Punjab Steels, Mandi Gobindgarh V. ACIT, Mandi Gobindgarh

ITA 466/CHANDI/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95747 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Business income; Condonation of delay
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.466/CHD/2015 (ASSESSMENT YEAR : 2009-10) PUNJAB STEELS, VS. THE A.C.I.T., VILL. TOORAN, AMLOH ROAD, CIRCLE MANDI MANDI GOBINDGARH. GOBINDGARH. PAN: AAEEP1241Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 01.12.2015 DATE OF PRONOUNCEMENT : 08.12.2015 O R D E R PER RANO JAIN, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 27.11.2014 FOR ASSESSMENT YEAR 2009-10. WE OBSERVE THAT THERE IS A DELAY OF 80 DAYS IN FI LING THE APPEAL. IT WAS STATED IN THE APPLICATION FOR CONDONATION OF DELAY THAT THE DELAY OCCURRED DUE TO SUDDEN ILLNESS OF THE CONCERNED OFFICIALS, SHRI KUL WANT RAI BANSAL AND SHRI RAJESH KUMAR MITTAL, PARTNERS OF TH E ASSESSEE FIRM. AN AFFIDAVIT OF SHRI RAJESH KUMAR M ITTAL 2 AND ANOTHER AFFIDAVIT OF SHRI KULWANT RAI BANSAL WA S ALSO FILED TO THIS EFFECT TOGETHER WITH THE PRESCRIPTION OF DOCTOR. ON PERUSAL OF THE SAME, WE ARE INCLINED TO CONDONE THE DELAY IN FILING THE APPEAL AS THE REASON FOR DELAY WAS ON ACCOUNT OF UNAVOIDABLE CIRCUMSTANCES BEYOND THE CON TROL OF THE ASSESSEE. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT A SURVE Y WAS CONDUCTED IN CASE OF THE ASSESSEE AS ON 9.1.20 09. DURING THE SURVEY PROCEEDINGS, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF RS.1.50 CRORES ON ACCOUNT OF C ASH, STOCK OF ROLLS AND MOULDS. THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON THE INCOME INCLUDING THE ADDITIONAL INCOME SURRENDERED DURING THE COURSE OF SURVEY. TH E CONTENTION OF THE ASSESSEE BEFORE THE ASSESSING OFF ICER WAS THAT THE ADDITIONAL INCOME WAS DERIVED FROM CAR RYING ON OF INDUSTRIAL UNDERTAKING AS A RESULT OF MANUFAC TURING PROCESS, AS WAS DULY MENTIONED IN THE LETTER ADDRES SED TO THE ADDL. CIT DURING THE COURSE OF SURVEY. HOWEVER , REJECTING THE SUBMISSIONS OF THE ASSESSEE THE ASSES SING OFFICER HELD THAT FOR CLAIMING DEDUCTION UNDER SECT ION 80IB OF THE ACT, THE ONUS IS ON THE ASSESSEE TO PRO VE THAT SUCH INCOME IS DERIVED FROM INDUSTRIAL UNDERTAKING. THE SURRENDERED AMOUNTS AND THE EXCESS STOCK OF ROLLERS OR MOULDS WERE NOT RECORDED IN THE REGULAR BOOKS OF AC COUNT. THEREFORE, HE HELD THAT THE SURRENDERED INCOME CANN OT BE SAID TO BE DERIVED FROM INDUSTRIAL UNDERTAKING. RE LYING 3 ON THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF HOME TEX VS. CIT, (2011) 243 CTR 81 (P&H), THE ASSESSING OFFICER DISALLOWED THE DEDUCTI ON CLAIMED UNDER SECTION 80IB OF THE ACT ON THE SURREN DERED INCOME. 3. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER AND AGAIN CONTENDED THAT THE OFFER WAS MADE ON AN UNDERSTANDING THAT THE INCOME WAS DERIVED FROM CARR YING ON OF THE INDUSTRIAL UNDERTAKING OUT OF MANUFACTURI NG PROCESS. THE ASSESSEE ALSO RELIED UPON THE SURREN DER LETTER GIVEN DURING THE COURSE OF SURVEY. THE LEAR NED CIT (APPEALS) FORWARDED THE MATERIAL TO THE ASSESSING O FFICER FOR HIS COMMENTS. IN THE REMAND REPORT SUBMITTED B Y THE ASSESSING OFFICER, HE RELIED UPON THE ASSESSMENT OR DER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE REMAND REPORT, THE LEARNED CIT (APPEALS) FORMED AN OPINION THAT THE SURRENDERED AMOUNT INCLUDING MOULD S AND ROLLERS ARE NOT RECORDED IN THE BOOKS OF ACCOUN T. THEREFORE, UNDER THE FACTS OF THE CASE, IT CANNOT B E CONCLUSIVELY SAID THAT THE ADDITIONAL INCOME IS DER IVED OUT OF THE INDUSTRIAL UNDERTAKING AS THERE IS NO MENTIO N OF THE SAME IN THE REGULAR BOOKS OF ACCOUNT RELIED UPON BY THE ASSESSEE. IN THIS VIEW, HE DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT (APPEALS), THE ASSESSEE HAS COME UP IN APPEAL BEFOR E THE 4 TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE FI LED WRITTEN SUBMISSIONS BEFORE US AND PRAYED TO DECIDE THE MATTER AFTER CONSIDERING THESE WRITTEN SUBMISSIONS ONLY. WE HAVE GONE TROUGH THE SUBMISSIONS SO MADE BY THE ASSESSEE AND OBSERVE THAT BASICALLY IT IS A REITERA TION OF THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. A DISTINCTION BETWEEN THE TERMS DERIVED FROM AND ATTRIBUTABLE HAS BEEN MADE RELYING ON A NUMBER OF JUDGMENTS OF VARIOUS HIGH COURTS AND THAT OF THE HO N'BLE SUPREME COURT IN THE CASE OF CIT VS. STERLING FOOD S (1999) 237 ITR 579 (SC), LIBERTY INDIA VS. CIT (200 9) 317 ITR 218 (SC). FURTHER, IT HAS BEEN STATED THAT THE ASSESSEE HAD MADE ALL EFFORTS TO EXPLAIN THAT THE SURRENDER OF RS.1.50 CROROES MADE ON ACCOUNT OF CAS H, ROLLS AND MOULDS WERE ACTUALLY OUT OF THE BUSINESS INCOME OF THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE. FUR THER, AN EFFORT HAS BEEN MADE TO DISTINGUISH THE CASE LAWS R ELIED UPON BY THE ASSESSING OFFICER. AS REGARDS THE JUDG MENT RELIED UPON BY THE ASSESSING OFFICER IN THE CASE OF HOME TEX (SUPRA), IT WAS STATED THAT THE FACTS OF THE CA SE WERE AT TOTAL VARIANCE WITH THE FACTS OF THE CASE. IT WAS STATED THAT A PLEA TO THE EFFECT THAT THE STOCKS AS SURREN DERED WERE THE INCOME OR PROFITS GENERATED OUT OF CARRYIN G OF THE UNDERTAKING, IF RAISED, THE DECISION WOULD HAVE BEE N IN FAVOUR OF THE ASSESSEE. AN EFFORT TO DISTINGUISH T HE CASE OF THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF NATIONAL LEGGUARD WORKS VS. CIT (2007) 288 ITR 18 WAS ALSO MADE. FURTHER, 5 IT WAS SUBMITTED THAT THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WAS ALLOWED TO THE ASSESSEE IN THE PRECEDING ASSESSMENT YEAR I.E. 2008-09. IT WAS ALS O SUBMITTED THAT THE HON'BLE PUNJAB & HARYANA HIGH CO URT HAS HELD IN THE CASE OF CIT VS . METALMAN AUTO P. LTD. (2011), 336 ITR 434 (P&H) THAT JOB WORK CHARGES AND MISCELLANEOUS RECEIPTS WERE INCIDENTAL TO PROFITS F ROM BUSINESS WOULD BE ENTITLED TO DEDUCTION UNDER SECTI ON 80IB OF THE ACT. ACCORDINGLY, EVEN THE ADDITIONAL INCOME IN THE FORM OF MOULDS, ROLLS AND CASH BEING AVAILAB LE IN THE FACTORY PREMISES ON THE DATE OF SURVEY WOULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE AC T. WITH THESE SUBMISSIONS, IT WAS PRAYED THAT THE DEDUCTION UNDER SECTION 80IB OF THE ACT BE ALLOWED ON THE SURRENDER ED AMOUNT ALSO. 5. THE LEARNED D.R. RELIED UPON THE ORDER OF THE HON'BLE JURISDICTION PUNJAB & HARYANA HIGH COURT IN THE CASE OF NATIONAL LEGGUARD WORKS (SUPRA) AND FURTHER ON HOME TEX (SUPRA) STATED THAT THE ISSUE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THIS ORDER OF THE HON'BLE JURISDICTIONAL HIGH COURT, WHEREBY IT HAS BEEN HELD IN VERY CLEAR TERMS THAT THE DEDUCTION UNDER SECTION 8 0IB OF THE ACT CANNOT BE ALLOWED ON THE INCOME SURRENDERED DURING THE COURSE OF SURVEY. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVE OF THE DEPARTMENT AND GONE THROUGH THE WRITTEN SUBMISSION FILED BY LEARNED COUNSEL FOR THE ASSESSEE, PERUSED THE FI NDINGS 6 OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIA L AVAILABLE ON RECORD. ON PERUSAL OF THE ORDER OF TH E HON'BLE JURISDICTIONAL OF PUNJAB & HARYANA HIGH COU RT IN THE CASE OF HOME TEX (SUPRA), WE SEE THAT THE ISSU E IS SAME AS IN THE PRESENT APPEAL AND THE HON'BLE HIGH COURT OBSERVED THAT SINCE THE ASSESSEE HAS FAILED TO SHOW THAT THE AMOUNT WHICH WAS INVESTED IN STOCK SURRENDERED AT THE TIME OF SURVEY WAS DERIVED FROM THE INDUSTRIAL UNDERTAKING, DEDUCTION UNDER SECTION 80IB OF THE AC T WAS NOT ALLOWABLE IN RESPECT OF SUCH EXCESS INCOME. 7. WE SEE THAT THE JUDGMENT HAS BEEN GIVEN ON THE ISSUE OF DEDUCTION UNDER SECTION 80IB OF THE ACT, T HE RATIO LAID DOWN BY THE HON'BLE COURT IS THAT A SPECIFIC DEDUCTION IS TO BE GIVEN ON THE FULFILLMENT OF CERT AIN CONDITIONS PRESCRIBED IN THE PROVISION OF THAT SEC TION. THERE COULD BE NO PRESUMPTION THAT THE AMOUNT SURRENDERED DURING THE COURSE OF SURVEY FULFILLS TH ESE CONDITIONS. FURTHER, THE ASSESSEE HAS NOWHERE, BEF ORE THE LOWER AUTHORITIES, BEEN ABLE TO DEMONSTRATE THAT TH E SURRENDERED INCOME WAS IN FACT DERIVED FROM THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT AND ALL OTHER CONDITIONS PR ESCRIBED UNDER SECTION 80IB OF THE ACT ARE FULFILLED BY THIS INCOME. IN VIEW OF THIS, RESPECTFULLY FOLLOWING THE JUDGMEN T OF THE HON'BLE HIGH COURT, WE CONFIRM THE ORDER OF THE ASS ESSING OFFICER IN DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 7 80IB OF THE ACT MADE BY THE ASSESSEE ON SURRENDERED INCOME. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF DECEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACCOUNTANT MEMBER DATED : 8 TH DECEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH