M/S. KUSA CHEMICALS (P) LTD., MUMBAI V. ACIT-8(3)(OSD), MUMBAI

ITA 2820/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3447 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R N VASANI
• Section: 14A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, G, MUMBAI BEFORE SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) KUSA CHEMICALS (P) LTD 15/19, J K INDUSTRIAL ESTATE MAHAKALI CAVES ROAD, ANDHERI(E), MUMBAI PAN:AAACK2777R .. APPELLANT VS ACIT (OSD)-(8)3) M K ROAD, MUMBAI-400020 RESPONDENT APPELLANT BY : SHRI R N VASANI RESPONDENT BY : SHRI VIJAY SHANKAR O R D E R PER VIJAY PAL RAO,JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06.03.2009 OF THE LEARNED CIT(A)-XXIX, MUMBAI FOR THE ASSESSMENT YEAR 2006-07. 2. EFFECTIVE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL READS AS UNDER : 1. THE LD. CIT(A) COMMITTED A GROSS ERROR OF LAW AND FACTS IN DISALLOWING THE EXPENSES OF RS.247887 /- U/S 14A OF THE IT ACT, 1961 2 3. ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) 2 4. HE ERRED IN NOT CONSIDERING THE FACTS THAT JOB WORK RECEIPT OF RS.640977 IS INCOME FROM INDUSTRIA L UNDERTAKING AND ERRED IN NOT ALLOWING THE DEDUCTION U/S 80IB ON THE SAID AMOUNT. 3. GROUNDS OF APPEAL NO.1 IS REGARDING DISALLOWANCE OF RS.2,47,887/- U/S 14A. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEARNED DR AND CONSIDERED THE RELEVANT RECOR D. DURING THE ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT T HE ASSESSEE HAS CLAIMED DIVIDEND OF RS.11,34,994/- A ND ALSO CLAIMED EXEMPTION U/S 10(34) OF THE ACT. THE ASSE SSEE DID NOT SHOW ANY EXPENDITURE TO EARN THE DIVIDEND. ACCO RDINGLY, THE AO BY FOLLOWING DECISION OF THIS TRIBUNAL IN T HE CASE OF M/S DAGA MANAGEMENT PVT LTD DISALLOWED THE EXPENDI TURE TO THE TUNE OF RS.2,47,887/- BY INVOKING THE PROVISION S OF SECTION 14A RE.W.RULE 8D OF THE IT RULES, 1962. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF TH E AO IN VIEW OF THE SAID DECISION OF THIS TRIBUNAL. 5. AT THE OUTSET, WE NOTE THAT THIS ISSUE HAS BEEN DECIDED BY THE HON. JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFT. P.LTD V/S CIT REPORTED IN 234 DTR (B OM)-1 WHEREIN IT HAS BEEN HELD RULE 8D IS NOT APPLICABL E FOR THE YEAR UNDER CONSIDERATION AND ALSO NOT APPLICABLE RETROSPECTIVELY. HOWEVER, THE DISALLOWANCE U/S 1 4A HAS TO ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) 3 BE MADE BY ADOPTING THE REASONABLE BASIS BY THE AO . RESPECTFULLY FOLLOWING THE DECISION OF THE HON. JUR ISDICTIONAL IN THE CASE OF GODREJ AND BOYCE MFT. P.LTD V/S CIT (SUPRA) WE REMIT THIS ISSUE TO THE RECORD OF THE AO TO DETERM INE THE EXPENDITURE TO BE DISALLOWED ON APPORTIONMENT BASI S BY APPLYING THE REASONABLE METHOD AFTER CONSIDERING TH E RELEVANT FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIG HT OF THE DECISION OF THE HON. JURISDICTIONAL HIGH COURT IN T HE CASE OF GODREJ AND BOYCE MFT. P.LTD V/S CIT (SUPRA). 6. GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE GROUND NO.4, REGARDING DISALLOWANCE OF JOBWO RK RECEIPT U/S 80IB AMOUNTING TO RS.6,40,977. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SHOWN AN A MOUNT OF RS.6,40,977/- AS JOB WORK INCOME WHICH WERE INC LUDED FOR CLAIMING DEDUCTION U/S 80IB. THE AO HELD THAT THE JOBWORK IS NOT RELATED TO THE MANUFACTURING ACTIVITY OF THE A SSESSEE- COMPANY. THEREFORE, HE TREATED THIS RECEIPT AS I NCOME FROM OTHER SOURCES AND DISALLOWED THE CLAIM OF DEDUCTION U/S 80IB. 8. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF T HE AO. ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) 4 9. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE JOBWORK CHARGES HAS BEEN RECEIVED BY THE A SSESSEE BY USING THE INDUSTRIAL UNDERTAKING. THEREFORE, BY RELYING UPON THE DECISION OF THE HON. PUNJAB AND HARYANA HI GH COURT IN THE CASE OF CIT V/S IMPEL FORGE AND ALLIED IN DUSTRIES LIMITED REPORTED IN (2010) 326 ITR 0027, THE SAME I S PART AND PARCEL OF THE ASSESSEES BUSINESS ACTIVITIES AND TH EREFORE THE SAME CANNOT BE HELD AS INCOME FROM THE OTHER SOURCE S 45. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE JOB-WORK IS NOT IN THE SIMILAR ACTIVITY OF MAN UFACTURING OF THE ASSESSEE. THE AO AND THE CIT(A) HAS CATEGORIC ALLY GIVEN FINDING THAT THE JOB-WORK RECEIPTS ARE NOT DERIVED FROM ITS INDUSTRIAL UNDERTAKING. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT PRODUCED ANY RECORD TO PROVE THE NATURE OF THE JOBWORK DONE BY THE ASSESSEE. HE HAS RELIED U PON THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE LEARNED AR AS WELL AS THE LEA RNED DR AND CONSIDERED THE RELEVANT RECORD. THE AO AS WELL AS THE LEARNED CIT(A) HAS DENIED THE CLAIM OF THE ASSESSEE U/S 80IB ON THE GROUND THAT THE ASSESSEE HAS NOT PRODUCED AN Y RECORD OR MATERIAL TO PROVE THAT THE JOBWORK RECEIPT ARE DERIVED FROM THE INDUSTRIAL UNDERTAKING. EVEN BEFORE US, THE ASSESSEE HAS NOT PRODUCED AN Y RECORD TO SHOW THE NATURE OF JOBWORK ACTIVITIES ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) 5 CARRIED OUT BY THE ASSESSEE. IN THE CASE OF CI T V/S IMPEL FORGE AND ALLIED INDUSTRIES LIMITED, THE HON. PUNJ AB AND HARYANA HIGH COURT UPHELD THE ORDER OF THIS TRIBU NAL IN ALLOWING THE CLAIM OF THE ASSESSEE IN RESPECT OF TH E JOB WORK. THE FACTS OF THE SAID CASE WERE THAT THE ASSESSEE W AS ENGAGED IN THE MANUFACTURING AND TRADING OF TRACTOR AND AUTO PARTS AND ALSO DOING JOB WORK OF SIMILAR NATURE. A VERTING TO THE FACTS OF THE PRESENT CASE, IT IS NOT CLEAR FRO M THE RECORD WHETHER THE JOBWORK WAS CARRIED OUT IN THE SIMILAR NATURE AS THE MANUFACTURING ACTIVITIES OF THE ASSESSEE OR SOM E OTHER ACTIVITIES. ACCORDINGLY, IN THE ABSENCE OF THE RE LEVANT RECORD IT CANNOT BE CONCLUSIVELY DECIDED WHETHER THE JOB W ORK CARRIED BY THE ASSESSEE IS IN THE SIMILAR NATURE AS OF THE MANUFACTURING ACTIVITIES AND THEREFORE ENTITLED FOR DEDUCTION U/S 80IB. IN THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTORE THE ISSUE TO THE RECORD OF THE AO TO VERIFY AND EXAMINE THE RELEVANT RECORD TO BE FILED BY THE ASESEEE AND THEN DECIDE THIS ISSUE AS PER LAW. 11. GROUND NO.4 IS ALLOWED FOR STATISTICAL PURPOSES . ITA NO. 2820/MUM/2009 (ASSESSMENT YEARS: 2006-07) 6 12. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES.. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2010 SD SD (J.SUDHAKAR REDDY) (V IJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 23 RD DAY OF DEC 2010 SRL:221210 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI