M/S HINDUSTAN ESSENTIAL OIL CO., MUMBAI v. ACIT 14(2), MUMBAI

ITA 3814/MUM/2010 | 2007-2008
Pronouncement Date: 09-09-2011 | Result: Allowed

Appeal Details

RSA Number 381419914 RSA 2010
Bench Mumbai
Appeal Number ITA 3814/MUM/2010
Duration Of Justice 1 year(s) 3 month(s) 27 day(s)
Appellant M/S HINDUSTAN ESSENTIAL OIL CO., MUMBAI
Respondent ACIT 14(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 09-09-2011
Date Of Final Hearing 05-09-2011
Next Hearing Date 05-09-2011
Assessment Year 2007-2008
Appeal Filed On 12-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI P.M. JAGTAP ACCOUNTANT MEMBER I.T.A. NO. 5060/MUM/2010. ASSESSMENT YEAR : 2007-08. DY. COMMISSIONER OF INCOME-TAX M/S HIN DUSTAN ESSENTIAL OIL CO. 14(2) MUMBAI. VS. R.N.6 2 ND FLOOR ANAND BHAVAN BABU GENU ROAD MUMBAI -400 002. APPELLANT. RESPONDENT. I.T.A. NO. 3814/MUM/2010. ASSESSMENT YEAR : 2007-08. M/S HINDUSTAN ESSENTIAL OIL CO. AS STT. COMMISSIONER OF INCOME-TAX MUMBAI. VS. 14(2) MUMBAI. APPELLANT. RESPONDENT. DEPARTMENT BY : SHRI GOLI SRINIWAS RAO. ASSESSEE B Y : SHRI BIKASH KUMAR BOGI. DATE OF HEARING : 05-09-2011 DATE OF PRONOUNCEMENT : O R D E R. PER P.M. JAGTAP A.M. : THESE TWO APPEALS ONE FILED BY THE ASSESSEE BEING ITA NO. 3814/MUM/2010 AND OTHER FILED BY THE REVENUE BEING ITA NO. 5050/M UM/2010 ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT (APPEALS)-25 MUMBAI DATED 22-03-2010. 2 ITA NO.5060/MUM/2010 ITA NO.3814/MUM/2010 ASSESSMENT YEAR:2007-08. 2. FIRST WE SHALL TAKE UP THE REVENUES APPEAL WHIC H INVOLVES A SOLITARY ISSUE RELATING TO ASSESSEES CLAIM FOR DEDUCTION U/S 10B. 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS MAINLY ENGAGED IN THE BUSINESS OF MANUFACTURING OF ESSENTI AL OIL FOR PERFUMERY COMPOUNDS ETC. THE SAID ACTIVITY IS BEING CARRIED O UT BY THE ASSESSEE IN ITS NILAKOTTAI UNIT AND DEDUCTION IN RESPECT OF PROFIT DERIVED FROM THE SAID UNIT DURING THE YEAR UNDER CONSIDERATION AMOUNTING TO RS.2 17 1 4 094/- WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 14 TH DEC. 2009 THE CLAIM OF THE ASSESSEE FOR THE SAID DEDUCTION WAS DISALLOWED BY THE AO ON THE GROUND THAT SIMILAR CLAIM OF THE ASSESSEE HAD BEEN DISALLOWED I N THE ASSESSMENTS COMPLETED FOR EARLIER YEARS. ON APPEAL THE LEARNED CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B AFTER HAVING FOUND T HAT A SIMILAR DEDUCTION CLAIMED BY THE ASSESSEE IN THE EARLIER YEARS I.E. ASSESSMEN T YEARS 2003-04 AND 2004-05 WAS ALLOWED BY HIS PREDECESSOR. HE ALSO NOTED THAT EVEN THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 HAS DECIDED A SIMI LAR ISSUE IN FAVOUR OF THE ASSESSEE UPHOLDING THE ORDER OF THE LEARNED CIT(APP EALS) ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B. FOLLOWING THE SAID DECISIONS THE LEARNED CIT(APPEALS) DIRECTED THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B IN RESPECT OF PROFITS DERIVED FROM NILAKOTTAI U NIT FOR THE YEAR UNDER CONSIDERATION. 4. AT THE TIME OF HEARING BEFORE US THE LEARNED RE PRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE INVOLVED IN THE APPEAL OF THE REVENUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003-04 VIDE ITS ORDER DATED 2 ND DEC. 2009 PASSED IN ITA NO. 3 ITA NO.5060/MUM/2010 ITA NO.3814/MUM/2010 ASSESSMENT YEAR:2007-08. 3953/MUM/2008 WHEREIN IT WAS HELD THAT THE AO WAS N OT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B MERELY ON THE GROUND THAT THE ASSESSEES MANUFACTURING ACTIVITY WAS ONLY A BLENDI NG OF VARIOUS OILS. IT WAS HELD THAT THE OUTPUT OF BLENDING PROCESS WAS COMMERCIALL Y DIFFERENT PRODUCTS FROM THE RAW MATERIALS USED IN THE PROCESS AND THE ACTIVITY OF THE ASSESSEE THUS WAS A MANUFACTURING ACTIVITY AS RIGHTLY HELD BY THE LEARN ED CIT(APPEALS). IT WAS HELD THAT THE ASSESSEE THEREFORE WAS ENTITLED TO CLAIM DEDU CTION U/S 10B IN RESPECT OF PROFIT DERIVED FROM NILAKOTTAI UNIT. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO ASSESSMENT YEAR 2003-04 WE RESPECTFULLY FOLLOW THE ORDER OF THE TR IBUNAL FOR ASSESSMENT YEAR 2003-04 (SUPRA) AND UPHOLD THE IMPUGNED ORDER OF TH E LEARNED CIT(APPEALS) DIRECTING THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 10B. THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 5. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE WHICH INVOLVES A SOLITARY ISSUE RELATING TO APPORTIONMENT OF EXPENSES OF MUMB AI OFFICE TO NILAKOTTAI UNIT FOR THE PURPOSE OF WORKING OUT THE PROFIT OF NILAKOTTAI UNIT ELIGIBLE FOR DEDUCTION U/S 10B. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS AGREED BY THE LEARNED REPRES ENTATIVES OF BOTH THE SIDES THIS ISSUE IN PRINCIPLE IS SQUARELY COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE TRIBUNAL RENDERED IN ASSESSEES OWN CASE FOR ASSESS MENT YEAR 2003-04 (SUPRA) WHEREIN IT WAS HELD THAT THE EXPENSES OF MUMBAI OFF ICE WERE LIABLE TO BE APPORTIONED TO NILAKOTTAI UNIT IN THE RATIO OF TURN OVER FOR THE PURPOSE OF DETERMINING THE PROFIT OF THE SAID UNIT ELIGIBLE FO R DEDUCTION U/S 10B. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER HAS SUBMITTED TH AT KEEPING IN VIEW THE DECISION 4 ITA NO.5060/MUM/2010 ITA NO.3814/MUM/2010 ASSESSMENT YEAR:2007-08. OF THE APPELLATE AUTHORITIES ON A SIMILAR ISSUE IN THE EARLIER YEARS THE EXPENSES OF MUMBAI OFFICE WERE ALREADY APPORTIONED BY THE ASSES SEE TO NILAKOTTAI UNIT IN THE RATIO OF TURNOVER WHILE DECLARING PROFIT OF THE SAI D UNIT ELIGIBLE FOR DEDUCTION U/S 10B. HE HAS CONTENDED THAT THE AO AS WELL AS LEARNE D CIT(APPEALS) HOWEVER AGAIN APPORTIONED THE EXPENSES OF MUMBAI OFFICE TO NILAKOTTAI UNIT IN THE RATIO OF TURNOVER WHICH HAS RESULTED IN SUCH APPORTIONMENT T WICE. IN THIS REGARD THE LEARNED DR HAS SUBMITTED THAT THIS ASPECT WAS NEVER BROUGHT TO THE NOTICE OF EITHER THE AO OR THE LEARNED CIT(APPEALS) BY THE ASSESSEE AND IF THE SAME IS TO BE ENTERTAINED BY THE TRIBUNAL AN OPPORTUNITY MAY BE GIVEN TO THE DEPARTMENT TO VERIFY THIS STAND TAKEN BY THE LEARNED COUNSEL FOR THE ASSESSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. WE FIND MERIT IN THIS CONTENTI ON OF THE LEARNED DR. THIS ISSUE IS THEREFORE RESTORED TO THE FILE OF THE AO FOR T HE LIMITED PURPOSE OF VERIFYING THE STAND TAKEN BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT APPORTIONMENT OF EXPENSES OF MUMBAI OFFICE TO NILAKOTTAI UNIT WAS ALREADY MAD E IN THE RATIO OF TURNOVER WHILE DECLARING PROFIT OF THE SAID UNIT ELIGIBLE FOR DEDU CTION U/S 10B. DEPENDING ON THE OUTCOME OF THE SAID VERIFICATION THE AO SHALL ALLO W APPROPRIATE RELIEF TO THE ASSESSEE. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED WHEREAS THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 9 TH DAY OF SEPT. 2011. SD/- SD/- (R.V. EASWAR) (P.M. J AGTAP) PRESIDENT. ACC OUNTANT MEMBER MUMBAI DATED: 9 TH SEPT. 2011. 5 ITA NO.5060/MUM/2010 ITA NO.3814/MUM/2010 ASSESSMENT YEAR:2007-08. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI BENC HES MUMBA I. WAKODE