Asst. Commissioner of Income tax Cir. 1(1), Panaji V. M/s. Alcon Cement Company Pvt. Ltd., Panaji

ITA 78/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93535 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 07-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BALAKRISHNA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER ITA NO. 7 8 /PNJ/201 4 (ASST. YEAR : 20 1 0 - 1 1 ) ACIT, CIRCLE - 1(1), PANAJI. VS. M/S. ALCON CEMENT CO . LTD., 402, AAKASH BHAWAN HELIODORO, SALGADO ROAD, PANAJI. PAN NO. AABCA 5330 P (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANDIP BHANDARE C A DEPARTMENT BY : SHRI B. BALAKRISHNA - D.R. DATE OF HEARING : 0 7 / 0 7 /2015 . DATE OF PRONOUNCEMENT : 07 / 0 7 /201 5 . O R D E R PER GEORGE MATHAN: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF L D.CIT (A), PANAJI IN APPEAL NO. 138/PNJ/2013 - 14 DATED 2 2/ 11 /201 3 FOR A.Y. 20 1 0 - 1 1 . 2. SHRI B. BALAKRISHNA, LEARNED DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SANDIP BHANDARE, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 2 ITA NO. 78 /PNJ/2014 3. IT WAS THE SUBMISSION OF THE LEARNED DR THAT THE ONLY ISSUE IN THE REVENUES APPEAL WAS AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWANCE ON ACCOUNT OF OUTSIDE BILL DISCOUNTS. IT WAS THE SUBMISSION THAT THE ASSESSEE SUPPLIES CLINKER IN RESPECT OF CEMENT MANUFACTUR ING TO M/S. ACC LTD. IT WAS THE SUBMISSION THAT THE ASSESSEE WAS GRANTING THE OUTSIDE BILL DISCOUNTS . IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD DISALLOWED THE SAID DISCOUNTS ON THE GROUND THAT THERE WAS NO BUSINESS NECESSITY FOR GRANTING THESE DISCOUNTS. IT WAS THE SUBMISSION THAT THE LD. CIT(A) DELETED THE DISALLOWANCE ON THE GROUND THAT THERE WAS NO DISALLOWANCE MADE FOR THE A.Y. 2009 - 10. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD.CIT(A) WAS LIABLE TO BE REVERSED. 4 . IN REPLY, LEARNED AR SUBMITTED THA T THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE OF CEMENT CLINKER. ON 01/04/2008, M/S. ACC LTD. BECAME A SHAREHOLDER OF THE ASSESSEE - COMPANY. THE ASSESSEE S E L L S THE ENTIRE PRODUCT TO ONLY ONE PARTY I.E. M/S. ACC LTD. THE ACC LTD. HOLDS 40% SHARES IN THE ASSESSEES COMPANY. THE DISCOUNTS OVER AND ABOVE THE BILL DIS C OUNTS STARTED FROM THE A.Y. 2008 - 09 . IT WAS THE SUBMISSION THAT THE OUTSIDE BILL DISCOUNTS WAS ON ACCOUNT OF TURNOVER 3 ITA NO. 78 /PNJ/2014 DISCOUNT AND TARGET DISCOUN T . IT WAS THE SUBMISSION THAT THESE TWO DISCO UNTS COULD NOT BE GIVEN IN THE BILLS ITSELF BECAUSE SUCH DISCOUNTS WERE GRANTED ONLY ON ATTAINING A PARTICULAR TURNOVER OR WHEN A PARTICULAR TARGET WAS ATTAINED. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD BEEN CLAIMING SEC. 80IB DEDUCTION TILL THE A.Y. 2 008 - 09. IT WAS THE FURTHER SUBMISSION THAT AS A CONSEQUENCE OF THE SAID DISCOUNT BEING GRANTED, THE ASSESSEE ALSO BENEFITED INSOFAR AS THE TURNOVER OF THE ASSESSEE WENT UP AND THE MARKETING SERVICE CHARGES REDUCED AND GROSS PROFIT RATIO OF THE ASSESSEE INCREASED FROM 11.16% IN A.Y. 2006 - 07 AND 14.38% IN A.Y. 2007 - 08 WHERE THE ASSESSEE HAD CLAIMED DEDUCTION U/S. 80IB TO 26.33% FOR THE A.Y. 2008 - 09 , 27.71% FOR THE A.Y. 2009 - 10 AND 26.39% FOR THE A.Y. 2010 - 11 WHERE THE ASSESSEE DID NOT CLAIM DEDUCTION U/S.80IB. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD.CIT(A) SHOULD BE UPHELD. 5. WE HAVE HEARD RIVAL SUBMISSION S . 6. ADMITTEDLY, THE GENUINENESS OF THE OUTSIDE BILL DISCOUNT IS NOT DISPUTED. THE FACT IS THAT THE SAID DISCOUNT BEING TURNOVER DISCOUNT AND TARGET DISCOUNT HAS RESULTED IN INCREASING THE ASSESSEES GROSS PROFIT AND CONSEQUENT INCREASE IN THE REVENUE. ADMIT T EDLY, THIS 4 ITA NO. 78 /PNJ/2014 DISCOUNT HAS BEEN CLAIMED RIGHT FROM THE A.Y. 2008 - 09, BUT NO DISALLOWANCE IN RESPECT OF SAME HAS BEEN DONE AND ONLY FOR THE A.Y. 2010 - 11, DISALLOWANCE HAS BEEN INITIATED. CONSIDERING THESE FACTS AND ESPECIALLY IN VIEW OF THE FACT THAT OUTSIDE BILL DISCOUNT HAS IN EFFECT INCREASED GROSS PROFIT RATIO OF THE ASSESSEE, IT CLEARLY SHOWS THAT THE SAID DISCOUNT WAS IN THE BUSINESS INTEREST AND A BUSINESS NECESSITY. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) ON THIS ISSUE IS O N RIGHT FOOTING S AND DOES NOT CALL FOR ANY INTERFERENCE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ( ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH JULY , 201 5 ). S D / - S D / - ( N.S.SAINI ) ( GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 07 TH JU LY , 201 5 . VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI 5 ITA NO. 78 /PNJ/2014 DATE INITIAL ORIGINAL DICTATION PAD IS ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 0 7 .0 7 .2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 08 .07 .2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 08 /07 /2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 08 /0 7 /2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 08 /07 /2015 SR.PS 6. DATE OF PRONOUNCEMENT 07 /0 7 /2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 09 /07 /2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER