Deputy Commissioner of Income-tax, Pune V. Finolex Cables Ltd., Pune

ITA 594/PUN/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6922 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRUPAMA KOTRU
• Assessee Lawyers: J G PENDSE
• Keywords: Business income
• Section: 143(3); 153A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO S . 593 TO 596 /P U N/20 1 6 / ASSESSMENT YEAR S : 20 0 8 - 09 TO 2011 - 12 THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(2), PUNE . / APPELLANT VS. FINOLEX CABLES LTD., 26/27, MUMBAI PUNE ROAD, PIMPRI, PUNE 411018 PAN : AAACF2637D . / RESPONDENT / APPELLANT BY : MS. NIRUPAMA KOTRU, CIT / RESPONDENT BY : S HRI J.G. PENDSE / DATE OF HEARING : 20 . 12 .2017 / DATE OF PRONOUNCEMENT: 21 . 1 2 .2017 / ORDER PER SUSHMA CHOWLA, JM: THIS BUNCH OF FOUR APPEAL S FILED BY THE REVENUE ARE AGAINST CONSOLIDATED ORDER OF CIT(A) - 11, PUNE , DATED 21.01.2016 RELATING TO ASSESSMENT YEAR S 200 8 - 09 TO 2011 - 12 AGAINST RESPECTIVE ORDERS PASSED U/S. 143(3) / 143(3) R.W.S. 153A OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 2 . TH IS BUNCH OF APPEALS RELATING TO THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE 2 ITA NO S . 593 TO 596/PUN/2016, FINOLEX CABLES LTD., PUNE OF CONVENIENCE. HOWEVER, IN ORDER TO ADJUDICATE THE ISSUES WE MAKE REFERENCE TO THE FACTS AND ISSUES IN ITA NO. 593/PUN/2016 , RELATING TO ASSESSMENT YEA R 200 8 - 09 . 3. THE REVENUE IN ITA NO. 593/PUN/2016 , RELATING TO ASSESSMENT YEAR 200 8 - 09 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN N DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80LB OF THE I.T. ACT, 1961 FOR GOA UNIT IN RESPECT OF SALE OF SCRAP AS RECEIPTS THERE FROM WAS NOT INCOME FROM SALE OF MANUFACTURED PRODUCTS OR BY PRODUCTS OF THE INDUSTRIAL UNDERTAKING. 2. ON THE FACTS AND THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE U/S. 80LB ON INCOME EARNED FROM SALE OF SCRAP WHEN IT WAS NOT DERIVED FROM THE ACTIVITIES OF THE ELIGIBLE BUSINESS. 3. THE ORDER OF THE LD. CIT(A) MAY BE VACATED AND THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND AND MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 4. THE LD. AR FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE STARTING FROM ASSESSMENT YEARS 2000 - 01 TO 2007 - 08. HE POINTED OUT THAT THE LATEST OR DER IS FOR ASSESSMENT YEAR 2007 - 08 WHEREIN REFERENCE HAS BEEN MADE TO THE EARLIER YEARS. 5. THE LD. DR FOR THE REVENUE FAIRLY ADMITTED THAT THE ISSUE HAS BEEN DECIDED BY THE TRIBUNAL. HOWEVER, THE REVENUE IS IN APPEAL AGAINST THE ORDER OF TRIBUNAL BEFOR E THE HONBLE HIGH COURT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. B RIEFLY IN THE FACTS OF THE CASE THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB OF THE ACT FOR 3 ITA NO S . 593 TO 596/PUN/2016, FINOLEX CABLES LTD., PUNE GOA UNIT IN RESPECT OF SALE OF SCRAP. WE FIND THAT SIMILAR ISSUE OF CLAIM OF DEDUCTION U/S. 80IB OF THE ACT ON SALE OF SCRAP GENERATED OUT OF MANUFACTURING PROCESS WAS TREATED AS BUSINESS INCOME AND THE DEDUCTION U/S. 80IB OF THE ACT WAS ALLOWED. THE TRI BUNAL IN ITA NOS.564 & 565/PN/2014 RELATING TO ASSESSMENT YEARS 2005 - 06 & 2007 - 08 IN THE APPEAL FILED BY THE REVENUE, WITH LEAD ORDER IN ITA NO.360/PN/2014 RELATING TO ASSESSMENT YEAR 2007 - 08 IN THE APPEAL FILED BY THE ASSESSEE, VIDE ORDER DATED 31.08.2015 HAD HELD AS UNDER : 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE EXAMINED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO PERUSED THE ORDERS OF CO - ORDINATE BENCH OF TRIBUNAL IN ITA NO. 105/PN/2007 FOR ASSESSM ENT YEAR 2002 - 03 DECIDED ON15 - 07 - 2011 AND ITA NO. 1975/PN/2013 FOR ASSESSMENT YEAR 2004 - 05 DECIDED ON 29 - 09 - 2014. WE FIND THAT THE TRIBUNAL HAS ACCEPTED THE CLAIM OF ASSESSEE BY PLACING RELIANCE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF M /S. FENNER INDIA LTD. REPORTED AS 241 ITR 803. THE RELEVANT EXTRACT OF THE ORDER OF TRIBUNAL IN ITA NO. 105/PN/2007 IS AS UNDER: 27. GROUND NO. 6 RELATES TO CIT(A)'S DIRECTION TO THE A.O TO ALLOW THE DEDUCTION U/S 80 - IB OF THE ACT IN RESPECT OF SCRAP GE NERATED OUT OF MANUFACTURING PROCESS TREATING THE SAME AS BUSINESS INCOME. THE A.O OBSERVED THAT THE SCRAP IS NOT A BYE PRODUCT OF THE ASSESSEE AND HENCE THE SALE OF THE SAME CANNOT BE TREATED AS THE BUSINESS INCOME OF THE UNIT AND HENCE NOT ELIGI9BLE FOR DEDUCTION U/S 80 - IB OF THE ACT. AS REGARDS THE ALTERNATIVE GROUND OF THE ASSESSEE OF TAKING NET INCOME EARNED OUT OF THE SALE OF SCRAP, THE A.O. OBSERVED THAT THE SAME IS NOT ACCEPTABLE AS THE COST RELATING TO THE SALE OF SCRAP WAS ALREADY DEBITED TO THE P & L A/C OF THE UNIT. THE A.O ALSO DID NOT GRANT DEDUCTION U/S 80 - IB IN RESPECT OF MISCELLANEOUS INCOME AMOUNTING TO RS.56,32,480/ - RELYING ON THE JUDGMENTS OF APEX COURT IN THE CASE OF PANDIAN CHEMICALS (233 ITR 497) AND STERLING FOODS LTD. (236 AITR 529) . ON APPEAL, THE CIT(A) HAS CONFIRMED THE VIEW TAKEN BY THE A.O ON THIS ISSUE. 28. AT THE VERY OUTSET, THE LEARNED COUNSEL FOR THE ASSESSEE HAS MENTIONED THAT THE SAID ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF .MADRAS HIGH COURT JUDGMEN T IN THE CASE OF M/S FENNER INDIA LTD (241 ITR 803) FOR THE PROPOSITION THAT THE PROFIT ON SALE OF SCRAP MATERIAL SINCE HAD A DIRECT LINK OR NEXUS WITH THE INDUSTRIAL UNDERTAKING AND THEREFORE, IT IS ELIGIBLE FOR DEDUCTION U/S 80IB, CONSIDERING THE SIMILAR ITY IN LANGUAGE USED IN SECTIONS 80HH AND 80IB OF THE ACT, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SHOULD SUCCEED IN THIS REGARD ALSO. ACCORDINGLY, GROUND 3 OF THE REVENUE'S APPEAL IS DISMISSED. IN ASSESSMENT YEAR 2004 - 05, THE CO - ORDINATE BENC H BY FOLLOWING THE DECISION RENDERED IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2002 - 03 GRANTED RELIEF TO THE ASSESSEE. 7. THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE FINDINGS OF THE TRIBUNAL ON THIS ISSUE. SINCE, THERE IS NO CHANGE IN FACTS AND CIRCU MSTANCES IN THE IMPUGNED ASSESSMENT YEARS, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. 4 ITA NO S . 593 TO 596/PUN/2016, FINOLEX CABLES LTD., PUNE ACCORDINGLY, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE AND DISMISS BOTH THE APPEALS OF THE REVENUE. 7. THE ISSUE ARISING IN THE PRESENT BUNCH OF APPEALS FILED BY THE REVENUE IS IDENTICAL TO THE ISSUE IN THE EARLIER YEARS AND THERE IS NO CHANGE IN THE FACTUAL ASPECT. ACCORDINGLY, WE UPHOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE GROUNDS OF APPEAL RAISE D BY THE REVENUE. 8. THE FACTS AND ISSUES IN ITA NO S . 594 TO 596 /PUN/2016 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 593 /PUN/2016 AND OUR DECISION IN ITA NO. 593 /PUN/2016 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS. 594 TO 596 /PUN/2016 . 9. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 21 ST DAY OF DECEM BER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 21 ST DECEM BER , 201 7 . R R K K / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 11 , PUNE ; 4. THE PR. C IT (CENTRAL), PUNE ; 5. , , / DR B , ITAT, PUNE; 6. / GUARD FILE. / BY ORDER //TRUE C OPY// / PRIVATE SECRETARY , / ITAT, PUNE