BDH INDUSTRIES LIMITED, MUMBAI V. I.T.O. - 9(1)(2), MUMBAI

ITA 7497/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5018 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2013
• Assessment Year: 2001-2002
• Appeal Filed On: 08-11-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 80HHC; 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H B ENCH, MUMBAI . . , !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO.7497/MUM/2011 ( ( ( ( ( / ASSESSMENT YEAR : 2001-02 M/S. BDH INDUSTRIES LTD., NAIR BAUG, AKURLI ROAD, KANDIVALI (E), MUMBAI 400 101 THE ITO-9 (1)(2), AAYAKAR BHAVAN, MUMBAI-400 020 ') % ./ *+ ./PAN/GIR NO. : AAACB 1720H ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY : ` SHRI SATISH R. MODY -.), 0 / /RESPONDENT BY : SHRI AARSI PRASAD 0 12% / DATE OF HEARING :19.09.2013 34( 0 12% / DATE OF PRONOUNCEMENT :19.09.2013 &5 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-19, MUMBAI DT.25.08.2011 PERTAINING TO A.Y. 2001-02. 2. THE ASSESSEE HAS RAISED 8 SUBSTANTIVE GROUNDS OF APPEAL. GROUND NO. 1 RELATES TO THE ADDITION OF RS. 24,54,000/- AS UNUTILIZED MODVAT CREDIT TO THE VALUE OF CLOSING STOCK. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE BROUGHT TO OUR NOTICE THAT THIS ISSUE HAS BEEN SETTLED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MAHALAXMI GLASS WORKS PVT. LTD. 318 ITR 116 AND BY THE DECISION OF THE ITA NO.7497/M/2011 2 TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2005-06 VI DE ITA NO. 6553/M/08. 4. WE HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. THE ISSUE IS NO W WELL SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF MAHALAXMI GLASS WORKS (SUPRA). RESP ECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH CO URT, THE AO IS DIRECTED TO DELETE THE ADDITION OF RS. 24,54,000/-. THIS GR OUND OF THE ASSESSEE IS ALLOWED. 5. GROUND NO. 2 RELATES TO THE ADDITION OF RS. 1,00 ,000/- AGAINST EXPORT MARKETING DEVELOPMENT EXPENSES AND RS. 1,00, 000/- AGAINST MARKETING EXPENSES. 6. THE ASSESSEE WAS ASKED TO FILE DETAILS OF THESE EXPENSES DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS. THE ASSESSEE FURNISHED ONLY THE NAMES OF THE PARTIES TO WHOM THE PAYMENT W AS SUPPOSEDLY MADE WITH NO ADDRESSES OR ANY OTHER EVIDENCE TO PROVE TH AT THE PAYMENTS HAVE ACTUALLY BEEN MADE TO THOSE PARTIES. FOR WANT OF E VIDENCE, THE AO DISALLOWED RS. 1,00,000/- EACH UNDER THE AFOREMENTI ONED HEAD OF EXPENSES. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COUL D NOT ADDUCE ANY EVIDENCE TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE. THE EXPENSES REMAIN UNVERIFIED EVEN BEFORE US THEREFORE WE HAVE NO HESI TATION IN CONFIRMING THE DISALLOWANCES MADE BY THE AO AND CONFIRMED BY T HE LD. CIT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. ITA NO.7497/M/2011 3 9. GROUND NO. 3 RELATES TO THE GRIEVANCE THAT THE L D. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN REDUCING INTEREST ON FDR OF RS.13,31,000/- FROM PROFITS OF BUSINESS FOR THE PUR POSE OF CALCULATING DEDUCTION U/S. 80HHC. 10. THIS GRIEVANCE OF THE ASSESSEE RELATES TO THE N ETTING OFF OF THE INTEREST. THIS ISSUE HAS BEEN NOW WELL SETTLED BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. VS CIT 343 ITR 89. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT, THE AO IS DIRECTED TO RECOMP UTE THE DEDUCTION U/S. 80HHC FOLLOWING THE RATIO LAID DOWN BY THE SUP REME COURT IN RESPECT OF NETTING OFF OF EXPENDITURE. GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSE. 11. GROUND NO. 4 RELATES TO THE GRIEVANCE THAT THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN REDUCING THE EXPO RT INCENTIVE FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF CALCULAT ING PROFITS AVAILABLE FOR DEDUCTION U/S. 80HHC. 12. THIS ISSUE IS ALSO NOW WELL SETTLED BY THE DECI SION OF THE HONBLE SUPREME COURT IN THE CASE OF TOPMAN EXPORT VS CIT 3 42 ITR 49(SC) THEREFORE, THIS ISSUE IS RESTORED BACK TO THE FILES OF THE AO. THE AO IS DIRECTED TO FOLLOW THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT IN THE CASE OF TOPMAN EXPORT (SUPRA). GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSE. 13. GROUND NO. 5 RELATES TO TAKING BOOK PROFIT AS COMPUTED UNDER NORMAL COMPUTATION OF TOTAL INCOME INSTEAD OF PROF IT AS PER PROFIT & LOSS ACCOUNT FOR CALCULATING DEDUCTION U/S. 80HHC WHILE COMPUTING TOTAL INCOME U/S. 115JB (MAT). ITA NO.7497/M/2011 4 14. THIS ISSUE IS COVERED BY THE DECISION OF THE H ONBLE SUPREME COURT IN THE CASE OF CIT VS BHARI INFORMATION TECHN OLOGY SYSTEMS (P) LTD. 340 ITR 593 WHEREIN THE HONBLE SUPREME COURT HAS LAID DOWN THE RATIO THAT DEDUCTION U/S. 80HHE OF THE ACT HAS GOT TO BE WORKED ON THE BASIS OF ADJUSTED BOOK PROFIT U/S. 115JA AND NOT ON THE BASIS OF THE PROFITS COMPUTED UNDER REGULAR PROVISIONS OF LAW AP PLICABLE TO COMPUTATION OF PROFITS AND GAINS OF BUSINESS. THE AO IS DIRECTED TO RECOMPUTE THE DEDUCTION U/S. 80HHC FOLLOWING THE RA TIO LAID DOWN BY THE HONBLE SUPREME COURT. GROUND NO. 5 IS ALLOWED FOR STATISTICAL PURPOSE. 15. GROUND NO. 6 IS CONSEQUENTIAL TO GROUND NO. 4. THEREFORE, THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSE. 16. GROUND NO. 7 RELATES TO LEVY OF INTEREST U/S. 2 34A OF THE ACT. LEVY OF INTEREST IS MANDATORY. THE AO IS DIRECTED TO LEVY INTEREST AS PER PROVISIONS OF LAW. 17. GROUND NO. 8 IS PREMATURE AND IS ACCORDINGLY DI SMISSED. 18. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19.9.2013 &5 0 4( % 6 7&8 19.9.2013 4 0 9 SD/- SD/- (H.L. KARWA ) (N.K . BILLAIYA ) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; 7& DATED 19 /09/2013 . . ./ RJ , SR. PS ITA NO.7497/M/2011 5 &5 0 -1! :!(1 &5 0 -1! :!(1 &5 0 -1! :!(1 &5 0 -1! :!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. !<9 -1 , , / DR, ITAT, MUMBAI 6. 9= > / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// ? ?? ? / @ * @ * @ * @ * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI