SADHANA NITRO CHEM LTD, MUMBAI V. DCIT 7(2), MUMBAI

ITA 6532/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0157 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 23-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 28-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S RAVICHANDRAN
• Assessee Lawyers: V MOHAN
• Section: 143(3); 10B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH , JM AND SHRI RAJESH KUMAR, AM ITA NO. 6532 & 6533 / MUM/ 20 1 4 ( / ASSESSMENT YEAR: 2009 - 10 & 2010 - 20 11 ) SADHANA NITROCHEM LTD., HIRA BAUG, 1 ST FLOOR, KASTURBA CHOWK (CP TANK), MUMBAI - 400004 / VS. DY. COMMISSIONER OF INCOME TAX , RANGE - 7 ( 2 ), ROOM NO.670, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT) : ( / RESPONDENT ) ./ PAN : AABCS1231R ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : M R.V MOHAN /R E SPONDENT BY : SHRI S RAVICHANDRAN, / DATE OF HEARING : 2 9 .6.2017 / DATE OF PRONOUNCEMENT : 5. 7 . 201 7 / O R D E R PER RAJESH KUMAR, A. M: THE CAPTIONED APPEAL S BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) - 13 , MUMBAI , DATED 2 1.08. 201 4 , PERTAINING TO THE ASSESSMENT YEARS 2009 - 10 & 2010 - 11 WHICH IN TURN HAVE ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 20.3.2013 FOR BOTH THE YEARS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2 ITA NO 6532 AND 6533/MUM/2014 2. THE ONLY ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF THE LD.CIT( A) NOT ALLOWING THE CORRECT QUANTUM OF DEDUCTION UNDER SECTION 10B OF THE INCOME TAX ACT, 1961. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN CHEMICALS AND IT HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR S UNDER CONSIDERATION ON 26.9.2009 AND 29.9.2010 DECLARING TOTAL LOSS OF RS.11,97,69,880/ - & RS.10,80,43,550/ - FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY . THE RETURN WAS PROCESSED UNDER SECTION 143(1) AND THEREAFTER THE CASE W AS SELECTED FOR SCRUTINY AND NOTICES UNDER SECTION 143(2) AND 142 (1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE SE YEAR S THE ASSESSEE HAS CLAIMED DEDUCTION U/S 10B TO THE TUNE OF RS.2,41,17,539/ - AND 62,54,575/ - FOR THE ASSESSMENT YEARS 2009 - 10 AND 2010 - 11 RESPECTIVELY IN RESPECT OF UNIT WHICH WAS FUNCTIONING FROM FINANCIAL YEAR 1999 - 2000. THE SAID PLAT WAS MANUFACTURING BTCA A CHEMICAL USED IN TEXTILE INDUSTRY FROM FINANCIAL YEAR 1999 - 2000 A ND THE NON - EOU UNIT IS ALSO FUNCTIONING F ROM THE SAME COMPOUND. ACCORDING TO THE AO, THE ASSESSEE SHOWED HIGHER PROFIT FROM EOU IN ORDER TO CLAIM HIGHER DEDUCTION U/S 10B OF THE ACT . THE AO REJECTED THE CLAIM OF THE ASSESSEE BY CITING VARIOUS REASONS LIKE EOU WAS IN EXTENSION OF OLD UNIT AND NOT OF N EW UNIT AND IF THE PROFIT WAS ESTIMATED ON THE SAME RATE AS IN THE OTHER UNIT OF THE ASSESSEE THERE COULD BE H ARDLY ANY AMOUNT OF DEDUCTION FOR CLAIM U/S 10B O F THE ACT AND ACCORDINGLY 3 ITA NO 6532 AND 6533/MUM/2014 FAMED ASSESSMENT U / S 143(3) OF THE ACT VIDE ORDER DATED 20.3.2013 BY A SSESSING THE TOTAL INCOME OF THE ASSESSEE AT (1)RS.9,37,38,890/ - AND ( - ) RS.10,17,88,980/ - FOR BOTH THE ASSESSMENT YEARS. 4 . IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY ALLOWING DEDUCTION OF RS.2,15,29,725/ - F OR BOTH THE YEARS AS AGAINST THE ACTUAL CLAIM OF THE ASSESSEE RS.2,41,17,539/ - TO BE REDUCED TO THE TUNE OF RS.25,87,814/ - FOR THE BOTH THE ASSESSMENT YEARS BY OBSERVING AS UNDER : 3.4 LIKE WISE INVOLVED IN THE APPEAL NO.44/2013 - 14 IT IS NOTED THAT FOR A Y.2009 - 10 FOR 'ADMINISTRATIVE EXPENSES', 'MISCELLANEOUS', 'PAYMENT TO AUDITORS 'AND 'MANAGERIAL REMUNERATION' SHOWN BY THE APPELLANT ARE RS.14,37,913/ - , RS.22,45,061/ - , RS.36,784/ - , RS.4,74,196/ - FOR 10B UNITS WHEREAS THE FIGURE TAKEN BY THE AO ON TURNOVE R BASIS ONLY (IN ABSENCE OF SEPARATE BOOKS ACCOUNTS IN THIS AY. ALSO) IS NOTED FROM THE ASSESSMENT FOLDER AND REFLECTED AS ANNEXURE 'B' IS RS.4,05,122, RS.52,72,142/ - , RS.32,999/ - , RS.4,25,405/ - RESPECTIVELY. THE DETAILS OF FIGURE UNDER THESE 4 HEADS ONLY , THUS AS PER THE TAKEN ON TURNOVER BASIS ONLY COMES TO RS.67,81,768/ - AGAINST THE EXPENSES UNDER THESE 4 HEADS DEBITED BY APPELLANT AT RS.41,93,954/ - . THUS THE DIFFERENCE OF RS.24,87,814/ - WHICH HAS BEEN DEBITED BY THE APPELLANT ON THE LESSER SIDE WHEN BO OKS OF ACCOUNTS ARE NOT SEPARATELY MAINTAINED FOR 10B UNITS AND THE BASIS HAS REMAINED TURNOVER ONLY BEING EXCESS CLAIM HAS TO BE DISALLOWED AND SO HAS TO BE UPHELD. ACCORDINGLY THE CLAIM MADE U/S.10B FOR AN AMOUNT OF RS.2,41,17,539/ - IS TO BE REDUCED BY T HIS AMOUNT I.E.RS.25,87,814/ - ON THIS ACCOUNT AND HENCE THE AO IS DIRECTED TO ALLOW REBATE U/S.10B FOR THE BALANCE AMOUNT OF RS.2,15,29,725/ - ONLY. THIS GROUND IS PARTLY ALLOWED . 5 . THE LD. AR SUBMITTED BEFORE US THAT THE CALCULATION AS MADE BY THE AO I S NOT CORRECT THEREBY ALLOWING THE LESSER CLAIM OF THE ASSESSEE U/S 10B OF THE ACT. THE LD. AR WHILE REFERRING TO THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.4664/MUM/2013 4 ITA NO 6532 AND 6533/MUM/2014 (AY - 2007 - 08) DATED 22.7.2015 SUBMITTED THAT AN IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN WHICH THE MODE OF CALCULATION OF THE DEDUCTION U/S 10B OF THE ACT HAS BEEN SHIFTED. THE LD. AR SUBMITTED BEFORE THE BENCH THAT THE AO BE DIRECTED TO FOLLOW THE SAME METHOD AS HAS BEEN DIRECTED TO THE AO BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSMENT YEAR 2007 - 08. 6. THE LD.DR APPEARED TO BE FAIRLY AGREED WITH THE SUBMISSIONS OF THE LD.AR. 7 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE CASE RELIE D UPON BY THE LD.AR, WE FIND THAT THE CO - ORDINATE BENCH OF THE TRIBUNAL HAS DIRECTED THE MODE OF ALLOCATION OF EXPENSE TO THE ELIGIBLE UNIT AND THE SAME MAY BE FOLLOWED IN THE SUBSEQUENT YEARS AS HAS BEEN HELD BY THE TRIBUNAL AS UNDER : 8. AFTER HEARING THE LD. REPRESENTATIVES OF THE PARTIES AND GOING THROUGH THE IMPUGNED ORDER, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY HELD THAT THE UNIT OF THE ASSESSEE WAS ELIGIBLE FOR CLAIM OF 10B DEDUCTION AS PER THE CBDT CIRCULAR(SUPRA). THE LD. CIT(A) AFTER ANALYZING THE REMAND REPORTS, DETAILS AND EVIDENCES ON THE FILE AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HAS VERY RATIONALLY ALLOCATED CERTAIN EXPENSES OF THE NON 10B UNIT TO THE ELIGIBLE UNIT AND THEREAFTER HAS RESTRICTED THE DISALLOWANCE TO RS.33,54,723/ - AND HAS ALLOWED THE BALANCE CLAIM OF DEDUCTION. WE DO NOT FIND ANY REASON TO INTERFERE IN THE WELL REASONED ORDER OF THE CIT(A). WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS ACCORDINGLY DISMISSED. SINCE FACTS OF BOTH THE CASES AR E MATERIAL SAME, WE THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL ON THE ISSUE SET ASIDE THE ORDER OF LD.CIT(A) AND DIRECT THE AO TO FOLLOW THE SAME METHOD AS DIRECTED BY THE 5 ITA NO 6532 AND 6533/MUM/2014 TRIBUNAL IN ASSESSEES OWN CASE TO WORK OUT THE DEDUCTION U/S 10B OF THE ACT. ACCORDINGLY, THE APPEAL S OF THE ASSESSEE ARE ALLOWED. 8 . IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH JU L , 2017. S D SD ( MAHAVIR SINGH ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 5 . 7 .2017 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, T RUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI