M/s. DIAMOND DYE CHEM LTD., MUMBAI V. DCIT Rg. - 6(2), MUMBAI

ITA 6873/MUM/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9052 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 23-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 18-12-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH L,MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI V. DURGA RAO (JM) I.T.A.NO. 6873/MUM/2006 (A.Y. 2003-04) DIAMOND DYE CHEM LTD., BLDG.NO.3, CIBA RESEARCH CENTRE, OFF AAREY ROAD, GOREGAON (E), MUMBAI-400 063. PAN: AAACD3478N VS. DCIT, RANGE 6(2), AAYKAR BHAVAN, 5 TH FLOOR, M.K. ROAD, MUMBAI-400 020. APPELLANT RESPONDENT I.T.A.NO.6547/MUM/2006 (A.Y. 2003-04) ACIT, RANGE 6(2), AAYKAR BHAVAN, 5 TH FLOOR, M.K. ROAD, MUMBAI-400 020. VS. DIAMOND DYE CHEM LTD., BLDG.NO.3, CIBA RESEARCH CENTRE, OFF AAREY ROAD, GOREGAON (E), MUMBAI-400 063. PAN: AAACD3478N APPELLANT RESPONDENT ASSESSEE BY S/SHRI SATISH MO DI & DHANESH BAFNA. DEPARTMEMT BY SHRI NA RENDER SINGH. O R D E R PER R.S. SYAL, AM : THESE TWO CROSS APPEALS - ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT( A) ON 09-10-2006 IN RELATION TO THE ASSTT. YEAR 2003-04. 2. GROUND NO.1 OF THE ASSESSEES APPEAL IS AGAINST THE INCLUSION OF CENVAT ELEMENT IN THE CLOSING STOCK. AT THE VERY OUTSET, T HE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT SIMILAR ISSUE CROPPED UP BEFORE THE TRIBUNAL IN THE IMMEDIATELY PRECEDING TWO YEARS I.E. 2002-03 AND 2001-02. PLACI NG ON RECORD COPIES OF THESE TWO SEPARATE ORDERS DATED 14-5-2010 AND 2-4-2008, T HE LD. A.R. CONTENDED THAT ITA NOS.6873 & 6547/M/06. 2 THE TRIBUNAL HAS DECIDED THIS ISSUE IN ASSESSEES F AVOUR. THE LD. D.R. FAIRLY CONCEDED THAT IT WAS A COVERED MATTER. IN VIEW OF T HE RIVAL BUT COMMON SUBMISSIONS, WE OVERTURN THE IMPUGNED ORDER ON THIS ISSUE BY RESPECTFULLY FOLLOWING THE EARLIER ORDERS PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE. THIS GROUND IS ALLOWED. 3. GROUND NO.2 IS AGAINST THE INCLUSION OF SCRAP SA LE AS PART OF THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S .80HHC. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MAT ERIAL ON RECORD, IT IS NOTED THAT THE MUMBAI BENCH OF THE TRIBUNAL IN A RECENT O RDER DATED 26-11-2010 IN ALBRIGHT & WILSON CHEMICALS (I) LTD. VS. DCIT HAS D ECIDED THIS ISSUE AGAINST THE ASSESSEE BY FOLLOWING THE JUDGMENT OF THE HONBLE S UPREME COURT IN THE CASE OF CIT VS. K. RAVINDRAN NAIR (2007) 295 ITR 228 (SC). THE PRESENT A.M. IS AUTHOR OF THE ABOVE REFERRED ORDER. FOLLOWING THE VIEW TAKEN BY THE MUMBAI BENCH ON SIMILAR ISSUE, WE APPROVE THE IMPUGNED ORDER ON THI S ISSUE. THIS GROUND FAILS. 4. GROUND NO.3 IS ABOUT THE EXCLUSION OF INTEREST R ECEIPT FROM THE PROFIT OF THE BUSINESS UNDER EXPLANATION (BAA) WHILE COMPUTING DE DUCTION U/S.80HHC. THE LD. A.R. CONTENDED THAT SIMILAR ISSUE WAS RAISED FOR A SSTT. YEAR 2002-03 AND THE TRIBUNAL HAS PARTLY ALLOWED THIS GROUND FOR STATIST ICAL PURPOSES. THE LD. D.R. CONCEDED THE FACTUAL POSITION. RESPECTFULLY FOLLOWI NG THE SAME, WE SET ASIDE THE IMPUGNED ORDER ON THIS ISSUE AND REMIT THE MATTER T O THE FILE OF AO FOR A FRESH DECISION IN ACCORDANCE WITH THE VIEW TAKEN BY THE T RIBUNAL IN ASSTT .YEAR 2002- 03. 5. GROUND NOS. 4 & 5 ARE AGAINST THE COMPUTATION OF ARMS LENGTH PRICE IN RESPECT OF EXPORTS TO ASSOCIATED ENTERPRISE. THE LD . D.R. FAIRLY CONCEDED THAT SIMILAR ISSUE IN THE EARLIER YEARS WAS DECIDED BY THE TRIBUNAL AGAINST THE ASSESSEE. IN VIEW OF THIS SUBMISSION, WE DISMISS TH ESE TWO GROUNDS OF APPEAL. ITA NOS.6873 & 6547/M/06. 3 6. GROUND NO. 1 OF REVENUES APPEAL IS AGAINST THE EXCLUSION OF EXCISE DUTY AND SALES-TAX FROM THE TOTAL TURNOVER FOR THE PURPO SE OF COMPUTATION OF DEDUCTION U/S.80HHC. WE FIND THAT THIS ISSUE IS NO MORE RES INTEGRA IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT VS. LA XMI MACHINE WORKS (2007) 290 ITR 677 (SC) DECIDING THAT EXCISE DUTY AND SALE S-TAX ARE NOT INCLUDIBLE IN THE TOTAL TURNOVER. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE IMPUGNED ORDER ON THIS SCORE. 7. GROUND NO. 2 IS AGAINST THE DIRECTION FOR NOT DE DUCTING 90% OF THE RECEIPTS BY WAY OF WRITE BACK SUPPLIERS, WRITE BACK CUSTOMER S, ETC. THE LD. A.R. PLACED ON RECORD A COPY OF THE ORDER PASSED BY THE TRIBUNAL I N ASSESSEES OWN CASE FOR ASSTT. YEAR 2002-03 REPORTED IN 2010-TIOL-47-ITAT-M UM DECIDING SIMILAR ISSUE IN ASSESSEES FAVOUR. THE LD. D.R. COULD NOT POINT OUT ANY DISTINGUISHING FEATURE IN THE FACTS OF THIS YEAR VIS-A-VIS EARLIER YEAR DECID ED BY THE TRIBUNAL. RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORD ER ON THIS ISSUE. 8. THE LAST GROUND IS AGAINST THE REDUCTION OF 5% A RMS LENGTH PRICE IN VIEW OF PROVISO TO SEC. 92C(2). HERE ALSO, THE LD. A.R. CAN DIDLY ACCEPTED THAT THE TRIBUNAL HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE IN THE PRECEDING YEAR. RESPECTFULLY FOLLOWING THE TRIBUNAL ON THE SAME ISSUE IN ASSESSE ES OWN CASE, WE SET ASIDE THE IMPUGNED ORDER ON THIS SCORE. THIS GROUND IS ALLOWE D. 9. IN THE RESULT, BOTH THE APPEALS ARE PARTLY ALLOW ED. ORDER PRONOUNCED ON THE 05TH DAY OF JANUARY, 20 11 SD/- SD/- (V. DURGA RAO) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 05 TH JANUARY , 2011. NG: ITA NOS.6873 & 6547/M/06. 4 COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-VI,MUMBAI. 4 CIT, MUMBAI CITY-VIMUMBAI. 5.DR,L BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NOS.6873 & 6547/M/06. 5 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 23-12-2010 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 23-12-2010 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER *