DCIT, CHENNAI v. M/s. FAL Industries Limited, CHENNAI

ITA 231/CHNY/1997 | 1993-1994
Pronouncement Date: 09-07-2010 | Result: Partly Allowed

Appeal Details

RSA Number 23121714 RSA 1997
Bench Chennai
Appeal Number ITA 231/CHNY/1997
Duration Of Justice 13 year(s) 5 month(s) 12 day(s)
Appellant DCIT, CHENNAI
Respondent M/s. FAL Industries Limited, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 09-07-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 1993-1994
Appeal Filed On 27-01-1997
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH A BEFORE SHRI PRADEEP PARIKH VICE-PRESIDENT AND SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NOS.1391 & 1392/MDS/96 & 231/MDS/97 ASSESSMENT YEARS : 1991-92 1992-93 & 1993-94 THE DY. COMMISSIONER OF INCOME-TAX SPL. RANGE-II CHENNAI. VS. M/S. FAL INDUSTRIES LIMITED PERUNGUDI CHENNAI 96. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB RESPONDENT BY : SHRI R.VIJAYARAGHAVAN O R D E R PER PRADEEP PARIKH V.P. THESE ARE THREE APPEALS BY THE DEPARTMENT. THE APPEALS FOR ASSESSMENT YEARS 1991-92 AND 1992-93 AR E AGAINST THE COMBINED ORDER OF THE LD. CIT(A) DATED 11.3.1996. THE APPEAL FOR ASSESSMENT YEAR 1993-94 I S AGAINST THE ORDER OF THE CIT(A) DATED 8.10.1996. 2. EARLIER APPEALS IN ITA NOS.1391 & 1392/MDS/96 W ERE DISPOSED OF BY THE TRIBUNAL BY ITS ORDER DATED 11.8 .2003. THE APPEAL IN ITA NO.231/MDS/97 WAS DISPOSED OF BY THE TRIBUNAL ON 14.1.2004. IN ALL THESE THREE APPEALS SEVERAL G ROUNDS WERE ADJUDICATED UPON. ONE OF THE GROUNDS IN ALL TH E THREE APPEALS RELATED TO THE ALLOWANCE OF DEDUCTION UNDER SEC.80HH OF THE INCOME-TAX ACT 1961 (THE ACT) ON I NCOME GENERATED FROM SALE OF SCRAP. THE TRIBUNAL HAD GRAN TED SUCH DEDUCTION AS CLAIMED BY THE ASSESSEE. THE DEPARTMEN T WAS AGGRIEVED BY THE ORDER OF THE TRIBUNAL AND ACCORDIN GLY HAD FILED AN APPEAL BEFORE THE HONBLE MADRAS HIGH COUR T UNDER 2 ITA 1391 1392/96 & 231/97 SEC.260A OF THE ACT. ONE OF THE ISSUES AGITATED BY THE DEPARTMENT PERTAINED TO THE IMPUGNED DEDUCTION. THE HONBLE HIGH COURT VIDE ITS ORDER DATED 24.6.2009 I N TAX CASE (APPEAL) NOS.383 & 384 OF 2004 FOR ASSESSMENT YEARS 1991-92 AND 1992-93 AND VIDE ITS ORDER DATED 14.12 .2009 IN TAX CASE (APPEAL) NO.441 OF 2004 FOR ASSESSMENT YEAR 1993-94 DECIDED THE ISSUE. THE COURT HELD THAT THE CLAIM OF THE ASSESSEE CAN BE ACCEPTED IF THE ASSESSEE IS ABL E TO PLACE MATERIAL TO SHOW THAT THE SCRAP SOLD BY IT WERE THE BY- PRODUCTS IN THE PROCESS OF ITS MANUFACTURING ACTIVI TY. IF IT IS A BY-PRODUCT IN THE PROCESS OF MANUFACTURE SUCH SCRA P WOULD HAVE SUFFERED EXCISE DUTY. ACCORDINGLY THE HIGH CO URT RESTORED THIS MATTER TO THE TRIBUNAL WITH THE DIREC TION TO HOLD AN ENQUIRY AFRESH PERMITTING THE ASSESSEE TO PRODUC E SUCH MATERIAL IN SUPPORT OF ITS STAND AND PASS ORDERS BA SED ON THE EVIDENCE THAT MAY BE PLACED. PURSUANT TO THIS DIREC TION OF THE HIGH COURT THE PRESENT APPEALS HAVE COME UP FO R HEARING. 3. THE ASSESSEE HAS PLACED A WRITTEN NOTE ON RECORD INDICATING THE PRODUCTS MANUFACTURED BY IT THE PRO CESS OF MANUFACTURE IN BRIEF AND INDICATING THE NATURE OF S CRAP GENERATED AS WELL AS THE APPROXIMATE PERCENTAGE OF WASTAGE. IT IS FURTHER SUBMITTED BY THE LD. COUNSEL THAT THE COMPANY IS CLOSED SINCE MANY YEARS AND HENCE IT IS NOT FEASIBLE TO PRODUCE ANY MATERIAL IN SUPPORT. THE CO NTENTION OF THE LD. D.R. IS THAT THE DEDUCTION CAN BE GRANTE D ONLY ON THE BASIS OF THE MATERIAL ON RECORD AND NOT ON THE BASIS OF THE SUBMISSIONS MADE. 4. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D THE MATERIAL ON RECORD. IT IS TRUE THAT THE ASSESSEE MA Y HAVE 3 ITA 1391 1392/96 & 231/97 GENERATED SOME SCRAP IN THE COURSE OF ITS MANUFACTU RING ACTIVITY. AT THE SAME TIME IT CANNOT BE RULED OUT THAT THE SALE OR AT LEAST A PART OF THE SCRAP SOLD COULD BE SUCH WHICH MAY NOT HAVE BEEN GENERATED IN THE COURSE OF MANUFA CTURING ACTIVITY. THEREFORE IT IS INCUMBENT FOR THE ASSESS EE TO PLACE SOME MATERIAL ON RECORD ON THE BASIS OF WHICH ITS C LAIM CAN BE CONSIDERED. IN THE ABSENCE OF ANY EVIDENCE THE CLAIM CANNOT BE ENTERTAINED MERELY ON IPSE DIXIT. THE PLE A THAT THE COMPANY HAS CLOSED DOWN ITS OPERATIONS IS OF NO AVA IL AND IT CANNOT BE PRESUMED THAT THE HONBLE HIGH COURT WAS NOT AWARE OF THE FACT THAT THE CLAIM IS ABOUT 20 YEARS OLD WHILE GIVING DIRECTIONS TO THE TRIBUNAL. SINCE WE ARE STR ICTLY BOUND BY THE DIRECTIONS OF THE HIGH COURT AND SINCE THERE IS NO MATERIAL BEFORE US TO CONSIDER THE CLAIM OF THE ASS ESSEE THE DEDUCTION UNDER SEC.80HH ON SALE OF SCRAP CANNOT BE GRANTED. ACCORDINGLY THIS GROUND IS DECIDED IN FA VOUR OF THE REVENUE. 5. IN THE RESULT ALL THE APPEALS OF THE DEPARTMENT REMAIN PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 9.7.2010. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (PRADEEP PARIKH) VICE-PRESIDENT CHENNAI DATED THE 9 TH JULY 2010 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR