ACIT, CHENNAI V. M/s. Light Alloy Products Ltd., CHENNAI

ITA 893/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51686 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-08-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K SRINIVASAN
• Keywords: Retrospective amendment
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NOS. 893, 894 & 895/MDS/2011 ASSESSMENT YEARS : 2002-03, 2003-04 & 2004-05 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-II(4), CHENNAI. V. M/S. LIGHT ALLOY PRODUCTS LTD., 67, CHAMIERS ROAD, CHENNAI-600 028 (PAN : AAACL1256C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, SR. DR RESPONDENT BY : SHRI K. SRINIVASAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THESE THREE APPEALS ARE FILED BY THE REVENUE AGAIN ST THE ORDERS OF THE LEARNED CIT(APPEALS)-III, CHENNAI IN ITA NO. 241/09 -10/A.III DATED 25-02-2011 FOR THE ASSESSMENT YEAR 2002-03, ITA NO. 680/08-09/ A.III DATED 25-02-2011 FOR THE ASSESSMENT YEAR 2003-04 AND ITA NO. 240/09-10/A .III DATED 25-02-2011 FOR THE ASSESSMENT YEAR 2004-05. 2. SHRI SHAJI P. JACOB, LEARNED SR.DR REPRESENTED O N BEHALF OF THE REVENUE AND SHRI K. SRINIVASAN REPRESENTED ON BEHALF OF THE ASS ESSEE. I.T.A. NOS. 893-895/MDS/2011 2 3. IN THE REVENUES APPEALS, THE REVENUE HAS RAISED THE FOLLOWING COMMON GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DED UCTION U/S. 80IB CLAIMED BY THE ASSESSEE ON THE PROFI T FROM JOB WORKS CONTRACT. 2.1 IT IS SUBMITTED THAT THE ASSESSEE HAS CLAIMED D EDUCTION U/S 80IBV FOR THE PROFIT DERIVED FROM JOBBING SERVICE . HOWEVER, THE ASSESSEE HAS NOT PROCURED ANY RAW MATERIALS ON IT S OWN BUT HAS BEEN DOING ONLY MOLDING OR CASTING ON THE RAW MATERIAL S SUPPLIED BY THE CUSTOMERS WITHOUT SUPPLYING THE END PRODUCT. 2.2 IT IS SUBMITTED THAT AS PER THE EXPLANATORY NO TES IN THE FINANCE (NO.2) ACT, 2009 THE DEDUCTION GRANTED BY SEC. 80 IA WILL NOT BE AVAILABLE TO A WORKS CONTRACT AWARDED BY ANY PERS ONS (INCLUDING CENTRAL OR STATE GOVERNMENT) AND EXECUTED BY THE UNDERTAKING OR ENTERPRISE REFERRED TO IN SUB-SECTION (1) WITH RE TROSPECTIVE EFFECT FROM APRIL 1, 2000. 2.3 IT IS FURTHER SUBMITTED THAT THE INTENTION OF THE LEGISLATION IS VERY CLEAR THAT DEDUCTION CANNOT BE GIVEN TO JOB WORKS AND THAT SINCE ALL OTHER CONDITIONS ARE SAME AND IDENTICAL IN SE CTION 80IA AND 80IB, THIS EXPLANATORY NOTICES GIVEN FOR 80IA CAN BE EX TENDED TO 80IB ALSO. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. IT WAS THE SUBMITTED BY THE LEARNED DR THAT THE LEARNED CIT(A) HAD ERRED IN ALLOWING THE DEDUCTION UNDER SECTION 80-IB OF THE I NCOME TAX ACT, 1961 CLAIMED I.T.A. NOS. 893-895/MDS/2011 3 BY THE ASSESSEE ON THE WORKS CONTRACT. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD FAILED TO RECOGNIZE THAT AN AMENDMENT HA D BEEN DONE TO THE PROVISIONS OF SECTION 80-IA BY THE FINANCE (NO.2) A CT, 2009 WHEREBY AN EXPLANATION HAD BEEN INTRODUCED WHICH DEBARRED THE G RANT OF DEDUCTION U/S 80IA ON THE WORKS CONTRACT. IT WAS THE SUBMISSION THAT THE SAID AMENDMENT HAD RETROSPECTIVE EFFECT W.E.F. 1.4.2000 AND THE ASSESS MENT YEAR INVOLVED IS 2002-03. IT WAS THE SUBMISSION THAT IN VIEW OF THE AMENDMENT THE DEDUCTION COULD NOT BE GRANTED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. HERE IT MAY BE MENTIONED THAT THE ASSESSEE HAS SOUGHT FOR AN ADJOURNMENT WHICH WA S REJECTED. A PERUSAL OF THE EXPLANATION TO SECTION 80IA WHICH HAS BEEN INTRODUCE D BY THE FINANCE (NO.2) ACT, 2009 WITH RETROSPECTIVE EFFECT FROM 01-04-2000 CLEA RLY SHOWS THAT IT IS IN RELATION TO THE APPLICABILITY OF THE PROVISIONS OF THE EXPLA NATION TO SECTION 80-IA(4). SEC. 80-IB IS NOT COVERED BY THE SAID EXPLANATION. IN FA CT, A PERUSAL OF THE PROVISIONS OF SECTION 80-IB(13) CLEARLY SHOWS THAT THE PROVISI ONS OF SUB-SECTION (5) AND SUB- SECTIONS (7) TO (12) OF SECTION 80-IA ARE REFERRED TO AND MADE APPLICABLE TO THE ELIGIBLE BUSINESS UNDER SECTION 80-IB. THE EXPLANAT ION TO SECTION 80-IA IS IN RELATION TO THE BUSINESS REFERRED TO IN SUB-SECTION (4) OF SEC. 80-IA AND CONSEQUENTLY THE SAME CANNOT BE ADOPTED FOR THE PUR POSE OF RESTRICTING THE DEDUCTION U/S. 80-IB. IT IS FURTHER NOTICED THAT THE LEARNED CIT(A) HAS RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT V. TAJ I.T.A. NOS. 893-895/MDS/2011 4 FIRE WORKS INDUSTRIES, REPORTED IN 288 ITR 92 TO HO LD THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURE. CONSEQUENTLY, WE ARE OF T HE VIEW THAT THE FINDING OF THE LEARNED CIT(A) IS ON THE RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMSTANCES, THE APPEALS OF THE REVENUE AR E DISMISSED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 01-08- 2011. SD/- SD- (DR. O.K. NARAYANAN) (GEORGE MATHAN) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 01 ST AUGUST, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE