M/S. VSL WIRES LTD, MUMBAI V. THE DCIT CEN CIR- 18 & 19, MUMBAI

ITA 456/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55152 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 30-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 21-01-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Assessee Lawyers: A K GHOSH
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 456/MUM/2008 ASSESSMENT YEAR : 2002-03 VSL WIRES LTD., APPELLANT 10, IMPERIAL CHAMBERS, WILSON ROAD, BALLARD ESTATE, MUMBAI 400 038. (PAN AABCV2362A) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT CENTRAL CIRCLE 18 & 19, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. APPELLANT BY : MR. A.K. GHOSH RESPONDENT BY : MR. SUBACHAN RAM DATE OF HEARING : 30/08/2011 DATE OF PRONOUNCEMENT : ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A)- CENTRAL-VI, MUMBAI, PASSED ON 29/10/2007 FOR THE ASSESSMENT YEAR 2002-03. 2. GROUND NO.1 READS AS UNDER:- 1. (A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) ERRED IN HOLDING AOS ACTION THAT THE APPELL ANT IS NOT ENTITLED TO DEDUCTION U/S 80 HHC AMOUNTING TO RS. 2 4,20,953/-. (B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO AS WELL AS THE CIT(A) ERRED IN NOT ADJUDICATING THE APPELLANTS CLAIM THAT DEPB CREDIT OF RS. 3,59,96,154/- WILL GO TO REDUCE THE COST OF MATERIAL CONSUMED/EXPORTED GOODS. ITA NO. 456/MUM/2008 M/S VSL WIRES LTD. 2 (C) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN HOLDING AOS ACTION THAT 90% OF DEP B CREDIT IS TO BE REDUCED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80 HHC INSTEAD OF 90% OF TH E PROFIT ON TRANSFER OF THE DEPB LICENCE AS PER EXPLANATION (BA A) OF SEC. 80 HHC READ WITH CLAUSES (IIID) & (IIIE) OF SEC. 28 OF THE ACT. (D) WITHOUT PREJUDICE TO GROUND NOS. 1 (A), (B) & ( C) THE LD. CIT(A) ERRED IN HOLDING THE AOS ACTION OF REDUCING 90% OF DEPB CREDIT FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80 HHC DESPITE THE FACT THAT DEPB CRE DIT IS ASSESSABLE UNDER CLAUSE (IV) OF SEC. 28 OF THE ACT. (E)WITHOUT PREJUDICE TO GROUND NOS. 1(A), (B), (C) & (D), THE LD. CIT(A) ERRED IN NOT DIRECTING THE AO TO EXCLUDE UNR EALIZED/UNSOLD DEPB CREDIT FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME, THOUGH THE SAME WAS SPECIFICALLY ARGUED DURING THE COURSE OF APPELLATE PROCEEDINGS DESPITE THE FACT THAT THE LD. CIT(A) HELD THAT THE SAME HAS NOT ACCRUED DURING THE YEAR UNDER CONSIDERATION. (F) WITHOUT PREJUDICE TO GROUND NOS. 1(A), (B), (C) , (D) & (E), THE CIT(A) FAILED TO APPRECIATE THAT THE FACE VALUE OF DEPB CREDIT/LICENCE IS CHARGEABLE TO TAX U/S 28(IIIB). 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CANVASSED THAT THE ISSUES RAISED UNDER GROUND NO. 1 , ARE SQUARELY COVERED BY THE DECISION OF THE ITAT, MUMBAI BENCHES , MUMBAI IN ASSESSEES OWN CASE FOR AY 2004-05 & 2005-06 IN ITA NO. 493 & 494/MUM/08 VIDE ORDER DATED 9 TH MARCH, 2011. THE LEARNED DR, ON THE OTHER HAND, DID NOT CONTROVERT THE SAID SUBMISS ION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE FIND THAT THE ITAT IN AY 2004-05 & 2005-06 FO LLOWING THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS [2010] 192 TAXMAN 435 (BOM) REMITTED THE ISSUES BACK TO THE FILE OF THE AO TO R ECONSIDER THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW I.E. IN THE LIGHT OF THE SAID DECISION OF HONBLE HIGH COURT (SUPRA). SINCE THE ISSUES UNDER CONSIDERATION IS SIMILAR TO THAT OF AY 2004-05 & 20 05-06, WE RESPECTFULLY FOLLOW THE DECISION OF CO-ORDINATE BEN CH IN THOSE YEARS ITA NO. 456/MUM/2008 M/S VSL WIRES LTD. 3 AND IN THE LIGHT OF THAT WE REMIT THE ISSUES BACK T O THE FILE OF THE AO WITH IDENTICAL DIRECTIONS. 5. GROUND NO. 2 & 3 READ AS UNDER:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ESTIMATED DISALLOWAN CE MADE BY THE AO OUT OF TELEPHONE EXPENSES AMOUNTING TO RS. 4 4,709/- ON AD-HOC BASIS DESPITE THE FACT THAT NO EVIDENCE OR M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ESTIMATED DISALLOWAN CE MADE BY THE AO OUT OF MOTOR CAR EXPENSES AMOUNTING TO RS. 2 0,748/- ON AD-HOC BASIS DESPITE THE FACT THAT NO EVIDENCE OR M ATERIAL WAS FOUND DURING THE COURSE OF SEARCH. 6. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASESSSEE HAS SUBMITTED THAT THE ISSUES RAISED IN GROUND NOS. 2 & 3 ARE COVERED BY THE DECISION OF ITAT, MUMBAI BENCHES, MUMBAI IN ASS ESSEES OWN CASE FOR AY 2004-05 & 2005-06 (SUPRA). ON THE OTHER HAND, THE LEARNED DR HAS NOT OBJECTED TO THE SUBMISSION OF TH E ASSESSEE. 7. WE FIND THAT THE ITAT IN AY 2004-05 & 2005-06 (S UPRA) RESTORED THE ISSUES BACK TO THE FILE OF THE CIT(A) FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF VIRAJ IMPO EXPO LTD. VS. DC IT IN ITA NO. 497/M/08 FOR AY 2005-06 VIDE ORDER DATED 23/04/09. SINCE THE ISSUES ARE SIMILAR TO THAT OF AY 2004-05 2005-06, F OLLOWING THE DECISION OF CO-ORDINATE BENCH IN AY 2004-05 & 2005- 06, WE REMIT THE ISSUES BACK TO THE FILE OF THE CIT(A) TO RE-DECIDE THE ISSUES FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA). 8. GROUND NO. 4 REGARDING CONFIRMING THE ADDITION O F RS. 10,721/- ON ACCOUNT OF EXPENDITURE RELATING TO THE PRIOR PER IOD, HAS NOT PRESSED AT THE TIME OF HEARING BEFORE US, THEREFORE, THE SA ME IS DISMISSED AS NOT PRESSED. ITA NO. 456/MUM/2008 M/S VSL WIRES LTD. 4 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF SEPTEMBER, 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 14 TH SEPTEMBER, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, F BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.