M/s A.P. Processors, Delhi v. ITO, New Delhi

ITA 4346/DEL/2015 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 434620114 RSA 2015
Assessee PAN AAFFA8023J
Bench Delhi
Appeal Number ITA 4346/DEL/2015
Duration Of Justice 1 year(s) 3 month(s) 18 day(s)
Appellant M/s A.P. Processors, Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC 2
Tribunal Order Date 21-10-2016
Date Of Final Hearing 01-08-2016
Next Hearing Date 01-08-2016
Assessment Year 2010-2011
Appeal Filed On 03-07-2015
Judgment Text
PAGE 1 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH JUDICIAL MEMBER I.T.A .NO.-434 5 & 4346/DEL/2015 (ASSESSMENT YEAR- 2009-10 & 2010-11) A.P. PROCESSORS 10 SURAJ NAGAR AZADPUR DELHI-110033. PAN-AAFFA8023J (APPELLANT) VS ITO WARD-20(3) NEW DELHI. (RESPONDENT) APPELLANT BY SH. VED JAIN ADV. RESPONDENT BY MS. ANIMA BAR A NWAL SR.DR ORDER BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE SEPARATE ORDERS DATED 25.02.2015 OF CIT(A)-1 2 NEW DELHI PERTAINING TO 2009- 10 AND 2010-11 ASSESSMENT YEARS. 2. THE LD. AR SUBMITTED RIGHT AT THE OUTSET THAT BO TH THE APPEALS ARE LARGELY COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE ORDERS OF THE ITAT IN ASSESSEE'S OWN CASE DATED 17.07.2015 IN ITA NO.3803/DEL/2010 A ND ITA NO.4117/DEL/2010 PERTAINING TO 2007-08 ASSESSMENT YEAR. COPY OF THE SAID ORDER IT WAS SUBMITTED IS PLACED AT PAGES 26 TO 58 OF THE PAPER BOOK. 3. IN THE SAID BACKGROUND INVITING ATTENTION TO GR OUND NO. 1 IN ITA NO.4345/DEL/2015 IT WAS SUBMITTED THAT THE ISSUE H AS BEEN CONSIDERED BY THE ITAT IN PARA 12.10 AND 12.11 AT INTERNAL PAGES 25-2 6 OF THE ORDER (PAGE 50-51 OF THE PAPER BOOK). ACCORDINGLY IT WAS SUBMITTED THA T THE CLAIM DESERVES TO BE DATE OF HEARING 0 4 .08.2016 DATE OF PRONOUNCEMENT 2 1 . 1 0.2016 PAGE 2 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) ALLOWED AS THE FACTS AND CIRCUMSTANCES CONTINUE TO REMAIN THE SAME. INVITING ATTENTION TO THE DATES OF THE IMPUGNED ORDERS WHICH IS 25.02.2015 IN BOTH THE YEARS IT WAS SUBMITTED THAT THE ORDER OF THE ITAT IS DATE D 17.07.2015 THUS IT WAS SUBMITTED THAT THE BENEFIT OF THIS ORDER OF THE ITA T WAS NOT AVAILABLE TO THE CIT(A). 4. CONSIDERING THE MATERIAL AVAILABLE ON RECORD AND THE ORDER OF THE ITAT THE LD. SR. DR THOUGH PLACED RELIANCE UPON THE IMPUGNED ORDERS HOWEVER SUBMITTED THAT FACTS CIRCUMSTANCES AND POSITION OF LAW CONTI NUE TO REMAIN THE SAME. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE RECORD. IT IS SEEN THAT THE ASSESSEE IS RELYING UPON THE FO LLOWING FINDING OF THE ITAT:- 12.10.WE HAVE HEARD BOTH THE PARTIES AND HAVE PERU SED THE RECORDS WE FIND THAT THE ASSESSEE HAS CLAIMED ADDITIONAL DEPRE CIATION OF RS.5 30 645/- UNDER SECTION 32(1)(IIA) OF THE ACT. THE AO DISALLO WED THE SAME ON THE GROUND THAT THE ASSESSEE IS NEITHER A MANUFACTURER OR PRODUCER OF AN ARTICLE OR THING AND IT IS ONLY DOING JOB WORK. THE APPELLA NT BROUGHT TO THE NOTICE OF AO THAT HONBLE SUPREME COURT HAS HELD THAT TEXTILE DYEING AND PRINTING HAS BEEN HELD TO BE MANUFACTURING IN THE CASE OF EM PIRE INDUSTRIES LTD. VS UNION OF INDIA 162 ITR 846 (S.C). THEREAFTER THE H ONBLE SUPREME COURT IN THE CASE OF UJAGAR PRINTS VS: UOI & ANR. HAS RECONF IRMED THE SAME. THE ISSUE OF JOB WORK IS ALSO SEEN TO BE COVERED IN FAV OUR OF THE ASSESSEE BY THE JUDGMENT OF THE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF CIT VS. NORTHERN AEROMATICS LTD. (2005) 196 CTR (DEL) 479. THE ABOVE DECISION HAS BEEN FOLLOWED IN THE CASE OF CIT VS. SADHU FORGING LTD . (2011) 336 ITR 444 (DEL.). IN THIS JUDGMENT THE COURT HAS FRAMED THE F OLLOWING QUESTIONS OF LAW AND HAS HELD AS UNDER:- 'I) WHETHER INCOME RECEIVED FROM JOB WORK/LABOUR CH ARGES ON WORK DONE BASED ON MATERIAL SUPPLIED BY THE CUSTOMERS QU ALIFIES FOR DEDUCTION UNDER S. 80-IB OF THE IT ACT 1961? (II) WHETHER INCOME RECEIVED FROM JOB WORK/LABOUR C HARGES ON WORK DONE ON MATERIAL '(SUPPLIED BY THE CUSTOMERS IS PRO FITS DERIVED FROM INDUSTRIAL UNDERTAKING TO BE ELIGIBLE FOR DEDUCTION UNDER S. 80-IB OF THE IT ACT? 12.11. THUS IN VIEW OF ABOVE CASE LAWS WE FIND TH AT THE ACTIVITY OF PROCESSING DONE BY THE ASSESSEE WAS 'MANUFACTURING' . IT WAS IMMATERIAL THAT THE ASSESSEE WAS DOING THE JOB OF PROCESSING A LSO FOR OUTSIDE CUSTOMERS TOO AND WAS CHARGING THEM ON JOB WORK BAS IS OR ON THE BASIS OF LABOUR CHARGES. WE HOLD THAT IT WILL STILL BE QUALI FIED AS CARRYING ELIGIBLE BUSINESS UNDER S.32(1)(IIA) OF THE ACT. THE RATIO O F THE DECISIONS IN THE CASES OF (I) CIT VS. METALMAN AUTO(P)M LTD. ( 011) 52 DTR (P&H) 385; (II) CIT VS. VALLABH YAMS (P) LTD. (2011) 51 DTR (P&H) 236; (III ) CIT VS. IMPEL FORGE & PAGE 3 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) ALLIED INDUSTRIES LTD. (2010) 326 ITR 27 (P&H); (IV ) CIT VS. RANE (MADRAS) LTD. (1998) 148 CTR (MAD) 404 : (1999) 238 ITR 377 (MAD) AND (V) DY CIT VS. HARJIVANDAS JUTHABHAI ZAVERI & ANR. (2002) 258 ITR 785 (GUJ.) STRENGTHENS OUR AFORESAID VIEW. IN VIEW OF THE ABOV E DETAILED DISCUSSIONS AND PRECEDENTS WE HOLD THAT ASSESSEE IS A MANUFACT URER AND ELIGIBLE FOR DEDUCTION U/S 32(1)(IIA) OF THE ACT AND SO WE ALLOW THE ADDITIONAL DEPRECIATION @20% ON RS. 49 83 575/- WHICH COMES RS .9 96 715/- AND ACCORDINGLY DECIDE THE GROUND NO. 3 IN FAVOR OF THE ASSESSEE. 6. CONSIDERING THE SAME I FIND WHERE THE FACTS AND CIRCUMSTANCES CONTINUE TO REMAIN THE SAME AND IN THE ABSENCE OF ANY INFIRMITY POINTED OUT IN THE IMPUGNED ORDER THE GROUND RAISED BY THE ASSESSEE HAS TO BE A LLOWED. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT GROUND NO. 1 OF THE ASSESSEE IS ALLOWED. 7. ADDRESSING GROUND NO. 2 IT WAS SUBMITTED BY THE LD. AR THAT THE SAID ISSUE ALSO CAME UP FOR CONSIDERATION BEFORE THE ITAT AND THE FACTS AND CIRCUMSTANCES CONTINUE TO REMAIN THE SAME. THE SAID PRAYER WAS NO T OBJECTED TO BY THE LD. SR.DR. 8. HAVING HEARD THE SUBMISSIONS AND PERUSED THE MAT ERIAL AVAILABLE RECORD IT IS SEEN THAT THE CO-ORDINATE BENCH HAD AN OCCASION TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER. THE FACTS CONTINUE T O REMAIN THE SAME AS THEREIN ALSO THE CLAIM UNDER SECTION 80IB WAS ADMITTEDLY THOUGH MADE DURING THE ASSESSMENT PROCEEDINGS HOWEVER THE AO DID NOT ADDRESS THEM AND THE CIT(A) CONSIDERING THE FACTS THAT THE ISSUE HAD NOT BEEN ADJUDICATED UPON BY THE ASSESSING OFFICER ALSO DENIED THE CLAIM. THE CO-ORDINATE BENCH CONSIDERING THE FACT THAT THE ASSESSEE HAD FILED EVIDENCES BEFORE THE ASSESSING OFFICER IN THE FORM OF CERTIFICATE OF REGISTRATION WITH THE SSI TO SATISFY THAT THE UNIT HAD STARTED P RODUCTION BEFORE 31.03.2002 AND THAT IT WAS A SMALL-SCALE INDUSTRY UNDERTAKING MANU FACTURING FABRIC RESTORED THE ISSUE TO THE AO HOLDING THAT THE ASSESSEE HAVING MA DE THE CLAIM HAS TO PROVE THAT IT IS ELIGIBLE AS PER 80 IB THEREBY DIRECTING THE ASSE SSING OFFICER TO EXAMINE THE CLAIM PAGE 4 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. IN VIEW OF THE FACT THAT NO INFIRMITY IN THE SAID DIRECTION WAS P OINTED OUT BY THE LD. SR.DR AND CONSIDERING THE ADMITTED FACT THAT THERE WAS NO CH ANGE IN FACTS AND CIRCUMSTANCES RESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH THE ISSUE IS RESTORED TO THE AO WITH IDENTICAL DIRECTION. 9. THE ISSUES RAISED IN GROUND NOS. 3 AND 4 IT WAS SUBMITTED BY THE LD. AR ARISE FOR THE FIRST TIME IN THE YEAR UNDER CONSIDER ATION AS NO DISALLOWANCE IN THE EARLIER YEARS WAS MADE BY THE AO ON SAME FACTS AND CIRCUMSTANCES AND THIS IS THE FIRST TIME THAT DISALLOWANCE HAS BEEN MADE. IT WAS HIS SUBMISSION THAT THE DISALLOWANCE HAS BEEN MADE ON THE BASIS OF PURE EST IMATES. THE LD. SR.DR RELIES UPON THE IMPUGNED ORDER. 10. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT THE ASSESSEE FIRM CONSISTING O F TWO PARTNERS SH. ARVIND JAIN AND SH. PANKAJ GUPTA SHARING EQUAL PROFIT RATIO ENGAGED IN THE BUSINESS OF TEXTILE DYING UNDER THE NAME AND STYLE OF M/S. A. P. PROCESSORS RETURNED AN INCOME OF RS.10 33 166/- AND RS.5 15 610/- RESPECTIVELY IN TH E YEARS UNDER CONSIDERATION. THE BUSINESS IS STATED TO BE CARRIED OUT FROM FACTO RY SITUATED AT PLOT NO.103 SECTOR- 24 FARIDABAD. 1/5 OF THE CAR EXPENSES AND TELEPHO NE EXPENSES IN THE YEARS AMOUNTING TO RS.52 985/- AND RS.37 919/- RESPECTIVE LY RS.40 053/- AND RS.29 569/- WERE ADDED BY WAY OF A DISALLOWANCE ON THE GROUNDS OF PERSONAL USER BY THE AO NOTING THAT NO LOG BOOK ETC. OR TELEPHONE REGISTER WAS MAINTAINED. 10.1. THE CIT(A) IN APPEAL AT INTERNAL PAGE 27 IN 2 009-10 AY AND PAGE 17 IN 2010- 11 AY REFERS THAT THE CLAIM IS IN REGARD TO THE FOL LOWING 3 CARS:- PAGE 5 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) 1. HONDA CITY CARD USED BY PARTNER SH.ARVIND JAIN 2. HONDA CITY CAR USED BY PARTNER SH. PANKAJ GUPTA 3. ALTO CAR STATED TO BE KEPT AT FACTORY. 10.2. CONSIDERING THE FACT THAT NEITHER LOG BOOKS W ERE MAINTAINING NOR EXCLUSIVE BUSINESS USER BY ANY OTHER EVIDENCE WAS FILED THE A DDITION WAS CONFIRMED. I FIND THAT THE MERE ARGUMENT THAT ADDITION MADE ON ESTIMA TES HAS BEEN SUSTAINED IN THE PECULIAR FACTS OF THE PRESENT CASE IS NOT OF MUCH HELP TO THE ASSESSEE AS ADMITTEDLY NO LOG BOOK HAS BEEN MAINTAINED. CONSIDERING THE F ACT THAT THE DISALLOWANCE HAS BEEN MADE FOR THE FIRST TIME THE DISALLOWANCE BY WA Y OF AN ESTIMATED IS RESTRICTED TO ONE TENTH OF THE AMOUNT CLAIMED. WHILE SO DIRECTIN G IT IS MADE CLEAR THAT THE SAID ESTIMATE IS BASED ONLY ON THE FACT THAT THESE ARE T HE FIRST FEW YEARS WHEN SUCH A DISALLOWANCE HAS BEEN MADE AS SUCH THE ASSESSEE MAY NOT HAVE BEEN AWARE THAT THE ASSESSEE WAS REQUIRED TO MAINTAIN A LOG BOOK FO R CLAIMING EXCLUSIVE BUSINESS USER. SIMILARLY FOR THE TELEPHONE EXPENSES IT IS S EEN THAT THE ADDITION BY WAY OF A DISALLOWANCE IS MADE FOR THE FIRST TIME WHEREIN NO TELEPHONE CALL REGISTERS HAVE BEEN MAINTAINED THE DISALLOWANCE IN THE ABSENCE OF EVIDENCE IS RESTRICTED TO ONE TENTH OF THE AMOUNT CLAIMED AGAIN FOR SIMILAR REASO NING. ACCORDINGLY GROUND NOS.3 & 4 ARE PARTLY ALLOWED. 11. ADDRESSING THE LAST GROUND THE LD. AR SUBMITTE D THAT THE DIRECTION TO THE AO BY THE ITAT THAT THE BENEFIT OF CREDIT FOR TDS O N VERIFICATION MAY BE ALLOWED TO THE ASSESSEE FOR WHICH PURPOSES THE ISSUE HAD BEEN REMANDED IN THE EARLIER YEAR. THE SAID PRAYER WAS NOT OBJECTED TO BY THE LD. SR.D R. CONSIDERING THE MATERIAL ON RECORD AND THE SUBMISSION ADVANCED RESPECTFULLY FOL LOWING THE ORDER OF THE CO- PAGE 6 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) ORDINATE BENCH THE ISSUE IS RESTORED TO THE FILE O F THE AO TO VERIFY AND ALLOW NECESSARY RELIEF QUA TDS PAID IF SO WARRANTED ON F ACTS. 12. IN THE RESULT ITA NO.4345/DEL/2015 OF THE ASSE SSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 13. IT WAS A COMMON STAND OF THE PARTIES BEFORE THE BENCH THAT THE ISSUES RAISED IN ITA NO.-4346/DEL/2015 IN 2010-11 ASSESSMENT YEAR ARE IDENTICAL TO THE FACTS CIRCUMSTANCES AND POSITION ON LAW AS IN THE EARLIER YEAR. ONLY THE SEQUENCE OF THE GROUNDS RAISED HAVE BEEN VARIED. 14. WHEREAS GROUND NOS. 1 AND 2 ADDRESS THE DISALLO WANCE MADE BY WAY OF AN ESTIMATION ON TELEPHONE AND CAR EXPENSES WHICH HAVE BEEN PARTLY ALLOWED IN THE EARLIER YEAR FACTS CIRCUMSTANCES ARGUMENTS AND P OSITION OF LAW REMAIN THE SAME. 15. GROUND NO. 3 IT IS SEEN IS IDENTICAL TO GROUND NO. 1 IN ITA NO.4345/DEL/2015 AND GROUND NO. 4 IN THE PRESENT AP PEAL IS IDENTICAL TO GROUND NO. 2 IN ITA NO.4345/DEL/2015 AND GROUND NO. 5 IS I DENTICAL TO GROUND NO.5 IN ITA NO.4345/DEL/2015. ACCORDINGLY FOLLOWING THE VI EW TAKEN IN ITA NO.4345/DEL/2015 GROUND NO. 3 IS ALLOWED. 16. GROUND NO. 4 FOLLOWING THE VIEW TAKEN IN THE AF ORESAID APPEAL IS RESTORED BACK TO THE AO TO ARRIVE AT DECISION ON CONSIDERED OF THE FACTS AND LAW. THE SAID GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 17. GROUND NO. 5 FOLLOWING THE PRECEDENT RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE CLAIM AND ALLOW NEC ESSARY RELIEF IF SO WARRANTED ON FACTS. PAGE 7 OF 7 I.T.A .NO.-4345 & 4346/DEL/2015 (A.P.PROCESSORS VS ITO) 18. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 21 ST OF OCTOBER 2016. SD/- (DIVA SIN GH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT AS SISTANT REGISTRAR ITAT NEW DELHI