The DCIT, Circle-4,, Ahmedabad v. Mazda Limited, Ahmedabad

ITA 85/AHD/2008 | 2004-2005
Pronouncement Date: 21-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 8520514 RSA 2008
Assessee PAN AABCM9273H
Bench Ahmedabad
Appeal Number ITA 85/AHD/2008
Duration Of Justice 2 year(s) 4 month(s) 18 day(s)
Appellant The DCIT, Circle-4,, Ahmedabad
Respondent Mazda Limited, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 21-05-2010
Date Of Final Hearing 13-05-2010
Next Hearing Date 13-05-2010
Assessment Year 2004-2005
Appeal Filed On 03-01-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI N.S. SAINI ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH JUDICIAL MEMBER DATE OF HEARING: 13.5.10 DRAFTED ON:13.05.2010 ITA NO.85/AHD/2008 ASSESSMENT YEAR : 2004-2005 THE DCIT CIRCLE-4 NAVJIVAN TRUST BLDG. OFF. ASHRAM ROAD AHMEDABAD. VS. MAZDA LTD. MAZDA HOUSE 650/1 PANCHWATI AMBAWATI AHMEDABAD. PAN/GIR NO. : AABCM 9273H (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RAJEEV AGARWAL CIT D.R. RESPONDENT BY: SHRI BANDESH SOPARKAR C.A. O R D E R PER N.S.SAINI ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD.CIT(APPEALS)-VIII AHMEDABAD DATED 30.10.2007. 2. GROUND OF THE APPEAL READS AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE DISALLOWANCE OF LIQUIDATED DAMAGES OF RS.42 06 346/-. 3. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS DECIDED THIS GROUND AS UNDER:- 2. THE FIRST GROUND IS AGAINST DISALLOWANCE OF LIQ UIDATED DAMAGES OF RS.42 06 346/-. THE A.O. HAS DISALLOWED THE SAME HOLDING THAT LIQUIDATED DAMAGES ARE IN THE NATURE O F PENALTY - 2 - IMPOSED BY DIFFERENT PARTIES ON THE APPELLANT COMPA NY ON ACCOUNT OF DELAYED DELIVERY OR LATE COMPLETION OF T HE TERMS AND CONDITIONS OF THE CONTRACT. SO THESE EXPENSES H AVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINE SS PURPOSE AND ARE IN THE NATURE OF PENALTY. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELL ANT BY THE ORDER OF CIT(A) FOR A.Y. 2000-01 AND A.Y. 2003-04 A ND BY THE HON'BLE I.T.A.T. AHMEDABAD FOR A.Y. 1997-98 IN ITA NO.612/AHD/2001. RESPECTFULLY FOLLOWING THE ABOVE D ECISIONS OF THE HON'BLE ITAT THE DISALLOWANCE MADE BY THE A O IS HEREBY DELETED. 4. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THIS ISSUE IS COVERED WITH THE DECISION OF AHMEDABAD D BENCH IN THE CASE OF MAZDA CONTROLS LTD. IN ITA NO.612/AHD/2001 FOR ASSESSMENT YEAR 1997-98 WHEREIN IT WAS HELD AS UNDER: 3. THE NEXT DISPUTE IS WITH REGARD TO LIQUIDATED D AMAGES OF RS.7 25 980/-. THE ASSESSEE COMPANY CLAIMED THREE A MOUNTS - (I) RS.3 36 333 BEING THE AMOUNT DEDUCTED BY COMPAN IES ON ACCOUNT OF DELAYED DELIVERY FROM VARIOUS INVOICES; (II) RS 3 45 905/- BEING THE AMOUNT DEDUCTED BY VARIOUS COMPANIES AS PENALTY AND OTHER DEMURRAGE CHARGES; A ND (III) RS.43 743 BEING OTHER SUNDRY DAMAGES ON VARIOUS OCC ASIONS DEDUCTED BY CLIENTS FROM THEIR SALES BILLS. THE ASS ESSING OFFICER DISALLOWED THE THREE PAYMENTS AGGREGATING T O RS.7 25 980/- BY STATING THAT THEY ARE IN THE NATUR E OF PENALTY IMPOSED BY DIFFERENT PARTIES AND THEREFORE NOT AL LOWABLE IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CA SE OF SWADESHI COTTON MILLS LTD. 63 ITR 65(SC) AND MADRAS HIGH COURT IN THE CASE OF RAMKRISHNA ENGG. INDUSTRIES (COIMBATORE)LTD. 215 ITR 723. 4. BEFORE THE CIT(A) THE ASSESSEE STATED AS UNDER:- 'THIS AMOUNT HAS BEEN DISALLOWED BY THE ASSESSING OFFICER AS EXPENSES ARE IN THE NATURE OF PENALTY IM POSED BY THE DIFFERENT PARTIES ON THE ASSESSEE COMPANY FO R DELAYED DELIVERY OR LATE COMPLETION OF THE TERMS AN D CONDITIONS OF THE ORDER. FURTHER HE HAS CITED TWO JUDGMENTS OF SWADESHI COTTON MILLS LTD. AT 63 ITR 65 - 3 - AND RAMKRISHNA ENGG. INDUSTRIES AT 215 ITR 72. A PERUSAL OF THESE JUDGEMENT -WOULD BRING TO YOUR HONOUR'S NOTICE THAT IN THE REFERRED CASES THE PEN ALTY IS IMPOSED FOR NON FULFILLMENT OF THE CONTRACT FOR PUR CHASE OF CAPITAL GOODS. HENCE BOTH THE CASES ARE FOR PENA LTY LEVIED ON THE PURCHASER OF CAPITAL GOODS WHO HAS CANCELLED THE PURCHASED ORDER. WHILE IN THE CASE OF THE ASSESSEE THE LIQUIDATED DAMAGES ARE IMPOSED BY PAR TIES AS A PERCENTAGE VALUE OF THE SALES ORDER FOR DELAYE D DELIVERY OF THE EQUIPMENT AND NONE OF THE AMOUNTS A RE FOR ANY CANCELLATION OF ANY ORDERS. WE CITE THE CAS E OF SARDAR PRIT INDER SINGH V/S. CIT AT 160 ITR 493 WHE REIN IT WAS HELD THAT THE AMOUNTS PAID AS DAMAGES TOWARD S LATE DELIVERY OF GOODS IS ALLOWABLE AS BUSINESS EXPENDITURE. THUS IT IS CLEAR THAT THE SAID AMOUNT OF LIQUIDATED DAMAGES ARE VERY MUCH A BUSINESS EXPENDITURE AND UNDER NO CIRCUMSTANCES CAN BE DISALLOWED. THE ASSESSEE COMPANY ONLY SELLS SPECIALISED PRODUCT S WHICH ARE TAILOR MADE AS PER THE SPECIFICATIONS REC EIVED FROM THE PARTIES. THE TERMS OF THE PURCHASE ORDER SPECIFY THAT ANY DELAY WILL BE CHARGED BY THE PARTI ES ON THE ASSESSEE COMPANY AND HENCE IT IS PART OF THE PURCHASE ORDER. DELAY IN DELIVERY OCCURS DUE TO DEL AY IN DRAWINGS APPROVALS BY THE CUSTOMERS DELAY IN INSPECTION AND PERFORMANCE TEST OF THE EQUIPMENTS B Y THE CUSTOMER OR THEIR AUTHORISED INSPECTORS. THESE ARE A NORMAL FEATURE INHERENT IN THE BUSINESS IN WHICH TH E ASSESSEE DEALS. HENCE SUCH AMOUNTS WHICH ARE A NORMAL FEATURE OF TH E BUSINESS CANNOT BE DISALLOWED. THUS WE WOULD REQUES T YOUR HONOUR TO DELETE THE ADDITION.' THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE BY STA TING THAT THE AMOUNTS CHARGED WERE PART OF THE PURCHASE ORDER ITSELF WHICH WAS AN INHERENT FEATURE IN THE BUSINESS. 5. WE HAVE HEARD THE PARTIES AND CONSIDERED THEIR R IVAL SUBMISSIONS. THE AMOUNTS WERE DEDUCTED BECAUSE OF T HE DELAY IN TERMS OF THE PURCHASE ORDER AND IT IS ALSO STATE D BY THE ASSESSEE THAT DELAY IN DELIVERY HAS OCCURRED DUE TO DELAY IN - 4 - DRAWINGS APPROVALS BY THE CUSTOMERS DELAY IN INSPE CTION AND PERFORMANCE TEST OF THE EQUIPMENTS BY THE CUSTOMER OR THEIR AUTHORIZED INSPECTORS WHICH WAS A NORMAL FEATURE IN THE BUSINESS OF THE ASSESSEE. THE DECISION RELIED UPON BY THE ASSESSEE IN THE CASE OF SARDAR PRIT INDER SINGH VS. CIT 160 ITR 493 FULLY SUPPORTS THE CLAIM OF THE ASSESSEE WH EREIN IT WAS HELD THAT THE AMOUNTS PAID AS DAMAGES TOWARDS L ATE DELIVERY OF GOOD IS ALLOWABLE AS BUSINESS EXPENDITU RE. THE ORDER OF THE CIT(A) IN OUR OPINION IS JUST AND PR OPER AND DOES NOT CALL FOR ANY INTERFERENCE. 5. FACT BEING IDENTICAL AND IN ABSENCE OF ANY DISTI NGUISHING FEATURES POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTAT IVE RESPECTFULLY FOLLOWING THE ABOVE QUOTED DECISION OF THE TRIBUNAL WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 6. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING THE A.O NOT TO INCLUDE EXCISE DUTY AND SALES TAX IN THE TOTAL TURN OVER FOR THE CALCULATION OF DEDUCTIO N U/S 80HHC. 7. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD AS UNDER:- 3. THE SECOND GROUND IS AGAINST THE ACTION OF TH E AO IN ADDING EXCISE DUTY OF RS.2 99 66 653/- AND SALES-TA X OF RS.1 20 95 809/- TO THE TOTAL TURNOVER FOR THE CAL CULATION OF DEDUCTION U/S 80HHC OF THE I.T. ACT . FOLLOWING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LAXMI MACHI NE WORKS (290 ITR 667) AND CATAPHARMA INDIA (292 1TR 641)(SC). THE AO IS DIRECTED TO EXCLUDE EXCISE DUTY AND SALES TAX ELEMENTS FROM THE TURNOVER IN BOTH NUMERATOR AN D DENOMINATOR IN CALCULATING DEDUCTION U/S. 80HHC OF THE I.T. ACT. - 5 - 8. BOTH THE PARTIES AGREED THAT THIS ISSUE IS ALSO COVERED WITH THE ABOVE CITED DECISION IN THE CASE OF MAZDA CONTROLS LTD. W HEREIN IT WAS HELD AS UNDER:- 6. THE NEXT ISSUE IS WITH REGARD TO EXCLUSION OF C ST GST AND EXCISE DUTY FROM THE TOTAL TURNOVER WHILE COMPU TING THE DEDUCTION U/S.80HHC. THIS ISSUE IS COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF TH E TRIBUNAL IN THE CASE OF IFB AGRO INDUSTRIES LTD. VS. DCIT 83 ITD 968(CAL.) WHEREIN IT WAS HELD THAT THE SALES-TAX AN D EXCISE DUTY ARE NOT TO BE INCLUDED AS PART OF THE TOTAL TU RNOVER IN VIEW OF THE DECISION OF THE CALCUTTA HIGH COURT IN THE C ASE OF CHLORIDE INDIA LTD. 256 ITR 325 AND OF THE BOMBAY H IGH COURT IN THE CASE OF SUDERSHAN CHEMICALS 245 ITR 76 9. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF TH E SPECIAL BENCH OF TRIBUNAL WE UPHOLD THE ORDER OF CIT(A) ON THIS ISSUE. 9. FURTHER WE FIND THAT THE ISSUE IS ALSO COVERED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF LAXMI MACHINES 290 ITR 667 WHEREIN IT WAS HELD THAT EXCISE DUTY AND SALES TAX ARE NOT INCLUDIBLE IN TOTAL TURNOVER IN FORMULA CONTAINED IN SECTION 80 HHC(3). RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE SUPREME COURT AND OF THIS TRIBUNAL WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 10. GROUND NO.3 OF THE APPEAL READS AS UNDER:- 3. THE LD. CIT(A) ERRED IN LAW AND ON THE FACTS O F THE CASE IN DIRECTING THE A.O NOT TO EXCLUDE INTEREST INCOME OF RS.3 94 774/- GST SET OFF OF RS.12 98 202/-WRITE O FF PAYMENT RECEIVED OF RS.1 15 767/- AND TECHNICAL DRAWINGS IN COME OF RS.28 00 156/- FROM THE PROFITS OF THE BUSINESS FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 80HHC. 11. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD AS UNDER:- - 6 - 4. THE THIRD GROUND IS AGAINST REDUCTION O F OTHER INCOME FROM BUSINESS PROFIT FOR THE PURPOSE OF CALCULATION OF DEDUCTION U/S 80HHC. THESE INCOMES ARE: (A) INTEREST INCOME : RS. 3 94 774/- (B) GST SET OFF : RS.12 98 202/- (C) WRITE OFF PAYMENT RECEIVED. : RS. 1 15 767 /- (D) TECHNICAL DRAWINGS. : RS.28 00 156/- THE ISSUES RELATING TO INTEREST INCOME AND GST SET OFF WERE DECIDED IN FAVOUR OF THE APPELLANT IN ITS OWN CASE BY THE CIT(A) FOR A.Y. 2001-02 AND A. Y. 2003-04 AND BY TH E ORDER OF HON'BLE ITAT FOR A.Y. 1997-98 AND A.Y. 2001-02 I N ITA NOS.612/AHD/2001 AND 728/AHD/2005. RESPECTFULLY FOL LOWING THE ABOVE DECISIONS OF THE HON'BLE ITAT I DIRECT T HE AO TO INCLUDE THE ABOVE INCOME IN BUSINESS PROFIT WHILE C OMPUTING DEDUCTION U/S 80HHC. AS REGARDS THE OTHER TWO ITEMS OF INCOME THE A.O. H ELD THAT THE RECEIPTS ARE NOT DERIVED FROM EXPORT BUSINESS O F THE APPELLANT. SO HE EXCLUDED 90% OF THE SAID INCOME WH ILE COMPUTING DEDUCTION U/S.80HHC. THE A.R. SUBMITTED T HAT THE WRITE OFF PAYMENTS RECEIVED REFERS TO RECOVERY OF A MOUNT WRITTEN OFF AS BAD DEBTS IN THE PRECEDING YEAR AND THIS IS BUSINESS RELATED INCOME. AS REGARDS TECHNICAL DRAWI NGS IT WAS SUBMITTED THAT THE APPELLANT HAD MADE TECHNICAL DRA WING AND DESIGN SHEET FOR M/S. CROLL-REYNOLDS ON A CHARGEABL E BASIS DURING THE YEAR WHICH IS IN THE ENGINEERING BUSINE SS AND HENCE IT IS A BUSINESS RELATED INCOME. I FIND THE S UBMISSIONS OF THE A.R. ARE ACCEPTABLE AND BOTH INCOMES SHOULD BE TREATED AS BUSINESS PROFITS AS THEY ARE CONNECTED WITH THE BUS INESS OF THE APPELLANT. THEREFORE THE A.O. IS DIRECTED TO INCLU DE THE SAID AMOUNTS IN BUSINESS PROFIT WHILE WORKING OUT THE DE DUCTION U./S.80HHC. 12. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THE ISSUE RELATING TO EXCLUDING GST SET OFF OF RS.12 98 202/- WRITE O FF OF PAYMENT RECEIVED OF RS.1 15 767/- IS COVERED WITH THE DECISION OF A HMEDABAD D BENCH IN THE CASE OF MAZDA CONTROLS LTD. IN ITA NO.612/AHD/2 001 FOR ASSESSMENT YEAR 1997-98. FOR THE ISSUE OF EXCLUDING INTEREST INCOME OF RS.3 94 774/- FROM THE BUSINESS PROFIT FOR COMPUTING DEDUCTION UN DER SECTION 80HHC - 7 - THE LEARN1ED AUTHORISED REPRESENTATIVE OF THE ASSES SEE SUBMITTED THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE L EARNED ASSESSING OFFICER TO VERIFY WHETHER BORROWED FUNDS WERE UTILISED FOR EARNING INTEREST INCOME AND INTEREST WAS PAID ON THAT BORROWED FUNDS BY THE ASSESSEE AND IF IT IS FOUND TO BE SO THEN TO ALLOW NET OFF OF INTEREST EX PENDITURE FROM INTEREST INCOME AND THEN TO REDUCE A NET AMOUNT OF INTEREST FROM THE BUSINESS PROFIT FOR COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. FURTHER WITH REGARD TO THE INCOME FROM TECHNICAL DRAWINGS OF RS. 28 00 156/- THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT THE SAME WAS RECEIVED FROM CUSTOMERS AND THEREFORE WAS THE BUSINESS INCOME OF THE ASSESSEE AND HENCE SHOULD NOT BE EXCLUDED FROM THE BUSINESS PROFIT FOR THE PURPOSES OF COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. THESE SUBMISSIONS WERE NOT CONTROVERTED BY THE LEARNED DE PARTMENTAL REPRESENTATIVE. 13. WE FIND THAT AHMEDABAD D BENCH OF THE TRIBUNA L IN THE CASE OF MAZDA CONTROLS LTD. IN ITA NO.612/AHD/2001 FOR ASSE SSMENT YEAR 1997- 98 HELD AS UNDER: 7. THE NEXT DISPUTE IS WITH REGARD TO THE D IRECTION TO CONSIDER THE FOLLOWING ITEMS FOR DEDUCTION U/S.80HH C:- 1) INTEREST INCOME RS 2 95 907/- 2) PACKING AND FORWARDING INCOME RS. 8 75 570/- 3) LABOUR CHARGES INCOME RS. 104188/ 4) INSURANCE CLAIM INCOME RS. 74980/- 5) RATE DIFFERENCE RS. 5 189/- 6) BAD DEBTS RECOVERED RS 82 794/- 7) GST SET OFF RS 2 37 513/- THE CONTENTION OF THE ID. DEPARTMENTAL REPRESENTATI VE IS THAT THESE ARE NOT THE INCOME DERIVED FROM EXPORT AND T HEREFORE THE ASSESSEE IS NOT ENTITLED TO ANY DEDUCTION. THE DEDUCTION U/S.80HHC(3) IS COMPUTED BY COMPARING THE EXPORT TU RNOVER OF THE ASSESSEE WITH THE TOTAL TURNOVER AND THE PRO FIT FROM - 8 - BUSINESS EARNED BY THE ASSESSEE. THE AMOUNT SO ARRI VED AT IS DEEMED BY SUB-SECTION OF SECTION 80HHC AS INCOME DE RIVED FROM EXPORT. WHAT THEREFORE WE HAVE TO DETERMINE IS WHETHER THEY ARE THE BUSINESS INCOME OF THE ASSESSEE AND IF THAT BE SO THAT WOULD FALL FOR CONSIDERATION IN COMPUTATION OF THE DEDUCTION. SUCH INCOMES ARE (I) INTEREST INCOME RS .2 95 907/- (II) PACKING AND FORWARDING INCOME OF RS.8 75 570 /- (III) LABOUR CHARGES INCOME RS.10 188/- AND (IV) INSURANC E CLAIMS INCOME RS.7 980/-. IT IS THUS CLEAR THAT ALL THE AF ORESAID INCOME ARE BUSINESS INCOME OF THE ASSESSEE AND NO SEPARATE ASSESSMENT UNDER ANY OTHER HEAD IS MADE BY THE ASSE SSING OFFICER. THEREFORE THE CIT(A) WAS JUSTIFIED IN DIR ECTING THE ASSESSING OFFICER TO INCLUDE THE AFORESAID AMOUNT W HILE WORKING OUT THE DEDUCTION U/S.80HHC. HIS ORDER ON T HIS ISSUE IS ACCORDINGLY UPHELD. 14. FACTS BEING IDENTICAL RESPECTFULLY FOLLOWING T HE ABOVE QUOTED DECISION OF THE TRIBUNAL WE DISMISS THE PART OF TH E GROUND OF APPEAL OF THE REVENUE DIRECTING THE LEARNED ASSESSING OFFICER TO INCLUDE GST SET OFF OF RS.12 92 202/- AND WRITE OFF OF PAYMENT RECEIVED OF RS.1 15 767/- WHILE COMPUTING DEDUCTION UNDER SECTION 80HHC. WITH REGAR D TO THE EXCLUSION OF INTEREST INCOME FROM BUSINESS PROFITS FOR COMPUT ING DEDUCTION UNDER SECTION 80HHC WE FIND FORCE IN THE SUBMISSION OF T HE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT IF BORROWED FUN DS ARE USED FOR EARNING INTEREST INCOME AND INTEREST IS PAID ON BORROWED FU NDS THEN SET OFF OF INTEREST EXPENDITURE SHOULD BE ALLOWED AGAINST INTE REST INCOME AND THE NET INTEREST INCOME SHOULD ALONE WE REDUCED FROM THE BU SINESS PROFIT FOR COMPUTING DEDUCTION UNDER SECTION 80HHC OF THE ACT. WE THEREFORE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND RESTO RE THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR PROPER V ERIFICATION AND THEN TO DECIDE THE ISSUE AS PER LAW IN LINE WITH THE DISCUS SION MADE HEREINABOVE AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THIS PART OF GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURP OSES. - 9 - 15. WITH REGARD TO THE INCOME OF RS.28 00 156/- FRO M TECHNICAL DRAWINGS WE FIND THAT IN THE INSTANT CASE THE C LAIM OF THE REVENUE IS THAT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS NOT JUSTIFIED IN NOT EXCLUDING 90% OF THE DRAWING CHARGES OF RS.28 00 15 6/- CREDITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) OBSERVED THAT THE ASSESSEE RECE IVED RS.28 00 156/- FOR TECHNICAL DRAWING AND DESIGN SHEET FROM M/S. CR OLL-REYNOLDS ON A CHARGEABLE BASIS DURING THE YEAR WHICH IS IN THE E NGINEERING BUSINESS AND HENCE IT IS BUSINESS RELATED INCOME. WE FIND THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY MAT ERIAL TO CONTROVERT THE ABOVE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). FROM THE ORDER OF ASSESSMENT IT IS OBSERVED THAT T HE ASSESSEE IN ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF MACHIN ERY PARTS. ON THE ABOVE FACTS THE EXPLANATION OF THE ASSESSEE THAT T HE TECHNICAL DRAWING WAS AN INTEGRAL PART OF THE ABOVE BUSINESS OF THE ASSES SEE CANNOT BE HELD AS INCORRECT. THUS THE DRAWING CHARGES IN QUESTION BE ING INTEGRAL PART OF THE MAIN BUSINESS OF THE ASSESSEE OF MANUFACTURING AND SELLING OF MACHINERY AND PARTS WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WHICH IS CONFI RMED AND THIS PART OF THE GROUND OF THE APPEAL OF THE REVENUE IS DISMI SSED. THUS THIS GROUND OF APPEAL OF REVENUE IS PARTLY ALLOWED. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AS ABOVE. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON THIS 21 ST DAY OF MAY 2010 SD/- SD/- ( MAHAVIR SINGH) (N.S. SAINI ) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; ON THIS 21 ST DAY OF MAY 2010 PARAS - 10 - COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIX AHMEDABAD. 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 13.05.2010 ---------------- --- 2. DRAFT PLACED BEFORE AUTHORITY14.05.2010 ------- ------------ 3. DRAFT PROPOSED & PLACED 14.05.2010 ----------- -------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 14.05.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 14.05.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 21.05.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 21.05.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- -- -------------------