ACIT 10(3), MUMBAI V. ABHILASHA TEX CHEM P. LTD, NAVI MUMBAI

ITA 2779/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-05-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANU KRISHNA
• Keywords: Reassessment proceedings
• Section: 80IB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , . . , . . BEFORE SHRI P.M.JAGTAP, AM & SHRI AMIT SHUKLA, JM ./ ITA NO.2779/MUM/2011 ( / ASSESSMENT YEAR :2005-2006) THE ACIT, 10(3), MUMBAI VS. ABHILASHA TEX CHEM P. LTD., 2 ND FLOOR, UDYOG KSHETRA, MULUND, GOREGAON, LINK ROAD, OFF L.B.S. MARG, MULUND (W)-NAVI MUMBAI- 400 080. ./ ./PAN NO.AAACA 3725 H ( /APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MS. ANU KRISHNA / RESPONDENT BY : NONE / DATE OF HEARING : 31 ST JULY, 2012 / DATE OF PRONOUNCEMENT : 3 RD AUGUST, 2012 / O R D E R PER AMIT SHUKLA (J.M.) : THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER DATED 21-1-2011, PASSED BY THE CIT(A )-22, MUMBAI FOR THE QUANTUM OF ASSESSMENT DETERMINED UNDER SE CTION 143(3), R.W.S. 147 FOR THE ASSESSMENT YEAR 2005-2006 ON THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING DEDUCTION U/S 80IB ON JOB WORK CHARGES RECEIVED. ITA NO : 2779/M/11 2 2. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, VARY, OMIT OR SUBSTITUTE ANY OF THE AFORESAI D GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF APPEAL. 2 . BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF CHEMIC ALS AND HAS FILED ITS RETURN OF INCOME ON 30-9-2005 AT AN INCOME OF ` .37,84,204/- AFTER CLAIMING DEDUCTION UNDER SECTION 80IB AMOUNTING TO ` .16,21,802/-, BEING 30% OF ` .54,06,010/-. THE SAID RETURN OF INCOME WAS SUBJECTED TO SCRUTINY UNDER SECTION 143(3). THE ASSESSEES CLAIM WAS ALLOWED VIDE ORDER DATED 28-12-2007 BY THE ASSESSING OFFICER. THEREAFTER THE CASE WAS REOPENED ON THE GROUND THAT DEDUCTI ON UNDER SECTION 80IB HAS BEEN CLAIMED ON VARIOUS INCOMES WHICH ARE NOT DERIVED FROM AN INDUSTRIAL UNDERTAKING. IN THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB ON THE PROFITS OF THE BUSINESS INCLUDING OTHER INCOME LIKE CONVERSION CHARGES, INTEREST ON INCOME-TAX REFUND, COMMISSION AND INTEREST ON HDFC DEPOSIT. IT WAS REQUIRED BY THE ASSESSEE TO EXPLAIN AS TO WH Y THE SAID INCOMES SHOULD NOT BE INCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IB. IN RESPONSE, THE ASSESSEE SUBMITTED THAT THE SAID INCOME IS DERIVED FROM INDUSTRIAL UNDERTAKING. THE A SSESSING OFFICER REJECTED THE SAID APPEAL AND DISALLOWED THE CLAIM. ITA NO : 2779/M/11 3 3. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT IT HAD FULFILLED ALL THE CONDITIONS AS LAID DOWN UNDER SECTION 80IB AND FURTHER IT HAD ENTERED INTO AN AGREEMENT WITH VA RIOUS PARTIES FOR CARRYING OUT PROCESSING ACTIVITY ON THE RAW MATERIAL I.E. CONVERSION OF RAW MATERIAL INTO FINISHED GOODS AND FOR CONVERSION OF RAW MATERIAL VARIOUS EXPENSES WERE INCURRED LIKE LABOUR, POWER, FUEL AND PACKING MATERIAL ETC., WHICH WERE DONE FROM ITS OWN INDUSTRIAL UNDERTAKING. THE ASSESSEE ALSO REFERRED TO MEANING OF MANUFACTURE, WHICH DOES NOT RESTRICT THE JOB WORK CHARGES AND M ANUFACTURING. FURTHER, IT AS AN INDEPENDENT ENTITY HAVING ITS OWN INFRASTRUCTURE, LABOUR, FINANCE AND PRODUCTION FACILITY. 