Narayan International, Noida V. DCIT, Noida

ITA 4691/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52827 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 27-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: ROHIT JAIN
• Keywords: Business income; Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 4691(DEL)/2010 ASSESSMENT YEAR: 2004-05 NARAYAN INTERNATIONAL, DEP UTY COMMISSIONER OF INCOME A-56, SECTOR-4, NOIDA. VS. TAX, C IRCLE NOIDA. PAN: AACFN3948A (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI ROHIT JAIN, ADVOCATE RESPONDENT BY: SH RI R.S. NEGI, SR. DR DATE OF HEARING : 11.10.2011 DATE OF PRONOUNCEMENT: 14.10.2011. ORDER PER K.G. BANSAL : AM BRIEFLY, THE BACKGROUND FACTS ARE THAT THE ASSE SSEE FILED ITS RETURN ON 30.09.2004 DECLARING TOTAL INCOME OF RS. 1,95,1 6,150/-. THE CASE WAS PICKED UP FOR SCRUTINY BY ISSUING NOTICE U/S 14 3(2) ON 07.06.2005. THE ASSESSMENT WAS COMPLETED ON 29.12.2006 AT TOTAL INCOME OF RS. 2,58,23,650/-. THE ASSESSEE FILED APPEAL AGAINST THIS ORDER, WHICH WAS DISPOSED OFF ON 13.08.2010. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED. ITA NO. 4691(DEL)/2010 2 2. GROUND NO. (A) REGARDING DISALLOWANCES FROM CAR EXPENSES, TELEPHONE EXPENSES AND MOTOR CAR DEPRECIATION HAS NOT BEEN PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, THE SAME IS DISMISSED. 3. GROUND NO. (B) IS AGAINST CONFIRMATION OF THE DI SALLOWANCE OF RS. 15,000/- OUT OF THE DISALLOWANCE OF RS. 30,000/- MADE BY THE AO FROM SUNDRY EXPENSES. THE CASE OF THE LD. COUNSEL IS T HAT THESE ARE TEA ETC. EXPENSES INCURRED ON EMPLOYEES. IN REPLY, THE LD. DR HAS REFERRED TO PARAGRAPH 9 OF THE ASSESSMENT ORDER. IT IS MENT IONED THAT THE SUNDRY EXPENSES OF RS. 6,53,731/- INCLUDE INTER-ALIA ENT ERTAINMENT, TEA, FOOD ETC. EXPENSES. A SUM OF RS. 30,000/- HAS BEEN DISALL OWED AS EXPENDITURE OF PERSONAL NATURE. THE LD. CIT(APPEALS) HAS REDUCE D THE AMOUNT TO RS. 15,000/-. LOOKING TO THE FACT THAT FINALLY A V ERY SMALL PORTION OF THE EXPENDITURE STANDS DISALLOWED, WE THINK THAT NO INTERFERENCE IS CALLED IN THE MATTER. THUS, THIS GROUND IS DISMISSED. 4. GROUND NOS. (C) AND (D) ARE IN RELATION TO CO MPUTATION OF DEDUCTION U/S 80HHC. IT IS MENTIONED THAT THE LD. CIT(APPEA LS) ERRED IN HOLDING THE DEPB BENEFIT AS NON-EXPORT PROFIT. IT IS FUR THER MENTIONED THAT HE ERRED ITA NO. 4691(DEL)/2010 3 IN UPHOLDING THE DISALLOWANCE MADE BY THE AO FRO M THE CLAIM MADE BY THE ASSESSEE IN THIS BEHALF. 4.1 THE ADMITTED POSITION IS THAT THE EXPORT TUR NOVER EXCEEDS RS. 10.00 CRORE AND THE ASSESSEE DID NOT FULFILL THE CON DITIONS SET OUT IN THE THIRD PROVISO TO SECTION 80HHC(3), INTRODUCED BY FIN ANCE ACT OF 2005. FURTHER, IT IS THE COMMON CASE THAT THE DEDUCTIO N HAS TO BE DECIDED IN THE LIGHT OF THE DECISION OF HONBLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. KALAPTARU COLOURS & CHEMICALS, (2010) 328 ITR 451. THIS DECISION HAS BEEN FOLLOWED BY HONBLE PUNJAB & HARYANA HIG H COURT IN THE CASE OF CIT VS. F.C. SONDHI & CO. P. LTD., (2011) 334 ITR 141. THE DECISION OF HONBLE BOMBAY HIGH COURT IS THAT THE AMOUNT RECE IVED ON TRANSFER OF DEPB BENEFIT IS NOT REQUIRED TO BE BIFURCATED I N TERMS OF THE FACE VALUE OF THE LICENCE AND THE PROFIT. THE WHOLE OF THE AMOUNT IS THE PROFIT TAXABLE UNDER SECTION 28(IIID). WITH THESE FINDINGS, THE H ONBLE COURT REMANDED THE PROCEEDINGS TO THE AO TO PASS A FRESH ORD ER. IN THE CASE OF THE AFORESAID F.C. SONDHI &CO., IT HAS BEEN MENTIONED THAT THE PROFIT HAS TO BE TREATED AS BUSINESS INCOME, WHICH HAS TO BE TAKEN INTO ACCOUNT FOR COMPUTING DEDUCTION U/S 80HHC. THE HONBLE COUR T REMANDED THE MATTER TO THE ITAT FOR FRESH DECISION AS PER LA W. THUS, IT FOLLOWS THAT ITA NO. 4691(DEL)/2010 4 THE BENEFIT IS BUSINESS INCOME TAXABLE U/S 28(I IID) AND THE DEDUCTION HAS TO BE COMPUTED BY TAKING INTER-ALIA THE PROVI SIONS OF THIRD PROVISO INTO ACCOUNT. IN THE LIGHT OF AFORESAID DECISION, WE RESTORE THE MATTER TO THE FILE OF THE AO TO COMPUTE THE DEDUCTION AGAIN AS PER THE AFORESAID DECISIONS AND ANY OTHER DECISION WHICH MAY BECOME AVAILABLE AT THE TIME OF PASSING THE ORDER. THE RESULT IS THAT GROUND NOS. (C) AND (D) ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 5. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 14.10.2 011. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- NARAYAN INTERNATIONAL, A-56, SECTOR 04, NOIDA. DCIT, CIRCLE NOIDA. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.