M/S. VIRAJ IMPOEXPO LTD, MUMBAI v. THE DCIT CEN CIR- 18 & 19, MUMBAI

ITA 457/MUM/2008 | 2004-2005
Pronouncement Date: 12-01-2011 | Result: Dismissed

Appeal Details

RSA Number 45719914 RSA 2008
Assessee PAN AAACV1939L
Bench Mumbai
Appeal Number ITA 457/MUM/2008
Duration Of Justice 2 year(s) 11 month(s) 22 day(s)
Appellant M/S. VIRAJ IMPOEXPO LTD, MUMBAI
Respondent THE DCIT CEN CIR- 18 & 19, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted F
Tribunal Order Date 12-01-2011
Date Of Final Hearing 08-11-2010
Next Hearing Date 08-11-2010
Assessment Year 2004-2005
Appeal Filed On 21-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI R V EASWAR PRESIDENT AND SHRI P M JAGTAP ACCOUNTANT MEMBER I T A NO: 457/MUM/2008 (ASSESSMENT YEAR: 2004-05) M/S VIRAJ IMPOEXPO LTD. MUMBAI APPELLANT (PAN: AAACV1939L) VS DEPUTY COMMISSIONER OF INCOME TAX RESPONDENT CENTRAL CIRCLE 18 & 19 MUMBAI I T A NO: 458/MUM/2008 (ASSESSMENT YEAR: 2003-04) M/S VIRAJ FORGINS LTD. MUMBAI APPELLANT (PAN: AAACV1901E) VS DEPUTY COMMISSIONER OF INCOME TAX RESPONDENT CENTRAL CIRCLE 18 & 19 MUMBAI I T A NO: 496MUM/2008 (ASSESSMENT YEAR: 2003-04) M/S VIRAJ PROFILES LTD. MUMBAI APPELLANT (PAN: AABCV1740N) VS DEPUTY COMMISSIONER OF INCOME TAX RESPONDENT CENTRAL CIRCLE 18 & 19 MUMBAI APPELLANTS BY: ADJOURNMENT APPLICATION DT. 31.12.20 10 RESPONDENT BY: SHRI A P SINGH O R D E R R V EASWAR PRESIDENT: THERE IS A DELAY OF 12 DAYS IN ITA NO: 458/MUM/200 8 AND A DELAY OF 27 DAYS IN ITA NO: 496/MUM/2008. CONSIDER ING THE SMALLNESS OF THE DELAY WE CONDONE THE SAME AND ADMI T THESE APPEALS. ITA NO: 457/MUM/2008 ITA NO: 458/MUM/2008 ITA NO: 496/MUM/2008 2 2. ALL THE THREE APPEALS INVOLVE A COMMON GROUND W HICH RELATES TO THE DEDUCTION UNDER SECTION 80HHC OF THE INCOME TAX ACT 1961. THE COMMON GROUND IS AS FOLLOWS: - 1.(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING AO'S ACTION THAT THE APPELLANT IS NOT ENTITLED TO DEDUCTION U/S. 80HHC AMOUNTING TO RS.1 50 14 179/- (RS.5 06 08 672/- IN ITA NO:458/MUM/2008 AND RS.11 16 36 925/- IN ITA NO:496/MUM/ 2008). (B) ON THE FACTS AND CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. AO AS WELL AS THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT ADJUDICATING THE APPELLANTS CLAIM THAT DEPB CREDIT OF RS.7 97 09 725/- (RS.12 99 90 583/- IN ITA NO:458/MUM/2008 AND RS.15 31 48 757/- IN ITA NO:496/MUM/ 2008) WILL GO TO REDUCE THE COST OF MATERIAL CONSUMED / EXPORTED GOODS. (C) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING AO'S ACTION THAT 90% OF DEPB CREDIT IS TO BE REDUCED FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC INSTEAD OF 90% OF THE PROFIT ON TRANSFER OF THE DEPB LICENCE AS PER EXPLANATION(BAA) OF SECTION 80HHC READ WITH CLAUSES (IIID) & (IIIE) OF SECTION 28 OF THE INCOME TAX ACT 1961. (D) WITHOUT PREJUDICE TO GROUND NOS.1 (A) (B) & (C) THE LD. CIT(A) ERRED IN HOLDING THE AO'S ACTION OF REDUCING 90% OF DEPB CREDIT FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 80HHC DESPITE THE FACT THAT DEPB CREDIT IS ASSESSABLE UNDER CLAUSE (IV) OF SECTION 28 OF THE INCOME TAX ACT 1961. (E) WITHOUT PREJUDICE TO GROUND NOS. 1(A) (B) (C) & (D) THE LD. CIT(A) ERRED IN NOT DIRECTING THE AO TO EXCLUDE UNREALIZED / UNSOLD DEPB CREDIT FOR THE PURPOSE OF COMPUTATION OF TOTAL INCOME THOUGH THE SAME WAS SPECIFICALLY ARGUED DURING THE COURSE OF APPELLATE PROCEEDINGS ITA NO: 457/MUM/2008 ITA NO: 458/MUM/2008 ITA NO: 496/MUM/2008 3 DESPITE THE FACT THAT THE LD. CIT(A) HELD THAT THE SAME HAS NOT ACCRUED DURING THE YEAR UNDER CONSIDERATION. 3. AT THE TIME OF THE HEARING IT WAS SUBMITTED ON BEHALF OF THE REVENUE THAT THE AFORESAID GROUND IS NOW COVERED AG AINST THE ASSESSEE BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. KALPATARU COLOURS & CHEMICALS (2010 ) 192 TAXMAN 435 (BOM). THIS POSITION WAS NOT DISPUTED BEFORE U S ON BEHALF OF THE ASSESSEE. THEREFORE RESPECTFULLY FOLLOWING TH E AFORESAID JUDGMENT WE AFFIRM THE ORDERS OF THE DEPARTMENTAL AUTHORITIES IN RESPECT OF GROUND NO.1 AND DISMISS THE GROUND IN AL L THE THREE APPEALS. 4. WE MAY NOW TAKE UP THE OTHER GROUNDS IN THE APPE ALS. IN ITA NO: 457/MUM/2008 GROUND NO.2 RELATES TO THE DI SALLOWANCE OF ` 66 909/- OUT OF THE TELEPHONE EXPENSES AND GROUND NO.3 RELATES TO THE DISALLOWANCE OF ` 60 450/- ON ACCOUNT OF MOTOR CAR EXPENSES. A PERUSAL OF THE ORDERS OF THE INCOME TAX AUTHORITI ES SHOWS THAT THE TOTAL TELEPHONE EXPENSES WERE 13 38 183/- AND TOTA L VEHICLE EXPENSES WERE ` 12 09 004/-. THE ASSESSING OFFICER DISALLOWED 5% OF THE TOTAL EXPENSES WHICH WAS CONFIRMED BY TH E CIT(A). AFTER HEARING THE LEARNED SENIOR DEPARTMENTAL REPRESENTAT IVE AND AFTER GOING THROUGH THE ORDERS OF THE DEPARTMENTAL AUTHOR ITIES WE DO NOT FIND ANY REASON TO INTERFERE IN THEIR ORDERS SINCE WE FIND THE DISALLOWANCE TO BE VERY REASONABLE AND FAIR. THESE GROUNDS ARE DISMISSED. 5. IN ITA NO: 458/MUM/2008 GROUND NOS. 2 AND 3 ARE SIMILARLY AGAINST THE DISALLOWANCE OF ` 57 547/- OUT OF THE TELEPHONE ITA NO: 457/MUM/2008 ITA NO: 458/MUM/2008 ITA NO: 496/MUM/2008 4 EXPENSES AND ` 51 579/- OUT OF THE MOTOR CAR EXPENSES RESPECTIVELY . THE TOTAL EXPENSES DEBITED IN THE ACCOUNTS ARE ` 11 50 941/- AND ` 10 35 181/- RESPECTIVELY. AS IN ITA NO: 457/MUM/20 08 HERE ALSO THE ASSESSING OFFICER HAS DISALLOWED 5% OF THE AMOU NT DEBITED TO THE PROFIT AND LOSS ACCOUNT. AFTER HEARING THE LEA RNED SENIOR DEPARTMENTAL REPRESENTATIVE AND AFTER GOING THROUGH THE ORDERS OF THE INCOME TAX AUTHORITIES WE CONSIDER THE DISALLO WANCES TO BE FAIR AND REASONABLE AND SEE NO REASON TO INTERFERE. THE SE GROUNDS ARE DISMISSED. 6. IN ITA NO: 496/MUM/2008 THE FIRST GROUND IS DIR ECTED AGAINST THE DISALLOWANCE OF THE EMPLOYERS CONTRIBUTION TO PROVIDENT FUND UNDER SECTION 43B OF THE ACT ON THE GROUND THAT IT HAS NOT BEEN PAID BEFORE THE DUE DATE FOR FILING THE RETURN OF I NCOME. THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE RESPECTFULLY F OLLOWING THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF CIT VS . ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) WHERE IT W AS HELD THAT THE AMENDMENT MADE TO SECTION 43B IS CLARIFICATORY AND TAKES RETROSPECTIVE EFFECT. THE ASSESSING OFFICER IS DIR ECTED TO VERIFY AND ALLOW THE PAYMENTS MADE BEFORE THE DUE DATE FOR FIL ING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. THE GROUND IS DISPOSED OF ACCORDINGLY. 7. GROUND NOS. 2 AND 3 ARE DIRECTED AGAINST THE DIS ALLOWANCE OF THE TELEPHONE EXPENSES OF ` 55 305/- AND MOTOR CAR EXPENSES OF ` 12 785/- RESPECTIVELY. THE TOTAL EXPENSES DEBITED IN THE BOOKS ARE ` 11 06 106/- ON ACCOUNT OF TELEPHONE EXPENSES AND ` 2 55 699/- ON ACCOUNT OF MOTOR CAR EXPENSES. HERE ALSO THE ASSES SING OFFICER ITA NO: 457/MUM/2008 ITA NO: 458/MUM/2008 ITA NO: 496/MUM/2008 5 HAS DISALLOWED 5% OF THE AMOUNTS DEBITED IN THE BOO KS WHICH HAS BEEN CONFIRMED BY THE CIT(A). AFTER HEARING THE LE ARNED SENIOR DEPARTMENTAL REPRESENTATIVE AND AFTER GOING THROUGH THE ORDERS OF THE DEPARTMENTAL AUTHORITIES WE FIND THE DISALLOWA NCE TO BE FAIR AND REASONABLE AND DECLINE TO INTERFERE. THE GROUNDS A RE DISMISSED. 8. GROUND NO.4 IS TO THE EFFECT THAT THE CIT(A) ERR ED IN NOT GIVING SPECIFIC DIRECTION TO THE ASSESSING OFFICER FOR NOT CHARGING INTEREST UNDER SECTIONS 234A AND 234B IN VIEW OF TH E CBDT CIRCULAR NO: 2/2006 DATED 17 TH JANUARY 2006. THE ASSESSING OFFICER IS DIRECTED TO LOOK INTO THE AFORESAID CIRCULAR AND AL LOW RELIEF IN THE CHARGING OF INTEREST IF THE CIRCULAR IS FOUND APPLI CABLE. THE GROUND IS DISPOSED OF ACCORDINGLY. 9. IN THE RESULT ITA NOS: 457/MUM/2008 AND 458/MUM /2008 ARE DISMISSED AND ITA NO: 496/MUM/2008 IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JANUARY 2011. SD/- SD/- (P M JAGTAP) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI DATED 12 TH JANUARY 2011 SALDANHA COPY TO: 1. M/S VIRAJ IMPOEXPO LTD. M/S VIRAJ FORGINS LTD. M/S VIRAJ PROFILES LTD. 10 IMPERIAL CHAMBERS WILSON ROAD BALLARD ESTATE MUMBAI 400 038 2. DCIT CENTRAL CIRCLE 18 & 19 MUMBAI 3. CIT-CENTRAL II MUMBAI 4. CIT(A)-CENTRAL VI MUMBAI 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI