Ajay Goyal, New Delhi V. DCIT, New Delhi

ITA 6383/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5251 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Business income
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH SMC : NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6383/DEL/2016 ASSESSMENT YEAR: 2012-13 AJAY GOYAL, VS DCIT, CIRCLE-19(1), 7/17, PUNJABI BAGH, NEW DELHI NEW DELHI - 110035 (PAN: AALPG0128J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SANJAY KUMAR, FCA REVENUE BY : SH. T. VASANTHAN, SR. DR ORDER THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDE R OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-16, NEW DELHI ON THE FOLLOWING GROUNDS:- 1(I) THAT THE LD. CIT(A) WITHOUT APPRECIATING THE FACTS OF THE CASE AND IN LAW HAS ERRED IN CONFIRMIN G THE ACTION OF THE DCIT IN APPLYING THE PROVISION OF SECTION 80IA(10) OF THE ACT AND REDUCING THE CLAIM U/S. 80IC BY RS. 10,31,696/- IN RESPECT OF PROFIT O F PROPRIETORSHIP CONCERN NAHAN INTERNATIONAL, WITHOUT ANY MATERIAL BASIS. THAT THE CLAIM U/S. 80IC BE ALLOWED AS CLAIMED. 2 (II) THAT IT MAY BE HELD THAT THE ADDITION OF RS. 10,31,696/- TO THE TAXABLE INCOME IS UNJUSTIFIED AND UNWARRANTED AND BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAD FILED ITS E-RETURN OF INCOME ON 21.09.2012 FOR AY 2012-13 DEC LARING AN INCOME OF RS.23,42,130/- AFTER CLAIMING THE DEDUCTI ON OF RS. 1,05,746/- U/S 80IC OF THE INCOME TAX ACT, 196 1 (HEREINAFTER REFERRED AS THE ACT). THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICE U/S 143(2) OF THE ACT DATED 21.08.2013 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN COMPLIANCE TO NOTICE ISSUED THE A.R. OF THE ASSESSEE ATTENDED THE CASE AND FILED COPY OF ITR ALONG WITH COPIES OF AUDITED FINANCIAL RESULTS. SUBSEQUENTLY NOTICES U/S 143(2) OF THE ACT AND 142( 1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED AND INFORMATIO N IN SUPPORT OF ITS CLAIMS WAS CALLED FOR. IN RESPONSE TO THE STATU TORY NOTICE ISSUED U/S 143(2) OF THE ACT & 142(1) OF THE ACT, THE A.R. OF ASSESSEE ATTENDED THE PROCEEDINGS AND SUBMITTED THE DOCUMENT S/EVIDENCES IN SUPPORT OF ITS CLAIM AS CALLED FOR DURING THE PROCE EDINGS. 2.1 IN THIS CASE THE ASSESSEE IS ONE OF THE DIREC TORS IN M/S PADMINI IMPEX PVT. LTD. AND DERIVING DIRECTOR'S SAL ARY FROM IT. APART FROM DIRECTOR SALARY, THE ASSESSEE IS ALSO ENGAGED IN THE BUSINESS OF MANUFACTURING OF HOME APPLIANCES LIKE HEATING APPLI ANCES, INDUCTION COOKER, LPG GAS, STOVES, KETTLES ETC. AND HAVING IT S UNIT AT VILLAGE MOGINAND, TEHSIL NAHAN, HIMACHAL PRADESH. DURING TH E RELEVANT 3 PERIOD ASSESSEE HAS EARNED A PROFIT OF RS. 1,04,37, 426/- FROM THIS BUSINESS ACTIVITY AND CLAIMED A DEDUCTION OF 100% O F THE ENTIRE PROFIT U/S. 80IC OF THE ACT. AO OBSERVED THAT ASSESSEE IS SELLING ALMOST HIS ENTIRE PRODUCTION TO THE COMPANY IN WHICH HE IS ONE OF THE DIRECTORS. AO OBSERVED THAT THE ASSESSEE HAS EITHER NOT CLAIME D OR HAS CLAIMED A VERY LOW / NOMINAL INCIDENTAL EXPENSES WHICH ARE NECESSARY FOR MANUFACTURING UNIT I.E. FREIGHT CHARGES, TRANSPORTA TION CHARGES, LOADING AND UNLOADING CHARGES ETC. IN COMPARISON TO HIS TURNOVER, KEEPING IN VIEW THE FACT THAT THE ASSESSEE HAS PURC HASED HIS RAW MATERIAL AS WELL AS PACKAGING MATERIAL MAINLY OUTSI DE THE HIMACHAL WHERE HIS UNIT IS LOCATED. THUS, WHILE COMPUTING TH E DEDUCTION U/S. 80IC IN RESPECT OF HIMACHAL UNIT COGNIZANCE OF THE FACT WAS TAKEN THAT MAJOR PART OF SALE OF THE ASSESSEE IS TO HIS O WN COMPANY AS SUCH MARKET FORCES DETERMINING THE SALE PRICE ARE NOT F ULLY SUBSTANTIATED IN THIS CASE AND SOME EXPENSES WERE ALSO FOUND ABSE NT, THEREFORE, IN VIEW OF THESE FACTS, THE PROFIT WAS ADJUSTED BY DEDUCTING AN AMOUNT OF RS. 10,31,696/- WHICH IS EQUAL TO 2% OF T OTAL SALES AND ELIGIBLE DEDUCTION U/S. 80IC OF THE ACT WAS COMPUTE D AT RS. 94,05,730/- AS AGAINST THE TOTAL DEDUCTION CLAI MED OF RS. 10,04,37,426 AND ACCORDINGLY ASSESSMENT WAS COM PLETED AT RS. 35,10,427/- U/S. 143(3) OF THE I.T. ACT, 1961 VIDE ORDER DATED 12.3.2015. AGAINST THE ASSESSMENT ORDER DATED 12.3. 2015, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGN ED ORDER DATED 4 1.11.2016 HAS PARTLY ALLOWED THE APPEAL OF THE ASSE SSEE AND CONFIRMED THE ADDITION IN DISPUTE. 3. AGGRIEVED WITH THE LD. CIT(A)S ORDER DATED 1.11 .2016, ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. DURING THE HEARING, LD. A.R. OF THE ASSESSEE HAS FILED A LETTER DATED 03.08.2017 ATTACHING THEREWITH THE DULY SWORN AFFIDAVIT OF THE ASSESSEE SH. AJAY GOYAL STATING THEREIN THAT IN NON E OF THE ASSESSMENT MADE SINCE ASSESSMENT YEAR 2010-11, SO F AR, PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IC WERE DIS TURBED EXCEPT IN THE ASSESSMENT FRAMED FOR THE ASSESSMENT YEAR 2012- 13 (YEAR UNDER PRESENT APPEAL) WHEREIN, PROFIT ELIGIBLE FOR DEDUC TION UNDER SECTION 80-IC WERE REDUCED BY RS. 10,31,696/- BEING 2% OF T HE TOTAL SALES OF THE INDUSTRIAL UNIT. HE FURTHER FILED THE RELATED ORDERS AS PASSED IN THE CASE OF THE ASSESSEE UNDER SECTION 143(1)/143(3 ) OF THE ACT FOR THE ASSESSMENT YEAR 2010-11, 2011-12, 2012-13, 2013 -14 AND 2014-15. THEREFORE, HE REQUESTED THAT FOLLOWING TH E CONSISTENT VIEW TAKEN IN THE PRECEDING YEARS AS WELL AS IN SUBSEQUE NT YEARS, THE ADDITION IN DISPUTE MAY BE DELETED AND APPEAL OF TH E ASSESSEE MAY BE ALLOWED. 5. ON THE CONTRARY, LD. DR DID NOT CONTROVERT THE C ONTENTION RAISED BY THE LD. A.R. OF THE ASSESSEE. HOWEVER, H E RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS. I HAVE GONE THROUGH THE ORDERS PASSED BY THE REVENUE AUTHO RITIES AS WELL AS 5 THE CONTENTION RAISED BY THE ASSESSEE IN THE GROUND S OF APPEAL; LETTER DATED 3.8.2017 FILED BY SH. SANJAY KUMAR; AFFIDAVIT FILED BY THE ASSESSEE AND ALSO THE ORDERS PASSED U/S. 143(1)/14 3(3) OF THE ACT FOR THE ASSESSMENT YEARS 2010-11 TO 2014-15. AFTER PERUSING THE AFORESAID DOCUMENTS/EVIDENCES, I FIND THAT ASSESSE E IS AN INDIVIDUAL BY STATUS AND IS A PROPRIETOR OF M/S NAHAN INTERNAT IONAL WHICH IS ENGAGED IN THE MANUFACTURING OF HOME APPLIANCES LIK E LPG GAS STOVES, INDUCTION COOKER, KETTLES AND HEATING APPLI CANES FROM ITS INDUSTRIAL UNIT AT VILLAGE MOGINAND, TEHSIL-NAHAN I N THE STATE OF HIMACHAL PRADESH (A NOTIFIED AREA WHICH QUALIFIES F OR DEDUCTION UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961) SINCE ASS ESSMENT YEAR 2010-11. I FURTHER FIND THAT EVER SINCE THE START O F THE AFORESAID INDUSTRIAL UNIT IN THE ASSESSMENT YEAR 2010-11, THE ASSESSEE CONTINUES TO BE ELIGIBLE FOR CLAIM OF DEDUCTION UND ER SECTION 80IC OF THE INCOME TAX ACT, 1961. I FURTHER NOTE THAT IN NO NE OF THE ASSESSMENT MADE SINCE ASSESSMENT YEAR 2010-11 SO FA R, PROFIT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IC WERE DIS TURBED EXCEPT IN THE ASSESSMENT FRAMED FOR THE ASSESSMENT YEAR 2012- 13 (YEAR UNDER PRESENT APPEAL), WHEREIN PROFIT ELIGIBLE FOR DEDUC TION UNDER SECTION 80IC WERE REDUCED BY RS. 10,31,696/- I.E. 2% OF TOT AL SALES OF THE INDUSTRIAL UNIT, WHICH IS NOT SUSTAINABLE IN THE EY ES OF LAW. KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, AS EXPLAINED ABOVE, I DELETE THE ADDITION OF RS. 10,31,696/- AN D ALLOWED THE CLAIM U/S. 80IC OF THE INCOME TAX ACT, 1961. 6 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON 11-08-2017. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED : 11-08-2017 SR BHATANGAR COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.