The ACIT, Vapi Circle, Vapi V. M/s. Hamilton Houseware Pvt..Ltd., SILVASSA

ITA 2070/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0707 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 2070/AHD/2013 (ASSESSMENT YEAR: 2010-11) ASSISTANT COMMISSIONER OF INCOME-TAX VAPI CIRCLE, VAPI V/S M/S. HAMILTON HOUSEWARES PVT. LTD. 288/1, NEAR DADRA GRAM PANCHAYAT DEMNI ROAD, DADRA, SILVASSA (APPELLANT) (RESPONDENT) PAN: AABCD1683Q APPELLANT BY : SHRI SANJAY KUMAR, SR. D.R . RESPONDENT BY : SHRI M.K. PATEL, A.R. ( )/ ORDER DATE OF HEARING : 30 -08-201 6 DATE OF PRONOUNCEMENT : 05-09-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), VALSAD, AHMEDABAD DATED 30.05.2013 PERTAINI NG TO A.Y. 2010- 11. ITA NO. 2070/AHD/2013 A.Y. 2010-11 2 2. THE SOLE GRIEVANCE OF THE REVENUE IS THAT THE LD. C IT(A) ERRED IN DIRECTING THE A.O. NOT TO EXCLUDE THE SCRAP INCOME OF RS. 53,52,206/- OF HARIDWAR UNIT AND RS. 25,18,539/- OF DADRA UN IT FROM THE INCOME ELIGIBLE FOR DEDUCTION U/S. 80IB/80IC OF THE ACT. 3. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MANUFACT URING VACUUM REFILLS, THERMO WARE AND TRADING OF GLASSWARE ITEMS . DURING THE YEAR UNDER CONSIDERATION FOLLOWING UNITS WERE RUN BY THE ASSESSEE. UNIT NATURE OF ACTIVITY DEDUCTION YEAR OF DEDUCTI ON RAKHOLI DIVISION TRADING OF THERMOWARE/PLASTIC HOUSE HOLD AND GLASSWARE/OPAL WARE GOODS AND VARIOUS PLASTIC/STEEL/GLASSWARE HOUSEHOLD ITEMS PIPARIA UNIT MANUFACTURING AND EXPORT OF SILVER COATED VACCUMED GLASS REFILLS DADRA UNIT MANUFACTURING OF CASSEROLES AND OTHER THERMOWARE/STEEL AND PLASTICS HOUSE-HOLD GOODS U/S. 80IB @ 30% 7 TH YEAR (NOT CLAIMED DUE TO LACK OF ELIGIBLE PROFIT DURING THE YEAR) HARIDWAR UNIT MANUFACTURING OF CASSEROLES AND OTHER THERMOWARE, STEEL, PLASTICS HOUSEHOLD GOODS. U/S. 80IC @ 100% 4 TH YEAR HARIDWAR UNIT-II (NEW UNDERTAKING) MANUFACTURING OF KITCHENWARE & TABLEWARE, SOFT STITCH LINE, PP FILES & FOLDERS THERMOWARE & HOUSEHOLD PRODUCTS U/S. 80IC @ 100% 1 ST YEAR (NOT CLAIMED DUE TO LACK OF ELIGIBLE PROFIT DURING THE YEAR) ITA NO. 2070/AHD/2013 A.Y. 2010-11 3 4. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB OF THE ACT IN RESPECT OF ITS DADRA UNIT AND U/S. 80IC OF THE ACT IN RESPECT OF ITS HARIDWAR UNIT. 5. ON FURTHER PROBE, THE A.O. FOUND THAT THE ASSESSEE HAS INCLUDED SCRAP SALES OF RS. 25,18,539/- IN DADRA UNIT AND RS. 53,5 2,206/- IN HARIDWAR UNIT UNDER THE HEAD OTHER INCOME AND HAS CLAIMED DEDUCTION U/S. 80IC/80IB OF THE ACT. THE A.O. WAS O F THE FIRM BELIEF THAT THE ASSESSEE IS NOT ELIGIBLE FOR SUCH DEDUCTIO NS FROM THE INCOME GENERATED OUT OF SCRAP SALES AND ACCORDINGLY DENIED THE CLAIM OF DEDUCTION U/S. 80IB/80IC OF THE ACT. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED ITS CLAIM OF DEDUCTION U/S. 80IB/80IC OF THE ACT. THE L D. CIT(A) WAS CONVINCED BY THE CLAIM AND FOLLOWING THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF HARJIVANDA S JUTHABHAI ZAVERI AND ANR. 258 ITR 785, DIRECTED THE A.O. TO ALLOW TH E DEDUCTION U/S. 80IB/80IC OF THE ACT. 7. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DREW OU R ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS. 988/AHD/2009, 942 & 3305/AHD/2010 AND 2673/AHD/2011 FOR A.Y. 2005-06 TO 2008-09. THE LD. D.R. COULD NOT BRING AN Y DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 9. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. ITA NO. 2070/AHD/2013 A.Y. 2010-11 4 THE TRIBUNAL IN ASSESSEES OWN CASE HAS CONSIDERED A SIMILAR ISSUE AT PARA 8 OF PAGE 5 OF ITS ORDER AND THE SAME READ AS UNDER:- 8. THE REVENUES FOURTH GROUND ASSAILS THE LD. CIT( A) ORDER GRANTING RELIEF TO THE ASSESSEE WITH REGARD TO EXCL USION OF SCRAP INCOME OF RS. 13,25,610/- FROM THE PROFIT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT WITHOUT CONSIDERING THE RATIO LAID DOWN BY THE HONBLE M.P. HIGH COURT IN THE CASE OF D.P. AGR AWAL VS. CIT 272 ITR 118 (MP) WHEREIN IT HAS BEEN HELD BY THE HO NBLE COURT THAT SCRAP INCOME WILL NOT BE ELIGIBLE FOR DEDUCTIO N U/S. 80IB OF THE ACT. 9. THE ASSESSING OFFICER NOTICED THE ASSESSEE'S IMP UGNED SCRAP SALES INCOME OF RS. 13,25,610/- AND HELD IT AS NOT TO HAVE BEEN DERIVED FROM NORMAL BUSINESS OPERATION. THE CIT(A) TREATS THE SCRAP IN QUESTION TO HAVE BEEN GENERATED FROM ITS M ANUFACTURING PROCESS HAVING DIRECT RELATION TO THE SOURCE OF BUS INESS INCOME. THE HON'BLE JURISDICTIONAL HIGH COURT IN DCIT VS. H ARJIVANDAS J. ZAVERI 258 ITR 785 DEALS WITH A CASE OF SALE OF EMP TY BOTTLES/PLASTIC WASTE IN CASE OF AN ASSESSEE INVOLVED IN MANUFACTURING ACTIVITY AND HOLDS THAT THE SAME ARE DIRECTLY CONNECTED WITH THE SAID ACTIVITY. THEIR LORDSHIPS A SSUMED A HYPOTHETICAL SITUATION THAT IN CASE THERE IS NO INDUSTRIAL/MANUFACTURING ACTIVITY, THERE WOULD NOT BE ANY SCRAP GENERATED. THE REVENUE HAS NOT BEEN ABLE TO DISTING UISH OPERATION OF THE SAME. WE ALSO FOLLOW SUIT AND HOLD THAT THE CIT(A) HAS RIGHTLY INCLUDED SCRAP INCOME OF RS43,25 ,610/- AS PROFITS ELIGIBLE FOR SECTION 80IB DEDUCTIONS THE RE VENUE'S CORRESPONDING GROUND IS REJECTED. ITA NO. 2070/AHD/2013 A.Y. 2010-11 5 10. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO-ORDIN ATE BENCH (SUPRA) IN ASSESSEES OWN CASE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 05 - 09- 2 016. SD/- SD/- (R.P. TOLANI) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD