M/s. SBL Ltd, New Delhi v. DCIT, New Delhi

CO 324/DEL/2009 | 2006-2007
Pronouncement Date: 22-02-2010 | Result: Allowed

Appeal Details

RSA Number 32420123 RSA 2009
Assessee PAN AAACS0417L
Bench Delhi
Appeal Number CO 324/DEL/2009
Duration Of Justice 4 month(s) 29 day(s)
Appellant M/s. SBL Ltd, New Delhi
Respondent DCIT, New Delhi
Appeal Type Cross Objection
Pronouncement Date 22-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted G
Tribunal Order Date 22-02-2010
Date Of Final Hearing 08-12-2009
Next Hearing Date 08-12-2009
Assessment Year 2006-2007
Appeal Filed On 23-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI K.D. RANJAN ACCOUNTANT MEMBER ITA NO.3607/DEL./2009 (ASSESSMENT YEAR : 2006-07) DCIT CIRCLE 7(1) VS. M/S SBL LTD. 2 COMMERCIAL COMPLEX SHRESTHA VIHAR NEW DELHI. (PAN/GIR NO.AAACS0417L) AND C.O. NO.324/DEL./2009 (IN ITA NO.3607/DEL./2009) (ASSESSMENT YEAR : 2006-07) M/S SBL LTD. VS DCIT CIRCLE 7(1) NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGGARWAL/GAUTAM JAIN ADV. REVENUE BY : SHRI GAJANAND MEENA CIT(DR) ORDER PER K.D. RANJAN: AM THE APPEAL BY THE REVENUE AND THE CROSS OBJECTION B Y THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 ARISE OUT OF THE ORDER OF C IT(A)-X NEW DELHI. THESE APPEALS WERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENC E ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. THE FIRST ISSUE IN REVENUE S APPEAL FOR CONSIDER ATION RELATES TO DELETING THE ADDITION OF RS.3 57 60 254/- MADE BY THE AO ON ACCO UNT OF JOB WORK EXPENSES. THE FACTS OF THE CASE STATED IN BRIEF ARE THAT THE ASSESSEE C LAIMED JOB WORK CHARGES AMOUNTING TO RS.3 57 60 254/- UNDER THE HEAD MANUFACTURING EXPE NSES AS IN THE IMMEDIATE PRECEDING ITA NO.3607/DEL./2009 & C.O. NO.324/DEL./2009 (A.Y. : 2006-07) 2 YEAR. IN AY 2004-05 AND IN EARLIER YEAR A VERY MEA GER AMOUNT OF JOB WORK HAD BEEN CLAIMED BY THE ASSESSEE. THE AO WAS THEREFORE OF THE VIEW THAT JOB WORK CHARGES PAID WERE DOUBTFUL. THE ASSESSING OFFICER WAS OF THE OP INION THAT THE EXPENDITURE INCURRED ON JOB WORK CHARGES WERE NOT GENUINE. HE THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE. 3. ON APPEAL THE ASSESSEE SUBMITTED RELYING ON THE EVIDENCE ON RECORD THAT JOB WORK CHARGES WERE GENUINE. THE ASSESSEE HAD MADE PAYMEN T THROUGH ACCOUNT PAYEE CHEQUES AND DEDUCTED TAX AT SOURCE ON JOB WORK CHARGES. TH E CIT(A) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE DELETED THE ADDIT ION BY OBSERVING AS UNDER: 9. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS MAD E BY THE AR OF THE APPELLANT AND ALSO CONSIDERED THE DOCUMENTS FILED I N PAPER BOOKS VOLUME I TO IV NUMBERING 1595 SHEETS AND THE WRITTEN SUBMISSIONS M ADE BY THE AR. THE REMAND REPORT AS WELL AS THE REJOINDER HAS ALSO BEEN TAKEN INTO ACCOUNT. IT IS NOTICED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE IN STEAD OF PURCHASING GOODS FROM ITS SISTER CONCERN STARTED GETTING JOB WORK DONE FR OM THEM AND PAID JOB CHARGES FOR THE WHOLE YEAR UNDER CONSIDERATION. OUT OF TOT AL JOB CHARGES OF RS.3 59 17 417/- THE ASSESSEE COMPANY PAID RS.3 57 60 254/- TO ITS SISTER CONCERNS NAMELY M/S DENZONG LABORATORIES (P) LTD LOCATED AT SAHIBABAD AND JAIPUR FOR SHAMPOO & DILUTION AND M/S SBL(SKM) PVT. LTD LOCATED AT SAHIBABAD FOR OIL. THE CLAIM OF DEDUCTION OF JOB CHARGES WAS SUBSTANTIATED BY NECESSARY DOCUMENTARY EVIDENCE IN THE SHAPE OF VOUCHERS DELI VERY CHALLANS BILLS RAISED BY JOB WORKERS AND THE BASIS OF CALCULATION OF SUCH JO B CHARGES FREIGHT BILLS INSURANCE COVER NOTES ETC WHICH WERE FILED DURING A SSESSMENT PROCEEDINGS AND COPIES OF WHICH WERE PLACED IN PAPER BOOK I TO IV I N THE APPELLATE PROCEEDINGS (AO IN REMAND REPORT HAS CONFIRMED THAT ALL THESE D ETAILS HAVE BEEN FILED DURING THE ASSESSMENT PROCEEDINGS). THE APPELLANT COMPANY MADE PAYMENTS BY ACCOUNT PAYEE CHEQUE AND DEDUCTED TDS ON PAYMENTS MADE TO J OB WORKERS. NECESSARY EVIDENCE IN THE SHAPE OF COPY OF ACCOUNT OF THE JOB WORKERS IN THE BOOKS OF THE APPELLANT COMPANY AND TDS CERTIFICATES HAVE BEEN PL ACED ON RECORD. EVEN THE CHALLANS FURNISHED BY ASSESSEE WERE DULY STAMPED BY CONCERNED TAX OFFICER OF GOVERNMENT OF WEST BENGAL AND BILLS OF TRUCK NUMBER S WERE MENTIONED IN THE CHALLANS/INVOICES. NON FURNISHING OF INCOME TAX PAR TICULARS/PAN DETAILS OF THE TWO SISTER CONCERNS WAS NO JUSTIFICATION FOR DISALL OWING THE WHOLE AMOUNT OF JOB WORK CHARGES BY THE AO SINCE BOTH THE COMPANIES WE RE LOCATED AT SIKKIM AND THE I.T. ACT HAS NOT YET BEEN IMPLEMENTED IN THE STATE OF SIKKIM. THE IDENTITY OF THE TWO COMPANIES IS ESTABLISHED AS THEY ARE DULY REGIS TERED UNDER SALES TAX/EXCISE AS WELL AS DRUGS & COSMETICS DEPARTMENT AS PER THE DETAILS REFERRED TO IN PARA 4.4 ABOVE. THE AO IN THE REMAND REPORT DATED 09.03.200 9 HAS NOT DENIED THAT THE DETAILS HAD BEEN FURNISHED BY THE ASSESSEE IN THE A SSESSMENT PROCEEDINGS; SHE HAS CONFIRMED THAT THE PAPER BOOK SUBMITTED DURING THE APPELLATE PROCEEDINGS HAS BEEN TEST CHECKED WITH THE DETAILS SUBMITTED DURING ASSESSMENT PROCEEDINGS. IT IS ITA NO.3607/DEL./2009 & C.O. NO.324/DEL./2009 (A.Y. : 2006-07) 3 NOT UNDERSTOOD AS TO HOW THE DETAILS FILED DURING A SSESSMENT PROCEEDINGS WERE CONSIDERED INADEQUATE AND INCOMPLETE TO PROVE T HE GENUINENESS OF EXPENSES INCURRED BY THE ASSESSEE. EVEN NOW SHE AHS NOT COM MENTED AS TO WHICH EVIDENCE FILED BY THE ASSESSEE IS INSUFFICIENT/INCORRECT TO PROVE THE GENUINENESS OF THE EXPENDITURE INCURRED. PURPOSEFULLY THE AO HAS NO T GIVEN ANY COMMENTS ON MERITS OF THE CASE AND IT IS PRESUMED THAT SHE DOES NOT HAVE ANYTHING TO SAY ON MERITS OF THESE EVIDENCES. HAVING CONSIDERED THE A PPELLANTS EXPLANATION DULY SUPPORTED BY RELEVANT PAPERS AND EVIDENCE IT IS CL EAR THAT JOB WORK CHARGES WERE PAID BASICALLY TO TWO SISTER CONCERNS FOR GETTING GOODS MANUFACTURED THE EXPLANATION ON VARIOUS ISSUES RAISED IN THE ASSESSM ENT ORDER IS FOUND LOGICAL REASONABLE AND IS DULY SUPPORTED BY EVIDENCE. I T HEREFORE HAVE NO HESITATION TO CONCLUDE THAT THE DISALLOWANCE MADE3 BY THE AO ARE ARBITRARY AND HIGHLY UNJUSTIFIED AND ACCORDINGLY DISALLOWANCE OF RS.3 5 7 60 254/- IS DELETED. 4. BEFORE US AT THE OUTSET LD.AR OF THE ASSESSEE SUBMITTED THAT ON IDENTICAL FACTS IN AY 2005-06 ITAT DELHI BENCH G IN ITA NO.3628/DE L./2008 DATED 09.10.2009 UPHELD THE DELETION OF ADDITION BY CIT(A). ON THE OTHER HAND LD.CIT(DR) SUPPORTED THE ORDER OF THE AO. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IDENTICAL ISSUE CAME UP BEFORE THIS TR IBUNAL FOR AY 2005-06 BEFORE ITAT DELHI BENCH G WHEREIN THE DELETION OF ADDITION BY LD.CIT(A) HAS BEEN UPHELD BY THE TRIBUNAL IN ORDER DATED 9.10.2009 BY OBSERVING AS UNDER: 12 THE DELETION OF THE ADDITION MADE BY THE AO HA S THUS IT IS SEEN BEEN ORDERED BY THE LD. CIT(A) ON THE BASIS OF THE COGEN T EVIDENCE FILED BY THE ASSESSEE. THEREFROM IT WAS FOUND AND IT REMAINS U NREBUTTED THAT AS NOTED BY THE LD. CIT(A) IN PARA 2.8 OF HIS ORDER: HAVING CONSIDERED THE APPELLANTS EXPLANATION DULY SUPPORTED BY RELEVANT PAPERS AND EVIDENCE IT IS QUITE CLEAR THA T THE APPELLANT COMPANY WAS PURCHASING SOME OF THE PRODUCTS FROM TW O CONCERNS AS FINISHED GOODS. HOWEVER DUE TO SOME DIFFERENCE S ON ACCOUNT OF DEMAND FOR HIGHER CHARGES ETC. THE ARRANGEMENT WERE MODIFIED AND INSTEAD OF PURCHASING FINISHED GOODS DIRECTLY THE RAW MATERIAL/PACKING MATERIAL WAS SUPPLIED TO THEM AND THEY WERE ASKED TO MANUFACTURE THE PRODUCTS ON JOB WORK BASIS . FOR THE FIRST SIX MONTHS OF THE YEAR THE APPELLANT HAS PURCHASED SOME FINISHED GOODS FROM SAME PARTIES. IN THE SECOND HALF THERE I S NO SUCH PURCHASE OF FINISHED GOODS AND INSTEAD JOB WORK CHA RGES WERE PAID FOR GETTING THE SAME GOODS AND INSTEAD JOB WORK CHA RGES WERE PAID FOR GETTING THE SAME GOODS MANUFACTURED FROM THOSE PARTIES. THE ITA NO.3607/DEL./2009 & C.O. NO.324/DEL./2009 (A.Y. : 2006-07) 4 APPELLANT HAS SUBMITTED A WORKING ACCORDING TO WHIC H THE PER UNIT COST OF SOME OF THE PRODUCTS IS LESS INCLUDING RAW MATERIAL JOB WORK AND TRANSPORT CHARGES AS COMPARED TO THE PURCH ASE PRICE OF FINISHED PRODUCTS PAID EARLIER. THE APPELLANT HAS DULY EXPLAINED AND MET WITH THE DOUBTS AND SUSPICIONS RAISED BY TH E AO IN THE ASSESSMENT ORDER. ON THE BASIS OF EXPLANATION OF TH E APPELLANT THE REASONS NOTED BY THE AO DISALLOWANCE APPEAR TO BE Q UITE UNJUSTIFIED AND MERE PRESUMPTIONS NOT SUPPORTED BY FACTS. THE AO FAILED TO APPRECIATE THE FACTS RELATING TO PAYMENT OF JOB WORK CHARGES WHICH WAS SIMPLY CHANGED OF ARRANGEMENT FOR GETTING SOME OF THE FINISHED GOODS FROM THE TWO PARTIES AT SIKKIM. THE EXPLANATION OF VARIOUS ISSUES RAISED IN ASSESSMENT ORDER IS FOUND VERY LOGICAL REASONABLE JUSTIFIED AND DULY SUPPOR TED. IN VIEW OF THIS I HAVE NO HESITATION TO CONCLUDE THAT THE DIS ALLOWANCE MADE BY THE AO WAS ARBITRARY AND HIGH UNJUSTIFIED. THE REFORE THE DISALLOWANCE OF RS.1 7U0 51 147/- IS DELETED. 13. THERE IS NO MATERIAL BEFORE US MUCH LESS MATER IAL FORCEFUL ENOUGH TO PERSUADE US TO DISLODGE THE WELL REASONED FINDINGS OF FACT RECORDED BY THEN LD. CIT(A). THERE IS AMPLE PROOF AND EVIDENCE AS CONSI DERED BY THE LD. CIT(A) TO PROVE IT BEYOND DOUBT THAT THE EXPENDITURE OF RS.17 05 147/- INCURRED BY THE ASSESSEE ON JOB WORK AT SIKKIM WAS IN FACT INCURRE D BY THE ASSESSEE AND IT WAS A GENUINE EXPENDITURE AND THAT THE DISALLOWANCE MADE WAS ENTIRELY UNCALLED FOR. ERGO THERE BEING NO INFIRMITY OR PERVERSITY THEREI N THE ORDER OF THE LD. CIT(A) IS ON THE BASIS OF THE DISCUSSION ABOVE HEREBY UPHELD . THE GROUNDS RAISED BY THE DEPARTMENT ARE THUS REJECTED. 6. SINCE THE FACTS OF THE CASE BEFORE US ARE IDENTI CAL TO THE FACTS OF AY 2005-06 AND THE REVENUE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE THE CONTRARY RELYING ON THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR AY 2005 -06 WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A) DELETING THE ADDITIO N. HENCE THE ORDER PASSED BY THE CIT(A) IS UPHELD. 7. THE NEXT ISSUE FOR CONSIDERATION WHICH IS COMMON IN REVENUES APPEAL AND C.O. FILED BY THE ASSESSEE RELATES TO DISALLOWANCE OF DE DUCTION U/S 80IB OF THE I.T. ACT. THE AO WHILE COMPUTING THE TOTAL INCOME DISALLOWED THE DEDUCTION U/S 80IB AT RS.2 08 284/-. ON APPEAL THE CIT(A) REDUCED THE DISALLOWANCE FRO M RS.2 08 284/- TO RS.62 485/-. THE REVENUE IS AGGRIEVED AGAINST THE REDUCTION IN DISAL LOWANCE FORM RS.2 08 284/- TO RS.62 485/- WHEREAS ASSESSEE IS AGGRIEVED AGAINST T HE CONFIRMING THE DISALLOWANCE TO THE EXTENT OF RS.62 485/-. ITA NO.3607/DEL./2009 & C.O. NO.324/DEL./2009 (A.Y. : 2006-07) 5 8. BEFORE US LD.AR OF THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION IN AY 2004-05 IN ITA NO.5037/DEL./200 4 DATED 13.02.2000 WHEREIN THE MATTER WAS SET ASIDE TO FILE OF THE AO WITH THE DIR ECTION TO EXAMINE THE CASE OF THE ASSESSEE AND DECIDE THE ALLOWANCE OF DEDUCTION U/S 80IB AFTER VERIFICATION. ON THE OTHER HAND LD.SR.DR SUPPORTED THE ORDER OF THE AO. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE AO WHILE ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB OBSERVED THAT THE ASSESSEE HAD INCLUDED A SUM OF RS.2 08 284/- EARNED ON ACCOUNT OF SCRAP SALES OF CORRUGATED BOXES AS PART OF INCOME FOR THE PURPOSE OF DEDUCTION U/S 80IB. THE AO WHILE DISALLOWING THE CLAIM RELIED ON THE ORDER IN PREVIO US YEAR WHEREIN THE DISALLOWANCE MADE BY THE AO ON IDENTICAL FACTS WAS UPHELD. 10. ON APPEAL THE CIT(A) RESTRICTED THE DISALLOWAN CE BY 30% OF THE SCRAP SALES OF RS.2 08 284/- I.E. RS.62 485/- AS AN ALTERNATIVE CO NTENTION OF THE ASSESSEE. 11. BEFORE US LD.AR OF THE ASSESSEE SUBMITTED AS I N AY 2004-05 THE MATTER MAY SET ASIDE TO HE FILE OF THE AO FOR RE-CONSIDERATION OF THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IB. 12. WE HAVE HEARD BOTH THE PARTIES. ITAT DELHI BE NCH G NEW DELHI FOR AY 2004-05 IN ITA NO.5037/DEL./2007 DATED 30.02.2009 S ET ASIDE THE MATTER TO THE FILE OF THE AO BY OBSERVING AS UNDER: 5.AS FAR AS SCARP SALES ARE CONCERNED THE LD.C IT(A) HAS CONFIRMED THE EXCLUSION OF THESE RECEIPTS BECAUSE THERE IS NO DIR ECT NEXUS. THESE RECEIPTS WERE GENERATED FROM SALE OF GUNNY BAGS PACKING MATERIALS ETC. IF THAT BE SO THEN SUCH RECEIPTS DESERVE TO BE EXCLUDED FROM MANUFACTURING ACTIVITY. WE SET ASIDE THIS ISSUE TO THE AO TO VERIFY THE EXACT NATURE OF RECEI PT. WE SUMMARIZE THE RESULT AS UNDER. THE AO SHALL GRANT DEDUCTION U/S 80IB ON AL L THE AMOUNTS MENTIONED IN PARAGRAPH NO.2 OF THE ORDER EXCEPT INTEREST ON FDR AND SCRAP SALE. HE SHALL READJUDICATE THE ISSUE REGARDING SCRAP SALE. 13. SINCE THE FACTS OF THE ASSESSMENT YEAR ARE IDEN TICAL TO THE FACTS OF THE ASSTT. YEAR 2004-05 WE SET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTIONS TO DECIDE THE ITA NO.3607/DEL./2009 & C.O. NO.324/DEL./2009 (A.Y. : 2006-07) 6 CLAIM OF THE ASSESSEE DE NOVO AFTER PROPER VERIFICA TION AS HAS BEEN DIRECTED IN AY 2004- 05. WE ORDER ACCORDINGLY. 14. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE C.O. FILED BY THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSE. 15. ORDER PRONOUNCED IN OPEN COURT ON THE CONCLUSIO N OF THE HEARING ON 22.02.2010. SD/- SD/- (I.P. BANSAL) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : FEB. 22 2009. *SKB* COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT 4. CIT (APPEALS)-X NEW DELHI. 5. DIT(DR) ITAT NEW DELHI. BY ORDER. ASSISTANT REGISTRAR ITAT.