ACIT, Panipat v. M/s. Accent for Living, Panipat

ITA 4153/DEL/2009 | 2002-2003
Pronouncement Date: 09-07-2010 | Result: Dismissed

Appeal Details

RSA Number 415320114 RSA 2009
Bench Delhi
Appeal Number ITA 4153/DEL/2009
Duration Of Justice 8 month(s) 17 day(s)
Appellant ACIT, Panipat
Respondent M/s. Accent for Living, Panipat
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 09-07-2010
Date Of Final Hearing 30-06-2010
Next Hearing Date 30-06-2010
Assessment Year 2002-2003
Appeal Filed On 22-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL I.T.A. NOS. 4153 & 4154/DEL/2009 ASSESSMENT YEARS: 2002-03 & 2004-0 5 ASSISTANT COMMISSIONER OF IT VS. M/S. ACCENT FOR LIVING PANIPAT CIRCLE G.T. ROAD PANIPAT. PANIPAT (APPELLANTS) (RESPONDENT) DEPARTMENT BY: MS. PRATIMA KAUS HIK SR.DR ASSESSEE BY : SHR I SATISH GOEL ADV. ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF REVENUE AGAINST THE SEPARATE ORDERS OF EVEN DATE I.E. 20.8.2009 PAS SED BY THE LEARNED CIT(APPEALS) FOR ASSESSMENT YEAR 2002-03 AND 2004-0 5. THE SOLITARY GRIEVANCE OF THE REVENUE IN BOTH THE APPEALS RELATE S TO DELETION OF PENALTY BY THE LEARNED CIT(APPEALS) WHICH WAS LEVIED UNDER SEC . 271(1)(C) OF THE INCOME-TAX ACT 1961 BY THE ASSESSING OFFICER. THE FACTS LEADING TO THE LEVY OF PENALTY ON ALL VITAL POINTS ARE COMMON IN BOTH T HE ASSESSMENT YEARS THEREFORE FOR THE FACILITY OF REFERENCE WE ARE MA INLY TAKING UP THE FACTS FROM ASSESSMENT YEAR 2002-03. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE MANUFACTURE AND EXPORT OF METAL PRODUCTS AND TE XTILES PRODUCTS. IT HAS FILED ITS RETURN OF INCOME ON 31.10.2002 DECLARING AN INCOME OF RS.20 82 910 IN ASSESSMENT YEAR 2002-03. THE RETURN IN ASSESSMENT YEAR 2004-05 WAS FILED ON IST OF NOVEMBER 2004 DECLARI NG AN INCOME OF RS.1 16 32 823. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SEC. 80-IB APART FROM THE DEDUCTION CLAIMED UNDER OTHER SECTIONS. IN THE COMPUTATION OF ELIGIBLE PROFIT FOR CLAIM OF DEDUCTION IT HAS INCL UDED EXPORT INCENTIVE I.E. THE DUTY DRAW BACK/DEPB OF RS.85 33 050 IN ASSESSMENT Y EAR 2002-03 AND RS.3 07 41 944 IN ASSESSMENT YEAR 2004-05 RESPECTIV ELY. ASSESSING OFFICER ON THE STRENGTH OF HON'BLE SUPREME COURTS DECISION IN THE CASE OF STERLING FOODS REPORTED IN 237 ITR 379 AND ON THE STRENGTH O F HON'BLE MADRAS HIGH COURTS DECISION IN THE CASE OF JAMEEN LEATHERS & U PPERS VS. CIT 246 ITR 97 DISALLOWED THE CLAIM OF ASSESSEE IN RESPECT OF I NCLUSION OF EXPORT INCENTIVE IN THE ELIGIBLE PROFIT FOR CLAIM OF DEDUC TION U/S.80IB. THE EXCLUSION OF EXPORT INCENTIVE IN THE SHAPE OF DUTY DRAW BACK AND DEPB FROM ELIGIBLE PROFIT FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S. 80-IB WAS UPHELD BY THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CA SE OF LIBERTY SHOES REPORTED IN 293 ITR 520. THIS ORDER OF THE HON'BLE PUNJAB AND HARYANA 3 HIGH COURT HAS BEEN FURTHER UPHELD BY THE HON'BLE S UPREME COURT IN THE CASE OF LIBERTY SHOES AND THE JUDGMENT IS REPORTED IN 317 ITR 218. IN THE CASE OF ASSESSEE THIS DISALLOWANCE IN THE QUANTUM PROCEEDINGS HAS BEEN UPHELD. ASSESSING OFFICER INITIATED THE PENALTY PRO CEEDINGS ON THE GROUND THAT ASSESSEE HAS CONCEALED THE PARTICULARS OF INCO ME BY FURNISHING INACCURATE PARTICULARS WHEREBY IT CLAIMED DEDUCTIO N U/S.80-IB ON AN AMOUNT WHICH IS NOT ELIGIBLE FOR DEDUCTION U/S. 80-IB OF T HE ACT. ASSESSEE CONTENDED BEFORE THE ASSESSING OFFICER THAT THE ISSUE REGARDI NG INCLUSION OR EXCLUSION OF AN EXPORT INCENTIVE FROM THE ELIGIBLE PROFIT FOR COMPUTATION OF DEDUCTION U/S. 80-IB WAS A DEBATABLE ISSUE WHEN ASSESSEE FILE D THE RETURN OF INCOME IN BOTH THESE ASSESSMENT YEARS. THERE WERE LARGE NUMBE R OF DECISIONS OF DIFFERENT HON'BLE HIGH COURTS WHICH WERE IN FAVOUR OF THE ASSESSEE SIMULTANEOUSLY THERE WERE DECISIONS WHICH WERE AGAI NST THE ASSESSEE. IT HAS DISCLOSED THE COMPLETE FACTS BUT CHOSE TO CLAIM THE DEDUCTION ON ACCOUNT OF THIS DIFFERENCE OF OPINION. HAD THE ASSESSEE NOT CL AIMED THE DEDUCTION THEN ITS CLAIM CAN NEVER BE ACCEPTED. THE ASSESSEE IN IT S SUBMISSIONS GAVE REFERENCE OF MORE THAN TWENTY ASSESSEES OF PANIPAT WHO HAVE ALSO INCLUDED SUCH EXPORT INCENTIVE IN THE ELIGIBLE PROFIT. THE A SSESSING OFFICER WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE. ACCO RDING TO HIM JUDGMENT OF 4 HON'BLE SUPREME COURT IN THE CASE OF CIT VS. STERLI NG FOODS WAS VERY MUCH THERE WHICH EXPLAINED THE EXPRESSION DERIVED FROM. HE FURTHER OBSERVED THAT ALL THE CASES WHICH HAVE BEEN REFERRE D BY THE ASSESSEE PENALTIES HAVE BEEN IMPOSED AND LEARNED CIT(APPEALS ) HAS CONFIRMED THE PENALTY. HE IMPOSED A PENALTY OF RS.7 61 570 IN ASS ESSMENT YEAR 2002-03 AND RS.21 21 350 IN ASSESSMENT YEAR 2004-05. 3. ON APPEAL TO THE LEARNED CIT(APPEALS) ASSESSEE HAS REITERATED THIS CONTENTION. LEARNED CIT(APPEALS) HAS OBSERVED THAT ASSESSING OFFICER MADE A REFERENCE OF LARGE NUMBER OF ASSESSEES NAMELY M /S. ORIENTAL RUGS CO. RAJ OVERSEAS M/S. YATI OVERSEAS (P) LTD. IN ALL T HESE CASES DISPUTE TRAVELED UP TO ITAT AND THE ITAT HAS DELETED THE PENALTY. TH E LEARNED CIT(APPEALS) HAS REPRODUCED THE FINDINGS OF THE ITA T INCLUDING ARGUMENTS EXTENSIVELY IN HIS ORDER. APART FROM THE ORDERS OF THE DELHI BENCHES ARISING FROM PANIPAT HE ALSO MADE A REFERENCE TO THE DECIS ION OF THE ITAT PUNE IN THE CASE OF KANBAY SOFTWARE INDIA (P) LTD. REPORTED IN 122 TTJ 721. THE LEARNED CIT(APPEALS) IN THIS WAY DELETED THE PENALT Y. 4. LEARNED DR WHILE IMPUGNING THE ORDER OF LEARNED CIT(APPEALS) CONTENDED THAT JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF STERLING FOOD WAS VERY MUCH AVAILABLE WHEN ASSESSEE FILED TH E RETURN. THERE WAS NO 5 DISPUTE WITH REGARD TO THE PROPOSITION THAT PROFIT DERIVED FROM MANUFACTURING ACTIVITIES OF AN INDUSTRIAL UNDERTAKING WILL ONLY Q UALIFY FOR DEDUCTION U/S.800IB OF THE ACT. THE EXPORT INCENTIVE COULD NO T BE CONSIDERED AS DERIVED FROM MANUFACTURING ACTIVITY BECAUSE THERE I S NO DIRECT NEXUS WITH THOSE RECEIPTS VIS--VIS MANUFACTURING ACTIVITIES. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESS EE BY VARIOUS ORDERS OF THE ITAT REFERRED BY THE LEARNED CIT(APPEALS) IN HIS OR DER. HE ALSO RELIED UPON THE JUDGMENT OF HON'BLE PUNJAB AND HARYANA HIGH COU RT IN THE CASE OF CIT VS. ARISUDANA SPG. MILLS LTD. RENDERED IN ITA NOS.4 10 TO 412 OF 2009. HE PLACED ON RECORD COPY OF THE HON'BLE HIGH COURTS D ECISION. IN THIS CASE THE ASSESSEE CLAIMED DEDUCTION U/S. 80-IA IN RESPECT OF PROFITS DERIVED FROM TRADING TURNOVER I.E. TRADING IN THE RAW-WOOL AND K NITTED CLOTHES. THE DEDUCTION U/S. 80IA WAS ALLOWABLE ONLY IN RESPECT O F INCOME DERIVED FROM MANUFACTURING OF GOODS AND NOT FROM TRADING IN THE RAW WOOL AND KNITTED CLOTHES. THE PROFIT IN RESPECT OF TRADING IN RAW-WO OL AND KNITTED CLOTHES WAS EXCLUDED FROM THE ELIGIBLE PROFIT FOR COMPUTATION O F DEDUCTION ADMISSIBLE U/S. 80-IA AND PENALTY PROCEEDINGS WERE INITIATED A GAINST THE ASSESSEE FOR IN INCLUSION OF SUCH PROFITS. THE ITAT DELETED THE PEN ALTY AND HON'BLE HIGH 6 COURT HAS CONFIRMED THE ITATS ORDERS. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER RELIED UPON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO-CHEMICALS LTD. REPORTED IN 322 I TR PAGE 158. HE PRAYED THAT THE APPEALS OF THE REVENUE DESERVES TO BE DISM ISSED. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THERE IS NO ALLEGATION AGAINST TH E ASSESSEE THAT IT HAS FURNISHED ANY INACCURATE PARTICULARS. THE ONLY AREA OF DISPUTE BETWEEN THE ASSESSEE AND THE ASSESSING OFFICER WAS WHETHER EXPO RT INCENTIVE WOULD BE INCLUDED IN THE ELIGIBLE PROFIT OR NOT. ACCORDING T O THE ASSESSING OFFICER THESE WERE NOT TO BE INCLUDED. THERE WAS A LOT OF C ONFUSION ON THIS ISSUE WHEN THE ASSESSEE FILED THE RETURN. DECISION FROM T HE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RITESH INDUSTRIES REPO RTED IN 274 ITR 324 WAS IN FAVOUR OF THE ASSESSEE. THERE WAS NO JURISDICTIO NAL HIGH COURT AT THAT POINT OF TIME. THE JUDGMENT OF HON'BLE PUNJAB AND H ARYANA HIGH COURT IN THE CASE OF LIBERTY SHOES CAME ON 22 ND SEPTEMBER 2006 WHEREAS THE RETURNS WERE FILED BY THE ASSESSEE IN OCTOBER 2002 AND NOVE MBER 2004. THE CONTROVERSY HAS ULTIMATELY BEEN RESOLVED BY THE HON 'BLE SUPREME COURT IN THE CASE OF LIBERTY SHOES IN 2009. THE ITAT HAS CON SIDERED ALL THESE ARGUMENTS IN THE ORDER OF M/S. ORIENTAL RUGS CO. WH ICH HAS BEEN REPRODUCED 7 BY THE LEARNED CIT(APPEALS) IN THE IMPUGNED ORDER. THE HON'BLE SUPREME COURT RECENTLY IN THE CASE OF RELIANCE PETRO-CHEMIC ALS (SUPRA) HAS OBSERVED THAT MAKING OF A CLAIM WHICH IS NOT SUSTAINABLE IN LAW BY ITSELF WILL NOT AMOUNT TO FURNISH INACCURATE PARTICULARS REGARDING THE INCOME OF THE ASSESSEE. IN THE PRESENT CASE THERE WAS DIFFERENCE OF OPINION WHETHER EXPORT INCENTIVES ARE TO BE INCLUDED OR NOT IN THE ELIGIBL E PROFIT WHEN ASSESSEE FILED THE RETURN. ALL THESE ASPECTS HAVE DULY BEEN CONSID ERED BY THE ITAT IN THE CASE OF M/S. ORIENTAL RUGS AND THE FINDING OF THAT CASE HAS BEEN EXTENSIVELY REPRODUCED IN THE IMPUGNED ORDER. ON DUE CONSIDERAT ION OF THE LEARNED CIT(APPEALS)S ORDER IN THE LIGHT OF HON'BLE PUNJAB AND HARYANA HIGH COURTS DECISION IN THE CASE OF ARISUDANA SPG. MILL S LTD. (SUPRA) WE DO NOT FIND ANY MERIT IN THESE APPEALS. THEY ARE DISMISSED . 7. IN THE RESULT BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 09.07.2010 ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 09/07/2010 MOHAN LAL 8 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR