DCIT, Gurgaon V. M/s. SPM Automotive Components Pvt. Ltd., Gurgaon

ITA 1662/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2028 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 23-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 20-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S RAJPUROHIT
• Keywords: Non-deduction of tax

Judgement Text

1 ITA NO. 1662/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 1662/DEL/2014 ( A.Y 2009-10) DCIT CIRCLE-2 GURGAON (APPELLANT) VS SPM AUTOMOTIVE COMPONENTS PVT. LTD. H. NO. MF-19, ELDECO MANSION, SECTOR-48, SOHNA ROAD GURGAON AAKCS0721K (RESPONDENT) APPELLANT BY SH. P.S. RAJPUROHIT, SR. DR RESPONDENT BY NONE ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 21/01/2014 PASSED BY CIT (A)-II, FARIDABAD FOR ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING CLAIM OF DEDUCTION U/S 80IC WI THOUT DECLARING OR GIVING ANY FINDING AS TO THE MAIN ISSUE INVOLVED IN THE CA SE THAT WHETHER ASSESSEE HAD DONE ANY MANUFACTURING ACTIVITY ELIGIBLE FOR CL AIMING DEDUCTION TO THE GOODS PURCHASED BY IT FROM ITS SISTER CONCERN IN TH E RELEVANT YEAR OR NOT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) IS NOT JUSTIFIED IN DATE OF HEARING 05.09.2018 DATE OF PRONOUNCEMENT 07.09.2018 2 ITA NO. 1662/DEL/2014 ALLOWING CLAIM OF DEDUCTION U/S 80IC MERELY RELYING ON THE ASSESSMENT ORDER FOR SUBSEQUENT YEAR AND REPORT OF INSPECTOR GATHERE D IN SUBSEQUENT YEAR, IGNORING THE FACTS BROUGHT ON RECORD BY THE AO PART ICULARLY THAT NO MANUFACTURING ACTIVITY WAS DONE IN RELATION TO THE GOODS SOLD BY THE ASSESSEE IN THE RELEVANT YEAR. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE RETURNED INCOME OF RS.NIL WAS ASSESSED AT RS.1 ,52,55,100/-, THE MAIN ADDITION BEING ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IC OF THE INCOME TAX ACT, 1961. THE OTHER ADDITION OF RS .25,000/- ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE RESULTED IN A DISALL OWANCE OF RS.25,000/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY MADE AN ADDITION AS THERE WAS NO MANUFACTURING ACTIVITY IN THE PRESENT ASSESSMENT YEAR. THE LD. DR SUBMITTED THAT THE CIT(A) ERRED I N ALLOWING CLAIM OF DEDUCTION U/S 80IC WITHOUT DECLARING OR GIVING ANY FINDING AS TO THE MAIN ISSUE INVOLVED IN THE CASE THAT WHETHER ASSESSEE HA D DONE ANY MANUFACTURING ACTIVITY ELIGIBLE FOR CLAIMING DEDUCTION TO THE GOO DS PURCHASED BY IT FROM ITS SISTER CONCERN IN THE RELEVANT YEAR OR NOT. 6. AT THE TIME OF ARGUMENT NONE APPEARED FOR THE AS SESSEE DESPITE NOTICE HAS BEEN SERVED TO THE ASSESSEE THROUGH WHATSAPP BY THE DEPARTMENT. THE SERVICE IS COMPLETED WE ARE TAKING OF THE SUBMISSIO NS MADE BEFORE THE CIT(A) AS THE ASSESSEES SUBMISSIONS BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE CIT(A) HA S CALLED FOR REMAND REPORT AND THE ASSESSING OFFICER HAS CATEGORICALLY HELD THAT SPM AUTOMATIC IS ENGAGED IN 3 ITA NO. 1662/DEL/2014 THE SUPPLY OF RAW MATERIAL FROM THEIR UNIT LOCATED AT RUDRAPUR, UTTRAKHAND. THE