THE ITO 21(1)(3), MUMBAI v. SHRI MAHAVIR INDUSTRIES, MUMBAI

ITA 3902/MUM/2008 | 2005-2006
Pronouncement Date: 25-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 390219914 RSA 2008
Bench Mumbai
Appeal Number ITA 3902/MUM/2008
Duration Of Justice 1 year(s) 8 month(s) 20 day(s)
Appellant THE ITO 21(1)(3), MUMBAI
Respondent SHRI MAHAVIR INDUSTRIES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 25-02-2010
Assessment Year 2005-2006
Appeal Filed On 04-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI R.S.PADVEKAR JM ITA NO.6081/MUM/2006 : ASST.YEAR 2003-2004 ITA NO.4436/MUM/2007 : ASST. YEAR 2004-2005 ITA NO.3902/MUM/2008 : ASST. YEAR 2005-2006 THE INCOME TAX OFFICER WARD 18(2)(1) MUMBAI. VS. M/S.MAHAVIR INDUSTRIES SR.NO.114 H.NO.15 CTS NO.2099 AIRPORT SIDE SERVICE ROAD WESTERN EXPRESS HIGHWAY VILE PARLE (EAST) MUMBAI 400 099. PA NO.AAGFM9913Q. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI S.S.RANA PITAMBAR DAS & L.K. AGRAWAL RESPONDENT BY : SHRI CHETAN A.KARIA O R D E R PER : R.S.SYAL AM : THESE THREE APPEALS BY THE REVENUE RELATE TO THE AS SESSMENT YEARS 2003- 2004 2004-2005 AND 2005-2006. SINCE SOME OF THE IS SUES RAISED IN THESE APPEALS ARE COMMON WE ARE THEREFORE PROCEEDING TO DISPOS E THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2003-2004 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE GRANTING OF DEDUCTION BY THE LEARNED CIT(A) U/S.80-IB. BRIEFLY STATED THE FA CTS OF THE CASE ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURI NG CUTTING AND POLISHING OF MARBLE SLABS TILES ETC. THE CLAIM OF DEDUCTION U/S .80-IB WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS IN HIS OPINION THE ACTIVITY OF THE ASSESSEE DID NOT RESULT IN THE MANUFACTURE OF PRODUCTION OF ANY GOODS. THE LEARNE D CIT(A) HOWEVER CONCURRED ITA NOS.6081/MUM/2006 & ORS. M/S.MAHAVIR INDUSTRIES. 2 WITH THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSE SSEE AND ALLOWED THE DEDUCTION. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. BOTH THE SIDES ARE IN AGREEMENT THAT THE IS SUE RAISED IN THIS APPEAL IS NO MORE RES INTEGRA IN VIEW OF THE RECENT JUDGEMENT OF THE HONBLE SUP REME UPHOLDING THE VIEW TAKEN BY THE RAJASTHAN HIGH COUR T IN THE CASE OF ARIHANT TILES AND MARBLES P. LTD. VS. ITO [(2007) 295 ITR 148 (RA J.)] THAT CONVERSION OF MARBLE BLOCKS INTO SLABS AND TILES AMOUNTS TO PRODU CTION AND HENCE DEDUCTION IS AVAILABLE U/S.80-IB. IN VIEW OF THE RIVAL BUT COMMO N SUBMISSIONS WE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 4. IN THE RESULT THE APPEAL IS DISMISSED. ASSESSMENT YEAR 2004-2005 5. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE GRANTING OF DEDUCTION U/S.80-IB IN RESPECT OF INCOME FROM MANUFACTURING M ARBLE SLABS TILES ETC. FROM ROUGH MARBLE BLOCKS. THE SECOND PART OF THIS ISSUE IS AGAINST THE ALLOWING OF DEDUCTION U/S.80-IB IN RESPECT OF AN AMOUNT OF RS.4 9.44 LAKHS BEING JOB CHARGES RECEIVED FOR CARRYING OUT JOB WORKS FOR OUTSIDE PAR TIES. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ISSUE RAISED IN THIS APPEAL IS MUTATIS MUTANDIS SIMILAR TO THAT CONSIDERED BY US IN THE AFORE-NOTED ASSESSMENT YEAR 2003-2004. IT DOES NOT MAKE ANY MATERIAL DIFFERENCE WHETHER THE INCOME IS DERIV ED FROM MANUFACTURING FOR SELF USE OR FROM THE JOB WORK DONE FOR OUTSIDE PARTIES. THE NEXUS OF INCOME IS TO BE SEEN WITH THE INDUSTRIAL UNDERTAKING AND NOT HOW TH E OUTPUT IS USED. WE THEREFORE UPHOLD THE VIEW TAKEN BY THE LEARNED CIT(A) IN GRAN TING DEDUCTION IN RESPECT OF JOB CHARGES ALSO. ITA NOS.6081/MUM/2006 & ORS. M/S.MAHAVIR INDUSTRIES. 3 7. THE ONLY OTHER ISSUE RAISED IN THIS APPEAL IS AG AINST ALLOWING DEDUCTION U/S.80-IB IN RESPECT OF THE INTEREST INCOME OF RS.1 00 084 FROM THE BANK FDR. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD WE FIND THAT THIS ISSUE IS SQUARELY COVERED AS STATED BY THE LD. DR IN FAVOUR OF THE REVENUE BY THE JUDGEMENTS OF THE HON BLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. VS. CIT [(2003) 262 ITR 278 (SC)] AND LIBERTY INDIA VS. CIT [(2009) 317 ITR 218 (SC)] . RESPECTFULLY FOLLOWING THESE BINDING PRECEDENTS WE ALLOW THIS GROUND. 8. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ASSESSMENT YEAR 2005-2006 9. GROUND NO.1 IS AGAINST ALLOWING DEDUCTION U/S.80 -IB. IT IS A COMMON CASE OF BOTH THE SIDES THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE SIMILAR TO OTHER TWO EARLIER YEARS. FOLLOWING THE VIEW TAKEN BY US HEREINABOVE WE DISMISS THIS GROUND OF APPEAL. 10. GROUND NO.2 IS AGAINST GRANTING OF DEDUCTION U/ S.80-IB ON INTEREST INCOME OF RS.1 22 006. HERE AGAIN IT IS A COMMON CASE THAT T HE FACTS OF THIS GROUND ARE SIMILAR TO ASSESSMENT YEAR 2004-2005. FOLLOWING THE REASONING ADOPTED BY US IN THE AFORE-NOTED EARLIER YEAR WE OVERTURN THE IMP UGNED ORDER ON THIS ISSUE. THIS GROUND IS ALLOWED. 11. THE LAST EFFECTIVE GROUND IS AGAINST RESTRICTIN G MOTOR CAR EXPENSES FROM RS.79 661 TO RS.9 537. THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE HAD SHOWN MOTOR CAR EXPENSES AT RS.3 98 306. THE A.O. DISALLO WED 20% OF SUCH EXPENSES ON ACCOUNT OF PERSONAL USE. IN THE FIRST APPEAL THE LE ARNED CIT(A) RESTRICTED THE ADDITION TO RS.9 537 ONLY. ITA NOS.6081/MUM/2006 & ORS. M/S.MAHAVIR INDUSTRIES. 4 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED FROM THE IMPUGNED ORDER THAT O UT OF A TOTAL SUM OF RS.3 98 306 A SUM OF RS.3 02 936 WAS PAID FOR REGISTRATION AND RTO TAX ON PURCHASE OF NEW CAR. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE LD. DR TO CONTROVERT THIS FACTUAL FINDING RETURNED BY THE LD. FIRST APPELLATE AUTHORITY. THIS AMOUNT IS OBVIOUSLY DEDUCTIBLE IN FULL. ONLY A SUM OF RS.95 3 71 REPRESENTED THE MOTOR CAR AND MAINTENANCE EXPENSES. IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN REDUCING THE ADDITION TO 10% OF THE EX PENDITURE INCURRED ON RUNNING OF MOTOR VEHICLE FOR PERSONAL USE. THIS GROUND IS NOT ALLOWED. 13. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 25 TH FEBRUARY 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XVIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.