Addl.C.I.T., Range-2, Gwalior V. M/s K.S.Oils Limited, Morena

ITA 410/AGR/2010

• Counselvise Citation: 41020314 RSA 2010
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-10-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-09-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: MAHESH AGARWAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO. 410/AGRA/2010 ASSTT. YEAR : 2007-08 ADDL. C.I.T., RANGE-2, VS. M/S. K.S. OILS LIMITE D, GWALIOR. TILAK ROAD, JIWAJI GANJ, MORENA. (PAN : AABCK 3119 J) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : SHRI MAHESH AGARWAL,, C.A. DATE OF HEARING : 12.10.2011 DATE OF PRONOUNCEMENT : 13.10.2011 ORDER PER B.C. MEENA, AM : THIS IS THE APPEAL FILED BY THE REVENUE ARISING O UT OF THE ORDER OF CIT(A), GWALIOR DATED 23.08.2010. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS DELET ING THE ADDITION OF RS.28,12,810/- ON ACCOUNT OF DISALLOWANCES OUT OF T HE CLAIM MADE BY THE ASSESSEE U/S. 80IB OF THE INCOME-TAX ACT. ITA NO. 410/AGRA/2010 2 3. THE ASSESSEE IS A PUBLIC LIMITED COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF MUSTARD OIL, REFINED O IL, SOLVENT OIL, TIN CONTAINER, VANASPATI GHEE & D.O.C. & POWER GENERATION THROUGH WINDMILL. DURING THE YEAR, THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB IN RES PECT OF VANASPATI DIVISION. THE ASSESSING OFFICER FOUND THAT VARIOUS EXPENSES DEBIT ED IN PROFIT AND LOSS ACCOUNT OF VANASPATI DIVISION WERE PROPORTIONATELY ON LOWER SI DE IN COMPARISON TO THE OTHER EXPENSES. FURTHER, THE ASSESSING OFFICER HAS ALSO N OTED THAT THE AUDITORS REMUNERATION PAID BY THE COMPANY AND DEBITED IN PRO FIT AND LOSS ACCOUNT HAD NOT BEEN ALLOCATED TO THE VANASPATI DIVISION AND THE AS SESSING OFFICER HELD THAT THE ASSESSEE HAS DIVERTED EXPENSES FROM VANASPATI DIVIS ION TO OTHER DIVISIONS AND THEREBY CLAIMING HIGHER DEDUCTION U/S. 80IB OF THE ACT. THE NET PROFIT RATE OF THE VANASPATI DIVISION DECLARED BY THE ASSESSEE AT THE TURNOVER OF RS.45.2 CRORES WAS AT 8.89% WHILE THE OVERALL AVERAGE NET PROFIT OF AS SESSEE-COMPANY WAS 6.79%. THE ASSESSING OFFICER RECOMPUTED THE CLAIM U/S. 80IB AN D REDUCED IT BY RS.28,12,810/- THE CIT(A) GRANTED THE RELIEF. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE ASSE SSING OFFICER AND THE LEARNED AR RELIED UPON THE ORDER OF CIT(A). ITA NO. 410/AGRA/2010 3 5. WE HAVE HEARD BOTH THE SIDES AND HAVE PERUSED TH E MATERIAL AVAILABLE ON RECORD. AS NOTICED BY THE ASSESSING OFFICER, THE A UDITORS REMUNERATION CLAIMED HAS NOT BEEN ALLOCATED PROPORTIONATELY TO THE VANAS PATI DIVISION. THIS IS AN ADMITTED FACT. THUS, WE ARE UNABLE TO UPHOLD THE DE LETION OF ADDITION BY THE CIT(A) IN TOTO. FURTHER, THE GROSS PROFIT RATES IN THE IMM EDIATE PRECEDING YEARS AT HIGHER RATE SHALL ALSO NOT BE A JUSTIFICATION FOR ACCEPTIN G THE CLAIM THAT AFTER DEBITING ALL THE EXPENSES, THE NET PROFIT FOR THE YEAR WAS 8.89% . AS STATED ABOVE, THERE WAS A SPECIFIC DEFECT, NOTED BY THE ASSESSING OFFICER, WH ICH HAS NOT BEEN CONTROVERTED, RATHER IT HAS BEEN ADMITTED THAT AUDITORS REMUNERA TION WAS NOT ALLOCATED TO THE VANASPATI DIVISION. THE DEDUCTION U/S. 80IB CAN BE ALLOWED ONLY AFTER REDUCING ALL RELEVANT EXPENSES RELATING TO THE PARTICULAR UNIT. FOR THIS PURPOSE, WE RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER TO WORK OUT THE 80IB DEDUCTION AFTER ALLOCATING THE EXPENSES WHICH HAVE NOT BEEN ALLOCAT ED BY THE ASSESSEE TOWARDS THE VANASPATI DIVISION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.10.2011. SD/- SD/- (H.S. SIDHU) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: OCTOBER, 2011 ITA NO. 410/AGRA/2010 4 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY