HERITABE MARBLES P. LTD, MUMBAI V. ACIT 6(3), MUMBAI

ITA 5211/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55942 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 22-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 25-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V V SHASTRI
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H,MUMBAI BEFORE SHRI D.K. AGARWAL (JM) & SHRI SHRI R.K. PA NDA (AM) I.T.A. NO.5211/MUM/2010 (A.Y. 2007-08) M/S. HERITAGE MARBLES PVT. LTD., PRABHAT COLONY, SERVICE ROAD, WESTERN EXPRESS HIGHWAY, SANTACRUZ (E), MUMBAI-400 055. PAN:AAACH1588D. VS. ASSTT. COMMR. OF INCOME-TAX-6(3), MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI DEEPAK TRALSHAWALA. RESPONDENT BY SHRI V .V. SHASTRI. DATE OF HEARING 16 - 11 - 2011 DATE OF PRONOUNCEMENT 25 - 11 - 2011 O R D E R PER D.K. AGARWAL, JM : THIS APPEAL FOR THE ASSESSMENT YEAR 2007-08 PREFERR ED BY THE ASSESSEE IS DIRECTED AGAINST THE COMMON ORDER DATED 12-02-2010 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2002-03 AND 2007-08. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF POL ISHED MARBLES, SLABS AND TILES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS , INTER ALIA, OBSERVED BY THE AO THAT THE ASSESSEE COMPANY HAS CLAIMED AN AMOUNT OF RS.29,03,274/- AS DEDUCTION U/S.80IB OF THE I.T. ACT, 1961 (THE ACT ). THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE SAME AND TO SHOW CAUSE A S TO WHY THE DEDUCTION ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 2 U/S.80IB SHOULD NOT BE DISALLOWED AS NO MANUFACTURI NG ACTIVITY IS BEING CARRIED OUT BY THE ASSESSEE. IN RESPONSE, THE ASSESSEE, INT ER ALIA, SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-05 AND ALSO BY THE DECISION OF THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF ARI HANT MARBLE PVT. LTD. (245 ITR 148) AND ALSO THE DECISION OF THE MUMBAI ITAT IN TH E CASE OF AAKASH STONES INDUSTRIES LTD. (ITA NOS.2968 & 7452/MUM/2004 DATED 9-8-2006). HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES PLEA. HE HELD THAT THE CONVERSION OF MARBLE BLOCKS INTO SLABS AND TILES DOES NOT AMOUNT TO MANU FACTURE AS EVEN AFTER THE CUTTING AND POLISHING THE MARBLE BLOCKS DO NOT LOS E ITS ORIGINAL IDENTITY AS MARBLE AND NOTHING NEW IS PRODUCED AND, HENCE, THE ASSESSE E IS NOT ELIGIBLE FOR CLAIMING OF THE DEDUCTION ALLOWABLE TO INDUSTRIAL UNDERTAKIN G ENGAGED IN MANUFACTURING OR PRODUCTION OF ARTICLES U/S.80IB OF THE ACT AND ACCO RDINGLY HE DISALLOWED THE DEDUCTION U/S.80IB AMOUNTING TO RS.29,03,274/- IN R ESPECT OF SILVASSA UNIT OF THE ASSESSEE AND ADDED BACK THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE AO FURTHER OBSERVED THAT, WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE HAS TWO PREMISES FROM WHICH THE SALES ARE EFFECTED I.E. MUM BAI AND SILVASSA. THE ASSESSEE HAS INCURRED OFFICE & ADMINISTRATIVE EXPEN SES OF RS.39.60 LAKHS FOR MUMBAI OFFICE AND RS.91.61 LAKHS FOR SILVASSA OFFIC E. ON COMPARISON OF THESE EXPENSES TO THE TOTAL SALES, THE UNIT OF MUMBAI, WH ICH HAS SALES OF RS.1.93 CRORES, HAS INCURRED MORE ADMINISTRATIVE EXPENSES A S COMPARED TO SILVASSA UNIT WHICH HAS SALES OF RS.11.79 CRORES. THUS, IT IS CLE AR THAT THE ASSESSEE IS DEBITING MORE EXPENSES IN MUMBAI UNIT AS COMPARED TO SILVASS A UNIT ON WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S.80IB. ACCORDINGL Y, THE AO, AFTER ALLOCATING PROPORTIONATE OFFICE & ADMINISTRATIVE EXPENSES AS P ER WORKING GIVEN AT PAGES 4 & 5 OF THE ASSESSMENT ORDER, ADDED AN AMOUNT OF RS.21 ,16,026/- ON ACCOUNT OF ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 3 OFFICE AND ADMINISTRATIVE EXPENSES OF SILVASSA UNIT AND WORKED OUT THE DEDUCTION U/S.80IB (WITHOUT PREJUDICE) AT RS.21,99,941/-. ON APPEAL, THE LD. CIT(A) FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ARIHANT TILES & MARBLES (P) LTD. AND THE DECISION OF ITAT IN ASSESS EES OWN CASE, DELETED THE DISALLOWANCE OF DEDUCTION U/S.80IB. WITH REGARD TO ALLOCATION OF OFFICE & ADMINISTRATIVE EXPENSES, THE LD. CIT(A) HELD THAT S INCE HE HAS HELD THAT 80B BENEFIT SHOULD BE GRANTED TO THE APPELLANT, THE GRO UND BECOMES INFRUCTUOUS. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. IN GROUND NOS.1, 2 & 3, THE ASSESSEE HAS CHALLE NGED THAT THE AO AND THE LD. CIT(A) WERE NOT JUSTIFIED IN ALLOCATING THE OF FICE & ADMINISTRATIVE EXPENSES OF RS.21,16,026/- IN THE ACCOUNT OF SILVASSA UNIT AND IN RESTRICTING THE DEDUCTION U/S.80IB OF SILVASSA UNIT RS.21,99,941/-. 5. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT SINCE SEPARATE BOOKS OF ACCOUNT AND VOUCHERS ARE MAINTAIN ED FOR BOTH THE UNITS, THE AO HAS ERRED IN ALLOCATING OFFICE & ADMINISTRATIVE EXPENSES ON THE BASIS OF TURNOVER AND IN ADDING THE SUM OF RS.21,16,026/- IN THE ACCOUNT OF SILVASSA UNIT. HE FURTHER SUBMITS THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN HERITAGE MARBLES PVT. LTD. VS. ITO IN ITA NO.1509/MUM/2009 FOR ASSESSMENT YEAR 2005-06 DATED 30-04- 2010 WHEREIN, ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL HAS SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AND ALLOWED THE CLAIM OF THE ASSESSEE. HE ALSO PLACED ON RECORD THE COPY OF THE SAID ORDER OF THE TRIBUNAL. ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 4 6. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE ORD ERS OF THE AO AND THE LD. CIT(A). 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT THERE IS NO DISPUTE THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION U/S.80IB IN RESPECT OF SILVASSA UNIT. HOWEVER, IT WAS RESTRICTED BY THE AO TO RS.21,99,94 1/- ON THE GROUND THAT THE ASSESSEE IS DEBITING MORE EXPENSES IN MUMBAI UNIT A S COMPARED TO SILVASSA UNIT, THE LATTER BEING ELIGIBLE FOR DEDUCTION U/S.80IB. T HE AO HAS ALLOCATED THE PROPORTIONATE OFFICE & ADMINISTRATIVE EXPENSES ON T HE BASIS OF TURNOVER AND HAS ADDED AN AMOUNT OF RS.21,16,026/- ON ACCOUNT OF OFF ICE & ADMINISTRATIVE EXPENSES IN RESPECT OF SILVASSA UNIT AND THEREBY RE DUCED THE DEDUCTION U/S.80IB TO RS.21,99,941/- AS AGAINST RS.29,03,274/- CLAIMED BY THE ASSESSEE. THIS ISSUE HAS BEEN EXAMINED IN DETAIL BY THE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA) WHEREIN IT HAS BEEN HELD THAT SINCE THE AO HAS FAIL ED TO FIND OUT ANY SPECIFIC DEFECT IN THE ALLOCATION MADE BY THE ASSESSEE AND T HERE IS NO MATERIAL ON RECORD ON WHICH THE RE-ALLOCATION OF EXPENSES CAN BE DONE OTHER THAN ALLOCATED BY THE ASSESSEE, THE TRIBUNAL SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES AND ALLOWED THE CLAIM OF THE ASSESSEE. IN THE ABSENCE O F ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE, WE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) AND KEEPING IN VIEW THAT THE ASSES SEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR BOTH THE UNITS, HOLD THAT THE AO WAS NOT JUSTIFIED IN ENHANCING THE OFFICE & ADMINISTRATIVE EXPENSES IN R ESPECT OF SILVASSA UNIT AND THEREBY REDUCING THE ELIGIBLE DEDUCTION U/S.80IB AN D, ACCORDINGLY, WE DIRECT THE AO TO ALLOW DEDUCTION U/S.80IB AS CLAIMED BY THE AS SESSEE. THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, ALLOWED. ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 5 8. GROUND NO. 4 IS AGAINST THE LEVY OF INTEREST UND ER SECTIONS 234B AND 234C. 9. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT CONSEQUENTIAL RELIEF MAY BE ALLOWED IN RESPECT OF L EVY OF INTEREST UNDER SECTIONS 234B AND 234C. 10. ON THE OTHER HAND, THE LD. D.R. SUPPORTS THE OR DERS OF THE AO AND THE LD. CIT(A). 11. AFTER HEARING THE RIVAL PARTIES AND PERUSING TH E MATERIAL AVAILABLE ON RECORD, WE DIRECT THE AO TO ALLOW CONSEQUENTIAL REL IEF TO THE ASSESSEE IN THIS REGARD. THE GROUND TAKEN BY THE ASSESSEE IS, THEREF ORE, PARTLY ALLOWED. 12. AT THE TIME OF HEARING, THE ASSESSEE DID NOT PR ESS GROUND NOS.5 & 6. THEREFORE, THE SAME ARE REJECTED BEING NOT PRESSED. 13. IN GROUND NO.7, THE ASSESSEE MAKES A PRAYER FOR ALLOWING THE APPEAL. IN VIEW OF OUR FINDING RECORDED HEREINABOVE, THE AO IS DIRECTED TO ALLOW DUE RELIEF AS MENTIONED HEREINABOVE. THE GROUND TAKEN BY THE ASSE SSEE IS, THEREFORE, ALLOWED. 14. IN THE RESULT, THE ASSESSEES APPEAL STANDS ALL OWED. ORDER PRONOUNCED IN THE COURT ON THE 25TH DAY OF NOVEMBER, 2011. SD/- SD/- (R.K. PANDA) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI: 25TH NOVEMBER , 2011. NG: COPY TO : 1. ASSESSEE. ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 6 2. DEPARTMENT. 3 CIT(A)-12,MUMBAI. 4 CIT,CITY-6,MUMBAI. 5.DR,H BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.5211/M/2010 HERITAGE MARBLES P.LTD. 7 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 16-11-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 17-11-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER