Income Tax Appellate Tribunal - Chandigarh
Sonalac Paints And Coatings Ltd., , ... vs Assessee on 26 December, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH 'B' CHANDIGARH
BEFORE SHRI H.L.KARWA, VI CE PRESI DEN T
AND SHRI MEHAR SI NGH, ACCOUN TAN T MEMBER
ITA No. 539/CHD/2010
Assessment Year . 2006-07
I TO, Ward-1( 2) , V M/s Sonal ac Pai nts &
Chandi garh. Coati ngs Ltd.,
Chandi garh.
PAN: AAI CS-4995D
&
CO 24/CHD/2010
In ITA No. 539/CHD/2010
M/s Sonal ac Pai nts & V I TO, Ward 1( 2) ,
Coati ngs Ltd., Chandi garh.
Chandi garh.
( Appel l ant) ( Respondent)
Department by: Shri N.K.Sai ni
Assessee by : Shri Pari kshi t Aggar wal
Date of Heari ng : 26.12.2011
Date of Pronouncement : 29.12.2011
ORDER
PER MEHAR SIN GH, AM
The present appeal fi l ed by the Revenue and the Cross Objecti ons by th e assessee have been fi l ed agai n st the order dated, 03.02.2010, passed by the l d. CI T( A) , for the assessment year 2006-07.
2. I n appeal , the Revenue has rai sed the fol l o wi ng Ground of Appeal :
"1. T he l d. CIT ( A) has erred in l a w al l o win g assessee's cl ai m f or deduc tion u/s 80 IB wh i ch the assessee h ad no t cl ai me d in th e re turn of inco me.2
2. On the f ac ts and c ircu ms tances of the c ase, the l d. C IT ( A) erred in al l o win g the deduc tion u/s 80 IB as the c ase l a w rel ied upon by her is n o t squ arel y appl i c abl e to the f ac ts of the presen t c ase.
3. It is pr ayed th at the order of the l d. C IT ( A) be c ancel l ed and th at of the AO be re s tored.
4. T he appel l an t c ar ves to add or amend an y grounds of appe al bef ore the appe al is he ar d or d is posed of . "
3. The Grounds of Cross Objecti on rai sed by the assessee vi de CO/24/Chd/2010 in I TA No. 539/Chd/2010 for the assessment year 2006-07 are reproduced hereunder :
"1. On the f ac ts an d in the c ircu ms tances of the c ase and in l a w, the wo r thy C IT ( A) in Appe al No. 276/P/ 08-09 d ated 03. 0 2. 2010 h as erred in p ass ing th at order in con tr aven tion of th e prov is ions of Sec tion 250( 6) of the Inco me- tax Ac t, 1961 to the e x ten t of not al l o wing the gro und o n cl ai m of deduc ti on u/s 80 IB on M isc. Bus iness inco me.
2. T hat the wo r th y C IT ( A) has erred in conf ir ming an add i tion of Rs.3, 31, 572/- mad e by l d. AO by d is al l o win g cl ai m of deduction u/s 80 IB on mi sc. bus iness inco me, the bre ak-up wh e reof is as under:
2.1 S al e of E mp ty D r ums / c o n ta i n e r s R s . 2, 3 0 , 7 6 6 . 00 2.2 In s u r an c e c l a i m f o r s to c k l o s s R s . 7 9, 6 2 6. 0 0 2.3 R e c o v e r y f ro m tr an s p o r te r f o r R s . 2 0, 0 0 0. 0 0 S tock l oss
2. 4 O ther pe tty inco mes Rs. 1, 180. 00 T otal Rs. 3, 31, 572. 00
3. T hat the res ponden t does no t agr ee wi th the grou nds of appe al r aised by th e appel l an t and the orde r of wo r th y C IT ( A), in rel ation there to, may be sus tained .3
4. T hat the res pon den t cr aves l e av e f or an y add i ti on, del e tion or ame nd men t in the grounds of cross-
ob jec tions o n or bef ore the s ame is he ar d or d is po sed of . "
4. Ld. 'DR' contended that the assessee has not cl ai med deducti on u/s 80I B of the Act, in the return of income, hence, no deducti on c an be al l o wed to hi m whi ch h as not been cl ai med i n the return of i ncome fi l ed by the assessee. Ld. 'DR' referred to the provi si ons of Secti on 80A su b-cl ause ( 5) , i ntroduced by Fi nance Act, 2009 w.e.f. 1.4.2003 which reads as under :
"80A( 5) Where t he assessee fai ls to make the claim in his ret urn o f income f or any deductio n u/s 10A or 10AA or Section 10B or Section 10BA or under any provisions o f this Chapter under the head "C- de ductions in re s pect o f certai n incomes", no deduction shall be allowed to him thereunder."
4.1 Ld. 'DR' vehementl y contended and argued that the deci si on i n the c ase of CI T V Re mco I nternati onal (2009) 221 C TR ( P&H) 491 rendered on 08.12.2008 i s not appl i cabl e to the facts of the present case, as the same wa s rendered before the i nserti on of Secti on 80A( 5) of the Act, by the Fi nance Act, 200 9 w.e.f. 01.04.20 03. The speci fi c provi si ons of Secti on 80A( 5) of the Act w ere not consi de red by the Hon'bl e Hi gh Cou rt. Further, the a ssessee i tsel f ad mi tted that the i mpugned cl ai m was not made i n the return due to cl eri cal mi stake. Consequentl y, wi th respect it was contended that t he deci si on i s n ot appl i cabl e to the facts of 4 the present case. I t was further contended by the l d. 'DR' that the i ssue i s covered i n favour of the revenue by the deci si on of the Hon'bl e Supreme Court i n the ca se of Goetze ( I ndi a) Ltd. V CI T ( 2006) 284 I TR 323 ( S.C) .
5. On the other hand, l d. 'AR' pl eaded that the return of i ncome was fi l ed by e-mai l an d there was so me error i n soft ware of the department whi ch depi cts 'ni l ' cl aim made by the assessee u/s 80I B of the Act. He referred to pages 31 to 37 of the Paper Book and i ndi cated that i n form No.10CCB, the deducti on u /s 80I B has been dul y cl ai med. Ho wever, a perusal of page 17 of the Paper Book fi l ed by th e assessee reveal s that deducti on under chapter VI A ( Schedul e 10) has been sho wn, as 'ni l '.
6. We have careful l y perused the ri val submi ssi ons, facts of the case and the rel evant records and the orders passed by the l o wer autho ri ti es. The AO, i n the assess ment order, dated 17.12.2008 passed u/s 1 43( 3) of the Ac t recorded speci fi c fi ndi ng that the assessee had not cl ai med any deducti on u/s 8 0I B of the Act, i n the return of i ncome and hence, the assessee i s l i abl e to pa y ta x on the enti re i ncome and the provi si ons of Secti on 80I B are not appl icabl e. The rel evant fi ndi ngs of the AO are reproduced hereunder, as contai ned i n para 3 of the order :
"Dur ing the cour se of the assess me n t proceed ing s, the counsel of the as sessee sub mi tted th at the un i t is e l ig ibl e f or deduction u/s 80 IB of the IT Act and the en tire i nco me of the un i t was e xe mp t under Sec tion 80 IB of th e In co me- tax Ac t. Ho we ver , the perus al of the IT return sho ws th at 5 the assessee h as no t cl ai me d an y deduc tion u/s 80 IB of the IT Ac t. T he re turn of inco me was rece ived by th e de p ar tme n t v ide ackno wl edge me n t No. 16200384 d ated
30. 11. 2006 and i t was no ticed th at on the f irs t p age of the re turn of inc o me, the gross to tal inco me ' Deduc tion under Ch ap ter V I-A' , N il h as bee n wr i tten. Fur ther, in schedul e-10 ' Ded uc tion un der ch ap ter V IA' Sec tion 80G to Sec tion 80LA we re wr i tten and ag ains t Sec tion 80 IB, N il was wr itte n. Howe v er, the asses see h as co mpu te d tax as per the prov is ion s of MAT and p aid tax accord ingl y. Bu t wh at is the b as i s of cal cul ation the tax as per MA T was no t men tioned b y the assessee. S ince the assess ee h as no t cl ai me d an y deduc tion u/s 80 IB of the IT Ac t, the assessee is l i abl e to p ay tax on the en tire inco me and the prov is ions of Sec tion 80 IB are no t appl ic abl e . T he assessee is requ i red to p ay the en tire tax on the re turned inco me. "
7. Ld. CI T( A) al l o wed the cl ai m of the assessee u/s 80I B of the Act, as i s evi dent from the rel evant part of the sai d order, reproduced hereunder :
"8. I h ave c aref ul l y cons idered the r iv al con ten tions an d the l eg al pos i tion as enunc i ated in v ar ious judge me n ts of Hon'bl e Cour ts as we l l as Bo ard C ircul ars. I am of the v ie w th at there i s ampl e f orce in assessee's con ten tion. My observ ations on th is issue are as under :
• T he rel evan t do cu men ts on record es tabl ish th e s tand of the l d. Counsel and v ar ious dec is ions o f Hon'bl e cour ts ( s upr a) f urther l en d suppor t to th at.
