INDOCO REMEDIES LTD, MUMBAI v. ACIT CEN CIR 34, MUMBAI

ITA 3587/MUM/2010 | 2007-2008
Pronouncement Date: 08-07-2011 | Result: Allowed

Appeal Details

RSA Number 358719914 RSA 2010
Assessee PAN AAACI0380C
Bench Mumbai
Appeal Number ITA 3587/MUM/2010
Duration Of Justice 1 year(s) 2 month(s) 2 day(s)
Appellant INDOCO REMEDIES LTD, MUMBAI
Respondent ACIT CEN CIR 34, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 08-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 08-07-2011
Date Of Final Hearing 04-07-2011
Next Hearing Date 04-07-2011
Assessment Year 2007-2008
Appeal Filed On 06-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI T.R. SOOD (AM) AND SHRI VIJAY PAL RAO (JM) I.T.A.NO.3587/MUM/2010 ASSESSMENT YEAR: 2007-08 INDOCO REMEDIES LIMITED INDOCO HOUSE 166 C.S.T. ROAD SANTACRUZ EAST MUMBAI 400 098. PAN: AAACI 0380 C VS. THE ASST. COMMISSIONER OF INCOME- TAX CENTRAL CIRCLE 34 AAYAKAR BHAVAN M.K. MARG MUMBAI 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PANKAJ JAIN RESPONDENT BY : SHRI SUNIL KUMAR SINGH O R D E R PER T.R. SOOD AM: IN THIS APPEAL THE ASSESSEE HAS RAISED VARIOUS GR OUNDS OF APPEAL BUT AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT ONLY THE FOLLOWING DISPUTES ARE INVOLVED : (1) DEPRECIATION HAS BEEN ALLOWED @ 15% FOR UPS AND PR OJECTOR (2) DISALLOWANCE UNDER SECTION 14A (3) (A) CONFIRMATION OF THE ACTION OF AO IN TREATING TH E EXPORT INCENTIVE AND SCRAP SALES AS PROFIT NOT DERIVED FRO M ELIGIBLE UNDERTAKINGS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S.80IB. (B) DISPUTES REGARDING ALLOCATION OF EXPENSES AMONG VARIOUS UNITS. (4) CONFIRMING THE ACTION F THE AO IN TREATING THE INSU RANCE CLAIM DISCOUNT AND SCRAP SALES AS NOT INCOME ARRIVED FRO M BADDI UNIT FOR THE PURPOSE OF DEDUCTION U/S.80IC. ISSUE NO.1 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSEE HAD CLAIMED 60% DEPRECIATION ON PURCHASE OF UPS AND PROJECTOR AS ACCORDING TO THE ASSESSEE THEY WERE PART OF THE COMPUTER. HOWEVER AO OBSERV ED THAT SAME ARE NOT PART OF ITA NO.3587/MUM/2010 INDOCO REMEDIES LTD. 2 THE COMPUTER AND ALLOWED ONLY 15% DEPRECIATION. THE ACTION OF THE AO WAS CONFIRMED BY THE LEARNED CIT(A). 3. THE LEARNED COUNSEL REFERRED TO THE DECISION OF THE DELHI BENCH IN THE CASE OF EXPEDITORS INTERNATIONAL (INDIA) LTD. V.AD DL. CIT (118 TTJ 652(DEL.) WHEREIN IT WAS HELD THAT PERIPHERALS SUCH AS PRINTE RS SCANNERS NT SERVER ETC. SHOULD ALSO BE ALLOWED DEPRECIATION @ 60%. 4. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT AS FAR AS THE PROJECTOR IS CONCERNED THE SAME CANNOT BE TREATED AS PERIPHERALS OF THE COMPUTER AND WAS NOT IN THE NATU RE OF PRINTER AND SCANNER ETC. IN THE REJOINDER THE LEARNED COUNSEL FOR THE ASSE SSEE SUBMITTED THAT PROJECTOR WAS ALSO USED FOR MAKING PRESENTATION THR OUGH COMPUTER AND SHOULD BE CONSIDERED AS PERIPHERAL OF THE COMPUTER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF EXPEDITO RS INTERNATIONAL (INDIA) (P) LTD. (SUPRA) IT WAS HELD THAT DEPRECIATION WAS ALLOWABL E @ 60% EVEN IN THE PERIPHERALS OF COMPUTERS SUCH AS PRINTERS SCANNERS NT SERVER ETC. WE ARE OF THE OPINION THAT UPS WOULD ALSO FORM PART OF THE PERIPH ERAL OF THE COMPUTER BECAUSE UPS IS USED ONLY AS A STAND-BY FOR OPERATION OF THE COMPUTER AND NO OTHER PURPOSE. HOWEVER AS FAR AS PROJECTOR IS CONCERNED IT CANNOT BE CONSIDERED AS PART OF THE COMPUTER SYSTEM BECAUSE PROJECTOR CAN B E USED INDEPENDENTLY FOR OTHER PURPOSES. IT MAY BE USED ALONG WITH THE COMPU TER BUT THAT WILL NOT MAKE IT AS PERIPHERAL OF COMPUTER. THEREFORE WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND HOLD THAT THE ASSESSEE IS ENTITLED TO 60 % DEPRECIATION ONLY IN RESPECT OF UPS. THE ORDER OF THE LEARNED CIT(A) IS CONFIRM ED AS FAR AS THE ISSUE REGARDING CONFIRMATION OF DEPRECIATION @15% IN RESPECT OF PRO JECTOR. THEREFORE THIS GROUND IS PARTLY ALLOWED. ITA NO.3587/MUM/2010 INDOCO REMEDIES LTD. 3 ISSUE NO. 2: 6. AFTER HEARING BOTH THE PARTIES WE FIND DURING THE ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAD EARNED CERTAIN DIVIDEND INCOME WHICH WAS EXEMPT FROM TAX. THE AO INVOKED SECTION 14A AND RUL E 8D AND DISALLOWED THE PROPORTIONATE INTEREST AND EXPENSES. THE ACTION OF THE AO WAS CONFIRMED BY THE LEARNED CIT(A). 7. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO.LTD. V. DCIT(328 ITR 81) HAS HELD THAT RULE 8D HAS NO RETRO SPECTIVE APPLICATION. 8. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT THE COURT HAS FURTHER HELD IN THE ABOVE CASE T HAT REASONABLE DISALLOWANCE CAN BE MADE. 9. AFTER CONSIDERING RIVAL SUBMISSIONS WE FIND THA T THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE MFG. CO. LTD. (SUPRA) HAS HELD THAT RULE 8D WILL NOT HAVE RETROSPECTIVE APPLICATION AND THE COU RT FURTHER HELD THAT THE AO HAD THE POWER TO MAKE REASONABLE DISALLOWANCE. THEREFOR E WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO COMPUTE THE DISALLOWANCE U/S.14A IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODREJ AND BOYCE M FG . CO. LTD. (SUPRA). THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. ISSUE NO. 3(A) 10. DURING THE ASSESSMENT PROCEEDINGS THE AO HELD CERTAIN SUMS TO BE NOT PART OF THE INCOME DERIVED FROM GOA UNIT FOR THE PU RPOSE OF DEDUCTION U/S.80IB. OUT OF THESE AMOUNTS THE ASSESSEE HAS CHALLENGED O NLY 2 ISSUES BEFORE US PERTAINING TO A SUM OF ` 14 39 379/- ON ACCOUNT OF EXPORT INCENTIVES AND ` 33 194/- ON ACCOUNT OF SCRAP SALES. THESE AMOUNTS W ERE NOT ALLOWED EVEN BY THE LEARNED CIT(A). ITA NO.3587/MUM/2010 INDOCO REMEDIES LTD. 4 11. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAIRLY CONCEDED THAT THIS ISSUE HAS BEEN DECIDED BY THE LEARNED CIT(A) B Y FOLLOWING THE OF THE EARLIER YEARS AGAINST THE ASSESSEE AND HE HAS NOTHING FURTH ER TO ADD. 12. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUPPORTED THE ORDER OF THE LEARNED CIT(A). 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIN D THAT THE LEARNED CIT(A) HAS CORRECTLY DECIDED THIS ISSUE AGAINST THE ASSESS EE BY FOLLOWING THE EARLER YEAR ORDER OF THE TRIBUNAL AND IN ANY CASE THESE ITEMS C ANNOT BE SAID TO HAVE BEEN DERIVED FROM INDUSTRIAL UNDERTAKING. THEREFORE WE CONFIRM THE ORDER OF THE LEARNED CIT(A). ISSUE NO. 3(B) 14. AFTER HEARING BOTH THE PARTIES WE FIND THAT WH ILE COMPUTING THE DEDUCTION U/S.80IC IN RESPECT OF BADDI UNIT SOME EX PENSE WERE RE-ALLOCATED BY THE AO. 15. THE LEARNED CIT(A) ALLOWED SOME RELIEF TO THE A SSESSEE. 16. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS SOME CONFUSION REGARDING THE FIGURES PERTAINING TO THE UNIT ELIGIBLE FOR DEDUCTION U/S.80IB AND THE UNITS ELIGIBLE FOR DEDUCTION U/S.8 0IC. THE LEARNED COUNSEL FOR THE ASSESSEE HAS FAIRLY CONCEDED THAT HE HAS NO GRIEVAN CE AGAINST THE MERIT OF THE ISSUE AND WRONG MENTIONING OF THE FIGURES BY THE LE ARNED CIT(A) CAN PERHAPS BE RECTIFIED. 17. ON THE OTHER HAND THE LEARNED DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT THE WRONG FIGURES CAN BE RECTIFIED BY THE LEAR NED CIT(A) AND THE TRIBUNAL NEED NOT GIVE ANY DIRECTION. 18. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE OBS ERVE THAT IF SOME FIGURES HAVE BEEN WRONGLY MENTIONED BY THE LEARNED CIT(A) THE SAME MAY BE GOT RECTIFIED BY THE LEARNED CIT(A) BY MOVING AN APPLIC ATION U/S.154 AND AS POINTED ITA NO.3587/MUM/2010 INDOCO REMEDIES LTD. 5 OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE HE DOE S NOT WISH TO RAISE ANY ARGUMENT IN RESPECT OF THE MERITS OF THE CLAIM AND THEREFORE THIS ISSUE HAS BECOME INFRUCTUOUS AND ACCORDINGLY DISMISS THE SAME . ISSUE NO. 4: 19. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT INSURANCE CLAIM DISCOUNT AND SCRAP SALES TOTALING TO ` 3 94 206/- CANNOT BE SAID TO HAVE BEEN DERIVED FROM BADDI UNIT FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.80IC. 20. THE ACTION OF THE ASSESSING OFFICER WAS CONFIRM ED BY THE LEARNED CIT(A). 21. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LEARNED CIT(A) HAS CORRECTLY DECIDED THE ISSUE BY F OLLOWING THE EARLIER ORDERS OF THE TRIBUNAL. 22. ON THE OTHER HAND THE LEARNED DEPARTMENTAL RE PRESENTATIVE SUPPORTED THE ORDER OF THE CIT(A). 23. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LEAR NED COUNSEL FOR THE ASSESSEE HAS CONCEDED THAT THE ORDER OF THE LEARNED CIT(A) IS JUSTIFIED. THEREFORE WE DISMISS THIS GROUND. 24. IN THE RESULT THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF JULY 2011. SD. SD. (VIJAY PAL RAO) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED THE 8 TH JULY 2011. KN COPY TO: 1. THE ASSESSEE 2. THE REVENUE 3. THE DIT (INTL. TAXATION) MUMBAI. 4. THE CIT(A)-11 MUMBAI 5. THE DR I BENCH MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR ITAT MUMBAI