ITO 15(3)(2), MUMBAI V. WELL PACK CONVERTORS, MUMBAI

ITA 9141/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71847 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 02-12-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 29-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH G, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AN D DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 9141/MUM/2010 ASSESSMENT YEAR: 2006-07 ITO 15(3)(2) 1 ST FLOOR, MATRU MANDIR, TARDEO MUMBAI-7 VS. M/S. WELL PACK CONVERTORS B-402, ROYAL ACORD. YOGI NAGAR, BORIVALI (W) MUMBAI.-400 092 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AAKFM 2005 K ASSESSEE BY : SHRI PRAKASH JHUNJHUNWALA REVENUE BY : SHRI R. K. SAHU DATE OF HEARING : 02.12.2013 DATE OF PRONOUNCEMENT : 06.12.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD.CIT(A) -26, MUMBAI DATED 18.10.2010 FOR THE ASSESSMENT YEAR 20 06-07. 2. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APP EAL RELATES TO THE DELETION OF THE DISALLOWANCE OF RS.16,20,167/- MADE BY THE AO AGAIN ST THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IB OF THE INCOME TAX ACT. 3. BRIEFLY STATED, THE ASSESSEE, A FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF POLY BAGS, DURING THE YEAR UNDER CONSIDERATION, HAD CLAIMED A DEDUCTION U/S 80IB OF THE ACT @ 100% OF RS.16,20,167/-. HOWEVER, IN THE ASSES SMENT FRAMED U/S 143(3), THE AO DISALLOWED THE SAID CLAIM AS THE ASSESSEE DID NOT F ULFILL THE CONDITION LAID DOWN IN THE PROVISIONS OF SECTION 80IB, NAMELY, THERE WAS NO EM PLOYEES OF 10 OR MORE WITH THE AID OF POWER/20 OR MORE WORKERS WITHOUT THE AID OF THE POW ER. FURTHER, THE AO OBSERVED THAT THE ASSESSEE HAD INCURRED BILLS OF POWER CONSUMPTIO N ONLY ON AVERAGE MINIMUM CHARGES PAYABLE WHICH WAS OTHERWISE ALSO PAYABLE EVEN IF TH E FACTORY REMAINED CLOSED. ACCORDINGLY, THE DEDUCTION CLAIMED BY THE ASSESSEE HAD BEEN DISALLOWED BY THE AO AND BROUGHT TO THE TAX. ON APPEAL, THE LD.CIT(A) ALLOWE D THE CLAIM OF THE ASSESSEE AFTER ITA NO. 9141/MUM/2010 M/S. WELL PACK CONVERTORS ASSESSMENT YEAR: 2006-07 2 CONSIDERING THE FACT THAT THE ASSESSEE HAD MORE THA N 10 EMPLOYEES ON AN AVERAGE AND THE ELECTRICITY CHARGES DURING THE PREVIOUS YEAR TO THE ASSESSMENT YEAR PAID BY THE ASSESSEE BEING RS.26,429/-. AGGRIEVED BY THE IMPUGN ED ORDER, THE REVENUE HAS PREFERRED THE APPEAL BEFORE US. 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE MATE RIAL ON RECORD, IT IS PERTINENT TO NOTE THAT THE PERUSAL OF THE RECORD REVEALS THAT FO R 8 MONTHS DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR THE ASSESSEE HAS EM PLOYED 10 OR MORE EMPLOYEES INCLUDING THE CASUAL WORKERS. THE PERUSAL OF THE EL ECTRICITY BILL AVAILABLE IN THE PAPER BOOK REVEALS THAT THE ELECTRIC METER BEARING SERVICE NO. 600455 INSTALLED AT THE ASSESSEES FACTORY HAS NOT BEEN FUNCTIONING FOR CERTAIN PERIOD DUE TO WHICH THE UNIT CONSUMPTION HAS BEEN REPORTED AT NIL. HOWEVER, IT IS FOUND THAT THE RE HAS BEEN AN ALTERNATE ELECTRIC METER BEARING SERVICE NO.33665 USED IN A MANUFACTURING AC TIVITY AND CONSOLIDATED BILL HAS BEEN ISSUED BY THE ELECTRICITY DEPARTMENT AGAINST WHICH THE ASSESSEE HAS PAID THE BILL THROUGH ACCOUNT PAYEE CHEQUE OF HDFC BANK. IT APPEARS THAT THESE FACTORS HAVE NOT BEEN TAKEN INTO ACCOUNT BY THE AO DURING THE SCRUTINY ASSESSME NT PROCEEDINGS. ON THE ISSUE OF NUMBER OF EMPLOYEES, IT IS PERTINENT TO NOTE THAT T HERE ARE NUMBER OF JUDICIAL DECISIONS WHICH SUPPORT THE PROPOSITION THAT CASUAL, TEMPORAR Y AND PERMANENT EMPLOYEES SHOULD BE CONSIDERED FOR THE PURPOSE OF COUNTING AND ALSO IT IS NOT NECESSARY THAT THERE SHOULD BE 10 OR MORE WORKERS FOR ALL THE TIME IN THE FINAN CIAL YEAR IF THE FACTORY IS RUNNING WITH THE AID OF POWER. IT IS SUFFICIENT THAT IF THERE IS SUBSTANTIAL COMPLIANCE AS REGARDS THE NUMBER OF WORKERS DURING THE FINANCIAL YEAR, THE AS SESSEE SHOULD BE ALLOWED THE DEDUCTION CLAIMED UNDER SECTION 80IB. CONSIDERING T HE FACTS IN TOTO, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENTS OF SECTION 80IB AND ELIGIBLE FOR THE CLAIM OF DEDUCTION AS CLAIMED. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE DECISI ON OF THE LD.CIT(A) AND THE SAME IS UPHELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF DECEMBER, 2013. SD/- SD/- (D. KARUNAKARA RAO) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.12.2013. *SRIVASTAVA ITA NO. 9141/MUM/2010 M/S. WELL PACK CONVERTORS ASSESSMENT YEAR: 2006-07 3 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR G BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.