ASSESSEE ALSO REPLIED TO THE REMAND REPORT THAT THE MANUFACTURING ACTIVITIES OF THE ASSESSEE ARE GENUINELY CARRIED OU T AT THE FACTORY PREMISES OF THE ASSESSEE AT RUDRAPUR. THE CIT(A) HELD AS UNDER :- 3.5. I HAVE CONSIDERED THE FACTS OF THE CASE TOGET HER WITH THE SUBMISSIONS OF THE APPELLANT AND THE REMAND REPORT OF THE AO. THE AO DISALLOWED DEDUCTION U/S 80IC OF THE INCOME TAX ACT SINCE HE RECEIVED INFORMATION FROM ONE OF THE BUYERS OF APPELLANT'S P RODUCTS THAT IT HAD PURCHASED GOODS AMOUNTING TO RS.2,58,40,801/- FROM THE GURGAO N UNIT OF THE APPELLANT COMPANY WHERE NO MANUFACTURING FACILITIES WERE LOCA TED. SINCE NO MANUFACTURING FACILITIES WERE LOCATED AT GURGAON UN IT, THE AO HELD THAT THE APPELLANT, IN ITS GURGAON UNIT HAD DONE THE JOB WOR K BY MAKING PURCHASES FROM ITS SISTER CONCERN, M/S SPM AUTO LTD., FARIDABAD AN D SELLING THE SAME TO RSB TRANSMISSION INDIA LTD. THIS RESULTED IN DISALLOWAN CE OF DEDUCTION U/S 80IC AMOUNTING TO RS. 1,57,23,099/-. DURING THE COURSE O F APPELLATE PROCEEDINGS; THE APPELLANT GAVE CONFIRMATIONS FROM RSB TRANSMISSION INDIA LTD. THAT THE ENTIRE PURCHASES MADE BY IT FROM THE APPELLANT COMPANY WER E FROM RUDRAPUR UNIT, WHICH WAS ENGAGED IN MANUFACTURING. THE CASE WAS RE MANDED TO THE AO TO EXAMINE M/S RSM TRANSMISSION INDIA LTD., WHO AFTER CONSIDERING THE REPLY OF M/S RSB TRANSMISSION INDIA LTD ALONG WITH OTHER REL EVANT EVIDENCES CAME TO THE CONCLUSION THAT THE APPELLANT COMPANY HAS MADE ITS ENTIRE SALES FROM RUDRAPUR UNIT. FURTHERMORE, THE APPELLANT ALSO GAVE A COPY OF ITS ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11 AS PER WHICH THE GENUINENESS OF MANUFACTURING ACTIVITY OF THE APPELLANT COMPANY HAV E BEEN ACCEPTED BASED ON ON-SPOT ENQUIRY CONDUCTED BY THE INSPECTOR ATTACHED WITH THE OFFICE OF THE AO. ACCORDINGLY, THE ENTIRE CLAIM OF DEDUCTION U/S 80IC (A)(II) HAS BEEN ALLOWED BY THE AO. AFTER A CAREFUL CONSIDERATION OF THESE FACTS, I T IS HELD THAT THE AO ERRED IN DISALLOWING THE CLAIM OF DEDUCTION U/S 80IC OF THE INCOME TAX ACT AMOUNTING TO RS.1,52,30,100/-. THE DISALLOWANCE MADE BY THE A.O IS THUS DELETED. GROUND NO. 1 OF THE APPEAL IS THUS ALLOWED. 4 ITA NO. 1662/DEL/2014 THUS, FROM THE PERUSAL OF THE ASSESSMENT ORDER AS WELL AS THE CIT(A)S ORDER IT CAN BE SEEN THAT THE MANUFACTURING ACTIVIT Y WAS VERY MUCH CARRIED OUT BY THE ASSESSEE IN THE PRESENT ASSESSMENT YEAR. TH EREFORE, THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE APP EAL OF THE REVENUE IS DISMISSED. 10. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2018 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 07/09/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 5 ITA NO. 1662/DEL/2014 DATE OF DICTATION 05.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 06.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 7 .09.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 7 .09.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 .09.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER