ACIT 8(1), MUMBAI v. DHANE SINGH ESTATE P. LTD, MUMBAI

ITA 2689/MUM/2009 | 2003-2004
Pronouncement Date: 24-03-2010 | Result: Dismissed

Appeal Details

RSA Number 268919914 RSA 2009
Assessee PAN AAACD8022E
Bench Mumbai
Appeal Number ITA 2689/MUM/2009
Duration Of Justice 10 month(s) 27 day(s)
Appellant ACIT 8(1), MUMBAI
Respondent DHANE SINGH ESTATE P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-03-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 24-03-2010
Date Of Final Hearing 09-03-2010
Next Hearing Date 09-03-2010
Assessment Year 2003-2004
Appeal Filed On 27-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI. R.K. GUPTA (J.M.) AND SHRI. B. RAMAKOT AIAH (A.M.) ITA NO.2685/MUM/2009 ASSESSMENT YEAR : 2001-2002 ITA NO.2689/MUM/2009 ASSESSMENT YEAR : 2001-2002 ACIT- 8(1)1 R.NO.210 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. VS. DHANA SINGH ESTATE PVT. LTD. DHANA SINGH PROCESSOR COMPOUND GALI VAZIR GLASS WORKS J.B. NAGAR ANDHERI (E) MUMBAI 400 59. PAN : AAACD8022E (APPLICANT) (RESPONDENT) APPLICANT BY : MR. T.T. JACOB (D.R.) RESPONDENT BY : MR. SASHI TULSIYAN O R D E R PER R.K. GUPTA J.M. THESE ARE TWO APPEALS BY DEPARTMENT AGAINST THE OR DER OF THE LEARNED CIT(A) WHO CANCELLED THE ADDITIONS MADE BY THE ASSE SSING OFFICER AND ALSO CANCELLED THE LEVY OF PENALTY RELATING TO ASSESSMEN T YEAR 2001-2002. 2. FIRST WE WILL TAKE APPEAL OF DEPARTMENT IN QUAN TUM MATTER. 3 THE DEPARTMENT IS OBJECTING IN DELETING THE ADDIT IONS MADE BY ASSESSING OFFICER ON ACCOUNT OF EXCESS DEDUCTION CL AIMED BY ASSESSEE U/S.80HHC. 3.1 DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER NOTICED THAT OUT OF TOTAL TURNOVER OF THE BUSINESS OF RS.19 46 4 7 568/- THE SALE OF FINISHED FABRICS AMOUNTING TO RS.15 46 88 314/- OUT OF WHICH FABRICS WITH F.O.B. VALUE OF RS.1 69 10 358/- WERE EXPORTED FOR WHICH A SEPARATE PROFIT & LOSS ACCOUNT I.E. DHANA SINGH ESTATE PVT. LTD. (EXP ORT UNIT) WAS PREPARED. THE ASSESSING OFFICER HAD OBSERVED FROM THE PERUSAL OF THE ASSESSMENT ITA NO.2685/MUM/2009 ITA NO.2689/MUM/2009 2 RECORDS THAT IN ORDER TO AVAIL 100% DEDUCTION U/S.8 0HHC ONLY THE EXPORT TURNOVER AND RELATED DIRECT EXPENSES WERE EXHIBITED IN THE EXPORT UNIT AND ALL THE OVERHEAD AND INDIRECT EXPENSES WERE BOOKED IN THE PROFIT & LOSS ACCOUNT OF TARAPUR UNIT IN RESPECT OF WHICH DEDUC TION WAS AVAILABLE TO THE EXTENT OF ONLY 30% U/S.80IB. THUS BY ADOPTING D UBIOUS METHOD THE ASSESSEE HAD CLAIMED AND ALLOWED EXCESS DEDUCTION A MOUNTING TO RS.33 48 689/-. THE ASSESSING OFFICER ASKED THE A PPELLANT VIDE NOTICE U/S.143(2) TO EXPLAIN ITS CLAIM. AFTER CONSIDERING THE REPLY OF THE ASSESSEE THE ASSESSING OFFICER RECOMPUTED THE DEDUCTION CLAI MED U/S.80HHC AND 80IB OF THE I.T. ACT. 4. BEFORE CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE WAS HAVING TWO SEPARATE UNITS WHICH WERE ENGAGED IN DIFFERENT KIND OF PRODUCTS. BOTH THE UNITS WERE INDEPENDENT OF EACH OTHER AND NO ACTIVIT IES OF THESE UNITS WERE INTER-DEPENDENT. ALL THE WORKERS STAFF AND MANAG EMENT WERE SEPARATE. THE ACCOUNTS WERE ALSO SEPARATELY MAINTAINED. THE DEDUCTION U/S.80HHC WAS CLAIMED IN RESPECT OF BUSINESS UNIT WHICH WAS C ATERING TO EXPORT MARKET. AFTER DETAIL EXAMINATION OF THESE FACTS DEDUCTION U/S.80HHC WAS GRANTED FOR THE EXPORT UNIT WHILE COMPUTING THE ASS ESSMENT U/S 143(3) OF THE ACT ORIGINALLY. HOWEVER THE ASSESSMENT WAS REOPENED U/S.148 OF THE ACT AND THE CLAIM U/S.80HHC WAS REDUCED FROM RS.46 64 899/- TO RS.4 91 303/-. THE RELIANCE WAS PLACED ON VARIOUS C ASE LAWS INCLUDING THE DECISION OF TRIBUNAL IN THE CASE OF G.M. KNITTING I NDUSTRIES P. LTD (ITA NO.7387/MUM/04) DATED 28.03.2008. IT WAS EXPLAIN ED THAT G.M. KNITTING INDUSTRIES P. LTD IS ONE OF THE GROUP CONCERN OF TH E ASSESSEE AND ON IDENTICAL FACTS THE TRIBUNAL HAS ALLOWED THE CLAIM U/S.80HHC IN RESPECT OF EXPORT UNIT ONLY INSTEAD OF TOTAL BUSINESS OF THE A SSESSEE. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD FOUND THAT THIS ISSUE IS COVERED BY DECISION OF TRIBUNAL IN THE CASE OF M/S. HARTEX EXPORT PVT. LTD. A GROUP CO NCERN OF THE ASSESSEE COMPANY DECIDED IN ITA NO.1961/MUM/04 DATED 01.08.2 007 AND BY THE DECISION OF TRIBUNAL IN ANOTHER CASE OF M/S. G.M. K NITTING INDUSTRIES P. LTD ITA NO.2685/MUM/2009 ITA NO.2689/MUM/2009 3 (SUPRA) OPERATIVE PORTION OF THE ORDER OF THE TRIBUNAL WAS REPRODUCED BY THE CIT(A) IN HIS ORDER AT PAGE NO.5 TO 6. NOW T HE DEPARTMENT IS IN APPEAL HEAR BEFORE THE TRIBUNAL. 6 THE LEARNED D.R. PLACED RELIANCE ON THE ORDER OF THE ASSESSING OFFICER ON THE OTHER HAND LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF THE LEARNED CIT(A). 7. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD. WE DO NOT FIND ANY INFIRMITY IN THE FINDIN G OF CIT(A). THE CIT(A) HAS DECIDED THE ISSUE FOLLOWING THE DECISION OF THE TRI BUNAL IN THE CASE OF ASSESSEES GROUP CONCERN WHERE IDENTICAL ISSUE WAS INVOLVED. THE TRIBUNAL HAS HELD THAT BOTH THE UNITS WERE INDEPENDENT. IN ONE UNIT THERE WAS EXPORT ACTIVITY AND IN OTHER UNIT THERE WERE OTHER BUSINESS ACTIVITIES. FOLLOWING THE DECISION OF MADRAS HIGH COURT IN THE CASE OF SURESH B. MEHTA THE TRIBUNAL HELD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80HHC INDEPENDENTLY ON THE UNIT WHERE EXPORT ACTIVITIES W ERE CARRIED OUT. SINCE FACTS ARE IDENTICAL IN THIS CASE ALSO; THEREFORE W E HOLD THAT CIT(A) WAS JUSTIFIED IN ALLOWING THE DEDUCTION TO THE ASSESSEE . ACCORDINGLY WE CONFIRM THE ORDER OF THE LEARNED CIT(A). 8. SINCE WE HAVE CONFIRMED THE ORDER OF CIT(A) IN DELETING THE DISALLOWANCE; THEREFORE PENALTY LEVIED U/S.271(1)( C) DOES NOT SURVIVE. ACCORDINGLY WE CONFIRM THE ORDER OF THE LEARNED CI T(A) WHO CANCELLED THE LEVY OF PENALTY. 9. IN THE RESULT BOTH THE APPEALS OF THE DEPARTMEN T ARE DISMISSED. ORDER PRONOUNCED ON THIS DAY OF 24 TH MARCH 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (R.K. GUPTA) JUDICIAL MEMBER MUMBAI DATED 24 TH MARCH 2010. JANHAVI ITA NO.2685/MUM/2009 ITA NO.2689/MUM/2009 4 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- MUMBAI 4. COMMISSIONER OF INCOME TAX CITY- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH D MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBA ITA NO.2685/MUM/2009 ITA NO.2689/MUM/2009 5 DATE INITIALS 1. DRAFT DICTATED ON 10-03-10 PS 2. DRAFT PLACED BEFORE AUTHOR 12-03-10 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER