M/s. G-Tech Industris, Kathua V. The Income-tax Officer, Kathua

ITA 373/ASR/2011

• Counselvise Citation: 37320914 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: 2008-2009
• Appeal Filed On: 22-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: K R JAIN
• Section: 142(1); 80IB

Judgement Text

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. NO.375 (ASR)/2011 ASSESSMENT YEAR: 2008-09 PAN: AAEFJ6381K M/S JAY AMBAY AROMATICS VS. THE INCOME TAX OFFIC ER, SIDCO, INDUSTRIAL ESTATE, WARD-1(1), 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 APPEAL AGAINST THE IMPUGNED ORDER PASSED BY THE CIT(A), JAMMU DATED 26.04.2011 FOR THE ASSESSMENT YEAR 2008-09. THE GROUNDS RAISED BY THE ASSESSEE IN THE APPEAL ARE 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 RESTRICTING THE DEDUCTION CLAIMED UNDER SECTION 80IB OF THE INCOME TAX ACT BY A SUM O F RS.11,36,380.00 ON ACCOUNT OF DISALLOWANCE OF PRE- OPERATIVE 2 EXPENSES WRITTEN OFF MADE U/S 35D OF THE INCOME T AX ACT IN THE COMPUTATION OF INCOME TO WORK OUT THE ELIGIBLE PROF ITS. 1.1 THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A ) HAS ERRED IN TREATING THE DISALLOWANCE OF PRE-OPERATIVE EXPENSES WRITTEN OFF AS INCOME GENERATED FROM A SEPARATE AND INDEPENDENT SO URCE AND THUS WAS TOTALLY INCORRECT IN REDUCING THE DEDUCTION U/S 80IB OF THE INCOME TAX ACT. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF PRE-OPERATIVE EXPENS ES WRITTEN OFF TWICE FIRSTLY BY ADDING THE SAME TO THE INCOME T O WORK OUT THE ELIGIBLE PROFITS AND SECONDLY BY REDUCING THE DECI TION CLAIMED U/S 80IB OF THE INCOME TAX ACT WITHOUT APPRECIATING TH AT 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 GROUND NO. 1 & 1.2 ABOVE, THE COMMISSIONER OF INCOME TAX (A) HAS FAILED TO FOLLOW THE DECISION OF THE JURISDICTIONAL I.T.A.T. AMRITSAR BENCHE PASSED IN THE CASE OF M/S SUN PHARMACEUTICALS INDUSTRIES VS. ITO 1(3), JAMMU, DATED 11 TH JUNE 2010 BEARING I.T.A. NO. 184(ASR)/2009 WHEREIN IT HA S BEEN HELD THAT ANY ADDITION WOULD RESULT IN THE ENHANCEMENT OF ELI GIBLE PROFITS OF THE BUSINESS AND THUS THE UNIT WAS ENTITLED FOR DEDUCTI ON OF SUCH ENHANCED INCOME UNDER SECTION 80IB READ WITH SECTION 80A AND 80AB OF THE INCOME TAX ACT. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY THE ABOVE GROUNDS OF APPEAL AT OR BEFORE THE TIME OF HEARING. 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FILED ITS E-RETURN ON 26.09.2008 AND REVISED HIS RETURN ON 1 2.0.2009 DECLARING NIL INCOME AFTER CLAIMING DEDUCTION U/S 80IB OF THE IN COME-TAX ACT, 1961 (IN SHORT THE ACT) OF RS.15,76,20,249/-. THE ASSESSEE IS ENGAGED IN 3 MANUFACTURING OF AROMATIC OIL. THE CASE OF THE ASSE SSEE WAS TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 31.08.2009 AND DULY SERVED UPON THE ASS ESSEE ON 09.09.2009. THEREAFTER, NOTICE UNDER SECTION 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 ACCOUNTANT O F THE ASSESSEE-FIRM ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILE D DOCUMENTS AS WELL AS BOOKS OF ACCOUNTS ALONG WITH VOUCHERS, AS CALLED FO R. BUT THE ASSESSING OFFICER HAS NOT ALLOWED THE DEDUCTION CLAIMED BY TH E ASSESSEE ON ACCOUNT OF PRE-OPERATIVE EXPENSES WRITTEN OFF TO THE TUNE OF R S.11,36,380/- UNDER SECTION 80IB OF THE ACT 2. BEING AGGRIEVED BY THE ORDER OF THE AO, THE ASS ESSEE FILED AN APPEAL BEFORE LEARNED CIT(A), JAMMU, WHO VIDE IMPUGNED ORD ER DATED 26.04.2011, CONFIRMED THE ADDITION SO MADE. NOW, THE ASSESSEE I S IN 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 CLAIM OF THE ASSESSEE AS THE INCOME GENERATED FROM A SEP ARATE 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 4 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 ALSO FILED ITS WRITTEN SUBMISSION. HENCE, HE PRAYED THAT THE DISALLOWANCE OF DEDUCTION BY RS.11,36,380/- ON ACCOUNT OF PRE-OPERA TIVE EXPENSES WRITTEN OFF UNDER SECTION 80IB MAY BE DELETED BY ALLOWING T HE 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 WE 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 S AKE OF CONVENIENCE AS UNDER: 5 8. THERE ALSO IS PRE-OPERATIVE EXPENSES WRITTEN OF F TO THE TUNE OF RS.11,36,380/- WHICH ARE CLAIMED BY THE ASSESSEE TO BE ELIGIBLE FOR DEDUCTION U/S 80IB OF THE I.T. ACT, 1961 ON THE GRO UND THAT THESE ADJUSTMENTS WERE NECESSARY TO REACH AT PROFITS OF B USINESS. NO SPECIFIC SUBMISSIONS EXCEPT THIS ARE MADE IN SUPPORT. THE DE DUCTION U/S 80IB OF THE ACT IS ALLOWABLE AS PROFITS OF ELIGIBLE BUSINES S WHICH ARE DERIVED FROM SUCH UNDERTAKING. IN NO WAY THE PRE-OPERATIVE BUSIN ESS WHICH ARE WRITTEN BACK AND TREATED AS INCOME FOR THE TAX PURP OSES WERE CONNECTED TO THE PROFITS DERIVED FROM ELIGIBLE BUSINESS. WHEN THE BUSINESS HAS NOT STARTED, THE PRE-OPERATIVE EXPENSES CANNOT BE IN AN Y WAY BE REGARDED AS DERIVED FROM SUCH BUSINESS. IN VIEW OF THIS, I HOLD THAT DEDUCTION U/S 80IB OF THE ACT IS NOT ALLOWABLE ON THE AMOUNT OF RS.11, 36,380/-. 5.1. KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTAN CES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS PASS ED A WELL REASONED ORDER WHICH REQUIRES NO INTERFERENCE AND ACCORDINGLY WE U PHOLD THE SAME AND DISMISS THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED 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 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. JAY AMBAY AROMATICS, JAMMU 2.THE ITO WARD 1(1), JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, AMITSAR. 5. THE SR DR, I.T.A.T., 6 TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.