HYGIENIC RESEARCH INSTITUTE PVT. LTD.(ERSTWHILE HRI COSMETICS (INDIA)PVT. LTD.), MUMBAI V. ITO, WARD- 8(2)(1), MUMBAI

ITA 4741/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3521 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 18-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 11-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B D NAIK
• Assessee Lawyers: USHA PRAJAPATI
• Section: 143(3)

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI H BENCH , ,, , , , , , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & RAM LAL NEGI,JUDICIAL MEMBER /.ITA NO.4741/MUM/2014, /ASSESSMENT YEAR-2010-11 HYGIENIC RESEARCH INSTITUTE PVT. LTD. (PREVIOUSLY KNOWN AS HRI COSMETICS (INDIA) PVT. LTD.), 602, SUPREME CHAMBERS,OFF VEERA DESAI ROAD ANDHERI WEST,MUMBAI-400 053 PAN:AABCH 1547 F VS. INCOME TAX OFFICER WARD-8(2)(1) AAYAKAR BHAVAN MUMBAI-400 020. ( / APPELLANT) ( / RESPONDENT) / ASSESSEE BY : MS. USHA PRAJAPATI / REVENUE BY : SHRI B.D. NAIK / DATE OF HEARING : 18.02.2016 / DATE OF PRONOUNCEMENT : 29.02.2016 , 1961 1961 1961 1961 254 254 254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED17.04.2014 OF CIT(A)-17, MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED IN THE BUSI NESS OF MANUFACTURING OF HAIR-DYES ETC.,FILED ITS RETURN OF INCOME ON 28.09. 2010, DEC LARING TOTAL INCOME AT RS.3.52 LAKHS.THE ASSESSING OFFICER (AO)COMPLETED THE ASSESSMENT, U/S 143(3) OF THE ACT,ON 13.03.2013,DETERMINING THE INCOME OF THE ASSESSEE A T RS.79.06 LAKHS. 2. FIRST EFFECTIVE GROUND OF APPEAL,FILED BY THE ASSES SEE,IS ABOUT DISALLOWANCE MADE WHILE CALCULATING THE DEDUCTION AVAILABLE U/S.80IC OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD CLAI MED DEDUCTION OF RS.75.53 LAKHS UNDER THE HEADS INSURANCE CLAIM (RS.71.93 LAKHS) AND MISC ELLANEOUS CLAIM(RS.3.60 LAKHS).HE ASKED THE ASSESSEE AS TO WHY THE ABOVE INCOME SHOUL D NOT BE ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES.AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE,HE HELD THAT THE AO HAD RECEIVED INSURANCE CLAIM ON LOSS OF PACKING MATERIA LS IN FIRE,THAT THE PROVISIONS OF SECTION 80IC WERE ABUNDANTLY CLEAR THAT PROFIT AND GAINS DE RIVED FROM BUSINESS OF MANUFACTURING/PRODUCING OF THE ARTICLES/THING WOULD BE ELIGIBLE FOR DEDUCTION,THAT INSURANCE CLAIM AND MISCELLANEOUS INCOME WERE NOT DIRECTLY OR INDIRECTLY DERIVED FROM SUCH MANUFACTURING OR PRODUCING OF THINGS OR ARTICLES,TH AT SAME WAS NOT ELIGIBLE FOR DEDUCTION. 3. AGGRIEVED BY THE ORDER OF AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,THE MADE ELABORATE SUBMIS SIONS.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R,HE HELD THAT MISCELLANEOUS INCOME WAS NOT DERIVED FROM THE INDUSTRIAL UNDERTAKING,THAT IT HAD NO DIRECT PROXIMITY WITH THE ACTIVITIES OF THE ASSESSEE,THAT IT INCLUDED SUNDRY DEBTORS WRI TTEN OFF U/S.41(1)OF THE ACT,THAT THE ISSUE OF 4741/14-HYGIENIC RESEARCH INSTITUTE P.LTD. 2 INSURANCE CLAIM STOOD DECIDED AGAINST THE ASSESSEE BY THE JUDGMENT OF THE P &H HIGH COURT DELIVERED IN THE CASE OF KHEMKA CONTAINER PVT.LTD.( 275ITR559).FOLLOWING THE SAID JUDGMENT,HE DISMISSED THE APPEAL FILED BY THE ASSES SEE. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE(AR)STATED T HAT THE INSURANCE CLAIM WAS RECEIVED TOWARDS LOSS OF PACKING MATERIAL ETC.,THAT IT WAS P ART OF CARRYING ON OF THE BUSINESS,DESTRUCTION OF GOODS BY FIRE WOULD HARDLY MAKE ANY SIGNIFICANT DIFFERENCE FOR CLAIMING/ALLOWING DEDUCTION U/S. 80IC OF THE ACT,TH AT THAT PROVISIONS OF SECTION 80IC FELL IN THE CATEGORY OF BENEFICIAL PROVISIONS , THAT INSURA NCE CLAIM RECEIVED SHOULD HAVE BEEN CONSIDERED AS PROFITS DERIVED FROM INDUSTRIAL UNDER TAKING.AR RELIED UPON THE CASES OF SHREE RAM MULTITECH LTD(33 TAXMAN94)SPORTKING INDIA LTD.( 183 TAXMAN 312) AND BIOTECH MEDICALS(119ITD143),THAT THE MATTER OF KHEMKA CONTA INER PVT.LTD.SUPPORTED THE CLAIM MADE BY THE ASSESSEE.DEPARTMENTAL REPRESENTATIVE (D R) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT DURING THE YEAR UNDER APPEAL FIRE HAD OCCURRED IN THE FACT ORY LOCATED IN HIMACHAL PRADESH,THAT THE ASSESSEE HAD RECEIVED COMPENSATION FROM THE INSURAN CE COMPANY,AMOUNTING TO RS.71.93 LAKHS,THAT THE COMPENSATION WAS RECEIVED TOWARDS LO SS OF PACKING MATERIAL AND RAW AND FINISHED GOODS,THAT IT WAS ALSO A FACT THE FIRE ACC IDENT WAS NOT AN ISOLATED EVENT-RATHER IT WAS DIRECTLY RELATED TO THE CARRYING ON OF BUSINESS OF THE ASSESSEE.IN OTHER WORDS,THERE WAS NEXUS TO THE BUSINESS WHERE GOODS WERE DESTROYED AND FOR WHICH INSURANCE WAS RECIEVED.SECTION 80IC OF THE ACT WAS INTRODUCED TO GIVE IMPETUS TO GENERATE EMPLOYMENT IN CERTAIN AREAS/LOCATIONS.THEREFORE, WE ARE OF THE OPINION TH AT THE INSURANCE CLAIM RECEIVED BY THE ASSESSEE HAD TO BE CONSIDERED AS PROFITS DERIVED FR OM INDUSTRIAL UNDERTAKING AND THAT THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S.80IC O F THE ACT.WE FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SHREE RAMA MULTI TECH LTD . (SUPRA)HAD HELD THAT INSURANCE CLAIM FOR LOSS OF RAW MATERIAL OR FINISHED GOODS WOULD BE ELIGIBLE FOR DEDUCTION U/S.80IC OF THE ACT.CONSIDERING THE FACTS OF THE CASE AND FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT,WE HOLD THAT INSURANCE CLAIM WAS ELIGIBLE FOR DEDUCTION U/S.80IC OF THE ACT. BUT,AS FAR AS OTHER AMOUNT I.E. RS.3.60 LAKHS IS CO NCERNED, IT IS FOUND THAT THE AO AND THE FAA HAVE GIVEN A CATEGORICAL FINDING OF FACT THAT D ETAILS, IN THAT REGARD, WERE NOT FILED BEFORE THEM.WE FIND THAT THE ASSESSEE HAD NOT FILED ANY AP PLICATION U/S.154 OF THE ACT BEFORE ANY OF THE AUTHORITIES TO CHALLENGE THE FINDING GIVEN BY T HEM.THEREFORE,WE ARE OF THE OPINION THAT THE FAA HAD RIGHTLY UPHELD THE ORDER OF THE AO AND HAD HELD THAT AMOUNT IN QUESTION WAS NOT ELIGIBLE FOR DEDUCTION U/S.80IC OF THE ACT.EFFECTIV E GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH FEBRUARY, 2016. 29 , 2016 SD/- SD/- ( /RAM LAL NEGI) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI, /DATE: 29.02. 2016 . . . .. . JV.SR.PS. 4741/14-HYGIENIC RESEARCH INSTITUTE P.LTD. 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , H , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.