DCIT - 4(1), MUMBAI V. M/s. BALAJI FILAMENTS LTD., MUMBAI

ITA 934/MUM/2007

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3861 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Next Hearing Date: 19-08-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 31-01-2007
• Court: TRIBUNAL
• Department Lawyers: U B JAKKE
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 80HHC; 28

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ./ ITA NO. 934 / MUM/20 07 ( / ASSESSMENT YEAR : 20 0 3 - 0 4 ) DCIT - 4(1), MU MBAI VS. M/S BALAJI FILAMENTS LTD., 1 ST FLOOR, BANDRAWALA BUILDING, 16, DADI SETH AGYARI LANE, MUMBAI - 400002 ./ ./ PAN/GIR NO. : A A A C B 2550 M ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI U.B.JAKKE /ASSESSEE BY : SHRI MAYUR KISNADWALA / DATE OF HEARING : 0 6 / 04 /201 6 / DATE OF PRONOUNCEMENT 27 / 04 /201 6 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED B Y THE REV ENUE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 0 3 - 20 0 4 . 2. FIRST THREE GRIEVANCE OF REVENUE RELATES TO ALLOWING DEDUCTION U/S.80HHC AT RS. 29,02,724/ - BY COMPUTING TOTAL TURN OVER AS PER CLAUSE (BAA) OF EXPLANATION TO SECTION 80HHC. AS PE R AO WHILE COMPUTING DEDUCTION U/S.80HHC, TURNOVER AND PROFIT OF ASSESSEE AS A WHOLE TO BE TAKEN IN PLACE OF PROFIT AND TURNOVER OF A UNIT OR UNDERTAKING OF ASSESSEE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ASSESSEES CLAIM DEDUCTION U/S.8 0HHC WAS REDUCED BY AO BY OBSERVING THAT INCOME OF THE ASSESSEE WAS TO BE FIRST COMPUTED AS PER PROVISIONS OF SECTION 28 AFTER TAKING INTO CONSIDERATION THE NET RESULTS OF INCOME AND AFTER GIVING ITA NO. 934 / 07 2 EFFECT TO THE PROVISIONS OF SET OFF LOSS U/S.70&71 AND SET O FF OF BROUGHT FORWARD LOSS U/S.72 AND DEDUCTION U/S.32(2) OF THE I.T.ACT IN RESPECT OF UNABSORBED DEPRECIATION OF THE EARLIER ASSESSMENT YEARS. BY THE IMPUGNED ORDER CIT(A) RESTRICTED THE ADDITION U/S.80HHC TO THE EXTENT OF GROSS TOTAL INCOME. LD. AR PLACE D ON RECORD ORDER OF THE TRIBUNAL ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1999 - 2000 WHEREIN THE TRIBUNAL HAS DEALT WITH THE SIMILAR ISSUE AND ALLOWED THE SAME IN ASSESSEES FAVOUR. 4. WE HAD GONE THROUGH THE ORDER OF THE TRIBUNAL, WHICH READS AS UNDER : - 12. WE HAVE HEARD BOTH THE LEARNED REPRESENTATIVES, ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE IN THE PAPER BOOK. SO FAR AS FACTUAL POSITION OF THE CASE IS CONCERNED, UNDISPUTEDLY, THE ASSESSEE RUNS THREE UNITS. FOR EXPORT ORIENTED UNIT, BOOKS OF AC COUNTS, RECORDS AS WELL AS PROFIT & LOSS ACCOUNT ETC. ARE MAINTAINED SEPARATELY. IN SUCH A CASE, FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80 HHC OF THE ACT, THE RELEVANT JUDICIAL PRONOUNCEMENTS HAVE HELD THAT U/S 80 HHC, ONLY THE PROFITS AND TURNOVER OF T HE EXPORT DIVISION ALONE HAVE TO BE TAKEN INTO CONSIDERATION AND NOT CLUBBED PROFITS. IN THIS REGARD, THE CASE IS SQUARELY COVERED BY THE FINDINGS IN THE CASE OF M/S. MANDHANA INDUSTRIES PVT. LTD. AS WELL AS BY THE DELHI ITAT JUDGMENT IN THE CASE OF CIT VS . PADMINI TECHNOLOGIES LTD.(SUPRA) AND IN THE CASE OF SUBHASH CHGANDAN KATHURIA VS. DCIT AS WELL. WE HAVE ALSO CONSIDERED THE CASE LAW CITED BY THE LEARNED DR IN 172 TAXMAN 347. BUT IN OUR OPINION, IT IS NOT APPLICABLE QUA PECULIAR FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. ACCORDINGLY, WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD SUCCEED. HENCE, THE ASSESSING OFFICER IS DIRECTED TO RE - COMPUTE THE DEDUCTION AND OTHER BENEFITS U/S 80HHC OF THE ACT QUA THE ASSESSEE BY TAKING INTO CONSIDERATION THE PROFITS AND TURNOVER OF THE EXPORT UNITS ONLY AFTER GRANTING ADEQUATE OPPORTUNITY OF HEARING. HENCE, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE OR DER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). 5. NEXT GRIEVANCE OF THE REVENUE RELATES TO CIT(A)S ACTION IN TREATING TWISTING AND TEXTURISING OF YARN IS A MANUFACTURING ACTIVITY, THEREBY ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S.80IB. ITA NO. 934 / 07 3 6. THE ISSUE UNDER CONSIDERATION IS COVERED BY THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF EMPTEE POLY - YARN PVT. LTD. 320 ITR 665 , WHEREIN THE HONBLE SUPREME COURT HELD THAT TWISTING AND TEXTURISING OF PARTIALLY ORIENTED YARN IS A MAN UFACTURING ACTIVITY, INSOFAR AS THERMO MECHANICAL PROCESS EMBEDDED IN PROCESS BRINGS ABOUT STRUCTURAL CHANGE IN YARN, THEREFORE, MAKES PROCESS MANUFACTURE. RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT, WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF CIT(A) IN TREATING THE TWISTING AND TEXTURISING OF YARN AS MANUFACTURING THEREBY ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S.80IB OF THE ACT. 7. WITH REGARD TO GROUND NO.5, IT WAS ALLEGED BY LD. AR THAT THIS GROUND DOES NOT ARISE OUT OF THE ORDER P ASSED BY CIT(A), INSOFAR AS PROVISIONS OF SECTION 80IA(5), 80IA(9) AND 80IA(10) OF THE ACT, IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE. 8. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(A), WHEREIN NONE OF THE PROVISIONS HAVE BEEN DEALT WITH. ACCORDINGL Y, GROUND NO.5 OF REVENUES APPEAL IS INFRUCTUOUS. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 27/04 / 201 6 . SD/ - ( PAWAN SINGH ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 27/04 /201 6 . . /PKM , . / PS ITA NO. 934 / 07 4 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//