DCIT, Ahmednagar V. Brook Crompton Greaves Ltd., Ahmednagar

ITA 199/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3275 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 09-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Assessee Lawyers: S P KULKARNI
• Keywords: Business income; Depreciation; Unabsorbed depreciation
• Section: 271(1)(c); 80HHC; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRAKUMAR YADAV AND SHRI D. KARUNAKARA RAO ITA NO. 199/PN/09 (ASST. YEAR 2003-04) DY. CIT, AHMEDNAGAR CIRCLE, AHMEDNAGAR .... APPELLANT VS. BROOK CROMPTON GREAVES LTD. B-108/109, MIDC AHMEDNAGAR PAN NO. AABCC1922F . RESPONDENT APPELLANT BY : SHRI ABHAY DAMLE RESPONDENT BY : SHRI S.P. KULKARNI ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-I, PUNE DATED 04/11/2008 FOR THE ASSESSMENT YEAR 2003-04. TH E GROUNDS READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(APPEAL) ERRED IN CANCELING THE PENALTY OF RS. 1 0,97,626/- LEVIED U/S. 271(1)(C) OF THE I.T. ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) ERRED IN CONCLUDING THAT THE EXPLANATI ON GIVEN BY THE ASSESSEE IN RESPECT OF DEDUCTION CLAIMED U/S 80HHC IS BONAFIDE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) HAS NOT CONSIDERED THE FACT THAT THE A SSESSEE HAS CARRIED FORWARD EXCESS BUSINESS LOSS AND UNABSORBED DEPRECI ATION BY CLAIMING SUCH UNLAWFUL DEDUCTION U/S. 80HHC, AND FURNISHED I NACCURATE PARTICULARS OF INCOME TO THE EXTENT OF RS. 29,86,736/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) FAILED TO CONSIDER HONBLE SUPREME COU RTS JUDGEMENT IN THE CASE OF VIRTUAL SOFT SYSTEMS LTD. VS. CIT (2007) 20 7 CTR (SC) 733, WHEREIN IT HAS BEEN HELD THAT PENALTY FOR CONCEALME NT CAN BE LEVIED EVEN IN ABSENCE OF ANY POSITIVE INCOME FOR AND FROM THE ASSESSMENT YEAR 2003- 04. ITA NO. 199/PN/09 A.Y 2003-04 PAGE 2 OF 4 5. THE ORDER OF THE CIT(APPEAL) MAY BE VACATED AND THAT OF THE A.O RESTORED. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSE SSEE FILED THE RETURN OF INCOME DECLARED TOTAL INCOME AT RS. NIL. ASSESSEE DE RIVES INCOME FROM MANUFACTURE OF AC ELECTRIC MOTORS AND SPARES AND IT IS A 100% EXPORT ORIENTED UNIT. COMPUTATION AS PER THE ASSESSEE IS AS FOLLOWS: - AS PER ASSESSEES COMPUTATION, THE NIL INCOME IS C OMPUTED AS UNDER:- 1.INCOME FROM BUSINESS RS. 6,00,79,567 2. LESS EXEMPTION U/S. 10B RS. 5,37,61,249 -------------------- BALANCE RS. 63,18,318 3. LESS CHAPTER VIA DEDUCTION U/S. 80HHC 29, 86,736 --------------------- 4. TOTAL INCOME RS. 33,31,582 5. LESS SET-OFF OF B/F LOSSES-BUSINESS RS. 33,31,582 LOSS OF A.Y 1999-00 (TO THE EXTENT BUSINESS INCOME) ---------------------- NET TAXABLE INCOME NIL ----------------------- 3. DURING THE ASSESSMENT PROCEEDINGS, THE AO FOUND TH AT THE DEDUCTION U/S 880HHC IS ALLOWABLE ONLY AFTER THE B/F LOSSES ARE GIV EN SET OFF AND ACCORDINGLY, HE CORRECTED THE COMPUTATION , WHICH IS AS UNDER:- INCOME AS PER COMPUTATION OF INCOME RS. 6,00,79,5 67/- LESS: EXEMPTION U/S. 10B RS. 5,37,61,249/- --------------------- TOTAL INCOME RS. 63,18,318/- LESS: SET OFF OF BUSINESS LOSSES OF RS. 63,18,318 /- A.Y 1999-00 & 00-01 --------------------- NET TAXABLE INCOME RS. NIL ---------------------- AS THERE ARE NO INCOME AFTER THE SET OFF IS GIVEN, THE AO DID NOT GRANT ANY DEDUCTION U/S 80HHC OF THE ACT. IN THIS REGARD, THE A .O INITIATED PENALTY PROCEEDINGS AND LEVIED THE PENALTY OF RS. 10,97,626/ -. CIT(A) DELETED THE SAME AS PER DISCUSSION GIVEN IN PARA 5.3 AND 5.4 OF THE IM PUGNED ORDER. 4. AGGRIEVED WITH THE SAME ASSESSEE FILED THE PRESENT APPEAL BEFORE US. DURING THE PROCEEDINGS LD. COUNSEL FOR THE ASSESSEE DE MONSTRATED THAT THE SAID CLAIM WAS MADE BY THE ASSESSEE RELYING ON THE BOMBAY HIGH COURT JUDGEMENT IN THE CASE OF SHIRKE CONSTRUCTION EQUIPMENTS LTD. 246 I TR 429(BOM) AND MANY ITA NO. 199/PN/09 A.Y 2003-04 PAGE 3 OF 4 OTHERS AT THE RELEVANT POINT OF TIME. THIS JUDGMENT PROVIDES FOR NON-SETTING OFF OF THE CARRIED FORWARD LOSSES AGAINST THE ELIGIBLE PROFITS BEFORE 80HHC DEDUCTION WAS CALCULATED. THOUGH, THE SAID JUDGEMENT WAS FINA LLY REVERSED AT THE LATER POINT OF TIME. 5. LD. DR RELIED ON THE HONBLE SUPREME COURT DECISION IN THE CASE OF IPCA LABORATORIES LTD. 266 ITR 521 WHICH PROVIDES FOR THE PRO POSITION THAT THE PROVISION OF SEC. 80AB HAS OVERRIDING EFFECTS ON ALL O THER PROVISIONS OF CHAPTER VIA. LD. DR RELIED ON THE ORDER OF THE A.O. 6. WE HERD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE PAPER BOOKS FILED BEFORE US. PARAS 5.3 AND 5.4 OF THE IMPUGNED ORDERS ARE RELEVANT AND THE SAME READS AS UNDER:- 5.3 IN CASE OF APPELLANT, IS A EXPORT ORIENTED COM PANY ELIGIBLE FOR DEDUCTION U/S. 80HHC IN RESPECT OF ITS EXPORT PROFI TS. APPELLANT HAD ALSO FURNISHED THE REQUISITE AUDIT REPORT SHOWING COMPUT ATION OF SUCH DEDUCTION ALONG WITH THE RETURN OF INCOME. THE SAID DEDUCTION CLAIMED BY THE APPELLANT WAS DISALLOWED ON THE BASIS THAT AFTE R SETTING OFF THE UNABSORBED DEPRECIATION AND CARRIED FORWARD LOSSES O F EARLIER YEARS, ASSESSEE HAD NO POSITIVE INCOME TO CLAIM THE DEDUCTION. THE CLAIM U/S. 80HHC WAS MADE BY THE APPELLANT ON THE BASIS O F DECISIONS OF VARIOUS HIGH COURTS. THE DISALLOWANCE MADE BY THE A SSESSING OFFICER OF THE CLAIM WAS UPHELD IN APPEAL BY THE CIT(A) HOLDIN G THAT THE DECISIONS OF THE HIGH COURT RELIED UPON BY THE ASSESSEE HAVE N O BINDING EFFECT IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT I N THE CASE OF IPCA LABORATORIES LTD. AS REPORTED IN 266 ITR 521 WHEREI N IT WAS HELD THAT PROVISIONS OF SECTION 80AB HAS OVERRIDING EFFECT ON ALL OTHER SECTIONS OF CHAPTER VIA. 5.4 AFTER CONSIDERING THE CONSPECTUS OF THE MATERIA L ON RECORD AND SUBMISSION OF THE APPELLANT REPRODUCED HEREINBEFORE , I AM OF THE CONSIDERED VIEW PRESUMPTION OF CONCEALMENT S CONTAI NED IN EXPLANATION (1) OF SECTION 271(1)(C) HAS BEEN REBUTTED BY THE A PPELLANT AND THAT ALL THE FACTS RELATING TO THIS EXPLANATION AND MATERIAL TO COMPUTATION OF TOTAL INCOME HAVE BEEN DISCLOSED. ON THE FACTS, THE EXPL ANATION OF THE APPELLANT ALSO CANNOT BE SAID TO BE MALA-FIDE. UNDE R THE CIRCUMSTANCES, IT IS HELD THAT EXPLANATION OF THE APPELLANT IS BONAFI DE AND ALL THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME HAVE BEEN DISCLOSED BY IT. ACCORDINGLY, PENALTY IMPOSED BY THE ASSESSING OFFICER AT RS. 10,97,626/- IN RESPECT OF EXCESS DED UCTION CLAIMED OF RS. 29,86,736/- IS HEREBY DELETED . 7. WE HAVE ALSO PERUSED ON THE FACTS FROM THE ANGLE OF THE DISCLOSURE OF RELEVANT DETAILS IN FILING THE RETURN OF INCOME. FROM T HE PERUSAL OF RECORDS, THE ASSESSEE IS NOT DEFAULTER OF DISCLOSURE OF ANY RELEVAN T PARTICULARS. WE HAVE ALSO ITA NO. 199/PN/09 A.Y 2003-04 PAGE 4 OF 4 NOTICED THERE EXISTS VARIOUS VIEWS IN THIS REGARD AT TH E RELEVANT POINT OF TIME. REVENUE HAS NOT DEMONSTRATED THAT THERE EXISTS ANY JU DGMENT AGAINST THE ASSESSEE IN RESORTING TO SUCH A CLAIM. IN THESE CIRCUM STANCES, IN OUR OPINION, THE ASSESSEE JUSTIFIED IN RELYING ON THE JUDGMENT OF THE HON.BLE HIGH COURT OF BOMBAY. CONSIDERING ALL THESE FACTS AT THE RELEVANT P OINT OF TIME; IN OUR OPINION ORDER FOR CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. ACCO RDINGLY, THE GROUNDS RAISED ARE DISMISSED . 8. IN THE RESULT APPEAL OF REVENUE IS DISMISSED . ORDER PRONOUNCED ON 24 TH SEPTEMBER, 2010. SD/- SD/- (SHAILENDRAKUMAR YADAV) (D.KARUNAKAR A RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 24 TH SEPTEMBER, 2010 R COPY OF THE ORDER IS FORWARDED TO : 1. DCT, AHMEDNAGAR CIRCLE, AHMEDNAGAR 2. ASSESSEE 3. CIT(A)-I, PUNE 4. CIT-I, PUNE 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE