DAMAN PLASTICS, MUMBAI V. ITO 15(1)(3), MUMBAI

ITA 7506/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1888 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHIYE
• Assessee Lawyers: DATTA RANJANE
• Keywords: Business income
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC : MUMBAI BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER ITA. NO.7506/MUM/2012 ASSESSMENT YEAR 2008-2009 M/S. DAMAN PLASTICS 507, EMBASSY CENTRE NARIMAN POINT, MUMBAI 400 021 PAN AADFD7256Q VS. THE ADDL. CIT, CIRCLE 15 (1) (3) MATRU MANDIR, TARDEO ROAD MUMBAI 400 007. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI DATTA RANJANE FOR RESPONDENT : SHRI SHEKHAR L. GAJBHIYE DATE OF HEARING : 14-01-2013 DATE OF PRONOUNCEMENT : 01-02-2013 ORDER PER R.K.GUPTA, J.M. 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-26, MUMBAI DATED 11.10.2012 FOR THE ASSESSME NT YEAR 2008-2009. THE ONLY ISSUE INVOLVED IN THE APPEAL OF THE ASSESSEE I S UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DENYING DEDUCTION UNDER SECTIO N 80IB IN RESPECT OF INCOME FROM INTEREST, JOB WORK CHARGES, SALE OF SCRAP AND SUNDRY BALANCE WRITTEN OFF AGGREGATING TO RS.3,02,483/-. 2. THE ASSESSING OFFICER COMPLETED ASSESSMENT AT T OTAL INCOME OF RS.3,02,840/- AS AGAINST NIL INCOME RETURNED BY THE ASSESSEE. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER DE NIED DEDUCTION UNDER SECTION 80IB IN RESPECT OF INCOME FROM INTEREST, JO B WORK CHARGES, SALE OF SCRAP AND SUNDRY BALANCE WRITTEN OFF AGGREGATING TO RS.3, 02,843/- ON THE GROUND THAT THE SAME WERE NOT DERIVED FROM THE BUSINESS AC TIVITY. ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT(A) WHO ALSO CONFIR MED THE ACTION OF THE ASSESSING OFFICER. 2 3. LEARNED COUNSEL FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS. ON THE OTHER HAND, LEARNED D.R. PLACED RELIANCE UPON THE O RDER OF THE LEARNED CIT(A). 4. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE ORDER OF THE LOWER AUTHORITIES, I FOUND THAT ASSESSEE DESERVE TO SUCCEED IN PART. OUT OF THE TOTAL INCOME COMPUTED AT RS.3,02,843/-, A SUM OF RS .1,65,288/- RELATES TO INTEREST INCOME EARNED ON FIXED DEPOSIT IN BANK KEP T AS SECURITY WITH ELECTRICITY BOARD. THIS IS A SETTLED ISSUE THAT INT EREST ON DEPOSITS, THE INCOME EARNED HAS TO BE ASSESSED AS INCOME FROM OTHER SOUR CES AS THE SAME CANNOT BE EQUATED AS DERIVED FROM INCOME FROM INDUSTRIAL UNDE RTAKING. THE HONBLE SUPREME COURT HAS SETTLED THIS ISSUE IN THE CASE OF PANDIYAN CHEMICALS. THEREFORE, TO THIS EXTENT, I HOLD THAT THE ORDER OF THE AUTHORITIES BELOW WAS CORRECT. HOWEVER, IN RESPECT OF OTHER INCOME I.E., INCOME FROM JOB WORK, SALE OF SCRAP AND SUNDRY CREDITORS WRITTEN OFF, I FOUND THA T ASSESSEE DESERVE TO SUCCEED. 5. ASSESSEE HAS SHOWN SMALL MISCELLANEOUS INCOME O N ACCOUNT OF MISCELLANEOUS SALES AT RS.2819/-. THE HONBLE DELHI HIGH COURT IN THE CASE OF SADHU FORGING LTD. (2011) 336 ITR 444 HAS HELD THAT SALE OF SCRAP/LABOUR CHARGES AND JOB WORK CHARGES ARE ALLOWABLE AS DEDUC TION UNDER SECTION 80IB OF THE ACT. SIMILAR VIEW HAS BEEN EXPRESSED IN THE CAS E OF CIT VS. IMPEL FORGE & ALLIED INDUSTRIES LTD. (2010) 326 ITR 27 (P & H). I N THIS CASE, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD THAT THE ASSES SEE WAS ENGAGED IN MANUFACTURING AND TRADING OF TRACTOR AND AUTO PARTS AND ALSO DOING JOB WORKS OF SIMILAR NATURE. THE ASSESSEE WAS AT LIBERTY TO D O MANUFACTURE FOR ITSELF OR FOR OTHERS, WHICH MAKES NO DIFFERENCE FOR THE PURPOSES OF SECTION 80IB OF THE ACT. ACCORDINGLY, DEDUCTION ON ACCOUNT OF JOB CHARGES WA S ALLOWED BY THE PUNJAB & HARYANA HIGH COURT UNDER SECTION 80IB. AGAIN IN THE CASE OF CIT VS. METALMAN AUTO P. LTD. (2011) 336 ITR 434 (P & H) HAS ALLOWED DEDUCTION UNDER SECTION 80IB ON JOB WORK CHARGES AND ON SALE OF SCRAP. ACCO RDINGLY, I DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB ON SALE OF SCRAP AS WELL AS ON ACCOUNT OF JOB WORK CHARGES AT RS.1,09,800/-. 3 6. REMAINING ITEM IS SUNDRY BALANCE WRITTEN OFF AG GREGATING TO RS.24,936./- I.E., IN RESPECT OF SUNDRY BALANCES AL L CREDITORS WRITTEN OFF. I NOTED THAT THE PURCHASE OF MATERIAL/SERVICE FROM SUCH CRE DITOR HAS GONE TO REDUCE THE PROFIT OF THE FIRM THEREBY REDUCING THE CLAIM O F DEDUCTION UNDER SECTION 80IB IN EARLIER YEAR. HENCE, CREDIT BALANCE WRITTEN OFF FROM SUCH EXPENSES WOULD FORM PART OF THE BUSINESS INCOME UNDER SECTIO N 41 (1) OF THE ACT. THEREFORE, I AM OF THE CONSIDERED VIEW THAT DEDUCTI ON UNDER SECTION 80IB IS ALLOWABLE ON THIS AMOUNT ALSO. ACCORDINGLY, I DIREC T THE ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB ON ACCOUNT OF JO B WORK CHARGES, SALE OF SCRAP AND SUNDRY BALANCES WRITTEN OFF. HOWEVER, NO DEDUCTION WILL BE ALLOWED IN RESPECT OF INTEREST AT RS.1,65,288/-. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST FEBRUARY, 2013. SD/- (R.K.GUPTA) JUDICIAL MEMBER MUMBAI, DATE 01 ST FEBRUARY, 2013. VBP/- COPY FORWARDED TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A)-3, MUMBAI. 4. CIT-2, MUMBAI 5. DR SMC BENCH 6. GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI.