M/S. ATCOM TECHNOLOGIES LTD, MUMBAI v. THE ADDL.CIT 6(1), MUMBAI

ITA 300/MUM/2006 | 2002-2003
Pronouncement Date: 16-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 30019914 RSA 2006
Assessee PAN AABCA2058C
Bench Mumbai
Appeal Number ITA 300/MUM/2006
Duration Of Justice 5 year(s) 8 month(s) 3 day(s)
Appellant M/S. ATCOM TECHNOLOGIES LTD, MUMBAI
Respondent THE ADDL.CIT 6(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 16-09-2011
Date Of Final Hearing 25-08-2011
Next Hearing Date 25-08-2011
Assessment Year 2002-2003
Appeal Filed On 12-01-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI J. SUDHAKAR REDDY ACCOUNTANT MEMBER AN D SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 300/MUM./2006 (ASSESSMENT YEAR : 2002-03 ) ATCOM TECHNOLOGIES LTD. 6A LALWANI INDUSTRIAL ESTATE 14 G.D. AMBEKAR ROAD WADALA MUMBAI 400 031 PAN AABCA2058C .. APPELLANT V/S ADDL. COMMISSIONER OF INCOME TAX CIRCLE-6(1) AAYAKAR BHAVAN 101 M.K. ROAD MUMBAI 400 020 .... RESPONDENT ASSESSEE BY : MR. K. GOPAL A/W MR. JITENDRA SINGH REVENUE BY : MS. USHA S. NAIR DATE OF HEARING 25.8.2011 DATE OF ORDER 16.09.2011 O R D E R PER J. SUDHAKAR REDDY A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 9 TH JUNE 2005 PASSED BY THE COMMISSIONER (APPEALS)-VI MUMBAI FOR ASSESSMENT YEAR 2002-03. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF WEIGHIN G SCALES. IT FILED ITS ATCOM TECHNOLOGIES LTD. ITA NO.300/M/2006 2 RETURN OF INCOME ON 1 ST OCTOBER 2002. LATER ON REVISED RETURN OF INCOME W AS FILED ON 16 TH JULY 2003 DECLARING TOTAL INCOME AT NIL . 3. WE HAVE HEARD LEARNED COUNSEL MR. K. GOPAL APPEAR ING ON BEHALF OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIV E USHA S. NAIR APPEARING ON BEHALF OF THE REVENUE. ON A CAREFUL CO NSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAPERS ON RECORD AS WELL AS THE CASE LAWS CITED BEFORE US WE HOLD AS F OLLOWS:- 4. GROUND NO.1 IS ON THE ISSUE OF DISALLOWANCE OF 1/1 0 TH OF THE SHARE ISSUE EXPENSES OF ` 2 14 525. THE FACTS ARE THAT SHARES WERE ISSUED FO R WORKING CAPITAL REQUIREMENTS OF THE COMPANY. AS THE SHARES WERE ISSUED AFTER COMMENCEMENT OF BUSINESS AND NOT FOR ESTABLIS HING ANY NEW INDUSTRIAL UNDERTAKING OR UNIT THE ASSESSING OFFICER HELD THA T THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION UNDER SECTION 35D. THE ASSES SEE RELIED UPON THE JUDGMENT OF HON'BLE SUPREME COURT IN BROOKE BOND IN DIA LTD. VS. CIT (1997) 225 ITR 798 (SC). 5. ON APPEAL THE COMMISSIONER (APPEALS) CONCURRED WIT H THE VIEW TAKEN BY THE ASSESSING OFFICER. 6. LEARNED COUNSEL FAIRLY SUBMITTED THAT THE TRIBUNAL VIDE ITS ORDER DATED 23 RD JULY 2008 PASSED IN ITA NO.2758/MUM./2002 AND 296 7/MUM./2004 AT PAGE-39 PARAS-78 & 79 AND AT PAGE-45 PARAS-102 AN D 103 CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND DISMISS THE ARGU MENT OF THE ASSESSEE. A COPY OF THE SAID ORDER IS PLACED ON RECORD. CONSIST ENT WITH THE VIEW TAKEN THEREIN WE DISMISS THIS GROUND OF THE ASSESSEE. 7. GROUND NO.2 IS ON THE ISSUE OF ALLOCATION OF DEPRE CIATION OF HEAD OFFICE TO UNITS-I II AND III FOR THE PURPOSE OF COMPUTATI ON OF DEDUCTION UNDER SECTION 80IB OF THE ACT. 8. AFTER HEARING BOTH THE PARTIES WE FIND THAT THIS I SSUE IS ADMITTEDLY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL PASSED IN ATCOM TECHNOLOGIES LTD. ITA NO.300/M/2006 3 ITA NO.2967/MUM./2004 ORDER DATED 23 RD JULY 2008 WHEREIN THE TRIBUNAL VIDE PARAS-93 TO 97 HELD AS FOLLOWS:- 93. ITA NO.2967/MUM./2004 (ASSESSMENT YEAR 2000-01) :- THE FIRST GROUND OF OBJECTION BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A) IN CONFIRMING THE ALLOCATION OF DEPRECIATION OF HAD OFFICE ASSETS OF ` 53 68 306 FOR WORKING OUT THE DEDUCTION AVAILABLE UNDER SECTION 80IB IN RESPECT OF DAMAN UNITS. 94. FOR THE YEAR UNDER CONSIDERATION ASSESSEE CLAI MED DEDUCTION OF ` 15 42 99 913 DETAILS OF WHICH ARE GIVEN BY THE A. O. AS FOLLOWS:- PARTICULARS PROFIT (IN ` ) RATE OF DEDUCTION AMOUNT OF DEDUCTION (IN ` ) UNIT-I DAMAN 8 10 24 281 30% 2 43 07 284 UNIT-II DAMAN (-) 17 42 117 100% (-) 17 42 117 UNIT-III DAMAN 13 17 34 746 100% 13 17 34 746 TOTAL 15 42 99 913 FROM THE WORKING OF APPORTIONMENT OF EXPENSES OF HE AD OFFICE / CORPORATE OFFICE TO DAMAN UNITS-I II AND III THE A.O. NOTICED THAT THE ASSESSEE HAS NOT ALLOCATED DEPRECIATION AND HEAD OF FICE OF ` 53 68 306 TO THESE UNITS. IT WAS SUBMITTED THAT THE PROFITS OF THE INDUSTRIAL UNITS ARE TO BE COMPUTED ON STAND ALONE BASIS AND THEREFORE DEPRECIATION ON ASSETS OF HEAD OFFICE IS NOT REQUIRED TO BE ALLOCATED. HOWEVER THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE A.O. HE FOUND THAT FROM HEAD OFFICE ASSESSEE WAS LOOKING AFTER MARKETING DISTRIBUTION AND SALE OF GOODS PRODUCED BY DIFFERENT UNITS. THE FINANCE MANAGEMENT PERSONNEL MANAGEMENT AND GE NERAL ADMINISTRATION WAS ALSO ORGANIZED AND MANAGED FROM HEAD OFFICE. THE A.O. HELD THAT THE PRODUCTION ALONE WITHOUT MARKET ING OF THE PRODUCTS WILL NOT RESULT INTO PROFIT. TO EARN THE PROFIT IT IS ESSENTIAL THAT PRODUCTS MANUFACTURED SHOULD BE MARKETED PROPERTY. THE ASSETS OF HEAD OFFICE ARE ALSO TO BE USED FOR THAT PURPOSE. H E FURTHER HELD THAT FOR ARRIVING AT CORRECT PROFIT DERIVED FROM THE IND USTRIAL UNDERTAKING IT WAS ESSENTIAL TO ALLOCATE DEPRECIATION ON THE ASSET S OF HEAD OFFICE AS WELL. ON PROPORTIONATE BASIS THE TURNOVER WORKED TO ` 5 85 145 FOR UNIT-I ` 1 61 586 FOR UNIT-II AND ` 9 47 506 FOR UNIT-III. THE A.O. FURTHER HELD THAT DEDUCTION UNDER SECTION 80IB IS A LLOWABLE ON THE PROFITS DERIVED FROM THE INDUSTRIAL UNDERTAKING AND SOME COMMERCIAL CONNECTION WAS NOT SUFFICIENT AS WAS AVAILABLE FOR THE ASSESSEE FOR THE PRECEDING YEARS UNDER SECTION 80IA. 95. SIMILARLY ASSESSEE CLAIMED DEDUCTION UNDER SEC TION 80IB AMOUNTING TO ` 13 17 34 746 IN RESPECT OF UNIT-III AT DAMAN. THE A.O. NOTICED THAT THE ` 13 17 34 746 IN RESPECT OF UNIT-III AT DAMAN. THE A.O. NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION UN DER SECTION 80IB ATCOM TECHNOLOGIES LTD. ITA NO.300/M/2006 4 ON THE PROFITS EARNED FROM THE CONTRACT OF SUPPLYIN G INSTALLING AND ERECTING OF MINERAL WATER PLAN TO ITS SUBSIDIARY CO MPANY VIZ ATCO HEALTHCARE LTD. MUMBAI AND ANOTHER COMPANY VIZ. HIND WATER P. LTD. JAIPUR. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF PROFITS EARNED FROM THE CONTRACT OF SUPPLYING INSTALLING A ND ERECTING OF MINERAL WATER PLANT TO THESE TWO COMPANIES. THE EXP LANATION OF THE ASSESSEE WAS NOT ACCEPTED BY THE A.O. HOWEVER HE A LLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF ` 11 99 53 867 I.E. AFTER REDUCING THE PROFIT EARNED ON CONTRACT OF SUPPLYING MINERAL WATER PLANT. AGGRIEVED BY THE ABOVE ASSESSEE APPROACHED THE FIR ST APPELLATE AUTHORITY. 96. THE GROUND BY THE ASSESSEE WAS DISMISSED BY THE LEARNED CIT(A) VIDE PARA-3.1 OF HIS ORDER OBSERVING AS UND ER:- 3.1 BEFORE ME NO SUFFICIENT REASON COULD BE PUT A S TO WHY THE ABOVE ALLOCATION IS NOT WARRANTED ON THE FA CTS OF THE CASE AS HEAD OFFICE EXPENSES ARE DEFINITELY REQ UIRED TO BE APPORTIONED TO THE VARIOUS UNITS OF THE COMPANY AND THE A.O. HAS CORRECTLY CONSIDERED THE DEPRECIATION AS AN ITEM WHICH REQUIRE ALLOCATION TO DIFFERENT UNIT AND THE ACTION OF THE A.O. IN ALLOCATING THE DEPRECIATION A S AN EXPENDITURE FOR WORKING OUT THE PROFIT IN RESPECT O F VARIOUS UNITS SITUATED IN DAMAN ELIGIBLE FOR 80IA I S CORRECT AND DOES NOT CALL FOR ANY INTERFERENCE. AGGRIEVED BY THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 97. WE HEARD THE RIVAL SUBMISSIONS. WHILE DEALING W ITH SIMILAR ISSUE HEREINABOVE IN REGARD TO ALLOCATION OF EXPENSES WH ILE COMPUTING DEPRECIATION WE HAVE HELD THAT IT IS NOT NECESSARY TO BIFURCATE THE EXPENSES FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF GLAXO SMITHKINE ASIA LTD. (SUPRA) AND ALLOWED THE CLAIM O F THE ASSESSEE. FACTS BEING IDENTICAL WE ALLOW THE APPEAL OF THE A SSESSEE ON THIS GROUND FOR THE YEAR UNDER CONSIDERATION AS WELL. 9. KEEPING IN VIEW THE AFORESAID DECISION OF THE TRIBU NAL WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE COMMISSIONER (APPEALS) AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 10. GROUND NO.3 IS ON THE DISALLOWANCE OF THE CLAIM UN DER SECTION 80IB ON OTHER INCOME OF ` 43 835. THE ASSESSEE HAD NOT FURNISHED THE DETAILS IN RESPECT OF THE NATURE OF OTHER INCOME. ADMITTEDLY THE ISSUE IS NOW COVERED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE B Y THE JUDGMENT OF HON'BLE SUPREME COURT IN LIBERTY INDIA V/S CIT (2009) 317 ITR 218 (SC). ATCOM TECHNOLOGIES LTD. ITA NO.300/M/2006 5 RESPECTFULLY FOLLOWING THE SAME WE DISMISS THIS GR OUND OF THE ASSESSEE AND HOLD THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM DED UCTION UNDER SECTION 80IB ON OTHER INCOME AS THE SAME IS NOT DERIVED FROM IND USTRIAL UNDERTAKING. 11. GROUND NO.4 IS ON THE ISSUE OF CLAIM OF DEDUCTION UNDER SECTION 80IA AS WELL AS UNDER SECTION 80HHC WITH SPECIFIC REFER ENCE TO THE PROVISIONS OF SECTION 80IA(9). THE MODUS OF COMPUTATION OF THE RE LIEF WAS THE MATTER OF MUCH DEBATE AND THE HON'BLE JURISDICTIONAL HIGH COU RT IN ASSOCIATED CAPSULES V/S DCIT (2011) 332 ITR 42 (BOM.) HAS LA ID DOWN THE PROCEDURE OF ALLOWING THE CLAIM. IN VIEW OF THIS RECENT JUDGM ENT WE SET ASIDE THE OF THE COMMISSIONER (APPEALS) AND RESTORE THE ISSUE BA CK TO THE FILE OF ASSESSING OFFICER FOR DENOVO ADJUDICATION IN LINE W ITH THE PRINCIPLES LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN ITS JUD GMENT IN ASSOCIATED CAPSULES PVT. LTD. (SUPRA). 12. GROUND NO.5 IS ON THE ISSUE OF CLAIM OF DEDUCTION OF DEFERRED TAX ASSETS AND STPI PROFITS UNDER SECTION 10A OF THE AC T FROM THE PROFITS. THE ISSUE PERTAINS TO THE COMPUTATION OF BOOK PROFITS U /S 115JB. 13. THE ASSESSEE CLAIMS REDUCTION OF CREDIT ON ACCOUNT OF DEFERRED TAX ASSETS. ON APPEAL THE COMMISSIONER (APPEALS) HELD THAT THE ASSESSEE HAS NOT BEEN ABLE TO PIN POINT AS TO UNDER WHICH CLAUSE OF SECTION 115JB ADJUSTMENT COULD BE MADE WHILE COMPUTING BOOK PROFI TS. ADMITTEDLY THE ISSUE IS NOW COVERED AGAINST THE ASSESSEE BY THE JU DGMENT OF HON'BLE SUPREME COURT IN APOLLO TYRES LTD. V/S CIT (2002) 255 ITR 273 (SC). CONSEQUENTLY WE UPHOLD THE FINDINGS OF THE COMMISS IONER (APPEALS) AND DISMISS THE GROUND RAISED BY THE ASSESSEE. 14. LEARNED COUNSEL DID NOT WISH TO PRESS GROUNDS NO.6 AND 7 BEFORE US. IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN JCIT V/S ROLTA INDIA LTD. (2011) 330 ITR 470 (SC) WE DISMISS THE GROUN DS RAISED BY THE ASSESSEE. ATCOM TECHNOLOGIES LTD. ITA NO.300/M/2006 6 15. GROUND NO.8 IS ON THE ISSUE OF DISALLOWANCE OF CAR RY FORWARD LOSSES. THE ASSESSEE SUBMITS THAT CARRY FORWARD LOSSES IS A VAILABLE TO THE ASSESSEE AND THE ISSUE MAY BE RESTORED TO THE FILE OF ASSESS ING OFFICER FOR VERIFICATION AND FRESH ADJUDICATION. 16. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND POINTS OUT THAT THE COMMISSIONER (APPEALS) HAS CLEARLY HELD TH AT THE ASSESSEE WAS NOT ABLE TO FURNISH THE SPECIFIC DETAILS EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE FIRST APPELLATE AUTHORITY. 17. ON A QUERY FROM THE BENCH LEARNED COUNSEL SUBMITS THAT HE WOULD NOT BE ABLE TO FURNISH THE REQUIRED DETAILS BEFORE THIS BENCH. ON THESE SUBMISSIONS WE ARE OF THE CONSIDERED OPINION THAT NO USEFUL PURPOSE WOULD BE SERVED BY RESTORING THE ISSUE BACK TO THE FILE O F ASSESSING OFFICER AS THE ASSESSEE IS NOT IN A POSITION TO SUBSTANTIATE ITS C LAIM. THUS THIS GROUND RAISED BY THE ASSESSEE IS DISMISSED. 18. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI DATED: 16 TH SEPTEMBER 2011 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A) MUMBAI CONCERNED; (4) THE CIT MUMBAI CITY CONCERNED; (5) THE DR B BENCH ITAT MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT MUMBAI BENCHES MUMBAI