M/s. Shiva Mint Industries, Jammu V. The Income-tax Officer, Jalandhar

ITA 372/ASR/2011

• Counselvise Citation: 37220914 RSA 2011
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 22-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: K R JAIN
• Keywords: Speculation loss
• Section: 43B; 142(1); 80IB; 43(5); 2

Judgement Text

ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NOS.372 & 121(ASR)/2011 & 2012 ASSESSMENT YEAR: 2007-08 & 2009-10 PAN: ABBFS4825M M/S SHIVA MINT INDUSTRIES VS. THE INCOME TAX OFF ICER, 99-B, BIRPUR INDUSTRIAL ESTATE, WARD-1(3), JAMMU , BARI BRAHMANA, JAMMU(J&K) JAMMU(J&K). (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K.R. JAIN, ADVOCATE RESPONDENT BY: SH. AMRIK CHAND, DR DATE OF HEARING: 18.12.2013 DATE OF PRONOUNCEMENT: 31/12/2013 ORDER PER BENCH THE ASSESSEE HAS FILED THE PRESENT TWO APPEALS AGA INST DIFFERENT IMPUGNED ORDERS OF CIT(A), JAMMU DATED 09.05.2011 & 29.02.2012 FOR THE ASSESSMENT YEARS 2007-08 & 2009-10. THE GROUNDS RAI SED IN BOTH THE APPEALS ARE IDENTICAL EXCEPT VARIATION IN AMOUNTS. THE GROUNDS TAKEN IN ITA NO.372(ASR)/2011 FOR THE ASSESSMENT YEAR 2007-08 AR E REPRODUCED AS UNDER: 1. THAT ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX(A) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REDUCING THE DEDUCTION CLAIMED ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 2 UNDER SECTION 80IB OF THE INCOME TAX ACT BY THE AMO UNT OF SPECULATIVE LOSSES WHICH WERE EARLIER ADDED BACK IN THE COMPUTATION OF INCOME TO WORK OUT THE ELIGIBLE PROFITS:- S.NO. NAME OF HEAD AMOUNT(RS.) I) SPECULATIVE LOSS IN COMMODITIES U/S 43(5) OF THE INCOME TAX ACT 2,337,393.00 II) MCX COMMODITY EXCHANGE EXPENSES 45,307.00 TOTAL 23,82,7000.00 1.1 THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A ) HAS ERRED IN TREATING THE DISALLOWANCE OF SPECULATIVE LOSSES AS INCOME GENERATED FROM A SEPARATE AND INDEPENDENT SOURCE AND THUS WAS TOTALLY INCORRECT IN REDUCING THE DEDUCTION U/S 80IB OF THE INCOME TA X ACT. 1.2 THAT ON THE FACT AND UNDER THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (A) FAILED T O APPRECIATED THAT THE SPECULATIVE LOSS OF RS. 23,82,700/- WAS AD DED BACK IN THE COMPUTATION OF INCOME TO WORK OUT THE ELIGIBLE PROF ITS OF THE INDUSTRIAL UNIT AND TO SHOW THE SPECULATIVE LOSSES SEPARATELY. THUS, THE CIT(A) ERRED IN REDUCING THE DEDUCTION CLAIMED U/S 80IB OF THE INCOME TAX ACT WITHOUT ANY BASIS WHATSOEVER EVEN WH EN THE ASSESSEE WAS ENTITLED TO A DEDUCTION UNDER SECTION 80IB BEIN G THE LOWER OF THE ELIGIBLE PROFITS AND THE GROSS TOTAL INCOME AS PER THE PROVISIONS OF SECTION 80A AND 80AB OF THE INCOME TAX ACT. 1.3 WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE CO MMISSIONER OF INCOME TAX (A) HAS FAILED TO FOLLOW THE DECISION OF THE JU RISDICTIONAL I.T.A.T. AMRITSAR BENCHES PASSED IN THE CASE OF M/S SUN PHAR MACEUTICALS INDUSTRIES VS. ITO 1(3), JAMMU, DATED 11 TH JUNE 2010 BEARING I.T.A. NO. 184(ASR)/2009 WHEREIN IT HAS BEEN HELD THAT ANY ADDITION WOULD RESULT IN THE ENHANCEMENT OF ELIGIBLE PROFITS OF TH E BUSINESS AND THUS THE UNIT WAS ENTITLED FOR DEDUCTION OF SUCH ENHANCE D INCOME UNDER SECTION 80IB READ WITH SECTION 80A AND 80AB OF THE INCOME TAX ACT. HENCE IT IS PRAYED THAT THE DISALLOWANCE OF DEDUCTI ON BY RS. 23,82,700/- UNDER SECTION 80IB IS LIABLE TO BE DELE TED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 3 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FILED ITS E-RETURN ON 30.10.2007 DECLARING NIL INCOME AFTE R CLAIMING DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT ) OF RS. 22,33,15,826/-. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF MENTHOL PRODUCTS. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND NOTICE U NDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 23.09.2009 AND DU LY SERVED UPON THE ASSESSEE ON 24.09.2009. THEREAFTER, NOTICE UNDER SE CTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE IN RESPONSE TO THE WHICH, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE AND THE A CCOUNTANT OF THE ASSESSEE- FIRM ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED DOCUMENTS AS WELL AS BOOKS OF ACCOUNTS ALONG WITH VOUCHERS, AS CALLED FOR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED EXCI SE DUTY REFUND OF RS. 25,94,01,981/- AND HAS CLAIMED DEDUCTION UNDER SECT ION 80IB OF THE ACT OF RS. 22,33,15,826/- ON THE INCOME CORRESPONDING TO T HE RECEIPT OF THE SAID REFUND. BUT THE ASSESSING OFFICER HAS NOT ACCEPTED THE CLAIM OF THE ASSESSEE AND HELD THAT THE RECEIPTS ON ACCOUNT OF EXCISE DUT Y REFUND GRANTED IN VIEW OF THE GOVERNMENT NOTIFICATION, WAS NOT ELIGIBLE TO BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S 80IB OF THE ACT AND PASSED THE ASSESSMENT ORDER DATED 30 TH DECEMBER, 2009. ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 4 2. BEING AGGRIEVED WITH THE ASSESSMENT ORDER, THE A SSESSEE FILED AN APPEAL BEFORE LEARNED CIT(A), JAMMU, WHO VIDE IMPUG NED ORDER DATED 09.05.2011, PARTLY ALLOWED THE APPEAL OF THE ASSESS EE. NOW, BEING AGGRIEVED WITH THE IMPUGNED ORDER, THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE THIS BENCH. 3. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE, SH.K.R.JAIN, ADVOCATE SUBMITTED THAT LEARNED CIT(A) HAS WRONGLY DISALLOWED THE SPECULATIVE LOSSES AS INCOME GENERATED FROM A SEPAR ATE AND INDEPENDENT SOURCE. HE FURTHER SUBMITTED THAT CIT(A) ERRED IN R EDUCING THE DEDUCTION CLAIMED U/S 80IB OF THE INCOME TAX ACT WITHOUT ANY BASIS WHATSOEVER EVEN WHEN THE ASSESSEE WAS ENTITLED TO A DEDUCTION UNDER SECTION 80IB BEING THE LOWER OF THE ELIGIBLE PROFITS AND THE GROSS TOTA L INCOME AS PER THE PROVISIONS OF SECTION 80A AND 80AB OF THE INCOME TA X ACT. LEARNED COUNSEL FOR THE ASSESSEE ALSO STATED THAT LEARNED C IT(A) HAS FAILED TO FOLLOW THE DECISION OF THE I.T.A.T. AMRITSAR BENCH PASSED IN THE CASE OF M/S SUN PHARMACEUTICALS INDUSTRIES VS. ITO 1(3), JAMMU, DAT ED 11 TH JUNE 2010 BEARING I.T.A. NO. 184(ASR)/2009 WHEREIN IT HAS BEE N HELD THAT ANY ADDITION WOULD RESULT IN THE ENHANCEMENT OF ELIGIBLE PROFITS OF THE BUSINESS AND THUS THE UNIT WAS ENTITLED FOR DEDUCTION OF SUCH ENHANCE D INCOME UNDER SECTION 80IB READ WITH SECTION 80A AND 80AB OF THE INCOME T AX ACT. ASSESSEE HAS ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 5 ALSO FILED ITS WRITTEN SUBMISSION. HENCE, HE PRAYED THAT THE DISALLOWANCE OF DEDUCTION BY RS. 23,82,700/- UNDER SECTION 80IB MAY BE DELETED BY ALLOWING THE PRESENT APPEAL. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH USE, ESPECIALLY THE ORDERS PASSED B Y THE REVENUE AUTHORITIES AND WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND W E ARE OF THE VIEW THAT LEARNED FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER WHICH REQUIRES NO INTERFERENCE. THE RELEVANT PART OF THE FINDINGS OF THE LD. CIT(A) IS REPRODUCED FOR THE SAKE OF CONVENIENCE AS UNDER : 5. I HAVE CAREFULLY CONSIDERED THE CONTENTION MADE AND FIND THAT THE ASSESSEE IS TO SUCCEED IN SECOND ALTERNATIVE AR GUMENT THAT EVEN IF THE DISALLOWANCXE WAS TO BE MADE YET IT QUALIFIED F OR DEDUCTION U/S 80IB OF THE ACT, IN VIEW OF THE DECISION OF THE JUR ISDICTIONAL BENCH OF HONBLE IAT, AMRITSAR ON DEDUCTION U/S 80IB OF I.T. ACT ON SUCH DISALLOWANCES IN CASE OF M/S. SUN PHARMACEUTICALS I TA NO.184(ASR)/209 FOR THE ASSESSMENT YEAR 2005-06 PAS SED ON 11.06.2010 AS SUBMITTED BY THE A/R IN HIS WRITTEN S UBMISSIONS WHICH DEALS WITH THE ISSUE AS UNDER: 38. AS REGARDS TO THE ADDITIONAL GROUND NOS.1, 2 A ND 3 CLAIMING CONSEQUENTIAL THE HIGHER DEDUCTION UNDER S ECTION 80IB ON ACCOUNT OF DISALLOWANCE OF REMUNERATION UND ER SECTION 40(B) AMOUNTING TO RS.33,20,15,856/-, DISAL LOWANCE UNDER SECTION 43B AMOUNTING TO RS.18,46,427/- AND DISALLOWANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.4,80,301/- FOR CONTRIBUTION OF DEDUCTION UNDER S ECTION 80IB. ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 6 THE LEARNED D.R. RELIED UPON THE ORDERS OF THE LOWE R AUTHORITIES. 39. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE PA RTIES AND CAREFULLY EXAMINED THE RECORDS. WE FIND THAT S ECTION 80AB STATES IN CLEAR TERMS AS UNDER:- SECTION 80AB. WHERE ANY DEDUCTION IS REQUIRED TO BE MADE OR ALLOW ED UNDER ANY SECTION INCLUDED IN THIS CHAPTER UNDER THE HEAD ING C.- DEDUCTIONS IN RESPECT OF CERTAIN INCOMES IN RESPEC T OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION WHIC H IS INCLUDED IN THE GROSS TOTAL INCOME OF THE ASSESSEE, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER THAT SECTI ON , THE AMOUNT OF INCOME OF THAT NATURE AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT (BEFORE MAKING ANY DEDUCTION UNDER THIS CHAPTER) SHALL ALONE BE DEEMED TO BE THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSEE AND WHICH IS INCLUDED IN HIS GROSS TOTAL I NCOME. 40. UNDER THE CIRCUMSTANCES TO THE EXTENT DISALLOWA NCE AND/OR THE ADDITIONS ARE MADE, WHICH ARE SUBJECT MAT TER OF ADDITIONAL GROUND, ORIGINAL PROFIT TO THE APPELLANT WOULD STAND ENHANCED OR EVEN ON THIS PROFIT WOULD GET DEDUCTION UNDER SECTION 80IB. ACCORDINGLY, THE ADDITIONS AMOUNTS (RS.32,20,15,856/-, RS.18,46,427/- AND RS.4,80,301/ -) ARE INCLUDED IN THE GROSS TOTAL INCOME, CONSEQUENTLY DE DUCTION UNDER SECTION 80IB IS ALLOWABLE ON SUCH HIGHER AMOU NT. HENCE, THESE ADDITIONAL GROUNDS OF APPEALS ARE ALLO WED SUBJECT TO THE PROVISIONS OF SECTION 80A(2) READ WITH SECTI ON 80AB AND 80B(5) OF THE I.T. ACT. 5A. RESPECTFULLY FOLLOWING THE DECISION OF JURISDIC TIONAL HONBLE ITAT, AMRITSAR, THESE AMOUNTS MENTIONED AT S.NO. (I ) TO (IV) IN THE GROUND NO.2 IS TO BE CONSIDERED FOR ALLOWING DEDUCT ION U/S 80IB. OTHER ITEMS AT S.NO.(V) AND (VI) DO NOT EVEN REMOTE LY RELATED TO THE INCOME DERIVED FROM ELIGIBLE BUSINESS HENCE CANNOT BE CONSIDERED FOR ITA NOS. 372 (ASR)/2011 & ITA NO. 121(ASR)/2012 7 ALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT. TO THIS EXTENT ONLY IN RESPECT OF ITEMS NO.(V) AND (VI) OF GROUND NO.2, TH E ACTION OF THE A.O. IS CONFIRMED. 5.1. IN VIEW OF THE ABOVE DISCUSSIONS, WE ARE OF TH E CONSIDERED VIEW THAT THE LD. CIT(A) HAS PASSED A DETAILED AND WELL REASO NED ORDER WHICH REQUIRES NO INTERFERENCE AND ACCORDINGLY WE UPHOLD THE SAME AND DISMISS BOTH THE APPEALS OF THE ASSESSEE. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DECEMBER, 2013 SD/- SD/- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31ST DECEMBER, 2013 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. SHIVA MINT INDUSTRIES, JAMMU 2. THE ITO WARD 1(3), JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, AMITSAR. 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.