The DCIT, Central Circle-2(2), Ahmedabad V. Manek Chemicals Pvt.Ltd., Mehsana

ITA 4158/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6020 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 01-06-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 20-11-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER DATE OF HEARING : 01/06/2010 DRAFTED ON: 0 1/06/2010 ITA NO.4158/AHD/2007 ASSESSMENT YEAR : 2001-02 THE DCIT CENTRAL CIRCLE-2(2) AHMEDABAD VS. M/S.MANEK CHEMICALS PVT.LTD. OPP.ONGC COLONY, PALAVASNA, MEHSANA PAN/GIR NO. : AABCM 2883 K (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI M.C. PANDIT, SR. D.R. RESPONDENT BY: -NONE- O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE REVENUE WH ICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-III, AHMEDAB AD DATED 27/08/2007 AND THE SOLITARY SUBSTANTIAL GROUND READ S AS UNDER:- 1. THE LEARNED CIT(APPEALS) ERRED IN DIRECTING TO EXCLUDE THE NET INTEREST INCOME FOR COMPUTING THE DEDUCTION U/S.80I B OF THE ACT. 2. ON PERUSAL OF THE CORRESPONDING ASSESSMENT ORDE R PASSED U/S.143(3) R.W.S. 147 OF THE I.T. ACT, 1961 DATED 31/10/2006, IT WAS NOTICED THAT THE ASSESSEE-COMPANY IS IN THE BUSINES S OF MANUFACTURING OF BLEACH. THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.80 -IB OF THE I.T. ACT, 1961 OF RS.13,76,018/-. ACCORDING TO ASSESSING O FFICER WHILE ITA NO. 4158/AHD/2007 DCIT VS. M/S.MANEK CHEMICALS P.LTD. ASST.YEAR 2001-02 - 2 - COMPUTING THE DEDUCTION, THE ASSESSEE HAS NOT EXCLU DED INTEREST INCOME OF RS.7,29,012/-. ACCORDING TO HIM, THE INTEREST I NCOME WAS NOT ELIGIBLE FOR DEDUCTION. ACCORDINGLY, THE ASSESSING OFFICER HAS RE-COMPUTED THE DEDUCTION U/S.80-IB OF THE I.T. ACT, 1961 AT RS.11, 56,475/- AND THE SAID ACTION OF THE ASSESSING OFFICER IS THE SUBJECT MATT ER OF THIS APPEAL. 3. WHEN THIS ISSUE WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, VIDE PARAGRAPH NO.6, IT WAS HELD THAT ONLY NET INTE REST INCOME HAS TO BE EXCLUDED FOR THE PURPOSE OF THE DEDUCTION U/S.80-I B OF THE I.T. ACT, 1961; REPRODUCED BELOW:- 6. BEFORE ME, IT WAS SUBMITTED THAT THE DEDUCTION U/S.80IB CLAIMED AT RS.13.76 LAKHS HAS BEEN INCORRECTLY REST RICTED TO RS.11.56 LAKHS BY THE A.O. DESPITE THE FACT THAT TO N THE SIMILAR ISSUE AND FACTS, THE JURISDICTIONAL ITAT IN THE CAS E OF DCIT VS. MEERA INDUSTRIES, 87 ITD 475, HAD HELD THAT ONLY TH E NET INTEREST INCOME SHOULD HAVE BEEN EXCLUDED. THE RATIO OF THI S DECISION WAS HELD APPLICABLE IN CASE OF THE APPELLANT BY THE CI T(A) IN RESPECT OF A.Y. 2002-03 ALSO VIDE ORDER DATED 16/3/2006 IN APPEAL NO.CIT(A)-III/CC-2(1)/144/04-5 AND ALSO IN RESPECT OF A.Y. 2003- 04 AND 2004-05 AS WELL BY THE CIT(A), VIDE APPELLAT E ORDERS DATED 13/10/2006 AND 08/05/2007 RESPECTIVELY. AS SUCH, F OLLOWING THE DECISION OF THE ITAT, AHMEDABAD AND OF THE CIT(A) I N RESPECT OF OTHER ASSESSMENT YEARS, ON THE SAME ISSUE, THE A.O. IS DIRECTED TO EXCLUDE THE NET INTEREST INCOME FOR COMPUTING THE D EDUCTION U/S.80-IB AND ACCORD THE RESULTANT RELIEF. ITA NO. 4158/AHD/2007 DCIT VS. M/S.MANEK CHEMICALS P.LTD. ASST.YEAR 2001-02 - 3 - 4. ON THE DATE OF HEARING, AN ADJOURNMENT APPLICATI ON FROM THE SIDE OF THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE WAS RECEIVED. HOWEVER, CONSIDERING THE NATURE OF ADDITION AND THE VIEW TAKEN BY THE LEARNED CIT(APPEALS), WE HAVE FOUND THAT THE ISSUE IS DIRECTLY COVERED IN FAVOUR OF THE ASSESSEE, THEREFORE, WE HAVE PROCE EDED TO DECIDE THIS CASE ON MERITS AFTER HEARING THE LEARNED DEPARTMENT AL REPRESENTATIVE. 5. AS IS APPARENT FROM THE ORDER OF LEARNED CIT(APP EALS), RELEVANT PORTION REPRODUCED ABOVE, THE ISSUE WHETHER THE GRO SS INTEREST INCOME OR THE NET INTEREST INCOME IS TO BE EXCLUDED FROM THE COMPUTATION OF DEDUCTION U/S.80-IB OF THE I.T. ACT, 1961 NOW STOOD RESOLVED BY THE SEVERAL DECISIONS MOST IMPORTANTLY THE DECISION OF THE RESPECTED CO- ORDINATE BENCH IN THE CASE OF DCIT VS. MIRA INDUSTR IES 87 ITD 475 WHEREIN IT WAS HELD THAT THE ASSESSING OFFICER SHOU LD EXCLUDE ONLY THE NET INTEREST INCOME FROM THE PROFITS AND GAINS SH OWN IN THE PROFIT & LOSS ACCOUNT TO ARRIVE AT THE INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING. A LATEST DECISION OF HON'BLE DELHI HI GH COURT IN THE CASE OF CIT VS. SHRI RAM HONDA POWER EQUIP (2007) 289 ITR 4 75 (DEL.) HAS ALSO LAID DOWN THE IDENTICAL RULE, THOUGH IN THE CO NTEXT OF 80HHC, EXPLANATION (BAA), WHICH CAN BE APPLIED MUTATIS MU TANDIS TO THE PRESENT APPEAL. 6. SINCE A VIEW HAS ALREADY BEEN TAKEN IN FAVOUR OF THE ASSESSEE, THEREFORE, THE GROUND RAISED BY THE REVENUE AGAINST THE DIRECTION TO EXCLUDE THE NET INTEREST INCOME FORM THE CALCULATIO N OF DEDUCTION ITA NO. 4158/AHD/2007 DCIT VS. M/S.MANEK CHEMICALS P.LTD. ASST.YEAR 2001-02 - 4 - U/S.80-IB OF THE I.T. ACT, 1961 STOOD HEREBY DECIDE D IN FAVOUR OF THE ASSESSEE, WITH THE RESULT THE GROUND RAISED BY THE REVENUE IS DISMISSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 11/ 06 /2010. SD/- SD/- ( A.N. PAHUJA ) ( MUKUL SHRAWA T ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11 / 06 /2010 T.C. NAIR, SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-III, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD