M/s Southern Rocks & MInerals Pvt. Ltd., Ongole, Hyderabad v. The DCIT, Circle-2(1), Guntur

ITA 192/VIZ/2010 | 2002-2003
Pronouncement Date: 01-07-2011 | Result: Allowed

Appeal Details

RSA Number 19225314 RSA 2010
Assessee PAN AADCS1378K
Bench Visakhapatnam
Appeal Number ITA 192/VIZ/2010
Duration Of Justice 1 year(s) 3 month(s) 13 day(s)
Appellant M/s Southern Rocks & MInerals Pvt. Ltd., Ongole, Hyderabad
Respondent The DCIT, Circle-2(1), Guntur
Appeal Type Income Tax Appeal
Pronouncement Date 01-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB
Tribunal Order Date 01-07-2011
Date Of Final Hearing 30-03-2011
Next Hearing Date 30-03-2011
Assessment Year 2002-2003
Appeal Filed On 19-03-2010
Judgment Text
ITA NOS 190 TO 192 AND 217 TO 219 OF 2010 SOUTHERN ROCKS & MINERALS (P) LTD. ONGOLE PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NOS.190 TO 192/VIZAG/2010 ASSESSMENT YEAR S : 2000 - 01 TO 2002 - 03 SOUTHERN ROCKS & MINERALS PVT. LTD. ONGOLE VS. DY.COMMISSIONER OF INCOME TAX CIRCLE-2(1) GUNTUR (APPELLANT) PAN NO: AADCS 1378 K (RESPONDENT) ITA NOS.217 TO 219/VIZAG/2010 ASSESSMENT YEARS: 2000-01 TO 2002-03 SOUTHERN ROCKS & MINERALS PVT. LTD. ONGOLE VS. ACIT CIRCLE-2(1) GUNTUR (APPELLANT) PAN NO: AADCS 1378 K (RESPONDENT) APPELLANT BY: SHRI S. RAMA RAO ADVOCATE RESPONDENT BY: SHRI T.H. LUCAS PETER CIT (DR) ORDER PER BENCH: THESE APPEALS OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY LEARNED CIT(A) GUNTUR AND THEY RELATE TO THE ASS ESSMENT YEARS 2000-01 TO 2002-03. 2. THE APPEALS NUMBERED AS ITA NO.190 TO 192 OF 201 0 ARE AGAINST THE ORDERS OF THE LEARNED CIT (A) BEFORE WHOM THE APPEA LS WERE FILED AGAINST CONSEQUENTIAL ORDERS PASSED BY THE ASSESSING OFFICE R FOR GIVING EFFECT ORDERS PASSED BY THE TRIBUNAL. WHILE THE ABOVE SAI D COURSE OF ACTION WAS IN PROCESS THE ASSESSEE ALSO FILED PETITIONS UNDER SE CTION 154 OF THE ACT FOR THE VERY SAME THREE YEARS BEFORE THE ASSESSING OFFI CER SEEKING RECTIFICATION OF THE CONSEQUENTIAL ORDERS AND THE SAME WERE REJEC TED. ACCORDINGLY THE ASSESSEE FILED APPEALS BEFORE THE LEARNED CIT (A) A GAINST SUCH REJECTION BUT COULD NOT SUCCEED. THE APPEALS NUMBERED AS 217 TO 219 OF 2010 ARE AGAINST THE APPELLATE ORDERS PASSED AGAINST SEC. 15 4 ORDERS FOR THE THREE ITA NOS 190 TO 192 AND 217 TO 219 OF 2010 SOUTHERN ROCKS & MINERALS (P) LTD. ONGOLE PAGE 2 OF 4 YEARS UNDER CONSIDERATION. HENCE THERE ARE TWO APPE ALS FOR EACH OF THE ASSESSMENT YEAR. THE ISSUE URGED IN ALL THESE APPE ALS RELATE TO THE MODE OF ALLOWING DEDUCTION UNDER SECTIONS 80IB AND 80HHC OF THE ACT. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE ORIGINALLY CLAIMED DEDUCTION BOTH UNDER SECTION 80I B AND 80HHC OF THE ACT IN ITS RETURNS OF INCOME. THE ASSESSING OFFICER REJ ECTED THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT BY HOLDING T HAT THE ACTIVITIES CARRIED ON BY THE ASSESSEE WOULD NOT FALL IN THE CATEGORY O F MANUFACTURE OR PRODUCTION. THE ASSESSEE CARRIED THE MATTER TO TH E TRIBUNAL AND THE ITAT HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IB OF THE ACT. WHILE GIVING EFFECT TO THE ORDERS OF THE ITAT THE ASSESSING OFFICER FIRST ALLOWED THE DEDUCTION UNDER SECTION 80IB OF THE ACT. THEREAFTER WHILE ALLOWING DEDUCTION UNDER SECTION 80HHC OF THE ACT THE ASSESSING OFFICER REDUCED THE AMOUNT OF DEDUCTION ALLOWED UNDER SECTI ON 80IB OF THE ACT FROM THE ELIGIBLE AMOUNT OF DEDUCTION COMPUTED UNDE R SECTION 80HHC OF THE ACT AND ONLY NET AMOUNT WAS ALLOWED UNDER SECTI ON 80HHC OF THE ACT. TO MAKE THIS POINT CLEAR WE EXTRACT BELOW THE METH OD OF DEDUCTION FOLLOWED BY THE ASSESSING OFFICER FOR THE ASSESSMEN T YEAR 2000-01. GROSS TOTAL INCOME RS.2 27 39 235 (A) DEDUCTION UNDER SECTION 80IB - 61 94 8 89 (B) DEDUCTION UNDER SECTION 80HHC- 1 0 2 44 007** ---------------- 1 64 38 896 ---------------- TOTAL INCOME 63 00 339 ======== ** TOTAL ELIGIBLE DEDUCTION UNDER SECTION 80HHC - RS.1 64 38 896/- LESS:- DEDUCTION ALLOWED UNDER SECTION 80IB AS PER PROVISIONS OF SECTION 80IA(9 ) R.W.S 80IB(13) 61 94 8 89/- ------------------ RS.1 02 44 007 ========== THE ASSESSEE WAS NOT IN AGREEMENT WITH THE METHOD F OLLOWED BY THE ASSESSING OFFICER AND HENCE FILED APPEALS BEFORE TH E LEARNED CIT(A). THE ASSESSEE ALSO FILED PETITIONS UNDER SECTION 154 OF THE ACT SEEKING ITA NOS 190 TO 192 AND 217 TO 219 OF 2010 SOUTHERN ROCKS & MINERALS (P) LTD. ONGOLE PAGE 3 OF 4 RECTIFICATION OF THE CONSEQUENTIAL ORDER AND THE SA ME WERE REJECTED. HENCE THE ASSESSEE FILED APPEALS BEFORE LEARNED CIT(A) AG AINST THE SAID REJECTION ALSO. HOWEVER THE LEARNED CIT(A) CONFIRMED THE OR DERS OF ASSESSING OFFICER BY TAKING SUPPORT OF THE SPECIAL BENCH DECI SION OF ITAT IN THE CASE OF ACIT VS. HINDUSTAN MINT & AGRO PRODUCTS (P) LTD. (2009) (119 ITD 107). 4. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. THE LEARNED AUTHORISED REPRESENTATIVE HAS PLACED RELIANCE ON TH E DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF ASSOCIATED CAPSULE S (P) LTD (2011) 237 CTR (BOM) 408 (2011) (50 DTR 65) WHERE IN THE HON 'BLE COURT HAS EXPLAINED THE MANNER OF ALLOWING DEDUCTIONS UNDER S ECTION 80IB AND 80HHC VIS--VIS 80IA(9) OF THE ACT BY GIVING AN ILLUSTRAT ION. THE HIGH COURT HELD THAT SEC. 80IA(9) AFFECTS ALLOWABILITY OF DEDUCTION AND NOT COMPUTATION OF DEDUCTION. FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE BOMBAY HIGH COURT. 39. IN THE RESULT WE HOLD THAT S.80IA(9) DOES NOT AFFECT THE COMPUTABILITY OF DEDUCTION UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A BUT IT AFFECTS THE ALL OWABILITY OF DEDUCTIONS COMPUTED UNDER VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A SO THAT THE AGGREGATE DEDUCTIO N UNDER SECTION 80-IA AND OTHER PROVISIONS UNDER HEADING C OF CHAPTER VI-A DO NOT EXCEED 100 PER CENT OF THE PROF ITS OF THE BUSINESS OF THE ASSESSEE. OUR ABOVE VIEW IS ALSO SU PPORTED BY THE CBDT CIRCULAR NO.772 DT. 23 RD DEC. 1998 WHEREIN IT IS STATED THAT S.80-IA (9) HAS BEEN INTRODUCED WITH A VIEW TO PREVENT THE TAXPAYERS FROM CLAIMING REPEATED DEDUCT IONS IN RESPECT OF THE SAME AMOUNT OF ELIGIBLE INCOME AND T HAT TOO IN EXCESS OF THE ELIGIBLE PROFITS. THUS THE OBJECT OF S.80-IA(9) BEING NOT TO CURTAIL THE DEDUCTIONS COMPUTABLE UNDE R VARIOUS PROVISIONS UNDER HEADING C OF CHAPTER VI-A IT IS REASONABLE TO HOLD THAT S.80-IA(9) AFFECTS ALLOWABILITY OF DED UCTION AND NOT COMPUTATION OF DEDUCTION. TO ILLUSTRATE IF RS. 100 IS THE PROFITS OF THE BUSINESS OF THE UNDERTAKING RS.30 I S THE PROFITS ALLOWED AS DEDUCTION UNDER SECTION 80-IA(1) AND THE DEDUCTION COMPUTED AS PER S.80HHC IS RS.80 THEN I N VIEW OF S.80-IA(9) THE DEDUCTION UNDER S.80HHC WOULD BE RE STRICTED TO RS.70 SO THAT THE AGGREGATE DEDUCTION DOES NOT EXCEED THE PROFITS OF THE BUSINESS. ITA NOS 190 TO 192 AND 217 TO 219 OF 2010 SOUTHERN ROCKS & MINERALS (P) LTD. ONGOLE PAGE 4 OF 4 WE NOTICE THAT THE METHOD FOLLOWED BY THE ASSESSING OFFICER WAS NOT IN ACCORDANCE WITH THE ILLUSTRATION GIVEN BY THE HON'B LE BOMBAY HIGH COURT. ACCORDINGLY WE SET ASIDE THE ORDERS OF LEARNED CIT( A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE IMPUGNED DEDUCTIONS IN THE MANNER EXPLAINED IN THE CASE OF ASSOCIATED CAPSULES (P) LT D (SUPRA). 5. IN THE RESULT ALL THE APPEALS OF THE ASSESSEE AR E TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 1 ST JULY 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:01-07-2011 COPY TO 1 SOUTHERN ROCKS & MINERALS (P) LTD. C/O SHRI S. R AMA RAO ADVOCATE FLAT NO.102 SHRIYAS ELEGANCE DOOR NO.3-6-643 ST. N O.9 HIMAYATNAGAR HYDERABAD 2 THE DY.COMMISSIONER OF INCOME TAX CIRCLE-2(1 GUNTU R 3 THE ACIT CIRCLE-2(1) GUNTUR 4 5. THE CIT GUNTUR THE CIT(A) GUNTUR 6 THE DR ITAT VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM