DCIT, New Delhi V. M/s Grave Applicances (P) Ltd., New Delhi

ITA 2610/DEL/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 7049 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 04-10-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 01-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJNI KANT GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE G.E. VEERABHADRAPPA, HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER I.T.A. NO. 2610/DEL/2010 ASSESSMENT YEAR: 2006-07 DEPUTY COMMISSIONER OF IT, VS. M/S. GRAVS APPLIANC ES (P) LTD. CIRCLE 12(1), PADMA TOWER-II, NEW DELHI. RAJENDRA PLACE, NEW DELHI-02 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJNI KANT GUPTA, SR.DR RESPONDENT BY: SHRI SA NJEEV JAIN, CA ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LEARNED CIT(APPEALS) DATED 02.03.2010 PASSED FOR ASSESSMENT YEAR 2006-07. THE SOLITARY ISSUE INVOLVED IN THIS APPEAL IS WHETHER D EDUCTION UNDER SECTION 80- IC WOULD BE COMPUTED ONLY TAKING INTO CONSIDERATION THE ELIGIBLE PROFIT OF THE UNIT LOCATED IN BADDI IN HIMACHAL PRADESH. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED ITS RETURN OF INCOME ON 28.11.2006 DECLARING A LOSS OF RS.45,89,6 25. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT BY IS SUANCES OF A NOTICE UNDER SEC. 143(2) OF THE ACT WHICH WAS DULY SERVED UPON T HE ASSESSEE. IN RESPONSE TO THE NOTICE SHRI PAWAN BATRA, CA APPEARED FROM TI ME TO TIME AND SUBMITTED THE REQUISITE DETAILS. THE ASSESSEE WAS M AINTAINING THREE SETS OF 2 ACCOUNTS, (I) FOR MANUFACTURING UNIT AT DELHI; (II) FOR THE TRADING UNITS AT DELHI; AND THE (III) MANUFACTURING UNIT FOR BADDI. AT BADDI, IT IS MANUFACTURING ELECTRICAL HOME APPLIANCES. IT IS ENT ITLED FOR DEDUCTION UNDER SECTION 80-IC. THE ASSESSEE WHILE COMPUTING THE DED UCTION ADMISSIBLE UNDER SECTION 80-IC DID NOT MAKE ADJUSTMENT OF THE LOSSES SUFFERED AT DELHI. IT HAS COMPUTED THE DEDUCTION ADMISSIBLE UNDER SECTION 80- IC EXCLUSIVELY FROM THE ELIGIBLE PROFIT OF BADDI UNIT. THE CASE OF THE ASSE SSING OFFICER IS THAT PROFIT OF THE WHOLE UNDERTAKING HAS TO BE COMPUTED AND THE REAFTER DEDUCTION, IF ANY, ADMISSIBLE UNDER SECTION 80-IC IS TO BE GRANTE D. 3. ON APPEAL, THE LEARNED CIT(APPEALS) HAS HELD THA T PROFIT OF EACH UNIT CAN BE COMPUTED SEPARATELY AND DEDUCTION UNDER SEC. 80-IC BE GRANTED ON THE PROFIT OF ELIGIBLE UNIT. LEARNED CIT(APPEALS) D IRECTED THE ASSESSING OFFICER NOT TO ADJUST THE LOSSES OF DELHI UNIT AGAI NST THE PROFIT OF BADDI UNIT WHILE COMPUTING THE DEDUCTION ADMISSIBLE UNDER SECT ION 80-IC. FOR SUCH CONCLUSION, LEARNED CIT(APPEALS) HAS RELIED UPON TH E DECISION OF HONBLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF D EWAN KRAFT SYSTEM (P) LTD. REPORTED IN 210 CTR(DEL) 124. 4. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DEC ISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF DEWAN KRAFT SYSTEMS (P) L TD. AS WELL AS IN THE 3 CASE OF CIT VS. SONA KOYO STERLING SYSTEM LTD. REND ERED ON 10.2.2010 AND REPORTED IN 230 CTR 251. LEARNED DR WAS UNABLE TO C ONTROVERT THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE . 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. HON'BLE DELHI HIGH COURT, VIDE IT S ORDER DATED 10.2.2010, HAS DISPOSED OF APPEALS FOR ASSESSMENT YEARS 1992-0 3 TO 1995-96 AND 2000- 01 IN THE CASE OF SONA KOYO STERLING SYSTEMS LTD. I N THAT CASE, THE ISSUE RELATES TO COMPUTATION OF DEDUCTION ADMISSIBLE UNDE R SECTION 80I OF THE ACT. HON'BLE HIGH COURT HAS CONSIDERED THE MEANING OF GR OSS TOTAL INCOME AS EXPLAINED IN SECTION 80-B(5) OF THE ACT AS WELL AS THE CONDITIONS ENUMERATED IN SUB-SECTION (6) OF SECTION 80IA OF THE ACT. THE HONBLE COURT HAS ALSO CONSIDERED ITS EARLIER DECISION IN THE CASE OF DEWA N KRAFT SYSTEMS (P) LTD. WHEREIN SECTION 80-IA(5) AND (7) WERE CONSIDERED. H ONBLE COURT HAS HELD THAT SUB-SECTION (6) OF SECTION 80-I BEGINS WITH A NON-OBSTANTE CLAUSE, ACCORDING TO THIS SECTION THE QUANTUM OF DEDUCTION IS TO BE COMPUTED AS IF THE INDUSTRIAL UNDERTAKING WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE RELEVANT YEARS. WHILE EXPLAINING THE PRO VISIONS, HONBLE COURT HAS OBSERVED THAT IN OTHER WORDS, EACH INDUSTRIAL U NDERTAKING OR UNIT IS TO BE TREATED SEPARATELY AND INDEPENDENTLY. THIS WAS OBSE RVED BECAUSE DEDUCTION UNDER SECTION 80IA WOULD BE ADMISSIBLE ONLY IN THOS E UNITS AND INDUSTRIAL 4 UNDERTAKING WHICH HAVE A PROFIT OR GAIN. IN SUB-SEC TION (7) OF SECTION 80IC, IT HAS BEEN PROVIDED THAT PROVISIONS CONTAINED IN SUB- SECTION (5) AND SUB- SECTIONS (7) TO (12) OF SECTION 80-IA SHALL, SO FAR AS MAY BE, APPLIED TO THE ELIGIBLE UNDERTAKING OR ENTERPRISES UNDER THIS SECT ION, MEANING THEREBY THAT SAME PROVISION WOULD BE APPLICABLE IN SECTION 80-IC OF THE ACT. HON'BLE DELHI HIGH COURT IN THE CASE OF DEWAN KRAFT SYSTEMS (P) LTD. AND SONA KOYO (SUPRA) HAS HELD THAT EACH UNIT WILL BE CONSID ERED INDEPENDENTLY. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT LEARN ED FIRST APPELLATE AUTHORITY HAS RIGHTLY APPLIED THE RATIO OF HON'BLE DELHI HIGH COURT AND HAS RIGHTLY DIRECTED THE ASSESSING OFFICER NOT TO ADJUS T THE LOSSES OF DELHI UNIT WHILE COMPUTING THE ELIGIBLE PROFIT IN RESPECT OF B ADDI UNIT FOR GRANTING DEDUCTION UNDER SECTION 80-IC OF THE ACT. NO OTHER ISSUE WAS AGITATED BEFORE US. HENCE, THE APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 08.10.2010 ( G.E. VEERABHADRAPPA) ( RAJ PAL YADAV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 08/10/2010 MOHAN LAL 5 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR