DCIT 8(3), V. RISHABH INSTRUMENTS P. LTD,

MA 17/MUM/2013

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0664 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T D SINGH
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Tax effect
• Section: 10B; 10

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI , , !' !' !' !' # $% # $% # $% # $% , ,, , & & & & ' ' ' ' BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ('(' ') . / M.AS NO.17/MUM./2013 ( . / ITA NO. 2197/MUM./2010 ) ( &) + ',+ / ASSESSMENT YEAR : 200506 ) DY. COMMISSIONER OF INCOME TAX CIRCLE8(3), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. ' / APPLICANT ) V/S M/S. RISHABH INSTRUMENTS P. LTD. A54, MAROL MIDC, ANDHERI (E) MUMBAI 400 093 .... -./0 / RESPONDENT / . / PERMANENT ACCOUNT NUMBER AAAC2228D &) +2# 3 4 / ASSESSEE BY : MR. MEHUL R. SHAH ' 3 4 / REVENUE BY : MR. T.D. SINGH )' 3 # / DATE OF HEARING 14.06.2013 $ 56, 3 # / DATE OF ORDER 26.06.2013 $ $ $ $ / ORDER # $% # $% # $% # $% , ,, , & & & & 7 7 7 7 / PER AMIT SHUKLA, J.M. BY WAY OF THIS MISCELLANEOUS APPLICATION, THE REVEN UE SEEKS RECALL OF THE IMPUGNED ORDER DATED 24 TH MAY 2012, PASSED BY THE TRIBUNAL IN ITA NO.2197/ MUM./2010, FOR THE ASSESSMENT YEAR 200506 , ON THE GROUND THAT THE TRIBUNAL HAS DISMISSED THE APPEAL ON THE G ROUND OF LOW TAX EFFECT RELYING ON THE CBDT INSTRUCTION NO.3/2011 AND FOLLO WING THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S MADHUK AR K. INAMDAR (HUF), [2009] 318 ITR 149 (BOM.). RISHABH INVESTMENTS P. LTD. 2 2. THE REVENUE, IN ITS APPLICATION, HAS CONTENDED THAT THE DISPUTED ISSUE IN THE PRESENT CASE AMOUNTED TO ` 11,16,528, ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES. THE TAX EFFE CT ON SUCH DISPUTED AMOUNT HAS BEEN WORKED OUT AS UNDER: RELIEF GRANTED BY CITA, BEING CHALLENGED BY REVENUE ` 11,16,528 TAX RATE 35% WITH 2.5% SURCHARGE TAX ` 11,16,528 X 35% = ` 3,90,784 SC ` 3,90,784 X 2.5% = ` 9,770 ` 4,00,554 ADD: EDUCATION CESS @ 2% ` 8,011 TOTAL TAX EFFECT ` 4,08,565 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE, RELYING ON THE AFORESAID CALCULATION OF TAX WORKED OUT BY THE ASSESSING OFFI CER, SUBMITTED THAT THE TAX EFFECT WAS MORE THAN ` 3,00,000 AND, THEREFORE, THE APPEAL SHOULD BE RECALLED FOR HEARING ON MERITS. 4. THE LEARNED COUNSEL, ON THE OTHER HAND, SUBMITTED T HAT THE ASSESSEE HAS SUBMITTED FOLLOWING WORKING OF THE TAX EFFECT BEFORE THE TRIBUNAL AT THE TIME OF HEARING, WHICH IS AS UNDER: 1. RELIEF GRANTED BY CITA, BEING CHALLENGED BY THE REVENUE ` 1,16,528 2. DEDUCTION U/S 10B (RELIANCE PLACED ON GEMPLUS JEWELLERY P. LTD., 330 ITR 175 (BOM.) ` 15,86,63,627 = ` 11,16,528 ` 25,13,03,970 = ` 7,04,933 ` 7,04,933 3. TAXABLE INCOME AFTER 10B DEDUCTION (WITHOUT CONSIDERING MERITS OF THE CASE) ` 4,11,595 4. TAX RATE (35% X 1.025% X 1.03%) ` 36.95 5. TAX EFFECT ` 1,52,089 RISHABH INVESTMENTS P. LTD. 3 5. HE SUBMITTED THAT THE A.O. IN THE PRESENT WORKING, HAS FAILED TO CONSIDER THE DEDUCTION UNDER SECTION 10B WHICH, AS PER THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S GEM PL US JEWELLERY INDIA LTD., [2011] 330 ITR 175 (BOM.), THE SAME HAS TO BE ALLOW ED EVEN ON THE DISALLOWANCE OF EXPENDITURE, AS THE EXPENDITURE DIS ALLOWED WILL ONLY GO TO ENHANCE THE INCOME WHICH IS EXEMPT UNDER SECTION 10 B. THE TAX HAS TO BE CALCULATED AFTER WORKING OUT THE DEDUCTION UNDER SE CTION 10B. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RELEVANT WORKING GIVEN BY EITHER PARTY. THE DISPUTED ISSUE B EFORE THE TRIBUNAL RELATES TO DISALLOWANCE OF PRIOR PERIOD EXPENSES OF ` 1,16,528, ON WHICH THE NORMAL TAX WORKING WOULD BE MORE THAN ` 3,00,000. HOWEVER, IN ASSESSEES CASE, IT HAS NOT BEEN DISPUTED THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B AND IF SUCH DISALLOWANC E IS MADE, IT WILL GO TO ONLY ENHANCE THE INCOME WHICH IS ULTIMATELY WILL SU BJECT TO DEDUCTION / EXEMPTION UNDER SECTION 10B. IN VIEW OF THE JUDGMEN T OF HON'BLE BOMBAY HIGH COURT IN GEM PLUS JEWELLERY INDIA LTD. (SUPRA) IF EFFECT OF DEDUCTION UNDER SECTION 10B IS GIVEN, THEN TAX EFFECT WOULD, ADMITTEDLY, BE MUCH LESS THAN ` 3,00,000 AND, THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE ORDER PASSED BY THE TRIBUNAL AS IT IS BEYOND THE PU RVIEW OF SECTION 254(2). CONSEQUENTLY, THE APPLICATION PREFERRED BY THE REVE NUE DOES NOT SURVIVE. 7. 2 #8 ' 3 ('(' ') 2 3 # 9 : 7. IN THE RESULT, REVENUES MISCELLANEOUS APPLICATI ON IS TREATED AS DISMISSED. $ 3 56, ; <)8 26 TH JUNE 2013 6 3 = : ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH JUNE 2013 SD/- RAJENDRA SINGH ACCOUNTANT MEMBER SD/- # # # # $% $% $% $% & & & & AMIT SHUKLA JUDICIAL MEMBER MUMBAI, <) <) <) <) DATED: 26 TH JUNE 2013 RISHABH INVESTMENTS P. LTD. 4 $ 3 -&#( >(,# / COPY OF THE ORDER FORWARDED TO : (1) &) +2# / THE ASSESSEE; (2) ' / THE REVENUE; (3) ? () / THE CIT(A); (4) ? / THE CIT, MUMBAI CITY CONCERNED; (5) ('B= -&#&) , , / THE DR, ITAT, MUMBAI; (6) =C+ D / GUARD FILE. .(# -&# / TRUE COPY $) / BY ORDER - . EF / PRADEEP J. CHOWDHURY '2G &) E' / SR. PRIVATE SECRETARY H / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI