D.C.I.T.-Central Circle-XII, Kolkata, Kolkata V. M/s Century Aluminium Mfg. Ltd., Kolkata

ITA 2408/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4933 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-09-2013
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN ANSARI
• Assessee Lawyers: N P JAIN
• Keywords: Business income
• Section: 80IB

Judgement Text

1 ITA NO.2408/KOL/2013-M/S.CENTURY ALUMINIUM MFG. LTD . A.Y.2008-09 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B KOL KATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI M.B ALAGANESH, AM ] ITA NO.2408/KOL/2013 ASSESSMENT YEAR : 2008-09 D. C.I.T., CENTRAL CIRCLE-XII, -VERSUS- M/S.CENTURY ALUMINIUM MFG.LTD KOLKATA KOLKATA (PAN:AABCC2200Q) (APPELLANT) (RESPONDENT) FOR THE APPELLANT: MD.GHAYASUDDIN ANSARI, JCIT, SR.DR FOR THE RESPONDENT: SHRI N.P.JAIN, ADVOCATE DATE OF HEARING : 09.05.2016. DATE OF PRONOUNCEMENT : 13.05.2016. ORDER PER N.V.VASUDEVAN, JM: THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DATED 15.07.2013 OF CIT(A) CENTRAL-II, KOLKATA, RELATING TO AY 2008-09. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND FACTS OF THE CASE IN DIRECTING TO INCLUDE T HE AMOUNT OF RS.60,36,888/- BEING INTEREST FROM DEBTOR IN CALCULATING DEDUCTION U/S 8 0IB OF THE ACT, WITHOUT APPRECIATING THAT THE INCOME FROM INTEREST IS NOT AN INCOME DIRE CTLY CONNECTED TO THE INDUSTRIAL OPERATION. 2. IN DOING SO, THE LD. CIT(A) HAS ERRED IN NOT APP RECIATING THE RATIO OF THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS STE RLING FOODS REPORTED IN 237 ITR 579 AND PANDIAN CHEMICALS LTD. VS CIT REPORTED IN 2 62 ITR 278. 3. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURING OF ALUMINIUM AND ZINC BASED ALLOYS AND DIE-CAST COMPON ENTS. IT IS NOT IN DISPUTE THAT THE ASSESSEE WAS ENTITLED FOR DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 (ACT) IN RESPECT OF PROFITS DERIVED FROM THE BUSINESS OF MAN UFACTURING AND SALE OF ALUMINIUM AND ZINC BASED ALLOYS. WHILE COMPUTING THE DEDUCTIO N U/S 80IB OF THE ACT THE ASSESSEE 2 ITA NO.2408/KOL/2013-M/S.CENTURY ALUMINIUM MFG. LTD . A.Y.2008-09 INCLUDED THE FOLLOWING AMOUNTS IN THE PROFITS OF TH E BUSINESS OF MANUFACTURING ON WHICH DEDUCTION U/S 80IB OF THE ACT WAS CLAIMED, VI Z., INTEREST RECEIVED WAS ALSO TAKEN INTO ACCOUNT AS BUSINESS INCOME OF THE INDUSTRIAL U NIT ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IB. THE AO HELD THAT AMOUNT OF INTEREST RECEIVED WAS RS.77,41,640/- (OF THE FARIDABAD UNIT) SHOULD BE DEDUCTED FROM THE PROFIT OF THE FAR IDABAD UNIT FOR CALCULATING ELIGIBLE PROFIT FOR CLAIMING DEDUCTION U/S 80IB BECAUSE IT CANNOT B E CONSTRUED AS PROFITS OF THE BUSINESS OF MANUFACTURE ON WHICH ALONE DEDUCTION U/S.80IB OF TH E ACT WAS ALLOWABLE. THE ASSESSEE HAD ON ITS OWN EXCLUDED INTEREST ON FDS OF RS.17,04,752 /- FROM THE INTEREST RECEIVED OF RS.77,41,640/- FROM THE PROFITS OF THE BUSINESS AND HAD INCLUDED INTEREST INCOME OF ONLY RS.60,36,888/- AS INCOME ON WHICH DEDUCTION U/S.80I B OF THE ACT WAS TO BE ALLOWED. . THE AO THEREFORE ALLOWED DEDUCTION U/S80IB @30% ON (RS .3,96,63,935/- MINUS RS.60,36,888/-) I.E. FOR RS.3,36,27,047/- INSTEAD OF RS.3,96,63,935 /- AS CLAIMED BY THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF AO ASSESSEE PREFERRE D APPEAL BEFORE CIT(A). CIT(A) FOUND THAT THE ITAT HAD ALLOWED SIMILAR CLAIM OF TH E ASSESEE ALLOWED THE CLAIM OF THE ASSESSEE IN AY 2000-01 & 2001-02 BY OBSERVING AS FO LLOWS :- 6. AFTER HEARING BOTH THE PARTIES AND GOING THROUG H THE DECISIONS CITED BY THE ASSESEE, WE ARE OF THE CONSIDERED VIEW THAT THE DEDUCTIONS O F RS.10,96,258/- FOR A.Y. 2000-01, RS.27,92,269/- FOR A.Y. 2001-02 AND .29,89,861/- FO R A.V. 2003-04 MADE OUT OF THE TOTAL INCOME TO CALCULATE DEDUCTION U/S 80LB ARE NO T JUSTIFIED AND NO DEDUCTION SHOULD BE MADE FOR CALCULATION OF DEDUCTION U/S 801B. IN OTHE R WORDS, DEDUCTION SHOULD BE ALLOWED AFTER ADDING THE INTEREST INCOME WHICH HAS BEEN DEDUCTED FROM THE TOTAL INCOME FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80I B. 5. THE CIT(A) FOLLOWING THE SAID DECISION OF ITAT ALLOWED THE CLAIM OF THE ASSESSEE, BY OBSERVING AS FOLLOWS: THUS, THE HON'BLE ITAT HELD THAT FOR THE PURPOSE O F CALCULATION U/S 801B, THE INTEREST RECEIVED FROM THE TRADE DEBTORS WILL NOT BE EXCLUDE D. IN OTHER WORDS, THE APPELLANT COMPANY IS ENTITLED FOR DEDUCTION U/S 801B ON THE I NTEREST RECEIVED FROM THE TRADE DEBTORS. FOR A.Y. 2006-07, THE APPEAL OF THE ASSESS EE COMPANY WAS DECIDED BY THE CIT(A), CENTRAL - II,. KOLKATA VIDE APPEAL NO. 189/ CC- XII/CIT(A)-CENT-II/KOIJ08-09 DATED 30.10.2009. IN THE SAID APPEAL, THE CIT(A) RE LYING ON THE DECISION OF HIS PREDECESSOR FOR A.Y. 2005-06 IN APPEAL NO. 289/CC-X II/CIT(A)/C-II/06-07 DATED 29.01.2008, DIRECTED THE AO TO INCLUDE THE AMOUNT O F RS.42,55,267/- AS INTEREST FROM DEBTORS OF CNFC DIVISION IN THE CALCULATION OF DEDU CTION U/S 80LS OF THE ACT. THE HON'BLE ITAT, KOLKATA UPHELD THE DECISION OF THE CI T(A) FOR A.Y. 2006-07 IN ITA NO. 216 (KOL) OF 2010 DATED 30.07.2010. THE SIMILAR VIE W WAS TAKEN BY THE CIT(A) IN THE 3 ITA NO.2408/KOL/2013-M/S.CENTURY ALUMINIUM MFG. LTD . A.Y.2008-09 CASE OF ASSESSEE COMPANY IN A.Y. 2007-08 WHICH WAS DECIDED VIDE APPEAL NO. 156/CC- XII/CIT(A)-C-II/KOIJ09-10 DATED 30.06.2010 AND UPHELD BY THE ITAT IN ITA NO. 1754/KO1/2010 DATED 10.02.2012. IN VIEW OF ABOVE FACTS, RESPECTFULLY, FOLLOW ING THE DECISIONS OF PREDECESSOR CIT(A) AND HON'BLE ITAT, KOLKATA, IT IS HELD THAT IN THE Y EAR UNDER APPEAL THE AO WAS NOT JUSTIFIED IN EXCLUDING THE INTEREST RECEIVED FROM T HE TRADE DEBTORS AMOUNTING TO RS.60,36,888/- FROM THE PROFIT FOR THE PURPOSE OF C ALCULATION OF DEDUCTION U/S 801B OF THE ACT. HE IS DIRECTED TO INCLUDE THE INTEREST REC EIVED FROM THE TRADE DEBTORS. IN THE PROFIT AND ALLOW THE DEDUCTION U/S 80IB OF THE ACT ACCORDINGLY. THE GROUND NO. 1 IS ALLOWED. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THIS TRIBUNAL. 7. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NOTICE THAT IDENTICAL ISSUE IN ASSESSEES OWN CASE HAS COME FOR CONSIDERATION BEFO RE THE TRIBUNAL FOR A.Y.2007-08 IN ITA NO.1754/KOL/2010 AND THE TRIBUNAL VIDE ITS O RDER DATED 10.02.2012 WAS PLEASED TO HOLD THAT INTEREST RECEIVABLE ON TRADING SHOULD ALSO BE TREATED AS PART OF BUSINESS PROFIT ON WHICH DEDUCTION U/S 80IB HAS TO BE ALLOWED. OUR ATTENTION WAS ALSO DRAWN TO THE SIMILAR ORDERS FOR A,Y.2006-07, 200-01 TO 2001-02 AND 2003-04 IN ITA NO.216/KOL/2010 AND 1535 TO 1537/KOL/2006. IN VIEW OF THE ABOVE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE WE ARE OF THE VIEW THAT THERE IS NO MERIT IN THIS APPEAL OF THE REVENUE. IT IS ALSO SEEN THAT THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT VS VIDYUT CORPORATION 324 ITR 221 (BOM) AND THE HON BLE GUJART HIGH COURT IN THE CASE OF CIT VS PRATHAM DEVELOPERS 355 ITR 507 (GUJ) HAD ALSO TAKEN A VIEW THAT INTEREST PAID ON UN PAID PURCHASE OF GOODS MANUFACT URED WHILE TAKING THE COMPONENTS OF THE PROFITS AND GAINS DERIVED FROM THE ELIGIBLE BUSINESS. IN VIEW OF THE ABOVE LEGAL POSITION WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. CONSEQUENTLY THE APPEAL OF THE REVENUE IS DISMISSED. 4 ITA NO.2408/KOL/2013-M/S.CENTURY ALUMINIUM MFG. LTD . A.Y.2008-09 8. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. O RDER PRONOUNCED IN THE COURT ON 13.05.2016. SD/- SD/- [M.BALAGANESH ] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13.05.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. CENTURY ALUMINIUM MFG. LTD., 113, PARK STREE T, N BLOCK, 3 RD FLOOR, KOLKATA- 700016. 2. D.C.I.T., CENTRAL CIRCLE-XII, KOLKATA. 3. CIT(A)-CENTRAL-II, KOLKATA 4. CIT-CENTRAL- II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER, ASST. REGISTRAR, ITAT, KOLKATA BENCHES