Asstt. Comm. Of Income Tax Circle 1, Margao V. M/s. Macbrout Engineering P. Ltd., Goa

ITA 215/PAN/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72061 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 25-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANJUL BARTHAKUR
• Assessee Lawyers: MANJUNATH HEGDE
• Section: 80IB; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 215 & 216 /PNJ/2013 : (ASST. YEAR : 2008 - 09 & 2009 - 10 ) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1, MARGAO (APPELLANT) VS. M/S. MACBROUT ENGINEERING PVT. LTD., D - 2/5, MARGAO INDUSTRIAL ESTATE, SAN JOSE DE AREAL, SALCETE, GOA PAN : AADCM6795L (RESPONDENT) APPELLANT BY : BANJUL BARTHAKUR, DR RESPONDENT BY : MANJUNATH HEGDE, CA DATE OF HEARING : 10/12/2013 DATE OF PRONOUNCEMENT : 10 /12/2013 O R D E R PER P.K. BANSAL : 1. SINCE THE GROUND NO. 4 IN APPEAL FOR A.Y. 2008 - 09 AND THE ONLY ISSUE INVOLVED IN ITA NO. 216/PNJ/2013 FOR A.Y. 2009 - 10 ARE COMMON, THEREFORE, BOTH THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. ITA NO. 215/PNJ/2013 : 2 . THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DT. 28.5.2013 BY TAKING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL. 2. THE LD. CIT(A) PANAJI, HAS ERRED IN DELETING THE ADDITION U/S 80IB OF THE I.T. ACT MADE BY AO AMOUNTING TO RS. 34,17,662/ - . 2 ITA NO. 21 5 &216 /PNJ/2013 (ASST. YEAR : 200 8 - 0 9 & 2009 - 10) 3. THE ASSESSEE BUSINESS ACTIVITY IS NOT AT ALL FALLING UNDER MANUFACTURING ACTIVITIES WITH THE AMBIT OF SECTION 80IB OF THE I.T. ACT. THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 80IB OF THE I.T. ACT. 4. THE LD. CIT(A) - PANAJI, HAS ERRED IN ALLOWIN G EXEMPTION U/S 10B AMOUNTING TO RS.18,09,409/ - BEING AN EXCESS DISALLOWANCE TOWARDS SALE OF SCRAP. 3 . THE GROUND NOS. 1 AND 5 ARE GENERAL IN NATURE. THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. 4 . GROUND NO S . 2 AND 3 ARE DULY COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ITA NO. 77/PNJ/2013 FOR THE A.Y 2006 - 07 DT. 13.9.2013 IN WHICH THIS TRIBUNAL HAS HELD AS UNDER : 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING OF MACHINE COMPONENTS VIS - - VIS SPARES, COMPRESSOR PARTS, NOZZLE RINGS AND OTHER TURBO MACHI NERY PARTS. THE ASSESSEE IS LOCATED IN INDUSTRIALLY BACKWARD AREA AS NOTIFIED IN 8 TH SCHEDULE OF THE ACT AND CLAIMED DEDUCTION U/S 80IB(4) OF THE ACT FOR A.Y. 2006 - 07 AND THIS IS THE THIRD YEAR OF THE CLAIM. THE CLAIM OF THE ASSESSEE FOR A.YS 2004 - 05 AND 2005 - 06 HAVE BEEN ALLOWED. DURING THE COURSE OF HEARING THE LD. AR WAS ASKED WHETHER IN A.Y. 2004 - 05 THE DEPARTMENT HAD OBJECTED OR RE - OPENED THE ASSESSMENT ORDER. THE LD. AR SUBMITTED THAT IT WAS ACCEPTED FOR A.Y. 2004 - 05. WE FIND THAT THE DEDUCTION U /S 80IB(4) WAS ALLOWED IN THE EARLIER YEARS BY THE DEPARTMENT IN ASSESSEES CASE. THEREFORE, WHEN IT IS ALLOWED IN THE INITIAL ASSESSMENT ORDER, THERE IS NO REASON FOR DISALLOWING THE CLAIM IN THE YEAR UNDER CONSIDERATION. WE FIND THAT THE AO HAS CONFIRM ED THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE QUALIFIES TO BE REGARDED AS MANUFACTURE AND ALLOWED THE CLAIM OF THE ASSESSEE FOR A.Y. 2004 - 05. THE PRINCIPLES OF CONSISTENCY WOULD APPLY AND HENCE IT IS NOT OPEN FOR THE DEPARTMENT TO QUESTION THE VALIDIT Y OF THE ALLOWABILITY OF THE CLAIM OF DEDUCTION U/S 80IB(4) FOR THE IMPUGNED ASSESSMENT YEAR BY HOLDING THAT THE ACTIVITIES UNDERTAKEN BY THE ASSESSEE CANNOT BE REGARDED AS MANUFACTURE MORE PARTICULARLY WHEN THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCE S OF THE CASE OF THE ASSESSEE. THIS VIEW IS SUPPORTED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GOPAL PUROHIT, 336 ITR 287. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTION HIGH COURT, WE DISMISS THE DEPARTMENT S APPEAL. 3 ITA NO. 21 5 &216 /PNJ/2013 (ASST. YEAR : 200 8 - 0 9 & 2009 - 10) RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL, WE CONFIRM THE ORDER OF CIT(A) AND ALLOW THE DEDUCTION TO THE ASSESSEE U/S 80 - IB AMOUNTING TO RS.34,17,662/ - . THUS, GROUND NOS. 2 AND 3 STAND DISMISSED. 5 . GROUND NO. 4 RELATES TO THE CLAIM OF DEDUCTION U/S 10B. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE IS AN 100% EOU. THE ASSESSEE HAS CLAIMED DEDUCTION IN ACCORDANCE WITH SEC. 10B(4) BY APPLYING THE FORMULA TO THE PROFIT FROM THE BUSINES S MULTIPLIED BY EXPORT TURNOVER TO THE TOTAL TURNOVER. THE AO DID NOT ACCEPT THE COMPUTATION MADE BY THE ASSESSEE BUT THE AO REDUCED OUT OF THE PROFIT FROM THE BUSINESS, AMOUNT RELATING TO THE SALE OF SCRAP AND THEN COMPUTED THE DEDUCTION U/S 10B. 5 . 1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SEC. 10B(4). THIS SECTION STIPULATES AS UNDER : (4) FOR THE PURPOSES OF SUB - SECTION (1), THE PROFITS DERIVED FROM EXPORT OF ARTICLES OR T HINGS OR COMPUTER SOFTWARE SHALL BE THE AMOUNT WHICH BEARS TO THE PROFITS OF THE BUSINESS OF THE UNDERTAKING, THE SAME PROPORTION AS THE EXPORT TURNOVER IN RESPECT OF SUCH ARTICLES OR THINGS OR COMPUTER SOFTWARE BEARS TO THE TOTAL TURNOVER OF THE BUSINESS CARRIED ON BY THE UNDERTAKING. FROM THE READING OF THIS SECTION IT IS APPARENT THAT THE DEDUCTION AVAILABLE U/S 10B(1) WILL BE THE AMOUNT WHICH BEARS TO THE PROFIT OF THE BUSINESS OF THE ELIGIBLE UNDERTAKING THE SAME PROPORTION AS THE EXPORT TURNOVER BEA RS TO THE TOTAL TURNOVER. IT IS NOT DENIED BY THE LD. DR THAT THE SCRAP SALE IS NOT PART OF THE PROFIT OF THE BUSINESS OF THE UNDERTAKING. UNDER THESE CIRCUMSTANCES, IN OUR OPINION, CIT(A) HAS RIGHTLY RE - CALCULATED THE EXEMPTION AVAILABLE TO THE ASSESSEE U/S 10B(4) BY INCLUDING THE SALE OF THE SCRAP IN THE PROFITS OF THE BUSINESS OF THE UNDERTAKING FOR THE PURPOSE OF COMPUTATION OF THE DEDUCTION IN 4 ITA NO. 21 5 &216 /PNJ/2013 (ASST. YEAR : 200 8 - 0 9 & 2009 - 10) RESPECT OF PROFIT DERIVED FROM THE EXPORTS IN ACCORDANCE WITH THE PROVISIONS OF SEC. 10B(4). IN VIEW OF THI S, IN OUR OPINION, NO INTERFERENCE IS CALLED FOR IN THE ORDER OF CIT(A). CIT(A), IN OUR OPINION, HAS RIGHTLY COMPUTED THE DEDUCTION U/S 10B TO THE ASSESSEE. THUS, GROUND NO. 4 STANDS DISMISSED. ITA NO. 216/PNJ/2013 : 6. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE CLAIM OF DEDUCTION BY THE ASSESSEE U/S 10B. BOTH THE PARTIES AGREED THAT THE ISSUE INVOLVED IN THIS GROUND IS SIMILAR TO THE ISSUE INVOLVED IN GROUND NO. 4 IN ITA NO. 215/PNJ/2013 FOR A.Y. 2008 - 09 EXCE PT FOR CHANGE IN THE FIGURES. 7. AFTER HEARING THE RIVAL SUBMISSIONS SINCE WE HAVE ALREADY DISMISSED GROUND NO. 4 TAKEN BY THE REVENUE IN ITA NO. 215/PNJ/2013 FOR A.Y. 2008 - 09 IN THE CASE OF THE ASSESSEE AS DISCUSSED IN THE PRECEDING PARAGRAPHS, RESPECT FULLY FOLLOWING OUR DECISION IN THE AFORESAID APPEAL WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE AND DISMISS THE APPEAL FILED BY THE REVENUE. 8 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE REVENUE STAND DISMISSED. 9 . ORDER PRONOUNCED IN THE OPEN COURT ON 1 0 .12.2013. S D / - S D / - (D.T.GARASIA) JUDICIAL MEMBER (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 1 1 /12/ 2013 *SSL* 5 ITA NO. 21 5 &216 /PNJ/2013 (ASST. YEAR : 200 8 - 0 9 & 2009 - 10) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT CONCERNED (4) CIT(A) CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA