Asst. Commissioner of Income tax Cir. 1, Margao V. M/s. Marpol Pvt. Ltd., Margao

ITA 62/PAN/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79697 (ITAT-PANAJI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NISHANT K LD
• Section: 115JB; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 62/PNJ/2014 (ASSESSMENT YEAR - 2006 - 07) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1, MARGAO - GOA. (APPELLANT) VS. M/ S. MARPOL PVT. LTD. PANANDIKAR CHAMBERS, 2 ND FLOOR, M.L. FURTADO ROAD, P.O. NO. 700, MARGAO - GOA PAN:AACCM2018D (RESPONDENT) APPELLANT BY : SHRI NISHANT K., LD. DR RESPONDENT BY : NONE DATE OF HEARING : 24 /06/2014 DATE OF PRONOUNCEMENT : 15 /07/2014 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE DEPARTME NT AGAINST THE ORDER OF CIT(A) - PANAJI, DATED 20 .11.2 013 FOR THE ASSESSMENT YEAR 2006 - 07 . 2. THE FOLLOWING GROUNDS ARE RAISED IN THIS APPEAL AS UNDER: - 1. THE ORDER OF LD. CIT(A) IS OPPOSED TO LAW AND FACT O THE CASE. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) - PANAJI, HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS. 13,36,921/ - , WHICH WAS ADDED BY AO, DISALLOWING DEDUCTION U/S 80IB OF THE I.T. ACT. 2.1. THE ASSESSEE HAS FILED THE RETURN OF IN COME ON 30 .11. 2006 DECLARING THE TOTAL INCOME OF RS. NIL UNDER NORMAL PROVISION OF THE I.T. ACT AND BOOK PROFIT U/S 115JB OF THE I.T. ACT OF RS. 1,35,02,279/ - . ON SCRUTINY OF THE CASE RECORDS, IT WAS REVEALED THAT THE DEDUCTION U/S. 80IB OF THE I.T. ACT WA S ALLOWED WITHOUT 2 . ITA NO.62/PNJ/2014 (A.Y.2006 - 07 ) ACIT VS. M/S MARPOL PVT. LTD. SET OFF OF INCOME OF VARIOUS UNITS/INTER UNIT LOSSES/ INCOMES. THE INCOME /LOSS OF VARIOUS UNITS IS AS UNDER: SL. NO. PARTICULARS AMOUNT 1 UNIT - 1 5044731 2 UNIT - 2 13613319 3 UNIT - 3 ( - )9501135 NET INCOME 915615 DEDUCTION ALLOWABLE U/S.80IB@ 30% 2747075 THE ASSESSING OFFICER NOTICED THAT DEDUCTION 80IB OF THE I.T. ACT WAS ALLOWED AT RS.40,83,996/ - RESULTING INTO EXCESS ALLOWANCE OF RS.13,36,921/ - . THEREFORE, ASSESSMENT WAS REOPENED AND ASSESSEE WAS GIVE TO SHOW CAUSE NOTICE AND HE CONTENDED THAT AS REGARDS THE LOSS OF UNIT - 3 IS NOT ADJUSTABLE AGAINST THE OTHER UNITS A S PER SECTION 80IB (13) R.W.S. 80IA(5) BUT THE ASSESSING OFFICER WAS OF THE VIEW THAT IT IS ALLOWABLE, THEREFORE, HE WITHDRAWN EXCESS DEDUCTION U/S. 80 I B OF RS.13,36,921/ - . 2.2. THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 6.3. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LEARNED COUNSEL OF THE APPELLANT ARGUED AS UNDER: THE LEARNED ASSESSING OFFICER HAS RE - OPE NED THE CASE U/S.148 ON THE GROUNDS T HAT THE LOSS OF UNIT III OF RS. 95,01,135/ - BE ADJUSTED AGAINST THE PROFITS OF THE OTHER UNITS AND DEDUCTIONS BE ALLOWED ON THE NET PROFITS. NO WHERE THE SECTION 8OIC RES TRICTS THE DEDUCTION, IN FACT 80 IC(7) R.W.S 80IA (5) SPECIFICALLY REFER TO THE DEDUCTION TO BE A LLOWED AS IF SUCH ELIGIBLE BUSINESS WERE THE ONLY SOURCE OF INCOME OF THE ASSESSEE DURING THE RELEVANT YEAR .................... . IN VIEW OF THE SPECIFIC PROVISIONS THERE IS NO SCOPE FOR SUCH INTER UNIT ADJUSTMENT. IN SUPPORT OF THE ABOVE WE RELY ON THE FOLLOWING DECISION (ENCLOSED FOR YOUR REFERENCE); A) CIT V/S SONA KOY STEERING SYSTEM LIMITED (DELHI HIGHLIGHTS) ITA NOS. 1279/08 788/2009. B) CIT V/S SCHMETZ INDIA (P) LIMITED (BOMBAY HIGH COURT) ITA 450 S OF 2010. C) CIT V/S CANARA WORKSHOP (P) LIMITED (161 ITR 320(SC). WE THEREFORE REQUEST YOU TO ALLOW OUT APPEAL IN FULL. 6.4. THE APPELLANT HAS PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT V/S SONA KOYO STEERING SYSTE MS LTD. REPORTED IN [2010] 32 ITR 463 3 . ITA NO.62/PNJ/2014 (A.Y.2006 - 07 ) ACIT VS. M/S MARPOL PVT. LTD. (DEL.) IN THIS CASE, THE ASSESSEE HAD TWO UNITS, NAMELY, A STEERING UNIT AND AN AXLE UNIT. THE ASSESSEE WAS INCURRING LOSSES IN ONE UNIT AND PROFIT IN OTHER UNIT. THE ASSESSEE CLA IMED DEDUCTION UNDER SECTION 80.I OF TH E INCOME TAX ACT, 1961. THE A.O. WHILE COMPUTING THE DEDUCTION ALLOWABLE TO THE ASSESSEE, SET - OFF THE LOSSES OF ONE UNIT AGAINST THE PROFITS OF OTHER UNIT AND THEREAFTER SOUGHT TO COMPUTE THE DEDUCTION. THE PLEA OF THE ASSESSEE BEFORE THE INCOME TAX APPELL ATE TRIBUNAL WAS THAT THE TWO UNITS ARE INDEPENDENT UNITS AND ONLY THE PROFIT MAKING UNIT SHOULD BE CONSIDERED ELIGIBLE FOR THE PURPOSES OF COMPUTING THE DEDUCTION UNDER SECTION 80.I READ WITH THE PROVISIONS OF SECTION 80 - I (6). THE TRIBUNAL ACCEPTED THE PL EA OF THE ASSESSEE. THE HONBLE HIGH COURT OF DELHI ALSO CONFIRMED THE ORDER OF THE HONBLE TRIBUNAL. THE HONBLE ITAT HELD THAT STEERING UNIT AND AXLE UNIT ARE TWO DIFFERENT UNITS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80I. THE ASSESSING OFFICER SHAL L GRANT DEDUCTION WITHOUT SET OFF LOSS OF ONE UNIT AGAINST THE PROFIT OF ANOTHER SUBJECT TO AVAILABILITY OF GROSS - PROFITS AS PER S.80B (5) OF THE ACT. 6.5. IN THE INSTANT CASE, THE FACT IS SIMILAR AND IS SQUARELY COVERED BY THE ABOVE QUOTED DECISION. THE GROSS TOTAL INCOME WAS POSITIVE INCOME AND IT INCLUDED PROFITS OF THE UNIT ELIGIBLE FOR CLAIM OF DEDUCTION U/S 801B. NOW THE QUANTUM OF DEDUCTION U/S 801B HAS TO BE COMPUTED IN RESPECT OF THE ELIGIBLE UNIT, AS IF IT IS AN INDEPENDENT UNIT AND SUCH DEDUCTIO N IS DEDUCTIBLE FROM THE GROSS TOTAL INCOME OF THE ASSESSEE, RELYING ON THE ABOVE DECISION, THE A.O. IS DIRECTED TO GRANT FULL DEDUCTION AS CLAIMED BY THE APPELLANT AND DELETE THE REDUCTION IN THE CLAIM AMOUNTING TO RS. 13,36,921/ - . THIS GROUND OF APPEA L O F THE APPELLANT IS ALLOWED. 2.3. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN CONTROVERSY IS GOVERNED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER OF INCOME TAX (CE NTRAL) MADRAS VS. CANARA WORKSHO PS P. LTD. 161 ITR 321(SC), WHEREIN THE HONBLE SUPREME COURT HAS HELD AS UNDER : IN COMPUTING THE PROFITS FOR THE PURPOSE OF DEDUCTION UNDER SECTION 80E OF THE INCOME - TAX ACT, 1961, THE LOSS INCURRED BY THE ASSESSEE I N THE MANUFACTURE OF ALLOY STEELS (A PRIORITY INDUSTRY) COULD NOT BE SET OFF AGAINST THE PROFITS OF THE MANUFACTURE OF AUTOMOBILE ANCILLARIES (ANOTHER PRIORITY INDUSTRY). THE ASSESSEE WAS ENTITLED TO A DEDUCTION AT 8 PER CENT. ON THE ENTIRE PROFITS OF THE AUTOMOBILE PARTS INDUSTRY INCLUDED IN THE TOTAL INCOME WITHOUT DEDUCTING THEREFROM THE LOSSES IN THE ALLOY STEEL MANUFA CTURE. WE RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT, WE ARE OF THE VIEW THAT THE CIT(A) IS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. 4 . ITA NO.62/PNJ/2014 (A.Y.2006 - 07 ) ACIT VS. M/S MARPOL PVT. LTD. 3 . IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 .7.2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARA SIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 15 .7.2014 P.S. - *PK* COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER