The DCIT, Circle-1, Ahmedabad V. M/s. Astral Poly Technik Pvt.Ltd., Ahmedabad

ITA 2790/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0550 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VAR T IK CHOKSHICA
• Section: 143(3); 133A; 148

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.2790/AHD/2013 WITH CO NO.81/AHD/2014 / ASSTT. YEAR: 2007-2008 DCIT, CIR.1 AHMEDABAD. VS M/S.ASTRAL POLY TECHNIK LTD. 207/1, ASTRAL HOUSE B/H. RAJPATH CLUB S.G. HIGHWAY AHMEDABAD 380 059. PAN : AABCA 2951 N ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI SATISH SOLANKI, SR.DR ASSESSEE BY : SHRI VAR T IK CHOKSHI,CA / DATE OF HEARING : 09/08/2016 / DATE OF PRONOUNCEMENT: 08/09/2016 $%/ O R D E R REVENUE IS IN APPEAL AGAINST THE ORDER OF THE LD.CI T(A)-VI, AHMEDABAD DATED 30.9.2013 PASSED FOR THE ASTT.YEAR 2007-08. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, THE ASSESSEE HAS FILED CO BEARING NO.81/AHD/2014. 2. THE LD.COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT ASSESSEE DOES NOT WANT TO PRESS CO. HENCE, CO FILED BY THE ASSESSEE IS REJECTED. 3. IN THE REVENUES APPEAL, SOLITARY GROUND OF APPE AL TAKEN BY THE REVENUE READS AS UNDER: ITA NO.2790/AHD/2013 WITH CO 2 THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETI NG THE ADDITION OF EXCESS INTEREST EXPENSES OF RS.31.35 LACS DEBITED B Y THE ASSESSEE IN THE ACCOUNTS OF GUJARAT UNIT AND THEREBY CLAIMING MORE DEDUCTION U/S.80IC FOR THE BADDI UNIT. THE ASSESSEE HAD CLAIMED THE E NTIRE INTEREST EXPENSES OF RS.170.64 LACS IN GUJARAT UNIT THOUGH 1 8.37% OF CAPITAL WAS EMPLOYED AT BADDI UNIT. 4. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 25.10.2007 DECLARING TOTAL INCO ME AT NIL, AFTER CLAIMING DEDUCTION UNDER SECTION 80IC OF THE ACT. THE ASSES SMENT ORDER WAS FRAMED UNDER SECTION 143(3) OF THE ACT ON 23.12.2009. THE REAFTER, A SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE UNDER S ECTION 133A OF THE ACT ON 14.4.2010. ACCORDING TO THE REVENUE, DURING THE COU RSE OF SURVEY, CERTAIN DETAILS CAME TO THE POSSESSION OF THE REVENUE EXHIB ITING THAT ASSESSEE HAS NUMBER OF UNITS LOCATED IN DIFFERENT PARTS OF THE C OUNTRY. SOME OF THE UNITS ARE ELIGIBLE UNDER SECTION 80IC OF THE ACT. THE A O WAS OF THE OPINION THAT THE ASSESSEE HAS NOT ALLOCATED INTEREST EXPENDITURE AND FOREIGN EXCHANGE FLUCTUATION GAIN/LOSS IN AN APPROPRIATE MANNER IN T HE UNITS WHICH ARE ENTITLED FOR DEDUCTION UNDER SECTION 80IC VIS--VIS UNITS WH ERE SUCH DEDUCTION WAS NOT ADMISSIBLE. ACCORDINGLY, HE REOPENED THE ASSES SMENT BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT. THE LD.AO HAS ULTIMATELY MADE AN ADDITION OF RS.31.35 LACS. DISSATISFIED WITH THIS ADDITION, THE ASSESSEE CARRIED IN APPEAL BEFORE THE LD.CIT(A). IT HAS RAISED TWO FOLD SUBMISSIONS. IN THE FIRST FOLD OF SUBMISSIONS, IT CONTENDED THAT THERE IS NO ABSURDITY IN THE ALLOCATION OF INTEREST EXPENDITURE BETWEEN ALL THE UNITS. IT HAS FILED WRITTEN SUBMISSIONS BEFORE THE LD.CIT(A) POINTING OUT AS TO HOW THE INTEREST EXPENDITURE HAVE BEEN ALLOCATED BY THE ASSESSEE. I N THE ALTERNATIVE CONTENTIONS, IT WAS CONTENDED THAT ADDITION OF RS.3 1.35 LAKHS CANNOT BE MADE, BECAUSE, IT WILL ONLY REDUCE THE DEDUCTION ADMISSIB LE UNDER SECTION 80IC OF ITA NO.2790/AHD/2013 WITH CO 3 THE ACT ON ONE OF THE UNITS SITUATED IN HIMACHAL PR ADESH. THE ASSESSEE HAD CONTENDED THAT OUT OF TOTAL AMOUNT WORKED OUT BY TH E ASSESSEE, IT HAS ITSELF DISALLOWED RS.22.83 LAKHS, AND IF FOREIGN EXCHANGE FLUCTUATION GAIN/LOSS IS BEING ALLOCATED IN THE MANNER PROPOSED BY THE AO, T HEN, DEDUCTION UNDER SECTION 80IC WOULD INCREASE INSTEAD OF GOING DOWN. THE LD.CIT(A) HAS ACCEPTED CONTENTIONS OF THE ASSESSEE ON THE STRENGT H OF HIS PREDECESSORS ORDER PASSED IN THE ASSTT.YEAR 2008-09. THE LD.CIT(A) WA S OF THE OPINION THAT IDENTICAL ISSUE WAS INVOLVED IN THE ASSTT.YEAR 2008 -09, WHERE THIS ADJUSTMENT MADE BY THE AO WAS NOT APPROVED. 5. BEFORE ME, IT WAS POINTED OUT THAT THE ISSUE IN THE ASSTT.YEAR 2008-09 TRAVELLED UPTO THE TRIBUNAL, AND THE TRIBUNAL HAS U PHELD THE ORDER OF THE CIT(A) IN ITA NO.1591/AHD/2013. HE PLACED ON RECOR D COPY OF THE TRIBUNALS ORDER. THE LD.DR, ON THE OTHER HAND, WA S UNABLE TO CONTROVERT THE CONTENTIONS RAISED BY THE LD.COUNSEL FOR THE ASSESS EE. 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, I AM OF THE VIEW THAT THE LD.FIRST APPELLATE AUTHORITY IN THIS ASSES SMENT YEAR HAS SIMPLY RELIED UPON THE FINDING OF THE CIT(A) RECORDED IN THE ASST T.YEAR 2008-09. THIS FINDING OF THE LD.CIT(A) IN THE ASSTT.YEAR 2008-09 HAS BEEN REPRODUCED BY THE TRIBUNAL ALSO. ORDER OF THE TRIBUNAL READS AS UNDER: 5. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) AND STRONGLY CONTENDED THAT IT HAS BEEN FOLLOWING THE ACCOUNTING POLICY OF ALLOCATING INTEREST EXPENDITURE @ 9% PER ANNUM ON THE BASIS OF THE DAILY PRODUCT. IT WAS BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE HIMACHAL PRADESH UNIT WAS SELF SUFFICIENT TO MEET ITS LIABIL ITY AND NO FUND HAS BEEN TRANSFERRED FROM GUJARAT UNIT TO HIMACHAL PRAD ESH UNIT. THEREFORE, THERE IS NO REASON WHY INTEREST SHOULD B E ALLOCATED TO THE H.P. UNIT. AFTER CONSIDERING THE FACTS AND THE SUBM ISSIONS, THE LD. CIT(A) OBSERVED AS UNDER:- ITA NO.2790/AHD/2013 WITH CO 4 4.4 THE CONTENTIONS OF THE ID. A.R. ARE TENABLE. TH E ALLOCATION OF INTEREST EXPENDITURE BETWEEN THE H.P. UNIT AND GUJA RAT UNIT WAS BEING DONE CONSISTENTLY ON DAILY PRODUCT BASIS. IN THE IMMEDIATELY PRECEDING YEAR, INTEREST EXPENDITURE OF RS.22.83 LAKHS WAS ALLOCATED TO THE H.P. UNIT. IN THE YEAR U NDER CONSIDERATION SINCE NO BORROWED FUNDS WERE UTILIZED BY THE H.P. UNIT, INTEREST EXPENDITURE WAS NOT ALLOCATED TO IT. THE CONTENTION THAT THE H.P. UNIT WAS GENERATING ENOUGH PROFITS/CA SH SURPLUS AND WAS IN A POSITION TO ADVANCE SURPLUS MONEY TO T HE HEAD OFFICE (INSTEAD OF UTILIZING THE FUNDS BORROWED BY THE HEAD OFFICE) WAS NOT CONTROVERTED BY THE A.O. AS REGARDS THE FOR EIGN EXCHANGE GAIN/LOSS, IN THE REASONS RECORDED FOR RE- OPENING, THIS ISSUE WAS FIGURING THEREIN. HOWEVER, IN THE YEAR UN DER CONSIDERATION, A.O. DID NOT ALLOCATE THE FOREIGN EX CHANGE GAIN TO H.P. UNIT, WHEREAS IN THE SUBSEQUENT A.Y. 2009-10 T HE FOREIGN EXCHANGE LOSS WAS ALLOCATED BETWEEN THE TWO UNITS. IN THE PRECEDING A.Y. 2007-08 THE INTEREST EXPENDITURE ALL OCATED BY THE APPELLANT TO THE H.P. UNIT OF RS.22.83 LAKHS WAS NO T DISTURBED BY THE A.O. THUS, THE AO'S APPROACH IN ALLOCATING INTE REST EXPENDITURE AND FOREIGN EXCHANGE GAIN/LOSS BETWEEN THE TWO UNITS HAS BEEN INCONSISTENT. IT IS VARYING MERELY O N THE BASIS OF THE ASSESSABILITY OF HIGHER OR LOWER INCOME. TAKING INTO ACCOUNT THE TOTALITY OF THE FACTS, I DO NOT FIND ANY REASON TO DISTURB THE ALLOCATION AS BEING DONE BY THE APPELLANT CONSISTEN TLY OVER THE YEARS. I AM OF THE VIEW THAT IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE. IT IS DELETED. ACCORDINGLY, GROUND NO. 3,4 & 5 ARE ALLOWED. GROUND NO.6 IS AN ALTERNATE CLAIM AND HAS BECOME INFRUCTUOUS IN VIEW OF MY FINDING ABOVE. ACCORDINGL Y, IT IS DISMISSED. 6. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FACTS IN ISSUE. THE UNDISPUTED FACT IS THAT THE H.P. UNIT HAD SUFFICIEN T RESERVES AND SURPLUS TO MEET ITS LIABILITY. IN FACT, THE FIRST APPELLATE AUTHORITY HAS NOT ONLY CONFIRMED THIS BUT HAS ALSO OBSERVED THAT THE H.P. UNIT HAD ADVANCED SURPLUS MONEY TO THE GUJARAT UNIT. A PERUSAL OF THE FINDINGS OF THE FIRST APPELLATE AUTHORITY WOULD SHOW THAT HE HAS CONSIDER ED THE ENTIRE FACTUAL MATRIX QUA THE ISSUE. ITA NO.2790/AHD/2013 WITH CO 5 7. SINCE THERE IS NO DISPARITY OF FACTS, THE LD.CIT (A) HAS ALSO RELIED UPON THIS FINDING IN THE IMPUGNED ORDER. THEREFORE, RES PECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL, I D O NOT SEE ANY REASON TO INTERFERE IN IT. ACCORDINGLY, THE APPEAL OF THE REV ENUE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE AND CO OF T HE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 8 TH SEPTEMBER, 2016 AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER