ACIT, New Delhi V. M/s. Gallium Industries Ltd., New Delhi

ITA 1819/DEL/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2660 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 22-04-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHWANI TANI YA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER ITA NO 1819/DEL/ 20 12 (A Y: 2006-07) ACIT VS. GALLIUM INDUSTRIES LTD. CIRCLE-12 (1) 876, SECTOR-A, NEW DELHI POCKET C, VASANT KUNJ NEW DELHI PIN: 110070 AAACG0108J (APPELLANT) (RESPONDENT ) ASSESSEE BY :SHRI SANJAY PANDEY, SR. D.R REVENUE BY : SHRI ASHWANI TANI YA, ADV. ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE REVENUE HAS QUESTIONED FIRST APPELLATE ORDER SOLELY ON THE GROUND THAT THE LD. CIT(A) WAS NOT CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN ALLOWING THE DEDUCTION U/S 10A TO THE EXTENT OF RS.1,36,72,561/- INSTEAD OF RS.1,25,95,182/- CALCUL ATED BY THE A.O. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENT S BY THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. IN SUPPORT OF THE ITA NO. 1819/DEL/2012 2 GROUND THE LD. D.R HAS BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER WHEREAS THE LD. AR HAS TRIED TO JUSTIFY THE FIRST A PPELLATE ORDER. 3. DURING THE YEAR, THE ASSESSEE WAS ENGAG ED IN THE BUSINESS OF MANUFACTURING OF TUBE MILL AND ALLIED EQUIPMENTS. IT WAS HAVING TWO UNITS I.E ONE AT NOIDA AND THE OTHER UNIT AT FARIDABAD PR OFITS DERIVED BY THE ASSESSEE COMPANY FROM ITS NOIDA UNIT WAS ELIGIBEL F OR TAX BENEFIT AS PER PROVISIONS OF SECTION 10A OF THE ACT. WHILE ALLOWIN G THE CLAIM OF THE ASSESSEE U/S 10A, THE A.O RESTRICTED THE CLAIM TO R S.1,25,95,182/- AS AGAINST RS.1,36,72,561/- CLAIMED BY THE ASSESSEE. THUS THE CLAIMED BENEFIT U/S 10A WAS REDUCED BY RS.10,77,379/- (RS.1 ,36,72,561/-- RS.1,25,95,182/-). THE ASSESSEE OBJECTED THE SAME BEFORE THE LD. CIT(A) WITH THIS CONTENTION THAT IT MAINTAINS ITS BOOKS OF ACCOUNTS FOR BOTH THE UNITS AND AFTER THAT A COMBINED BALANCE SHEET IS PREPARED FOR SUBMITTING TO THE INCOME-TAX DEPARTMENT, SHOWING THE TOTAL INCOME EAR NED BY THE ASSESSEE COMPANY. FOR THE IMPUGNED ASSESSMENT YEAR ALSO, TH E ASSESSEE HAD SUBMITTED ALL THE THREE BALANCE SHEETS I.E. OF NOID A UNIT, FARIDABAD UNIT AND COMBINED BALANCE-SHEET WITH PROFIT AND LOSS ACC OUNT AND ALL ANNEXURES AND SCHEDULES THERETO. IT WAS CONTENDED THAT THE A .O HAD A MIS- CONCEPTION IN HIS MIND AND HAS MADE THE IMPUGNED DI SALLOWANCE WITHOUT VERIFYING THE BALANCE-SHEET AND PROFIT AND LOSS ACC OUNT OF THE NOIDA UNIT , PROFITS OF WHICH WERE CLAIMED BY THE ASSESSEE AS EL IGIBEL FOR DEDUCTION U/S 10A OF THE ACT. IT WAS POINTED OUT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPONSE TO THE DIRECTION OF THE A.O THE ASSESSEE HAD SUBMITTED THAT THE TOTAL EXPORT TURNOVER AS APPEARI NG IN PROFIT AND LOSS ACCOUNT HAS BEEN COMPUTED ON C.1.F BASIS AND HAS BE EN SHOWN AT RS.20,87,70,917/- . IT WAS ALSO EXPLAINED THAT FRE IGHT EXPENSES AMOUNTING ITA NO. 1819/DEL/2012 3 TO RS.1,30,03,371/- IN RESPECT OF EXPORT AS WELL AS MADE FROM NOIDA UNIT, HAVE DULY BEEN EXCLUDED WHILE WORKING OUT THE DEDUC TION CLAIMED U/S 10A OF THE ACT. HOWEVER, THE A.O WITHOUT EXAMINING THE DETAILS FURNISHED BY THE ASSESSEE HAS RESTRICTED THE CLAIM OF THE ASSESS SE U/S 10A OF THE ACT TO RS. 1,25,95,182/- ON EXPORT TURNOVER OF NOIDA UNIT. IT WAS POINTED OUT THAT WHILE DOING SO, THE A.O CONSIDERED THE FREIGHT AMOU NT AT RS.1,58,23,601/- WHICH INCLUDES THE AMOUNT OF FREIGHT PAID BY THE AS SESSEE AMOUNTING TO RS.28,20,230/- OF ITS FARIDABAD UNIT, WHICH WAS NOT PART OF THE EXPORT TURNOVER OF THE NOIDA UNIT. NOT ONLY THAT, THE A.O ALSO REDUCED THE EXPORT TURNOVER WORKED OUT