The DCIT, Circle-10, Ahmedabad V. M/s. Jaffe Manufacturing Co., Ahmedabad

ITA 797/AHD/2009

• Counselvise Citation: 79720514 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-09-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 12-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAY RAJ KUMAR
• Assessee Lawyers: PF JAIN
• Keywords: Business income; Speculation loss; Set aside
• Section: 133A; 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI T. K. SHARMA, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.797 / AHD/2009 (ASSESSMENT YEAR 2001-02) DCIT, CIRCLE 10, AHMEDABAD VS. M/S. JAFFE MANUFACTURING CO., B/4, ELLIS BRIDGE GYMKHANA ELLIS BRIDGE, AHMEDABAD. PAN/GIR NO. : AACFT6415A (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI JAY RAJ KUMAR, SR. DR RESPONDENT BY: SHRI P.F JAIN, A.R. DATE OF HEARING: 07.10.2011 DATE OF PRONOUNCEMENT: 14.10.11 O R D E R PER SHRI A. K. GARODIA, AM:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A) XVI, AHMEDABAD DATED 15.01.2009 FOR THE AS SESSMENT YEAR 2001-02. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION OF RS.25,49,296/- MADE ON ACCOUNT OF DEDUC TION U/S 80IB, CASH-WAGES/SALARY BY THE A.O. 2) ON THE FACTS AND CIRCUMSTANCES OF THE SE, THE L D. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE A.O. BE R ESTORED TO THE ABOVE EXTENT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSM ENT IN THIS CASE WAS REOPENED ON THIS BASIS THAT THE ASSESSEE WAS ALLOWE D SET OFF OF SPECULATIVE LOSS IN SHARE TRANSACTION OF RS.59,81,526/-AGIANST BUSINESS INCOME AND DEDUCTION U/S 80-IB IS REQUIRED TO BE DISALLOWED ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND IN THE COURSE OF SURV EY U/S 133A CARRIED I.T.A.NO.797 /AHD/2009 2 ON 21.02.2006 IN THE CASE OF SHRI AREEZ P. KHAMBATT A, PROP. OF JAFFE MANUFACTURING COMPANY. ON THE BASIS OF SURVEY REP ORT IN THE CASE OF SHRI AREEZ P. KHAMBATTA, THE CLAIM OF THE ASSESSEE READING DEDUCTION U/S 80IB WAS DISALLOWED AND FURTHER DISALLOWANCE OF RS. 1.50 LACS WAS MADE OUT OF CASH WAGES/SALARY. BEING AGGRIEVED, THE ASS ESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO DELETED THE DISA LLOWANCE OF DEDUCTION U/S 80IB AND ALSO DELETED THE DISALLOWANC E OF CASH WAGES/SALARY ON THIS BASIS THAT IN ASSESSMENT YEAR 2002-03 AND 2003-04 IN THE CASE OF SHRI AREEZ P KHAMBATTA, THE ISSUE WA S DECIDED IN FAVOUR OF THE ASSESSEE ON BOTH ACCOUNTS. NOW, THE REVENUE IS IN APPEAL BEFORE US. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS IT IS SUBMITTED BY THE LD. A.R. OF THE ASSESSEE THAT I N THIS CASE, THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL D ECISION IN THE CASE OF AREEZ KHAMBATTA FOR THE ASSESSMENT YEAR 2003-04 & 2 006-07 AS PER I.T.A.NO. NO.2061/AHD/2007 AND 1942/AHD/2009 DATED 12.08.2011. HE SUBMITTED A COPY OF THIS TRIBUNAL DECISION. IT WA S HIS SUBMISSION THAT ON THE BASIS OF SURVEY CARRIED OUT IN THE CASE OF AREE Z P KHAMBATTA, THESE TWO DISALLOWANCES WERE MADE BY THE A.O. AND SINCE B OTH THE DISALLOWANCES WERE DELETED IN THE CASE OF SHRI AREE Z KHAMBATA IN ASSESSMENT YEAR 2003-04 AND 2006-07, IN THE CASE OF THE PRESENT ASSESSEE ALSO, BOTH THE DISALLOWANCES WERE RIGHTLY DELETED B Y THE LD. CIT(A). 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. THE ISSUE IN DISPUTE WAS DECIDED BY LD. CIT(A) IN PARA 2 OF H IS ORDER, WHICH IS REPRODUCED BELOW: THE ONLY EFFECTIVE GROUND IN THIS APPEAL IS REGARD ING DENIAL OF DEDUCTION U/S 80IB ON THE GROUND OF EMPLOYMENT O LE SS THAN 10 WORKERS AND DISALLOWANCE OF SALARY OF RS.1,50,000/- . (ANOTHER GROUNDS REGARDING VALIDITY OF REASSESSMENT PROCEEDI NGS WERE NOT PRESSED). SHRI P.F. JAIN, AUTHORIZED REPRESENTATIV E ATTENDED AND STATE THAT THE SAID ADDITION HAVE BEEN MADE BY THE A.O. ON THE BASIS OF SURVEY CONDUCTED IN THE MONTH OF FEB, 2006 IN TH E CASE OF AREEZ KHAMBATTA. SINCE SHRI AREEZ KHAMBATTA HAS TAKEN OV ER THE I.T.A.NO.797 /AHD/2009 3 BUSINESS OF THIS FIRM IN 2002, THE A.O. HAS RESORTE D TO 148 PROCEEDINGS IN THE CASE OF THIS FIRM AND MADE SIMIL AR DISALLOWANCE. IT WAS STATED THAT THIS FIRM HAD TWO PARTNERS NAMEL Y SHRI AREEZ KHAMBATTA AND HIS DAUGHTER. AFTER THE MARRIAGE OF THE DAUGHTER, SHE RETIRED FORM THE PARTNERSHIP FIRM AND SHRI AREE Z KHAMBATTA BECAME THE PROPRIETOR. IT WAS STATED THAT THIS CAS E IS COVERED IN FAVOUR OF THE APPELLANT BY THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2002-03 & 2003-04 IN THE CASE OF SH RI AREEZ KHAMBATTA ON BOTH THE ISSUES I.E. DEDUCTION U/S 80I B AND WAGES OF RS.1.50 LACS. RESPECTFULLY FOLLOWING THE ORDER OF MY PREDECESSOR CIT(A) FOR THE ASSESSMENT YEAR 2002-03 & 2003-04, T HE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S 80IB IN VIE OF THE FACT THAT MORE THAN 10 WORKERS WERE EMPLOYED BY THE APPELLANT AND TO ALLOW THE SALARY OF RS.1.50 LACS WHICH IS DISALLOWED IN RESPE CT OF FOUR WORKERS. 4. IN THE CASE OF SHRI AREEZ KHAMBATTA, THE TRIBUNAL H AS DECIDED BOTH THE ISSUES IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 AND 2006- 07 AND SINCE THIS WAS THE ONLY BASIS FOR MAKING THI S DISALLOWANCE IN THE PRESENT CASE, WE FEEL THAT THE ISSUE INVOLVED IS SQ UARELY COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUNAL DECISION IN THE CA SE OF AREEZ KHAMBATA (SUPRA) FOR THE ASSESSMENT YEAR 2003-04 & 2006-07. 5. LD. D.R. OF THE REVENUE COULD NOT POINT OUT ANY DIF FERENCE IN THE FACTS AND HENCE, WE DO NOT FIND ANY REASON TO TAKE A CONTRARY VIEW IN THIS CASE. WE, THEREFORE, DECLINE TO INTERFERE IN THE O RDER OF LD. CIT(A) BY RESPECTFULLY FOLLOWING THE TRIBUNAL ORDER IN THE CA SE OF AREEZ KHAMBATTA FOR THE ASSESSMENT YEAR 2003-04 BECAUSE THIS VERY B USINESS OF THIS ASSESSEE WAS TAKEN OVER BY SHRI AREEZ KHAMBATTA IN ASSESSMENT YEAR 200304. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCT., 2011. SD./- SD./- (T. K. SHARMA) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 14.10. 2011 SP I.T.A.NO.797 /AHD/2009 4 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 10/10 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/10 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S.13/10 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 14/10 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.14/10 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 14/10/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..