DCIT, New Delhi V. M/s. Lumax Ancillary Ltd., New Delhi

ITA 2288/DEL/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6419 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 15-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UMESH CHAND DUBEY
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92; 143(1); 80IC; 143(2); 80IC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO. 2288/DEL/2014 (ASSESSMENT YEAR: 2010-11) DCIT CIRCLE-4(1) NEW DELHI VS. LUMAX ANCILLIARY LTD. (FORMERLY KNOWN AS M/S DEEPAK AUTO PVT. LTD.) B-86, MAYAPURI INDUSTRIAL AREA, PHASSE-I, NEW DELHI PAN : AAACD2571J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. UMESH CHAND DUBEY, SR.DR RESPONDENT BY : SH. R. K. GUPTA, CA DATE OF HEARING : 01.03.2017 DATE OF PRONOUNCEMENT : 21.03.2017 O R D E R PER BEENA A. PILLAI, J.M : 1. T HE PRESENT APPEAL HAS BEEN PREFERRED BY REVENUE AGAINST ORDER DATED 30.01.2014 PASSED BY LD. CIT(A) -VIII, NEW DELHI FOR ASSESSMENT YEAR 2010-11 ON FOLLOWING GROU NDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.99,99,800/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 801C ? 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2 ITA NO. 2288/DEL/2014 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FORGO ANY GROUND(S) OF THE APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2010 DECLARING AN INCOME OF RS.3,54,24,862/-. THE CASE W AS PROCESSED UNDER SECTION 143(1) OF THE ACT. SUBSEQUE NTLY, IT WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ALONGWITH NOTICE UNDER SECTION 1 42(1) AND QUESTIONNAIRE TO THE ASSESSEE. 3. DURING THE ASSESSMENT PROCEEDINGS LD. AO OBSERVED THAT ASSESSEE HAD THREE MANUFACTURING UNITS AT GURGAON, PUNE AND RUDRAPUR. ASSESSEE DURING THE YEAR UNDER CONSID ERATION, CLAIMED EXEMPTION UNDER SECTION 80IC OF THE ACT. IT HAS BEEN OBSERVED THAT ASSESSEE IS IN THE BUSINESS OF MANUFA CTURING WIRE ASSEMBLY, LAMP ASSEMBLY AND CONTROL CABLES OF DIFFERENT VARIETIES AND SUPPLY THEM TO THE OEM COMPONENTS. IT HAS BEEN OBSERVED THAT THESE ARE BASICALLY AUTO COMPONE NTS AND ASSESSEE, IN A NUTSHELL IS MANUFACTURING AND TRADIN G OF SUCH COMPONENTS. DURING THE RELEVANT YEAR ASSESSEE CLAIM ED DEDUCTION AMOUNT OF RS.99,99,800/- UNDER SECTION 80 IC OF THE ACT. ASSESSING OFFICER WHILE FRAMING ASSESSMENT ORDER DISALLOWED ENTIRE CLAIM OF DEDUCTION UNDER SECTION 80IC, ON THE GROUND THAT SIMILAR DISALLOWANCE WAS MADE IN TH E EARLIER ASSESSMENT YEAR BEING 2009-10. IT WAS ALLEGED THAT THE ASSESSEE HAD FAILED TO EXPLAIN THE DIFFERENCE IN DI RECT EXPENSES 3 ITA NO. 2288/DEL/2014 IN GURGAON UNIT, AGAINST RUDRAPUR UNIT. LD. AO HELD THAT ASSESSEE INFLATED ITS PROFITS AT RUDRAPUR UNIT, BY TRANSFERRING EXPENSES OF RUDRAPUR UNIT TO GURGAON UNIT. 4. AGGRIEVED BY ORDER OF LD. AO ASSESSEE PREFERRED AP PEAL BEFORE LD. CIT(A). ASSESSEE BEFORE LD. CIT(A) HAD B ROUGHT TO HIS ATTENTION THAT HIS PREDECESSORS LD. CIT(A), FOR ASSESSMENT YEAR 2009-10 HAD DELETED THE ENTIRE DISALLOWANCE VI DE ORDER DATED 03.08.2012. RELYING UPON FINDINGS OF PREDECES SOR LD. CIT(A) FOR ASSESSMENT YEAR 2009-10, LD. CIT (A) HEL D THAT EXEMPTION CLAIMED BY ASSESSEE UNDER SECTION 80IC OF THE ACT WAS ALLOWABLE. HOWEVER, LD. CIT(A) DIRECTED LD. AO TO VERIFY FIGURES AND FACTS FROM ACCOUNTS OF THE ASSESSEE AND TO CONDUCT A FIELD SURVEY IF NEED ARISES IN EVENT ANY DISALLOWANCE HAS TO BE MADE THEREBY DELETING ADDITION MADE. 5. AGGRIEVED BY ORDER OF LD. CIT(A) ASSESSEE IS IN AP PEAL BEFORE US NOW. 6. AT THE OUTSET LD. AR SUBMITTED THAT ISSUE STANDS N OW IS SQUARELY COVERED BY DECISION OF THIS TRIBUNAL IN AS SESSEES OWN CASE VIDE ORDER DATED 24.09.2014 PASSED IN ITA NO. 5631/DEL/2012. IT HAS BEEN SUBMITTED BY LD. AR THAT THERE IS NO CHANGE IN THE FACTUAL POSITION IN RESPECT OF THE SE UNITS IN THE YEAR UNDER CONSIDERATION. 7. LD. AR SUBMITTED THAT THE ASSESSEE IS STILL MAINTA INING SEPARATE BOOKS OF ACCOUNT FOR EACH UNIT AND IS PREP ARING PROFIT AND LOSS ACCOUNT BALANCE SHEET UNIT WISE. HE HAS FU RTHER SUBMITTED THAT LD. AO HAS NOT OBSERVED ANY DISCREPA NCY IN 4 ITA NO. 2288/DEL/2014 RESPECT OF EXPENSES OF EACH UNITS, EXCEPT FOR INCRE ASE OF EXPENSES IN GURGAON UNIT VIS--VIS RUDRAPUR UNIT. 8. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH T HE SIDE IN THE LIGHT OF RECORDS PLACED BEFORE US. ON P ERUSAL OF ORDER PASSED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2 009-10 IN ASSESSEES OWN CASE, THERE IS A CATEGORICAL FACTUAL OBSERVATION IN RESPECT OF SIMILAR ALLEGATIONS RAISED BY ASSESSI NG OFFICER THEREIN. THIS TRIBUNAL OBSERVED AS UNDER: 6. THE FIRST APPELLATE AUTHORITY AT PARA 5.3 OF THIS ORDER GAVE THE FOLLOWING FACTUAL FINDINGS: A) THE GURGAON IS A VERY OLD UNIT AND WHEREAS RUDRAPUR AND PUNE UNIT STARTED MANUFACTURING ON 1.11.2007 AND 16.1.2008 RESPECTIVELY. B) THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR EACH UNIT AND IS PREPARING PROFIT AND LOSS ACCOUNT, BALANCE SHEET UNIT WISE. C) THE CONSUMPTION OF RAW MATERIAL FOR RUDRAPUR UNIT AND PUNE UNIT DURING THE YEAR HAS COME DOWN AS COMPARED TO F. Y. 2007-08, BUT IT IS STILL HIGHER AS COMPARE TO GURGAON UNIT. THE COMPARATIVE DETAILS JUSTIFIES THE DIFFERENCE IN CONSUMPTION OF RAW MATERIAL AS EACH UNIT IS MANUFACTURING DIFFERENT VARIETIES OF PRODUCTS UNDER THE SAME CLASSIFICATION AND THE QUANTUM OF GOODS MANUFACTURED, SELLING PRICE AS WELL AS CUSTOMERS ARE DIFFERENT FOR EACH UNIT. D) THE PERCENTAGE OF CONSUMPTION OF RAW MATERIAL FOR RUDRAPUR UNIT IS LOWER IN COMPARISON WITH THE PERCENTAGE OF CONSUMPTION OF RAW MATERIAL OF PUNE UNIT. E) NO DEFICIENCY WAS FOUND BY THE DCIT IN THE STOCK RECORDS MAINTAINED IN RUDRAPUR UNIT AND THE 5 ITA NO. 2288/DEL/2014 EXCISE RECORD MAINTAINED IN GURGAON AND PUNE UNIT. F) NO DEFECTS WERE POINTED OUT BY THE ASSESSING OFFICER, WHILE VERIFYING THE EXPENSES OF ALL THE UNITS. G) THE DATA DISSCLOSE THAT THE MANUFACTURING EXPENSES OF GURGAON UNIT HAVE COME DOWN FROM 21.41% IN ASSESSMENT YEAR 2006-07 TO 20.07% IN ASSESSMENT YEAR 2009-10 AND THEREFORE, THE ALLEGATION OF ASSESSING OFFICER THAT THE ASSESSEE HAS DIVERTED THE RUDRAPUR UNIT EXPENSES TO GURGAON UNIT TO CLAIM MORE DEDUCTION IS NOT SUBSTANTIATED BY THESE FIGURES AND THE ALLEGATION OF THE ASSESSING OFFICER IS NOT BASED ON CORRECT APPRECIATION OF FACTS. H) SIMILARLY, THE FIGURES OF ADMINISTRATIVE, SELLIN G AND DISTRIBUTION EXPENSES DO NOT SUBSTANTIATES THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS DIVERTING EXPENSES OF RUDRAPUR UNIT TO GURGAON UNIT TO CLAIM THE HIGHER DEDUCTION U/S 80IC OF THE ACT. I) THE DATA SHOWS THAT THE PROFITS DECLARED BY GURGAON UNIT HAS INCREASED AS COMPARE TO THE EARLIER YEARS AND HENCE THE ALLEGATION OF THE ASSESSING OFFICER OF TRANSFERRING EXPENSES FOR RUDRAPUR UNIT TO GURGAON UNITS IS ERRONEOUS. J) THE ALLEGATION OF THE ASSESSING OFFICER THAT NO PROPER ALLOCATION OF COMMON EXPENSES HAS BEEN DONE BY THE ASSESSEE IS NOT BASED ON CORRECT APPRECIATION OF FACTS. K) DETAILS OF WAGES, ALLOWANCES AND JOB WORK CHARGES OF GURGAON UNIT HAS COME DOWN DURING THE YEAR AS COMPARE TO A.Y 2006-07. THIS SHOWS THAT THE ALLEGATION OF THE ASSESSING OFFICER OF 6 ITA NO. 2288/DEL/2014 TRANSFER OF EXPENSES ON WAGES FROM RUDRAPUR UNIT TO GURGAON UNIT IS NOT SUPPORTED BY FACTS. L) GURGAON UNIT AND PUNE UNIT ARE PAYING EXCISE DUTY ON THE ITEMS MANUFACTURED AND WHEREAS RUDRAPUR UNIT DOES NOT PAY ANY EXCISE DUTY. THIS HAS RESULTED IN THE PROFIT PERCENTAGE BEING DIFFERENT FOR EACH UNIT. M) THERE ARE NO DEFECTS POINTED OUT BUY THE A.O IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 9. IT HAS FURTHER BEEN SUBMITTED BY LD. AR THAT ASSESS ING OFFICER WHILE CARRYING ON WITH THE ASSESSMENT PROCE EDINGS FOR ASSESSMENT YEAR 2014-15 BEING THE SUBSEQUENT ASSESS MENT YEAR, HAS ACCEPTED THE DEDUCTION CLAIMED BY ASSESSE E ON SIMILAR FACTS UNDER SECTION 80IC. 10. LD. DR PLACED RELIANCE UPON DECISIONS OF THIS TRIB UNAL IN THE CASE OF: A) HARDING LOEVNEE FUNDS INC., V/S ADIT IN ITA NO. 2316/MUM/2011 FOR A.Y 2007-08, PASSED BY MUMBAI TRIBUNAL VIDE ORDER DATED 28.03.2012. B) MAHARASHTRA STATE ELECTRICITY DISTRIBUTION CO. LTD., V/S ACIT REPORTED IN (2011) 16 TAXMANN.COM 46 . IT IS OBSERVED THAT THESE DECISIONS ARE DELIVERED ON DIFFERENT FACTS. THERE IS DIRECT DECISION IN THE CASE OF ASSESSEE IT SELF FOR PRECEDING ASSESSMENT YEAR ON THE SAME FACTS, RESPEC TFULLY FOLLOWING THE SAME, WE UPHOLD DECISION OF LD. CIT(A ). ACCORDINGLY, THE GROUNDS RAISED BY REVENUE STANDS D ISMISSED. 7 ITA NO. 2288/DEL/2014 IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST MARCH, 2017. SD/- SD/- (R. K.PANDA) (BEENA A. PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 21.03.2017 @M!T COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, NEW DELHI S.NO. DETAILS DATE 1 DRAFT DICTATED ON 06.03.2017 2 DRAFT PLACED BEFORE AUTHOR 07.03.2017 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO BENCH CLERK 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE A.R. 10 DATE OF DISPATCH OF ORDER