M/s. Nitya Packaging P Ltd., CHENNAI V. ACIT, Pondicherry

ITA 1732/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64521 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 14-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JUNIOR
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1732/MDS/2012 (ASSESSMENT YEAR : 2009-10) M/S NITYA PACKAGING P. LTD., NO.48, 3 RD CROSS STREET, ANANDARANGA PILLAI NAGAR, PONDICHERRY 605 001. PAN : AAACN2383E (APPELLANT) V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, PONDICHERRY. (RESPONDENT) APPELLANT BY : SHRI SAROJ KUMAR PARIDA, ADVOCATE RESPONDENT BY : SHRI K.E.B. RENGA RAJAN, JUNIOR STANDING COUNSEL DATE OF HEARING : 07.11.2012 DATE OF PRONOUNCEMENT : 07.11.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE ASSESSEE, IT IS AGGRI EVED THAT IT WAS NOT GIVEN BENEFIT OF DEDUCTION UNDER SECTION 80-IB OF INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') FOR INTEREST INCOME ` 2,21,593/-, OTHER INCOME I.T.A. NO. 1732/MDS/12 2 ` 2,37,639/-, FARM HOUSE INCOME ` 87,064/- AND SURPLUS ON FIXED ASSETS ` 4,57,011/-. 2. WHEN THE MATTER CAME UP BEFORE US, LEARNED A.R. FAIRLY ADMITTED THAT INSOFAR AS INCOME OTHER THAN OTHER IN COME OF ` 2,37,639/-/- WAS CONCERNED, ASSESSEE WAS NOT ENTITL ED FOR THE RELIEF PRAYED FOR IN VIEW OF THE DECISION OF HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA V. CIT (317 ITR 218). INSOFAR AS THE ISSUE RELATING TO OTHER INCOME ` 2,37,639/- WAS CONCERNED, LEARNED A.R. SUBMITTED THAT THIS WAS PROVISION FOR EXPENSES MADE IN THE EA RLIER YEARS FOUND NOT REQUIRED AND THEREFORE, WRITTEN BACK. AS PER T HE LEARNED A.R., SUCH PROVISIONS WHEN MADE IN THE EARLIER YEARS WERE CHARGED TO PROFIT & LOSS ACCOUNT OF THE RESPECTIVE YEARS. WHE N IT WAS FOUND THAT THE PROVISIONS WERE NO MORE REQUIRED, THIS WAS WRIT TEN BACK TO THE PROFIT & LOSS ACCOUNT. ACCORDING TO HIM, THE EXPEN SES ON WHICH SUCH PROVISIONS WERE MADE, WERE ALL INCURRED IN RELATION TO MANUFACTURING ACTIVITY. THEREFORE, ACCORDING TO HIM, THE CLAIM U NDER SECTION 80-IB WAS CLEARLY ALLOWABLE WHEN THE PROVISIONS WERE WRIT TEN BACK. LEARNED A.R. ALSO SUBMITTED THAT SIMILAR ISSUE HAD COME UP BEFORE THIS TRIBUNAL IN I.T.A. NO. 844/MDS/2012 AND IT WAS DECIDED IN FAVOUR I.T.A. NO. 1732/MDS/12 3 OF ASSESSEE. A COPY OF THE ORDER DATED 11 TH JULY, 2012 OF THIS TRIBUNAL WAS PLACED ON RECORD. 3. PER CONTRA, LEARNED D.R. FAIRLY ADMITTED THAT IN SOFAR AS THE ISSUE ON DEDUCTION UNDER SECTION 80-IB WITH REGARD TO OTH ER INCOME WAS CONCERNED, IT STOOD DECIDED IN FAVOUR OF ASSESSEE B Y VIRTUE OF TRIBUNALS DECISION FOR ASSESSMENT YEAR 2008-09. 4. WE HAVE PERUSED THE ORDERS AND HEARD THE SUBMIS SIONS. INSOFAR AS INTEREST INCOME ` 2,21,593/-, FARM HOUSE INCOME ` 87,064/- AND PROFIT ON SALE OF FIXED ASSET ` 4,57,011/- ARE CONCERNED, WITHOUT DOUBT, THEY ARE NOT ELIGIBLE FOR DEDUCTION UNDER SE CTION 80-IB, SINCE THESE WERE NOT INCOME DERIVED FROM INDUSTRIAL UNDER TAKING OF THE ASSESSEE. BY VIRTUE OF DECISION OF HONBLE APEX CO URT IN THE CASE OF LIBERTY INDIA (SUPRA), SUCH INCOME WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION UNDER SECTION 80-IB OF THE ACT. HOWEVER, INSOFAR AS OTHER INCOME ` 2,37,639/- IS CONCERNED, ADMITTEDLY, THESE WERE PR OVISIONS WRITTEN BACK. SUCH PROVISIONS WERE CHARGED IN THE EARLIER YEAR IN THE PROFIT & LOSS ACCOUNT. THE PROVISIONS WERE MADE FO R EXPENSES. ON SIMILAR FACTS, IN ASSESSEES APPEAL FOR 2008-09, TH IS TRIBUNAL HAS HELD AT PARA 4 OF ITS ORDER AS UNDER:- I.T.A. NO. 1732/MDS/12 4 4. THE NEXT CONTENTION ON THE SAME GROUND RELATES T O THE EXPENSES NO LONGER REQUIRED. THE ASSESSEE HAD PROV IDED FOR EXPENSES IN THE PREVIOUS YEAR RELEVANT TO THE EARLI ER ASSESSMENT YEAR. THE PROVISION WAS MADE FOR EXPENSES ACTUALLY INCURRED BUT BILLS WERE NOT RECEIVED. THEREFORE, ON THE BASIS O F THE REASONABLE ESTIMATE, PROVISION WAS MADE AND THE SAM E WAS CLAIMED AS DEDUCTION IN COMPUTING THE INCOME OF THE EARLIER ASSESSMENT YEAR. THE PROVISION WAS ALLOWED AS A DE DUCTION IN THAT ASSESSMENT YEAR. THEREAFTER IN THE PREVIOUS Y EAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR, WHEN THE ACCOUNTS ARE FINALLY SETTLED IN RESPECT OF THOSE EXPENSES, THE ASSESSEE FOUND THAT AN AMOUNT OF ` 5,54,914/- IS STILL AVAILABLE IN THE PROVISION EVE N AFTER PAYING ALL SUCH EXPENDITURE. THIS UNEXPIRED PORTION OF THE EARLIER PROVISION WAS BROUGHT BACK BY THE ASSESSEE TO THE PROFIT AND LOSS ACCOUNT. THE QUESTION IS WHETHER THE INCO ME BY WAY OF THIS CREDIT ENTRY WOULD AMOUNT TO BUSINESS INCOME E LIGIBLE FOR DEDUCTION UNDER SEC.80IB. THE ANSWER IS YES. THE EARLIER PROVISION WAS MADE TO MEET THE EXPENSES INCURRED FO R THE BUSINESS OF THE ASSESSEE. THE EXCESS PROVISION WAS WRITTEN OFF IN THE SUCCEEDING ASSESSMENT YEAR. ALL THESE ADJUS TMENTS ARE NOTHING BUT ADJUSTMENTS RELATING TO BUSINESS EXPEND ITURE. THEREFORE, THE REVERSAL IS IN THE NATURE OF BUSINES S PROFITS OF THE ASSESSEE ENTITLED FOR DEDUCTION UNDER SEC.80IB. THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE. 5. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE AR E OF THE OPINION THAT ASSESSEE WAS ELIGIBLE FOR CLAIMING DEDUCTION U NDER SECTION 80-IB OF THE ACT ON OTHER INCOME ` 2,37,639/-. A.O. IS DIRECTED TO RE-WORK THE DEDUCTION CONSIDERING OTHER INCOME OF ` 237,639/- ALSO. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. I.T.A. NO. 1732/MDS/12 5 THE ORDER WAS PRONOUNCED IN THE COURT ON WEDNESDAY, THE 7 TH OF NOVEMBER, 2012, AT CHENNAI. SD/- SD/- (V.DURGA RAO) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 7 TH NOVEMBER, 2012. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-XII, CHENNAI-34 (4) CIT, PONDICHERRY (5) D.R. (6) GUARD FILE