M/s. The Madras Aluminium Company Limited, Salem v. ACIT, Salem

ITA 243/CHNY/2007 | 2004-2005
Pronouncement Date: 24-02-2012 | Result: Allowed

Appeal Details

RSA Number 24321714 RSA 2007
Assessee PAN AAACT7665D
Bench Chennai
Appeal Number ITA 243/CHNY/2007
Duration Of Justice 5 year(s) 23 day(s)
Appellant M/s. The Madras Aluminium Company Limited, Salem
Respondent ACIT, Salem
Appeal Type Income Tax Appeal
Pronouncement Date 24-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 24-02-2012
Date Of Final Hearing 23-02-2012
Next Hearing Date 23-02-2012
Assessment Year 2004-2005
Appeal Filed On 31-01-2007
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH CHENNAI. BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER & SHRI GEORGE MATHAN JUDICIAL MEMBER I.T.A. NO. 243/MDS/2007 ASSESSMENT YEAR: 2004-05 THE MADRAS ALUMINIUM COMPANY LIMITED. METTUR DAM R.S. SALEM DISTRICT 636 402. [PAN: AAACT7665D] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE SALEM. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R. MEENAKSHISUNDARAM ADVOCATE REVENUE BY : SHRI SHAJI P. JACOB ADDL. CIT DATE OF HEARING : 23.02.2012 DATE OF PRONOUNCEMENT : 24.02.2012 ORDER PER N.S. SAINI ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT SALEM DATED 24.11.2006 PASSED UNDER SECTION 26 3 OF THE INCOME TAX ACT IN ASSESSMENT YEAR 2004-05. SHRI R.MEENAKSHISUN DARAM ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI SHAJ I P. JACOB ADDL. CIT REPRESENTED ON BEHALF OF THE REVENUE. 2. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY O NE DAY. THE ASSESSEE HAS FILED AN AFFIDAVIT EXPLAINING THE REASON FOR DE LAY. THE LD. DR HAD NO OBJECTION IN CONDONING THE DELAY AND DECIDING THE A PPEAL ON MERIT. WE FIND THAT THE REASON FOR DELAY TO BE A PLAUSIBLE ONE. HE NCE WE CONDONE THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.243/M/07 243/M/07 243/M/07 243/M/07 2 DELAY AND ADMIT THE APPEAL FOR HEARING. 3. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE FIRST GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) WENT WRONG IN DIREC TING THE ASSESSING OFFICER TO DISALLOW DEDUCTION UNDER SECTION 80HHC WHILE COM PUTING BOOK PROFIT UNDER SECTION 115JB OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS PERUSED TH E ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN T HE INSTANT CASE THE GROSS TOTAL INCOME AS PER NORMAL COMPUTATION WAS NIL AND THEREFORE NO DEDUCTION WAS ALLOWED UNDER SECTION 80HHC IN THE NORMAL COMPU TATION. THE ASSESSEE WAS ASSESSED ON THE BASIS OF BOOK PROFIT COMPUTED U NDER SECTION 115JB OF THE ACT. IN COMPUTING THE BOOK PROFIT UNDER SECTION 115JB THE ASSESSING OFFICER ALLOWED DEDUCTION OF ` .15 32 296/- UNDER SECTION 80HHC ON THE BASIS OF EXPORT TURNOVER OF THE ASSESSEE. IN THE IMPUGNED ORDER PASSED UNDER SECTION 263 THE LD. CIT DIRECTED TO WITHDRAW THE D EDUCTION ALLOWED UNDER SECTION 80HHC IN COMPUTATION OF BOOK PROFIT ON THE GROUND THAT IN THE ALUMINIUM DIVISION WHERE EXPORT WERE MADE THERE W AS LOSS. 5. WE FIND THAT THE HONBLE SUPREME COURT IN THE C ASE OF BHARI INFORMATION TECHNOLOGY SYSTEMS P. LTD. [2012] 17 TAXMANN.COM 62 (SC) AL-KABEER EXPORTS LIMITED VS. CIT IN SLP(C) NOS. 33932-33933/ 2010 ORDER DATED 03.02.2012 AND AJANTA PHARMA LTD. V. CIT [2010] 327 ITR 305 (SC) HAS HELD THAT IN COMPUTING BOOK PROFIT UNDER SECTION 11 5JB DEDUCTION UNDER SECTION 80HHC IS TO BE CALCULATED WITH REFERENCE TO BOOK PROFIT AND NOT WITH I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.243/M/07 243/M/07 243/M/07 243/M/07 3 REFERENCE TO PROFIT OF BUSINESS COMPUTED UNDER THE NORMAL COMPUTATIONAL PROVISIONS. 6. WE FIND THAT UNDER THE SCHEME OF THE INCOME TAX ACT THE BOOK PROFIT IS COMPUTED ON THE BASIS OF NET PROFIT AS APPEARING IN THE AUDITED PROFIT AND LOSS ACCOUNT OF THE COMPANY AND IN SUCH COMPUTATION HEAD-WISE OR SOURCE- WISE COMPUTATION OF INCOME IS NOT MADE. THUS THE O RDER OF THE LD. CIT IS NOT IN ACCORDANCE WITH THE ABOVE SETTLED POSITION OF LA W. WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT AND ALLOW THIS GROUND OF A PPEAL OF THE ASSESSEE. 7. THE OTHER ISSUE ARGUED BY THE LD. AR OF THE ASS ESSEE IN THE APPEAL WAS THAT THE LD. CIT WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO DISALLOW TRAVELLING EXPENSES INCURRED FOR THE WIFE OF THE DIRECTOR. 8. THE ORDER OF THE LD. CIT ON THE RELEVANT ISSUE AFTER QUOTING THE SUBMISSIONS OF THE ASSESSEE IS AS UNDER: (4) IT IS FOUND THAT THE DETAILS OF DIRECTORS EXP ENSES INCLUDE CERTAIN EXPENSES TOWARDS THE WIFE OF THE DIRECTORS WHICH IS NOT ALLOWABLE. THE ASSESSING OFFICER SHOULD DISALLOW SU CH EXPENSES. 9. WE FIND THAT THERE IS ABSOLUTELY NO REASON GIVE N BY THE LD. CIT AS TO WHY THE EXPENDITURE INCURRED TOWARDS WIFE OF THE DI RECTOR WAS NOT ALLOWABLE. THERE IS NO FINDING THAT SUCH EXPENDITURE WAS NOT I NCURRED OUT OF COMMERCIAL EXPEDIENCY BY THE COMPANY. IN OUR CONSIDERED OPINIO N SUCH A NON-SPEAKING ORDER IS UNSUSTAINABLE. EVEN THE INSTANCE OF OR THE AMOUNT OF EXPENDITURE WHICH WAS FOUND BY THE LD. CIT AS NON-ALLOWABLE HAS BEEN STATED IN THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.243/M/07 243/M/07 243/M/07 243/M/07 4 ORDER. THE ORDER IS ALSO VAGUE. THEREFORE WE HAVE NO ALTERNATIVE BUT TO CANCEL SUCH AN ORDER. WE DO SO AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 10. NO OTHER POINT HAS BEEN URGED BY THE REVENUE E XCEPT THE ABOVE POINT. 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.02.2012. SD/- SD/- (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI DATED THE 24.02.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.