2010 A.Y.:-2005-06 I.T.A NO.1636/AHD/2010 A.Y. 2005-06 PAGE NO ACIT VS. PRIMA FRUIT PRODUCTS 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN GRANTING DEDUCTION U/S 80IB ON THE TRADING SALE OF RS. 2,64,200/- WITHOUT CONSIDERING THE FACT THAT NO PROCESS WAS DONE BY THE ASSESSEE AS LAID DOWN IN SECTION 80IB(2)(III) O F THE I.T. ACT, 1961. 3. LD. CIT(A) HAS DEALT THIS GROUND AS UNDER:- GROUND NO. 3: DEDUCTION U/S 80IB HAVE NOT BEEN ALL OWED FOR SALE OF RAW MATERIAL FOR RS. 2,64,200/-. THE LD. A.R. SUBM ITTED THAT, AS PER PARA-9(II) OF THE ASSESSMENT ORDER, THE AMOUNT OF R S. 2,64,200/- BEING SALE OF RAW MATERIAL HAS BEEN DEDUCTED FROM THE 80I B CLAIM ON THE GROUND THAT THE SALE SHOWN BY THE APPELLANT IS INCL USIVE OF RAW MATERIAL SALE ON WHICH 80IB CLAIM IS NOT ALLOWABLE. IT MAY KINDLY BE NOTED THAT THE SALE SHOWN BY THE APPELLANT AS PER T HE PROFIT & LOSS ACCOUNT EXCLUSIVE OF VALUE OF RAW MATERIAL SALES BE CAUSE THE RAW MATERIAL SALES VALUE HAS BEEN ALREADY DEDUCTED FROM THE RAW MATERIAL PURCHASE AMOUNT AND THEREFORE THE QUESTION OF ANY D EDUCTION IN 80IB CLAIM DOES NOT ARISE. FULL FACTS HAS BEEN DISCUSSE D IN WRITTEN SUBMISSION DATED 15/03/2008 PLACED IN THE PAPER BOO K, RELEVANT PAGE NUMBER IS 6. IN THE REMAND REPORT, IT HAS BEEN MEN TIONED THAT THIS HAS BEEN DISCUSSED WHILE DEALING WITH THE ADDITION ON A CCOUNT OF SALE OF RAW MATERIAL BUT AS POINTED OUT, THE APPELLANT HAS NOT CLAIMED ANY 80IB CLAIM OF THE SALE OF RAW MATERIAL AND THEREFOR E, THE QUESTION OF DISALLOWING 80IB CLAIM TO THAT EXTENT DOES NOT ARIS E. AS A RESULT, THE 80IB CLAIM REDUCED BY THE A.O. BY RS. 2,64,200/- MA Y KINDLY BE DELETED AS ERRONEOUS AND THE 80IB CLAIM MAY KINDLY BE CORRESPONDINGLY INCREASED BY THIS AMOUNT. IN THE REMAND REPORT, THE A.O. HAD STATED THAT, THI S ISSUE IS RELATED TO THE GROUND NO. 2 DISCUSSED ABOVE. SINCE THE GROUND NO. 2 IS ALLOWED IN FAVOUR OF THE ASSESSEE, THIS GROUND BECOME INFRU CTUOUS AND ACCORDINGLY DISPOSED OFF . I.T.A NO.1636/AHD/2010 A.Y. 2005-06 PAGE NO ACIT VS. PRIMA FRUIT PRODUCTS 3 4. SINCE REVENUE HAS NOT CHALLENGED THE ORDER OF L D. CIT(A) IN RESPECT TO GROUND NO. 2 BEFORE LD. CIT(A) WHICH RELATED TO ADDITION ON ACCOUNT OF UNACCOUNTED SALE OF RAW MATERIALS OF RS. 36,50,3 90/-, THE DELETION OF THIS AMOUNT OF RS. 2,64,200/- BY LD. CIT(A) CANNOT BE CHALLENGED AS LD. CIT(A) HAS HELD THAT IN VIEW OF THE GROUND NO. 2 BE ING ALLOWED IN FAVOUR OF THE ASSESSEE, THIS GROUND HAS BECOME INFR UCTUOUS AND ACCORDINGLY DISPOSED OFF. THEREFORE, THIS GROUND O F REVENUE IS DISMISSED. 5. GROUND NO. 2 READS AS UNDER:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 27 ,51,270/- MADE ON ACCOUNT OF UNACCOUNTED SALE OF RAW MATERIAL, WITHOU T CONSIDERING THE FACT THAT SUCH ADDITION WAS MADE BASED ON THE DETAI LS GIVEN BY THE ASSESSEE AS ALSO MATERIAL IMPOUNDED AT THE SURVEY P ROCEEDINGS. 6. BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSE SSMENT PROCEEDING BOOK NO. BF/53 IMPOUNDED AT THE TIME OF SURVEY WAS SHOWN TO AUTHORIZE REPRESENTATIVE OF THE ASSESSEE AND HE WAS ASKED TO EXPLAIN THE TRANSACTIONS APPEARING ON THE SAME. THE EXPLANATI ON OF THE ASSESSEE WAS OF THAT PAGE NO. 3 OF THIS BOOK CONTAINS RATIO OF C ONSUMPTION OF MALIC ACID AND SIMILARLY PAGE NO. 5 CONTAINS RATIO OF CON SUMPTION OF CITRIC ACID. AFTER ANALYZING THE FIGURES, THE ASSESSEE EX PLAINED THAT FOR PRODUCTION OF 500 KG OF ORANGE (OR), 300 KG MALIC A CID IS REQUIRED. SIMILARLY, ASSESSEE EXPLAINED REQUIREMENT OF CITRIC AND MALIC ACID FOR VARIOUS PRODUCTS BY GIVING A CHART WHICH IS FORMING PART OF THE ASSESSMENT ORDER. BASED ON THAT CHART GIVEN BY THE ASSESSEE AND FIGURES APPEARING IN THE BOOK IN IMPOUNDED DURING THE COURS E OF SURVEY I.T.A NO.1636/AHD/2010 A.Y. 2005-06 PAGE NO ACIT VS. PRIMA FRUIT PRODUCTS 4 PROCEEDINGS, THE ASSESSING OFFICER WORKED OUT THE C ONSUMPTION OF MALIC ACID AND CITRIC ACID AT 2,87,323 KGS FOR PRODUCTIO N OF 6,11,577/- KGS OF FINISHED PRODUCTS. THE ASSESSING OFFICER CONCLUDED THAT AS AGAINST THE REQUIREMENT OF 2,87,323/- KGS CONSUMPTION OF CITRIC ACID AND MALIC ACID, THE ASSESSEE HAS CONSUMED 3,19,434/- I.E. MO RE BY 32,111/- KG. THE A.O. THEREFORE HELD THAT EXCESS CONSUMPTION OF RAW MATERIAL OF 32,111/- KG. MIGHT HAVE BEEN SOLD BY THE ASSESSEE I N OPEN MARKET AND VALUE OF SUCH SALE WAS ADOPTED AT RS. 56 PER KG. T HUS COST OF SALE OF MALIC ACID AND CITRIC ACID CAME TO RS. 17,98,216/- AND BY ADDING GROSS PROFIT @ 53 % UNACCOUNTED SALES WORKED OUT TO RS. 2 7,51,270/- AND THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. 7. LD. CIT(A) HOWEVER AFTER TAKING INTO CONSIDERA TION THE REMAND REPORT OF THE ASSESSING OFFICER ON THE SUBMISSION BEFORE H IM WAS OF THE VIEW THAT SINCE ASSESSEE IS AN INDUSTRIAL UNDERTAKING EN TITLED TO DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, THE PROFIT OF THE ASSES SEE IS EXEMPT, THEREFORE, THERE WAS NO LOGIC WHY THE ASSESSEE WIL L SELL THE RAW MATERIAL IN THE OPEN MARKET FOR GENERATING PROFIT WHICH WAS NOT EXEMPT U/S 80IB OF THE ACT. HE WAS FURTHER OF THE VIEW THAT A.O. H AS ONLY SUSPECTED THE ASSESSEE ON THE BASIS OF THE CERTAIN CALCULATIONS A ND ARRIVED AT THE CONCLUSION THAT THE ASSESSEE MIGHT HAVE SOLD THOSE RAW MATERIALS IN THE OPEN MARKET. LD CIT(A) HAS RIGHTLY FOUND THIS OBSER VATION OF THE A.O. WITHOUT ANY BASIS AND THEREFORE WAS JUSTIFIED IN DE LETING THE ADDITION MADE BY THE A.O. WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY HIM AND THE SAME IS HEREBY UPHELD. THIS GROUND OF THE REVENUE IS DISMISSED. I.T.A NO.1636/AHD/2010 A.Y. 2005-06 PAGE NO ACIT VS. PRIMA FRUIT PRODUCTS 5 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (T.R.MEENA) ( D.K.TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 22/03/2013 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A) 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , ( / ' ) ! , '# STRENGTHENED PREPARATION & DELIVERY OF ORDERS IN TH E ITAT 1) DATE OF TAKING DICTATION 14-03-2013 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE N.A. 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 18-03-2013 4) DATE OF CORRECTION 19-03-2013 5) DATE OF FURTHER CORRECTION XXXX 6) DATE OF INITIAL SIGN BY MEMBERS 20-03-2013 7) ORDER UPLOADED ON 8) ORIGINAL DICTATION PAD HAS BEEN ENCLOSED IN THIS FILE YES 9) ORDER SENT TO BENCH CLERK 22-03-2013