The Asstt. Commissioner of Income Tax, Jammu V. M/s Kaiser Industries Pvt. Ltd, Samba

ITA 381/ASR/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3268 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 20-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2019
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VASU GUPTA
• Section: 143(3); 80IB; 80IA; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N. S . SAINI, ACCOUNTANT MEMBER A ND SH. N. K. CHOUDH RY , JUDICIAL MEMBER ITA NO. 381 /ASR./2016 : ASSTT. YEAR : 2006 - 07 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 1, JAMMU VS M/S KAISER INDUSTRIES PVT. LTD., INDUSTRIAL GROWTH CENTRE, SIDCO, SAMBA (APPELLANT) (RESPONDENT) PAN NO. A ABCK0456G ASSESSEE BY : SHRI. VASU GUPTA , CA REVENUE BY : SH . YASHENDER GARG, DR DATE OF HEARING : 21 .02 .201 9 DATE OF PRONOUNCE MENT : 22 .03 .201 9 ORDER PER N. S . SAINI, A CCOUNTANT M EMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), JAMMU DATED 31.03.20 16. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE DEDUCTION U/S 80IB(4) OF THE INCOME TAX ACT, 1961 IN RESPECT OF SAMBA UNIT AS THE SAME WAS CLAIMED TO INFLATE THE PROFIT OF ELIGIBLE UNIT FOR THE MOTIVE OF AVAILING DEDUCTION U/S 80IB. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT T HE APPELLANT COMPANY IS DOING THE BUSINESS OF MANUFACTURING SPECIALLY AGRO CHEMICALS. IT HAS TWO UNITS ONE AT BAHADURGARH & OTHER A T SAMBA. IT HAD FILED ITS RETURN OF ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 2 INCOME FOR THE ASSESSMENT YEAR 200 6 - 07 AT A TOTAL INCOME OF RS.20,81, 617/ - AFTER CLAIMING 100% DEDUCTION U/S 80 IB OF THE ACT AMOUNTING TO RS.2,96,22,328/ - IN RESPECT OF SAMBA UNIT. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS MADE U/S 143(3) OF THE ACT ON 29.12. 2008 AT A TOTAL INCOME OF RS.60,53, 810/ - . SUBSEQUENTLY, THE CASE WAS RE - OPENE D U/S 148 OF THE ACT FOR THE REASON THAT A SUM OF RS.51,07, 624/ - ON ACCOUNT OF EXCISE DUTY R EFUND ON WHICH DEDUCTION U/S 80 IB OF THE ACT HAS BEEN CLAIMED DOES NOT QUALIFY FOR SUCH DEDUCTION. THE ASSESSMENT ORDER U/S 143(3) /147 OF THE ACT WAS PASSED ON 26.03.2013 AND THE CLAIM OF DEDUCTIONS OF RS.2,96,22,328/ - CLAIMED U/S 80 IB(4) OF THE ACT IN RESPECT OF SAMBA UNIT WAS DENIED BY INV OKING THE PROVISIONS OF SEC. 80IB(13) READ WITH SEC. 80IA(10) OF THE ACT. 4. ON APPEAL, BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE SUBMITTED AS UNDER: 'THE ID. A.O. IS UNJUSTIFIED IN DENYING THESE DEDUCTIONS ENUMERATED AS UNDE R : 1. REG ARDING DENIAL OF DEDUCTION OF RS.2,96, 22,328/ - CLAIMED U/S 80 - IB(4) IN RESPECT OF SAMBA UNIT BY INVOKING THE PROVISIONS OF SEC.80IB(13) R.W.S . 80IA(10) OF THE INCOME TAX ACT,1961 . THE APPELLANT IS AGGRIEVED FOR DENIAL OF 80 - 1 B(4) OF THE INCOME TAX ACT, 196 1 CLAIM IN RESPECT OF ITS SAMBA UNIT FOR AN AMOUNT OF RS.2,96,22,328 / - . THE PERUSAL OF THE ASSESSMENT ORDER SHALL REVEAL THAT IT IS NOT THE CASE THAT CERTAIN CONDITIONS FOR ELIGIBILITY OF DEDUCTION U/S 80 - 1B ARE NOT FULFILLED. THE CONDITIONS WHICH ARE TO B E FULFILLED FOR CLAIM OF DEDUCTION U/S 80 - 1B IS LAID DOWN AS UNDER: - I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUCTION, OF A BUSINESS ALREADY IN EXISTENCE ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 3 II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USE D FOR ANY PURPOSE; II I) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA. IV) IN A CASE WHERE THE I NDUSTRIAL UNDERTAKING MANUFACTURES OR PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOYS TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. THE RECORDS DO REVEAL THAT A.O. IS SATISFIED ABOUT THESE CONDITIONS STANDS FULFILLED BUT THE ONLY SECTION VIDE WHICH THIS DEDUCTION HAS BEEN DENIED IS SECTION 80 - IA (10) WHICH OF COURS E GETS ATTRACTED BY VIRTUE OF SECTION 80 - IB(13). FOR THE SAKE OF CONVENIENCE SECTION 80 - 1A(10) IS REPRODUCED: WHERE IT APPEARS TO THE ASSESSING OFFICER THAT, OWING TO THE CLOSE CONNECTION BETWEEN THE ASSESSEE CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OTHER REASON, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THE PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS, THE ASSESSING OFFICER SHALL, IN COMPUTIN G THE PROFITS AND GAINS OF SUCH ELIGIBLE BUSINESS FOR THE PURPOSES OF THE DEDUCTION UNDER THIS SECTION, TAKE THE AMOUNT OF PROFITS AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED THERE FROM. NOW, THE PERUSAL OF THIS SECTION NOWHERE EMPOWERS THE LD. A.O. T O WITHDRAW THE CLAIM OF DEDUCTION U/S 80 - IB. IT TALKS OF ONLY EXTRA ORDINARY PROFIT OF THE ELIGIBLE UNIT TO BE REDUCED, IF ANY, AND THEN ONLY WHEN THERE ARE CERTAIN BUSINESS TRANSACTIONS BETWEEN THE ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 4 ASSESSEE AND SOME OTHER PERSON. IN FACT THAT IS ALSO NOT THE FACT OF THE CASE. SECTION 80 - IA(10) TALK OF EXTRA ORDINARY PROFIT, OWING TO THE CLOSE CONNECTION BETWEEN THE APPELLANT CARRYING ON THE ELIGIBLE BUSINESS TO WHICH THIS SECTION APPLIES AND ANY OTHER PERSON, OR FOR ANY OTHER REASON, THE COURSE OF BUSINESS BETWEEN THEM IS SO ARRANGED THAT THE BUSINESS TRANSACTED BETWEEN THEM PRODUCES TO THE ASSESSEE MORE THAN THE ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS. YOUR GOODSELF SHALL APPRECIATE THAT LD. A.O . HAS GONE BEYOND WHAT SE CTION 80 - 1A (10) OF THE I. TAX ACT, 1961 EMPOWERS HIM TO DO SO. BECAUSE, IF AT ALL THERE IS SOME EXTRAORDINARY PROFIT DUE TO SOME TRANSACTIONS THEN THE PROFIT AS MAY BE REASONABLY DEEMED TO HAVE BEEN DERIVED FROM ELIGIBLE BUSINESS WAS REQUIRED TO BE DETERM INED WHEREAS THE LD. A.O. HAS DENIED WHOLE DEDUCTION U/S 80 - IB. FURTHER, THE LD. A.O. HAS DONE THE COMPARISON OF TWO UNITS OF THE APPELLANT BY COMPARING ITS NET PROFIT AND GROSS PROFIT AND TO DO SO EXPENSES LIKE REMUNERATION ETC. HAVE BEEN COMPARED AND FIN ALLY ALLEGED THAT REMUNERATION OF BAHADURGARH UNIT SHOULD HAVE BEEN DEBITED TO SAMBA UNIT IGNORING THE FACT THAT EVEN WITHOUT SAMBA UNIT THIS REMUNERATION USED TO BE INCURRED AT BAHADURGARH UNIT. FURTHER THE LD. A.O. EVEN AFTER OBSERVING THAT THERE IS PROF IT RISE DUE TO EXCISE DUTY REFUND AS THE REFUND OF THIS DUTY AMOUNTING TO RS.5107624/ - WHEN PAID TO EXCISE DEPTT. HAS NOT BEEN DEBITED TO THE P&L A/C AND THE CONSEQUENTIAL REFUND HAS BEEN TREATED AS RECOVERY OF AMOUNT PAID TO EXCISE DEPTT. THUS PRIMARILY T HE FIGURES OF RS.5107624/ - GIVEN RISE TO THE HIGHER PROFITS TO SAMBA UNIT. HAD THIS UNIT BEEN INDEPENDENT OF BAHADURGARH UNIT EVEN THEN THE PROFIT WOULD HAVE REMAINED THE SAME. THUS THE MATTER WHICH CANNOT BE FACTUALLY DENIED IS THAT: FIRST, SEC. 80 - IA (1 0) SHOULD NOT HAVE BEEN INVOKED AS THERE ARE NO TRANSACTIONS/REASONS TO BELIEVE THAT SAMBA UNIT HAS EARNED EXTRA ORDINARY PROFIT. ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 5 SECOND, THAT WITHOUT PREJUDICE TO ITEM FIRST, EVEN IF SEC. 80 - IA (10) WAS TO BE INVOKED EVEN THEN THE THEN LD. A.O. IS NOT EMP OWERED TO WITHDRAW DEDUCTION U/S 80 - IB (4) AS SEC. 80 - IA (10) DOES NOT EMPOWER THE LD. A.O. TO DO SO BUT TO DETERMINE THE PROFIT AS DEEMED TO HAVE ARRIVED FROM ELIGIBLE BUSINESS. THIRDLY, THERE IS NO EXTRA ORDINARY PROFIT FROM SAMBA UNIT FROM ANY CLOSE CON NECTION AS REFERRED TO IN SEC. 80 - IA (10) BECAUSE THE PROFIT IN SAMBA UNIT IS EXCESS BY RS.5107624/ - DUE TO FACTORS ELABORATED ABOVE. ALTHOUGH THE LD. A.O. HAS ALSO ATTRIBUTED REMUNERATION AND RENT AS OTHER FACTORS YET SO FAR AS REMUNERATION IS CONCERNED T HE LD. A.O. HAS FAILED TO UTTER A WORD AS YOUR GOODSELF IN THE ASSESSMENT YEAR 2009 - 10 HAS HELD SALARY TO BE GENUINE AS HAVE BEEN DEBITED TO BAHADURGARH UNIT EXCEPT FOR RS.30 0000/ - IN THE CASE OF MR. SUDERSHAN MALHOTRA . THUS SALARY PART GETS OBSOLETE WHEN LD. A.O. HAS HIMSELF CONCEDED THE ISSUE. FURTHER, THE LD. A.O. HAS MADE COMPARISON OF RENT WITH SAMBA UNIT .THE RENTED PROPERTIES USED FOR BAHADURGARH UNIT AND FOR WHICH RENT HAS BEEN PAID IN ANY CASE WERE NOT REQUIRED TO BE COMPARED WITH SAMBA UNIT FOR C OMPARISON OF PROFITS. THUS UNDER FACTS AND CIRCUMSTANCES, THE ORDER OF LD. A.O. IS AGAINST FACTS. FURTHER, THERE CANNOT BE JUSTICE TO APPORTION EXPENSES OF BAHADURGARH UNIT TO SAMBA UNIT WHICH ALREADY PERTAIN TO BAHADURGARH UNIT. NOW, WHEN AN ASSESSEE S TARTS BUSINESS WITH ONE UNIT AND BOOKS ALL EXPENSES IN THE ACCOUNTS OF THAT UNIT DUE TO DIRECT AND EXCLUSIVE BENEFIT OF SUCH EXPENSES FOR SUCH UNIT, THEN APPORTIONMENT OF EVERY EXPENSE INCURRED WHOLLY AND EXCLUSIVELY FOR SUCH UNIT WITH THE UNITS ESTABLISHE D BY THE ASSESSEE LATER ON SHOULD NOT BE APPORTIONED AMONGST THESE UNITS. IN THIS REGARD, WE WOULD LIKE TO PLACE ON RECORD ABOUT THE COMPANY WHICH TH E LD. A.O. HAS NOT ANALYSED. THE APPELLANT IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF C HEMICALS VIZ. EMULSIFIERS / SURFACTANTS WHICH ARE SPECIALTY CHEMICALS. THERE ARE VARIOUS CHEMICALS WHICH ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 6 CONSTITUTE RAW MATERIALS AND CONSUMED TO MANUFACTURE THE FOLLOWING FINISHED PRODUCTS: EMULSOL - 3522 EMULSOL - 7066 EMULSOL - 3144 EMULSOL - CCA E MULSOL - CCM EMULSOL - 371A EMULSOL - 371M EMULSOL - PAP EMULSOL - HP - 85 THESE FINISHED PRODUCTS ARE SOLD TO DIFFERENT AGRO CHEMICAL FORMULATORS BUT TO NONE OF THE PARTIES HAVING THE CLOSE CONNECTIONS AT ALL. THESE FINISHED PRODUCTS ARE MANUFACTURED AT T WO DIFFERENT UNITS I.E. AT SAMBA AND BAHADURGARH AND SOLD TO DIFFERENT CLIENTS BUT THE RECIPE OF THE FINISHED PRODUCTS KEEP CHANGING BASED ON THE REQUIREMENTS OF THE CLIENT AND ALSO BASED ON THE AVAILABILITY OF RAW MATERIAL. SAMBA UNIT DOES NOT HAVE SS RE ACTORS, FILTER PRESS, BOILERS AND GLASS LINED REACTORS DUE TO WHICH IT IS PROCUR ING RAW MATERIAL VIZ. B - 10, B - 11 , C - 9 AND METHANOL FROM BAHADURGARH UNIT. FOR A SUPPOSITION LET US SAY THE APPELLANT CLOSES THE SAMBA UNIT, THEN WHETHER EXPENSES OF BAHADURGAR H UNIT WILL BECOME LESS? NO, AS THE BAHADURGARH UNIT IS WORKING INDEPENDENTLY AND WAS ESTABLISHED FIRST BY THE ASSESSEE THEREAFTER SAMBA UNIT. THE EXPENSES OF BAHADURGARH UNIT ARE OF FIXED NATURE AND DO NOT NEED TO BE APPORTIONED AMONG OTHER UNIT. AS THE APPELLANT HAS LESSER DEMAND OF ITS PRODUCTS MANUFACTURED BY IT IN BAHADURGARH AREA, SO THE APPELLANT SELLS/TRANSFERS THE SAME TO ITS SAMBA UNIT IN J & K STATE (BY ADDING A MARKUP TO THE COST PRICE AND THE SAME IS ALSO ACCEPTED BY CENTRAL EXCISE DEPARTMENT) WHERE THE ASSESSEE HAS HIGHER DEMAND OF ITS PRODUCTS AND THE SAME IS TRUE AS THE SALES IN SAMBA UNIT ARE ALWAYS HIGHER THAN THE BAHADURGARH UNIT WHICH CAN BE VERIFIED BY GOING THROUGH THE ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 7 PROFIT AND LOSS ACCOUNT OF BOTH THE UNITS FOR THE VARIOUS YEARS. IN FACT, THE APPELLANT HAS USED ITS IDLE ACTIVITY AT BAHADURGARH UNIT BY MAKING SUCH TRANSFER OF PRODUCTS TO ITS SAMBA UNIT SO AS TO DO BUSINESS WHICH IS NOT MUCH IN BAHADURGARH UNIT. WE WOULD ALSO LIKE TO BRING TO YOUR KIND NOTICE THAT OF THE TOTAL STOCK MA NUFACTURED AND SOLD BY BAHADURGARH UNIT FOR RS. 61986644.56, A STOCK OF RS. 43742291.20 HAVE BEEN TRANSFERRED TO SA MBA UNIT AND IT CONSTITUTES ONLY 37.52 % OF TOTAL PURCHASES OF SAMBA UNIT. FURTHER THE STOCKS SO TRANSFERRED IS EXCISABLE AND EXCISE DEPARTMEN T HAS NEVER OBJECTED OR QUESTIONED ABOUT THE PRICE OF THIS MATERIAL BEING TRANSFERRED TO SAMBA UNIT. IT IS CATEGORICALLY STATED THAT SAMBA UNIT HAS NOT SOLD ITS FINISHED PRODUCTS TO ANY OF ITS RELATED PARTIES AT ALL. IT IS PERTINENT TO STATE THAT COMMON E XPENSES VIZ. DIRECTORS REMUNERATION AND LEGAL EXPENSES HAVE ALREADY BEEN APPORTIONED BETWEEN BAHADURGARH UNIT AND SAMBA UNIT AS IS APPARENT FROM THE DETAILS OF ADMINISTRATIVE AND OTHER EXPENSES. SO FAR AS SALARY EXPENSES OF RS. 1618884.00 DEBITED TO BAHADU RGARH UNIT IS CONCERNED, IT IS ALSO PERTINENT TO STATE THAT THE LD. A.O. HAS ALREADY ALLOWED THIS EXPENDITURE AS GENUINE IN RESPECT OF BAHADURGARH UNIT. FINALLY THERE ARE RENTAL EXPENSES O F RS . 900000.0 0 BEING INCURRED BY BAHADURGARH UNIT FOR RENTED PREMIS ES SO THIS EXPENDITURE CAN ALSO NOT BE TREATED AS COMMON EXPENSE TO BE APPORTIONED TO SAMBA UNIT. THE PERUSAL OF ALL OTHER EXPENSES DEBITED UNDER ADMINISTRATIVE AND OTHER EXPENSES DO REVEAL THAT THESE ARE INCURRED FOR RESPECTIVE UNITS AND CANNOT BE TREATED AS COMMON EXPENSES. WE ARE ALSO ENCLOSING HEREWITH THE PROFIT AND LOSS ACCOUNT OF THE BAHADURGARH UNIT WHEN THE ASSESSEE DO NOT HAVE SAMBA UNIT. THE PERUSAL OF THIS P & T ACCOUNT SHALL REVEAL THAT EVEN WITHOUT THE SAMBA UNIT THE ASSESSEE WAS EARNING FROM THIS TAXABLE ACTIVITY AROUND 3.23% WHICH MEANS THAT THERE IS NO EXAGGERATION OF PROFITS IN SAMBA UNIT TO CLAIM 80 - IB. EVEN IF WE COMPARE THE EXPENSES OF BAHADURGARH ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 8 UNIT AS ON 2004 WITH 2006, THEN ALSO IT REVEALS THAT RISE IN ALL THE EXPENSES IS NOT ABNOR MAL BUT RELATED TO BUSINESS ONLY. IT IS PERTINENT TO STATE THAT AFTER DUE DELIBERATIONS THE WORTHY CIT IN THE ORDER PASSED U/S 264 DATED 29.03.2014 FOR THE ASSESSMENT YEAR 2010 - 11 HAS ALLOWED DEDUCTION CLAIMED U/S 80 - IB IN RESPECT OF SAMBA UNIT. HE HAS HE LD THAT CERTAIN COMMON EXPENSES OF BAHADURGARH UNIT WERE TO BE APPORTIONED AMONG UNITS IN THE RATIO OF THEIR TURNOVER. THE RELEVANT PART OF THE ORDER REPRODUCED AS UNDER: - 'THE LD. A.O. IN ITS REPORT HAS INCLINED TO STATE THAT THE REASONS POINTED OUT IN A SSESSMENT ORDER ARE NOT FACTUALLY CORRECT. SHE MEANS TO STATE THAT LEGALLY SECTION 80 - IA (10) CANNOT BE INVOKED TO DISALLOW THE CLAIM OF ASSESSEE U/S 80 - IB (4) WHEN ALL OTHER CONDITIONS FOR CLAIMING DEDUCTION U/S 80 - 1B (A) ARE FULFILLED. THIS IS QUITE ELA BORATED IN HER REPORT. THE A.O. ADMITS THAT CONDITIONS FOR DISALLOWANCE UNDER SECTION 80 - IB (4) ARE NOT VIOLATED HENCE 80 - IB (4) DEDUCTION SHOULD HAVE BEEN ALLOWED. HOWEVER, THE LD. A.O. IN HER REPORT HAS SUGGESTED APPORTIONMENT OF COMMON EXPENDITURE. HAVI NG PERUSED THE DETAILS PLACED ON RECORDS, I OBSERVE FROM THE ASS ESSMENT ORDER THAT COMMON EXPENSES WHICH HAVE BEEN DISCUSSED TO BE DEBITED IN BAHADURGARH UNIT ARE AS UNDER: S. NO. NATURE OF THE EXPENSE TOTAL AMOUNT(RS.) CAR RUNNING END MA INTENANCE EXPENSES 219808.00 DIWALI EXPENSES 98090.00 KEYMAN INSURANCE EXPENSE 1398502.00 PROPERTY TAX AND MAINTENANCE AT MUMBAI FLATS 76310.00 SALARY 3100000.0 0 STAFF RECRUITMENT & TRAINING EXPENSES 40849.00 TRAVELLING EXPENSES 504575.00 LOAN PROCESSING FEES 715451.00 INTEREST ON LOAN 923960. 00 INTEREST ON CAR 71451.00 INTEREST ON FLAT 373425.00 THE TOTAL OF THIS EXPENSE WORKS OUT TO RS 75,22,421.00. HOWEVER FROM THIS FIGURE, I DO NOT ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 9 CONSIDER THE KEYMAN INSUR ANCE EXPENSE TO BE PART OF COMMON EXPENSE AS IN THE VERY NEXT YEAR, THE WHOLE MATURITY FROM THE POLICY HAVE BEEN OFFERED TO TAX IN BAHADURGARH UNIT. FURTHER FINANCIAL EXPENSES INCURRED FOR FLAT LOAN AS WELL AS LOAN PROCESSING FEES AND LOAN FOR BAHADURGARH UNIT AMOUNTING TO RS 325425.00, RS . 7,15,451.0 0 AND RS.9,23,960.00 ARE NOT TO BE CONSIDERED AS PART OF COMMON EXPENSES AS THE SAMBA UNIT HAS INDEPENDENTLY INCURRED FINANCIAL EXPENSES AMOUNTING TO RS.40118093/ - . SIMILAR IS THE POSITION OF RAJKOT UNIT. HOWE VER INTEREST ON CAR LOAN IS TO BE CONSIDERED AS COMMON EXPENSES. EVEN THE PROPERTY TAX EXPENSES AND MAINTENANCE OF MUMBAI FLATS IS NOT TO BE CONSIDERED AS COMMON EXPENSES. THUS, THE COMMON EXPENSES, WHICH I DIRECT THE A.O. TO BE APPORTIONED ARE: - CAR RUNN ING AND MAINTENANCE EXPENSES 219808.00 DIWALI EXPENSES 98090.00 SALARY 3100000.00 STAFF RECRUITMENT & TRAINING EXPENSES 40849.00 TRAVELLIN G EXPENSES 504575.00 INTEREST ON CAR 71451.00 40,34, 773.00 ACCORDINGLY, IN MY CONSIDERED OPINION THE COMMON EXPENSES WHIC H NEED TO BE APPORTIONED TO SAMBA, BAHADURGARH AND RAJKOT UNIT AMOUNTS TO RS.4034773.00. I, THEREFORE, DIRECT THE A.O. TO ALLOW T HE CLAIM OF ASSESSEE U/S 80 - IB ( 4) BUT RESTRICT IT BY APPORTIONING THE COMMON EXPENSES OF RS.4034773.00 IN THE RATIO OF TURNOVE R OF THREE UNITS WHICH IS RS.149426660.00 FOR SAMBA UNIT, RS 283486948.00 FOR BAHADURGARH UNIT (BOTH FOR TRADING AND MANUFACTURING TURNOVER) AND RS.12573540.00 FOR RAJKOT UNIT WHICH WORKS OUT TO RS. 1353075.00 FOR SAMBA UNIT, RS.2567583.00 FOR BHADURGARH U NIT AND RS.114115.00 FOR RAJKOT UNIT. ACCORDINGLY, THE A.O. IS DIRECTED TO RECOMPUTE THE TOTAL INCOME AFTER REDISTRIBUTING/ APPORTIONING THESE COMMON EXPENSES AND ACCORDINGLY AFTER GIVING RELIEF U/S 80 - IB FOR SAMBA UNIT, COMPUTE THE TOTAL INCOME OF THE ASS ESSEE.' ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 10 BASED ON THIS ORDER, THE A.O. HAS ALSO ALLOWED DEDUCTION U/S 80 - IB IN RESPECT OF SAMBA UNIT WITHOUT INVOKING THE PROVISIONS OF SEC.80IB(13) R.W.S 80IA(10) OF THE INCOME TAX ACT,1961 IN ASSESSMENT ORDERS PASSED IN RESPECT OF ASSESSMENT YEARS 2007 - 0 8,2011 - 12 & 2012 - 13. THE COPIES OF THESE ORDERS ARE ENCLOSED. WE UNDERSTAND THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE BY YOUR GOODSELF IN THE ORDER PASSED FOR THE ASSESSMENT YEAR 2009 - 10. IN THIS REGARD IT IS STATED THAT AT THAT TIME CLEAR FAC TS OF THE CASE WERE NOT DRAWN BEFORE YOUR GOODSELF. BASED ON NON - FACTUAL SUBMISSIONS IMPORTANT ASPECTS OF THE ISSUE NOW BROUGHT TO YOUR KNOWLEDGE HAD REMAINED UNNOTICED THAT TIME. THIS HAS CONTRIBUTED IN INFIRMITY OR WE CAN SAY ERROR IN YOUR THEN JUDGMENT ON WHICH WE PRAY AND PLEA THAT YOUR EARLIER DECISION NEEDS TO BE REVIEWED UNDER SUCH FACTS AND CIRCUMSTANCES SO THAT JUSTICE IS NOT DENIED TO THE APPELLANT. THE THEN COUNSEL OF THE APPELLANT HAS MISERABLY FAILED TO NOT TO BRING YOUR KIND KNOWLEDGE THAT STO CKS TRANSFERRED TO SAMBA UNIT FROM BHADURGARH UNIT ARE AT THE SAME RATE AT WHICH BHADURGARH UNIT SHALL BE ABLE TO SELL IT TO OUTSIDERS. SINCE THESE ARE EXCISABLE ITEMS AS SUCH VARIATION IN RATE CANNOT BE MADE. FURTHER, THE PURCHASE PRICE OF RAW MATERIAL AS PROCURED FROM BHADURGARH UNIT WHICH CONSTITUTES ONLY 37.52% AS SUBMITTED EARLIER, ARE AT PURCHASE RATES AT WHICH SUCH GOODS ARE AVAILABLE IN THE MARKET. KEEPING IN VIEW NO VARIATIONS IN STOCK PROCURED FROM BHADURGARH UNIT IT WOULD BE UNJUSTIFIED AND UN - FA CTUAL TO STATE THAT SOME PROFITS FROM BHADURGARH UNIT HAS BEEN DIVERTED IN THE BOOKS OF SAMBA UNIT TO AVAIL THE FRAUDULENT PROFIT U/S 80 - IB OF THE INCOME TAX ACT,1961. THE THEN ID. A.O. IN THE REMAND REPORT IN THE ASSESSMENT YEAR 2009 - 10 HAVE ACTUALLY ACCE PTED WHAT WAS SUBMITTED BEFORE YOUR GOODSELF DURING APPELLATE PROCEEDINGS EXCEPT FOR CERTAIN COMMON EXPENSES. BUT SOMEHOW THEN COUNSEL OF THE APPELLANT HAS FAILED TO SUBSTANTIATE WHEREBY YOUR GOODSELF HAVE FELT TO IGNORE THE ACCEPTABILITY OF ISSUE DURING R EMAND. HAD THE THEN COUNSEL BROUGHT TO YOUR KNOWLEDGE THE FACTS AND SUBSTANTIATED IT WITH ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 11 EVIDENCE YOU WOULD HAVE ACCEPTED THE CONDITIONS OF A.O. ACCEPTING THE ELIGIBILITY OF CLAIM OF DEDUCTION U/S 80 - IB OF THE INCOME TAX ACT, 1961. THEREFORE, RESPECTFULL Y FOLLOWING THE CONSISTENCY AND ALSO IN VIEW OF THE FACTS NARRATED ABOVE IT IS REQUESTED TO ALLOW THE DEDUCTION U/S 80 - IB AS NEITHER THE DENIAL CAN BE MADE U/S 80 - IB(4) AS ALL THE CONDITIONS LAID DOWN IN THE SECTION FOR ITS CLAIM ARE FULFILLED NOR THE PROV ISIONS OF SECTION 80 - 1A (10) CAN BE SAID TO BE ATTRACTED AS THERE IS NO REASON TO STATE THAT THE APPELLANT HAS EARNED MORE THAN ORDINARY PROFITS WHICH MIGHT BE EXPECTED TO ARISE IN SUCH ELIGIBLE BUSINESS . 5. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APP EALS) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: I HAVE CONSIDERED THE DENIAL OF DEDUCTION OF RS.2,96,22,328/ - CLAIMED U/S 80 - IB(4) BY THE AO IN RESPECT OF SAMBA UNIT BY INVOKING THE PROVISIONS OF SEC.80IB (13) R.W.S 80IA (10) OF THE INCOM E TAX ACT, 1961. THE BASIC REASON OF DISALLOWING THE DEDUCTION TO THE APPELLANT U/S 80 - IB (4) WAS BASED ON THE ORDER PASSED BY THE AO FOR THE ASSTT. YEAR 2009 - 10. THE CASE WAS REOPENED U/S 147 FOR THE ASSESSMENT YEAR UNDER CONSIDERATION ON THE BASIS OF DIS ALLOWANCE MADE U/S 80 IB IN THE AY 2009 - 10. THE AO DISALLOWED THE CLAIM OF DEDUCTIONS MADE U/S 80 IB AND THE LD . CIT (A) CONFIRMED THE ORDER OF THE AO. THE MATTER TRAVELLED TO ITAT, AMRITSAR BENCH, AMRITSAR WHO DECIDED THE ISSUE AGAINST THE ORDER OF THE LD . CIT (A) AND DIRECTED THE AO TO FOLLOW THE DIRECTION OF THE LD. CIT, JAMMU WHO HAD DIRECTED THE AO U/S 264 IN THE AY 2010 - 11 TO ALLOW THE CLAIM OF THE ASSESSEE U/S 80 IB (4) BY ALLOCATING PROPORTIONATE' EXPENDITURE OF THE SAMBHA UNIT. THE AO THEN FOLLOWED THE DIRECTION OF THE ITAT AND ACCORDINGLY, ALLOCATED EXPENDITURE OF SAMBHA UNIT AS DIRECTED BY THE LD. CIT, JAMMU AND ALLOWED THE DEDUCTIONS U/S 80 IB (4). NOW, COMING TO THE APPEAL FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, SINCE ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 12 THE DEDUCTIONS U/S 80 IB HAS BEEN ALLOWED IN THE AY 2009 - 10 ON THE SIMILAR FACTS AND CIRCUMSTANCES ON BASIS OF WHICH THE CASE WAS REOPENED IN THE AY 2006 - 07 THE ISSUE STAND SETTLED IN VIEW OF THE DIRECTION GIVEN BY THE HON'BLE ITAT IN THE AY 2009 - 10. THUS, AS A RULE OF CON SISTENCY AND RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE ITAT, AMRITSAR BENCH, AMRITSAR, THE DISALLOWANCE U/S 80 - IB(4) AMOUNTING TO RS.2,96,22,328/ - IS DELETED AND THE APPEAL IS ALLOWED. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MAT ERIALS AVAILABLE ON RECORD, WE FIND THAT THE LD. DEPARTMENTAL REPRESENTATIVE HAS SIMPLY RELIED ON THE ORDER OF THE ASSESSING OFFICER. HE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). FURTHER, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE ORDER OF THE TRIBUNAL DATED 29.03.2016 IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 HAS ALLOWED THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT POINT O UT ANY GOOD REASON AS TO WHY THE COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2009 - 10. NO MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE ORDER OF THE TRIBUNAL IN ASSESSMENT YEAR 2009 - 10 I N ASSESSEE S OWN CASE WAS VARIED IN APPEAL BY ANY HIGHER FORUM. HENCE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WHICH IS HEREBY CONFIRM AND THE GROUND OF THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 381 /ASR./2016 KAISER INDUSTRIES PVT. LTD. 13 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. (ORDER PRON OUNCED IN THE OPEN COURT ON 22 /0 3 /2019 ) SD/ - SD/ - ( N. K. CHOUDHRY ) (N. S . SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 /03 /2019 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR