PERFECT CARBOUYS P. LTD, MUMBAI V. DCIT 9(2), MUMBAI

ITA 9153/MUM/2010

• Counselvise Citation: 915319914 RSA 2010
• Duration Of Justice: 3 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI . . , , , BEFORE SHRI N.K.SAINI , AM AND SHRI SANJAY GARG , JM ITA NO . 9153 /MUM/20 1 0 : ASST.YEAR 2007 - 200 8 PERFECT CARBOUYS PRIVATE LIMITED GB/4, VIRWANI INDUSTRIAL ESTATE W.E.HIGHWAY, GOREGAON (EAST) MUMBAI 400 063 . PAN : AAACP6643F / VS. THE DY.COMMISSIONER OF INCOME - TAX CIRCLE 9(2) MUMBAI. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI KETAN VAJANI / RESPONDENT BY : SHRI AARSI PRASAD / DATE OF HEARING : 04. 02 .201 4 / DATE OF PRONOUNCEMENT : 12 .0 2 .20 1 4 / O R D E R PER N.K.SAINI (AM) : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 12.11.2010 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 20, MUMBAI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) HAS ERRED IN HOLDING THAT THE VAT REFUND RECEIVABLE IS NOT DERIVED FROM THE BUSINESS OF THE UNDERTAKING. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONE R OF INCOME - TAX (APPEALS) ITA NO. 9153 /MUM/201 0 . PERFECT CARBOUYS PRIVATE LIMITED . 2 HAS ERRED IN CONFIRMING THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTION 80 - IB OF THE ACT, IN RESPECT OF VAT REFUND RECEIVABLE AMOUNTING TO RS.24,02,283. 3. FROM THE ABOVE GROUNDS IT IS GATHERED THAT THE ONLY GRIEVANCE OF TH E ASSESSEE IN THIS APPEAL RELATES TO THE DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80 - IB OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS THE ACT ] IN RESPECT OF VAT REFUND RECEIVABLE AMOUNTING TO RS.24,02,283. 4. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC CONTAINERS AND FILED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2007 DECLARING AN INCOME OF RS. 41,26,142 WHICH WAS PROCESSED U/S 143(1) OF THE ACT. LATER ON, THE CASE WAS SELECTED FO R SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER [ A.O. FOR SHORT] NOTICED THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80 - IB OF THE ACT, WHICH INCLUDES AN AMOUNT OF RS.24,02,283 ON ACCOUNT OF VAT REFUND RECEIVED. THE A.O. DID NOT ALLOW THE CLAIM ON THE SAID AMOUNT BY HOLDING THAT THE VAT REFUND WAS NOT AN INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 80 - IB OF THE ACT. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTE D THAT VAT REFUND RELATED TO RAW MATERIAL USED IN MANUFACTURING ACTIVITY OF THE UNDERTAKING, SO IT WAS DIRECTLY DERIVED FROM THE UNDERTAKING ELIGIBLE FOR DEDUCTION U/S 80 - IB OF THE ACT. ITA NO. 9153 /MUM/201 0 . PERFECT CARBOUYS PRIVATE LIMITED . 3 5. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE OBSERVED THAT THE VAT REFUND IS EXCESS TAX PAID WHICH CAN NEVER BE AN INCOME DERIVED FROM THE UNDERTAKING AS THE DIRECT SOURCE WAS NOT THE INDUSTRIAL UNDERTAKING , EVEN THOUGH IT MAY BE INCIDENTAL TO THE BUSINESS OF THE UNDERTAKING. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF LIBERTY INDIA V. CIT REPORTED AT 317 ITR 218. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FUR THER SUBMITTED THAT THE VAT REFUND CLAIM IS GRANTED TO THE ASSESSEE ON THE BASIS OF A SCHEME FRAMED BY THE GOVERNMENT. IT WAS FURTHER STATED THAT THE ASSESSEE IS EXEMPT FROM PAYMENT OF SALES - TAX ON THE SALES MADE BY IT UNDER NOTIFICATION NO.DNH/CST/4 - 1/99/ 3 DATED 31.12.1999 AND THE PROCEDURE OF CLAIMING THE EXEMPTION, PRESCRIBED BY THE GOVERNMENT IS TO CLAIM REFUND OF TAXES PAID ON THE RAW MATERIALS USED IN THE MANUFACTUR ING OF EXEMPT GOODS. THUS, THE VAT REFUND RECEIVABLE BY THE ASSESSEE PERTAINS TO THE VA T PAID ON RAW MATERIALS PURCHASED BY IT AND USED IN THE MANUFACTURING OF FINISHED GOODS. T HUS , THE SAME CAN BE SAID TO HAVE BEEN DERIVED FROM THE INDUSTRIAL UNDERTAKING, AND THEREFORE, DEDUCTION U/S 80IB OF THE ACT , SHOULD BE ALLOWED. RELIANCE WAS PLACED O N THE FOLLOWING CASE LAWS: - ( I ) CIT V. MEGHALAYA STEELS LTD. 332 ITR 91 (GAU) ( II ) CIT V. RACHNA UDHYOG 230 CTR 72 (BOM.) ITA NO. 9153 /MUM/201 0 . PERFECT CARBOUYS PRIVATE LIMITED . 4 ( III ) M/S.J.K.ALUMINIUM CO. V. ITO ITA NO.3303/DEL./2010 ( IV ) M/S.DIAMOND TOOLS INDUSTRIES ITA NO.136/MUM/2009. 6. THE ASSESSEE ALSO REQUESTED TO ADMIT THE ADDITIONAL EVIDENCE IN THE FORM OF EXTRACTS OF THE RELEVANT SECTIONS OF THE DADRA & NAGAR HAVELI VALUE ADDED TAX REGULATIONS 2005 , UNDER RULE 18(4) READ WITH RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963. COPY OF WHICH IS PLACED AT PAGE NOS. 65 TO 71 OF THE A SSESSEE S PAPER BOOK. IN HIS RIVAL SUBMISSIONS, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE VAT REFUND WAS NOT AN INCOME DERIVED FROM THE INDUSTRIAL UNDERTAKING, THER EFORE, THE DEDUCTION ON THIS AMOUNT U/S 80 - IB OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE AND THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O. FOR REJECTING THE CLAIM OF THE ASSESSEE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE H ON BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA (SUPRA). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE THE ASSESSEE MOVED AN APPLICATION UNDER RULE 18(4) READ W ITH RULE 29 OF THE APPELLATE TRIBUNAL RULES, 1963 FOR ADMISSION OF NEW EVIDENCES WHICH WERE NOT FURNISHED EITHER BEFORE THE A.O. OR BEFORE THE LEARNED CIT(A). IT IS AN ADMITTED FACT THAT IN THE SAID NEW EVIDENCES THE SCHEME UNDER VAT IS DISCUSSED IN DETAIL SO THESE DOCUMENTS GO TO THE ROOT OF THE MATTER, THEREFORE, THESE DESERVE TO BE ADMITTED. HOWEVER, THE SCHEME PRESCRIBED IN THE DADRA & NAGAR ITA NO. 9153 /MUM/201 0 . PERFECT CARBOUYS PRIVATE LIMITED . 5 HAVELI VALUE ADDED TAX REGULATIONS 2005 WAS NEITHER EXAMINED BY THE A.O. NOR BY THE LEARNED CIT(A). WE, THEREFORE , DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE LEARNED CIT(A) TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BY CONSIDERING THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE FIR ST TIME BEFORE THIS BENCH OF I.T.A.T. 8 . IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THIS 12 TH DAY OF FEBRUARY , 201 4 . , 2014 SD/ - SD/ - ( SANJAY GARG ) ( N.K.SAINI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12 TH FEBRUARY , 201 4 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT , MUMBAI. 4. / CIT(A) - 20, MUMBAI. 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / B Y ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI