ITO 15(3)(4), MUMBAI V. REFLEXO EYEWEAR, NAVI MUMBAI

ITA 4421/MUM/2011

• Counselvise Citation: 442119914 RSA 2011
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-06-2012
• Assessment Year: misc
• Appeal Filed On: 01-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G K NAIR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH D , MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA NO.4421/MUM/2011 ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER WARD-15(3)(4) ROOM NO.115, MATRU MANDIR TARDEO MUMBAI-400 008. M/S. REFLEXO EYEWEAR 206, PLOT NO.85, SUBRAM PLACE SECTOR-15, KOPERKAIRNE NAVI MUMBAI-400 709. PAN NO. AAHFR 4373 R (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI G.K. NAIR RESPONDENT BY : NONE DATE OF HEARING : 18.6.2012 DATE OF PRONOUNCEMENT : 20.6.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER DATED 25.3.2011 OF CIT(A) FOR THE ASSESSMENT YEAR 2007-08. THE ONLY DISPUTE IN THIS APPEAL IS REGARDING DISALLOWANCE OF CLAI M OF DEDUCTION UNDER SECTION 80 IB(4). 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHO WAS ENGAG ED IN MANUFACTURING OF SPECTACLES, FRAMES ETC. FOR THE RELEVAN T YEAR, HAD ITA NO.4421/MUM/2011 A.Y.07-08 2 CLAIMED DEDUCTION UNDER SECTION 80IB(4) AT RS.64,27,838 /-. THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT NOT A SINGL E UNIT OF ELECTRICITY HAD BEEN CONSUMED DURING 1.10.2006 TO 31.3. 2007. THE ELECTRICITY DEPARTMENT HAD CHARGED ONLY RENT FOR THE M ETER DURING SUCH PERIOD. THE AO, THEREFORE, ASKED ASSESSEE TO EXPLAIN AS T O WHY THE CLAIM OF DEDUCTION UNDER SECTION 80 IB(4) SHOULD NOT BE DISALLOWED FOR THE SECOND HALF OF THE YEAR AS THERE WAS NO MANUFACTURIN G ACTIVITY. THE ASSESSEE EXPLAINED THAT THE MAIN REASON FOR NO UNIT CONSUMPTION WAS DEFECT IN THE ELECTRICITY METER, AND THEREFORE READ ING WAS SHOWN AS NIL. IT WAS ALSO SUBMITTED THAT IN THE ENTIRE PROCESS O F MANUFACTURING POWER WAS USED ONLY FOR SOLDERING AND BU FFING WHICH DOES NOT REQUIRE HEAVY ELECTRICITY CONSUMPTION. THE AO H OWEVER DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND OBSERVED THAT IT WAS FOR THE ASSESSEE TO PROVE THAT THE METER WAS FAULTY. HE CO NCLUDED THAT THERE WAS NO MANUFACTURING ACTIVITY FOR SECOND HALF OF THE YEAR AND DISALLOWED 50% OF CLAIM UNDER SECTION 80IB(4). 3. THE ASSESSEE DISPUTED THE DECISION OF AO AND SUBMITTED B EFORE CIT(A) THAT THE ASSESSEE WAS A MANUFACTURING CONCERN AND CL AIM OF DEDUCTION UNDER SECTION 80 IB(4) HAD BEEN ALLOWED FROM ASSESSMENT YEAR 2004-05 TO 2006-07 AND THIS WAS THE 4 TH YEAR. THE ASSESSEE ALSO SUBMITTED THAT THE DEDUCTION COULD NOT BE DISALLOWED O NLY ON THE GROUND OF NO CONSUMPTION OF ELECTRICITY. THE ASSESSEE FILE D FURTHER ITA NO.4421/MUM/2011 A.Y.07-08 3 DETAILS TO SUBSTANTIATE THE CLAIM THAT IT WAS A MANUF ACTURING CONCERN. CIT(A) FORWARDED DETAILS TO AO WHO IN THE REMAND R EPORT DATED 11.3.2011 REITERATED THE EARLIER STAND THAT THERE WA S NO CONSUMPTION OF ELECTRICITY DURING LATTER HALF OF THE YEAR, AND TH EREFORE, THERE WAS NO MANUFACTURING DONE. ACCORDINGLY DISALLOWANCE HAD BEEN CORRECTLY MADE. IN REPLY THE ASSESSEE STATED THAT THE ASTT. ENGINEE R, SUB DIVISION-III, DAMAN HAD STATED THAT NIL CONSUMPTION D URING THE PERIOD OCTOBER 2006 TO MARCH 2007 WAS DUE TO THE FACT THAT TH ERE WAS DOOR LOCK AND HENCE, READING COULD NOT BE TAKEN BUT READING S WERE TAKEN IN THE SUBSEQUENT PERIOD. THE ASSESSEE ALSO SUBMITTED THAT IT HAD GIVEN COPY OF AN ORDER FROM DEPARTMENT OF VALUE ADDED TAX FOR THE PERIOD 1.4.2006 TO 31.3.2007 BEFORE AO IN WHICH THE ASSESSEE H AD BEEN CONSIDERED AS A MANUFACTURING CONCERN THROUGHOUT THE YEAR WHICH THE LD. AO HAD IGNORED. CIT(A) AFTER CONSIDERING THE SUBM ISSIONS OF THE ASSESSEE AND ON EXAMINATION OF RECORDS NOTED THAT FOR THE RELEVANT YEAR THE ASSESSEE HAD SHOWN SALES FROM THE MANUFACTURING OF GOODS AT RS.2.69 CRORES COMPARED TO RS.2.68 CRORES IN THE PRECEDING YEAR AND NET PROFIT WAS SHOWN AT RS.66,70,990/- COMPARED TO RS.65 ,05,068/- IN THE PRECEDING YEAR. THUS PROFIT CLAIMED FOR DEDUCTION HAD BEEN DERIVED FROM MANUFACTURING ACTIVITY. CIT(A) REFERRED TO THE R EMAND REPORT DATED 11.3.2011 IN WHICH THE AO HAD STATED THAT IT W AS PROBABLE THAT THE ARTICLES DURING THE PERIOD 1.10.2006 TO 31.3.200 7 WERE ITA NO.4421/MUM/2011 A.Y.07-08 4 MANUFACTURED ELSEWHERE OR BROUGHT FROM SOME WHERE ELSE TO ASSESSEES PREMISES. CIT(A) OBSERVED THAT THE AO PRODUCED NO EVIDENCE IN SUPPORT OF THE CLAIM THAT THE ARTICLES IN TH E SECOND HALF WERE MANUFACTURED ELSEWHERE. CIT(A) CONCLUDED THAT THE AO HAD DENIED DEDUCTION WRONGLY. THE CLAIM WAS SUPPORTED BY AU DITORS REPORT IN FORM 10CCA AND ALL CONDITIONS WERE FULFILLED. CIT( A) THEREFORE, ALLOWED THE CLAIM OF THE ASSESSEE AGGRIEVED BY WHICH, TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL . 4. NO ONE APPEARED ON BEHALF OF THE ASSESSEE AT THE TIM E OF HEARING OF APPEAL THOUGH NOTICE OF HEARING HAD BEEN GIVEN WELL IN ADVANCE. WE, THEREFORE, PROCEED TO DECIDE THE APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AFTER HEARING THE L D. DEPARTMENTAL REPRESENTATIVE WHO PLACED RELIANCE ON THE ORDER OF AO . 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80IB(4) FOR SECOND HALF OF THE YEAR I.E. FROM 1.10.006 TO 31.3.2007 THE DISALLOWANCE HAS BEEN MADE ON THE GROUND THAT IN THE SECOND HALF THERE WAS NO CONSUMPTION OF ELECTRICITY. IN OU R VIEW, ONLY ON THE GROUND THAT THERE WAS NO CONSUMPTION OF ELECTRI CITY IN SECOND HALF OR CONSUMPTION WAS LESS CLAIM CAN NOT BE DISALLOWED, W HEN ASSESSEE IS A MANUFACTURING CONCERN AND THERE IS NO EVIDENCE TO PROVE ITA NO.4421/MUM/2011 A.Y.07-08 5 THAT THE ASSESSEE HAD DERIVED INCOME FROM OTHER SOURCES WHI CH WAS INCLUDED IN THE PROFIT CLAIMED FOR DEDUCTION. THOUGH AO IN THE REMAND REPORT MENTIONED THAT IT WAS PROBABLE THAT DURING TH E SECOND HALF, THE GOODS WERE MANUFACTURED ELSEWHERE OR BROUGHT FROM SOMEW HERE TO ASSESSEES PREMISES BUT THERE WAS NO EVIDENCE GIVEN IN SUPPO RT OF THIS FINDING. CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE F OR THE WHOLE YEAR HAD SHOWN SALES OF 2.69 CRORES FROM MANUFACTURING O F GOODS AND PROFIT FROM WHICH WAS RS.66,90,990/- WHICH HAD BEEN CLAI MED UNDER SECTION 80IB(4). THE CLAIM OF DEDUCTION UNDER SECTION 8 0IB(4) HAS BEEN ALLOWED IN THE EARLIER YEARS. THE LD. DR HAS NOT PRODUCED ANY MATERIAL BEFORE US TO CONTROVERT THE FINDING OF CIT(A ) THAT THE PROFIT DERIVED WAS FROM SALE OF MANUFACTURING OF GOODS. UNDER THESE CIRCUMSTANCES, THE DISALLOWANCE MADE BY AO @ 50% IS NOT COR RECT. WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) ALLOWING THE CLAIM AND SAME IS THEREFORE, UP HELD. 5. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.06.2012. SD/- SD/- (D. MANMOHAN) VICE PRESIDENT (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED:20.06.2012. JV. ITA NO.4421/MUM/2011 A.Y.07-08 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.