ACIT, Circle - 39, Kolkata, Kolkata V. M/s Sheo Sakti Coke Industries, Kolkata

ITA 631/KOL/2012

• Counselvise Citation: 63123514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SABOORUL HASAN USMANI
• Assessee Lawyers: H N DUBEY
• Keywords: Business expenditure
• Section: 80IB; 194C

Judgement Text

I.T.A. NO.: 631/KOL./2012 ASSESSMENT YEAR : 2007-08 PAGE 1 TO 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 631/KOL./ 2012 ASSESSMENT YEAR : 2007-2008 ASSISTANT COMMISSIONER OF INCOME TAX, ........ .APPELLANT CIRCLE-39, KOLKATA, 8 TH FLOOR, PODDAR COURT, 18, RABINDRA SARANI, KOLKATA-700 001 -VS.- M/S.SHEO SAKTI COKE INDUSTRIES,.................... .................RESPONDENT 115, COLLEGE STREET, KOLKATA-700 012 [PAN : AAHFS 4971 J] APPEARANCES BY: SHRI SABOORUL HASAN USMANI, SR. D.R., FOR THE DEPAR TMENT SHRI H.N. DUBEY, ADVOCATE, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : NOVEMBER 07, 2013 DATE OF PRONOUNCING THE ORDER : NOVEMBER 21, 2013 O R D E R PER BENCH: 1. THIS APPEAL FILED BY THE REVENUE IS AGAINST AN O RDER DATED 25 TH JANUARY, 2012 OF COMMISSIONER OF INCOME TAX (APPEAL S)-IV, KOLKATA FOR ASSESSMENT YEAR 2007-08. 2. GRIEVANCE RAISED BY THE REVENUE IN ITS APPEAL IS THAT LD. CIT(APPEALS) GRANTED DEDUCTION UNDER SECTION 80IC O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON TRANSPORT CHARGE EXPENSES OF RS.87,12,741/- DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT. I.T.A. NO.: 631/KOL./2012 ASSESSMENT YEAR : 2007-08 PAGE 1 TO 4 3. FACTS APROPOS ARE THAT ASSESSEE, CLAIMING TO HAV E STARTED A BUSINESS OF MANUFACTURING AND SELLING OF LAM COKE, HAD FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR, PREFERRING DEDUCT ION UNDER SECTION 80IC OF THE ACT ON A RS.23,36,680/-, FROM SUCH MANU FACTURING OPERATION. THERE WAS A CLAIM OF EXPENDITURE OF RS.87,12,747/- ON ACCOUNT OF TRANSPORTATION CHARGES. THIS COMPRISED OF RS.61,38, 987/- TO M/S. OM TRANSPORT CO. AND RS.7,59,250/- TO GAUHATI BHOPAL T RANSPORT CO. PVT. LTD. ON BEING ASKED BY THE ASSESSING OFFICER, ASSESSEE C OULD NOT PRODUCE ANY EVIDENCE FOR DEDUCTION OF TAX AT SOURCE ON SUCH PAY MENT. IN ABSENCE OF ANY DETAILS, ASSESSING OFFICER WAS OF THE OPINION T HAT SECTION 40(A)(IA) OF THE ACT STOOD ATTRACTED. ASSESSING OFFICER ALSO DEN IED THE CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT FOR A REASO N THAT THE ASSESSEE HAD NOT COMMENCED PRODUCTION BEFORE 1 ST APRIL, 2007. ASSESSMENT WAS ACCORDINGLY COMPLETED. 4. ASSESSEES APPEAL BEFORE CIT(APPEALS) IN SO FAR AS ITS CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT WAS SUCCESS FUL. HOWEVER, LD. CIT(APPEALS) CONFIRMED THE DISALLOWANCE OF TRANSPOR T CHARGES OF RS.87,12,747/-, ON WHICH TAX WAS NOT DEDUCTED AT SO URCE. NEVERTHELESS, ACCORDING TO HIM, DISALLOWANCE OF SUCH EXPENDITURE ONLY WENT TO INCREASE THE INCOME CHARGEABLE TO TAX, WHICH COULD BE GIVEN 100% DEDUCTION UNDER SECTION 80IC OF THE ACT. 5. NOW BEFORE US, LD. D.R. SUBMITTED THAT, THOUGH D ISALLOWANCE UNDER SECTION 40(A)(IA) WAS SUSTAINED BY THE LD. CIT(APPE ALS), HE NEVERTHELESS HELD SUCH AMOUNT ALSO TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IC OF THE ACT. AS PER LD. D.R., SUCH DIRECTIONS WERE GIVE N WITHOUT PROPERTY CONSIDERING THE SAID SECTION. LD. D.R. SUBMITTED TH AT BY ALLOWING A CLAIM FOR DEDUCTION ON AN AMOUNT OTHERWISE NOT ALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT, THE LATTER PROVISION WAS REND ERED OTIOSE. I.T.A. NO.: 631/KOL./2012 ASSESSMENT YEAR : 2007-08 PAGE 1 TO 4 6. AGAINST THIS, LD. A.R. ON BEHALF OF THE ASSESSEE SUBMITTED THAT ONCE A DISALLOWANCE OF BUSINESS EXPENDITURE WAS MADE, IT W ENT TO INCREASE THE PROFIT, WHICH WAS ELIGIBLE FOR CLAIM OF DEDUCTION U NDER SECTION 80IC OF THE ACT. ACCORDING TO HIM, THIS VIEW WAS SUPPORTED BY D ECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ITO VS.- KEVAL C ONSTRUCTION REPORTED IN (2013) 354 ITR 13, WHEREIN IT WAS HELD THAT EVEN WHEN DISALLOWANCE WAS REQUIRED TO BE MADE UNDER SECTION 40(A)(IA) OF THE ACT, THE ULTIMATE PROFIT AFTER CONSIDERING SUCH DISALLOWANCE WOULD BE ELIGIB LE FOR DEDUCTION. 7. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE RECORD, WE F IND THAT ASSESSEE HAD FILED ITS RETURN OF INCOME FIRST YEAR FOR THE IMPUG NED ASSESSMENT YEAR AND THE DECLARED INCOME WAS NIL. IT IS NOT DISPUTED THA T THE ASSESSEE HAD STARTED A BUSINESS OF MANUFACTURING OF LAM COKE, TH OUGH INITIALLY ITS CLAIM FOR DEDUCTION UNDER SECTION 80IC WAS DISALLOW ED BY THE ASSESSING OFFICER FOR A REASON THAT PRODUCTION HAD NOT COMMEN CED BEFORE 1 ST APRIL, 2007. IN ITS APPEAL BEFORE LD. CIT(APPEALS), SAID D EDUCTION WAS DIRECTED TO BE ALLOWED. SINCE THE ASSESSEE HAD CLAIMED DEDUC TION UNDER SECTION 80IC ON THE NET PROFIT OF RS.23,36,680/- ON ITS LAM COKE BUSINESS, WE CANNOT SAY THAT THE CLAIM OF TRANSPORTATION CHARGES OF RS.87,12,747/- WAS NOT RELATED TO ITS BUSINESS OF MANUFACTURING LAM CO KE. THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSEE WAS DOING ANYTHING ELSE. THERE IS ALSO NO FINDING BY THE ASSESSING OFFICER THAT THE TRANSPORT ATION CHARGES WERE NOT REQUIRED FOR THE PURPOSE OF THE MANUFACTURING BUSIN ESS OF THE ASSESSEE. IT WAS DISALLOWED ONLY FOR A REASON THAT DEDUCTION OF TAX WAS NOT MADE AS REQUIRED UNDER SECTION 194C OF THE ACT. HONBLE GUJ ARAT HIGH COURT IN THE CASE OF KEVAL CONSTRUCTION (SUPRA), RELIED BY THE L D. A.R., HAS HELD THAT WHERE A DISALLOWANCE OF EXPENDITURE WAS MADE FOR WA NT OF DEDUCTION OF TAX AT SOURCE, IT COULD NOT BE DENIED THAT SUCH DIS ALLOWANCE WOULD ULTIMATELY GO TO INCREASE THE PROFIT OF ASSESSEE AN D WHATEVER BE THE ULTIMATE PROFIT COMPUTED, AFTER MAKING DISALLOWANCE , SUCH PROFIT WOULD STILL QUALIFY FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE I.T.A. NO.: 631/KOL./2012 ASSESSMENT YEAR : 2007-08 PAGE 1 TO 4 DEDUCTION HERE CLAIMED BY THE ASSESSEE IS UNDER SEC TION 80IC OF THE ACT AND THIS ALSO FALLS UNDER THE SAME CHAPTER VI-A OF THE INCOME TAX ACT, WHERE UNDER SECTION 80IB ALSO LIES. THEREFORE, WE A RE OF THE VIEW THAT THE PRINCIPLE OF LAW ENUNCIATED BY THE HONBLE GUJARAT HIGH COURT IN THE ABOVEMENTIONED DECISION WOULD PARI PASSU APPLY HERE ALSO. WE CANNOT THEREFORE FIND FAULT IN THE DIRECTION GIVEN BY THE LD. CIT(APPEALS) THAT THE ASSESSEE WOULD BE ELIGIBLE TO GET THE CLAIM OF DEDU CTION UNDER SECTION 80IC OF THE ACT ON ITS PROFITS INCLUDING THE DISALL OWANCE UNDER SECTION 40(A)(IA) OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DAY OF NOVEMBER, 2013. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 21 ST DAY OF NOVEMBER, 2013 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.