DCIT, New Delhi V. M/s Deepak Auto P. Ltd., New Delhi

ITA 5631/DEL/2012

• Counselvise Citation: 563120114 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 30-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: R K KAPPOR
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SH. I. C. SUDHIR , J M AND SH. J. S. REDDY, A M ITA NO. 5631 /DE L/2012 : ASSTT. YEAR : 200 9 - 10 DCIT, CIRCLE - 10(1) NEW DELHI VS M/S DEEPAK AUTO P. LTD. (NOW LUMAX ANC ILLARY LTD.), B - 86, MAYAPURI IND. AREA, PH - I, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAA CD2571J A SSESSEE BY : SH. PRADEEP DINODIA , CA & R. K. KAPPOR , CA REVENUE BY : SMT. PARWINDER KAUR, SR . DR DATE OF HEARIN G : 30.7 . 2014 DATE O F PRO NOUNCEMENT : 24. 9 .2014 ORDER P ER J. S REDDY , AM: THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 13, NEW DELHI DATED 3.8.2012. 2 . THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF AUTO COMPONENTS. IT HAS THREE MANUFACTURING UNITS, NAMELY, GURGAON, PUNE AND RUDRAPUR. THE RUDRAPUR UNIT IS LOCATED IN A BACKWARD REGION AND IS ELIGIBLE FOR INCENTIVES. THE ASSESSEE CLAIMED E XEMPTION U/S 80IC FOR THE RUDRAPUR UNIT. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE U/S 80IB FOR ITS RUDRAPUR UNIT ON THE GROUND THAT THE PROFIT RATE OF RUDRAPUR UNIT IS MUCH MORE THAN THE PROFIT RATE OF OTHER TWO ITA NO. 5631 /DEL/201 2 DEEPAK AUTO P. LTD. 2 UNITS . H E WAS ALSO OF THE OPINION THAT THE EXPENDITURE PERTAINING TO RUDRAPUR UNIT HAS BEEN DIVERTED AND CLAIMED IN THE OTHER UNITS TO REDUCE TAX LIABILITY . AGGRIEVED THE ASSESSEE CAR RIED THE MATTER AN APPEAL. THE FIRST A PPELLATE AUTHORITY CONSIDERED THE FACTS OF THE CASE AND GAVE A FACTUAL FINDING THAT THE CONCLUSIONS DRAWN BY THE ASSESSING OFFICER WERE ERRONEOUS. HE GRANTED RELIEF . 3. AGGRIEVED THE REVENUE IS BEFORE US ON THE FOLLOWING GROUNDS: 1. WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 36,66,420/ - MADE BY THE A.O ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S 80IC OF THE I.T. ACT, 1961 AND ALLOWED DEDUCTION OF RS. 36,66,420/ - ? 2. WHETHER THE LD. CIT(A) UNDER THE FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN GIVING THE VERDICT ON THE ISSUE ON THE BASIS OF SUBMISSION MADE BY THE ASSESSEE BEFORE HIM WHICH WERE NEVER BEEN PUT ON RECORDS BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS ? 4 . WE HAVE HEARD SMT. PARWINDER KAUR, SR. DEPARTMENTAL REPRESENTATIVE ON BEHALF OF THE REVENUE AND SHRI PRADEEP DINODIA, CA ON BEHALF OF THE ASSESSEE. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND WHEREAS THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE O RDER THE LD. CIT(A). 5 . ON A CAREFUL CONSIDERATION OF THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE PAPERS ON RECORD WE HOLD AS FOLLOWS. ITA NO. 5631 /DEL/201 2 DEEPAK AUTO P. LTD. 3 6 . THE FIRST APPELLATE AUTHORITY AT PARA 5.3 OF THIS ORDER GAVE THE FOLLOWING FACTUAL FINDINGS: A ) THE GURGAON IS A VERY OLD UNIT AND WHEREAS RUDRAPUR AND PUNE UNIT STARTED MANUFACTURING ON 1.11.2007 AND 16.1.2008 RESPECTIVELY. B ) THE ASSESSEE IS MAINTAINING SEPARATE BOOKS OF ACCOUNTS FOR EACH UNIT AND IS PREPARING PROFIT AND LOSS