ACIT, CHENNAI V. M/s. Rajkumar Impex Private Ltd., CHENNAI

ITA 1746/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0781 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-02-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 18-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR S MOHARANA
• Keywords: Business income; Deemed to accrue or arise in india
• Section: 40A(3); 143(3); 80HHC

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL B BENCH, CHENNAI. BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT & SHRI S.S. GODARA, JUDICIAL MEMBER I.T.A. NO.1746/MDS/2012 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE V(3), CHENNAI 600 034. VS. M/S. RAJKUMAR IMPEX PRIVATE LTD., B-603, KESHAVE DUGAR APARTMENTS, NO. 1, EAST AVENUE, KESAVAPERUMALPURAM, R.A. PURAM, CHENNAI 600 028. [PAN:AAACR3577J] (APPELLANT) (RESPONDENT) APPELLANT BY : DR. S. MOHARANA, CIT RESPONDENT BY : NONE DATE OF HEARING : 11.02.2013 DATE OF PRONOUNCEMENT : 11.02.2013 ORDER PER S.S. GODARA, JUDICIAL MEMBER THIS REVENUES APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) VI, CHENNAI D ATED 22.06.2012 IN ITA NO. 103/10-11 FOR THE ASSESSMENT YEAR 2003-04 I N PROCEEDINGS UNDER SECTION 143(3) R.W.S. 263 OF THE INCOME TAX ACT 196 1 [IN SHORT THE ACT]. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.17 1717 1746 4646 46/M/ /M/ /M/ /M/1 11 12 22 2 2 2. THE FOLLOWING SUBSTANTIVE GROUNDS HAVE BEEN RAISED BY THE REVENUE IN THE INSTANT APPEAL: 1. XXXXXXXXXXX 2. THE LD. CIT(A) ERRED IN HOLDING THAT THE DISALL OWANCE U/S.40(A)(3) SHALL FORM PART OF BUSINESS INCOME FOR THE PURPOSE OF CALCULATING RELIEF U/S.80IA AND 80HHC. 2.1. THE LD. CIT(A) FAILED TO APPRECIATE THAT DISA LLOWANCE IN TERMS OF SEC.40(A)(3) WILL CREATE ONLY DEEMED INCOME AND CAN NOT BE CONSIDERED AS COMMERCIAL PROFIT COMPUTED AS PER THE PROFIT AND LOSS ACCOUNT. 2.2 HAVING REGARD TO THE NARROW INTERPRETATION OF THE TERM 'DERIVED FROM THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE DISALLOWANCE MADE U/S.40(A)(3) CANNOT BE SAID TO HAVE BEEN DERIV ED BY THE ASSESSEE FROM THE ELIGIBLE INDUSTRIAL UNDERTAKING. 2.3 IT IS SUBMITTED THAT THE RELIED UPON DECISION OF THE HON'BLE ITAT IN THE ASSESSE'S CASE IN ITA NO.199/MDS/2008, DT.09 .04.2009 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND APPEAL HAS BEEN FILED BEFORE THE HON'BLE HIGH COURT OF MADRAS. 3. THE LD.CIT(A) ERRED IN HOLDING THAT RELIEF U/S.8 0IA SHOULD NOT BE DEDUCTED FROM THE PROFITS AND GAINS FOR COMPUTING R ELIEF U/S.80HHC. 3.1 IT IS SUBMITTED THAT THE SLP FILED BY THE DEPAR TMENT AGAINST THE RELIED UPON DECISION OF THE MADRAS HIGH COURT IN TH E CASE OF M/S.MRF LTD. [TC(A) NO.1020 OF 2009, DT.27.10.2009] HAS BEE N ADMITTED BY THE HON'BLE SUPREME COURT. 3.2 IT IS FURTHER SUBMITTED THAT THE RELIED UPON D ECISION OF THE HON'BLE ITAT IN THE ASSESSEE'S CASE IN ITA NO.199/M DS/2008, DT.09.04.2009 HAS NOT BEEN ACCEPTED BY THE DEPARTME NT AND APPEAL HAS BEEN FILED BEFORE THE HON'BLE HIGH COURT OF MADRAS. 4. XXXXXXXXXXXX 3. FACTS COMMON TO BOTH THE GROUNDS ARE THAT THE A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING CA SHEW KERNELS FROM I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.17 1717 1746 4646 46/M/ /M/ /M/ /M/1 11 12 22 2 3 THE RAW CASHEW AND SELLS THE SAME IN DOMESTIC AND E XPORT MARKETS. ON 03.11.2003, IT HAD FILED ITS RETURN DISCLOSING IN COME OF ` .84,44,996/-. ON 31.03.2006, REGULAR ASSESSMENT HAD BEEN COMPLETED, WHEREIN THE TOTAL TAXABLE INCOME WAS COMPUTED AS ` .1,53,70,562/- BY ALLOWING DEDUCTION UNDER SECTION 80HHC OF ` .70,93,887/- AND UNDER SECTION 80IA OF ` .79,67,837/-. THEREAFTER, THE CIT INVOKED JURISDICT ION UNDER SECTION 263 OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO COM PLETE DE NOVO ASSESSMENT AFTER EXAMINING ASSESSEES INCOME FROM D UTY ENTITLEMENT PASS BOOK [DEPB] AND INTEREST ON DEPOSITS FOR THE PURPOS E OF SECTION 80IB. IN CONSEQUENCE TO THE ABOVE DIRECTIONS, THE ASSESSING OFFICER PASSED ORDER DATED 25.09.2008 AND BROUGHT TO TAX ASSESSEES INTE REST INCOME UNDER THE HEAD OTHER SOURCES, BY EXCLUDING THE PROFIT ON SA LE OF RAW CASHEW AND CASHEW KERNELS FROM GROSS TOTAL INCOME. HE ALSO REC OMPUTED THE DEDUCTIONS UNDER SECTION 80HHC AND 80IA (SUPRA). 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL, WHER EIN THE CIT(A) HAS RELIED ON THE ORDER OF THE CHENNAI ITAT B BENCH I N I.T.A. NO. 199/MDS/2008 DATED 09.04.2009 FOR THE ASSESSMENT YE AR 2003-04 PASSED IN ASSESSEES CASE AND ACCEPTED ITS CONTENTIONS AGAINS T THE RECOMPUTATION ABOVE SAID. THEREFORE, THE REVENUE IS AGGRIEVED. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.17 1717 1746 4646 46/M/ /M/ /M/ /M/1 11 12 22 2 4 5. REPRESENTING REVENUE, THOUGH THE DR HAS SUBMITT ED THAT THE FACTS OF THE INSTANT CASE ARE SIMILAR AS THOSE INVOLVED IN I .T.A. NO. 199/MDS/2008 (SUPRA), BUT HE VEHEMENTLY ARGUED THAT THE FINDINGS CONTAINED THEREIN HAVE NOT ATTAINED FINALITY SINCE THE REVENUES APPEAL IS PENDING BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. 6. ON BEHALF OF THE ASSESSEE, NONE HAS COME PRESEN T. WE ALSO FIND THAT IT HAS BEEN DULY SERVED NOTICE BY RPAD AND ACKNOWLE DGEMENT HAS COME ON RECORD. HENCE, WE PROCEED TO DECIDE THE APPEAL EX-P ARTE. 7. WE HAVE CONSIDERED THE ARGUMENTS OF THE REVENUE AS WELL AS PERUSED THE FINDINGS OF THE ASSESSING OFFICER AND C IT(A). THE ISSUES INVOLVED IN BOTH GROUNDS RAISED BY THE REVENUE ARE WHETHER THE DISALLOWANCE UNDER SECTION 40A(3) FORMS PART OF BUS INESS INCOME FOR CALCULATING DEDUCTION UNDER SECTION 80IA AND SECTIO N 80HHC AND A DEDUCTION UNDER SECTION 80IA IS TO BE DEDUCTED FROM THE PROFITS AND GAINS FOR COMPUTING RELIEF UNDER SECTION 80HHC OR NOT. THE RE VENUE HAS FAIRLY CONCEDED THAT BOTH ISSUES ARE COVERED IN ASSESSEES FAVOUR, BUT, ITS ONLY ARGUMENT IS ITS APPEAL IS PENDING BEFORE THE HONBL E JURISDICTIONAL HIGH COURT. THIS, IN OUR OPINION DOES NOT FORM A VALID G ROUND NOT TO FOLLOW THE FINDINGS OF A COORDINATE BENCH (SUPRA) IN THE ABSEN CE OF WELL REASONED DISTINGUISHING FEATURES. THEREFORE, WE UPHOLD THE F INDINGS UNDER CHALLENGE RECORDED BY THE CIT(A) DECIDING THE APPEAL IN ASSES SEES FAVOUR. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.17 1717 1746 4646 46/M/ /M/ /M/ /M/1 11 12 22 2 5 8. CONSEQUENTLY, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 11 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S.S. GODARA) JUDICIAL MEMBER CHENNAI, DATED, THE 11.02.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.