DCIT 24(3), MUMBAI V. CELLO STATIONERY PRODUCTS, MUMBAI

ITA 4365/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7179 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 20-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C ,MUMBAI BEFPRE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI A. L. GEHLOT, ACCOUNTANT MEMBER I.T.A.NO.4365/MUM/2009 (A.Y. 2006-07) DY.COMMR.OF INCOME-TAX-24(3), R.NO.701, CIT(A)-11, 7 TH FLOOR, BKC, BANDRA (E),MUMBAI-400051. VS. M/S. CELLO STATIONERY PRODUCTS, 5, VAKIL INDL.ESTATE, WALBHAT RD., GOREGAON (E),MUMBAI-63. PAN:AADFC8145P APPELLANT RESPONDENT APPELLANT BY SHR I AJIT KUMAR SINHA. RESPONDENT BY SHRI N ITESH JOSHI. O R D E R PER D. MANMOHAN, VICE PRESIDENT: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 25-5-2009 PASSED BY THE CIT(A)XXIV, MUMBAI, AND IT PERTAINS T O THE ASSESSMENT YEAR 2006- 07. ELIGIBILITY TO CLAIM DEDUCTION UNDER SEC. 80IB OF THE ACT, IN THE PECULIAR CIRCUMSTANCES OF THE CASE, IS SUBJECT MATTER OF DIS PUTE BEFORE US. 2. AT THE TIME OF HEARING, BOTH THE PARTIES ADMITTE D THAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UNDER CONSIDE RATION ARE IDENTICAL TO THE FACTS IN THE ASSESSEES OWN CASE FOR THE IMMEDIATEL Y PRECEDING YEAR I.E. ASSESSMENT YEAR 2005-06. VIDE ITA NO.5866/MUM/08 DA TED 23-2-2010, THE ITAT, C-BENCH, MUMBAI, CONSIDERED THIS ISSUE ELABOR ATELY AND ARRIVED AT A CONCLUSION THAT THE ASSESSEE IS ENTITLED TO DEDUCTI ON U/S.80IB OF THE ACT IN RESPECT OF ITS ENTIRE PROFITS. 3. IN SO FAR AS THE ASSESSMENT YEAR 2006-07 I S CONCERNED, THE LD. CIT(A) ITA 4365/M/09 CELLO STATIONERY PRODUCTS 2 ACCEPTED THE PLEA OF THE ASSESSEE BY FOLLOWING THE DECISION OF HIS PREDECESSOR FOR THE ASSESSMENT YEAR 2005-06 AND IN THIS REGARD OBSE RVED AS UNDER : 4.2 THERE IS NO DIFFERENCE IN FACTS DURING THIS YE AR. I THEREFORE DO NOT FIND ANY REASON TO DIFFER FROM THE DETAILED FIN DINGS OF THE CIT(A) MADE IN THE A.Y. 2005-06. THE FACTS OF CASE AS DISC USSED IN THE ASSESSMENT YEAR 2005-06 DO NOT LEAVE ANY DOUBT TO S HOW THAT CSM WAS FLOATED FOR EFFICIENT & COORDINATED MARKETING O F SIMILAR PRODUCTS MANUFACTURED BY VARIOUS GROUP CONCERNS & NOT FOR AN Y TAX BENEFIT. I AGREE WITH LD. A.R. THAT IF CSM HAD NOT BEEN CREATE D, THE GROUP CONCERNS WOULD HAVE DONE THE MARKETING THEMSELVES. THEY WOULD NOT HAVE PASSED ON THE DISCOUNT OF 25% TO CSM & WOU LD HAVE INCURRED THE EXPENSES INCURRED BY CSM THEMSELVES. I N THAT CASE THEIR PROFIT WOULD HAVE BEEN HIGHER BY THE AMOUNT O F THE PROFIT OF CSM. THE PROFIT OF THE APPELLANT WOULD HAVE BEEN 44 .24% [44.10 + 0.14%]. IN SUCH A SITUATION THE AMOUNT OF CLAIM U/S .80IB WOULD HAVE BEEN HIGHER & THE DEPARTMENT WOULD HAVE ALLOWE D SUCH HIGHER AMOUNT OF DEDUCTION. UNLESS CSM HAD SHOWN LOSS, IT CANNOT BE SAID AS A CASE OF UNDUE TRANSFER OF EXPENSES FROM THE AP PELLANT & OTHER MANUFACTURING CONCERNS TO CSM. THE VOLUME OF BUSINE SS OF CSM WITH THE APPELLANT WAS HARDLY 10% OF ITS TOTAL VOLU ME. 90% OF PURCHASES OF CSM WERE MADE FROM OTHER GROUP CONCERN S & THE MANNER OF BUSINESS WITH ALL GROUP CONCERNS WAS EXAC TLY SIMILAR. IT IS SEEN FROM THE ASSESSMENT ORDER OF GROUP CONCERNS FO R THE ASSESSMENT YEAR 20067-07 THAT NO DISALLOWANCE OF DE DUCTION U/S.80IB WAS MADE IN ANY SUCH CASE THOUGH THEIR ASS ESSMENTS WERE MADE IN SCRUTINY. IN VIEW OF ALL THESE DISCUSSIONS & REASONS DISCUSSED IN THE ASSESSMENT YEAR 2005-06 I HOLD THA T THE A.O. WAS NOT JUSTIFIED IN RESTRICTING THE ALLOWANCE OF DEDUC TION U/S.80IB ON HIS ACCOUNT. THE DISALLOWANCE MADE ON THIS ACCOUNT IS D ELETED. THE VIEW TAKEN BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06 WAS UPHELD BY THE ITAT (SUPRA). UNDER THESE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) AND THEREFORE DISMIS S THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED ON THE 30TH DAY OF MARCH, 20 10. SD/- SD/- (A.L. GEHLOT) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI: 30TH MARCH , 2010 ITA 4365/M/09 CELLO STATIONERY PRODUCTS 3 COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-XXIV,MUMBAI. 4 CIT-24,MUMBAI. 5.DR,C BENCH,MUMBAI. 6. GUARD FILE. (TRUE COPY) BY ORDER, NG: ASST.REGISTRAR, ITAT, MUMBAI. ITA 4365/M/09 CELLO STATIONERY PRODUCTS 4 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26-3-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 29-3-10 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER