M/s. Fine Aromatics, Jammu V. The Income-tax Officer, Jammu

ITA 374/ASR/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68292 (ITAT-AMRITSAR)
• 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: 43B; 142(1); 80IB; 2

Judgement Text

ITA NO.374(ASR)/2011 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. NO.374 (ASR)/2011 ASSESSMENT YEAR: 2008-09 PAN: AABFF4186D M/S FINE AROMATICS VS. THE INCOME TAX OFFICER, 47-B, BIRPUR 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 09.05.2011 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 REDUCING THE DEDUCTION CLAIMED ITA NO.374(ASR)/2011 2 UNDER SECTION 80IB OF THE INCOME TAX ACT BY THE FOL LOWING DISALLOWANCES MADE SIN THE COMPUTATION OF INCOME TO WORK OUT THE ELIGIBLE PROFITS:- S.NO. NAME OF HEAD AMOUNT(RS.) I) INTEREST ON TDS U/S 40 168.00 II) PROVISION FOR FBT U/S 40 11,000.00 III) EXCISE DUTY PAID WRITTEN OFF 1,00,222.00 IV) LEASE PAID (FACTORY PLOT 53,362.00 TOTALRS. 1,64,752.00 1.1 THAT THE LEARNED COMMISSIONER OF INCOME-TAX (A ) HAS ERRED IN TREATING THE DISALLOWANCE OF EXPENSES AS INCOME GEN ERATED FROM A SEPARATE AND INDEPENDENT SOURCE AND THUS WAS TOTALL Y INCORRECT IN REDUCING THE DEDUCTION U/S 80IB OF THE INCOME TAX A CT. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME-TAX ( A)HAS ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES TWICE FIR STLY BY ADDING THE SAME TO THE INCOME TO WORK OUT THE ELIGIBLE PROFIT S AND SECONDLY BY REDUCING THE DECITION CLAIMED U/S 80IB OF THE INCOM E TAX ACT WITHOUT APPRECIATING THAT THE ASSESSEE WAS ENTITLED TO A D EDUCTION UNDER SECTION 80IB BEING THE LOWER OF THE ELIGIBLE PROFI TS 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. 1,64,752S/- 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 NO.374(ASR)/2011 3 2. THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE FILED ITS E-RETURN ON 26.09.2008 AND HAS DECLARED AN INCOME OF RS.7887/- AFTER CLAIMING DEDUCTION U/S 80IB OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) OF RS.10,83,70,818/-. THE ASSESSEE IS ENGAGED IN MANUFACTURING OF AROMATIC OIL. THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED TO THE A SSESSEE ON 25.08.2009 AND DULY SERVED UPON THE ASSESSEE ON 02.09.2009. TH EREAFTER, NOTICE UNDER SECTION 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WAS ISSUED TO THE ASSESSEE IN RESPONSE TO THE WHICH, AUTHORIZED REPRE SENTATIVE OF THE ASSESSEE AND THE ACCOUNTANT OF THE ASSESSEE-FIRM ATTENDED TH E PROCEEDINGS FROM TIME TO TIME AND FILED DOCUMENTS AS WELL AS BOOKS OF ACC OUNTS ALONG WITH VOUCHERS, AS CALLED FOR. BUT THE ASSESSING OFFICER HAS NOT ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80I B 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 09.05.2011, 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 ITA NO.374(ASR)/2011 4 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 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.1,64,752/- UNDER SECTION 80IB MAY B E DELETED BY ALLOWING THE PRESENT APPEAL. 4. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. ITA NO.374(ASR)/2011 5 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. IN THE WRITTEN SUBMISSION, THE AUTHORISED REPRE SENTATIVE HAS CITED THE CASE LAW OF M/S. SUN PHARMACEUTICALS ITA NO.184(ASR)/209 FOR THE ASSESSMENT YEAR 2005-06 PASSED ON 11.06.201 0 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. 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 ITA NO.374(ASR)/2011 6 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 DISALLOWANCE 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. 6A. RESPECTFULLY FOLLOWING THE DECISION OF JURISDIC TIONAL HONBLE ITAT, AMRITSAR, THE AMOUNTS MENTIONED AT S.NO. (V) 3 IN THE GROUND NO.4 IS TO BE CONSIDERED FOR ALLOWING DEDUCTION U/S 80IB. OTHER ITEMS AT S.NO.(I), (II), (II) AND (IV) DO NOT EVEN REMOTE LY RELATED TO THE INCOME DERIVED FROM ELIGIBLE BUSINESS HENCE CANNOT BE CONSIDERED FOR ALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT. TO THIS EXTENT ONLY IN RESPECT OF ITEMS NO.(I), (II), (III) AND (IV) OF GR OUND NO.3, THE ACTION OF THE A.O. IS CONFIRMED. 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 ITA NO.374(ASR)/2011 7 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 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: M/S. FINE 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., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.