DCIT, Ludhiana V. M/s BBF Industries Limited, Ludhiana

ITA 411/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5102 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.411/CHD/2017 ASSESSMENT YEAR: 2010-11 THE DCIT VS. BBF INDUSTRIES LTD. CIRCLE 1 (FORMERLY KNOWN AS BHARAT BOX LUDHIANA FACTORY LTD.) 181, BEANTPURA CHANDIGARH ROAD LUDHIANA PAN NO. AAACB9276E (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SUDHIR SEHGAL REVENUE BY : MS. CHANDERKANTA DATE OF HEARING : 24/05/2017 DATE OF PRONOUNCEMENT : 07/06/2017 ORDER PER ANNAPURNA GUPTA A.M. THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)-2, LUDHIANA DT. 16/12/2016, ON THE F OLLOWING GROUNDS OF APPEAL: 1. WHETHER UPON FACTS AND CIRCUMSTANCES OF THE CASE IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFF ICER TO ALLOW THE MAT CREDIT AGAINST THE TAX LIABILITY PAYABLE BEFORE SUR CHARGE AND EDUCATION CESS? 2. THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. THE ONLY ISSUE IN THE PRESENT APPEAL PERTAINS TO SE TTING OFF OF MAT CREDIT AGAINST THE TAX LIABILITY PAYABLE BEFORE OR AFTER CHARGING SURCHARGE AND EDUCATION CESS THEREON. 3. BRIEF FACTS RELEVANT TO THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF DUPL EX CARTONS, PRINTED DISPLAY CARDS, PAPER LABEL, DISPLAY CARDS, PLASTIC MOULDED ARTICLES, MOSQUITO COILS, TOILET CLEANER AND TRADIN G. ASSESSMENT IN 2 THE IMPUGNED CASE WAS COMPLETED UNDER SECTION 143(3 ) OF THE ACT AND INCOME UNDER THE NORMAL PROVISION OF THE ACT WA S ASSESSED AT RS. 18,32,13,512/- AS AGAINST RS. 17,40,28,840/- RE TURNED BY THE ASSESSEE. THE BOOK PROFIT OF THE ASSESSEE UNDER SEC TION 115JB OF THE ACT WAS RETURNED AND ASSESSED AT RS. 17,29,32,586/- . TAX COMPUTED UNDER THE NORMAL PROVISION BEING MORE THAN THAT UND ER SECTION 115JB THE TAX LIABILITY OF THE ASSESSEE WAS DETERMI NED TO BE PAYABLE UNDER THE NORMAL PROVISION OF THE ACT. AGAINST THE SAME MAT CREDIT UNDER SECTION 115JAA, BROUGHT FORWARD FROM EARLIER YEARS WAS SET OFF. SUBSEQUENTLY AGAINST THE ORDER OF THE LD. CIT(A), A PPEAL WAS PREFERRED BEFORE THE ITAT AND ORDER DT. 20/11/2014 WAS PASSED BY THE ITAT REDUCING THE ASSESSED INCOME TO RS. 17,45, 10,825/-. CONSEQUENTLY APPEAL EFFECT ORDER WAS PASSED BY THE AO AND IN THE SAID APPEAL EFFECT ORDER THE AO DETERMINED THE TAX LIABILITY BY INCLUDING SURCHARGE AND CESS THEREON AND THERE AFTE R GAVE THE BENEFIT OF MAT CREDIT AGAINST THE SAME. 4. THE ASSESSEE CHALLENGED THE SAID ACTION OF THE A O BEFORE THE LD. CIT(A). THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE LD. CIT(A) REPRODUCED AT PARA 3.2 OF THE ORDER. IN HIS WRITTEN SUBMISSIONS THE ASSESSEE CONTENDED THAT SURCHARGE AND CESS SHOU LD HAVE BEEN LEVIED ON THE BALANCE TAX PAYABLE AFTER SETTING OFF OF MAT CREDIT FROM THE TAX PAYABLE DETERMINED BY APPLYING THE BAS IC RATE OF TAX. THE ARGUMENT OF THE ASSESSEE IN SUPPORT OF HIS CONT ENTION WERE AS FOLLOWS: (A) SINCE MAT CREDIT DO NOT INCLUDE SURCHARGE AND CESS, TAX PAYABLE FOR THE IMPUGNED YEAR, AGAINST WHICH MAT CR EDIT 3 WAS TO BE SET OFF, SHOULD HAVE BEEN DETERMINED ON T HE SAME BASIS I.E; WITHOUT INCLUDING SURCHARGE AND CES S. (B) EVEN AS PER THE MODALITY PRESCRIBED IN FORM ITR-6, FOR COMPUTING TAX LIABILITY ON TOTAL INCOME, SURCHARGE AND CESS ARE TO BE LEVIED AFTER SETTING OFF MAT CREDIT FROM THE TAX CALCULATED AS PAYABLE ON THE PRESCRIBED TAX RATE. (C) RELIANCE WAS PLACED ON THE DECISION OF ITAT CHA NDIGAR BENCH IN THE CASE OF M/S VARDHMAN TEXTILES LIMITED VS. ACIT CHANDIGARH IN ITA NO. 6/CHD/2015 DT. 12/07/2015. 5. LD. CIT(A) AFTER CONSIDERING THE ASSESSEES SUBM ISSION FOUND MERITS IN THE CONTENTION AND HELD THAT SURCHARGE AN D CESS OUGHT TO BE LEVIED AFTER SETTING OFF MAT CREDIT FROM THE TAX PAYABLE. LD. CIT(A) RELIED UPON THE JUDGMENT OF THE HONBLE ALLA HABAD HIGH COURT IN THE CASE OF DCIT VS. VACMENT INDIA LTD. 36 9 ITR 304 IN THIS REGARD AND ALSO THE DECISION OF THE HONBLE CHANDIG ARH BENCH IN THE CASE OF M/S VARDHMAN TEXTILES LIMITED (SUPRA). 6. AGGRIEVED BY THE SAME THE REVENUE HAS NOW CAME U P IN APPEAL BEFORE US. 7. DURING THE COURSE OF HEARING THE LD. DR CONTENDE D THAT SURCHARGE AND CESS BEING PART OF THE TAX LIABILITY SHOULD BE INCLUDED IN THE SAME BEFORE SETTING OFF MAT CREDIT. 8. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND R ELIED UPON THE ORDER OF THE LD. CIT(A) AND THE DECISION OF THE HON BLE ITAT CHANDIGARH BENCH IN THE CASE OF VARDHMAN TEXTILES(S UPRA). 9. WE HAVE HEARD THE CONTENTION OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD PLACED BEFORE US. THE ONLY ISSUE TO 4 BE ADJUDICATED IN THE PRESENT CASE IS WHETHER SURCH ARGE AND CESS IS TO BE LEVIED BEFORE ADJUSTMENT OF MAT CREDIT OR AFT ER. 10. LD. CIT(A), WE FIND HAS HELD THAT SURCHARGE AND CESS IS TO BE LEVIED AFTER SET OFF OF MAT CREDIT AND HAS RELIED U PON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF DCIT VS. VACMENT INDIA LTD. 369 ITR 304 AND THE DECISION OF THE CHAN DIGARH BENCH OF THE ITAT IN THE CASE OF M/S VARDHMAN TEXTILES LIMIT ED VS. ACIT CHANDIGARH IN ITA NO. 6/CHD/2015 DT. 12/07/2015 IN THIS REGARD. 11. WE HAVE GONE THROUGH BOTH THE ORDERS AND WE FIN D THAT IT HAS BEEN HELD CATEGORICALLY IN BOTH THE CASES THAT SURC HARGE AND CESS IS TO BE LEVIED AFTER SET OFF OF MAT CREDIT FROM THE T AX PAYABLE. 12. LD. DR HAS NOT BROUGHT BEFORE US ANY NEW FACT T O DISTINGUISH THE SAID CASE NOR HAS POINTED OUT TO US AS TO HOW T HE RATIO LAID DOWN IN THE SAID CASES WOULD NOT APPLY IN THE PRESENT CA SE. IN VIEW OF THE SAME WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A). IN VIEW OF THE SAME WE UPHOLD THE ORDER OF THE LD. CIT (A) HOLDING THAT SURCHARGE AND CESS HAS TO BE LEVIED AFTER SET OFF O F MAT CREDIT. 13. THE GROUND OF APPEAL RAISED BY THE REVENUE BEFO RE US ARE THEREFORE DISMISSED. 14. IN THE RESULT, APPEAL OF THE REVENUE IS THEREFO RE DISMISSED. SD/- SD/- (DIVA SINGH) (ANNAPURNA GUPTA ) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 07/06/2017 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR