Scott Edil Pharmacia Limited, Chandigarh V. Addl. CIT, Chandigarh

ITA 217/CHANDI/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8951 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: PARISKSHIT AGGARWAL
• Keywords: Business income; Agreed addition
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.217/CHD/2014 (ASSESSMENT YEAR : 2010-11) SCOTT EDIL. PHARMACIA LIMITED, VS. THE ADDL.C.I.T., PLOT NO.54-55, INDUSTRIAL AREA-II, RANGE I, CHANDIGARH. CHANDIGARH. PAN: AAHCS1643K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARISKSHIT AGGARWAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 09.08.2016 DATE OF PRONOUNCEMENT : 21.11.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DATED 31.12.2013 FOR ASSESSMENT YEARS 2010-11. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF I NCOME TAX (APPEALS) IS BAD, AGAINST FACTS AND LAW. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX [APP EALS] WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE ERRED IN SUSTAINING THE ADDITION OF RS. 1,05,23,200.00 ON ACCOUNT OF INCREASE IN THE GROSS PROFIT ON THE BASIS OF PRE AND POST SURVEY PERIODS. THE AD DITION 2 IS BASED ON SUSPICION, INFERENCES, SURMISES, PRESUM PTIONS AND CONJECTURES. THE ADDITION BE DELETED. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELETE ANY OF THE GROUNDS OF APPEAL BEFORE THE SAME ARE TAKEN UP FOR FINAL DISPOSAL. 3. BESIDES THE ABOVE, AN ADDITIONAL GROUND WAS RAISED BEFORE US, WHICH READS AS UNDER : 4. THAT ON THE FACTS, CIRCUMSTANCES AND LEGAL POSI TION OF THE CASE, THE LD. AO MADE A SERIOUS ERROR BY NOT ALLOWING THE ENHANCED DEDUCTION U/S 80IC FOR ADDITION TO BUSINESS INCOME DERIVED FROM MANUFACTURING ACTIVITY ON ERRONEOUS ASSUMPTION THAT APPELLANT HAS AGREED FOR IT AND SO HAS FAILED TO APPLY THE LAW IN TRUE SPIRIT. FURTHER, THE WORTHY CIT(A) ALLOWED THE CONTENTION THAT THE ADDITION WAS NOT AGREED BUT HAS ERRED IN NOT ALLOWING THE CONSEQUENTIAL BENEFIT OF ALLOWANCE OF DEDUCTION U/S 8O-IC ON ENHANCED BUSINESS PROFITS.' 4. THE LEARNED COUNSEL FOR THE ASSESSEE REQUESTED THAT SINCE THE GROUND RELATED TO THE LEGALITY OF EL IGIBILITY OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON INCOM E ENHANCED BY MAKING ADDITION, THE SAME BE ADMITTED FOLLOWING THE HON'BLE APEX COURT DECISION IN THE CA SE OF CIT VS. NTPC LTD. 5. HAVING HEARD THE CONTENTIONS WE ADMIT THE ADDITIONAL GROUND RAISED SINCE IT IS A LEGAL GROUND WHICH CAN BE ADJUDICATED ON THE BASIS OF FACTS AVAILABLE ON RECORD. 3 6. HAVING ADMITTED THE ADDITIONAL GROUND, WE SHALL FIRST DEAL WITH THE SAME. 7. BRIEFLY FACTS RELATING TO THE ISSUE ARE THAT DU RING THE YEAR SURVEY UNDER SECTION 133A OF THE ACT WAS C ARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 19.8.2009. DURING THE COURSE OF ASSESSMENT PROCEED INGS THEREAFTER, ON PERUSAL OF THE TRADING, MANUFACTURIN G AND PROFIT & LOSS ACCOUNT OF THE ASSESSEE, THE ASSESSIN G OFFICER FOUND THAT THE GP RETURNED BY THE ASSESSEE FOR THE PRE-SURVEY PERIOD WAS 17.98%, WHICH WENT DOWN TO 15.95% AS AT THE END OF THE YEAR I.E. ON 31.3.2010. ON BEING CONFRONTED WITH THE SAME, THE ASSESSEE OFFERE D EXPLANATION WHICH WAS FOUND CORRECT TO SOME EXTENT BY THE ASSESSING OFFICER BUT IN THE ABSENCE OF COMPLETE DE TAIL AND WORKING, THE PLEA WAS REJECTED. THEREAFTER, TH E ASSESSING OFFICER HELD THAT THOUGH THE DIFFERENCE I N THE GP WAS 2.03%, THE ASSESSEE HAD AGREED TO AN INCREAS E IN GROSS PROFIT OF 0.90% WITH THE UNDERTAKING THAT NO ADDITIONAL DEDUCTION UNDER SECTION 80IC OF THE ACT WOULD BE CLAIMED. ACCORDINGLY, AN ADDITION OF RS.1,05,23 ,200/- WAS MADE TO THE INCOME OF THE ASSESSEE AND NO DEDUC TION UNDER SECTION 80IC OF THE ACT WAS ALLOWED. 8. THE LEARNED CIT (APPEALS) DEALT WITH THE ISSUE ON MERITS AND UPHELD THE DISALLOWANCE MADE WITHOUT ADJUDICATING UPON THE DISALLOWANCE OF DEDUCTION UND ER SECTION 80IC OF THE ACT ON THE ENHANCED GROSS PROFI T. 4 9. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAD NEVER AGREED TO THE AD DITION AND DENIAL OF DEDUCTION UNDER SECTION 80IC OF THE A CT OF THE SAME, WHICH IS EVIDENT FROM THE FINDING OF THE LEARNED CIT (APPEALS) ALSO AT PARA 4.3 OF HIS ORDER, WHERE HE HAS HELD THAT THE ADDITION WAS NOT AN AGREED ADDITION. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE STATE D THAT THE FACT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IC OF THE ACT, IS NOT DISPUTED AND THE SA ME CANNOT, THEREFORE, BE DENIED FOR THE REASON THAT TH E ASSESSEE CONSENTED TO NOT CLAIM THE SAME. 10. THE LEARNED D.R., ON THE OTHER HAND, STATED TH AT THE ASSESSEE WAS BOUND BY THE SURRENDER OF THE CLAI M MADE BY IT TO THE ASSESSING OFFICER AND COULD NOT N OW RETRACT FROM THE SAME. 11. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. WE HOLD THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTI ON UNDER SECTION 80IC OF THE ACT ON THE ENHANCED GROSS PROFITS OF THE ASSESSEE. THE FACT THAT THE ASSESSE E IS ELIGIBLE TO DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE ENHANCED PROFITS IS NOT DISPUTED SINCE THE ASSESSIN G OFFICER HAS HIMSELF ADMITTED TO THE SAME, WHILE HOL DING THAT THE ASSESSEE HAD SURRENDERED HIS CLAIM OF THE SAME. FURTHER, THE LEARNED CIT (APPEALS) HAS ALSO GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE DID NOT GIVE CONSENT 5 TO ANY SUCH ADDITION TO THE ASSESSING OFFICER. THE REFORE, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION UNDER S ECTION 80IC OF THE ACT ON THE ENHANCED GROSS PROFITS. BEI NG A LEGAL CLAIM, THE ALLOWABILITY OF THE SAME IS NOT TO BE DENIED MERELY ON THE WHIMS AND FANCIES OF THE ASSES SEE, WHICH IS ANY CASE IS FACTUALLY CONSIDERED. 12. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE I S, THEREFORE, ALLOWED. 13. SINCE WE HAVE ALLOWED THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE ADDI TION MADE, THE GROUND NO.2 RAISED BY THE ASSESSEE CHALLE NGING THE ADDITION MADE BECOMES IRRELEVANT AND WAS ALSO N OT PRESSED BEFORE US. THE SAME IS, THEREFORE, TREATED AS DISMISSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACOUNTANT MEMBER DATED : 21 ST NOVEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6