Alidhara Textool Engineers Pvt.Ltd., Surat V. The Dy.CIT, Circle-1, Surat

ITA 2928/AHD/2009

• Counselvise Citation: 292820514 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 27-10-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gross profit estimation; Depreciation
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI G. D. AGARWAL, VP AND SHRI BHAVNESH SAINI, JM) ITA NO.2928/AHD/2009 A. Y.: 2006-07 ALIDHARA TEXTOOL ENGINEERS PVT. LTD., PLOT NO.168, ROAD NO.6-B, UDHYOGNAGAR, UDHNA, SURAT VS THE ADDL. CIT, CIRCLE- 1, AAYAKAR BHAVAN, MAJURA GATE, SURAT PA NO. AAACD 8469 M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI HARDIK VORA, AR RESPONDENT BY SHRI VINOD TANWANI, SR. DR DATE OF HEARING: 27-09-2011 DATE OF PRONOUNCEMENT: 30-09-2011 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-I, SURAT DATED 23 RD SEPTEMBER, 2009 FOR THE ASSESSMENT YEAR 2006-07, O N THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING BOOKS OF ACCOUNTS U/S. 145(3) OF THE I. T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING ITA NO. 2928/AHD/2009 ALIDHARA TEXTOOL ENGINEERS PVT. LTD. VS ADDL. CIT, CIRCLE-1, SURAT 2 OFFICER IN ESTIMATING GROSS PROFIT AT THE RATE OF 27.49% AND THEREBY ERRED IN CONFIRMING THE ADDITION OF RS.56,63,101/- FOR ALLEGED LOW GROSS PROFIT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEDUCTION U/S 80 IB TO THE EXTENT OF RS. 3,98,662/- ON VATAV KASAR INCOME OF RS.13,28,874/-. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING DEDUCTION U/S 80IB TO THE EXTENT OF RS.68,676/- BY REWORKING WRITTEN DOWN VALUE OF ASSETS. 2. ON GROUNDS NO.1 AND 2 OF THE APPEAL, THE AO NOTE D THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURIN G OF DRAW TEXTURISING AND WINDER MACHINERY. DURING THE YEAR T HE ASSESSEE HAS SHOWN TURNOVER OF RS.56.71 CRORES AND GROSS PROFIT RATE OF 26.45% AGAINST TURNOVER OF RS.75.16 CRORES AND GROSS PROFI T RATE OF 28.66% IN THE LAST YEAR. THE AO NOTED CERTAIN REASONS FOR REJ ECTION OF THE BOOK RESULTS OF THE ASSESSEE AND IT WAS STATED THAT THE REASON FOR FALL IN GROSS PROFIT IS ATTRIBUTABLE TO RISE IN RATIO OF RA W MATERIAL CONSUMED WHICH REMAINED UNVERIFIABLE IN THE ABSENCE OF DAY T O DAY STOCK RECORD. IT WAS ALSO NOTED THAT SIMILARLY, BOOK RESU LTS WERE REJECTED IN THE PRECEDING ASSESSMENT YEAR 2005-06 IN WHICH SPEC IAL AUDIT WAS ALSO CONDUCTED U/S 142(2A) OF THE IT ACT. BOOK RESU LTS WERE ACCORDINGLY REJECTED AND GROSS PROFIT RATE OF 27.49 % WAS APPLIED AND ADDITION WAS ACCORDINGLY MADE. THE LEARNED CIT(A) F OLLOWING HIS APPELLATE ORDER FOR PRECEDING ASSESSMENT YEAR CONFI RMED THE ITA NO. 2928/AHD/2009 ALIDHARA TEXTOOL ENGINEERS PVT. LTD. VS ADDL. CIT, CIRCLE-1, SURAT 3 ADDITIONS AND DISMISSED BOTH THE GROUNDS OF APPEAL. ON GROUND NO.3 OF THE APPEAL, THE ASSESSEE CLAIMED DEDUCTION U/S 8 0 IB OF THE IT ACT WHICH WAS DENIED BY THE AO BECAUSE VATAV KASAR INCO ME IS NOT DERIVED FROM INDUSTRIAL UNDERTAKING AND FOLLOWING T HE ORDER FOR ASSESSMENT YEAR 2005-06, THE LEARNED CIT(A) ALSO DI SMISSED THIS GROUND. ON GROUND NO.4 OF THE APPEAL, THE CLAIM OF DEPRECIATION WAS DENIED. IN THE ASSESSMENT ORDER THE AO HAS STATED T HAT IN EARLIER YEAR ALSO THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB OF THE IT ACT WITHOUT CLAIMING DEPRECIATION. THE AO FOLLOWED THE ORDER OF ITAT SPECIAL BENCH IN THE CASE OF VAHID PAPER CONVERTERS (98 ITD 165) AND COMPUTED THE DEDUCTION U/S 80IB OF THE IT ACT A FTER ALLOWING DEPRECIATION. THE LEARNED CIT(A) CONFIRMED THE ADDI TION AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THESE GROUNDS OF APPEAL WERE CONSIDERED BY ITAT AHMEDABAD B BENCH IN THE CASE OF THE SAME ASSESSEE IN PRECEDING ASSESSME NT YEAR 2005- 06 IN ITA NO. 3497/AHD/2008 VIDE ORDER DATED 12-08- 2011 AND THE APPEAL ON FIRST THREE GROUNDS HAS BEEN ALLOWED AND ON GROUND NO.4, THE GROUND OF APPEAL OF THE ASSESSEE WAS DISMISSED. THEREFORE, ALL THE GROUNDS ARE COVERED BY THE ORDER OF THE TRIBUNA L IN THE CASE OF THE SAME ASSESSEE FOR PRECEDING ASSESSMENT YEAR. CO PY OF THE ORDER IS PLACED ON RECORD. THE LEARNED DR ON GOING THROUG H THE ORDER OF THE TRIBUNAL DATED 12-08-2011 DID NOT DISPUTE THE C ONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. ITA NO. 2928/AHD/2009 ALIDHARA TEXTOOL ENGINEERS PVT. LTD. VS ADDL. CIT, CIRCLE-1, SURAT 4 4. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTI ES IN THE LIGHT OF THE FINDINGS OF THE AUTHORITIES BELOW, WE ARE OF TH E VIEW THAT ALL THE FOUR GROUNDS OF APPEAL ARE COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF THE SAME ASSESSEE FOR PRECEDING ASSESSMENT YEAR 2005-06. ON GROUNDS NO.1, 2 AND 3 OF THE APPEAL, THE LEARNED CIT(A) FOLLOWING THE ORDER FOR PRECEDING ASSESSMENT YEAR 2005-06 CON FIRMED THE ADDITIONS. IN THE PRECEDING ASSESSMENT YEAR 2005-06 , THE TRIBUNAL VIDE ORDER DATED 12-08-2011 HELD THAT REJECTION OF THE BOOKS OF ACCOUNTS IS NOT JUSTIFIED AND RESULTANTLY ADDITION ON ACCOUNT OF FALL IN GROSS PROFIT RATE WAS DELETED. FURTHER, DEDUCTION W AS ALLOWED U/S 80 IB OF THE IT ACT ON VATVA KASAR INCOME. GROUNDS NO. 1, 2 AND 3 OF THE APPEAL ARE, THEREFORE, SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL DATED 12-08-2011. BY FOLLOWING THE SAME OR DER, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITIONS. GROUNDS NO.1, 2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE ACC ORDINGLY ALLOWED. 5. ON GROUND NO.4 OF THE APPEAL, THE TRIBUNAL C ONFIRMED THE ORDER OF THE AUTHORITIES BELOW IN PRECEDING ASSESSMENT YE AR 2005-06. THEREFORE, THIS GROUND OF APPEAL IS SQUARELY COVERE D AGAINST THE ASSESSEE. GROUND NO.4 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. 6. NO OTHER POINT IS ARGUED OR PRESSED. ITA NO. 2928/AHD/2009 ALIDHARA TEXTOOL ENGINEERS PVT. LTD. VS ADDL. CIT, CIRCLE-1, SURAT 5 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (G. D. AGARWAL) VICE PRESIDENT (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD