M/s Sunil Gupta, Prop. Sirmour Minerals & Chemicals, Paonta Sahib V. ITO, Nahan

ITA 293/CHANDI/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5412 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 25-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH SMC, CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.293 /CHD/2010 (ASSESSMENT YEAR : 2004-05) SUNIL GUPTA, PROP.SIRMOUR MINERALS & VS. THE INCOM E-TAX OFFICER, CHEMICALS, VILL. KEDAR PUR, NAHAN. PAONTA SAHIB. PAN: AEHPG2521H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARRY RIKHY RESPONDENT BY : SMT.SARITA KUMARI, DR O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (A), DATED 6.1.2010 RELATING TO ASSES SMENT YEAR 2004-05 AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER G IVING EFFECT TO THE ORDER OF THE TRIBUNAL. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER : 1. THAT THE LD. CIT(A) HAS ERRED IN LAW & FACTS HA S DISALLOWED THE FREIGHT PAID AGAINST THE FREIGHT EXPENSES. 2. THAT THE LD. CIT(A) HAS ALSO NOT SETOFF THE FREI GHT EXPENSES PAID BY THE UNIT AGAINST THE FREIGHT SUBSIDY RECEIVED BY THE UNIT WHICH IS BEING THE REIMBURSEMENT OF EXPENSES. 2 3. THE LD. CIT(A) HAS ALSO NOT CONSIDERED THE ORDE R OF TRIBUNAL, CHANDIGARH IN THE ASSESSEES OWN CASE FOR THE SAME ASSESSMENT YEAR. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS CARRYING ON MANUFACTURING OF CALCITE POWDER, COURSE POWDER, ETC .. THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IA/80IB OF THE IN COME-TAX ACT IN RELATION TO THE FREIGHT SUBSIDY. IN THE ORIGINAL R OUND OF ASSESSMENT THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80I A/80IB OF THE INCOME-TAX ACT WAS DENIED. IN APPEAL BEFORE THE TR IBUNAL THOUGH IN THE GROUNDS OF APPEAL THE ASSESSEE HAD CHALLENGED THE D ENIAL OF DEDUCTION UNDER SECTION 80IA/80IB OF THE ACT, BUT AT THE TIME OF HEARING THE ONLY GRIEVANCE OF THE ASSESSEE RELATED TO COMPUTATION OF DISALLOWANCE AFTER CONSIDERING THE EXPENDITURE INCURRED FOR EARNING TH E FREIGHT SUBSIDY. THE TRIBUNAL IN I.T.A.NO. 977/CVHANDI/2007 VIDE ORD ER DATED 19.6.2008 HELD AS UNDER : 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND THE PRECEDENT RELIED UPON BY THE ASSESSEE, WE DIRECT TH E ASSESSING OFFICER TO RE-COMPUTE THE DEDUCTION UNDER SECTION 80IA/80IB BY EXCLUDING THE SUM OF FREIGHT SUBSIDY CALCULATED AFTER SETTING OFF THE EXPENSES WHICH ARE DIRECTLY LINKED TO IT. SINCE THE ASSESSE E HAS NOT SOUGHT ANY OTHER RELIEF ON THIS ASPECT, THE GROUNDS OF APPEAL NOS.2 TO 4 ARE TREATED AS PARTLY ALLOWED. 4. AS PER THE DIRECTIONS OF THE TRIBUNAL THE ASSESS ING OFFICER WAS TO RECOMPUTE THE DEDUCTION UNDER SECTION 80IA/80IB OF THE ACT AFTER EXCLUDING THE SUM OF FREIGHT SUBSIDY AFTER SETTING OFF THE EXPENSES DIRECTLY LINKED TO IT. THE DEDUCTION UNDER SECTION 80IA/80IB OF THE ACT WAS DENIED TO THE ASSESSEE ON THE SAID FREIGHT SUBS IDY, AS THE ASSESSEE HAD NOT PRESSED THE SAID ISSUE BEFORE THE TRIBUNAL. THE ONLY QUESTION TO 3 BE DETERMINED WAS THE QUANTUM OF THE EXCLUSION OF T HE FREIGHT SUBSIDY AMOUNT RECEIVED BY THE ASSESSEE AFTER SETTING OFF T HE EXPENDITURE DIRECTLY RELATABLE TO IT. 5. THE ASSESSING OFFICER WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL HAD COMPUTED THE INCOME BY TOTALING THE NE T PROFIT, FREIGHT PAID, FREIGHT SUBSIDY ACCRUED MINUS FREIGHT PAID AN D WORKED OUT THE INCOME AT RS.4,63,434/- AND THEREAFTER EXPENSES AS PER THE DIRECTIONS OF THE TRIBUNAL WERE ALLOWED AT RS.27,500/-. 6. IN APPEAL THE CIT(A) UPHELD THE ORDER OF THE ASS ESSING OFFICER OBSERVING THAT THE ASSESSEE HAD NOT BEEN ABLE TO PR OVE HIS CASE THAT THERE WAS ANY AMBIGUITY IN THE ORDER OF THE ASSESSING OFF ICER. 7. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE AFORESAID ORDER OF THE AUTHORITIES BELOW. THE LEARNED A.R. FOR THE AS SESSEE POINTED OUT THAT THE BASIS FOR COMPUTING THE EXPENSES AND CALCULATIO N OF THE INCOME IN THE HANDS OF THE ASSESSEE IS NOT CLEAR. 8. THE LEARNED D.R. FOR THE REVENUE HAS PLACED RELI ANCE ON ORDERS OF ASSESSING OFFICER & CIT(A). A REMAND REPORT HAS BE EN SUBMITTED BY THE ASSESSING OFFICER, NAHAN DATED 13.9.2010 IN WHICH H E HAS STATED THAT NO WORKING OF FIGURES WAS PLACED ON RECORD BY THE THEN ASSESSING OFFICER WHILE GIVING APPEAL EFFECT, SO IT WAS NOT POSSIBLE TO GIVE THE CALCULATION OF THE FIGURES MENTIONED THEREIN. 9. THE LEARNED A.R. FOR THE ASSESSEE INVITED OUR AT TENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSING OFFI CER WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL IN WHICH IT WAS POINTED OUT THAT THE TOTAL EXPENSES OF FREIGHT PAID WERE RS.23,02,756/- IN ADDITION TO CERTIFICATION CHARGES OF RS.3000/-, PRINTING AND ST ATIONERY OF RS.4500/- AND TRAVELING EXPENSES OF RS.20,000/- TOTALING TO R S.27,500/-. THE 4 EXPENDITURE OF RS.27,500/- WAS IN ADDITION TO THE E XPENDITURE INCURRED ON FREIGHT PAID TOTALING TO RS.23,02,756/-, AGAINST WHICH THE ASSESSEE HAD RECEIVED FREIGHT SUBSIDY OF RS.12,33,836/-. T HE LEARNED A.R. FOR THE ASSESSEE ALSO POINTED OUT THAT THE ASSESSEE AS PER SCHEME OF HIMAHAL PRADESH WAS ENTITLED TO RECEIVE 75% OF THE AMOUNT O N ACCOUNT OF THE EXPENDITURE INCURRED ON FREIGHT AS FREIGHT SUBSIDY. 10. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THOUGH THE APPEAL EFFECT HAD BEEN ALLOWED BY THE ASSESSING OFF ICER AGAINST WHICH THE PRESENT APPEAL IS FILED. THE MISCELLANEOUS AP PLICATION HAS BEEN MOVED AGAINST THE ORDER OF THE TRIBUNAL DATED 19.6. 2008 VIDE WHICH THE ASSESSEE WAS ALLOWED DEDUCTION UNDER SECTION 80IA/8 0IB OF THE ACT ON THE FREIGHT SUBSIDY RECEIVED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE IN THE PRESENT CASE WAS SET ASIDE BY THE TRIB UNAL VIDE ITS ORDER DATED 19.6.2008. THE ISSUE RAISED BEFORE THE TRIBU NAL WAS IN CONNECTION WITH THE DENIAL OF DEDUCTION UNDER SECTION 80IA/80I B OF THE ACT ON FREIGHT SUBSIDY WHICH WAS NOT PRESSED BY THE LEARNE D COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARING AND THE ONLY GRIEVANCE OF THE ASSESSEE BEFORE THE TRIBUNAL WAS IN RELATION TO THE COMPUTATION OF DISALLOWANCE AFTER CONSIDERING THE EXPENDITURE INCU RRED FOR EARNING THE FREIGHT SUBSIDY. IN LINE WITH THE SUBMISSIONS OF T HE ASSESSEE, THE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTE THE DED UCTION UNDER SECTION 80IA/80IB OF THE ACT AFTER EXCLUDING THE FREIGHT SU BSIDY CALCULATED AFTER SETTING OFF THE EXPENSES WHICH ARE DIRECTLY LINKED TO IT. IN THE FACTS OF THE PRESENT CASE WE FIND THAT THE TOTAL EXPENDITURE DEBITED BY THE ASSESSEE TO FREIGHT PAID ACCOUNT IS RS.23,02,756/- ON WHICH SUBSIDY OF RS.12,33,836/- HAD BEEN RECEIVED. THE ASSESSEE HAD FURNISHED AN EXPLANATION BEFORE THE ASSESSING OFFICER DURING THE COURSE OF APPEAL 5 EFFECT BEING GIVEN TO THE ORDER OF THE TRIBUNAL WHI CH IS PLACED AT PAGES 5 & 6 OF THE PAPER BOOK. FURTHER, THE ASSESSEE HAS D EBITED A SUM OF RS.19,01,324/- TO FREIGHT ACCOUNT IN THE PROFIT & L OSS ACCOUNT PLACED AT PAGES 2 & 3 OF THE PAPER BOOK AND THE WORKING IS AS UNDER : FREIGHT ACCOUNT (IN RS.) 1) OUTWARD FREIGHT PAID 23,02,756/- 2) INWARD FREIGHT PAID 8,32405/- LESS: FREIGHT SUBSIDY ACCRUED DURING YEAR. 12,33,836/- BALANCE AS PER P&L A/C 19,01,325/- 12. THE ASSESSEE HAS ALSO PLACED ON RECORD THE SCHE ME OF THE GOVERNMENT OF INDIA FOR GRANT OF SUBSIDY ON TRANSPO RT OF RAW MATERIAL AND FINISHED GOODS IN THE STATE OF HIMACHAL PRADESH . AS PER THE SCHEME, THE TRANSPORT SUBSIDY IS TO BE GIVEN ON TRANSPORT C OSTS BETWEEN THE LOCATION OF THE INDUSTRIAL UNIT IN THE STATE AND TH E NEAREST RAIL-HEAD. THE SAID TRANSPORT SUBSIDY WOULD COVER 75% OF THE EXPEN SES. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD RECEIVED TR ANSPORT SUBSIDY OF RS.12,33,836/- AS AGAINST EXPENDITURE ON FREIGHT PA ID RS.23,02,756/-. AFTER SETTING OFF OF THE FREIGHT SUBSIDY RECEIVED A GAINST THE EXPENDITURE INCURRED ON THE SAME, THE RESULTANT IS A LOSS AND A CCORDINGLY NO ADJUSTMENT IS REQUIRED TO BE MADE IN THE PROFITS OF BUSINESS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA/80IB OF THE ACT. IN A NY CASE, THE ASSESSEE IN THE FIRST ROUND OF APPEAL BEFORE THE TRIBUNAL HA D NOT PRESSED THE ISSUE OF ALLOWABILITY OF AFORESAID DEDUCTION UNDER SECTIO N 80IA/80IB OF THE ACT ON THE FREIGHT SUBSIDY RECEIVED AND HAD LIMITED THE GRIEVANCE AGAINST THE AMOUNT TO BE EXCLUDED FROM THE PROFITS O F BUSINESS. WE DIRECT 6 ACCORDINGLY. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF MAY, 2011. SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 31 ST MAY, 2011 RATI COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH