The ACIT, Ahmedabad Circle-1, Ahmedabad V. Arvind Fashion Ltd., Ahmedabad

MA 162/AHD/2010

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7604 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Section: 80HHC; 80IB

Judgement Text

, , . .. . . .. . , . ! ! ! ! ! ! ! ! , ' ' ' ' # # # # IN THE INCOME TAX APPELLATE TRIBUNAL : B BENCH : AHMEDABAD BEFORE SHRI D.K.TYAGI, J.M. & HONBLE SHRI A.MOHA N ALANKAMONY, A.M.) $$ $$ $$ $$ ! ! ! ! (M.A.) NO.162/AHD/2010 : ASSESSMENT YEAR 2001-02 (ARISING OUT OF ITA NO.1037/AHD./2005) A.C.I.T., CIRCLE-1, AHMEDABAD ... . ( / APPLICANT) -VS- PAN: AABCA 2402L M/S. ARVIND FASHIONS LTD.,AHMEDABAD ( %&' / RESPONDENT) ( ) /APPLICANT BY : SHRI SAMIR TEKRIWAL, SR.D.R. %&' ( ) / RESPONDENT BY : SHRI P.M. MEHTA, A.R. *!+ ( ,' / DATE OF HEARING : 03/02/2012 - . ( ,' / DATE OF PRONOUNCEMENT : 03/02/2012 / / / / / ORDER PER SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER : THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATI ON SEEKING RECALLING OF THE ORDER PASSED BY THE TRIBUNAL DATED 18.12.2009 IN ITA NO.1037/AHD/2005 FOR THE ASSESSMENT YEAR 2001-02. 2. THE REVENUE, VIDE ITS M.A. DATED 12.07.2010, HAS SUBMITTED THAT THE FOLLOWING MISTAKES HAVE CREPT INTO THE ORDER OF THE TRIBUNAL WHICH ARE TO BE RECTIFIED. 2 M.A.NO. 162-AHD-2010 THE HON'BLE ITAT DEALT WITH THE ISSUES RELATED TO W ORKING OF DEDUCTION U/S 80 IB AND 80 HHC OF THE ACT AS STATED IN THE TABLE BELOW AS PER PARA NO.7 OF ITS ORDER. SR. NO. PARTICULAR AMOUNT 1 INTEREST OTHERS(BANK DEPOSIT) 1,55,000 2 DUTY DRAW BACK 26,43,000 MISC. INCOME 3 MISC. INCOME I.E. SALE OF SCRAP 1,17,849 4 SALE OF EXPORT QUOTA 1,26,581 5 STOCK ADJUSTMENT 31,52,697 OTHER INCOME 6 PENAL CHARGES ON DEL. DEPOSITS I. E. INTEREST ON DELAYED DEPOSIT OF SALE PROCEEDS BY FRANCHISEES /DEALERS 5,11,688 7 PENAL CHARGES ON DEL. DEPOSIT (WRANGLER) I.E. INTEREST ON DELAYED DEPOSIT OF SALE PROCEEDS BY FRANCHISEES/DEALERS 10,970 8 OTHER INCOME 2,24,273 TOTAL 69,42,058 I. FOR THE PURPOSE OF DEDUCTION U/S 80 IB: A. 'MISC. INCOME I.E..SALE OF SCRAP', RS. 1.17.84 97-(ITEM NO.3 OF THE TABLE THE HON'BLE ITAT HAS DISCUSSED THE INCOME DERIVED F ROM SALE OF SCRAP. HOWEVER, PERUSAL OF GROUPING OF 'OTHER INC OMES', AS FILED WITH THE RETURN OF INCOME, AS WELL AS THE SUBMISSION OF THE ASSESSEE BEFORE THE AO, SHOWS THAT THE AMOUNT OF RS.1,17,849 /- PERTAIN TO MISC. INCOME ONLY, WHILE SALE OF SCRAP SHOWN AT RS.7,43,673/- HA S NOT BEEN DISALLOWED BY THE AO. IT IS THEREFORE CLEA R THAT THE ITAT ERRONEOUSLY CONSIDERED THE MISC. INCOME OF RS.1,17, 849/- AS BEING ON ACCOUNT OF 'SALE OF SCRAP'. THIS MISTAKE, BEING APPARENT ON RECORD, MAY KINDLY BE RECTIFIED AND ORDER MAY BE PA SSED, ACCORDINGLY. RELEVANT COPIES FROM THE SUBMISSION BY THE ASSESS EE ARE ENCLOSED FOR KIND PERUSAL. 3 M.A.NO. 162-AHD-2010 B. STOCK ADJUSTMENT OF RS.31 .S2.697/- (ITEM NO. 5 OF THE TABLE) :- THE HONBLE ITAT DECIDED THE ISSUE WITH THE FOLLOWI NG OBSERVATION: 'V) FIFTH ITEM IS THE STOCK ADJUSTMENT AMOUNTING TO RS.31,52,697/-. THE STOCK ADJUSTMENT AMOUNT REPRESENTS THE VARIOUS PERSONAL ACCOUNTS OF PARTIES DEALING WITH THE ASSESSEE WHO A RE LIABLE TO PAY TO THE ASSESSEE FOR SHORTAGE OF GOODS AND MATERIALS. T HEREFORE, THIS INCOME IS GENERATED DIRECTLY FROM THE BUSINESS TURN OVER OF THE STOCK AND MATERIALS HANDLED BY THE ASSESSEE IN ITS REGULA R ACTIVITIES. THEREFORE, THIS INCOME IS IN THE NATURE OF DIRECT I NCOME GENERATED FROM THE OPERATIONAL ACTIVITIES OF THE ELIGIBLE IND USTRIAL UNIT. IN FACT IT IS IN THE NATURE OF 'EARNED INCOME'. BUT FOR THE MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSESSEE SCRAP WOULD N OT HAVE GENERATED AND IN A WAY, THIS IS ADDITIONAL SALES PR OCEEDS RECEIVED BY THE ASSESSEE FROM VARIOUS PARTIES. THEREFORE, THERE IS NO REASON TO EXCLUDE THIS AMOUNT FROM THE COMPUTATI ON OF ELIGIBLE PROFITS FOR THE PURPOSE OF SECTION 80/8. WE DIRECT THE AO TO TREAT THIS AMOUNT OF RS.31 ,52,697/- AS PART OF THE ELIGIBLE P ROFITS.' HOWEVER, IT IS SEEN THAT THE DISCUSSION IN RESPECT OF INCOME FROM SALE OF SCRAP HAS ERRONEOUSLY CREPT IN THE DISCUSSION ON THIS POINT. THEREFORE, THE SAME MAY BE RECTIFIED AN* ORDER PAS SED ACCORDINGLY. II. FOR THE PURPOSE OF COMPUTATION OF 80HHC PROFI TS:- AS CAN BE SEEN FROM PARA NO. 5.1 OF THE ASSESSMENT ORDER THE A.O. DISALLOWED 90% OF THE FOLLOWING RECEIPTS: SR. NO. PARTICULAR AMOUNT 1 INTEREST OTHERS(GROSST) 1,55,000 MISC. INCOME 2 MISC. INCOME 1,17,849 3 PENAL CHARGES ON DEL. DEPOSITS 31,52,697 OTHER INCOME 4 5,11,688 5 10,970 6 2,24,273 TOTAL 41,72,477 4 M.A.NO. 162-AHD-2010 A. DUTY DRAW BACK RS.26.43 LACS :- ON THE ISSUE OF 80IB PROFITS, THE HON'BLE ITAT, VIDE PARA 8.II) OF ITS ORDER, DISMISSED THE CLAIM OF THE ASSESSEE IN V IEW OF THE JUDGEMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA LTD. HOWEVER, VIDE PARA 9.II) OF ITS ORDER THE TRIB UNAL HELD THAT THIS AMOUNT HAS BE TO BE CONSIDERED AS PART OF BUSINESS PROFIT WHILE COMPUTING THE DEDUCTION U/S.80HHC IN THE LIGHT OF T HE TAXATION LAWS AMENDMENT ACT, 2005, BUT SUBJECT TO THE CONDITIONS PRESCRIBED IN THE AMENDED LAW AND THE ISSUE WAS REMITTED BACK TO THE FILE OF THE AO TO DECIDE THE MATTER IN ACCORDANCE WITH LAW. IT IS HOWEVER SEEN THAT THE AO HAS NOT EXCLUDED THIS AMOUNT IN COMPUTA TION OF DEDUCTION U/S.80HHC AS CAN BE SEEN FROM THE TABLE ABOVE. THER EFORE, IT APPEARS TO BE A MISTAKE THAT THE ISSUE WAS SET ASID E AND REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THEREFOR E, IT IS REQUESTED THAT THE MISTAKE, APPARENT ON RECORDS, MAY KINDLY B E RECTIFIED AND ORDER PASSED ACCORDINGLY. B. MISC. INCOME I.E., SALE OF SCRAP RS. 1.17,849 /- (SR. NO.3 ):- THIS ITEM IS SHOWN AS ' MISC. INCOME' IN THE SUBMISSION FILED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HOWEVER, IN THE TRIBUNAL'S ORDER (AT S R. NO. 3 OF THE TABLE) IT IS MENTIONED AS ' MISC. INCOME I.E., SALE OF SCRAP. THE HON'BLE ITAT ALLOWED THE SAME AS ELIGIBLE FOR 8 0HHC PROFIT AS IF THE SAME IS FROM SALE OF SCRAP. AS MENTIONED EARLIER IN RESPECT OF THE SAME HEAD OF INCOME, THERE IS NOTHING ON REC ORD TO SUGGEST THAT THE MISC. INCOME IS ON ACCOUNT OF THE 'SALE OF SCRAP'. FURTHER, IT IS SEEN FROM THE RECORD THAT THE INCOME FROM SALE O F SCRAP IS SHOWN AS RS.7,43,673/- WHICH HAS NOT BEEN EXCLUDED BY THE ASSESSING OFFICER IN THE COMPUTATION OF DEDUCTION U/S.80HHC. IT IS THEREFORE SEEN THAT THE HON'BLE ITAT HAS WRONGLY TAKEN THE MI SC. INCOME AS TO BE PERTAINING TO SALE OF SCRAP. THIS, BEING A MISTA KE APPARENT ON RECORD, MAY KINDLY BE RECTIFIED AND ORDER PASSED AC CORDINGLY. C. SALE OF EXPORT QUOTA RS.1,26,581/- (SR. NO.4) :- HERE TOO, THE HON'BLE ITAT DISMISSED THE CLAIM OF T HE ASSESSEE FOR THE PURPOSE OF 80IB PROFITS BUT SET ASIDE THE ISSUE BACK TO THE 5 M.A.NO. 162-AHD-2010 FILE OF THE AO TO DECIDE THE MATTER AFRESH IN ACCOR DANCE WITH LAW, AS PER PARA 9. IV) OF ITS ORDER. IT IS HOWEVER SEEN THAT THE AO, IN THE ASSESSMENT ORDER ITSELF, HAS NOT EXCLUDED THIS AMOU NT IN COMPUTATION OF DEDUCTION U/S.80HHC. THEREFORE, IT APPEARS TO BE A MISTAKE THAT THE ISSUE WAS SET ASIDE AND REMITTED BACK TO THE FI LE OF THE ASSESSING OFFICER. ALL THE ABOVE MISTAKES ARE APPARENT ON RECORDS AND THEREFORE, IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY RECTIFY THE MISTAKES AND PASS NECESSARY ORDER ACCORDINGLY. 3. ON PERUSING THE ORDER OF THE TRIBUNAL, WITH RES PECT TO ABOVE SUBMISSION IN CLAUSE I.(A) AND II.(B), IT APPEARS T HAT THE WORD SALE OF SCRAP IS WRONGLY MENTIONED AS PER THE CLAIM OF THE REVENU E. THE LD. A.R. ALSO DID NOT CONTROVERT TO THE SUBMISSIONS OF THE LD. D.R. T HEREFORE, AT PAGE 3 PARA 7 OF THE ORDER OF THE TRIBUNAL DATED 18.12.2009, IT EM NO.3 MISC. INCOME I.E., SCALE OF SCRAP SHALL STAND CORRECTED AS MIS C. INCOME. IT IS ORDERED ACCORDINGLY. 3.1 WITH RESPECT TO THE SUBMISSION OF THE REVENUE I N I(B), IT IS OBVIOUS THAT THE SENTENCE REFERRED BY THE REVENUE IN BUT FOR THE MANUFACTURING ACTIVITIES CARRIED ON BY THE ASSESSEE SCRAP WOULD N OT HAVE GENERATED AND IN A WAY, THIS IS ADDITIONAL SALES PROCEDS RECE IVED BY THE ASSESSEE FROM VARIOUS PARTIES IS A PASSING REMARK RECORDED BY THE BENCH WHICH DO NOT DISTORT THE DECISION RENDERED. T HEREFORE, WE ARE OF THE OPINION THAT THERE IS NO MISTAKE ON RECORD WHICH RE QUIRES TO BE CORRECTED IN THE ORDER OF THE TRIBUNAL. THEREFORE, THIS ISSUE RA ISED BY THE REVENUE IS DISMISSED. 6 M.A.NO. 162-AHD-2010 3.2 WITH RESPECT TO THE SUBMISSIONS OF THE REVENUE IN II(A) & II(C), THE TRIBUNAL HAS REMITTED THE ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE MATTER IN ACCORDANCE WITH LAW AND ON MERITS. BASED ON THIS ORDER, THE LD. AO HAS PASSED AN ORDER. IF THERE IS A MISTAKE IN TH E ORDER OF THE AO, IT CANNOT BE DEEMED THAT THERE IS A MISTAKE IN THE ORD ER OF THE TRIBUNAL WHICH IS REQUIRED TO BE RECTIFIED. THEREFORE, THESE ISSUE S RAISED BY THE REVENUE DO NOT SURVIVE. IT IS ORDERED ACCORDINGLY. 4. IN THE RESULT, THE MISCELLANEOUS APPLICATION FIL ED BY THE REVENUE IS PARTLY ALLOWED. 0 / ( - . 1!2 03 / 02 /201 2 3 ( + 4 SD/- SD/- (D.K.TYAGI) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED : 03/02/2012 / / / / ( (( ( %,$ %,$ %,$ %,$ 6$.,2 6$.,2 6$.,2 6$.,2- -- - 1. &' 2. %&' 3. , *; 4. *;- - 5. $> %,!, , 4 6. A0 / , B/ D , 4 TALUKDAR/ SR. P.S.