Marshal Exports, V. ACIT, Range-I,

ITA 4141/DEL/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9839 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 12-08-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 26-10-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C
• Assessee Lawyers: ROHIT JAIN
• Keywords: Business income; Depreciation
• Section: 80HHC; 80IB; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `I : NEW DELHI) BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) M/S MARSHAL EXPORTS, VS. ACIT, RANGE I, 162, LAJPAT NAGAR, MORADABAD. MORADABAD (U.P.) (PAN/GIR NO.AAAAM1375P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ROHIT JAIN, ADV. REVENUE BY : SHRI P.C. PANCHOLI, DR ORDER PER A.K. GARODIA: AM THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE O RDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), BAREILLY DATE D 16.8.2005 FOR THE ASSESSMENT YEAR 2002-03. GROUND NO.1 OF THE APPEAL READS AS UNDER: 1. THAT ON THE FACTS AND CIRCUMSTANCES FOT HE CASE AND IN LAW THE IMPUGNED ORDER DATED 16.8.2005, PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS), BAREILLY, CIT(A) U/S 250 OF T HE INCOME-TAX ACT, 1961 (THE ACT) IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB INITIO. 2. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THIS GROUND IS GENERAL AND REQUIRES NO ADJUDICATION. 3. GROUND NOS.2,3,4 & 7 ARE INTERCONNECTED, WHICH R EAD AS UNDER: 2. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING DEDUCTION ADMISSIBLE TO THE APP ELLANT U/S 80IB OF THE ACT AT RS.2717256 AS AGAINST DEDUCTION OF RS .2784410 CLAIMED BY THE APPELLANT. 3. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING DEDUCTION ADMISSIBLE TO THE APP ELLANT U/S 80HHC OF THE ACT AT RS.5706240 AS AGAINST DEDUCTION OF RS.7796348 CLAIMED BY THE APPELLANT. I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 2 4. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING THAT FOR COMPUTING ALLOWABLE DEDU CTION U/S 80HHC ELIGIBLE PROFITS OF TTHE BUSINESS MUST BE REDUCED B Y DEDUCTION ALLOWED U/S 80IB OF THE ACT. 7. THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING DUTY DRAW BACK OF RS.743436 RELATI NG TO EARLIER YEAR BUT ACCRUED AND RECEIVED DURING THE YEAR, IS TO BE EXCLUDED FROM BUSINESS PROFITS OF THE CURRENT YEAR I.E. IT SHALL NOT BE ELIGIBLE FOR DEDUCTION U/S 80HHC AND U/S 80IB. 4. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THESE ISSUES ARE NOW COVERED AGAINST THE ASSESSEE BY THE JUDGMENT OF TH E SPECIAL BENCH OF THE TRIBUNAL, RENDERED IN THE CASE OF ACIT VS. HINDUSTA N MINT & AGRO PRODUCTS PVT. LTD. AS REPORTED IN 119 ITD 106 (DEL.(SB).LD.DR OF THE REVENUE ALSO MADE THE SAME SUBMISSIONS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL PLACED ON RECORD AND WE FIND THAT THE ISSUE IN THE PRESENT CASE REGARDING REDUCTION OF AMOUNT OF DEDUCTION ALLOWED U/S 80IB F ROM BUSINESS PROFIT FOR ALLOWING DEDUCTION U/S 80HHC IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL WHEREIN IT WAS HE LD THAT DEDUCTION TO BE ALLOWED UNDER ANY OTHER PROVISION OF CHAPTER VI-A WITHIN C , IS TO BE REDUCED BY THE AMOUNT OF DEDUCTION ALLOWED U/S 80IB/80IA OF THE IN COME-TAX ACT, 1961. IN THE PRESENT CASE, WE FIND THAT THE ASSESSING OFFICER HA S WORKED OUT THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IB OF RS.2717256. WHILE COMPUTING THE DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC, THE ASSESSING OFFICER HAS REDUCED THIS AMOUNT OF DEDUCTION ALLOWED U/S 80IB F ROM THE BUSINESS PROFIT AND ON THE REMAINDER AMOUNT OF PROFIT ONLY, DEDUCTION U /S 80HHC HAS BEEN WORKED OUT. THIS WORKING OF DEDUCTION ALLOWABLE U/S 80HHC DONE BY THE ASSESSING OFFICER IS IN LINE WITH THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF HINDUSTAN MINT & AGRO PRODUCTS PVT. LTD . (SUPRA) AND HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF TH E COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ASPECT OF THE ISSUE. I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 3 6. THERE IS ONE MORE ASPCT I.E. THAT AN AMOUNT OF R S.743436 WAS REDUCED BY THE ASSESSING OFFICER FROM BUSINESS PROFIT ON TH E BASIS THAT IT IS RECEIPT OF DUTY DRAW BACK FOR EARLIER YEARS. IT WAS SUBMITTED BY T HE LD.AR OF THE ASSESSEE THAT ADMITTEDLY, AN AMOUNT OF RS.743436 ON ACCOUNT OF DU TY DRAW BACK RECEIVED BY THE ASSESSEE IN THE PRESENT YEAR IS RELATED TO EARL IER YEAR, BUT THE ASSESSING OFFICER HAS REDUCED THE SAME FROM BUSINESS INCOME F OR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 8 0IB AND 80HHC, BUT THE TAXABLE INCOME OF THE ASSESSEE HAS BEEN COMPUTED BY THE ASSESSING OFFICER ON THE GROSS AMOUNT WITHOUT REDUCING SUCH DUTY DRAW BA CK RECEIVED BY THE ASSESSEE IN THE PRESENT YEAR WHICH IS RELATED TO EA RLIER YEAR. IT WAS HIS SUBMISSION THAT THE ASSESSING OFFICER CANNOT DO THE SAME. EITHER THE INCOME SHOULD BE REDUCED FROM THE TAXABLE INCOME OF THE PR ESENT YEAR ALSO AND IF IT IS NOT SO REDUCED FROM THE TAXABLE INCOME OF THE ASSES SEE OF THE PRESENT YEAR, THE SAME CANNOT BE REDUCED FROM BUSINESS PROFIT FOR THE PURPOSE OF COMPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IB AND 80 HHC. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE ARE IN AGREEMENT WITH LD .AR OF THE ASSESSEE THAT EITHER THE RECEIPT OF DUTY DRAW BACK RELATING TO EA RLIER YEAR IN THE PRESENT YEAR HAS TO BE REDUCED FROM TAXABLE INCOME ALSO IF THE ASSES SING OFFICER WANTS TO REDUCE THE SAME FROM BUSINESS PROFIT FOR THE PURPOSE OF CO MPUTING DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80IB AND 80HHC, BUT IF THE ASS ESSING OFFICER DOES NOT REDUCE THE SAME FORM TAXABLE INCOME OF THE PRESENT YEAR, THE ASSESSING OFFICER CANNOT REDUCE THE SAME FROM BUSINESS PROFIT ONLY FO R THE PURPOSE OF COMPUTING OF DEDUCTION ALLOWABLE TO THE ASSESSEE U/S 80HHC AND 8 0IB. WE FIND THAT ON PAGE NO.6 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS WORKED OUT INCOME OF THE ASSESSEE FROM THE EXPORT AT RS.11612463 AND IN ANNEXURE A1 & A2, THE ASSESSING OFFICER HAS COMPUTED THE DEDUCTION ALLOWA BLE TO THE ASSESSEE U/S 80IB AND 80HHC RESPECTIVELY. WHILE DOING SO, THE ASSESSING OFFICER HAS STARTED WITH THAT THE BUSINESS INCOME ASSESSED BY HIM AT RS.11612463 AND THEN I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 4 HE HAS REDUCED THE AMOUNT OF RS.743436 ON THE BASIS THAT IT IS DUTY DRAW BACK OF EARLIER YEAR. WE ARE OF THE CONSIDERED OPINION THA T ONCE THIS AMOUNT OF DUTY DRAW BACK OF EARLIER YEAR IS INCLUDED BY THE ASSESS ING OFFICER IN THE TAXABLE INCOME OF THE ASSESSEE FOR THE PRESENT YEAR, THE SA ME CANNOT BE EXCLUDED FROM BUSINESS PROFIT FOR THE PURPOSE OF COMPUTING DEDUCT ION ALLOWABLE TO THE ASSESSEE U/S 80IB & 80HHC. WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. THESE GROUNDS ARE PARTLY ALLOWED. 8. GROUND NO.5 OF THE APPEAL READS AS UNDER: THAT THE CIT(A) HAS ERRED ON FACTS AND I LAW IN UP HOLDING THE ADDITION MADE BY THE ACIT ON ACCOUNT OF DISALLOWANCE OF EXPE NSES IN RELATION OF FOREIGN TRAVELING EXPENSES OF RS.343260 WITHOUT APP RECIATING THE FACT HAT THE ASSESSEE HAD ALREADY DEBITED PERSONAL EXPENSES IN THE CAPITAL ACCOUNT OF PARTNERS. 9. BRIEFLY STATED, THE FACTS ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER ON PAGE 2 OF THE ASSESSMENT ORDER THAT IN THE P&L A/C, THE ASSESSEE HAD DEBITED FOREIGN TOUR EXPENSES TO THE TUNE OF RS.54.39 LAKH. THE ASSESSING OFFICER HAS FURTHER NOTICED THAT THESE EXPENSES INCLUDE THE EXC HANGE OF CURRENCY AMOUNTING TO RS.3811107. IT IS ALSO NOTED BY THE ASSESSING O FFICER THAT OUT OF THIS, CURRENCY EXPENSES OF RS.378512 ARE VOUCHED. REGARDING THE B ALANCE AMOUNT OF EXCHANGE EXPENSES OF RS.3432595, IT IS NOTED BY THE ASSESSING OFFICER THAT ASSESSEE HAS STATED THAT THESE EXPENSES ARE TOTALLY RELATED TO BUSINESS AND THEREFORE, NO DISALLOWANCE SHOULD BE MADE FORM THE ABOVE EXPENSES. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE CAPITAL ACC OUNT OF THE MEMBERS WHO VISITED FOREIGN COUNTRIES DO NOT SUGGEST REGARDING WITHDRAWAL FROM THEIR CAPITAL ACCOUNT OR OTHERWISE SPENT FOR THEIR PERSONAL EXPEN SES AS WELL AS PERSONAL ENTERTAINMENT WHILE ON FOREIGN TOUR. IT IS ALSO NO TED BY HIM THAT PERSONAL ENTERTAINMENT AND PERSONAL EXPENDITURE ARE NATURAL AND, THEREFORE, THE INVOLVEMENT OF PERSONAL ENTERTAINMENT COULD NOT BE RULED OUT. HE HAS REFERRED TO TRIBUNALS DECISION OF DELHI BENCH RENDERED IN THE CASE OF M/S RADICO KHAITAN LTD., RAMPUR FOR ASSESSMENT YEAR 1989-90 AND HE HAS ESTIMATED THE DISALLOWANCE ON THIS ACCOUNT AT RS.343260 BEING 10% OF RS.3432595 TOWARDS EXPENSES OF PERSONAL NATURE AS WELL AS PERSONAL ENT ERTAINMENT. BEING AGGRIEVED, I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 5 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E COMMISSIONER OF INCOME- TAX (APPEALS), BUT WITHOUT SUCCESS. NOW, THE ASSES SEE IS IN FURTHER APPEAL BEFORE US. 10. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THE AD HOC DISALLOWANCE IS NOT JUSTIFIED AND IN SUPPORT OF THIS CONTENTION, RELIANCE WAS PACED ON THE FOLLOWING THREE DECISIONS OF THE TRIBUNAL: A) MAHENDRA OIL CAKE INDUSTRIES (P) LTD., 55 TTJ 7 11. B) NODI EXPORT VS. ACIT, 24 SOT 526 C) ACIT VS. AMTEK AUTO LTD., 112 TTJ 455. 11. AT THIS JUNCTURE, IT WAS ENQUIRED BY THE BENCH REGARDING THE DETAILS OF FOREIGN CURRENCY EXPENSES AND IN REPLY, IT WAS SUBM ITTED BY THE LD.AR OF THE ASSESSEE THAT PROVIDING OF SUCH MINOR DETAILS IS N OT PRACTICABLE. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BEL OW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL PLACED ON RECORD AND HAVE GONE THROUGH THE ORDERS O F THE AUTHORITIES BELOW AND THE TRIBUNALS DECISIONS REFERRED TO BY THE LD.AR O F THE ASSESSEE. WE FIND THAT OUT OF FOREIGN CURRENCY EXCHANGE PURCHASED BY THE A SSESSEE OF RS.38,11,107, THE ASSESSEE HAS PROVIDED VOUCHERS REGARDING PART E XPENSES TO THE EXTENT OF RS.378512 AND NO SUCH VOUCHERS AND DETAILS WERE PRO VIDED FOR THE BALANCE AMOUNT OF RS.3432595. IN THE LIGHT OF THIS FACT, W E DO NOT FIND ANY SUBSTANCE IN THE CLAIM OF THE LD.AR OF THE ASSESSEE THAT PROVID ING VOUCHERS AND DETAILS FOR EXPENSES INCURRED ON FOREIGN TOUR OUT OF FOREIGN CU RRENCY PURCHASED IS NOT PRACTICAL. WHEN THE ASSESSEE CAN PROVIDE SUCH VOUC HERS AND DETAILS FOR AN AMOUNT OF RS.378512, WE FAILL TO UNDERSTAND AS TO W HY THE SAME CANNOT BE PROVIDED FOR THE BALANCE AMOUNT. IN THE ABSENCE OF VOUCHERS AND DETAILS FOR THE EXPENSES OF RS.34.32 LAKH, THE ASSESSING OFFICER IS LEFT WITH NO OPTION, BUT TO ESTIMATE THE EXPENSES OF PERSONAL NATURE EMBEDDED I N THE SAME. 13. REGARDING THE TRIBUNALS DECISION RENDERED IN T HE CASE OF MAHENDRA OIL CAKE INDUSTRIES PVT. LTD. VS. ACIT,55 TTJ 71, WE FI ND THAT IT WAS DECIDED ON THE BASIS THAT NO SPECIFIC ITEM OR INSTANCE OF PERSONAL EXPENDITURE HAS BEEN BROUGHT OUT BY THE AUTHORITIES BELOW. WE ARE OF THE CONSID ERED OPINION THAT IF COMPLETE I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 6 DETAILS AND VOUCHERS ARE PROVIDED BY THE ASSESSEE T HEN THE ASSESSING OFFICER, SHOULD POINT OUT SPECIFIC ITEM OF PERSONAL EXPENDIT URE TO MAKE ANY DISALLOWANCE. WITHOUT DOING THE SAME, NO DISALLOWANCE CAN BE MADE . IN THE PRESENT CASE, NO VOUCHER OR DETAILS OF EXPENSES HAS BEEN FURNISHED F OR THIS AMOUNT OF RS.34.32 LAKH AND HENCE IN THE PRESENT CASE, THE ASSESSING O FFICER HAD NO OPTION BUT TO ESTIMATE THE SAME. BECAUSE OF THIS REASON, THIS T RIBUNALS DECISION IS NOT APPLICABLE IN THE PRESENT CASE. 14. NOW, WE EXAMINE THE TRIBUNALS DECISION RENDERE D IN THE CASE OF NODI EXPORTS VS. ACIT, 24 SOT 526. IN THIS CASE ALSO, W E FIND THAT IT WAS NOTED BY THE TRIBUNAL THAT THE ASSESSING OFFICER HAS NOT POINTED OUT ANY EXPENDITURE WHICH COULD BE RELATED TO PERSONAL EXPENSES OF THE PARTNE R AND THE EMPLOYEES. THE TRIBUNAL HAS FOLLOWED ITS EARLIER DECISION OF MAHE NDRA OIL CAKE INDUSTRIES PVT. LTD. (SUPRA). SINCE, IN THE PRESENT CASE, NO VOUCH ER OR DETAILS WERE FURNISHED BY THE ASSESSEE TO THE ASSESSING OFFICER, THIS TRIBUNA LS DECISION IS ALSO NOT APPLICABLE BECAUSE IF THE DETAILS AND VOUCHERS ARE NOT PROVIDED BY THE ASSESSEE TO THE ASSESSING OFFICER, HOW THE ASSESSING OFFICER CAN POINT OUT SPECIFIC ITEM OF PERSONAL EXPENSES. 15. NOW, WE CONSIDER OTHER TRIBUNALS DECISION REND ERED IN THE CASE OF ACIT VS. M.TECH AUTO LTD., 112 TTJ 455. WE FIND THAT I N THIS CASE ALSO, IT WAS NOTED BY THE TRIBUNAL THAT NO SPECIFIC INSTANCE OF ANY NO N-BUSINESS RELATED BUSINESS HAS BEEN POINTED OUT BY THE ASSESSING OFFICER. FOR THE SAME REASON, THIS TRIBUNALS DECISION IS ALSO NOT APPLICABLE IN THE PRESENT CASE BECAUSE VOUCHERS AND DETAILS WERE NOT FURNISHED. WE, THEREFORE, CONFIRM THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE. THIS GROUND OF THE ASSESSEE IS REJECTED. 16. GROUND NO.6 OF THE APPEAL READS AS UNDER: THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDITION MADE BY THE ACIT ON A CCOUNT OF DISALLOWANCE OF EXPENSES IN RELATION OF :- A. CAR AND SCOOTER EXPENSES OF RS.15678 B. EMPLOYEE WELFARE EXPENSES OF RS.5247 C. TELEPHONE EXPENSES OF RS.73415 D. DONATION OF RS.3400 E. DEPRECIATION ON CAR FOR PERSONAL U/S 26019. I.T.A. NOS.4141/DEL./2005 (ASSESSMENT YEAR : 2002-03) 7 17. THIS GROUND WAS NOT PRESSED BY THE LD.AR OF THE ASSESSEE AND THE SAME IS DISMISSED AS NOT PRESSED 18. IN THE RESULTED, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 19. ORDER PRONOUNCED IN OPEN COURT ON 21ST AUGUST, 2009. (A.D. JAIN) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: AUG. 21, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), BAREILLY. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT