ACIT, UDAIPUR V. M/s. Secure Meters Ltd., UDAIPUR

ITA 348/JODH/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70357 (ITAT-JODHPUR)
• Duration Of Justice: 4 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-11-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 12-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 348JODH/2009 (A.Y. 2002-03) ACIT, VS. M/S. SECURE METERS LTD., CIRCLE-2, UDAIPUR. E-CLASS, PRATAP NAGAR INDUSTR IAL AREA, UDAIPUR. PAN NO. AACCS 8785 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : DR. DEEPAK SEHGAL- D.R. DATE OF HEARING : 13/11/2013. DATE OF PRONOUNCEMENT : 18/11/2013. O R D E R PER N.K.SAINI, A.M THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 24/03/2009 OF LD. CIT (A), UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) HAS ERRED IN:- 1. PROVIDING RELIEF REGARDING EXCLUSION OF OTHER INCOM E OF RS. 4,70,75,654/- (RS. 3,20,85,128/- FOR BAROTIWALA & R S. 1,49,90,526/- 2 FOR UDAIPUR UNIT) AND NOT ALLOWING DEDUCTION U/S 80 IA THEREON AND NO CONSIDERING TRADING PROFIT OF RS. 5,81,919/- OF BAR OTIWALA UNIT AS PROFIT DERIVED BY NEW INDUSTRIAL UNDERTAKING. 2. PROVIDING RELIEF REGARDING EXCLUSION OF DEDUCTION U /S 80IA OF UDAIPUR UNIT FROM THE PROFIT OF THE BUSINESS FOR COMPUTING DEDUCTION U/S 80HHC. 3. PROVIDING RELIEF REGARDING NOT ALLOWING DEDUCTIO N U/S 80HHC ON EXPORT OF TRADING GOODS AND EXCLUSION OF 90% OF THE INTEREST RECEIPT. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 2. GROUND NO.1 RELATES TO THE DEDUCTION UNDER SECTION 80IA OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) IN RESPECT OF OTHER INCOME OF BAROTIWALA AND UDAIPUR UNIT AND TRA DING PROFIT OF BAROTIWALA UNIT. 3. AS REGARDS TO THIS ISSUE, LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED VIDE ORDER DATED 28/08/2012 OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CAS E IN I.T.A.NO. 542/JU/2007 AND 349/JU/2009 FOR THE A.YS. 2004-05 & 2005-06 RESPECTIVELY. THE AFORESAID CONTENTION OF THE LEAR NED COUNSEL FOR THE ASSESSEE WAS NOT CONTROVERTED BY THE LEARNED D.R. 4. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PAR TIES AND THE MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING 3 SIMILAR FACTS IN ASSESSEES OWN CASE HAS ALREADY BE EN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARA 3.8 OF THE AFORESAID REFERRE D TO ORDER DATED 28/08/2012, WHICH READS AS UNDER:- 3.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND CONSI DERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND P ERUSING THE MATERIALS AVAILABLE ON RECORD, WE FOUND THAT THE LD . CIT(A) HAS GIVEN THE FINDING OF FACTS. THE LD. CIT(A) HAS CONSIDERE D EACH ITEMS SEPARATELY WHERE HE FOUND THAT INCOME IS FROM OTHER SOURCES. HE HAS TREATED THE INCOME FROM OTHER SOURCES LIKE LEASE AN D INTEREST INCOME. THE LD. CIT(A) HAS FOLLOWED THE DECISION O F THE TRIBUNAL FOR THE EARLIER YEARS TREATING THE INTEREST INCOME AS I NCOME FROM OTHER SOURCES. HOWEVER, HE FOUND THAT IN EARLIER YEARS, THERE WAS NO EXPENDITURE ON ACCOUNT OF INTEREST. THEREFORE, THE AO WAS DIRECTED TO ALLOW NETTING OF INTEREST. THIS IS A SETTLED PO SITION IN LAW NOW THAT IF THERE IS AN INEXPLICABLE LINK BETWEEN THE INTERE ST INCOME AND EXPENDITURE THEN NETTING OF BOTH HAS TO BE ALLOWED. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DIRECTING THE AO TO ALLOW THE NETTING IF THERE IS A NEXUS BETWEEN THE I NTEREST EARNING AND EXPENDITURE. AS REGARDS THE OTHER ITEMS I.E. SCRAP SALES, LIQU IDATED DAMAGES, SUNDRY CREDITORS AND PACKING AND FORWARDING, THE LD . CIT(A) HAS GIVEN REASONABLE REASONING THAT THEY ARE PART OF THE SAME BUSINESS. THEREFORE, RECEIPT ON THIS ACCOUNTS CANNOT BE TREAT ED AS INCOME FROM OTHER SOURCES. THE FINDINGS OF THE LD. CIT(A) IS R EPRODUCED SOMEWHERE ABOVE IN THIS ORDER. IN RESPECT OF LEASE RENT, THE LD. CIT(A) HAS TREATED IT AS INCOME FROM OTHER SOURCES. HOWEVER, THE EXPE NDITURE ON ACCOUNT OF LEASE RENT WAS TO BE SET OFF I.E. IN OUR CONSIDERED VIEW IS CORRECT. AS SATED ABOVE, THE LD. CIT(A) HAS GIVEN REASONABLE FINDINGS WHICH HAS BEEN REPRODUCED ALSO AND THEREFORE, WE DO NOT WANT TO GO IN DETAIL FURTHER AND ACCORDINGLY THE FINDINGS OF T HE LD. CIT(A) ON THIS ISSUE IS ALSO CONFIRMED. 5. IT IS NOTICED THAT A SIMILAR ISSUE WAS RAISED BY T HE DEPARTMENT IN THE EARLIER YEAR I.E. A.Y. 2004-05. WE, THEREFORE, CON SIDERING THE SIMILARITY 4 OF THE FACTS FOR THE YEAR UNDER CONSIDERATION VIS- -VIS FOR THE A.Y. 2004- 05, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPA RTMENT. 6 . GROUND NO.2 OF THIS APPEAL RELATES TO THE DEDUCT ION UNDER SECTION 80IA OF THE ACT OF UDAIPUR UNIT FROM THE PROFIT OF THE BUSINESS FOR COMPUTING DEDUCTION UNDER SECTION 80HHC. 7. AS REGARDS TO THIS ISSUE, IT WAS COMMON CONTENTION OF BOTH THE PARTIES THAT THIS ISSUE IS COVERED BY THE DECISION OF THIS BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 28 /08/2012 IN I.T.A.NO. 542/JU/2007 & 349/JU/2009 FOR THE A.YS. 2004-05 & 2 005-06 (SUPRA). IT IS NOTICED THAT A SIMILAR ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE VIDE AFORESAID REFERRED TO ORDER, WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA NOS. 5.1 TO 5.6, FOR THE COST OF REPETITION, THESE ARE NOT REPRODUCED HEREIN AND THE CONCLUSION HAS BEEN GIVEN IN PARA 5.6, WHICH READS AS UNDER:- AFTER CONSIDERING THE SUBMISSIONS AND PERUSING TH E MATERIAL AVAILABLE ON RECORD, WE FOUND THAT AGAIN THE LD. CI T(A) WAS CORRECT IN GIVING THE ABOVE FINDINGS. IN FACT, THIS ISSUE HAS ALREADY BEEN EXAMINED BY US WHILE DISPOSING OFF THE GROUND OF TH E DEPARTMENT IN RESPECT OF NETTING OF INTERESTS AND DEDUCTION ON AC COUNT OF OTHER INCOME. THESE ARE THE SIMILAR INCOME AND SIMILAR F INDINGS HAS BEEN GIVEN BY THE LD. CIT(A). ITEM WISE FINDING HAS BEEN GIVEN BY THE LD CIT(A). THEREFORE, WE DO NOT WANT TO GO INTO DETAI L FURTHER AS SIMILAR FINDINGS HAS BEEN CONFIRMED BY US WHILE DISPOSING O FF THE GROUND 5 NO.2 OF THE DEPARTMENT. THUS THIS GROUND OF THE DE PARTMENT ALSO FAILS. 8. SO, BY RESPECTFULLY FOLLOWING THE AFORESAID REFERR ED TO ORDER DATED 28/08/2012 IN I.T.A.NO. 542/JU/2007 FOR THE A.Y. 20 04-05 IN ASSESSEES OWN CASE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 9. THE ANOTHER ISSUE VIDE GROUND NO.3 OF THIS DEPARTME NTAL APPEAL RELATING TO THE TRADING PROFIT OF BAROTIWALA UNIT H AS ALSO BEEN DECIDED IN THE AFORESAID REFERRED TO ORDER DATED 28/08/2012 VI DE PARA NOS. 4.1 TO 4.5 AND THE CONCLUSION HAS BEEN GIVEN IN PARA 4.5, WHICH READS AS UNDER:- AFTER CONSIDERING THE ORDERS OF THE AO AND THE LD . CIT(A) ON WHICH RELIANCE HAS BEEN PLACED BY THE RESPECTIVE PARTIES, WE FOUND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A). IT IS SE EN THAT IN EARLIER YEAR, THE FACTS WERE DIFFERENT FOR THE REASON THAT FROM T HE ASSESSMENT YEAR 1994-95 TO 1998-99, THE ASSESSEE USED TO PURCH ASED THE METER READING INSTRUMENT AND SOLD IT AS IT IS TO THE CUST OMERS. THERE WAS NO RELATION TO THE MANUFACTURING ACTIVITY OF THE IN DUSTRIAL UNDERTAKING AND NO DIRECT NEXUS OF THIS INCOME WITH THE INCOME OF THE INDUSTRIAL UNDERTAKING. HOWEVER, IN THE YEAR U NDER CONSIDERATION, IT IS SEEN THAT THE ASSESSEE RECEIVE D THE COMBINED ORDER FOR SUPPLY OF MANUFACTURED GOODS AND BOUGHT O UT COMPONENTS WHICH IS NECESSARY TO FULFILL THE ORDER OF THE CUST OMER. THE ASSESSEE IS MANUFACTURING THE METER AND THE SAME IS PACKED I N THE BOXES AND THUS THE SALE OF BOXES CANNOT BE TREATED A SEPARATE TRADING RECEIPT THOUGH THE BOXES WERE PURCHASED FROM THE MARKET. TH E ASSESSEE HAS SOLD ONE COMPONENT I.E. METER WHICH IS KEPT UND ER THE BOX. THEREFORE, SALE OF BOX CANNOT BE TREATED AS A SEPAR ATE SALE. THE TOTAL TURNOVER OF THE BATED UNIT IS RS. 64 CRORES A ND BAROTIWALA UNIT IS RS. 59 CRORES. THE QUANTUM OF THESE COMPONENTS WHICH WERE 6 PURCHASED FROM THE MARKET TO SUPPLY THE MATERIAL CO MPRISES OF ONLY 1.31% AND 4.47%. IT IS FURTHER SEEN THAT THERE IS A COMPULSION ON THE PART OF THE ASSESSEE TO SUPPLY THE ENERGY METER ALO NGWITH OTHER COMPONENTS TO THE CUSTOMERS OTHERWISE THEY WILL NOT BE ACCEPTABLE TO THE PARTIES AND THIS FACT HAS BEEN CONSIDERED BY THE LD. CIT(A) IN DETAIL IN HIS ORDER AND ONLY THEN HAS ALLOWED THE C LAIM OF THE ASSESSEE. THE LD. CIT(A) HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF DCIT VS. CHAMANLAL & SONS 93 TTJ 132 (A MRITSAR) AND THEREAFTER HAS ALLOWED THE CLAIM OF THE ASSESSEE. THE FINDINGS OF THE LD. CIT(A) IN OUR CONSIDERED VIEW ARE REASONABLE FI NDINGS WHICH REMAINED UNCONTROVERTED ALSO. THEREFORE, WE CONFIR M THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ALSO. 10. SO BY RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER DATED 28/08/2012 IN I.T.A.NO. 542/JU/2007 FOR THE A.Y. 20 04-05 IN ASSESSEES OWN CASE, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE ALSO., 11. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 18 TH NOVEMBER, 2013). (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH NOVEMBER , 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.