4 . THE CIT(A) HELD THAT SO FAR AS THE INTEREST AND COMMISSION INCOME ARE CONCERNED, THE SAME IS NOT DERIVED FROM INDUSTRIAL UNDERTAKING AND DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB ON INTEREST AND COMMISSION INCOME HAS RIGHTLY BEEN DISALLOWED BY THE ASSESSING OFFICER. THIS ISSUE IS SETTLED AS ASSESSEE HAS NOT DISPUTED THE SAME. HOWEVER, SO FAR AS THE C ONVERSION CHARGES, WHICH IS IN FACT, JOB CHARGES, LEARNED CIT(A) AFTER RE FERRING TO VARIOUS DECISIONS OF THE ITAT AND HONBLE HIGH COURTS, HELD THAT JOB CHARGES ARE, IN FACT, PART OF MANUFACTURING AND ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB FROM RECEIPT OF JOB CHARGES. ITA NO : 2779/M/11 4 5. LEARNED SENIOR DR RELYING ON THE FINDINGS OF THE ASSESSING OFFICER SUBMITTED THAT JOB WORK CANNOT BE TERMED AS MANUFACTURING AS THE SAME IS DONE ON BEHALF OF SOME OTHER PERSONS. SHE ALSO SUBMITTED THAT THE EXPRESSION DERIVED FROM , HAS BEEN EXPLAINED BY THE HONBLE SUPREME COURT IN THE CASE OF , PANDIAN CHEMICALS LTD. V. COMMISSIONER OF INCOME-TAX, REPORTED IN 262 ITR 278 AND SUBMITTED THAT JOB CHARGES CANNOT BE HELD TO BE DERIVED FROM INDUSTRIAL UNDERTAKING. THE RELIANCE WAS ALSO PLACED IN THE CASE OF COMMISSIONER OF INCOME-TAX V. K. RAVINDRANATHAN NAIR, REPORTED IN 295 ITR 228. 6 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LEARNED SENIOR DR AND THE FINDINGS GIVEN BY THE ASSESSING OFFICER AS WELL AS THE CIT(A). IT HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS HAVING ITS OWN INDUSTRIAL UNDERTAKING WITH PLANTS AND MACHINERIES THROUGH WHICH IT HAS BEEN CARRYING OUT MANUFACTURING AND ALSO DOING JOB WORKS. ON PERUSAL OF THE VARIOUS DECIS ION, AS HAVE BEEN RELIED UPON BY THE ASSESSEE BEFORE TH E CIT(A), IT IS SEEN THAT IN THE CASE OF CIT VS. BANGALORE CLOTHING CO MPANY, REPORTED IN 260 ITR 371 , THE HONBLE BOMBAY HIGH COURT HAS HELD THAT JOB WORK, PROCESSING ACTIVITY BEING LINKED TO THE MANUFACTURING A CTIVITY OF THE ASSESSEE BY USING ITS ENTIRE UNDERTAKING OF THE COMPANY, THE ASSESSEE WAS ENTITLED FOR DEDUCTION UNDER SECTION 80HHC. SIMILARLY, ITA NO : 2779/M/11 5 THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. RANE (MADRAS) LTD., REPORTED IN 238 ITR 377 , HAS HELD THAT THE JOB WORK WAS CARRIED OUT IN THE COURSE OF MANUFACTURE OF ITS PRODUCTS WITH THE SAME MACHINERIES WERE EMPLOYED IN DOING THE JOB WORKS, THERE IS NEXUS OR CONNE CTION BETWEEN THE JOB WORKS CARRIED ON BY THE ASSESSEE IN THE INDUSTRY, THEREFORE, THE RECEIPT FROM THE JOB WORK WAS ENTITLED FOR RELIEF UNDER SE CTION 80I. VARIOUS OTHER JUDICIAL DECISION CITED IN THE ORDER OF THE CIT(A), HAVE ALSO OPINED ON THE SAME PROPOSITION. THUS, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDING AND THE CONCLUSION DRAWN BY THE CIT(A) AND ALSO IN ABSENCE OF ANY CONTRARY DECISION BROUGHT TO OUR KNOWLEDGE, THE ORDER OF THE CIT(A) IS CONFIRMED. ACCORDINGLY, GROUND TAKEN BY THE DEPARTMENT ARE DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD AUGUST, 2012 . 3 RD AUGUST, 2012 SD/- SD/- ( . . ) ( ) ( P.M.JAGTAP) ( AMIT SHUKLA) /ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED 3 RD / AUGUST/2012 . . / PKM. . ./PS ITA NO : 2779/M/11 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI