M/s Mahajan Conveyor Industries, Kangra v. ITO, Nurpur

ITA 350/CHANDI/2011 | 2007-2008
Pronouncement Date: 02-02-2012 | Result: Allowed

Appeal Details

RSA Number 35021514 RSA 2011
Assessee PAN AANFM3447Q
Bench Chandigarh
Appeal Number ITA 350/CHANDI/2011
Duration Of Justice 9 month(s) 27 day(s)
Appellant M/s Mahajan Conveyor Industries, Kangra
Respondent ITO, Nurpur
Appeal Type Income Tax Appeal
Pronouncement Date 02-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 02-02-2012
Date Of Final Hearing 27-10-2011
Next Hearing Date 27-10-2011
Assessment Year 2007-2008
Appeal Filed On 05-04-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL: A BENCH: CH ANDIGARH BEFORE SHRI H L KARWA VP AND SHRI D K SRIVASTAVA AM ITA NO. 349/CHD/2011 ASSESSMENT YEAR 2006-07 M/S MAHAJAN CONVEYER INDUSTRIES V. ADDL D.C.I.T. PALAMPUR TEHSIL INDORA KANGRA AANFM 3447 Q ITA NO. 344/CHD/2011 ASSESSMENT YEAR 2007-08 I.T.O. NURPUR (HP) V. M/S MAHAJAN CONVEYER INDUS TRIES INDL AREA BAIN ATTARIAN TEHSIL INDORA KANGRA ITA NO. 350/CHD/2011 ASSESSMENT YEAR 2007-08 M/S MAHAJAN CONVEYER INDUSTRIES V. I.T.O. NURPUR TEHSIL INDORA KANGRA DEPARTMENT BY : SHRI N.K. SAINI ASSESSEE BY: SHRI J.S. BHASIN DATE OF HEARING: 05.12.2011 DATE OF PRONOUNCEMENT: 02.02.2012 ORDER D K SRIVASTAVA: APPEAL BEARING ITA NO. 349/CHD/2011 IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) ON 24.1. 2011 FOR AY 2006-07 WHILE THE OTHER TWO CROSS-APPEALS FILED BY THE ASSE SSEE AND THE DEPARTMENT ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) FOR AY 2007-08 ON 24.1.2011. MOST OF THE ISSUES IN THE PRESENT BUNCH OF APPEALS ARE COMMON. WE THEREFORE FIND IT CONVENIEN T TO DISPOSE THEM OFF BY A CONSOLIDATED ORDER. 2. IN ITA NO. 349/CHD/2011 THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1 THAT THE IMPUGNED ORDER OF LD. CIT(A) DISMISSING THE ASSESSEES APPEAL ON ALL THE GROUNDS RAISED BEING MOST CRYPTIC SKETCHY NON SPEAKING ARBITRARY AND PASSED WITHOUT CONSIDERED THE ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 2 DETAILED WRITTEN SUBMISSIONS OF ASSESSEE IS PER SE NOT SUSTAINABLE AND LIABLE TO BE HELD AS VOID AB INITO. 2. THAT WITHOUT PREJUDICE TO ABOVE THE LD. CIT(A) IN THE GIVEN FACTS OUGHT TO HAVE ALLOWED THE ASSESSEES CONTENT ION THAT THE ASSESSMENT ORDER SUFFERED FROM THE VICE OF LIMITATI ON. 3. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDI NG THE REFERENCE MADE TO DVO U/S 142A BUY THE AO WITHOUT F INDING ANY FAULT IN THE BOOKS OF ASSESSEE. 4. THAT THE ADDITION OF RS. 79 965/- TOWARDS THE AL LEGED DIFFERENCE IN VALUATION OF FACTORY BUILDING HAS BEE N WRONGLY SUSTAINED. 5. THAT EVEN OTHERWISE THE ABOVE DIFFERENCE BEING WELL WITHIN 10% OF THE COST IT OUGHT TO HAVE BEEN IGNORED. CO NTRARY FINDINGS OF THE LD. CIT(A) ARE SIMPLY UNTENABLE. 6. THAT THE MOST ARBITRARY ADVERSE AND PERVERSE OB SERVATIONS MADE BY THE LD. ADDL CIT IN THE SHAPE OF ADVANCE R ULING ON ASSESSEES ENTITLEMENT TO DEDUCTION U/S 80IC WHEN H E AS NOT SEIZED OF THE ISSUE OUGHT TO HAVE BEEN NULLIFIED B Y THE LD. CIT(A). 7. THAT THE ORDERS OF THE AUTHORITIES BELOW ARE AG AINST LAW AND FACTS OF THE CASE AND HENCE NOT SUSTAINABLE. 3. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS FIRST THREE GROUNDS OF APPEAL THEY ARE THERE FORE DISMISSED AS NOT PRESSED. 4. AS REGARDS THE ISSUES IN GROUND NOS. 4 AND 5 TH E LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DIFFERENCE IN COST ESTIMATED BY THE ASSESSEE AND THE VALUATION DONE BY THE DVO IS ONLY RS. 79 965/- WHICH WORKS OUT TO 8.44%. HE SUBMITTED THAT THE AFORESAI D DIFFERENCE IN VALUATION IS ON ACCOUNT OF ESTIMATION AND OPINION O F THE DEPARTMENTAL VALUATION OFFICER AND HENCE SHOULD BE TREATED WITHI N THE LIMITS OF TOLERANCE AS HELD IN ITO V. JMP ENTERPRISES 203 IT R 62 (AT) AND ALSO IN A DECISION OF THE HON'BLE PATNA HIGH COURT IN 18 DT R (PAT) 283. 5. IN REPLY THE LD. DR SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 3 6. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. ACCORDING TO THE ASSESSEE THE DIFFERE NCE IN COST ESTIMATED BY THE ASSESSEE AND THE DVO WORKS OUT TO LESS THAN 10%. THE AFORESAID SUBMISSION HAS NOT BEEN REBUTTED BY THE DEPARTMENT. IT HAS BEEN HELD IN THE DECISIONS CITED BY THE LD. COUNSEL FOR THE A SSESSEE THAT THE DIFFERENCE IN THE VALUATION TO THE EXTENT OF 10% IS WITHIN THE LIMITS OF TOLERANCE. IN THIS VIEW OF THE MATTER GROUND NOS. 4 AND 5 TAKEN BY THE ASSESSEE ARE ALLOWED. 7. APROPOS GROUND NO. 6 THE LD. CIT(A) HAS HELD AS UNDER:- 5 GROUND NO. 6 IS DIRECTED AGAINST THE OBSERVATION MADE REGARDING DEDUCTION U/S 80IC IS DISMISSED IN VIEW O F THE FACT THAT THIS IS ONLY AN OBSERVATION AND NO ADDITION HAS BEE N MADE ON THIS ACCOUNT. 8. AFTER HEARING BOTH THE PARTIES WE ARE IN AGREEM ENT WITH THE AFORESAID DECISION OF THE LD. CIT(A). GROUND NO. 6 IS THEREFORE DISMISSED. 9. GROUND NO. 7 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION. 10. APPEAL FILED BY THE ASSESSEE FOR AY 2006-07 IS PARTLY ALLOWED. 11. IN ITA NO. 350/CHD/2011 THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1 THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN SUSTAIN ING THE ADDITION OF RS. 57 814/- TOWARDS THE ALLEGED DIFFER ENCE IN COST OF CONSTRUCTION OF FACTORY BUILDING EVEN WHEN THIS IS SUE WAS NEVER CONFRONTED TO ASSESSEE DURING ASSESSMENT. 2. THAT THE ADDITION OF RS. 57 814/- TOWARDS THE AL LEGED DIFFERENCE IN VALUATION OF FACTORY BUILDING HAS BEE N WRONGLY SUSTAINED. ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 4 3. THAT EVEN OTHERWISE THE ABOVE DIFFERENCE BEING WELL WITHIN 10% OF THE COST IT OUGHT TO HAVE BEEN IGNORED. CO NTRARY FINDINGS OF THE LD. CIT(A) ARE SIMPLY UNTENABLE. 4. THAT THE ORDERS OF THE AUTHORITIES BELOW ARE AG AINST LAW AND FACTS OF THE CASE AND HENCE NOT SUSTAINABLE. 12. THE ISSUE RAISED IN THE AFORESAID GROUNDS OF AP PEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY OUR DECISION FOR AY 2006- 07. FOLLOWING THE SAME THE APPEAL FOR AY 2007-08 IS ALLOWED. 13. IN ITA NO. 344/CHD/2011 THE DEPARTMENT HAS TAK EN THE FOLLOWING GROUNDS OF APPEAL: 1 ON THE FACTS AND IN THE CIRCUMSTANCES THE LD. C IT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS. 90 74 399/- U/S 80IC EVEN THROUGH THE ASSESSEE MANUFACTURES SYNTHETIC RUBBER PRODUCTS THAT ARE INCLUDED IN SCHEDULE XIII OF THE ACT. 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD ANY OTHER GROU ND OF APPEAL WHICH MAY ARISE AT THE TIME OF HEARING. 14. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING CONVEYER A ND TRANSMISSION BELTS. THE ASSESSEE CLAIMED DEDUCTION U/S 80IC IN RESPECT OF PROFITS FROM THE AFORESAID BUSINESS WHICH WAS DISALLOWED BY THE AO WITH THE FOLLOWING OBSERVATIONS:- IN REPLY DATED 15.12.2009 (PLACED ON RECORD) IT WA S SUBMITTED THAT THE ASSESSEE WAS MANUFACTURING CONVEYER AND T RANSMISSIONS BELTS WHICH WERE COVERED UNDER EXCISE TARIFF CLASSI FICATION 40.10 OF CENTRAL EXCISE ACT AND ITEM OF EXCISE TARIFF 40.10 IS NOT THERE IN SCHEDULE 13. THE SYNTHETIC RUBBER PRODUCT IS UNDER HEADING 40.02 IN SCHEDULE 13. IT WAS FURTHER SUBMITTED THAT THE NIC CLASSIFICATION OF SYNTHETIC RUBBER PRODUCTS IN SCHE DULE 13 IS 24131 WHEREAS AS PER INDUSTRIAL REGISTRATION OF THE ASSES SEE THE NIC CLASSIFICATION IS 66116. THE ASSESSEE ALSO ENCLOSE D THE PROJECT REPORT APPROVAL BY THE GMDIC DHARAMSHALA AND THE P HOTO COPY OF PROVISIONAL REGISTRATION CERTIFICATE. THE ASSESSEE PRODUCED THE ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 5 PHOTOCOPIES OF ALL THE PURCHASE BILLS OF THE RAW MA TERIAL REQUIRED FOR MANUFACTURE OF THE CONVEYER BELTS. THE RAW MATERIAL USED BY THE ASSESSEE AS PER PERMA NENT REGISTRATION CERTIFICATION ISSUED BY THE GMDIC IS R AW RUBBER CLOTH (NYLON FABRIC) ZINC OXIDE AND CHEMICALS. BU T THE PERUSAL OF THE PURCHASE BILLS REVEALS THAT THE ASSESSEE MADE S OME PURCHASES OTHER THAN THE RAW MATERIAL MENTIONED IN THE DIC CE RTIFICATE FROM SOME DEALERS WHO DEAL IN SYNTHETIC RUBBER PRODUCTS. USE OF SYNTHETIC RUBBER EVEN IN SMALL FRACTION WILL MAKE THE PRODUCT SYNTHETIC RUBBER PRODUCTS AS IN THE CASE OF PAN MAS ALA CONTAINING TOBACCO IS CONSIDERED A TOBACCO PRODUCT WOULD FALL UNDER THE CATEGORY OF SYNTHETIC RUBBER PRODUCTS IN ITEM 11 OF SCHEDULE 13 OF THE INCOME-TAX ACT. AS SUCH DEDUCTION CLAIMED AT R S. 9074399/- U/S 80IC IS NOT ALLOWABLE. 15. ON APPEAL THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS:- 4 THE FACTS AS WELL AS THE SUBMISSIONS OF THE APPE LLANT HAVE BEEN CONSIDERED BY THE UNDERSIGNED. THE APPELLANT S MAIN PLEA IS THAT THE ITEM MANUFACTURED BY HIM DOES NOT FALL UND ER THE LIST OF BANNER ITEMS UNDER EXCISE TARIFF CLASSIFICATION IN SCHEDULE 13. THE CLASSIFICATION IS AS UNDER:- SCHEDULE 13 PART B SR NO. ACTIVITY/ARTICILE OR THING EXCISE CIF. SUB CLASS UNDER NIC 11 SYNTHETIC RUBBER 40.02 24231 AS AGAINST 40.02 THE EXCISE CLASSIFICATION OF THE APPELLANTS PRODUCT IS 40.10. THE NIC CLASSIFICATION OF CONVEY ER AND TRANSMISSION BELTS MANUFACTURED BY THE APPELLANT WA S 66116 AS AGAINST 24131 OF SYNTHETIC RUBBER PRODUCTS. THE AP PELLANTS PRODUCT DOES NOT QUALIFY UNDER SCHEDULE 13 ITEMS WH ICH ARE BANNED IN THE STATE OF H.P. MOREOVER THE AO HAS GI VEN NO CATEGORICAL FINDING AS TO THE PRESENCE OF SYNTHETIC RUBBER IN THE PRODUCT OF THE APPELLANT. SHE HAS NOT PROVED THAT THE APPELLANT IS USING SYNTHETIC RUBBER IN HIS PRODUCT. THE AO HAS NOT BROUGHT ANY OTHER MATERIAL ON RECORD TO PROVE THAT THE APPELLAN TS PRODUCT FALLS UNDER SCHEDULE 13. THEREFORE THE DISALLOWANCE OF D EDUCTION U/S ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 6 80IC IS NOT CALLED FOR. THE APPELLANT SUCCEEDS ON THESE GROUNDS OF APPEAL. 16. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THEIR SUBMISSIONS. SL NO. 11 IN PART B OF THIRTEENTH SCH EDULE READS AS UNDER:- SL ACTIVITY OR ARTICLE OR EXCISE SUB-CLASS UNDER NO THING CLASSIFICATION NATIONAL INDUSTR IAL CLASSIFICATION (NIC) 1998 11. SYNTHETIC RUBBER PRODUCTS 40.02 24131 17. PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT IT W AS SPECIFICALLY BROUGHT TO THE NOTICE OF THE AO THAT THE PRODUCT MA NUFACTURED BY THE ASSESSEE DOES NOT FALL UNDER SL NO. 11 OF PART B OF THIRTEENTH SCHEDULE. THE AO HAS NOT REBUTTED THE AFORESAID SUBMISSIONS M ADE BY THE ASSESSEE. THE LD. CIT(A) HAS GIVEN COGENT REASONS FOR DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE. THERE IS NO MATERI AL ON RECORD TO HOLD THAT THE PRODUCT MANUFACTURED BY THE ASSESSEE WAS S YNTHETIC RUBBER PRODUCT FALLING UNDER THE SPECIFIED EXCISE CLASSIFI CATION AND NATIONAL INDUSTRIAL CLASSIFICATION. IN THIS VIEW OF THE MAT TER WE CONFIRM THE ORDER PASSED BY THE LD. CIT(A). APPEAL FIELD BY TH E DEPARTMENT IS DISMISSED. ORDER PRONOUNCED ON 02.02.2012 SD/- SD/- (H L KARWA) (D K SRIVAST AVA) VICE PRESIDENT ACCOUNANT MEMBER CHANDIGARH 02.02.2012 SURESH COPY TO: 1. THE APPELLANT MAHAJAN CONVEYER INDUSTRIES 2. THE RESPONDENT ITO/ADDL DCIT 3. THE CIT SHIMLA 4. THE CIT(A) SHIMLA 5. THE D.R INCOME-TAX DEPARTMENT CHANDIGARH ASSISTANT REGISTRAR ITAT CHANDIGARH ITA NOS. 344 349 AND 350/CHD/2011 ITO V. MAHAJAN CONVEYOR MAHAJAN CONVEYOR V. ADDL CIT 7