Manpasand Beverages Pvt. Ltd., Vadodara V. The Deputy Commissioner of Income Tax, Circle-2(1)(2), Baroda

ITA 679/AHD/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5198 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 17-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T C MEENA
• Section: 43B; 40A(3); 14A; 80IB

Judgement Text

, , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD L LL LK KK KOZJH OZJH OZJH OZJH OLHE OLHE OLHE OLHE VGEN VGEN VGEN VGEN] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; , ] YS[KK LNL; ,OA OAOA OA EK/ EK/EK/ EK/KQFERK KQFERK KQFERK KQFERK JKW; JKW;JKW; JKW;] U; ] U;] U; ] U;KF KFKF KF;D LNL; ;D LNL; ;D LNL; ;D LNL; DS LE{KA DS LE{KA DS LE{KA DS LE{KA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SMT MADHUMITA ROY, JUDICIAL MEMBER ./ I.T.A. NO. 679/AHD/2017 ( / ASSESSMENT YEAR : 2012-13) MANPASAND BEVERAGE PVT. LTD., E-62, MANJUSAR GIDC, MANJUSAR SAVLI ROAD, VADODARA 391 775. / VS. DCIT, CIRCLE 2(1)(2), BARODA. ./ ./ PAN/GIR NO. : AAHCM 1210 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MUKUND BAKSHI, A.R. / RESPONDENT BY : SHRI T. C. MEENA, SR. D.R. / DATE OF HEARING 24/01/2019 !'# / DATE OF PRONOUNCEMENT 06/02/2019 $% / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)2, VADODARA [CIT(A) IN SHORT] VIDE APPEAL NO.CAB/(A)-2 /189/15-16 DATED 06.12.2016 ARISING IN THE MATTER OF ASSESSMENT ORDE R PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HERE-IN-AFTER REFERRED TO AS 'THE ACT') DATED 28.10.2015 RELEVANT TO ASSESSMENT YEAR (AY) 2012-13. ITA NO.679/AHD/2017 MANPASAND BEVERAGES PVT. LTD., A.Y. 2012-13 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE A RE AS UNDER:- 1. THE LD CIT(A)-2, VADODARA HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.1,50 ,000/- U/S 14A OF THE I.T. ACT. THE DISALLOWANCE BEING UNWARRANTE D IN FACTS AND IN LAW IS PRAYED TO BE ALLOWED. 1. THE LD CIT(A)-2, BARODA HAS ERRED IN LAW AND IN FAC TS IN CONFIRMING THE ADDITION OF AN AMOUNT OF RS.20,90,804/- REPRESE NTING THE FOLLOWING ITEMS OF EXPENSE: I) INTEREST ON TDS 7,191 II) INTEREST ON EXCISE DUTY 7,634 III) EXCISE DUTY ON OTHER EXPENSES 15,07,036 IV) LATE PAYMENT OF EMP CONTRIBUTION TO PF U/S 36(1)(VA) 5,68,943 TOTAL 20,90,804 THE LD CIT(A) ERRED IN REJECTING THE CONTENTION OF THE APPELLANT THAT SUCH DISALLOWANCE OF EXPENDITURE HAS RESULTED IN TH E ENHANCEMENT OF THE GROSS TOTAL INCOME WHICH OTHERWISE IS ALLOWED A S DEDUCTION U/S 80IB(11A). 2. YOUR APPELLANT CARVES LIBERTY TO ADD, ALTER, AMEND OR DELETE ANY OR ALL THE GROUNDS OF APPEAL STATED ABOVE. 3. AT THE OUTSET, THE LEARNED AR BEFORE US SUBMITTE D THAT HE HAD BEEN INSTRUCTED NOT TO PRESS GROUND NO. 1, THEREFORE WE DISMISS THE SAME AS NOT PRESSED. 4. THE SECOND ISSUE RAISED BY THE ASSESSEE IS THAT LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 20,90,804/- ON ACCOUNT OF CERTAIN EXPENSES. ITA NO.679/AHD/2017 MANPASAND BEVERAGES PVT. LTD., A.Y. 2012-13 - 3 - 5. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF PROCESSING O F FRUIT JUICES. THE AO DURING THE ASSESSMENT PROCEEDINGS HAS DISALLOWED THE FOLLOWING EXPENSES. I) INTEREST ON TDS 7,191 II) INTEREST ON EXCISE DUTY 7,634 III) EXCISE DUTY ON OTHER EXPENSES 15,07,036 IV) LATE PAYMENT OF EMP CONTRIBUTION TO PF U/S 36(1)(VA) 5,68,943 TOTAL 20,90,804 5.1 THE ABOVE DISALLOWANCE OF THE EXPENSES WERE ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 6. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL TO LEARN ED CIT(A) WHO HAS CONFIRMED THE ORDER OF THE AO. BEING AGGRIEVED BY THE ORDER OF LEARNED CIT(A) ASSE SSEE IS IN APPEAL BEFORE US. 7. THE LEARNED AR BEFORE US SUBMITTED THAT THE ASSE SSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB (11A) OF THE ACT ON THE INCO ME ENHANCED BY SUCH DISALLOWANCE OF THE EXPENSES. 8. ON THE OTHER HAND, LEARNED DR VEHEMENTLY SUPPORT ED THE ORDER OF AUTHORITIES BELOW. ITA NO.679/AHD/2017 MANPASAND BEVERAGES PVT. LTD., A.Y. 2012-13 - 4 - 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THERE IS NO AMBIGUITY THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB (11A) OF THE ACT. THEREFORE, THE DISALLOWANCE MADE U/S 40A(3), 43B OF THE ACT RELATING TO THE BUSINESS ACTIVITY WOULD BE ELIGIBLE FOR DEDUCTION UNDER CHAPTER-VIA AS PER THE CBDT CIRCULAR NO. 37/2016 DATED 02.11.2016. 9.1 WE ALSO FIND THAT IN THE IDENTICAL FACTS & CIRC UMSTANCES, THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE DECIDED TH E ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO. 2662/AHD/2015 VIDE ORDER DA TED 7-6-2018. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDE R: 4. GROUND NO.4 CONCERNS CORRESPONDING DEDUCTION U/ S. 80IB(11A) ON THE PORTION OF THE ELIGIBLE BUSINESS PROFIT ENHANCE D ON ACCOUNT OF DISALLOWANCES UNDER S. 40A(3) OF RS.30,000/-. SIMIL ARLY, GROUND NO.5 CONCERNS ENHANCED DEDUCTION UNDER S.80IB(11A) OWING TO INCREASE IN ELIGIBLE PROFITS IN VIEW OF THE DISALLOWANCES MADE UNDER S.43B AMOUNTING TO RS.42,07,953/-. IT IS THE CASE ON BEHA LF OF THE ASSESSEE THAT THE ASSESSEE IS ELIGIBLE FOR CORRESPONDING DEDUCTIO N UNDER S.80IB(11A) ON ACCOUNT OF DISALLOWANCES MADE IN THE ASSESSMENT 40A(3) AND 43B OF THE ACT SINCE THE ELIGIBLE PROFIT STOOD ENHANCED DU E TO SUCH DISALLOWANCE. 5. AS SUBMITTED ON BEHALF OF THE ASSESSEE, WE FIND THAT CBDT HAS ADDRESSED THE AFORESAID ISSUE IN FAVOUR OF THE ASSE SSEE AS PER ITS CIRCULAR NO.37/2016 DATED 2ND NOVEMBER, 2016. AS PE R THE AFORESAID CIRCULAR, THE BOARD HAS ACCEPTED THE PROPOSITION TH AT DISALLOWANCES SO MADE UNDER S.40A(3), 43B ETC. OF THE ACT RELATED TO BUSINESS ACTIVITY WOULD BE ELIGIBLE FOR CHAPTER VI-A DEDUCTION IN VIE W OF THE ENHANCEMENT OF THE PROFITS OF THE ELIGIBLE BUSINESS . IN VIEW OF THE CBDT CIRCULAR, THE CONTROVERSY STANDS SETTLED IN VIEW OF THE ASSESSEE. THUS, GROUND NOS. 4 & 5 OF THE ASSESSEE ARE ALLOWED. ITA NO.679/AHD/2017 MANPASAND BEVERAGES PVT. LTD., A.Y. 2012-13 - 5 - 9.2 THE LEARNED DR BEFORE US HAS NOT BROUGHT ANYTHI NG ON RECORD CONTRARY TO THE ARGUMENT ADVANCED BY THE LEARNED AR . 9.3 THEREFORE WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION ON THE ENHANCED INCOME ON ACCOUNT OF THE ADDITION OF CERTA IN ITEMS AS DISCUSSED ABOVE. THEREFORE WE REVERSE THE ORDER OF AUTHORITIE S BELOW AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE, THE G ROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/02/2019 SD/- SD/- E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; E/KQFERK JKW; OLHE VGEN OLHE VGEN OLHE VGEN OLHE VGEN U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; (MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 06/02/2019 PRITI YADAV, SR.PS !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-2, VADODARA. 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD. 6. .34 5 / GUARD FILE. % & / BY ORDER, , / //TRUE COPY// '/& () ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD