PLOY PLAST CHEMI PLANTS, MUMBAI V. ASST CIT 15(3), MUMBAI

ITA 8064/MUM/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62401 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K JALALI
• Assessee Lawyers: M B AGARWAL
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 8064/MUM/2011 (ASSESSMENT YEAR: 2007-08) M/S. POLY PLAST CHEMI PLANTS A C I T - 15(3) GR. FLOOR, THAKORE INDL. ESTATE MATRU MANDIR, NANA CHOWK KURLA KIROL ROAD, VIDYAVIHAR (W) VS. GRAND ROAD, MUMBAI 400007 MUMBAI 400086 PAN - AAHFP 7909 E APPELLANT RESPONDENT APPELLANT BY: SHRI M.B. AGARWAL RESPONDENT BY: SHRI R.K. JALALI DATE OF HEARING: 26.04.2012 DATE OF PRONOUNCEMENT: 01.06.2012 O R D E R PER R.S. PADVEKAR, J.M. IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LEARNED CIT(A)-26, MUMBAI DATED 13.09.2011 FOR A.Y. 2007-08. 2. GROUND NO. 1 READS AS UNDER: - 1) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) 26, ERRED IN LAW AS WELL AS ON FACTS AND CIRCUMSTANCES OF THE CA SE IN CONFIRMING THE DISALLOWANCE OF RS.1,90,431 BEING UN UTILIZED CENVAT CREDIT. THE LEARNED COMMISSIONER (APPEALS) E RRED IN HOLDING THAT BY NOT UTILIZING THE CENVAT CREDIT THE APPELLANT HAS DEFINITELY PAID AND CLAIMED MORE EXCISE DUTY THAN D UE FOR THE CURRENT YEAR. 3. THE FACTS PERTAINING TO THE GROUND ARE THAT THE ASS ESSEE IS ENGAGED IN THE MANUFACTURING, PROCESSING AND ERECTION OF CHEMI CAL PLANTS, PIPE FITTINGS, INDUSTRIAL EQUIPMENTS, ETC. THE AO HAS OBSERVED THA T THE ASSESSEE BEING MANUFACTURER WAS ENTITLED TO CLAIM CENVAT CREDIT AV AILABLE FOR SET OF EXCISE DUTY PAYABLE ON THE FINISHED GOODS. DURING THE YEAR ASSESSEE HAS SHOWN CENVAT CREDIT RECEIVABLE AT ` 1,90,431/- WHICH WAS APPEARING IN ITS BALANCE SHEET. THE AO WAS OF THE OPINION THAT ASSESSEE SHOU LD HAVE TAKEN SET OFF OF ITA NO. 8064/MUM/2011 M/S. POLY PLAST CHEMI PLANTS 2 THE SAID CREDIT FROM THE EXCISE DUTY PAYABLE BY THE ASSESSEE ON THE FINISHED GOODS. THE AO HAS OBSERVED THAT FOR THE NON-CLAIM O F THE SET OFF OF UNUTILISED CENVAT CREDIT, THE EXCISE DUTY PAID COUL D HAVE BEEN REDUCED TO THE EXTENT OF ` 1,90,431/-. HE, THEREFORE, MADE A DISALLOWANCE OF ` 1,90,431/- FOR NOT CLAIMING THE SET OFF AND MADE ADDITION TO T HE INCOME OF THE ASSESSEE. THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY T HE AO. 4. I HAVE HEARD THE PARTIES. AS PER THE FACTS ON RECOR D I FIND THAT ASSESSEE HAS ACTUALLY PAID THE EXCISE DUTY AND CLAIMED THE S AME. ASSESSEE HAS SHOWN THE UN-UTILISED CENVAT CREDIT IN THE BALANCE SHEET AT ` 1,90,431/-. IN THE OPINION OF THE AO, IF THE ASSESSEE WOULD HAVE C LAIMED THE SET OFF OF THE SAID CREDIT, THE EXCISE LIABILITY WOULD HAVE BEEN R EDUCED. HE, THEREFORE, MADE THE DISALLOWANCE OUT OF THE EXCISE DUTY PAID BY THE ASSESSEE. IN MY OPINION THE REASON GIVEN BY THE AO IS NOT CORRECT. AS THERE IS NO DISPUTE THAT THE ASSESSEE AS IN FACT PAID THE EXCISE DUTY. IT REMAIN S UNEXPLAINED WHY THE ASSESSEE DID NOT PREFER TO CLAIM SET OFF OF THE CEN VAT CREDIT BUT AT THE SAME TIME MERELY BECAUSE THE SET OFF IS NOT CLAIMED, NO DISALLOWANCE CAN BE MADE FROM THE ACTUAL PAYMENT MADE BY THE ASSESSEE. I, TH EREFORE, ALLOW GROUND NO. 1 AND DELETE THE ADDITION OF ` 1,90,431/-. 5. GROUND NO. 2 READS AS UNDER: - 2) THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) 26 ERRED IN LAW AS WELL AS IN THE FACTS AND CIRCUMSTANCES OF TH E CASE ON NOT CONSIDERING THE AMOUNT OF RS.3,10,428/- FOR THE PUR POSE OF COMPUTING THE DEDUCTION UNDER SECTION 80IB OF THE I NCOME-TAX ACT. THE LEARNED COMMISSIONER (APPEAL) ERRED IN TRE ATING DISALLOWANCE AND ADJUSTMENTS MADE UNDER THE PROVISI ONS OF THE INCOME-TAX ACT AS INCOME. 6. ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB O F THE ACT OF ` 1,64,49,598/- AT 100% OF THE PROFIT. THE AO MADE CE RTAIN DISALLOWANCES OUT OF THE EXPENDITURE LIKE EXCISE PENALTY OF ` 5,000/- AND DISALLOWANCE FOR NON-TDS ON INTEREST PAID TO L&T OR ` 1,19, 997/-. ASSESSEE CLAIMED THAT DUE TO DISALLOWANCE OF ` 1,20,997/- THE BUSINESS PROFIT WAS INCREASED AND HE NCE THE ASSESSEE WAS ENTITLED TO GET THE BENEFIT OF 80I B(4) ON THE SAID INCREASE IN THE BUSINESS PROFIT. THE AO ALSO DISALLOWED THE INT EREST INCOME OF ` 14,076/- ON THE FIXED DEPOSITS WITH THE BANK. THE AO REJECTE D THE CLAIM OF THE ITA NO. 8064/MUM/2011 M/S. POLY PLAST CHEMI PLANTS 3 ASSESSEE FOR CONSIDERING THE EXPENDITURE DISALLOWED FOR CLAIMING DEDUCTION UNDER SECTION 80IB(4). THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO. ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. SO FAR AS THE DISALLOWANCE OF THE EXCISE PENALTY AND DISALLOWANCE OF INTEREST PAID TO L&T FOR NON-DEDUCTION OF TDS BY INVOKING SECTION 40A(IA) OF THE ACT BUSINESS PROFIT IS INCREASED, THERE SHOULD NOT BE QUARREL WHEN THE BUS INESS PROFIT IS INCREASED AND HENCE, IN MY OPINION, ASSESSEE IS ENTITLED FOR CLAIMING THE DEDUCTION UNDER SECTION 80IB(4) ON INCREASED BUSINESS PROFIT. SO FAR AS THE INTEREST INCOME IS CONCERNED, THE AO HAS RIGHTLY MADE THE DI SALLOWANCE. WHILE ADJUDICATING GROUND NO. 1 DISALLOWANCE OF ` 1,90,431/- TOWARDS NON- UTILISATION OF CENVAT CREDIT IS ALLOWED, THEN THE S AID AMOUNT CANNOT BE CONSIDERED FOR GIVING BENEFIT OF SECTION 80IB(4) . IN THE RESULT GROUND NO. 2 IS ALLOWED AND THE AO IS DIRECTED TO CONSIDER THE SAID TWO DISALLOWANCES FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80IB(4 ). 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST JUNE 2012. SD/- (R.S. PADVEKAR) JUDICIAL MEMBER MUMBAI, DATED: 1 ST JUNE 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 26, MUMBAI 4. THE CIT 15, MUMBAI CITY 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.