DCIT, New Delhi V. M/s. Lumax Ancilary Ltd., New Delhi

ITA 4345/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3836 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: D , NEW DELHI BEFORE SHRI G.D.AGRAWAL , HON BLE PRESIDENT AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 43 4 5 /DEL/201 4 AY: 20 11 - 12 DCIT, CIRCLE 4(1) NEW DELHI VS . LUMAX ANCILARY LTD. B 86, MAYAPURI INDUSTRIAL AREA PHASE I NEW DELHI PAN: AABCJ 2911 R (APPELLANT) (RESPONDENT) APPELLAN T BY SH. AMIT JAIN, SR.DR RESPONDENT BY SH. RATNESH GUPTA , C.A . DATE OF HEARING 18.01.2018 DATE OF PRONOUNCEMENT 30.01.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER T HE PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER DATED 2 7 /05/14 PASSED BY LD.CIT(A) - 8, NEW DELHI FOR ASSESSMENT YEAR 2011 - 12 ON THE FOLLOWING GROUNDS OF APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.2,04,01,620/ - MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80 IC? 2. THAT THE ORDER OF THE LD.CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 2 OF 7 3. THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR FOREGO ANY GROUNDS OF APPEAL ABOVE AT T HE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : A SSESSEE FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME OF RS.3,71,64,507/ - ON 24/09/11. THE RETURN WAS PROCESSED UNDER SECTION 143(1) AND SUBSEQUENTLY WAS SELECTED FOR SCRUTINY. ACC ORDINGLY NOTICES UNDER SECTION 143(2) OF THE A CT WAS ISSUED ALONG WITH NOTICE UNDER SECTION 142(1) AND QUESTIONNAIRE. IN RESPONSE TO THE STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD. AO AND FILED REQUISITE DETAILS/INFORMATION. 2.1. LD . AO OBSERVED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF AUTO COMPONENTS AND HAD CLAIMED EXEMPTION UNDER SECTION 80 IC OF THE A CT AT RS.2,04,01,620/ - . 2.2. LD. AO DISALLOWED THE CLAIM UNDER SECTION 80 IC ON THE GROUND THAT SIMILAR DISALLOWANCE WAS MADE IN THE EARLIER ASSESSMENT YEARS BEING 2009 - 10 AND 2010 - 11. FURTHER LD. AO OBSERVED THAT ASSESSEE DO NOT HAVE ANY COGENT EXPLANATION FOR VARIATION IN PROFIT RATE WITH RESPECT TO EXEMPT AN D NON - EXEMPT UNIT. HE HAS ALSO RECORDED THAT ASSESSEE HAS FAILED TO EXPLAIN THE DIFFERENCE IN THE DIRECT EXPENSES WHICH VARIES FROM 15.46% IN GURGAON UNIT TO 4.72% IN THE RUDRAPUR UNIT. 2.3 . AGGRIEVED BY THE ORDER OF LD.AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) WHO ALLOWED THE CLAIM OF ASSE SSEE UNDER SECTION 80IC BY FOLLOWING THE ORDER PASSED OF HIS PREDECESSOR FOR ASSESSMENT YEAR 2009 - 10. ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 3 OF 7 2.4. AGGRIEVED BY THE ORDER OF LD.CIT(A) REVENUE IS IN APPEAL BEFORE US NOW. 2.5. LD. DR PLACED RELIANCE UPON THE ORDER OF LD. AO. 2.6 . AT THE OUTSET LD. AR SUBMITTED THAT THE ISSUE STANDS COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF THIS T RIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 IN ITA NO. 5631/DEL/2012 VIDE ORDER DATED 24/09/14 AND ITA NO. 22 88/DEL/2014 VIDE ORDER DATED 2 1/03/17 RESPECTIVELY. 2.7. LD.AR FURTHER SUBMITTED THAT ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR EACH UNIT AND IS PREPARING PROFIT AND LOSS ACCOUNT AND BALANCE SHEET UNIT WISE. HE HAS ALSO URGED THAT THERE HAS BEEN NO DISCREPANCY OBSERVED BY L D.AO OR ANY VIOLATION BY ASSESSEE AS PER SECTION 80 IC OF THE ACT. 3. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. IT IS OBSERVED THAT THE ISSUE STANDS SQUARELY COVERED BY ORDER OF THIS T RIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2009 - 10 AND 2010 - 11. FOR THE SAKE OF CONVENIENCE WE ARE REPRODUCING HERE UNDER THE RELEVANT EXTRACT OF THE ORDER PASSED FOR ASSESSMENT YEAR 2010 - 11 IN ITA NO. 2 2 88/DEL/2014 WHICH IS AS UNDER: 8. WE HAVE PERUSED T HE SUBMISSIONS ADVANCED BY BOTH THE SIDE S IN THE LIGHT OF RECORDS PLACED BEFORE US. ON PERUSAL OF ORDER PASSED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2009 - 10 IN ASSESSEE'S OWN CASE, THERE IS A CATEGORICAL FACTUAL OBSERVATION IN RESPECT OF SIMILAR ALLEGATION S RAISED BY ASSESSING OFFICER THEREIN. THIS TRIBUNAL OBSERVED AS UNDER: ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 4 OF 7 6. THE FIRST APPELLATE AUTHORITY AT PARA 5.3 OF THIS ORDER GAVE THE FOLLOWING FACTUAL FINDINGS: A) THE GURGAON IS A VERY OLD UNIT AND WHEREAS RUDRAPUR AND PUNE UNIT STARTED MANUFACTU RING ON 1.11.2007 AND 16.1.2008 RESPECTIVELY. B) THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR EACH UNIT AND IS PREPARING PROFIT AND LOSS ACCOUNT , BALANCE SHEET UNIT WISE. C) THE CONSUMPTION OF RAW MATERIAL FOR RUDRAPUR UNIT AND PUNE UNIT D URING THE YEAR HAS COME DOWN AS COMPARED TO F. Y. 2007 - 08, BUT IT IS STILL HIGHER AS COMPARE TO GURGAON UNIT. THE COMPARATIVE DETAILS JUSTIFIES THE DIFFERENCE IN CONSUMPTION OF RAW MATERIAL AS EACH UNIT IS MANUFACTURING DIFFERENT VARIETIES OF PRODUCTS UNDE R THE SAME CLASSIFICATION AND THE QUANTUM OF GOODS MANUFACTURED / SELLING PRICE AS WELL AS CUSTOMERS ARE DIFFERENT FOR EACH UNIT. D) THE PERCENTAGE OF CONSUMPTION OF RAW MATERIAL FOR RUDRAPUR UNIT IS LOWER IN COMPARISON WITH THE PERCENTAGE OF CONSUMPTION O F RAW MATERIAL OF PUNE UNIT. E) NO DEFICIENCY WAS FOUND BY THE DCIT IN THE STOCK RECORDS MAINTAINED IN RUDRAPUR UNIT AND THE EXCISE RECORD MAINTAINED IN GURGAON AND PUNE UNIT. F) NO DEFECTS WERE POINTED OUT BY THE ASSESSING OFFICER WHILE VERIFYING THE EX PENSES OF ALL THE UNITS. G) THE DATA DISCLOSE THAT THE MANUFACTURING EXPENSES OF GURGAON UNIT HAVE COME DOWN FROM 21.41 % IN ASSESSMENT YEAR 2006 - 07 TO 20.07% IN ASSESSMENT YEAR 2009 - 10 AND THEREFORE THE ALLEGATION OF ASSESSING OFFICER THAT THE ASSESSEE H AS DIVERTED THE RUDRAPUR UNIT EXPENSES TO GURGAON UNIT TO CLAIM MORE DEDUCTION IS NOT SUBSTANTIATED BY THESE FIGURES AND THE AL L EGATION OF THE ASSESSING OFFICER IS NOT BASED ON CORRECT APPRECIATION OF FACTS. H) SIMILARLY , THE FIGURES OF ADMINISTRATIVE , S ELLING AND DISTRIBUTION EXPENSES DO NOT SUBSTANTIATE THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS DIVERTING EXPENSES OF RUDRAPUR UNIT TO GURGAON UNIT TO CLAIM THE HIGHER DEDUCTION U/ S 80 IC OF THE ACT. I ) THE DATA SHOWS THAT THE PROFITS DECLARED BY GURGAON UNIT HAS INCREASED AS COMPARE TO THE EARLIER YEARS AND HENCE THE ALLEGATION ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 5 OF 7 OF THE ASSESSING OFFICER OF TRANSFERRING EXPENSES FOR RUDRAPUR UNIT TO GURGAON UNITS IS ERRONEOUS. J) THE ALLEGATION OF THE A SSESSING OFFICER THAT NO PROPER ALLOCATION OF COMMON EXPENSES HAS BEEN DONE BY THE ASSESSEE IS NOT BASED ON CORRECT APPRECIATION OF FACTS. K) DETAILS OF WAGES , ALLOWANCES AND JOB WORK CHARGES OF GURGAON UNIT HAS COME DOWN DURING THE A.Y. 2006 - 07. THIS S HOWS THAT THE ALLEGATION OF THE A.O. OF TRANSFER OF EXPENSES ON WAGES FROM RUDRAPUR UNIT TO GURGAON UNIT IS NOT SUPPORTED BY FACTS. L) GURGAON UNIT AND PUNE UNIT ARE PAYING EXCISE DUTY ON THE ITEMS MANUFACTURED AND WHEREAS RUDRAPUR UNIT DOES NOT PAY ANY E XCISE DUTY. THIS HAS RESULTED IN THE PROFIT PERCENTAGE BEING DIFFERENT FOR EACH UNIT. M) THERE ARE NO DEFECTS POINTED OUT BY THE A.O IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 9. IT HAS FURTHER BEEN SUBMITTED BY LD. AR THAT ASSESSING OFFICER WH ILE CARRYING ON WITH THE ASSESSMENT PROCEEDINGS FOR ASSESSMENT YEAR 2014 - 15 BEING THE SUBSEQUENT ASSESSMENT YEAR, HAS ACCEPTED THE DE DUCTION CLAIMED BY ASSESSEE ON SIMILAR FACTS UNDER SECTION 80 IC. 3.1. LD. D.R. OR LD.AO HAS NOT BROUGHT TO OUR NOTICE ANY DISTINGUISHING FACTS. RESPECTFULLY FOLLOWING THE SAME WE DISMISS THE GROUNDS RAISED BY REVENUE. 4. IN THE RESULT APPEAL FILED BY REVENUE STANDS DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON 30 TH JANUARY, 2018. SD/ - SD/ - ( G.D.AGRAWAL ) (BEENA A PILLAI) PRES IDENT JUDICIAL MEMBER DT. 30 TH JANUARY, 2018 ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 6 OF 7 C OPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA 4345/DEL/2014 A.Y. 2011 - 12 DCIT VS. LUMAX ANCILARY LTD., NEW DELHI PAGE 7 OF 7 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON DRAGON 18.01.18 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER