IO 23(1)(1), MUMBAI V. SYNTEXURES, MUMBAI

ITA 2222/MUM/2013

• Counselvise Citation: 222219914 RSA 2013
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 24-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: D M SHAH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.2222/M/2013 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, 23(1)(1), R.NO.101, C-10, 1 ST FLOOR, B.K.C. BANDRA (E), MUMBAI 51 VS. M/S. SYNTEXTURE, 1 ST FLOOR, MAHAJAN MILL COMPOUND, LBS MARG, VIKHROLI WEST, MUMBAI 400 079 PAN: AAAFM4905A (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI D.M. SHAH, A.R. REVENUE BY : SHRI NEIL PHILIP, D.R. DATE OF HEARING : 24.06.2015 DATE OF PRONOUNCEMENT : 24.06.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 11.12.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUND OF AP PEAL: WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS RIGHT IN DELETING ADDITION OF RS.1,27,448/- ON ACCOUNT OF REBATE AND DISCOUNT, RS.2,33,922/- ON ACCOUNT OF INTEREST RECEIVED ON SA LE OF YARN AND AN AMOUNT OF RS.14,46,219/- RECEIVED ON JOB WORK CHARGES WITHOUT APPRECIATING THE DECISION OF THE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT 1 (2009) 317 ITR 218 (S.C.). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING AND DEALING IN YAR N AND FABRICS AND HAS FILED ITA NO.2222/M/2013 M/S. SYNTEXTURE 2 E-RETURN FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIMING DEDUCTION UNDER SECTION 80IB. THE ASSESSI NG OFFICER (HEREINAFTER REFERRED TO AS THE AO) OBSERVED THAT THE CREDITS VI Z. REBATE & DISCOUNT, INTEREST ON FIXED DEPOSIT, INTEREST RECEIVED ON YARN SALES, JOB WORK CHARGES RECEIVED, SUBSIDY INCOME AND SUNDRY BALANCE EARNED BY THE ASS ESSEE HAD NOT BEEN DERIVED BY THE ASSESSEE FROM ITS INDUSTRIAL UNDERTA KING. HE HELD THAT THERE WAS NO DIRECT NEXUS BETWEEN THESE ITEMS OF INCOME AND T HE ASSESSEES INDUSTRIAL UNDERTAKING WHICH ARE NOT ELIGIBLE FOR DEDUCTION UN DER SECTION 80IBOF THE ACT. BEING AGGRIEVED BY THE ABOVE DENIAL OF DEDUCTION, T HE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A). 4. THE LD. CIT(A) HAS GIVEN HIS FINDING IN RESPECT OF EACH AND EVERY INDIVIDUAL ITEM. IN RESPECT OF REBATE & DISCOUNT, IT WAS EXPLAINED BY THE ASSESSEE TO THE LD. CIT(A) THAT THE REBATE & DISCOU NT WAS ON PURCHASE OF RAW MATERIAL WHICH ACTUALLY REDUCED THE COST OF RAW MAT ERIAL. THUS, THE REBATE & DISCOUNT HAD A DIRECT LINK WITH THE ASSESSEES MANU FACTURING ACTIVITY AND HENCE THE SAME WAS ELIGIBLE FOR DEDUCTION UNDER SECTION 8 0IB. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND FUR THER RELYING UPON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. METAL MAN AUTO PVT. LTD. 336 ITR 434, HELD THAT TH E REBATE & DISCOUNT EARNED ON THE PURCHASE OF RAW MATERIAL IS REQUIRED TO BE CONSIDERED AS DERIVED FROM INDUSTRIAL UNDERTAKING. HE, THEREFORE, DIREC TED THE AO TO ALLOW DEDUCTION UNDER SECTION 80IB IN RESPECT OF REBATE A ND DISCOUNTS ON PURCHASE OF RAW MATERIAL. THE LD. CIT(A), HOWEVER, DENIED THE DEDUCTION IN RE SPECT OF INTEREST ON FDRS. THE ASSESSEE, HOWEVER, NOT PREFERRED ANY APP EAL AGAINST THE DENIAL OF SAID DEDUCTION OF INTEREST ON FDRS. AS FAR AS THE ISSUE OF INTEREST RECEIVED ON SALE OF YARN OF RS.2,32,922/- IS CONCERNED, THE LD. CIT(A) OBSERVED THAT AN ITA NO.2222/M/2013 M/S. SYNTEXTURE 3 IDENTICAL ISSUE HAS ALREADY BEEN DECIDED BY THE HON BLE BOMBAY HIGH COURT AS HAS BEEN RELIED UPON BY THE ASSESSEE IN THE CASE OF CIT VS. VIDYUT CORPN. 324 ITR 221 WHEREIN IT HAS BEEN HELD THAT ANY INTER EST RECEIVED ALONG WITH SALE PROCEEDS IS TOWARDS THE SALE PRICE OF THE GOODS AND HENCE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. IN RESPECT OF JOB WORK CHARGES, IT WAS SUBMITTED BY THE ASSESSEE THAT BESIDES ITS MANUFACTURING ACTIVITY, THE ASSESSEE AL SO DID SOME JOB WORK FOR CONVERTING THE RAW MATERIAL SUPPLIED BY ITS CUSTOME RS AS PER THEIR SPECIFIC REQUIREMENT. IT WAS SUBMITTED THAT THE JOB WORK CH ARGES RECEIVED HAD A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITIES. THE LD. C IT(A), CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE AND FURTHER FOLLO WING THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT RELIED UPON BY THE ASSESSEE IN THE CASES CIT VS. METAL MAN AUTO PVT. LTD. 336 ITR 434 AND CIT VS. IMPEL FORGE AND INDUSTRIES LTD. 336 ITR 37 WHEREIN IT HAS BEEN HELD THAT SUCH JOB WORK CHARGES CAN BE REGARDED AS DERIVED FROM THE ELIGIBL E INDUSTRIAL UNDERTAKING AND DIRECTED THE AO TO ALLOW 80IB DEDUCTION IN RESPECT OF JOB WORK CHARGES. THE LD. CIT(A), HOWEVER, DENIED THE CLAIM OF DEDUCTION IN RESPECT OF SUNDRY BALANCES WRITTEN BACK AND SUBSIDING. THE LD. CIT(A ) ALLOWED THE APPEAL OF THE ASSESSEE IN PART. AGGRIEVED BY THE ORDER OF TH E LD. CIT(A), THE REVENUE HAS COME IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. R EPRESENTATIVES OF THE PARTIES. WE FIND THAT THE LD. CIT(A) HAS RIGHTLY A LLOWED THE CLAIM OF THE ASSESSEE IN RESPECT OF THE REBATE & DISCOUNT ON PUR CHASE OF RAW MATERIAL, INTEREST RECEIVED ON SALE OF YARN AND INCOME RECEIV ED ON JOB WORK CHARGES FOLLOWING THE DECISIONS OF THE HONBLE HIGH COURTS. THE LD. D.R. COULD NOT POINT OUT ANY DECISION CONT RARY TO THE ABOVE FINDINGS OF THE LD. CIT(A). ITA NO.2222/M/2013 M/S. SYNTEXTURE 4 6. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS HERE BY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.06.2015. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.10.2015. * KISHORE, SR. P.S. 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.