ACCOUNT , BALANCE SHEET U NIT W ISE. C ) THE CONSUMPTION OF RAW MATERIAL FOR RUDRAPUR UNIT AND PUNE UNIT DURING THE YEAR HAS COME DOWN AS COMPARE D TO F. Y. 2007 - 08, BUT IT IS STILL HIGHER AS COMPARE TO GURGAON UNIT. THE COMPARATIVE DETAILS JUSTIFIES THE DIFFERENCE IN CONSUMPTION OF RAW MATERI AL AS EACH UNIT IS MANUFACTURING DIFFERENT VARIETIES OF PRODUCTS UNDER THE SAME CLASSIFICATION AND THE QUANTUM OF GOODS MANUFACTURED, SELLING PRICE AS WELL AS CUSTOMERS ARE DIFFERENT FOR EACH UNIT. D ) THE PERCENTAGE OF CONSUMPTION OF RAW MATERIAL FOR RUDR APUR UNIT IS LOWER IN COMPARISON WITH THE PERCENTAGE OF CONSUMPTION OF RAW MATERIAL OF PUNE UNIT. E ) NO DEFICIENCY WAS FOUND BY THE DCIT IN THE STOCK RECORD S MAINTAINED IN RUDRAPUR UNIT AND THE EXCISE RECORD MAINTAINED IN GURGAON AND PUNE UNIT. ITA NO. 5631 /DEL/201 2 DEEPAK AUTO P. LTD. 4 F ) NO D EFECTS WERE POINTED OUT BY THE ASSESSING OFFICER, WHILE VERIFYING THE EXPENSES OF ALL THE UNITS. G ) THE DATA DISS CLOSE THAT THE MANUFACTURING EXPENSES OF GURGAON UNIT HAVE COME DOWN FROM 21.41% IN ASSESSMENT YEAR 2006 - 07 TO 2 0.07% IN ASSESSMENT YEAR 2009 - 10 AND THEREFORE, THE ALLEGATION OF ASSESSING OFFICER THAT THE ASSESSEE HAS DIVERTED THE RUDRAPUR UNIT EXPENSES TO GURGAON UNIT TO CLAIM MORE DEDUCTION IS NOT SUBSTANTIATED BY THESE FIGURES AND THE ALLEGATION OF THE ASSESSING OFFICER IS NOT BASED ON CORREC T APPRECIATION OF FACTS. H ) SIMILARLY, THE FIGURES OF ADMINISTRATIVE, SELLING AND DISTRIBUTION EXPENSES DO NOT SUBSTANTIATE S THE ALLEGATION OF THE ASSESSING OFFICER THAT THE ASSESSEE IS DIVERTING EXPENSES OF RUDRAPUR UNIT TO GURGAON UNIT TO CLAIM THE HIGH ER DEDUCTION U/S 80IC OF THE ACT. I ) THE DATA SHOWS THAT THE PROFITS DECLARED BY GURGAON UNIT HAS INCREASED AS COMPARE TO THE EARLIER YEARS AND HENCE THE ALLEGATION OF THE ASSESSING OFFICER OF TRANSFERRING EXPENSES FOR RUDRAPUR UNIT TO GURGAON UNITS IS ER RONEOUS. J ) THE ALLEGATION OF THE ASSESSING OFFICER THAT NO PROPER ALL OC ATION OF COMMON EXPENSES HAS BEEN DONE BY THE ASSESSEE IS NOT BASED ON CORRECT APPRECIATION OF FACTS. ITA NO. 5631 /DEL/201 2 DEEPAK AUTO P. LTD. 5 K ) DETAILS OF WAGES, ALLOWANCE S AND JOB WORK CHARGES OF GURGAON UNIT HAS COME DO WN DURING THE YEAR AS COMPARE TO A.Y 2006 - 07. THIS SHOWS THAT THE ALLEGATION OF THE ASSESSING OFFICER OF TRANSFER OF EXPENSES ON WAGES FROM RUDRAPUR UNIT TO GURGAON UNIT IS NOT SUPPORTED BY FACTS. L ) GURGAON UNIT AND PUNE UNIT ARE PAYING EXCISE DUTY ON TH E ITEMS MANUFACTURED AND WHEREAS RUDRAPUR UNIT D OES NOT PAY ANY EXCISE DUTY. THIS HAS RESULTED IN THE PROFIT PERCENTAGE BEING DIFFERENT FOR EACH UNIT. M) THERE ARE NO DEFECTS POINTED OUT BUY THE A.O IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 6 . THESE FACTUA L FINDINGS OF THE FIRST APPELLATE AUTHORITY COULD NOT BE CONTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE. HENCE WE HAVE TO UPHOLD THE FINDING OF THE LD. CIT(A). 7 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN CO URT ON 24 / 9 /2014. SD/ - SD/ - (I. C. SUDHIR ) ( J. S. REDDY ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 /9/ 2014 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR