Ajanta Offset & Packagings Ltd.,, Delhi v. ITO, New Delhi

ITA 4801/DEL/2009 | 2004-2005
Pronouncement Date: 26-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 480120114 RSA 2009
Bench Delhi
Appeal Number ITA 4801/DEL/2009
Duration Of Justice 2 month(s) 8 day(s)
Appellant Ajanta Offset & Packagings Ltd.,, Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 26-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 26-02-2010
Assessment Year 2004-2005
Appeal Filed On 18-12-2009
Judgment Text
I.T.A. NO.4800 & 4801 /DEL/09 1/7 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.4800 & 4801 /DEL/2009 ASSESSMENT YEAR : 2003-04 & 2004-05 THE AJANTA OFFSET & PACKAGING ITO LTD. B-95 WAZIRPUR INDL. AREA WARD-1 (4) NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.AAACA-0245-Q APPELLANT BY : NONE RESPONDENT BY : MS. BANITA DEVI NAOREM SR. DR. ORDER PER A.K. GARODIA AM: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD CIT(A) IV NEW DELHI BOT H DATED 9.10.2009 FOR ASSESSMENT YEAR 2003-04 AND 2004-05. SINCE SIMILA R ISSUES ARE INVOLVED BOTH THESE APPEALS ARE DECIDED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE AND HENCE WE PROCEED TO DECIDE THESE APPEALS OF THE ASSESSEE EX PARTE QUA THE ASSESSEE. 3. GROUND NO.1 OF THE APPEAL IN ASSESSMENT YEAR 200 3-04 AND GROUND NO.2 IN ASSESSMENT YEAR 2004-05 ARE GENERAL. GROUND NO. 1 OF THE APPEAL IN ASSESSMENT YEAR 2004-05 IS REGARDING REJECTING THE APPLICATION OF THE ASSESSEE FOR CONDONATION OF DELAY IN FILING THE APPEAL BEFOR E LD CIT(A). WE FIND THAT THERE WAS DELAY OF 30 DAYS FOR FILING THE APPEAL BEFORE L D CIT(A) FOR 2004-05 AND THE . I.T.A. NO4800 & 4801/DEL/09 2/7 ASSESSEE HAS REQUESTED FOR CONDONATION OF DELAY ON THE BASIS THAT THE PERSON LOOKING AFTER THE TAXATION MATTERS IN ASSESSEES CA SES BY NAME SHRI ANIL AGARWAL WAS TRANSFERRED FROM CORPORATE OFFICE TO BRANCH OFF ICE LOCATED AT FARIDABAD AND IN VIEW OF THE ABSENCE OF SHRI ANIL AGARWAL THE DIRE CTOR AND CONTROLLER OF ACCOUNTS SHRI K.K. AGARWAL WAS TO ATTEND THE TAXATION MATTER S. IT WAS ALSO SUBMITTED BEFORE LD CIT(A) THAT SINCE SHRI K.K. AGARWAL WAS N OT DEALING WITH DAY TODAY INCOME TAX MATTERS FOR THE LAST EIGHT YEARS AND HE WAS UNDER THE MISTAKEN BELIEF THAT THE TIME PERIOD WAS 60 DAYS FOR FILING THE APP EAL BEFORE LD CIT(A) AND NOT 30 DAYS. LD CIT(A) HAS REJECTED THE REQUEST OF THE ASS ESSEE FOR CONDONATION OF DELAY BUT CONSIDERING THE FACTS NARRATED BY THE ASS ESSEE BEFORE THE LD CIT(A) WE ARE OF THE CONSIDERED OPINION THAT SUCH DELAY SH OULD BE CONDONED AND HENCE WE CONDONE THE SAME. GROUND NO.1 OF THE ASSESSEE IN ASSESSMENT YEAR 2004- 05 IS ALLOWED. 4. THE FIRST ISSUE ON MERIT IS REGARDING ALLOWABILI TY OF DEDUCTION U/S 80HHC ON DEPB BENEFITS OF RS.32 43 921/- IN ASSESSMENT YE AR 2003-04 AND RS.51 .65 495/- IN ASSESSMENT YEAR 2004-05. THIS I SSUE HAS BEEN RAISED BY THE ASSESSEE AS PER GROUND NO.2 IN ASSESSMENT YEAR 200 3-04 AND AS PER GROUND NO.3 IN ASSESSMENT YEAR 2004-05. 5. IT WAS SUBMITTED BY LD DR OF THE REVENUE THAT NO W THIS ISSUE HAS TO BE DECIDED AFRESH BY THE ASSESSING OFFICER AS PER DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF TOPMAN EXPORTS AS REPORTED IN 318 ITR (AT) 87. ACCORDINGLY WE SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND RESTORE THIS MATTER BACK TO THE FILE OF T HE ASSESSING OFFICER FOR BOTH THE YEARS FOR A FRESH DECISION IN THE LIGHT OF THE DECI SION OF THE SPECIAL BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF TOPMAN EXPORTS (SU PRA). 6. THE SECOND ISSUE ON MERIT IS REGARDING INCLUSION OF AMOUNT OF RS.53 44 492/- IN THE TOTAL TURNOVER OF THE ASSESSE E COMPANY FOR THE PURPOSE OF . I.T.A. NO4800 & 4801/DEL/09 3/7 DETERMINING DEDUCTION U/S 80HHC OF THE INCOME TAX A CT 1961. THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE AS PER GROUNED NO.3 IN ASSESSMENT YEAR 2003-04. 7. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE LD DR OF THE REVENUE. WE FIND THAT IT HAS BEEN OBSERVED BY THE LD CIT(A) ON PAGE NO.3 OF HIS ORDER IN ASSESSMENT YEAR 2003- 04 THAT THE ASSESSEE HAS SUBMITTED A DISCLAIMER CER TIFICATE AND REQUESTED THE ASSESSING OFFICER FOR NOT INCLUDING THIS AMOUNT IN THE TOTAL TURNOVER. WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS CALLED F OR IN THE ORDER OF THE LD CIT(A) ON THIS ISSUE BECAUSE WE FIND THAT AS PER EXPLANATI ON (BA) TO SECTION 80HHC (4C) IT IS PROVIDED THAT TOTAL TURNOVER SHALL NOT INCLUDE FREIGHT OR INSURANCE ATTRIBUTABLE TO THE TRANSPORT OF THE GOODS OR MERCH ANDISE BEYOND THE CUSTOMS STATION AS DEFINED IN THE CUSTOMS ACT 1962. AS PER THE PROVISO TO THIS CLAUSE THE EXPRESSION TURNOVER SHALL HAVE EFFECT AS IF IT ALSO EXCLUDED ANY SUM REFERRED TO IN CLAUSE (IIIA) (IIIB) (IIIC) (IIID) & (IIIE) OF S ECTION 28. FROM THIS DEFINITION OF TOTAL TURNOVER IN EXPLANATION (BA) TO SECTION 80 HHC (4C) WE FIND THAT NO EXCLUSION ON ACCOUNT OF DISCLAIMER CERTIFICATE IS REQUIRED TO BE MADE FROM TOTAL TURNOVER. OTHERWISE ALSO DISCLAIMER CERTIFICATE IS ON THIS A CCOUNT THAT DEDUCTION ON ACCOUNT OF 80 HHC FOR A PARTICULAR EXPORT IS NOT TO BE CLAI MED BY THE ASSESSEE COMPANY BEING A SUPPORTING MANUFACTURER TO OTHER MANUFACTUR ING COMPANY AS NOTED ON PAGE-2 OF STATEMENT OF FACTS FILED BEFORE LD CIT(A) . THIS DOES NOT MEAN THAT PROFIT OF BUSINESS AS PER P&L A/C OF THE ASSESSEE DOES NOT INCLUDE PROFIT ON THAT TURNOVER. IT MERELY MEANS THAT THE ASSESSEE IS NOT CLAIMING DEDUCTION U/S 80HHC ON SUCH EXPORT. HENCE IN OUR CONSIDERED OPINION T HE TURNOVER IS TO BE EXCLUDED FROM EXPORT TURNOVER AS HAS BEEN DONE BY THE ASSESS EE BUT IT CANNOT BE EXCLUDED FROM TOTAL TURNOVER AS PER THIS CLAIM OF T HE ASSESSEE. HENCE THIS GROUND OF THE ASSESSEE IS REJECTED. 9. THE NEXT ISSUE IS REGARDING ASSESSING THE INTERE ST INCOME AS INCOME FROM OTHER SOURCES TO THE EXTENT OF RS.18 12 644/- IN AS SESSMENT YEAR 2003-04 AND . I.T.A. NO4800 & 4801/DEL/09 4/7 RS.17 90 797/- IN ASSESSMENT YEAR 2004-05. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10. WE HAVE HEARD THE LD DR OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IT HA S BEEN NOTED BY THE LD CIT(A) ON PAGE NO.3 OF HIS ORDER IN ASSESSMENT YEAR 2003- 04 AS PER THE ASSESSEE THAT INTEREST INCOME WAS EARNED ON FIXED DEPOSIT MADE ON ACCOUNT OF MARGIN MONEY FOR BANK GUARANTEES ETC. WHICH WERE INEXTRICABLY LI NKED WITH THE BUSINESS OF THE ASSESSEE COMPANY. 11. IT WAS SUBMITTED BY THE LD DR OF THE REVENUE TH AT THIS ISSUE IS NOW COVERED AGAINST THE ASSESSEE AS PER THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT V. SHRIRAM HONDA POWER EQUIPMENT LTD. AS REPORTED IN 289 ITR 475 (DEL.). 12. WE HAVE HEARD THE LD DR OF THE REVENUE. WE AR E IN AGREEMENT WITH LD DR OF THE REVENUE THAT THIS ISSUE IS NOW COVERED IN FAVOUR OF THE REVENUE BY THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN TH E CASE OF SHRIRAM HONDA POWER EQUIPMENT LTD. (SUPRA). IN THAT CASE ALSO I T WAS THE CLAIM OF THE ASSESSEE THAT INTEREST WAS EARNED ON FIXED DEPOSIT FOR THE PURPOSE OF AVAILING OF CREDIT FACILITY FROM THE BANK AND UNDER THESE FACTS IT WAS HELD BY HON'BLE DELHI HIGH COURT THAT SUCH INTEREST INCOME NECESSARILY TO BE TREATED AS INCOME FROM OTHER SOURCES AND NOT BUSINESS INCOME. ONCE THE IN TEREST INCOME IS HELD TO BE ASSESSABLE AS INCOME FROM OTHER SOURCES IN THE LIGH T OF THIS JUDGMENT OF HON'BLE DELHI HIGH COURT NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS. 13. THERE IS ONE MORE ISSUE IN BOTH THE YEARS REGAR DING EXCLUSION OF 90% OF MISC. INCOME TO THE EXTENT OF RS.18 14 306/- IN ASS ESSMENT YEAR 2003-04 AND RS.15 84 084/- IN ASSESSMENT YEAR 2004-05. THIS I SSUE HAS BEEN RAISED BY THE ASSESSEE IN BOTH THE YEARS AS PER GROUND NO.5. . I.T.A. NO4800 & 4801/DEL/09 5/7 14. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 15. WE HAVE HEARD THE SUBMISSIONS OF THE LD DR OF T HE REVENUE. WE FIND THAT IN THIS REGARD IT IS OBSERVED BY THE LD CIT(A) IN ASSESSMENT YEAR 2003-04 THAT THE ASSESSING OFFICER HAS REDUCED THE AMOUNT OF INT EREST AND THE AMOUNT OF EXCHANGE RATE DIFFERENCE AND 90% OF THE BALANCE OF OTHER INCOME WAS ALSO REDUCED WHILE WORKING OUT THE PROFIT OF THE BUSINES S. IT IS FURTHER OBSERVED BY THE LD CIT(A) THAT THE CONTENTION OF THE ASSESSEE THAT THIS MISC. INCOME IS IN THE NATURE OF BUSINESS INCOME IS NOT SUPPORTED BY ANY E VIDENCE AND OR ARGUMENTS. BY MAKING THIS OBSERVATION THE LD CIT(A) HAS DECID ED THIS ISSUE AGAINST THE ASSESSEE. SIMILAR IS THE OBSERVATION OF LD CIT(A) I N 2004-05 BUT NOTHING IS COMING OUT REGARDING THE NATURE OF SUCH OTHER MISC. INCOME IN BOTH THE YEARS AND HENCE WE FEEL THAT THIS MATTER SHOULD GO BACK TO TH E FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AND ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND RESTORE THIS MATTE R BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. THE ASSESS EE SHOULD FURNISH COMPLETE DETAILS AND EVIDENCE REGARDING NATURE OF MISC. INCO ME FOR BOTH THE YEARS AND THEREAFTER THE ASSESSING OFFICER SHOULD DECIDE THIS ISSUE AFRESH AND PASS NECESSARY ORDER AS PER LAW. 16. THERE IS ONE MORE ISSUE IN BOTH THE YEARS REGAR DING AD HOC DISALLOWANCES AT RS.5 LAKHS IN ASSESSMENT YEAR 2003-04 AND RS.6 LAKHS IN ASSESSMENT YEAR 2004-05 ON ACCOUNT OF EXPORT PROMOTION EXPENSES BU SINESS PROMOTION EXPENSES AND TRAVELING AND CONVEYANCE EXPENSES. 17. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 18. WE HAVE HEARD THE SUBMISSIONS OF THE LD DR OF T HE REVENUE. WE FIND THAT LD CIT(A) HAS CONFIRMED THE DISALLOWANCE IN BOTH TH E YEARS ON THE BASIS THAT THERE IS NO POSSIBILITY OF HAVING FULL VERIFICATION OF ALL THESE EXPENSES. WE ARE NOT . I.T.A. NO4800 & 4801/DEL/09 6/7 IN AGREEMENT WITH THE AUTHORITIES BELOW ON THIS ISS UE AND WE FEEL THAT IN THE INTEREST OF JUSTICE THIS MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. THE ASSESSING OFFICER SHOULD MAKE SPECIFIC QUERY REGARDING THE EXPENSES FOR WHICH HE IS OF THE OPINION THAT T HE SAME IS NOT FULLY VERIFIABLE OR THAT THE SAME IS NOT FOR BUSINESS PURPOSE. IN REPL Y IF THE ASSESSEE IS NOT IN A POSITION TO SUBSTANTIATE ITS CLAIM THEN ONLY DISALL OWANCE CAN BE MADE BY POINTING OUT SPECIFIC ITEMS OF EXPENSES WHICH IS NOT VERIFIA BLE OR NOT FOR BUSINESS PURPOSE. IF THE ASSESSEE FAILS TO GIVE FULL DETAILS OF THE E XPENSES AND POINTING OUT OF SUCH SPECIFIC DISALLOWABLE ITEM IS NOT POSSIBLE FOR THE REASON OF FAILURE OF THE ASSESSEE TO GIVE PROPER DETAILS THE ASSESSING OFFICER CAN M AKE REASONABLE DISALLOWANCE ON ESTIMATE BASIS ALSO. WE THEREFORE SET ASIDE TH E ORDER OF THE LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND RESTORE THIS MATTER BAC K TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AS PER ABOVE DISCUSSIO N. THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW AFTER PROVID ING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN BOTH THE YEARS. 19. THE REMAINING ISSUES REGARDING CHARGING OF INTE REST U/S 234B IS CONSEQUENTIAL IN BOTH THE YEARS AND INITIATION OF P ENALTY PROCEEDINGS U/S 271(1)(C) IS PRE-MATURE. IF THE PENALTY IS ULTIMATE LY IMPOSED THE ASSESSEE CAN CARRY THE MATTER IN APPEAL BUT AT THIS STAGE I.E. T HE STAGE OF INITIATION OF PENALTY PROCEEDINGS NO INTERFERENCE IS CALLED FOR FROM OUR SIDE. 20. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 21. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH FEBRUARY 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 26.2.2010. HMS . I.T.A. NO4800 & 4801/DEL/09 7/7 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).