ALLANA INVESTMENTS & TRADING CO. P..LTD, MUMBAI V. ASST CIT 1(1), MUMBAI

ITA 3302/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8185 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 08-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Section: 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANJAY GARG,J.M. ./ITA NO. 3302/MUM/2014 , / ASSESSMENT YEAR: 2004-05 M/S. ALLANA INVESTMENTS & TRADING CO. LTD. ALLANA HOUSE, 4, J.A. ALLANA MARG COLABA, MUMBAI-400 001. PAN: AAACA 5915 F VS. ACIT-1(1) INCOME TAX OFFICE, 5TH FLOOR, ROOM NO.533/579 AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI RAJESH KUMAR YADAV ASSESSEE BY: SHRI APURVA SHAH / DATE OF HEARING: 18.01.2017 / DATE OF PRONOUNCEMENT: 15.02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , -PER RAJENDRA,AM: CHALLENGING THE ORDER,DATED 31/03/2014,OF THE CIT ( A)-1,MUMBAI THE ASSESSEE AND HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF MANUFACTURING AND EXPORT OF FROZEN FOOD PRODUCTS,FILED ITS RETURN OF INCOME ON 31/10/2 005,DECLARING TOTAL TAXABLE INCOME AT RS.NIL UNDER THE NORMAL PROVISIONS OF THE ACT AND BOOK PRO FIT OF RS. 1.05 CRORES AS PER THE COMPUTATION MADE U/S.115 JB OF THE ACT.THE ASSESSING OFFICER (A O)COMPLETED THE ASSESSMENT, U/S.143(3),ON 26/12/2006,DETERMINING THE INCOME OF THE ASSESSEE A T RS. 50,00,890/-UNDER NORMAL PROVISIONS AND AT RS.1.41 CRORES U/S.115 JB OF THE ACT. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT COMPUTATION OF PROFITS AS PER THE PROVISIONS OF SECTION 115 JB OF THE ACT.AGGRIEVED BY THE ORDER,DTD.26.12.2006 ,OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).VIDE PARA GRAPH NO.5.2,THE FAA HAD DIRECTED THE AO TO PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSEE AND TO WORK OUT THE DISALLOWANCE U/S.14A OF THE ACT IN RESPECT OF EXPENSES RELATED TO EXEMPT IN COME IN ACCORDANCE WITH THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF GODREJ BOYCE MANUF ACTURING COMPANY LTD.IN COMPLIANCE TO THE ABOVE-MENTIONED ORDER OF THE FAA(DATED 18/03/20 11),THE AO COMPUTED THE TOTAL INCOME AS UNDER: 3302/M/14(04-05) ALLANA INVESTMENTS&TRDG.CO.LTD. 2 3. AGGRIEVED BY THE ORDER OF THE AO GIVING EFFECT TO T HE ORDER OF THE FAA,,THE ASSESSEE AGAIN FILED AN APPEAL BEFORE THE FAA AND CONTENDED THAT I T HAD FILED A RETURN OF INCOME WHEREIN THE TAXABLE INCOME WAS SET OFF BY UNABSORBED LOSSES,THA T TAX WAS COMPUTED U/S.115 JB AFTER REDUCING THE DEDUCTION THAT WOULD BE ALLOWABLE U/S.80HHC OF THE ACT WHEN COMPUTED BASED ON BOOK PROFIT,THAT DURING THE ASSESSMENT PROCEEDINGS THE A O HAD HELD THAT ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S.80 HHC, THAT THE THEN FAA HAD HELD TH AT IT WAS ENTITLED TO THE DEDUCTION,THAT WHILE GIVING EFFECT TO THE ORDER THE AO DID NOT ALLOW DED UCTION FOR PROFITS FROM EXPORTS U/S.80 HHC NOR DID HE GIVE ANY REASON FOR DENYING THE ASSESSEE THE SAID DEDUCTION WHILE COMPUTING BOOK PROFITS,THAT WHILE CALCULATING TAX U/S. 115 JB ON B OOK PROFITS AMOUNT ELIGIBLE FOR DEDUCTION U/S. 80 HHC HAD TO BE REDUCED, THAT THE COMPUTATION SHOU LD BE BASED ON BOOK PROFITS, THAT THE AO SHOULD BE DIRECTED TO RE-COMPUTE BOOK PROFIT AFTER REDUCING EXPORT PROFITS THEREFROM. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ORDER GIVING EFFECT TO THE ORDER OF THE THEN FAA,THE FAA HELD THAT THE AO HAD FOLLOWED THE ORDER CORRECTLY AND IN AN APPROPRIATE MANNER,THAT IN THE ORIGINAL ASSESSMENT THE AO HAD C OMPUTED THE BOOK PROFIT AT RS. 1.14 CRORES AND TAX OF RS. 10.89 LAKHS FOR SUCH PROFIT,THAT IT HAD NOT CONTESTED THE BOOK PROFIT U/S. 115 JB, THAT THERE WAS NO CAUSE OF ACTION FOR YOU TO REVIEW THE COMPETITION OF BOOK PROFIT, THAT ISSUE OF COMPUTATION OF BOOK PROFIT WAS NOT ORIGINALLY DECID ED BY THE THEN FAA IN THE INITIAL PROCEEDINGS, THAT SAME COULD NOT BE RAISED BEFORE HIM. 4. DURING THE COURSE OF HEARING BEFORE US,THE AUTHORIS ED REPRESENTATIVE(AR)STATED THAT THE ASSESSEE HAD AGITATED THE ISSUE OF DEDUCTION U/S.80 HHC DURING THE ORIGINAL APPELLATE PROCEED - INGS,THAT THE FAA HAD ALLOWED THE APPEAL OF THE ASS ESSEE,THAT WHILE GIVING EFFECT TO THE SAID ORDER THE AO HAD NOT FOLLOWED THE DIRECTIONS OF THE FAA.H E REFERRED TO THE COMPETITION OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION WITH THE ORI GINAL RETURN OF INCOME(PAGE 2 AND THREE OF THE PAPER BOOK) AND THE ORDER OF THE FAA DATED 18/03/20 11.HE RELIED UPON THE CASE OF AL-KABEER EXPORTS LTD.(SPECIAL LEAVE PETITION NUMBER 32274 OF 2010),DELIVERED BY THE HONORABLE SUPREME COURT AND SYNCOME FORMULATIONS(I)LTD. (106 ITD 193) .THE DEPARTMENTAL REPRESENTATIVE(DR) RELIED UPON THE ORDER OF THE FAA. 3302/M/14(04-05) ALLANA INVESTMENTS&TRDG.CO.LTD. 3 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ENTIRE ISSUE HAS ARISEN WITH REGARD TO THE ORDER GIVING EF FECT TO THE ORDER OF THE FAA DATED 18/03/ 2011.THE ASSESSEE HAD RAISED TWO EFFECTIVE GROUNDS AGAINST THE ORDER OF THE AO DATED 26/12/2006.ONE OF THE GROUNDS WAS ABOUT DEDUCTION U /S.80HHC OF THE ACT.AFTER ANALYSING THE ISSUE AT LENGTH (PAGES 1-26 OF THE ORDER),THE THEN FAA HELD AS UNDER: 4.27. SINCE THE APPELLANT HAS COMPLIED ALL THE RELE VANT PROVISIONS OF THE ACT, FOR MAKING CLAIM OF DEDUCTION U/S. 80 HHC (1A) OF THE I.T.ACT R.W.SECTI ON (3A) (4A) OF SECTION 80 HHC OF THE ACT, IT SHOULD BE ALLOWED DEDUCTION U/S. 80 HHC OF THE ACT. THE AO IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION TO THE APPELLANT AS CLAIMED BY THE APPELL ANT. THUS, APPELLANTS THESE GROUNDS OF APPEAL OR ALLOWED. THE ABOVE ORDER OF THE FAA LEAVES NO DOUBT THAT ISS UE OF DEDUCTION U/S. 80 HHC OF THE ACT WAS DECIDED IN FAVOUR OF THE ASSESSEE AND WHILE GIVING EFFECT TO THE ORDER THE AO WAS BOUND TO GIVE THE RELIEF TO IT.IN THE COMPUTATION OF INCOME,FILED ALONG WITH THE RETURN THE ASSESSEE HAD COMPUTED THE BOOK PROFIT AS PER SECTION 115 JB AS U NDER: COMPUTATION OF BOOK PROFIT AS PER SECTION 115JB NET PROFIT/(LOSS) AS PER PROFIT & LOSS A/C. RS. 7,794,215 ADD: PROVISION FOR TAXATION RS. 7,165,946 RS.14,960,161 LESS: DEDUCTION U/S. 80HHC RS. 3,651,601 LESS: DIVIDEND INCOME U/S.10(34) RS. 784,5 24 BOOK PROFIT U/S.115JB RS.10,524,036 IN THE COMPUTATION THE ASSESSEE HAD DEDUCTED TWO IT EMS I.E. DEDUCTION U/S.80 HHC OF THE ACT AND DIVIDEND INCOME U/S.10 (34).IT IS A FACT THAT WHILE GIVING EFFECT TO THE ORDER OF THE FAA,DATED 18/03/2011,THE AO HAD NOT CONSIDERED THE RELEVANT F ACTS AND THE MATERIAL.CONSIDERING THESE FACTS WE ARE OF THE OPINION THAT THE FAA WAS NOT JUSTIFIE D IN DISMISSING THE APPEAL OF THE ASSESSEE. SO, REVERSING HIS ORDER,WE DIRECT THE AO TO COMPUTE THE BOOK PROFITS AFTER CONSIDERING THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN A ND THE JUDGMENTS RELIED UPON BY THE ASSESSEE BEFORE US.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH FEBRUARY, 2017. 15 , 2017 SD/- SD/- /- ( /SANJAY GARG) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 15.02.2017. JV.SR.PS. 3302/M/14(04-05) ALLANA INVESTMENTS&TRDG.CO.LTD. 4 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.