Sh. Sunandan Aggarwal, Jammu V. The Income-tax Officer, Jammu

ITA 524/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8853 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR TARUNDEEP KAUR
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.524(ASR)/2014 ASSESSMENT YEAR:2009-10 PAN: AAUPA5823F SH. SUNANDAN AGGARWAL, VS. INCOME TAX OFFICER, JAMMU. WARD 1(3), JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. TARUN BANSAL, ADVOCATE RESPONDENT BY: DR. TARUNDEEP KAUR, DR DATE OF HEARING: 26/11/2015 DATE OF PRONOUNCEMENT: 16/02/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2009-10, AGAINST THE ORDER DATED 24.06.2014, PASSED BY THE L D. CIT(A), CONTENDING THAT THE LD. CIT(A) HAS ERRED IN NOT ACCEPTING THE SUBMISSIONS OF THE ASSESSEE THAT ON THE ADDITIONS MADE U/S 40(A)(IA) O F THE I.T.ACT, 1961, THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 80IB OF T HE ACT AND THAT NO TAX CAN BE IMPOSED ON THESE ADDITIONS. 2. THE ASSESSEE DECLARED HIS INCOME AT RS.3,40,140/ - AFTER CLAIMING DEDUCTION U/S 80-IB OF THE ACT, TO THE TUNE OF RS.1 ,62,96,414/-. DURING SCRUTINY PROCEEDINGS, THE AO NOTICED THAT THE ASSES SEE HAD WRONGLY CLAIMED THIS EXCESS DEDUCTION U/S 80-IB, INSTEAD OF THE AMOUNT OF RS.1,57,94,227/-. IT WAS OBSERVED THAT AS SUCH THE ASSESSEE HAD ITA NO.524(ASR)/2014 ASSTT. YEAR: 2009-10 2 CLAIMED EXCESS DEDUCTION OF RS.5,02,189/- U/S 80-IB OF THE ACT. ON QUERY, THE ASSESSEE STATED THAT THIS AMOUNT DID NOT REPRESENT ANY OTHER INCOME BUT IT REPRESENTED EXPENSES DISALLOWED FROM THE PROFIT & LOSS ACCOUNT AND THAT THE SAID ADDITION HAD BEEN MADE ON ACCOUNT OF DISALLOWANCE U/S 40(A)(IA) OF THE ACT, FOR NON-DED UCTION OF TDS ON PAYMENTS OF RS.5,02,189/- CONCERNING LOADING AND U NLOADING EXPENSES. THE AO OBSERVED THAT THE DISALLOWANCE U/S 40(A) OF THE ACT, IS FOR VIOLATION OF A SPECIFIC PROVISIONS OF THE ACT; THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF THE SECTION 40(A)(IA ) OF THE ACT AND THIS AMOUNT WAS NOT AN ALLOWABLE EXPENSE AND WAS ADDED B ACK BY THE AUDITOR TO THE INCOME IN THE PROFIT & LOSS ACCOUNT; THAT THE AUDITOR HAD ALREADY POINTED OUT THE DISCREPANCY IN FORM 3CD OF THE AUDIT REPORT; THAT THE INCOME HAD NO DIRECT NEXUS WITH THE MANUFA CTURING ACTIVITY OF THE ASSESSEE AND THUS, IT COULD NOT BE SAID TO HAVE BEEN DERIVED FROM THE SAID BUSINESS; AND THAT IT WAS NOT THE INTENT ION OF THE LEGISLATURE TO GIVE UNDUE BENEFIT TO THE ASSESSEE TO CONTRAVENE TH E PROVISIONS OF THE LAW. THE AO RELIED ON THE AMRITSAR BENCH, ITAT DEC ISION IN THE CASE OF M/S. KASHMIR TUBES, JAMMU, DECIDED IN ITA NO.145( ASR)/2005, DATED 07.12.2007. DEDUCTION TO THE EXTENT OF RS.5,02,189/ - WAS, THUS, DISALLOWED AND ADDED BACK TO THE RETURNED INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ASSESSMENT ORDER. 3. AGAINST THE ORDER OF THE LD. CIT(A), BEFORE THIS BENCH, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE MAT TER IS COVERED IN ITA NO.524(ASR)/2014 ASSTT. YEAR: 2009-10 3 FAVOUR OF THE ASSESSEE BY THE ORDER DATED 26.07.201 2, PASSED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 BY THE AMRITSAR BENCH OF THE TRIBUNAL. 4. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 5. UNDENIABLY, THE AFORESAID TRIBUNAL ORDER IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008-09, IS IN FAVOUR OF T HE ASSESSEE. THEREIN, RELIANCE HAS BEEN PLACED ON THE DECISION OF THE AMR ITSAR BENCH OF THE TRIBUNAL IN THE CASE OF SUN PHARMACEUTICALS, PASS ED ON 11.06.2010, IN ITA NO.184(ASR)/2009, FOR THE ASSESSMENT YEAR 2005- 06. 6. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS OBSERV ED THAT IN DCIT VS. RAMESH BHATIA C. PRAJAPATI, THE AHMEDABAD BENC H OF THE TRIBUNAL, IN ITA NO.226 OF 2010, HAD HELD THAT IT IS A SETTLE D PRINCIPLE THAT THE DEEMING FICTION CREATED UNDER ANY PROVISION OF THE ACT CANNOT BE IMPORTED INTO A BENEFICIAL PROVISION OF THE ACT; T HAT THE ADDITION MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE IS DUE TO THE DEEMING FICTION CREATED BY THE PENAL SECTION 40(A)(IA) OF THE ACT; THAT THUS, THE EFFECT OF THE SAME CANNOT BE IMPORTED INTO A BENEFI CIAL PROVISION, LIKE SECTION 80-IB(1) OF THE ACT; THAT WHILE COMPUTING DEDUCTION U/S 80- IB(10), THE PLAIN MEANING OF THE LANGUAGE OF THE AC T HAS TO BE GIVEN EFFECT AND THE LEGAL FICTION CREATED BY VIRTUE OF SECTION 40(A)(IA) CANNOT BE EXTENDED TO DETERMINE THE PROFIT OF THE BUSINESS FO R THE PURPOSE OF COMPUTING DEDUCTION U/S 80IB(1) ; THAT SECTION 80IB (10) OF THE ACT HAS TO ITA NO.524(ASR)/2014 ASSTT. YEAR: 2009-10 4 BE APPLIED FOR THE DEFINITE AND LIMITED PURPOSE FO R WHICH IT IS CREATED; THAT IN THE CASE OF EXECUTORS AND TRUSTEES OF SIR CAWASJI JEHANGIR (FIRST BARONET) VS. CIT, 35 ITR 537 (BOM.), IT HA S BEEN EXPLAINED THAT UNLESS IT IS CLEARLY AND EXPRESSLY PROVIDED, IT IS NOT PERMISSIBLE TO IMPOSE A SUPPOSITION ON A SUPPOSITION OF LAW; THAT IT IS N OT PERMISSIBLE TO SUB- JOIN OR TRACK A FICTION UPON A FICTION; AND THAT TH US, AS FAR AS ARRIVING AT THE DEDUCTION U/S 80IB OF THE ACT IS CONCERNED, ONE HAS TO STRICTLY FOLLOW THE PROVISIONS OF THAT SECTION AND COMPUTE THE DEDU CTION ACCORDINGLY, WITHOUT INFUSING ANY OTHER PROVISION OF THE ACT, WH ICH CREATES A LEGAL FICTION. 7. IN SUN PHARMACEUTICALS (SUPRA), HOWEVER, CONSE QUENTIAL HIGHER DEDUCTION U/S 80IB OF THE ACT ON ACCOUNT OF DISALLO WANCE UNDER SECTION 40(A)(IA) OF THE ACT HAS BEEN ALLOWED, HOLDING, IN TER-ALIA, THAT ADDITION OF INCOME U/S 40(A)(IA) RESULTS INTO INCREASE IN THE INCOME OF THE ASSESSEE, WHICH INCOME WOULD BE PROFIT DERIVED FROM THE INDU STRIAL UNDERTAKING. THE PROVISION CONTAINED UNDER SECTION 80IB FOR CO MPUTATION OF INCOME WAS FOUND TO CONTAIN A MANDATE THAT WHERE ANY DEDUC TION IS REQUIRED TO BE MADE OR ALLOWED UNDER ANY LAW, INCLUDED IN THIS CHAPTER UNDER THE HEADING, C.- DEDUCTIONS IN RESPECT OF CERTAIN INCO ME IN RESPECT OF ANY INCOME OF THE NATURE SPECIFIED IN THAT SECTION, WHI CH IS INCLUDED IN THE GROSS INCOME OF THE ASSESSEE, THEN, NOTWITHSTANDING ANYTHING CONTAINED IN THAT SECTION, FOR THE PURPOSE OF COMPUTING DEDU CTION UNDER THAT SECTION, THE AMOUNT OF INCOME OF THAT NATURE AS COM PUTED IN ACCORDANCE ITA NO.524(ASR)/2014 ASSTT. YEAR: 2009-10 5 WITH THE PROVISIONS OF THIS ACT ( BEFORE MAKING AN Y DEDUCTION UNDER THIS CHAPTER) SHALL ALONE TO BE DEEMED TO THE AMOUNT OF INCOME OF THAT NATURE WHICH IS DERIVED OR RECEIVED BY THE ASSESSE E AND WHICH IS INCLUDED IN HIS GROSS TOTAL INCOME. 8. THE DECISION OF THE TRIBUNAL IN THE CASE OF SUN PHARMACEUTICALS (SUPRA), AS NOTED, WAS FOLLOWED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2008-09, VIDE ORDER DATED 26.07.201 2 (SUPRA). THE FACTS IN THE PRESENT CASE OF THE ASSESSEE FOR THE AY 2008 -09 HAVE NOT BEEN SHOWN TO BE ANY DIFFERENT FROM THOSE PRESENT IN THE ASSESSEES CASE FOR THE YEAR UNDER CONSIDERATION, I.E., 2009-10. MOREOV ER, THE ORDER OF THE TRIBUNAL IN THE ASSESSEES CASE FOR THE AY 2008-09 HAS ALSO NOT SHOWN TO HAVE BEEN ACCEPTED ON APPEAL. IT HAS ALSO NOT BE EN SHOWN TO HAVE EVEN BEEN STAYED. 9. IN VIEW OF THE ABOVE RESPECTFULLY FOLLOWING THE SAID TRIBUNAL ORDER IN THE ASSESSEES CASE FOR THE ASSESSMENT YEAR 2008 -09, THE GRIEVANCE OF THE ASSESSEE IS ACCEPTED. THE ORDER OF THE LD. CIT( A) IS REVERSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/02/2016 SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 16/02/2016 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH.SUNANDAN AGGARWAL, JAMMU. 2. THE ITO, WARD 1(3), JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. ITA NO.524(ASR)/2014 ASSTT. YEAR: 2009-10 6 5. THE SR. DR, ITAT, ASR.