PROTECH ENGINEERING INDUSTRIES PVT. LTD., MUMBAI V. DCIT, CIT- 3(2), MUMBAI

ITA 3779/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0305 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POOJA SWAROOP
• Assessee Lawyers: G P MEHTA
• Section: 43B; 143(3); 80IB; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI D.T GARASIA , JUDICIAL MEMBER AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER ITA NO.3779/MUM./2015 (ASSESSMENT YEAR: 2010 - 11) PROTECH ENGINEERING INDUSTRIES PVT. LTD. C/O. G.P. MEHTA & CO. CAS, 807, TULSIANI CHAMBERS, 212, NARIMAN POINT, MUMBAI 400021 PAN AAACP7376B . APPELLANT V/S DCIT, CIRCLE 3(2) 6 TH FLOOR, AAYAKAR BHAVAN MUMBAI 400020 . RESPONDENT ASSESSEE BY : SHRI. G.P. MEHTA REVENUE BY : M.S. POOJA SWAROOP DATE OF HEARING 17.05.2017 DATE OF ORDER - 14.06 .2017 O R D E R PER: MANJUNATHA G. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF THE CIT(A) - 8, MUMBAI DATED 27.03.2015 AND IT PERTAINS TO THE ASSESSMENT YEAR 2010 - 11. PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 2 2 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF BULK ROLLS ALUMINIUM FOIL, PRINTING THEREON , FILED IT S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2010 - 11 ON 01.10.2010 DECLARING TOTAL INCOM E OF RS.43,62,074 / - . THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDING LY , NOTICE U/S. 143(2) WAS ISSUED. I N RESPONSE TO NOTICE , THE AUTH ORISED REPRESENTATIVE TO THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED R ELEVANT DETAILS AS CALLED FOR. T HE A . O COMPLETE D ASSESSMENT U/S. 143(3) ON 21.02.2013, DETERMI NING THE TOTAL INCOME OF RS.69 ,5 5 , 610/ - , INTER ALIA MAKING ADDITIONS TOWARDS DISALLOWANCE OF EXPENDITURE U/S. 40 ( A ) (IA) OF THE ACT, DISALLOWANCE OF UNPAID BONUS U/S. 43B AND DISALLOWANCES OF PROPORTION ATE EXPEN SES OF BADDI UNIT. 3. AGGRIEVED BY THE ASSESSMENT ORDER , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) , THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS. THE CIT(A) F OR THE DETAILED DISCUSSION IN HI S ORDER DATED 21.02.2013 , PARTL Y ALLOWED APPEAL FILED BY THE ASSESSEE , WHEREIN DELETED ADDITIONS MADE BY THE A . O TOWARDS DISA LLOWANCE OF EXPENDITURE U/S.40 ( A ) (IA) AND DISALLOWANCE OF PRO PORTIONATE EXPENDITURE OF BADDI UNIT, HOWEVER CONFIRMED ADDITIONS MADE TOWARDS DISALLOWANCE OF UNP AID BONUS U/S. 43B OF THE ACT. T HE CIT(A) , FURTHER , REJECTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 3 TOWARDS ENHANCED PROFITS U/S. 80 IC OF THE ACT. AGGRIEVED BY THE CIT(A) ORDER , THE ASSESSEE IS IN APPEAL BEFORE US. 4. T HE LD. A . R FOR THE ASSESSEE , SUBMITT ED THAT THE LD. CIT(A) WAS ERRED IN CONFIRMING THE ADDITIONS MADE BY THE A . O TOWARDS DISALLOWANCE OF UNPAID BONUS U/S. 43B OF THE ACT , AND ALSO REJECTION OF DEDUCTION CLAIMED U/S. 80IC OF THE ACT , TOWARDS ENHANCED PROFITS OF THE ELIGIBLE UNIT. THE L D. A . R FURTHER SUBMITTED THAT ONCE DISALLOWANCE IS MADE TOWARDS ANY EXPENDITURE, THE PROFIT OF THE ASSESSEE WOULD INCREASE WHICH IS ELIGIBLE FO R DEDUCTION U/S. 80 IC OF THE ACT. I N THIS REGARD, RELIED UPON THE DECISION OF HONBLE HIGH COURT OF BOMBAY , IN THE CASE OF CIT VS. SUNIL VISHWAMBHARNATH TIWARI (2015 ) 63 TAXMANN.COM 241 (BOM) AND ALSO CBDT C IRCULAR NO. 37 OF 2016 DATED 2 ND NOV, 2016. ON THE OTHER HAND, THE LD. D . R STRONGLY SUPPORTED ORDER OF THE CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. T HE A . O DISALLOWED UNPAID BONUS U/S. 43B OF THE ACT, AND ALSO DENIED DEDUCT ION CLAIMED U/S. 80IC OF THE A CT , FOR ENHANCED PROFIT S , ON THE GROUND THAT THE LEG AL FICTION CREATED BY VIRTUE OF SECTION 43B , CANNOT BE E XTENDED TO D ETERMIN E THE PROFIT OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80IC OF THE ACT. I T IS THE CONTENTION OF THE ASSESS E E THAT ENHANCED PROFIT ON PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 4 ACCOUNT OF ANY DISALLOWANCE OF EXPENDITURE U/S . 32, 40(A)(IA), 40A(3), 43B ETC., IS ELIGIBLE FOR D EDU CTION PROVIDED, UNDER CHAPTER VI - A . W E FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE , FOR THE REASON THAT THE HONBLE HIGH COURT OF BOMBAY , IN THE CASE OF CIT VS. SUNIL VISHWAMBHARNATH TIWARI ( SUPRA) , HAS OBSERVED THAT WHERE ASSESSING OFFICER HAD DISALLOWED CERTAI N EXPENDITURE U/S. 40 (A)( IA ) OF THE A CT , AND ADDED BACK S AME TO TOTAL INCOME OF THE ASSESSEE , DEDUCTION U/S. 80IB (10) CLAIMED BY ASSESSEE NEEDED TO BE ALLOWED ON ENTIRE GROSS TOTAL INCOME OF THE ASSESSEE . W E FURTHER OBSERVED THAT THE CBDT VIDE ITS C IRCULAR NO. 37 OF 2016 DATED 2 ND NOV, 2016 CLARIFIED THAT THE DISALLOWANCE S MADE U/S. 32, 40 (A)( IA ) , 40A(3), 43B ETC ., OF THE ACT, AND OTHER SPECIFIC DISALLOWANCE S, RELATED TO THE BUSINESS AC TIVITY AGAINST WHICH CHAPTER VI - A DEDUCTION HAS BEEN CLAIMED, RESULT IN ENHANCEMENT OF THE PROFITS OF ELIGIBLE BUSINESS, AND THAT DEDUCTION UNDER CHAPTER VI - A IS ADMISSIBLE ON THE PROFITS SO ENHANCED BY THE DISALLOWANCE. T HEREFORE , IN VIEW OF THE DECISION OF THE HONBLE HIGH COURT OF BOMBAY , IN THE CASE OF CIT VS. SUNIL VISHWAMBHARNATH TIWARI (SUPRA) AND ALSO CIRCULAR OF THE CBDT , THE LEGAL PO SITION STANDS CLEAR THAT WHERE ANY DISALLOWANCES MADE TOWARDS CERTAIN EXPENDITURE U/S. 32 , 40 (A)( IA ) , 40A(3), 43B ETC., OF THE ACT , RELATED TO THE BUSINESS ACTIVITY AGAINST WHICH CHAPTER VI - A DEDUCTION HAS BEEN CLAIMED , THEN THE ENHANCE D PROFIT ON ACCOUNT OF PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 5 DISALLOWANCE OF ANY EXPENDITURE IS ADMISSIBLE FOR DEDUCTION UNDER CHAPTER VI - A OF THE ACT AND HENCE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION TOWARDS ENHANCED PROFIT S U/S. 80IC OF THE ACT. THEREFORE , WE DIRECT THE A . O, TO ALLOW DEDUCTION TOWARDS ENHANCED PROFIT S U/S. 80IC OF THE ACT , ON ACCOUNT OF DISAL LOWANCE OF UNPAID BONUS U/S. 43B OF THE ACT. 6 . IN THE RESULT , APPEAL FILLED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUN CED IN THE OPEN COURT ON 14.06 .2017 SD/ - SD/ - D.T. GARASIA MANJUNATHA G JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.06 .2017 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE. PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 6 BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT, MUMBAI PROTECH ENGINEERING INDUSTRIES PVT. LTD. ITA NO.377 9/MUM./2015 7