BY THE ASSESSEE FURTHER BY 10% OF THE EXPENSES INCURRED ON POSTAGE AND TELEPHONE AND INSURANCE CHA RGES BEING THE AMOUNT DEBITED IN THE COMBINED PROFIT AND LOSS ACCO UNT WHICH SHOWS THE POSTAGE AND TELEPHONE EXPENSES OF RS.24,78,325/- I. E RS.44,899/- FOR NOIDA UNIT AND RS.24,33,425/- FOR FARIDABAD UNIT AN D INSURANCE CHARGES OF RS.17,54,911/- FOR FARIDABAD UNIT. THUS, THE A. O FURTHER REDUCED THE EXPORT TURNOVER OF THE NOIDA UNIT BY THE AMOUNT OF EXPENSES INCURRED BY THE ASSESSESE. IN RESPECT OF FRIDABAD UNIT. THUS, THE EXPORT TURNOVER OF THE NOIDA UNIT WHICH WAS TO BE CONSIDERED FOR MAKIN G OUT DEDUCTION U/S 10A AND HAS BEEN WORKED OUT BY THE ASSESSEE DULY CE RTIFIED BY THE STATUTORY AUDITORS AMOUNTING TO RS.17,58,06,222/- W AS REDUCED BY THE A.O WITH THE ABOVE AMOUNT OF RS.30,95,973/- BEING THE A MOUNT OF EXPENSES OF THE FARIDABAD UNIT WHICH HAVE NO CONCERN FOR DETERM INING THE PROFITS DERIVED FROM NOIDA UNIT, WHICH IS ELIGIBLE FOR DEDU CTION U/S 10A OF THE ACT. 4. CONSIDERING THE ABOVE SUBMISSIONS WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY COME TO THE CONCLUSION THAT FOR WORKING OUT PROFITS U/S 10A, THE FIGURES ARE TO BE CONSIDERED FOR NOIDA UNI T ONLY WHICH IS AN ITA NO. 1819/DEL/2012 4 ELIGIBLE UNIT FOR DEDUCTION U/S 10A OF THE ACT AND FOR ANY EXPENSES INCURRED IN RESPECT OF FARIDABAD UNIT, WHICH HAS NO CONCERN WITH THE DEDUCTION U/S 10A AS BOTH THE UNITS ARE INDEPENDENT UNITS AND BOO KS OF ACCOUNTS ARE ALSO BEING KEPT FOR BOTH THE UNITS SEPARATELY BY THE ASS ESSEE COMPANY. THE LD. CIT(A) HAS ALSO RIGHTLY HELD THAT THE TOTAL TURNOVE R SHOWN OF THE NOIDA UNIT IS TO BE REDUCED BY THE AMOUNT OF THE FREIGHT AMOUN TING TO RS.1,30,03,371/- TO WORK OUT THE ACTUAL TOTAL TURNOVER. THIS AMOUNT OF TOTAL TURNOVER IS TO BE FURTHER REDUCED BY THE AMOUNT WHICH HAS NOT BEEN BR OUGHT FOR RECEIPT IN INDIA I.E. RS.1,99,61,324/- TO ARRIVE AT THE ACTUAL EXPORT TURNOVER WHICH COME TO RS.17,58,06,222/- FOR WORKING OUT THE ELIGI BLE PROFIT AND TO DETERMINE THE FURTHER TURNOVER. THE ACTUAL ELIGIBL E DEDUCTION U/S 10A IN RUPEES WORKS OUT AS UNDER:- PROFIT OF THE UNDERTAKING X EXPORT TURNOVE R/TOTAL TURNOVER 1,52,24,966 X 17,58,06,222/19,57,67,546= 1,36,72,561(A) AS AGAINST WORKED OUT BY THE LD. AO AS UN DER:- 1,52,24,966 X 17,27,10,249/ 20,87,70,917 = 1,25,95,182 (B) 5. THE LD. CIT(A) HAS RIGHTLY H ELD THAT THE A.O HAS ERRED IN TAKING THE EXPORT TURNOVER OF RS.17,27,10,249/- BY REDUCING THE FIGURES AS PER DETAILS GIVEN HEREUNDER AND DISCUSSED ABOVE WHI CH IS OF THE FARIDABAD UNIT I) FREIGHT (FARIDABAD UNIT) RS. 28,20,231 II) INSURANCE CHRGES (ADHOC OUT OF RS.17,54,911/- OUT OF FARIDABAD UN IT) RS. 27,910/- III) POSTAGE AND TELEPHONE 10% (FBD.UNI T)RS. 2,47,832/- ITA NO. 1819/DEL/2012 5 TOTAL: RS. 30,95,973/- 6. WE ALSO FIND THAT THE A.O HAS LIKEW ISE ERRED IN TAKING THE TOTAL TURNOVER AT RS.20,87,70,917/- WHEREAS THE SAME WAS TO BE TAKEN AFTER REDUCING THE FREIGHT OF RS.1,30,03,371/- WHICH COME S TO RS.19,57,67,546/-. IN VIEW OF THESE RELEVANT FACTS OF THE CASE IN TOTA LITY WE FULLY CONCUR WITH THE FINDING OF THE LD. CIT(A) THAT THE A.O WAS NOT JUST IFIED IN MAKING DISALLOWANCE OF RS.10,77,379/- OUT OF THE CLAIMED DEDUCTION U/S10A OF THE ACT. THE DIRECTION OF THE LD. CIT(A) TO ACCEPT THE ELIGIBLE DEDUCTION U/S 10A AT RS.1,36,72,561/- IS THUS UPHELD. IN RESULT GRO UND IS REJECTED. 7. CONSEQUENTLY, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 5TH JULY/ 2013. SD/- SD/- (J. S. REDDY) (I. C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 05 DAY OF JULY, 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT (ITAT), NEW DELHI. AR, ITAT NEW DELHI . ITA NO. 1819/DEL/2012 6