Bharat Bobbins Ltd.,, Ahmedabad v. The ACIt., Circle-1,, Ahmedabad

ITA 2391/AHD/2005 | 2002-2003
Pronouncement Date: 26-02-2010 | Result: Allowed

Appeal Details

RSA Number 239120514 RSA 2005
Bench Ahmedabad
Appeal Number ITA 2391/AHD/2005
Duration Of Justice 4 year(s) 3 month(s) 12 day(s)
Appellant Bharat Bobbins Ltd.,, Ahmedabad
Respondent The ACIt., Circle-1,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 13-02-2009
Date Of Final Hearing 22-02-2010
Next Hearing Date 22-02-2010
Assessment Year 2002-2003
Appeal Filed On 14-11-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'C' (BEFORE S/SHRI N S SAINI AND MAHAVIR SINGH) ITA NO.2391/AHD/2005 (ASSESSMENT YEAR:- 2002-03) BHARAT BOBBINS LIMITED OPP. AJIT MILLS RAKHIAL ROAD AHMEDABAD V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-1 AHMEDABAD [PETITIONER] [RESPONDENT] PETITIONER BY :- SHRI ANIL R SHAH RESPONDENT BY:- SHRI M C PANDIT SR. DR O R D E R PER N S SAINI (ACCOUNTANT MEMBER) : THIS APPEAL OF THE ASSESSEE WAS DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 13 -02-2009. THE ASSESSEE THEREAFTER FILED A MISCELLANEOUS APPLICATI ON BEARING NO.71/AHD/2009. THE SAID MISCELLANEOUS APPLICATION WAS DISPOSED OF BY THE TRIBUNAL ON 04-09-2009 AND THE ORDER OF T HE TRIBUNAL WAS RECALLED FOR THE LIMITED EXTENT OF DECIDING WHETHER ON THE BASIS OF DETAILS OF MISCELLANEOUS INCOME OF RS.8 09 774/- FI LED AT PAGE 27 OF THE PAPER BOOK FILED AT THE TIME OF ORIGINAL HEARIN G THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 80HHC OF THE IT ACT 1961 ON THE SAID INCOME. 2 AT THE TIME OF HEARING THE LEARNED AUTHORISED REP RESENTATIVE OF THE ASSESSEE REFERRED TO PAGE-27 OF THE PAPER BO OK AND POINTED OUT THAT THE DETAILS OF MISCELLANEOUS APPLICATION D URING THE ASSESSMENT YEAR ARE AS UNDER:- 2 MACHINERY MAINTENANCE RS.1 56 000.00 MISCELLANEOUS INCOME RS. 2 872.00 SALES OF SCRAP RS.4 67 760.00 PACKING & FORWARDING RS.1 70 850.00 DISCOUNT RS. 3 203.30 -------------------- RS.8 09 774.30 HE SUBMITTED THAT AS THE ABOVE MISCELLANEOUS INCOME WAS DERIVED FROM THE BUSINESS OF THE ASSESSEE THE SAME WAS ELI GIBLE FOR DEDUCTION U/S 80HHC OF THE ACT. 3 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND SUBMITTED THAT THE MISCELLANEOUS INCOME EARNED BY T HE ASSESSEE DURING THE YEAR WILL BE ENTITLED TO DEDUCTION U/S 8 0HHC OF THE ACT ONLY IF THE SAID INCOME HAS NEXUS OR IS DERIVED FRO M THE EXPORT ACTIVITIES OF THE ASSESSEE. AS THE ASSESSEE HAS FAI LED TO SHOW ANY NEXUS OF THE ABOVE INCOME EARNED BY THE ASSESSEE WI TH THE EXPORT ACTIVITIES OF THE ASSESSEE THE ASSESSEE IS NOT ENT ITLED FOR DEDUCTION U/S 80HHC OF THE ACT ON THE ABOVE MISCELLANEOUS INC OME. 4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABL E ON RECORD. IN THE INSTANT CASE THE ASSESSEE IS ENGAGED IN THE BUS INESS OF MANUFACTURING OF TEXTILE ACCESSORIES AND CHEMICALS. THE ASSESSEE HAS SHOWN MISCELLANEOUS INCOME OF RS.8 09 774/- BY CREDITING THE SAME IN THE PROFIT & LOSS ACCOUNT AND BREAK UP OF T HE SAME IS AS UNDER:- 3 MACHINERY MAINTENANCE RS.1 56 000.00 MISCELLANEOUS INCOME RS. 2 872.00 SALES OF SCRAP RS.4 67 760.00 PACKING & FORWARDING RS.1 70 850.00 DISCOUNT RS. 3 203.30 -------------------- RS.8 09 774.30 THE LEARNED ASSESSING OFFICER WAS OF THE VIEW THAT THE ABOVE RECEIPTS HAD NO CONNECTION WITH THE EXPORT ACTIVITI ES OF THE ASSESSEE AND THEREFORE THE SAME CANNOT BE INCLUDED IN PROFIT DERIVED FROM EXPORT FOR COMPUTING DEDUCTION ALLOWAB LE U/S 80HHC OF THE ACT. THE LEARNED ASSESSING OFFICER THEREFOR E EXCLUDED RS.8 09 774/- OUT OF THE EXPORT PROFITS DISCLOSED B Y THE ASSESSEE FOR COMPUTING THE DEDUCTION ALLOWABLE U./S 80HHC OF THE ACT. ON APPEAL THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) OPINED THAT THE ABOVE RECEIPTS OF RS.8 09 774/- IS NOT REL ATED TO THE BUSINESS OF THE ASSESSEE AND THEREFORE CONFIRMED TH E ACTION OF THE LEARNED ASSESSING OFFICER IN EXCLUDING THE ABOVE AM OUNT WHILE COMPUTING DEDUCTION ALLOWABLE U/S 80HHC OF THE ACT. WE FIND THAT PROFITS DERIVED FROM EXPORTS UNDER SCHEME OF SECTIO N 80HHC IS TO BE COMPUTED IN THE MANNER SPECIFIED IN SECTION 80HH C(3) OF THE ACT AND THERE BEING A SPECIFIC FORMULA PROVIDED IN THE SECTION ITSELF NO OTHER MEANING CAN BE ASSIGNED TO IT. AS PER THE PRO VISIONS OF SECTION 80HHC(3) FOR ARRIVING AT PROFITS DERIVED FR OM EXPORTS ONE HAS TO COMPUTE THE PROFITS OF BUSINESS AS PER EXPLA NATION (BAA) OF THE ACT WITH REFERENCE TO COMPUTATION MADE UNDER TH E HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION THEN HAS TO APPLY FORMULA SPECIFIED IN SUB-SECTION (3) OF SECTION 80H HC AND THE RESULTANT AMOUNT SHALL BE DEEMED AS PROFITS DERIVED FROM EXPORT. IN OTHER WORDS ONE HAS TO COMPUTE PROFITS AND GAINS O F BUSINESS OR 4 PROFESSION AS PER THE PROVISIONS OF PART-D OF CHAP TER IV OF THE ACT AND IN COMPUTING THE SAME ONE CANNOT EXCLUDE ANY AM OUNT ON THE GROUND THAT SUCH AMOUNT OF INCOME HAS NO CONNECTION WITH THE EXPORT ACTIVITY OF THE ASSESSEE. THUS IN OUR CONSI DERED OPINION THE LEARNED ASSESSING OFFICER WAS NOT JUSTIFIED IN EXCL UDING AFORESAID INCOME OF RS.8 09 774/- ON THE GROUND THAT SUCH INC OME HAS NO CONNECTION WITH THE EXPORT ACTIVITY OF THE ASSESSEE . FURTHER THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HAS HE LD THAT THE AFORESAID INCOME OF RS.8 09 774/- ARE NOT IN THE NA TURE OF INCOME FROM BUSINESS AND ARE NOT DERIVED IN THE ORDINARY COURSE OF DAY-TO- DAY BUSINESS TRANSACTIONS. WE FIND THAT NO REASON O R BASIS OF THE ABOVE CONCLUSION WAS STATED BY THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS) IN HIS ORDER. THUS SUCH A NON -SPEAKING ORDER CANNOT BE SUSTAINED. WE FIND THAT THE LEARNED AUTHO RISED REPRESENTATIVE OF THE ASSESSEE HAS SIMPLY PROVIDED THE BREAK-UP OF THE RECEIPTS BUT COULD NOT EXPLAIN THE NATURE OF TR ANSACTIONS FROM WHICH SUCH RECEIPTS ACCRUED TO THE ASSESSEE. APPARE NTLY FROM THE NOMENCLATURE GIVEN IT APPEARS THAT THE RECEIPTS WER E IN THE COURSE OF THE BUSINESS OF THE ASSESSEE BUT IN ABSENCE OF F ULL DETAILS OF THE TRANSACTIONS RESULTING IN THE RECEIPTS TO THE ASSES SEE THE ACTUAL NATURE OF THE RECEIPTS CANNOT BE DECIDED BY US. IN THESE CIRCUMSTANCES IN OUR CONSIDERED OPINION IT SHALL BE IN THE INTEREST OF JUSTICE TO RESTORE THIS ISSUE BACK TO THE FILE O F THE LEARNED ASSESSING OFFICER FOR ADJUDICATION AFRESH KEEPING I N VIEW THE OBSERVATIONS MADE HEREINABOVE AND PROVISIONS OF CLA USE (BAA) OF EXPLANATION TO SECTION 80HHC AND PROVISIONS OF SUB- SECTION (3) OF SECTION 80HHC OF THE ACT. WE ORDER ACCORDINGLY. NEE DLESS TO MENTION THAT PROPER OPPORTUNITY OF HEARING SHALL BE ALLOWED TO THE ASSESSEE BY THE LEARNED ASSESSING OFFICER BEFORE AD JUDICATING THE ISSUE AFRESH AS PER LAW. THUS THIS PART OF GROUND OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5 5 IN THE RESULT THIS PART OF THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 26-02-2010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 26-02-2010 COPY OF THE ORDER FORWARDED TO : 1. BHARAT BOBBINS LIMITED OPP. AJIT MILLS RAKHIAL ROAD AHMEDABAD 2. THE ACIT CIRCLE-1 AHMEDABAD 3. CIT CONCERNED 4. CIT(A)-V AHMEDABAD 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD