M/S. APLAB LTD., THANE v. ACIT CIR - 1, THANE

ITA 1260/MUM/2008 | 2004-2005
Pronouncement Date: 22-11-2011 | Result: Allowed

Appeal Details

RSA Number 126019914 RSA 2008
Assessee PAN AAACA1030H
Bench Mumbai
Appeal Number ITA 1260/MUM/2008
Duration Of Justice 3 year(s) 9 month(s) 1 day(s)
Appellant M/S. APLAB LTD., THANE
Respondent ACIT CIR - 1, THANE
Appeal Type Income Tax Appeal
Pronouncement Date 22-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 22-11-2011
Date Of Final Hearing 21-11-2011
Next Hearing Date 21-11-2011
Assessment Year 2004-2005
Appeal Filed On 20-02-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI G.E. VEERBHADRAPPA PRESIDENT AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.1259 AND 1260/MUM/2008 (ASSESSMENT YEARS: 2003-04 AND 2004-05) M/S. APLAB LTD. A/5 WAGLE INDUSTRIAL ESTATE THANE ....... APPELLANT VS ACIT- CIRCLE-1 I.T. OFFICERS THANE ..... RESPONDENT PAN: AAACA 1030 H APPELLANT BY: SHRI M. SUBRAMANIAN RESPONDENT BY: SHRI P.K.B. MENON DATE OF HEARING: 22.11.2011 DATE OF PRONOUNCEMENT: 22.11.2011 O R D E R PER R.S. PADVEKAR JM THESE TWO APPEALS FOR THE A.YS. 2003-04 AND 2004-05 ARE FILED CHALLENGING THE RESPECTIVE IMPUGNED ORDERS OF THE L D. CIT (A)-II THANE. SO FAR AS ASSESSMENT YEAR 2003-04 IS CONCER NED (ITA 1259 OF 2008) THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF BEING HEARD I N THE MATTER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT FULLY ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 2 AND PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANC ES OF THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT TAKING INTO CONSIDERATION FULLY AND PROPERLY THE WR ITTEN SUBMISSIONS SUBMITTED DURING THE COURSE OF HEARING PROCEEDINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. AND HOLDING THAT THE APPELLANT IS NOT ENTITLED TO T HE BENEFITS OF DEDUCTION U/S.80HCC OF THE IT ACT. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING THE LOSS ON ACCOUNT OF FOREIGN EXCHANGE RATE VARIATION OF ` 2 39 267/-. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING AN AMOUNT OF ` 1 595/- THOUGH ALLOWABLE U/S.37(1) OF THE I.T. ACT. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DISALLOWING AN AMOUNT OF ` 1 10 205/- OUT OF CONVEYANCE EXPENSES VEHICLE EXPENSES ETC. ON THE GROUND THAT THE ELEMENT OF PERSONAL EXPENDITURE CANNOT BE RULED OUT. 2. WE HAVE HEARD THE PARTIES. THE ASSESSEE COMPANY IS IN MANUFACTURING AND ASSEMBLING AS WELL AS TRADING IN POWER EQUIPMENTS ELECTRONIC INSTRUMENTS AND OTHER INDUST RIAL CONTROLLER EQUIPMENTS. THE ASSESSEE FILED THE RETURN OF INCOM E FOR THE A.Y. 2003-04 WAS SELECTED FOR SCRUTINY AND ASSESSMENT WA S COMPLETED U/S. 143(3) OF THE ACT. THE A.O. HAS NOTED THAT TH E ASSESSEE DISCLOSED TURNOVER OF ` 59.62 CRORE ON WHICH GP WAS SHOWN AT ` 18.35 CRORE AND N.P. IS SHOWN AT ` 1.26 CRORE WHICH WORKED OUT AT 30.79% AND 2.12% ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 3 RESPECTIVELY. THE ASSESSEE ALSO HAS CLAIMED THE DE DUCTION U/S.80HHC WHICH WAS SUPPORTED BY THE AUDIT REPORT IN FORM 10C CAC. THE A.O. ISSUED QUESTIONNAIRES TO THE ASSESSEE AND CALLED FO R THE DETAILS OF THE DIFFERENT EXPENDITURE CLAIMED BY THE ASSESSEE. THE A.O. HAS NOTED THAT WHILE COMPUTING THE DEDUCTION U/S.80HHC THE AS SESSEE HAS INCLUDED THE BANK INTEREST IN THE PROFITS OF THE BU SINESS. THE ASSESSEE HAS ALSO INCLUDED THE OTHER RECEIPTS IN THE COMPUTA TION OF THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF WORKING DEDUCTIO N U/S.80HHC. THE OTHER RECEIPTS INCLUDED IN THE PROFITS OF THE BUSIN ESS ARE IN THE NATURE OF:- (I) SALES OTHER CHARGES; (II) SERVICES CHARGES MFG. GOODS; (III) SERVICES CHARGES TRADING GOODS; (IV) AMC CHARGES MFG. GOODS; (V) AMC CHARGES TRADING GOODS; (VI) LABOUR CHARGES RECEIVED 3. THE TOTAL OF THE OTHER CHARGES INCLUDING THE PRO FIT & LOSS ACCOUNT WAS ` 8 59 84 403/-. THE A.O. WAS OF THE OPINION THAT T HE OTHER CHARGES CANNOT BE INCLUDED INTO THE PROFITS O F THE BUSINESS AS THE SAID ARE NOT DERIVED FROM THE EXPORT BUSINESS O F THE ASSESSEE. THE A.O. GAVE HIS EMPHASIS ON THE COMPUTATION OF DEDUCT ION U/S.80HHC. HE THEREFORE REDUCED THE INTEREST INCOME AND OTHE R RECEIPTS FROM THE PROFITS OF THE BUSINESS TO THE EXTENT OF 90% WHICH RESULTED INTO NEGATIVE FIGURE OF ` (-5 80 92 036/-). HE THEREFORE REJECTED THE CLAI M OF DEDUCTION MADE BY THE ASSESSEE U/S.80HHC. HE AL SO MADE OTHER DISALLOWANCES TOWARDS EXCHANGE VARIATION LOSS PERS ONAL EXPENDITURE PENALTY ETC. WHICH ARE TO THE EXTENT OF ` 3 51 067/-. 4. IN A.Y. 2004-05 THE ASSESSEE HAS TAKEN FOLLOWIN G GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL. ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF BEING HEARD I N THE MATTER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT FULLY AND PROPERLY APPRECIATING THE FACTS AND CIRCUMSTANC ES OF THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN DISMISSING THE APPEAL WITHOUT TAKING INTO CONSIDERATION FULLY AND PROPERLY THE WR ITTEN SUBMISSIONS SUBMITTED DURING THE COURSE OF HEARING PROCEEDINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DENYING THE BENEFITS OF PROVISIONS OF SEC.80HHC OF THE IT ACT 1961. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. AND SUSTAINING THE DISALLOWANCE OF AN AMOUNT OF ` 7 76 092/- BEING ADDITION MADE AS WRITTEN OFF OF OUTSTANDING AMOUNT IN THE NAME OF APLAB EXCEL ENGG. PVT. LTD. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. AND SUSTAINING THE DISALLOWANCE OF AN AMOUNT OF ` 23 85 970/- BEING ADDITION MADE AS WRITTEN OFF OUT STANDING CLAIMS NOT ALLOWED. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) ERRED IN CONFIRMING THE ACTION OF THE A.O. AND SUSTAINING THE DISALLOWANCE OF AN AMOUNT OF ` 1 50 000/- BEING ADDITION MADE AS ON ACCOUNT OF EXPENSES IN T HE NATURE OF PERSONAL EXPENDITURE. ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 5 5. THE RETURN FILED FOR THE A.Y. 2004-05 WAS ALSO SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. THE A.O. HAS NOTED THAT THE ASSESSEE HAS DECLARED TURNO VER AT ` 73.90 CRORE ON WHICH NET PROFIT IS SHOWN AT ` 2.74 CRORE WHICH IS WORKING OUT TO RS.3.70 CRORE. THE ASSESSEE CLAIMED THE DED UCTION U/S.80HHC AT ` 13 55 455/- WHICH WAS SUPPORTED BY THE REQUIRED AU DIT REPORT. THE A.O. CALLED FOR THE VARIOUS DETAILS OF THE PURC HASES SALES COMMISSION PAID MAJOR EXPENSES ETC. WHICH WERE FIL ED BY THE ASSESSEE. IN THIS YEAR ALSO THE A.O. HAS A RESERVA TION FOR ALLOWING THE DEDUCTION CLAIMED U/S.80HHC FOR THE REASON THAT THE ASSESSEE HAS INCLUDED THE MISCELLANEOUS RECEIPTS WHICH WERE ALSO IN THE A.Y. 2003- 04 IN COMPUTATION OF THE PROFITS OF THE BUSINESS. THE A.O. PROCEEDED TO DISALLOW 90% OF THE INTEREST AND MISCELLANEOUS R ECEIPTS FROM THE PROFITS OF THE BUSINESS WHICH RESULTED INTO NEGATIV E PROFIT (OF ` 1 27 70 022/-) THE A.O. THEREFORE HELD THAT THE A SSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80HHC. APART FROM THAT THE A.O. ALSO MADE THE ADDITIONS OF THE FOLLOWING AMOUNTS:- (I) WRITTEN OFF OF OUTSTANDING AMOUNT IN NAME OF AP LAB ENGINEERING P. LTD. ` 7 76 092/- (II) WRITTEN ON OUTSTANDING CLAIM NOT ALLOWED ` 23 85 970/- (III) EXPENDITURE PERSONAL ` 1 50 000/- 6. THE A.O. FINALLY DETERMINED THE TOTAL TAXABLE IN COME OF ` 3 85 93 183/- AS AGAINST ` 3 39 24 636/- DECLARED BY THE ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDERS BEFOR E THE LD. CIT (A) IN BOTH THE ASSESSMENT YEARS BUT THE ASSESSEE DID N OT FIND FAVOUR AS IN BOTH THE ASSESSMENT YEARS THE APPEALS FILED BY T HE ASSESSEE WERE DISMISSED. NOW THE ASSESSEE IS IN APPEAL BEFORE U S. 7. WE HAVE HEARD RIVAL SUBMISSIONS OF THE PARTIES A ND PERUSED THE RECORDS. THE LD. COUNSEL TOOK US THROUGH THE ORDER OF THE LD. CIT (A) IN BOTH THE ASSESSMENT YEARS. HE VEHEMENTLY ARGUES THAT IN SPITE OF DETAIL SUBMISSIONS FILED BEFORE THE LD. CIT (A NO PAINS ARE TAKEN TO ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 6 GIVE THE PROPER REASONING FOR REJECTING THE CLAIM O F THE ASSESSEE. THE LD. COUNSEL SUBMITS THAT BOTH THE APPEALS MAY BE SE T ASIDE TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION WITH A DIRECT ION FOR GIVING REASONABLE OPPORTUNITY TO THE ASSESSE AND DECIDING ALL ISSUES ONLY AFTER CONSIDERING WRITTEN SUBMISSION FILED BY THE A SSESSEE. 8. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSE L. WE FIND THAT THE ASSESSEE FILED THE DETAILED SUBMISSIONS BEFORE THE LD. CIT (A) BUT THOSE ARE CONSIDERED SUPERFICIALLY. THE LD. D.R. H AS NOT OBJECTION FOR SETTING ASIDE BOTH THE APPEALS TO THE FILE OF THE L D. CIT (A). IN OUR OPINION ALSO ALL THE GRIEVANCES RAISED BY THE ASSES SEE IN BOTH THE APPEALS NEEDS RECONSIDERATION BY THE LD. CIT (A). WE THEREFORE SET ASIDE THE ORDERS OF THE LD. CIT (A) IN BOTH THE ASS ESSMENT YEARS AND RESTORE THE MATTERS TO THE FILE OF THE LD. CIT (A) FOR FRESH CONSIDERATION AS PER THE PROVISIONS OF LAW. NEEDLESS TO SAY THAT THE ASSESSEE SHOULD BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD AS P ER THE PRINCIPLES OF NATURAL JUSTICE. THE CIT (A) IS DIRECTED TO PASS S PEAKING ORDER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE. ACCORDINGLY ORDERS OF THE LD. CIT (A) ARE SET ASIDE FOR BOTH TH E ASSESSMENT YEARS. 9. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR THE STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND NOVEMBER 2011 AFTER CONCLUSION OF THE HEARING. SD/- SD/- ( G.E. VEERBHADRAPPA ) PRESIDENT ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE : 22ND NOVEMBER 2011 ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 7 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) II THANE. 4) THE CIT-I THANE. 5) THE D.R. A BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITAS 1259 AND 1260/MUM/2008 M/S. APLAB LTD. 8 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.11.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 22.11.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER