ADOR WELDING LTD., MUMBAI v. ADDL.CIT, RANGE-2(1), MUMBAI

ITA 6145/MUM/2011 | 2008-2009
Pronouncement Date: 09-10-2013 | Result: Dismissed

Appeal Details

RSA Number 614519914 RSA 2011
Assessee PAN AAACA9076B
Bench Mumbai
Appeal Number ITA 6145/MUM/2011
Duration Of Justice 2 year(s) 1 month(s) 3 day(s)
Appellant ADOR WELDING LTD., MUMBAI
Respondent ADDL.CIT, RANGE-2(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-10-2013
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 09-10-2013
Date Of Final Hearing 01-10-2013
Next Hearing Date 01-10-2013
Assessment Year 2008-2009
Appeal Filed On 06-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUM BAI . . BEFORE SHRI B. R. MITTAL JM AND SHRI SANJAY ARORA AM ./ I.T.A. NO. 6145/MUM/2011 ( / ASSESSMENT YEAR: 2008-09) ADOR WELDING LTD. 4 TH & 5 TH FLOOR ADOR HOUSE 6K DUBASH MARG FORT MUMBAI-400 001 / VS. ADDL. CIT RANGE-2(1) MUMBAI ! ./' ./PAN/GIR NO. AAACA 9076 B ( !# /APPELLANT ) : ( $!# / RESPONDENT ) !# % / APPELLANT BY : SHRI GIRISH M. BALEKUNDRI $!# & % / RESPONDENT BY : SHRI SURENDRA KUMAR ' ()* & + / DATE OF HEARING : 01.10.2013 -. & + / DATE OF PRONOUNCEMENT : 09.10.2013 / / O R D E R PER SANJAY ARORA A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-4 MUMBAI (CIT(A) FOR SHO RT) DATED 01.07.2011 DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 2008-09 VIDE ORDER DATED 08.12.2010. 2 ITA NO. 6145/MUM/2011 (A.Y. 2008-09) ADOR WELDING LTD. VS. ADDL. CIT 2. OPENING THE ARGUMENTS FOR AND ON BEHALF OF THE A SSESSEE IT WAS SUBMITTED BY THE LD. AUTHORIZED REPRESENTATIVE (AR) ITS COUNSEL TH AT THE ASSESSEE-COMPANY HAS FIVE UNITS OF WHICH ADMITTEDLY ONLY ONE I.E. AT SILVA SSA IS AN ELIGIBLE UNIT U/S.80-IB OF THE ACT. THE ONLY CONTROVERSY THAT ARISES IS THE DETERM INATION OF THE PROFIT DERIVED FROM THE SAID UNIT QUALIFYING FOR DEDUCTION UNDER THE SAID S ECTION. SEPARATE BOOKS OF ACCOUNT ARE ADMITTEDLY BEING MAINTAINED FOR THE SAID UNIT AND REPORT IN THE PRESCRIBED FORM I.E. FORM 10CCB HAS ALSO BEEN OBTAINED AND PLACED ON RE CORD. THE DIFFERENCE ARISES IN VIEW OF THE ALLOCATION OF INTEREST AND FINANCE CHARGES F OR RS.117.39 LACS. THE SAME FORMING PART OF THE HEAD OFFICE EXPENDITURE INCURRED AT A TOTAL OF RS.222.15 LACS UNDER THE SAID HEAD STANDS ALLOCATED TO THE VARIOUS UNITS ON THE BASIS OF THEIR RESPECTIVE TURNOVERS SO THAT THE SALES OF THE SILVASSA UNIT (AT RS.77.22 CR ORES) BEING AT 29.6% OF THE ASSESSEES TOTAL TURNOVER (RS. 260.55 CRORES) THE SAID SUM ( RS.117.39 LACS) WAS ALLOCATED TO THE SAID UNIT IN THE SAME RATIO I.E. AT RS.34.75 LACS REDUCING THE DEDUCTION U/S. 80IB CLAIMED BY THE ASSESSEE QUA THE SAID UNIT PER ITS RETURN TO THAT EXTENT. THE S AME STOOD CONFIRMED IN APPEAL ON THE SAME BASIS SO THAT AGGRIEVED THE A SSESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD. NO INFIRMITY WHATSOEVER IN THE SAID ALLOCATION STOOD POINTED OUT BY THE LD. AR BEFORE US EVEN ON BEING SPECIFICALLY CALLED UPON TO STATE THE SAME HAVING APPEALED AGAINST THE ORDER BY THE FIRST APPELLATE AUTHORITY. HIS SUBMISSION THAT THERE HAS IN FACT BEEN A DECLINE IN THE INTEREST EXPENSE OF THE SILVASSA UNIT I.E. VIS--VIS THE P RECEDING YEAR AS WOULD BE APPARENT FROM THE PROFIT AND LOSS ACCOUNT OF THE SAID UNIT BEING A CASH GENERATING UNIT WOULD BE TO NO CONSEQUENCE. ADMITTEDLY THE INTEREST EXPENDITURE H AS BEEN INCURRED BY THE HEAD OFFICE WHICH EXISTS AND OPERATES ONLY FOR SERVICING THE DI FFERENT OPERATIONAL UNITS. THE ASSESSEES INCOME COULD ONLY BE DETERMINED AFTER DE DUCTING THE HEAD OFFICE EXPENSES BEING ADMITTEDLY BUSINESS EXPENSES AND CLAIMED AS S UCH AND WHERE SUBJECT TO ANY DEDUCTION I.E. IN RESPECT OF THAT DERIVED FROM AN Y SPECIFIC SOURCE OF INCOME OR OPERATION TO THE EXTENT IT IS RELATABLE THERETO. ON A QUERY B Y THE BENCH IT WAS EXPLAINED BY THE LD. AR THAT THE SAID INTEREST EXPENDITURE IS WITH REGAR D TO THE BORROWINGS MADE TOWARD THE 3 ITA NO. 6145/MUM/2011 (A.Y. 2008-09) ADOR WELDING LTD. VS. ADDL. CIT POOL OF CARS BEING USED BY THE HEAD OFFICE. THE CAS E FOR ALLOCATION IS THEREFORE UNEXCEPTIONAL. ANY INCOME THAT MAY HAVE BEEN EARNED BY THE HEAD OFFICE AS CLAIMED BY THE LD. AR BEFORE US WOULD BE TO NO CONSEQUENCE; T HE SAME BEING ASSESSABLE AS SUCH. IT IS ONLY WHERE THE RELEVANT EXPENDITURE I.E. ALLOCATI ON OF WHICH IS BEING MADE STANDS INCURRED FOR THE PURPOSE OF EARNING OR TOWARD THE S AID INCOME THAT A SET OFF OF THE SAID EXPENDITURE AGAINST THE RESULTING INCOME WOULD ARIS E PRECLUDING ALLOCATION OF THE SAID EXPENDITURE. WE THEREFORE FIND NO INFIRMITY WHATS OEVER IN THE ALLOCATION AS MADE BY THE REVENUE; IT HAVING ALREADY EXCLUDED FROM THE RELEVA NT HEAD OFFICE EXPENDITURE THE SUMS WHICH WERE DIRECTLY RELATABLE TO SPECIFIC PURPOSES. WE DECIDE ACCORDINGLY. 4. IN THE RESULT THE ASSESSEES APPEAL IS DISMISSE D. 0. 1 (230 & 0 & 45 ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 09 2 013 SD/- SD/- (B. R. MITTAL) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' * MUMBAI; 6( DATED : 09.10.2013 ).(../ ROSHANI SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $!# / THE RESPONDENT 3. ' 7 ( ) / THE CIT(A) 4. ' 7 / CIT CONCERNED 5. :);< $ (=2 + =2. ' * / DR ITAT MUMBAI 6. <>3 ?* / GUARD FILE ! ( / BY ORDER )/(* + (DY./ASSTT. REGISTRAR) ' * / ITAT MUMBAI