ACIT CIR 6(3), AKOLA V. LEBEN LABORATORIES P. LTD, AKOLA

ITA 3892/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 16-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Assessee Lawyers: J D MISTRY
• Keywords: Business income; Revised return
• Section: 80HHC; 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 3892/MUM/2009 (ASSESSMENT YEAR: 2002-03) ACIT, AKOLA CIRCLE M/S. LEBEN LABORATORIES P. LTD. FIRST FLOOR, AAYAKAR BHAVAN L-4, MIDC, PHASE-III MURTIZAPUR ROAD, AKOLA VS. AKOLA 444104 PAN - AAACL 2524 M APPELLANT RESPONDENT APPELLANT BY: SHRI SHRAVAN KUMAR RESPONDENT BY: SHRI J.D. MISTRY O R D E R PER B. RAMAKOTAIAH, A.M. THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A) VI, MUMBAI DATED 02.04.2009. 2. REVENUE HAS RAISED THE FOLLOWING TWO GROUNDS: - 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THAT THE DEDU CTION U/S. 80IB, DISALLOWED BY THE A.O. TO THE EXTENT OF RS.21 ,46,194/- BE ALLOWED TO THE ASSESSEE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO ALLOW DEDU CTION U/S 80HHC WITHOUT REDUCING THE DEDUCTION U/S. 80IB OF T HE ACT. 3. BRIEFLY STATED, ASSESSEE, A MANUFACTURER OF PHARMAC EUTICAL PRODUCTS, FILED RETURN OF INCOME DECLARING TOTAL INCOME OF ` 36,47,710/-. ASSESSEES BUSINESS INCOME WAS TO THE TUNE OF ` 71,53,980/- AND CLAIMED DEDUCTION UNDER SECTION 80IB TO THE TUNE OF ` 21,46,194/- AND DEDUCTION UNDER SECTION 80HHC OF ` 13,58,822/-. THIS RETURN FILED ON 29.10.2002 WAS PR OCESSED UNDER SECTION 143(1). WHILE SCRUTINISING THE RETURN FOR A.Y. 2005-06 THE A.O. WAS OF THE OPINION THAT INCOME HAS ESCAPED ASSESSME NT FOR THIS ASSESSMENT YEAR AND THE CASE WAS REOPENED UNDER SECTION 147 BY ISSUING A NOTICE DATED 12.03.2007. IN RESPONSE TO THE SAID NOTICE THE ASSE SSEE FILED ITS REVISED ITA NO. 3892/MUM/2009 M/S. LEBEN LABORATORIES P. LTD. 2 RETURN OF INCOME ON 30.03.2007 DECLARING TOTAL INCO ME OR ` 44,47,660/-. ONE OF THE REASONS FOR REOPENING THE ASSESSMENT WAS CLA IM OF 80IB DEDUCTION ON DEPB WHICH, IN THE REVISED RETURN, ASSESSEE HAS CON CEDED AND THE DEDUCTION UNDER SECTION 80IB WAS RESTRICTED TO ` 13,46,246/- AS AGAINST ` 21,46,194/- CLAIMED IN THE ORIGINAL RETURN. THERE I S NO CHANGE AS FAR AS DEDUCTION UNDER SECTION 80HHC WAS CONCERNED. THE A. O., FOLLOWING HIS FINDINGS IN A.Y. 2005-06, HELD THAT THE ASSESSEE WA S NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. THE MATTER WAS CARRIE D TO THE CIT(A), WHO, AFTER EXAMINING ASSESSEES SUBMISSION ALLOWED THE C LAIM OF 80IB. WITH REFERENCE TO 80HHC CLAIM THE A.O. INVOKED PROVISION S OF SECTION 80IA(9). FOLLOWING THE DECISION OF THE HON'BLE MADRAS HIGH C OURT IN THE CASE OF SCM CREATIONS VS. ACIT IN APPEAL NO. 310&311 OF 2008 TH E CIT(A) ALLOWED THE DEDUCTION OF 80HHC WITH A DIRECTION NOT TO REDUCE T HE AMOUNT OF DEDUCTION UNDER SECTION 80IB, PROVIDED BOTH THE DEDUCTIONS DI D NOT EXCEED MORE THAN 100% OF THE ELIGIBLE PROFIT. THE REVENUE IS AGGRIEV ED ON THE ABOVE ISSUE AND RAISED THE GROUNDS ACCORDINGLY. 4. THE LEARNED D.R., REFERRING TO THE ORDER PASSED BY THE A.O. RUNNING TO 34 PAGES, DRAW OUR ATTENTION TO THE CONCLUSION DRAW N ON PAGE 33 TO SUBMIT THAT THE ASSESSEE WAS NOT ELIGIBLE FOR 80IB CLAIM. HE ALSO REFERRED TO THE FINDINGS IN PAGE 17 ABOUT THE STORY OF THE SO CALL ED UNIT-V, THE DISCUSSION MADE BY THE A.O. UNDER THIS HEAD TO SUBMIT THAT ASS ESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB AS ASSESSEE HAS NOT CO MPLIED WITH THE CONDITIONS THEREON. HE RELIED ON THE FINDINGS OF TH E A.O. WITH REFERENCE TO THE REASONS FOR DENYING THE CLAIM BY THE A.O. THEN HE REFERRED TO PARA 3.3 OF THE CIT(A)S ORDER TO SUBMIT THAT THE CIT(A) DID NO T ASK FOR ANY REMAND REPORT AND ON THE BASIS OF THE SUBMISSIONS MADE BY THE ASSESSEE HE ALLOWED THE CLAIM AND HAS NOT COUNTERED THE FINDINGS OF THE A.O. 5. WITH REFERENCE TO GROUND NO. 2 ON 80HHC R.W.S. 80IA (9) HE FAIRLY CONCEDED THAT THE ISSUE IS TO BE DECIDED AGAINST TH E REVENUE FOLLOWING THE ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT IN T HE CASE OF ASSOCIATED CAPSULES P. LTD. VS. DCIT 332 ITR 42( BOM). ITA NO. 3892/MUM/2009 M/S. LEBEN LABORATORIES P. LTD. 3 6. THE LEARNED A.R. SUBMITTED THAT THE ENTIRE ORDER OF THE A.O. IS BASED ON THE SO CALLED FINDINGS OF THE A.O. ON STORY OF THE SO CALLED UNIT-V, THE DEDUCTION OF WHICH WAS CLAIMED IN A.Y. 2003-04 FOR THE FIRST TIME WHICH WAS EXAMINED BY THE A.O. IN A.Y. 2005-06. WHILE THE ISS UE OF CLAIM OF DEDUCTION UNDER UNIT-V IS PENDING BEFORE THE CIT(A), HE RE FERRED TO THE RETURN OF INCOME FILED AND THE ENCLOSURES THEREON TO SUBMIT T HAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB ONLY UNIT II, UNIT II & UNIT IV AND THERE IS NO DEDUCTION CLAIMED ON UNIT V DURING THE YEAR UNDER C ONSIDERATION. IT WAS HIS SUBMISSION THAT SINCE THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON UNIT V THE SO CALLED FINDING PERTAINING TO UNIT V DOES NOT APPLY TO THE YEAR UNDER CONSIDERATION. REFERRING TO THE PAPER BOOK FILED IN THIS REGARD, PARTICULARLY TO THE STATEMENT OF 80IB CLAIMS MADE IN ANNEXURE-IA, P AGE 1, THE LEARNED COUNSEL SUBMITTED THAT THE ASSESSEE WAS CLAIMING DE DUCTION ON UNIT I UPTO 1995-96 AND UNIT II WAS ELIGIBLE FOR 80IA/80IB DEDU CTION FROM A.Y. 1994-95. UNIT III WAS ALSO ELIGIBLE FOR DEDUCTION FROM 1996- 97 AND UNIT IV WAS ELIGIBLE FOR DEDUCTION FROM A.Y. 1999-2000. IN ALL THESE YEA RS, THE DEDUCTION WAS EXAMINED AND ALLOWED AND IN THE IMPUGNED YEAR, I.E. A.Y. 2002-03 ASSESSEE HAS CLAIMED DEDUCTION ON UNIT II, UNIT III AND UNIT IV ONLY AND THERE WAS NO DEDUCTION CLAIMED ON UNIT V. REFERRING TO THE ORDER PASSED IN A.Y. 2005-06 AND THE ORDER PASSED IN THE IMPUGNED YEAR IN RESPON SE TO SECTION 148, IT WAS THE SUBMISSION OF THE LEARNED COUNSEL THAT THE A.O. VERBATIM EXTRACTED THE ASSESSMENT ORDER FROM 2005-06 TO A.Y. 2002-03 A ND THE SO CALLED FINDINGS MADE BY THE A.O. AND RELIED UPON BY THE LE ARNED D.R. DOES NOT APPLY TO THE FACTS ON RECORD AS THE ASSESSEE HAS NO T CLAIMED DEDUCTION ON UNIT V IN THE IMPUGNED ASSESSMENT YEAR. THEREFORE, THE CIT(A), AFTER EXAMINING THIS FACT HAS ALLOWED THE DEDUCTION TO TH E ASSESSEE UNDER SECTION 80IB AS THE SAME WAS CLAIMED IN EARLIER YEARS AND W AS ALLOWED AND IS BEING CONTINUATION OF DEDUCTION CLAIMS ON THE SAME UNITS. 7. THE LEARNED COUNSEL, HOWEVER, FAIRLY CONCEDED THAT THE ASSESSEE HAS NOT CONTESTED THE ISSUE OF 148 AS IT HAS FILED REVI SED RETURN WITHDRAWING THE CLAIM OF 80IB ON DPEB AND THE AMOUNT OF CLAIM INVOL VED AS PER REVISED RETURN IS ONLY ` 13,46,246/-. ITA NO. 3892/MUM/2009 M/S. LEBEN LABORATORIES P. LTD. 4 8. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RECOR D. AS SEEN FROM THE RECORD THE A.O. BASED HIS FINDINGS ON THE BASIS OF HIS ORDER FOR A.Y. 2005-06 MOSTLY PERTAINING TO UNIT V. THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IB ON UNIT V IS NOT BEFORE US AS THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON UNIT V DURING THE IMPUGNED ASSESSMENT YEAR. IT IS A LSO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER 80IB ORIGINALL Y ON THE BASIS OF THE 10CC REPORT ON UNITS II, III & IV ONLY, WHICH WAS ALLOWE D IN EARLIER ASSESSMENT YEARS. THIS BEING CONTINUATION OF THE CLAIMS, WE ARE OF TH E OPINION THAT THERE IS NO REASON TO INTERFERE IN THE ORDERS OF THE CIT(A). WE MAKE IT CLEAR THAT THIS ORDER HAS NOT CONSIDERED THE FINDINGS VIS--VIS A.Y. 2005 -06 ON UNIT V AS THE SAID MATTER WAS STILL PENDING, AS SUBMITTED, BEFORE THE CIT(A). THE DEDUCTION WAS ALLOWABLE UNDER SECTION 80IB TO THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR ON UNITS II, III & IV AS THE FINDINGS OF THE A .O. DOES NOT APPLY TO THESE UNITS. IN FACT, THERE IS NO DISCUSSION PERTAINING T O THESE UNITS CLAIMS OF WHICH WERE ALLOWED IN EARLIER YEARS. WE WERE INFORMED THA T NO ACTION HAS BEEN TAKEN ON THE CLAIM OF THE ASSESSEE IN EARLIER YEARS, EVEN THOUGH THE A.O. HAS TAKEN UP THE ISSUE WITH REFERENCE TO UNIT V IN A.Y. 2005-06 AND REOPENED THE ASSESSMENT FOR ASSESSMENT YEARS 2002-03 AND 2003-04 . THEREFORE, WE ARE OF THE OPINION THAT THE FINDINGS PERTAINING TO UNIT V DOES NOT AFFECT THE CLAIM OF THE ASSESSEE ON UNITS II, III & IV, WHICH WERE ALLO WED IN EARLIER YEARS. THE ORDER OF THE CIT(A) TO THAT EXTENT IS CONFIRMED. 9. IT IS ALSO NOTICED THAT THE REVENUE HAS RAISED GROU ND ON AN AMOUNT OF ` 21,46,194/-, WHICH WAS INITIALLY CLAIMED IN THE RET URN FILED BY THE ASSESSEE. HOWEVER, IN THE PROCEEDINGS UNDER SECTION 148 ASSES SEE REVISED THE CLAIM TO ` 13,46,246/- WITHDRAWING THE DEDUCTION UNDER 80IB ON DEPB PROFITS. TO THAT EXTENT THE GROUND RAISED BY THE REVENUE ON THE ENTIRE AMOUNT OF ` 21,46,194/- WAS MISLEADING AND NOT FACTUALLY CORREC T. 10. WITH REFERENCE TO GROUND NO. 2 ON REDUCING DEDUCTIO N UNDER SECTION 80HHC INVOKING PROVISIONS OF SECTION 80IA (9), THIS ISSUE IS HELD AGAINST THE REVENUE BY THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES PVT. LTD. VS. DCIT 332 ITR 42 W HEREIN IT WAS HELD AS UNDER: - ITA NO. 3892/MUM/2009 M/S. LEBEN LABORATORIES P. LTD. 5 SECTION 80-IA(9) OF THE INCOME-TAX ACT, 1961, PROV IDES THAT THE DEDUCTION TO THE EXTENT OF PROFITS ALLOWED UNDER SE CTION 80-IA (1) WOULD NOT BE ALLOWED UNDER ANY OTHER PROVISIONS. IT MEANS THAT THE DEDUCTIONS ALLOWABLE UNDER OTHER PROVISIONS UNDER H EADING C OF CHAPTER VI-A WOULD BE ALLOWED TO THE EXTENT OF PROF ITS AS REDUCED BY THE PROFITS ALLOWED UNDER SECTION 80-IA(1). THE SEC OND PART OF SECTION 80-IA(9) DOES NOT REFER TO THE METHOD OF COMPUTING DEDUCTION UNDER OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI-A. T HUS, SECTION 80- IA(9) SEEKS TO CURTAIL THE ALLOWANCE OF DEDUCTION A ND NOT THE COMPUTATION OF DEDUCTION UNDER ANY OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI-A OF THE ACT. THE LEGISLATURE HAS U SED SPECIFIC WORDS WHENEVER IT INTENDS TO AFFECT THE COMPUTATION OF DE DUCTION. AS THE WORDS USED IN SECTION 80-IA(9) RELATE TO ALLOWANCE AND NOT COMPUTATION OF DEDUCTION, IT CANNOT BE INFERRED THA T SECTION 80-IA(9) WAS INSERTED WITH A VIEW TO AFFECT COMPUTATION OF D EDUCTION UNDER ANY OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI- A. SINCE SECTION 80-IA(9) USED THE WORDS SHALLOT BE ALLOWED, THE S ECTION SEEKS TO RESTRICT THE ALLOWANCE OF DEDUCTION AND NOT THE COM PUTATION OF DEDUCTION UNDER ANY OTHER SECTIONS UNDER HEADING C OF CHAPTER VI-A OF THE ACT. THEREFORE THE REASONABLE CONSTRUCTION O F SECTION 80-IA(9) WOULD BE THAT WHERE THE DEDUCTION IS ALLOWED UNDER SECTION 80-IA(A), THEN THE DEDUCTION COMPUTED UNDER OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI-A HAVE TO BE RESTRICTED TO THE PROFIT S OF THE BUSINESS THAT REMAIN AFTER EXCLUDING THE PROFITS ALLOWED AS DEDUC TION UNDER SECTION 80-IA, SO THAT THE TOTAL DEDUCTION ALLOWED UNDER TH E HEADING C OF CHAPTER VI-A DOES NOT EXCEED THE PROFITS OF THE BUS INESS. HELD ACCORDINGLY, THAT THE TRIBUNAL WAS NO RIGHT I N HOLDING THAT SECTION 80-IA (9) OF THE ACT, MANDATES THAT THE AMO UNT OF PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80-IA(9) OF THE ACT HAVE TO BE REDUCED FROM THE PROFITS OF THE BUSINESS OF THE UND ERTAKING WHILE COMPUTING DEDUCTION UNDER ANY OTHER PROVISIONS UNDE R HEADING C IN CHAPTER VI-A OF THE ACT. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE REJECT THE GROUND RAISED BY THE REVENUE ON THIS ISSUE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH APRIL 2011. SD/- SD/- (R.V. EASWAR) (B. RAMAKOTAIAH) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH APRIL 2011 ITA NO. 3892/MUM/2009 M/S. LEBEN LABORATORIES P. LTD. 6 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) VI, MUMBAI 4. THE CIT VI, MUMBAI CITY 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.