M/s Sanwaria Agro Oils Ltd., v. The ACIT, 1(1),

ITA 34/IND/2007 | misc
Pronouncement Date: 24-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 3422714 RSA 2007
Assessee PAN AACCS1449N
Bench Indore
Appeal Number ITA 34/IND/2007
Duration Of Justice 3 year(s) 2 month(s) 14 day(s)
Appellant M/s Sanwaria Agro Oils Ltd.,
Respondent The ACIT, 1(1),
Appeal Type Income Tax Appeal
Pronouncement Date 24-03-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 24-03-2010
Date Of Final Hearing 22-03-2010
Next Hearing Date 22-03-2010
Assessment Year misc
Appeal Filed On 10-01-2007
Judgment Text
THE INCOME TAX APPELATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER ITA NOS.488/IND/07 & 17/IND/08 A.YS 2002-03 & 2004-05 ASSTT. COMMR. OF INCOMETAX 1(1) BHOPAL APPELLANT VS. M/S SAWARIA AGRO OILS LIMITED BHOPAL PAN AACCS1449N RESPONDENT ITA NO. 34/IND/07 A.Y. 2003-04 M/S SAWARIA AGRO OILS LIMITED BHOPAL APPELLANT VS ASSTT. COMMR. OF INCOMETAX 1(1) BHOPAL RESPONDENT DEPARTMENT BY SHRI RAJPAL SINGH SR. DR ASSESSEE BY SHRI ANIL KHABYA CA O R D E R PER BENCH THESE APPEALS BELONG TO THE SAME ASSESSEE AND INVOL VE COMMON ISSUES HENCE THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER F OR THE SAKE OF CONVENIENCE. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PER USED THE MATERIAL ON RECORD. FIRST WE SHALL TAKE UP THE REVENUES APPEAL IN ITA NO. 488/IND/07. 3. THE GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN : 1. ALLOWING THE DEDUCTION UNDER SECTION 80HHC OF TH E INCOME TAX ACT AMOUNTING TO RS.51 16 552/- AS AGAIN ST RS.NIL WORKED OUT BY THE ASSESSING OFFICER 4. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFI CER WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC FOUND THAT IN RESPECT OF TRADING GOODS EXPORTED BY THE ASSESSEE THE ASSE SSEE HAD SHOWN INDIRECT COST IN FORM NO. 10CCAC AT RS. 5 10 275/- WHEREAS SELLING AND ADMINISTRATIVE EXPENSES AND FIN ANCE CHARGES WERE MUCH MORE AND THOSE SHOULD HAVE BEEN CONSIDERED IN COMPUTING THE INDIRECT COST. THE ASS ESSING OFFICER ACCORDINGLY RECOMPUTED THE RESULTS OF TRA DING GOODS EXPORTS AND WORKED OUT THE LOSS THEREIN AT RS.1 05 51 697/- AS AGAINST PROFIT OF RS.51 62 521/- SHOWN BY THE ASSES SEE. 5. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APP EAL BEFORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEA LS) WHEREIN IT WAS CLAIMED THAT THE ASSESSING OFFICER H AD WRONGLY ATTRIBUTED THE INDIRECT COST AND SUCH INDIRECT COST AT THE MOST COULD BE RS.1 73 42 612/- AND ACCORDINGLY PROFIT OF EXPORTED GOODS WAS RS.36 14 660/-. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE COMPUTED THE TOTAL CLAIM OF THE ASSESSEE UNDER SECTION 80HHC AT RS.51 16 552/- BY HOLDING THAT ALL THE COSTS COULD NOT BE TERMED AS INDIRECT COST ATTRIBUTABLE T O EXPORT OF TRADING GOODS. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 6. THE LEARNED DR CONTENDED THAT FROM THE DETAILS O N RECORD IT WAS NOT CLEAR AS TO HOW THE INDIRECT COS T ATTRIBUTABLE TO EXPORT OF TRADING GOODS HAD BEEN WORKED OUT. THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SELLING AND DISTRIBUTION EXPENSES COMPRISED OF TRANSPORTATION CHARGES SHORT AGE/QUALITY REBATE BROKERAGE BARDANA ETC. WHICH WERE OF THE NATURE OF DIRECT EXPENSES AND THE SAME HAD BEEN CONSIDERED AS PART THEREOF. HE FURTHER TRIED TO EXPLAIN THE FACTS BY DRAWING OUR ATTENTION TO PAGES 5 AND 6 OF THE PAPER BOOK CONTAI NING DETAILS OF EXPENSES HOWEVER ON A QUERY FROM US AS TO WHY FOR M NO. 10CCAC WAS NOT FILED BEFORE US SO AS TO ENABLE US T O FIND OUT THE TRUE NATURE OF THESE EXPENSES AND TO VERIFY THE CLAIMS MADE BY THE ASSESSEE THE LEARNED COUNSEL FAIRLY SUBMITT ED THAT IT WAS NOT AVAILABLE AT THE MOMENT. 7. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT NEITHER THE ASSESSING OFFICER NOR THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAS POINTED OU T SPECIFIC ITEMS WHICH COULD BE CONSIDERED AS INDIRECT EXPENSE S/COSTS ATTRIBUTABLE TO EXPORTS AND THEREFORE WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH AND DECIDE THE SAME AS PER LAW. IT IS NEEDLESS TO MENT ION THAT THE ASSESSING OFFICER SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE WHO SHALL BE AT LIBERTY TO FILE NECESS ARY DETAILS TO SUBSTANTIATE ITS CLAIM. THUS THIS GROUND OF THE R EVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO. 2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN : 2. ALLOWING THE DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT AMOUNTING TO RS.1 51 09 230/- AS AGA INST RS.1 03 02 401/- ALLOWED BY THE ASSESSING OFFICER. 9. THE FACTS IN BRIEF ARE THAT THE ASSESSING OFFI CER WHILE COMPUTING DEDUCTION UNDER SECTION 80IA OF THE ACT H ELD THAT THE PROFIT EARNED FROM TRADING GOODS WAS NOT ELIGIBLE F OR DEDUCTION UNDER SECTION 80IA OF THE ACT HENCE HE REDUCED TH E SAME FROM ELIGIBLE PROFITS. THE ASSESSEE IN APPEAL BEF ORE THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) CONTEN DED THAT THE ASSESSING OFFICER HAD WORKED OUT THE LOSS IN TH E TRADING ACTIVITIES HENCE THE ASSESSEE WAS ENTITLED TO DED UCTION UNDER SECTION 80IB OF THE ACT ON THE HIGHER AMOUNT OF PRO FIT BECAUSE P&L ACCOUNT HAD BEEN PREPARED FOR BOTH THE ACTIVITI ES TOGETHERLY. THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HOWEVER HELD THAT SINCE THE LOSS IN THE TRADING EX PORTS HAD BEEN RECOMPUTED BY HIM AS PROFIT TO THE TUNE OF RS. 36 14 660/- HENCE THE DEDUCTION UNDER SECTION 80IA HAD TO BE GIVEN @ 30% ON SUM OF RS.3 61 97 740/- AND WORKED OUT THE S AME AT RS.1 08 59 322/-. THUS HE GAVE A FURTHER DEDUCTIO N OF RS.5 56 921/-. AGGRIEVED BY THIS THE REVENUE IS I N APPEAL BEFORE US. 10. THE LEARNED DR PLACED STRONG RELIANCE ON THE OR DER OF THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASS ESSEE ON THE OTHER HAND SUPPORTED THE ORDER OF THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). 11. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IN OUR VIEW THE PROFITS OF TRADING GOODS HA VE TO BE EXCLUDED IN COMPUTING THE DEDUCTION UNDER SECTION 8 0IB OF THE ACT. HENCE IN PRINCIPLE WE CONFIRM THE FINDINGS O F THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS). HOWEVER AS A CONSEQUENCE OF OUR FINDINGS ON GROUND NO. 1 IF THE RE COMES ANY LOSS IN THE ACTIVITY OF EXPORT OF TRADING GOODS THEN CONSEQUENTIAL ADJUSTMENT SHALL HAVE TO BE MADE IN T HE PROFITS OF MANUFACTURING UNIT. WE DIRECT THE ASSESSING OFFICE R TO CARRY OUT SUCH DIRECTIONS IN CASE OF NECESSITY. THUS TH E GROUND OF THE REVENUE IS DISMISSED SUBJECT TO THE DIRECTION A S AFORESAID. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. NOW WE SHALL TAKE UP THE ASSESSEES APPEAL IN ITA NO. 34/IND/07. GROUND NOS. 1 AND 2 READ AS UNDER :- 1. THAT THE LEARNED CIT(A) ERRED IN NOT HOLDING TH AT THE AO ERRED IN REOPENING THE ASSESSMENT U/S 148 AND AS SUCH THE ORDER OF ASSESSMENT WAS BAD IN LAW. 2. THAT THE LEARNED CIT(A) ERRED IN NOT DIRECTING T HE A.O. TO DROP THE PROCEEDINGS U/S 152(2). THESE GROUNDS WERE NOT PRESSED AND HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 14. GROUND NO. 3 READS AS UNDER :- THAT THE LEARNED CIT(A) ERRED IN MAINTAINING THE A CTION OF A.O. IN NOT ALLOWING DEDUCTION OF RS.25 28 610/- U/ S 80HHC(1) OF THE ACT. BOTH THE PARTIES FAIRLY AGREED THAT THE ISSUE RAISE D IN THIS GROUND IS IDENTICAL TO THE ISSUE RAISED IN GROUND N O. 1 OF ITA NO. 488/IND/07. HENCE WE RESTORE THIS ISSUE TO THE FIL E OF THE ASSESSING OFFICER ON IDENTICAL LINES. 15. GROUND NO. 4 READS AS UNDER :- THAT THE LEARNED CIT(A) ERRED IN MAINTAINING THE A CTION OF A.O. IN NOT ALLOWING DEDUCTION OF RS.18 88 815/- CL AIMED U/S 80IB. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THIS GROUND THE ISSUE INVOLVED IS AS TO HOW TO COMPUTE T HE PROFITS OF ELIGIBLE INDUSTRIAL UNDERTAKING WHERE A CONSOLIDATE D PROFIT AND LOSS ACCOUNT HAD BEEN PREPARED FOR BOTH TRADING ACT IVITIES AS WELL AS MANUFACTURING ACTIVITIES. HE FURTHER CONT ENDED THAT THE LOSS IN THE EXPORT ACTIVITY OF TRADING GOODS HAD TO BE ADDED TO THE PROFIT OF INDUSTRIAL UNDERTAKING SO AS TO WORK OUT THE CORRECT QUANTUM THEREOF WHICH THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) HAD NOT DONE HENCE HIS ACTION WAS NOT CORRECT IN LAW. 16. ON THE OTHER HAND THE LD. DR STRONGLY PLACED S TRONG RELIANCE ON THE ORDER OF THE LEARNED COMMISSIONER O F INCOMETAX (APPEALS). 17. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUT HORITIES BELOW. IT IS NOTED THAT THE ASSESSEE HAS PREPARED C ONSOLIDATED TRADING AND PROFIT AND LOSS ACCOUNT FOR BOTH THE TR ADING ACTIVITIES AS WELL AS MANUFACTURING ACTIVITIES AND SINCE THERE IS A LOSS IN THE TRADING ACTIVITIES AS COMPUTED IN THE COURSE OF ASSESSMENT PROCEEDINGS HENCE THE PROFITS OF INDUSTRIAL UNDER TAKING HAVE TO BE INCREASED TO COMPUTE THE DEDUCTION UNDER SECTION 80IB OF THE ACT. ACCORDINGLY WE ACCEPT THIS GROUND OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RECOMPUTE THE D EDUCTION UNDER SECTION 80IB OF THE ACT ACCORDINGLY. THUS T HIS GROUND OF THE ASSESSEE IS ALLOWED. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE STAND S PARTLY ALLOWED. 19. NOW WE SHALL TAKE UP THE REVENUES APPEAL IN I TA NO. 17/IND/08. THE ONLY GROUND TAKEN BY THE REVENUE R EADS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS ERRED IN : 1. DIRECTING TO RECOMPUTE DEDUCTION UNDER SECTION 80HHC(1) OF THE INCOMETAX ACT AFTER INCLUDING MISCELLANEOUS INCOME FOR WORKING OUT THE PROFIT OF BUSINESS FOR THE PURPOSE OF CALCULATION OF DEDUCTIO N UNDER SECTION 80HHC OF THE INCOMETAX ACT WHICH WAS RIGHTL Y COMPUTED BY THE AO IN ACCORDANCE WITH LAW AS PER DETAILED DISCUSSION IN THE ASSESSMENT ORDER. BOTH THE PARTIES SUBMITTED THAT THERE WAS SOME MIS- DRAFTING OF THIS GROUND OF APPEAL AND THE ISSUE INVOLVED WAS AS TO HOW THE PROFITS OF TRADING GOODS EXPORTED BY THE ASSESSEE H AD TO BE COMPUTED BY ATTRIBUTING THE INDIRECT COST AS RELEVA NT TO THE TRADING GOODS EXPORTED BY THE ASSESSEE. IT WAS ALSO SUBMITTED THAT MISCELLANEOUS INCOME HAD ALREADY BEEN EXCLUDED BY THE LEARNED COMMISSIONER OF INCOMETAX (APPEALS) IN COMP UTING THE DEDUCTION UNDER SECTION 80HHC OF THE ACT. BOTH THE PARTIES FURTHER SUBMITTED THAT THIS ISSUE WAS IDENTICAL TO THE ISSUE RAISED IN GROUND NO.1 OF THE REVENUES APPEAL IN IT A NO. 488/IND/07 HENCE COULD BE RESTORED TO THE FILE OF THE ASSESSING OFFICER. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH IN T ERMS OF OUR DIRECTIONS GIVEN ON GROUND NO. 1 IN ITA NO. 488/IND /07. 20. IN THE RESULT THE APPEAL OF THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 21. TO SUM UP THE REVENUES APPEAL IN ITA NO. 488/ IND/07 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES THE ASSESS EES APPEAL IN ITA NO. 34/IND/07 IS PARTLY ALLOWED AND THE REVENUE S APPEAL IN ITA NO. 17/IND/08 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON_24THMARCH 20 10 SD SD (JOGINDER SINGH) (V.K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER 24 TH MARCH 2010 COPY TO APPELLANT RESPONDENT CIT CIT(A) DR GUA RD FILE DBN/-