M/s. Aditya Fashions, Tiruppur v. DCIT, Coimbatore

ITSSA 10/CHNY/2010 | misc
Pronouncement Date: 06-08-2010 | Result: Allowed

Appeal Details

RSA Number 1021716 RSA 2010
Assessee PAN AADFA5878M
Bench Chennai
Appeal Number ITSSA 10/CHNY/2010
Duration Of Justice 3 month(s) 20 day(s)
Appellant M/s. Aditya Fashions, Tiruppur
Respondent DCIT, Coimbatore
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 06-08-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 06-08-2010
Date Of Final Hearing 02-08-2010
Next Hearing Date 02-08-2010
Assessment Year misc
Appeal Filed On 16-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE SHRI ABRAHAM P. GEORGE AND SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.(SS) A. NO. 10/MDS/2010 BLOCK PERIOD : 01-04-1996 TO 11-03-2003 M/S.ADITYA FASHIONS 3/333 UTHUKULI ROAD KULATHUPALAYAM PIRIVU 5 PERIYAPALAYM TIRUPUR. V. THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-II COIMBATORE. (PAN: AADFA5878M ) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T. BANUSEKAR RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R OF THE LEARNED CIT(APPEALS)-II COIMBATORE IN IT APPEAL NO. 48C/08 -09 DATED 22-01-2010 FOR THE BLOCK PERIOD 1-4-1996 TO 11-3-2003. 2. SHRI T. BANUSEKAR CA REPRESENTED ON BEHALF OF T HE ASSESSEE AND SHRI P.B.SEKARAN LEARNED CIT-DR REPRESENTED ON BEHALF O F THE REVENUE. I.T (SS).A. NO.10/MDS/2010 2 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT AS A CONSEQUENCE OF THE SEARCH IN THE CASE OF ONE T.V. R AMASAMY TIRUPUR IT WAS FOUND THAT THE ASSESSEE HAD PAID TO THE SAID T.V. R AMASAMY AN AMOUNT OF ` . 4 17 000/- BEING UNACCOUNTED RENT AND AN AMOUNT OF ` . 2 50 000/- AS ADVANCE DEPOSIT FOR THE PREMISES TAKEN ON RENT. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD DELETED THE ADDITION MADE OF ` . 2 50 000/- BEING THE ADVANCE BUT HAD CONFIRMED THE ADDITION OF ` . 4 17 000/- REPRESENT THE UNACCOUNTED RENT PAID FOR THE ASSESSMENT YEAR 2001-02 2002-03 AND 2003-0 4. IT WAS THE SUBMISSION THAT IN THE COURSE OF STATEMENT RECORDED FROM THE A SSESSEE THE ASSESSEE HAS SPECIFICALLY CLAIMED THAT THE UNACCOUNTED RENT WAS PAID OUT OF THE SALE PROCEEDS OF THE SCRAP GENERATED BY THE ASSESSEE IN THE HOSIE RY BUSINESS. IT WAS THE SUBMISSION THAT THE REVENUE HAD ACCEPTED THAT THE U NACCOUNTED RENT HAD BEEN PAID OUT OF THE SALE OF SCRAP IN THE HOSIERY BUSINE SS AND CONSEQUENTLY THE SAME WAS LIABLE TO BE TREATED AS BUSINESS PROFITS WHILE COMPUTING THE DEDUCTION U/S. 80HHC. IT WAS THE SUBMISSION THAT THE LEARNED CIT( A) HAD NOT ACCEPTED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SARLA HANDICRAFTS P. LTD. V. ADDL. CIT REPORTED IN 296 ITR 94 WHEREIN THE HON'BLE HIGH COURT HAD CATEGORIC ALLY HELD THAT THE DEDUCTION U/S 80HHC IS AVAILABLE ONLY ON THE FULFILMENT OF CE RTAIN CONDITIONS SPECIFIED THEREIN AND THERE CAN BE NO PRESUMPTION THAT THE SU RRENDER MADE ON ACCOUNT OF THE DIFFERENCE FOUND IN THE STOCK AT THE TIME OF SU RVEY REPRESENTS INCOME FROM I.T (SS).A. NO.10/MDS/2010 3 EXPORTS. IT WAS THE SUBMISSION THAT THE ASSESSEE W AS NOT CLAIMING THAT THE UNACCOUNTED RENT MUST BE TREATED AS THE BUSINESS IN COME OF THE ASSESSEE FROM THE EXPORTS. IT WAS THE SUBMISSION THAT THE CLAIM OF THE ASSESSEE WAS ONLY THAT THE UNACCOUNTED RENTAL EXPENDITURE WHICH HAS BEEN T REATED AS UNACCOUNTED INCOME OF THE ASSESSEE WAS OUT OF THE BUSINESS INCO ME OF THE ASSESSEE BEING OUT OF THE SALE OF THE SCRAP GENERATED BY THE ASSES SEE IN THE COURSE OF ITS BUSINESS AND CONSEQUENTLY THE SAME WAS LIABLE TO BE INCLUDED IN ITS BUSINESS INCOME FOR THE PURPOSE OF COMPUTING THE DEDUCTION U /S. 80HHC. 4. IN REPLY THE LEARNED DR RELIED UPON THE DECISION OF THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF NATIONAL LEGGUARD WORKS V . CIT REPORTED IN 288 ITR 18 WHEREIN THE HON'BLE HIGH COURT HAS CATEGORICALL Y HELD THAT THE BURDEN WAS ON THE ASSESSEE TO PROVE THAT THE AMOUNT SURRENDERE D BY THE ASSESSEE AFTER SURVEY OPERATIONS REPRESENTED EXPORT PROFITS AND TH IS BURDEN HAVING NOT BEEN DISCHARGED THE ASSESSEE IS NOT ENTITLED TO SPECIAL DEDUCTION U/S. 80HHC IN RESPECT OF SUCH AMOUNT. IT WAS THE SUBMISSION THA T THE ORDERS OF THE LEARNED CIT(A) AND THE ASSESSING OFFICER SHOULD BE UPHELD. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT A SWORN STATEMENT HAS BEE N RECORDED FROM THE I.T (SS).A. NO.10/MDS/2010 4 ASSESSEE AND THE ASSESSEE HAS EXPLAINED THE SOURCE FOR THE UNACCOUNTED PAYMENTS TO BE OUT OF THE UNACCOUNTED SALE PROCEEDS OF THE WASTE CLOTH. THIS STATEMENT OF THE ASSESSEE IS ALSO AGAIN SUPPORTED B Y THE RECORDING IN THE ASSESSMENT ORDER AT PAGE 7 PARA 24(B) WHEREIN THE A SSESSING OFFICER HAS ALSO ACCEPTED THAT THE SOURCE OF FUNDS FOR MAKING ADDIT IONAL RENT PAYMENTS WAS FIRST ATTRIBUTED TO SALE OF WASTE AS ADMITTED DURING ENQU IRY AND THEN TO THE AMOUNTS AVAILABLE FROM HIS DRAWINGS AS CLAIMED DURING THE A SSESSMENT PROCEEDINGS. IF IT IS RENT PAID FOR RESIDENCE OF THE ASSESSEE HE CAN ATTRIBUTE THE SOURCE TO DRAWINGS. AS HUMAN PROBABILITY WOULD HAVE IT EVERY ASSESSEE WOULD ONLY TRY TO BOOK ALL THE PERMISSIBLE BUSINESS EXPENSES AND NOT MEET IT OUT OF HIS DRAWINGS. THUS THE ASSESSEE IS BLOWING HOT AND COLD THAT HE H AS CORRECTLY RECORDED RENT PAID AT ` 25 000 PER MONTH ( ` 75 000 FOR 3 MONTHS) FOR THE FIRST YEAR UNDER OCCUPATION AND RECORDED ONLY ` . 9 000 FOR THE NEXT YEAR UNDER OCCUPATION. THUS THE FACTUM THAT THE SOURCE OF FUNDS FOR THE PA YMENT OF THE UNACCOUNTED RENT HAS BEEN ACCEPTED BY THE REVENUE TO BE FROM TH E SALE OF SCRAP GENERATED IN THE BUSINESS OF THE ASSESSEE. ONCE THIS IS ACCEPTE D THEN THE SAME WOULD HAVE TO BE TREATED AS THE BUSINESS INCOME OF THE ASSESSE E AND THE SAME WOULD HAVE TO BE INCLUDED IN THE PROFITS OF THE BUSINESS FOR T HE PURPOSE OF COMPUTING THE DEDUCTION U/S. 80HHC. THIS VIEW OF OURS ALSO FINDS SUPPORT FROM THE PRINCIPLES LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN THE CASE OF SARLA HANDICRAFTS P.LTD. REFERRED TO SUPRA BY THE LEARNE D CIT(A) FOR DENYING THE I.T (SS).A. NO.10/MDS/2010 5 ASSESSEE THE BENEFIT OF DEDUCTION U/S. 80HHC AS CLA IMED. IN THE CIRCUMSTANCES THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 6 TH AUGUST 2010. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 6 TH AUGUST 2010. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE