BDH INDUSTRIES LTD, MUMBAI V. DCIT 9(1), MUMBAI

ITA 912/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71097 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 12-09-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 01-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SATISH R MODY IZRFKHZ DH LS

Judgement Text

BDH INDUSTRIES LTD. . - 1 - VK;DJ VIHYH; VF/KDJ.K TH U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUM BAI JH JKTSUNZ FLAG YS[KK LNL; ,OA JH FOT; IKY JKO] YS[ KK LNL; DS LE{K BEFORE SHRI RAJENDRA SINGH ACCOUNTANT MEMBER AND SH RI VIJAY PAL RAO JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO. 911/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 1996-97 VK;DJ VIHY LA[;K /ITA NO. 912/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 1998-99 BDH INDUSTRIES LTD. NAIR BAUG, AKURLI ROAD, KANDIVALI E, MUMBAI - 400101 VS./ CUKE DCIT 9(1), 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. PAN:- AAACB1720H VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI SATISH R MODY IZR;FKHZ DH VKSJ LS @ RESPONDENT BY MS. DIVYA BAJPAI VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER RAJENDRA SINGH, AM THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS DATED 12.11.2010 AND 14.11.2010 OF CIT(A) FOR THE ASSESS MENT YEARS 1996-97 AND 1998- 99. THE DISPUTE RAISED IN BOTH THE APPEALS IS IDENT ICAL WHICH RELATES TO REDUCTION OF LQUOKBZ DH RKJH[K @ DATE OF HEARING 12-09-2013 ?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT 12-09-2013 BDH INDUSTRIES LTD. . - 2 - 90% OF JOB WORK CHARGES AS PER EXPLANATION(BAA). TH ESE APPEALS WHICH ARE IDENTICAL ARE BEING DISPOSED OFF BY A SINGLE CONSOLIDATED ORD ER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORTING OF PHARMACEUTICAL PRODU CTS HAD ALSO PRODUCED GOODS ON BEHALF OF THE OTHER PARTIES ON JOB WORK BASIS. T HE ASSESSEE HAD RECEIVED JOB WORK CHARGES OF RS. 22,03,000/- IN ASSESSMENT YEAR 1996- 97 AND RS. 18,81,000/- IN ASSESSMENT YEAR 1998-99. THE ASSESSEE TREATED THE J OB WORK CHARGES AN INTEGRAL PART OF THE BUSINESS OPERATIONS WHICH AS PER THE AS SESSEE WAS FULLY ELIGIBLE FOR DEDUCTION U/S 80HHC. AO HOWEVER TREATED THE JOB WOR K CHARGES AS INCOME OF THE NATURE MENTIONED IN EXPLANATION (BAA) AND ACCORDING LY REDUCED 90% OF SUCH CHARGES FROM THE PROFIT OF BUSINESS WHILE COMPUTING DEDUCTION U/S 80HHC. THE ORDER OF AO HAS BEEN UPHELD BY CIT(A) AGAINST WHICH THE A SSESSEE HAS FILED THESE APPEAL BEFORE TRIBUNAL. 3. BEFORE US THE LEARNED AR FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE WAS NOT PRESSING THE APPLICABILITY OF THE PROVISIONS OF EXPLANATION (BAA) FOR REDUCTION OF 90% OF JOB WORK CHARGES. IT WAS SUBMITTED THAT ONLY 90% OF NET JOB WORK CHARGES SHOULD BE REDUCED IN VIEW OF THE JUDGMENT OF HONBL E SUPREME COURT IN CASE OF ACG ASSOCIATE CAPSULES PRIVATE LIMITED V. CIT [343 ITR 89]. THE LEARNED DR PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING TREATMENT OF JOB WORK CHARGES WHILE COMPUTING DEDUCTION U/S 80HHC. THE AUTHORITIES BELOW HAVE TREATED THE JOB W ORK CHARGES OF THE NATURE OF ITEMS MENTIONED IN EXPLANATION (BAA) TO SECTION 80H HC AND HAVE ACCORDINGLY REDUCED 90% OF JOB WORK CHARGES FROM THE PROFIT OF BUSINESS WHILE COMPUTING DEDUCTION U/S 80HHC. THE LEARNED AR FOR THE ASSESSE E FAIRLY CONCEDED TO REDUCTION OF 90% OF JOB WORK CHARGES FROM THE PROFIT OF BUSIN ESS. HE HOWEVER SUBMITTED THAT ONLY 90% OF NET JOB WORK CHARGES SHOULD BE REDUCED. THE ALTERNATIVE CLAIM OF THE ASSESSEE IS IN CONFORMITY WITH THE JUDGMENT OF HON BLE SUPREME COURT IN CASE OF BDH INDUSTRIES LTD. . - 3 - ACG ASSOCIATED CAPSULES (SUPRA). WE, THEREFORE, DIR ECT THE AO TO REDUCE 90% OF NET JOB WORK CHARGES AFTER DEDUCTING THE EXPENSES INCUR RED FOR EARNING OF THE ABOVE CHARGES AFTER NECESSARY VERIFICATION AND AFTER ALLO WING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT BOTH THE APPEALS ARE PARTLY ALLOWE D FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 12 -9-2013 SD/- SD/- (VIJAY PAL RAO) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 12.9.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI