DCIT CIR 22(1), NAVI MUMBAI V. POSITIVE INDUSTRIES, MUMBAI

ITA 1843/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3169 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Audit objection; Additional evidence; Tax effect
• Section: 80IB; 12A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.1843/M/2013 ASSESSMENT YEAR: 2009-10 THE DCIT, CIR-22(1), ROOM NO.411, 4 TH FLOOR, TOWER NO.6, VASHI STATION COMPLEX, MUMBAI - 400703 VS. M/S. POSITIVE INDUSTRIES, 305/306, VINDHYACHAL CHS, 7 TH ROAD, NEELKANTH VALLY, RAJAWADI, GHATKOPAR (E), MUMBAI 400 077 PAN: AADFP 8298A (APPELLANT) (RESPONDENT) CO NO.103/M/2014 (ARISING OUT OF ITA NO.1843/M/2013) ASSESSMENT YEAR: 2009-10 M/S. POSITIVE INDUSTRIES, 305/306, VINDHYACHAL CHS, 7 TH ROAD, NEELKANTH VALLY, RAJAWADI, GHATKOPAR (E), MUMBAI 400 077 PAN: AADFP 8298A VS. THE DCIT, CIR-22(1), ROOM NO.411, 4 TH FLOOR, TOWER NO.6, VASHI STATION COMPLEX, MUMBAI - 400703 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SANJAY R. PARIKH, A.R. REVENUE BY : DR. S. PANDIAN, D.R. DATE OF HEARING : 28.03.2016 DATE OF PRONOUNCEMENT : 31.03.2016 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED APPEAL BY THE REVENUE AND THE COR RESPONDING CROSS OBJECTIONS BY THE ASSESSEE HAVE BEEN DIRECTED AGAIN ST THE ORDER DATED 17.12.2012 OF THE COMMISSIONER OF INCOME TAX (APPEA LS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009- 10. ITA NO.1843/M/2013 M/S. POSITIVE INDUSTRIES 2 2. THE REVENUE IN THIS APPEAL HAS AGITATED THE ACTI ON OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.15,09,709/- MADE BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) IN RESPECT OF C OMMISSION PAID ON PURCHASES. AT THE OUTSET, THE LD. D.R. HAS STATED AT BAR THAT THE TAX EFFECT IN THIS APPEAL IS LESS THAN RS.10 LAKHS AND THAT AS PER THE CBDT CIRC ULAR NO.21/2015 DATED 10/12/2015, HE DOES NOT PRESS THE APPEAL OF THE REV ENUE AND THE SAME MAY BE DISMISSED AS NOT PRESSED. 3. THE CBDT VIDE CIRCULAR DATED 10/12/2015 (SUPRA) HAS REVISED THE MONETARY LIMITS FOR FILING OF APPEALS BY THE DEPART MENT BEFORE THE TRIBUNAL AND FURTHER VIDE PARA 10 OF THE SAID CIRCULAR IT HA S BEEN CLARIFIED THAT SAID CIRCULAR IS APPLICABLE RETROSPECTIVELY TO THE PENDI NG APPEALS ALSO. THE RELEVANT PORTION OF THE CIRCULAR DATED 10/12/2015 (SUPRA) IS REPRODUCED BELOW:- 3.HENCEFORTH APPEALS/SLPS SHALL NOT BE FILED IN CAS ES WHERE THE TAX EFFECT DOES NOT EXCEED THE MONETARY LIMITS GIVEN HEREUNDER:- SL. NO. APPEALS IN INCOME-TAX MATTERS MONETARY LIMI TS (IN RS.) 1. BEFORE APPELLATE TRIBUNAL 10,00,000 2. BEFORE HIGH COURT 20,00,000 3. BEFORE SUPREME COURT 25,00,000 ................................................ ................................................... ....................... 4. FOR THIS PURPOSE, 'TAX EFFECT' MEANS THE DIFFERE NCE BETWEEN THE TAX ON THE TOTAL INCOME ASSESSED AND THE TAX THAT WOULD HAVE B EEN CHARGEABLE HAD SUCH TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME I N RESPECT OF THE ISSUES AGAINST WHICH APPEAL IS INTENDED TO BE FILED (HEREI NAFTER REFERRED TO AS 'DISPUTED ISSUES'). HOWEVER THE TAX WILL NOT INCLUD E ANY INTEREST THEREON, EXCEPT WHERE CHARGEABILITY OF INTEREST ITSELF IS IN DISP UTE. IN CASE THE CHARGEABILITY OF INTEREST IS THE ISSUE UNDER DISPUTE, THE AMOUNT OF INTEREST SHALL BE THE TAX EFFECT. IN CASES WHERE RETURNED LOSS IS REDUCED OR ASSESSED AS INCOME, THE TAX EFFECT WOULD INCLUDE NOTIONAL TAX ON DISPUTED ADDITIONS. I N CASE OF PENALTY ORDERS, THE TAX EFFECT WILL MEAN QUANTUM OF PENALTY DELETED OR REDUCED IN THE ORDER TO BE APPEALED AGAINST. 8. ADVERSE JUDGMENTS RELATING TO THE FOLLOWING ISS UES SHOULD BE CONTESTED ON MERITS NOTWITHSTANDING THAT THE TAX EFFECT ENTAILED IS LESS THAN THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE OR THERE IS NO TAX EFFECT: ITA NO.1843/M/2013 M/S. POSITIVE INDUSTRIES 3 (A) WHERE THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF AN ACT OR RULE ARE UNDER CHALLENGE, OR (B) WHERE BOARD'S ORDER, NOTIFICATION, INSTRUCTION OR C IRCULAR HAS BEEN HELD TO BE ILLEGAL OR ULTRA VIRES, OR (C) WHERE REVENUE AUDIT OBJECTION IN THE CASE HAS BEEN ACCEPTED BY THE DEPARTMENT, OR (D) WHERE THE ADDITION RELATES TO UNDISCLOSED FOREIGN A SSETS/ BANK ACCOUNTS. 9. THE MONETARY LIMITS SPECIFIED IN PARA 3 ABOVE S HALL NOT APPLY TO WRIT MATTERS AND DIRECT TAX MATTERS OTHER THAN INCOME TA X. FILING OF APPEALS IN OTHER DIRECT TAX MATTERS SHALL CONTINUE TO BE GOVER NED BY RELEVANT PROVISIONS OF STATUTE & RULES. FURTHER, FILING OF APPEAL IN CA SES OF INCOME TAX, WHERE THE TAX EFFECT IS NOT QUANTIFIABLE OR NOT INVOLVED, SUC H AS THE CASE OF REGISTRATION OF TRUSTS OR INSTITUTIONS UNDER SECTION 12A OF THE IT ACT, 1961, SHALL NOT BE GOVERNED BY THE LIMITS SPECIFIED IN PARA 3 ABOVE AN D DECISION TO FILE APPEAL IN SUCH CASES MAY BE TAKEN ON MERITS OF A PARTICULAR C ASE. 10. THIS INSTRUCTION WILL APPLY RETROSPECTIVELY TO PENDING APPEALS AND APPEALS TO BE FILED HENCEFORTH IN HIGH COURTS/ TRIB UNALS. PENDING APPEALS BELOW THE SPECIFIED TAX LIMITS IN PARA 3 ABOVE MAY BE WITHDRAWAL NOT PRESSED. APPEALS BEFORE THE SUPREME COURT WILL BE GOVERNED BY THE INSTRUCTIONS ON THIS SUBJECT, OPERATIVE AT THE TIME WHEN SUCH APPEAL WAS FILED. (UNDERLINED FOR EMPHASIS BY US) 4. THE TAX EFFECT IN DISPUTE IN THE CAPTIONED APPEA L IS STATED TO BE BELOW THE MONETARY LIMIT OF RS.10.00 LACS AS SPECIFIED IN THE CBDT CIRCULAR DATED 10/12/2015 (SUPRA). THE LD. DR HAS NOT BROUGHT OUT ANY MATERIAL TO SUGGEST THAT THE CAPTIONED APPEAL IS PROTECTED BY ANY OF TH E CIRCUMSTANCES PRESCRIBED IN PARA-8 OF THE CIRCULAR DATED 10/12/2015 (SUPRA). HE THEREFORE HAS STATED THAT IN VIEW OF THE ABOVE CIRCULAR OF THE CBDT, THE CAPTION ED APPEAL BE TREATED AS WITHDRAWN/NOT PRESSED. HENCE, WITHOUT GOING INTO T HE MERIT OF THE ISSUES RAISED IN THE PRESENT APPEAL, THIS APPEAL IS TREATE D AS DISMISSED AS WITHDRAWN/NOT PRESSED AS ITS FILING BEING IN CONTRA VENTION OF THE CBDT CIRCULAR DATED 10/12/2015(SUPRA) READ WITH SECTION 268A OF THE INCOME TAX ACT. 5. NOW COMING TO THE CROSS OBJECTION FILED BY THE A SSESSEE I.E. CO NO.103/M/2014. ITA NO.1843/M/2013 M/S. POSITIVE INDUSTRIES 4 CO NO.103/M/2014 6. THE ASSESSEE HAS RAISED THREE ISSUES IN ITS CROS S OBJECTIONS. THE FIRST ISSUE IS RELATING TO DISALLOWANCE OUT OF ELECTRICIT Y EXPENSES. THE LD. A.R. OF THE ASSESSEE HAS STATED AT BAR THAT AS PER THE INST RUCTIONS OF HIS CLIENT, HE DOES NOT PRESS THIS ISSUE. THIS ISSUE/GROUND IS, THUS, DISMISSED AS NOT PRESSED. 7. THE SECOND CROSS OBJECTION TAKEN BY THE ASSESSEE IS RELATING TO THE DISALLOWANCE OF FACTORY EXPENSES OF RS.2 LAKHS. TH E LD. A.R. OF THE ASSESSEE HAS DEMONSTRATED THAT THE SAID ADDITION WAS MADE BY THE AO ALLEGING THAT THE ASSESSEE HAD NOT FURNISHED THE NECESSARY DETAILS IN THIS RESPECT. THE LD. A.R. HAS INVITED OUR ATTENTION TO PAGE 34 OF THE PAPER B OOK WHICH IS AN APPLICATION DATED 16.05.12 ADDRESSED TO THE LD. CIT(A) FOR ADMI SSION OF ADDITIONAL EVIDENCE. IN PARA 5 & 6 OF THE SAID APPLICATION, T HE ASSESSEE HAS STATED THAT THE AO HAD MADE THE SAID DISALLOWANCE ON ADHOC BASIS AN D THAT THE AO HAD NOT ASKED THE ASSESSEE TO SUBMIT THE EVIDENCES IN THAT REGARD. THE ASSESSEE, THUS, HAD FILED THE ADDITIONAL EVIDENCES SHOWING THE DETA ILS OF THESE FACTORY EXPENSES. 8. THE LD. CIT(A) HAD CALLED INTER-ALIA A REMAND REPORT ON THIS ISSUE ALONG WITH OTHER ISSUES RAISED BY THE ASSESSEE. HOWEVER, THE AO IN THE REMAND REPORT FAILED TO GIVE ANY FINDING OR REPORT ON THE ABOVE ISSUE. THE SAID PLEA HAD ALSO BEEN RAISED BY THE ASSESSEE BEFORE THE LD. CIT(A). HOWEVER, THE LD. CIT(A) WITHOUT TAKING INTO CONSIDERATION THE PLEA O F THE ASSESSEE UPHELD THE ADDITIONS MADE BY THE AO ON THIS ISSUE. 9. THE LD. A.R., BEFORE US, HAS STATED THAT THE ASS ESSEE HAD FILED THE DETAILS IN THE SHAPE OF ADDITIONAL EVIDENCES BEFORE THE AO, THE COPIES OF WHICH HAVE BEEN PLACED AT PAGE 41 TO 53 OF THE PAPER BOOK BEFO RE US. 10. WE HAVE GONE THROUGH THE ORDER OF THE LD. CIT(A ). WE FIND THAT THE ASSESSEE HAD TAKEN A SPECIFIC OBJECTION THAT DESPIT E FILING OF THE NECESSARY ITA NO.1843/M/2013 M/S. POSITIVE INDUSTRIES 5 DETAILS, THE AO HAS FAILED TO GIVE HIS FINDINGS IN THE REMAND REPORT IN THIS RESPECT AND EVEN THE LD. CIT(A) HAS ALSO FAILED TO CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE IN THIS RESPECT. 11. IN VIEW OF THIS, THIS ISSUE NEEDS TO BE EXAMINE D BY THE AO AFRESH. WE ACCORDINGLY RESTORE THIS ISSUE TO THE FILE OF THE A O WITH A DIRECTION TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE IN RESPECT OF THE FACTORY EXPENSES AND DECIDE IT AFRESH. 12. THE THIRD ISSUE RAISED BY THE ASSESSEE IS RELAT ING TO THE ENHANCEMENT OF DEDUCTION UNDER SECTION 80IB. THE PLEA OF THE ASSE SSEE HAS BEEN THAT IN VIEW OF THE ADDITIONS MADE BY THE AO, THE ASSESSEE WAS E NTITLED TO THE CORRESPONDING ENHANCEMENT IN RESPECT OF DEDUCTION C LAIMED UNDER SECTION 80IB AS THE ASSESSEE WAS ELIGIBLE FOR THE SAME. HO WEVER, THE LOWER AUTHORITIES HAVE FAILED TO CONSIDER THE ABOVE PRAYER OF THE ASS ESSEE. THE LD. CIT(A) HAS EVEN NOT DISCUSSED THIS ISSUE IN THE IMPUGNED ORDER . WE ACCORDINGLY RESTORE THIS ISSUE ALSO TO THE FILE OF THE AO WITH A DIRECT ION TO CONSIDER THE ELIGIBILITY OF THE ASSESSEE FOR ENHANCED DEDUCTION UNDER SECTION 8 0IB ON ACCOUNT OF ADDITIONS, IF ANY, MADE/SUSTAINED IN THE CASE OF TH E ASSESSEE AND IF THE ASSESSEE IS FOUND ELIGIBLE FOR THE SAME, THEN TO ALLOW THE C LAIM OF THE ASSESSEE ACCORDINGLY. 13. WITH THE ABOVE OBSERVATION AND IN VIEW OF THE C IRCULAR DATED 10/12/2015, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATI STICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.03.2016. SD/- SD/- (RAMIT KOCHAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.03.2016. * KISHORE, SR. P.S. ITA NO.1843/M/2013 M/S. POSITIVE INDUSTRIES 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.