ACIT, CHENNAI v. M/s. Ucal Fuel Systems Ltd., CHENNAI

ITA 1519/CHNY/2011 | 2004-2005
Pronouncement Date: 30-11-2011 | Result: Dismissed

Appeal Details

RSA Number 151921714 RSA 2011
Assessee PAN AAACU0541K
Bench Chennai
Appeal Number ITA 1519/CHNY/2011
Duration Of Justice 2 month(s) 22 day(s)
Appellant ACIT, CHENNAI
Respondent M/s. Ucal Fuel Systems Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 30-11-2011
Assessment Year 2004-2005
Appeal Filed On 08-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO. 1519/MDS/2011 (ASSESSMENT YEAR : 2004-05) THE A.C.I.T CIRCLE III(3) CHENNAI (APPELLANT) VS. M/S UCAL FUEL SYSTEMS LTD RAHEJA TOWERS DELTA WING UNIT 705 177 ANNA SALAI CHENNAI 600 002. PAN NO. AAACU 0541 K (RESPONDENT) ASSESSEE BY : SHRI VIKRAM VIJAYARAGH AVAN ADVOCATE DEPARTMENT BY : SHRI SHAJI P. JACOB SR. DR. DATE OF HEARING : 30.11.2011 DATE OF PRONOUNCEMENT : 30.11.2011 O R D E R PER N.S. SAINI ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY DEPARTMENT FOR THE ASSE SSMENT YEAR 2004-05 AGAINST THE ORDER DATED 08.06.2011 OF COMMI SSIONER OF INCOME TAX [A]-III CHENNAI BY TAKING THE FOLLOWING GROUNDS OF APPEAL: I.T.A. NO. 1519/MDS/2011 2 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CONTRARY TO THE LAW AND FACT S OF THE CASE. 2. THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER NOT TO REDUCE THE PONDICHERRY PROFITS U/S 80IB FROM THE TOTAL BUSINESS PROFITS OF THE ASSESSEE-COMPANY WHILE COMPUTING DEDUCTION U/S.80HHC. 2.1 IT IS SUBMITTED THAT SECTION 80IA(9) AND 8018(13 ) CONVEY THAT WHERE ANY AMOUNT OF PROFITS AND GAINS O F AN UNDERTAKING OR OF AN ENTERPRISE IN THE CASE OF A N ASSESSEE IS CLAIMED AND ALLOWED UNDER THE SECTION F OR ANY ASSESSMENT YEAR THE DEDUCTION TO THE EXTENT OF SUCH PROFITS AND GAINS SHALL NOT BE ALLOWED UNDER A NY OTHER PROVISIONS OF THE CHAPTER UNDER THE HEADING 'DEDUCTIONS IN RESPECT OF CERTAIN INCOMES' AND AS P ER SECTION 80IB(13) THE PROVISIONS CONTAINED IN SUB- SECTION (5) AND SUB SECTIONS 7 TO 12 OF SECTION 80I A SHALL SO FAR AS MAY BE APPLY TO THE ELIGIBLE BUSI NESS UNDER THE SECTION. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THE ABOVE AND CONFIRMED THE DISALLOWANCE. 3. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE ASSESSEE'S APPEAL WITH RESPECT TO DEDUCTION U/S.80I A. 3.1 IT IS SUBMITTED THAT THE DECISION OF THE HON'BL E ITAT RELIED ON BY THE CIT(A) IN ASSESSEE'S OWN CASE F OR A.Y 2005-06 IN ITA NO.1487/MDS/2010 DATED 21-04- 2011 HAS NOT BECOME FINAL AND THE REVENUE HAS PREFERRED FURTHER APPEAL. 3.2 IT IS SUBMITTED THAT THE CIT(A) HAS ALLOWED THE DEDUCTION U/S.80IA RELYING ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TT K I.T.A. NO. 1519/MDS/2011 3 PHARMA LTD. TC(A) NO.298/04 DATED 23-122009. THE ABOVE DECISION OF THE MADRAS HIGH COURT WAS NOT ACCEPTED BY THE DEPARTMENT ON THE GROUND THAT IN THE CASES REFERRED BY THE HON'BLE MADRAS HIGH COURT IN ARRIVING THAT DECISION NAMELY RAJAPALAYAM MILLS LTD. VS. CIT(1978) 115 ITR 777 AND SYNCOO INDUSTRIE S LTD. THERE WAS NO REFERENCE TO SECTION 801(6) OF T HE IT ACT AND THE PURPOSE OR REASON FOR INTRODUCTION OF SECTION 801(6) OF THE IT ACT. 3.3 IT IS SUBMITTED THAT THE ITAT CHENNAI BENCH IN THE CASE OF M/S. EAGLE PRESS (P) LTD. (ITA NO.2967(MDS)/2004) HAS CONSIDERED THE APPLICABILIT Y OF SECTION 80IA(5). IN THIS CASE THE ITAT HAS OBSERV ED THAT 'TO MEET THE SITUATION ENVISAGED BY THE HON'BL E SUPREME COURT IN THE CASE OF M/S. PATIALA FLOOR MIL LS CO. (P) LTD. (115 ITR 640) THE LEGISLATURE HAS SPECIFICALLY INSERTED A DEEMING LEGAL FICTION BY WA Y OF SUB-SECTION(5) IN SECTION 80IA WHICH PROVIDES AS T O HOW THE PROFITS AND GAINS OF ELIGIBLE BUSINESS SHOU LD BE COMPUTED. 2. THE ONLY ISSUE INVOLVED IN THIS APPEAL WHICH IS TO BE DECIDED BY US PERTAINS TO RESTRICTION OF RELIEF U/S 80HHC O F THE I.T. ACT 1961 BY REDUCING THE DEDUCTION U/S 80IB OF THE ACT FROM PROFITS OF BUSINESS WHILE COMPUTING DEDUCTION U/S 80HHC OF THE ACT. 3. THE FACTS LEADING TO THIS APPEAL ARE THAT WHILE COMPUTING DEDUCTION U/S 80HHC OF THE ACT THE ASSESSING OFFIC ER REDUCED BUSINESS INCOME BY RS. 6 49 73 660/- WHILE COMPUTI NG DEDUCTION I.T.A. NO. 1519/MDS/2011 4 U/S 80HHC OF THE ACT BY FOLLOWING THE DECISION OF T HE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF M/S LEBEN LABORATORI ES LTD VS. CIT IN ITA NO. 2850/MUM/2004 ORDER DATED 29.6.2006. 4. ON APPEAL BEFORE THE LD. CIT(A) THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT RESTRICTION IN SECTION 80IB(13)/80IA (9) OF THE ACT IS ONLY WITH REGARD TO ALLOWANCE OF DEDUCTION U/S 80HH C OF THE ACT AND NOT COMPUTATION OF DEDUCTION AS PER PROVISIONS OF SECTION 80HHC AND IN ANY EVENT THE DEDUCTION ALLOWED U/S 8 0HHC AND 80IB SHOULD NOT EXCEED THE GROSS TOTAL INCOME. HE ALSO FILED COPY OF THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. M/S MRF LIMITED IN TAX CASE [APPEAL] NO. 1020 OF 2009 D ATED 27.10.2009 AND THE DECISION OF THE HON'BLE BOMBAY H IGH COURT IN THE CASE OF ASSOCIATED CAPSULES (P) LTD. VS. DCIT 3 32 ITR 42 [BOM]. 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND RELYING ON THE DECISION OF THE HON'BLE MADRAS AND BOMBAY HIGH COURTS DIRECTED THE ASSESSING OFFICER TO COMPUTE DEDUCTION U/S 80HHC OF THE ACT WITHOUT REDUCING THE DEDUCTION U/S I.T.A. NO. 1519/MDS/2011 5 80IB FROM PROFITS OF BUSINESS AND FURTHER DIRECTED THAT TOTAL DEDUCTION ALLOWED UNDER CHAPTER VIA SHOULD NOT EXCE ED THE PROFITS OF BUSINESS. 6. BEING AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US BY RAISING THE ABOVE QUOTED GRO UNDS OF APPEAL. 7. THE LD. D.R. AT THE TIME OF HEARING VEHEMENTLY ARGUED AND SUPPORTED THE ORDER OF THE ASSESSING OFFICER. HE R ELIED ON THE DECISION OF THE DELHI SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF CIT VS. HINDUSTAN MINT & AGRO PRODUCTS [2009] 119 I TD 113 [DEL] [SB] AND ALSO THE DECISION OF THE HON'BLE KERALA HI GH COURT IN THE CASE OF OLAM EXPORTS [INDIA] LTD. VS. CIT [2011] 33 2 ITR 40 [KER] AND ALSO THE DECISION OF THE HON'BLE DELHI HIGH COURT I N THE CASE OF GREAT EASTERN EXPORTS VS. CIT [2011] 332 ITR 14 [DE L] AND SUBMITTED THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE RE VENUE AND THEREFORE FOLLOWING THE SAME THE ORDER OF THE LD. CIT(A) SHOULD BE REVERSED AND THAT OF THE ASSESSING OFFICER SHOULD B E RESTORED. I.T.A. NO. 1519/MDS/2011 6 8. THE LD. A.R. RELIED ON THE DECISION OF THE HON'B LE MADRAS HIGH COURT DATED 27.10.2009 IN TAX CASE NO. 1020/2009 IN THE CASE OF CIT VS. MRF LTD AND THE DECISION OF THE HON'BLE BOM BAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULES (P) LTD. [SUPRA] AND SUBMITTED THAT THE ISSUE WHETHER DEDUCTION U/S 80HHC OF THE A CT IS ALLOWABLE TO THE ASSESSEE AFTER REDUCING THE DEDUCTION ALLOWA BLE U/S 80IA OF THE ACT OR NOT HAS BEEN DECIDED IN FAVOUR OF THE AS SESSEE. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE HON'B LE MADRAS HIGH COURT HAS HELD THAT DEDUCTION U/S 80HHC OF THE ACT SHOULD BE COMPUTED WITHOUT REDUCING THE DEDUCTION U/S 80IA AL LOWABLE TO THE ASSESSEE. SINCE THE ISSUE IS SQUARELY COVERED BY T HE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT WHICH IS BINDING ON US THEREFORE RESPECTFULLY FOLLOWING THE SAME WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). IT IS CONFIRMED AND THE G ROUNDS OF APPEAL OF THE REVENUE ARE DISMISSED. I.T.A. NO. 1519/MDS/2011 7 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF HEAR ING IN THE PRESENCE OF THE PARTIES ON 30 TH NOVEMBER 2011. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 30 TH NOVEMBER 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A) CHENNAI (4) CIT CHENNAI (5) D.R. (6) GUARD FILE