• I h ave co me acro ss o ther such c ases as we l l , wh e re there h as bee n an error s i mp l y bec ause of techn ic al i ty invol ved in e-f il ing wh ic h was a n e w conce p t in the ye ar under cons ider ation.6
• T he very f ac t th at Aud i t Re por t i n f or m 10CCB h as been f il ed and in col . 30 of th at f or m, deduc tion u/ s 80 IB h as been cl e arl y men tioned l ends credence to assessee's con te n tion. Aud i t re po r t in f or m No. 3C D is ano ther ev ide nce to sho w th at the cl ai m wa s mad e as in tende d.
• In the assess men t ye ar 2005-06, c l ai m was al l o we d to the assessee v ide order u/s 143 ( 3).
9. Fur ther the c as e of jur isd ic tion al H igh Cour t is iden tic al on f ac ts ( 17 DT R 214 ( P&H ) ( supr a) . T he subs tan ti al ques tions of l a w here we r e :
"1. Whe ther, on the f ac ts and c ircu ms tances of the c ase an d in l a w, the T ribun al wa s r igh t in l a w in al l o win g assesse e's cl ai m f or deduc tion under s. 80 IB wh ich the assessee h ad ne i ther cl ai me d in th e re turn of inco me nor through a rev ised re turn of inco me?
2. Whe ther on the f ac ts and c ircu ms tances of the c ase, the dec is io n of T ribun al is no t con tr ar y to the l a w as s pel t ou t by the Hon'bl e Supre me Cour t i n Goe tze ( Ind i a) L td. v CIT ( 2006) 204 CT R ( S. C) 182 ( 2006) 284 IT R 323 ( S. C) and Addl . C IT V Gur jargr avures ( P ) Ltd. 1978 CT R (S. C) 1 ( 1978) 111 IT R 1 ( S. C) ?
10. T he Hon'bl e Punjab & H ar yan a H igh Cour t in th e aboves aid c ase o bserved and hel d as under :
"2. T he assessee cl ai me d deduc tion under s. 80 IB of the Ac t and though f or m No. 10CCB and o the r requ is i te docu me n ts we re f urnish ed, the AO wi th o u t ref erring to the s aid docu men ts mad e assess men t. On ap pe al , the appel l ate au th or ity up hel d the cl a i m of the assessee. T he T ribun al h as uphel d the s ai d v ie w.
3. Ld. Counsel f or the Revenue submi ts th at the assessee made cl ai m by way of an appl ic atio n 7 wi th ou t f il ing a rev ised re turn and in such a s itu ation judg me n t of the Hon'bl e Supre me Cour t i n Goe tze ( Ind i a) L td. v C IT ( 2006) 204 CT R ( S. C) 182 :
( 2006) 284 IT R 323 ( S. C) was appl ic abl e an d deduc tion coul d n o t be al l o we d.
4. We are un abl e to acce p t the sub mis s ion. T he T ribun al h as con s idered th is issu e and f ound th at as per f or m 10CCB f il ed d ur ing assess me n t proceed ings, th e cl ai m of th e assessee wa s ad miss ibl e. F ind i ng of the T ribun al is as under : "19. In v ie w of the above, we f ind no error in the order of the l d. C IT ( A). It h as corr ec tl y been h el d b y the f irs t appel l ate au thor i ty, in ter al i a th at as per f or m No. 10CCB f il ed dur ing the assess men t proceed ings, the cl ai m made b y the assessee wa s ad miss ibl e and the s ame re main ed to be al l o we d.
T he order of the l d. C IT ( A) is hereby uphel d in v i e w of the above d iscuss ion. T he gr iev ance of th e De p ar tme n t s tan ds re jec ted. "
5. In v ie w of the f ind ing th at the assessee was no t mak ing an y f resh cl ai m and h ad dul y f urnishe d the doc u men ts and sub mitte d f orm f or cl ai m unde r s. 80 IB, there was no requ ire me n t f or f il ing an y rev ised re turn. T he judg men t rel i ed upon was no t appl ic abl e.
11. In v ie w of the above d iscuss ion and res pec tf ul ly f ol l o wing th e abo ve quo ted dec is io n of Hon'bl e Punjab & H ar yan a H igh Cour t th is ground of the asse ssee is al l o we d. "
8. I n the course of appel l ate proceedi ngs before the Bench, i t transpi red that the assessee has submi tted before the AO vi de l etter dated 15.12.2008 that the cl ai m of deducti on u/s 80I B was not made i n the return of i ncome due to cleri cal mi stake and by mi stake, amount was fi l l ed as ' Ni l ' agai nst 8 the cl ai m of deducti on u/s 80I B. The rel evant part of the submi ssi on i s reproduced hereunder :
"1. S ir, we h ave gon e throug h the Inc o me T ax Re turn f or the ye ar in ques tion as we l l as o ther necess ar y re cords. It is sub mi tted th at non cl ai m of deduc tion u/s 80 IB in the re turn of inco me was a cl er ic al mis take and b y mis take amo un t was f il l e d as N IL ag ains t the col u mn of deduc tion u/s 80 IB. In f ac t, the deduc tion h as been correc tl y c l ai me d in the co mpu tati on ch ar t of inco me wh ich is al r e ad y on record of your goodself . A co py of the s ame is e nclosed here wi th al so. "
8( 1) A bare perusal of the submi ssi o n fi l ed by the a ssessee before the AO, demonstrates that the cl ai m of deducti on u/s 80I B of the Act has not been made due to cl eri cal mi stake. I t i s admi tted by the assessee i tsel f that non-fi l i ng of the cl ai m u/s 80I B of the Act i s attri buted to cl eri cal mi stake. Further, a bare perusal of the provi si on of Secti on 80A( 5) of the Act reproduced abov e, clearly mand ates that no c laim under Chapter V IA - under the head "C-deductions in respe ct of certain incomes " shall be allow ed where the as sessee fails to make the claim in his return of income. The provisions of Section 80A(5) are mandatory in character. Therefore, as contended by the l d. 'DR', i t i s re spectful l y submitted that the deci si on rel i ed upon by the as sessee, i n the c ase of CI T V Remco I nternati onal ( 2009) 17 D TR 214, i s not a ppl icabl e to the facts of the present case, bei ng factual l y di fferent and di sti ngui shabl e. Further, the Hon'bl e Hi gh Court rendered the deci si on, on 8.12 .2008, before the provi si ons of Se cti on 80A( 5) were i nserted vide Fi nance Act 2009 w.e.f. 1.4.2003. Further, the i ssue i n questi on i s covered i n favour of the revenue by the 9 deci si on of the Hon'bl e Supreme Court i n the case of Goetze ( I ndi a) Ltd. ( supra) . The rel e vant porti on of reproduced hereunder :
"Deduc tion-Re tur n-Deduc tion cl ai me d af ter re turn f il ed- No po we r in As sess ing Au thor i ty to en ter tain c l ai m mad e o ther wis e th an b y way of rev ised re turn- Inco me - tax Ac t, 1961, ss. 139, 254. "
9. I n the course of assessment proceedi ngs, the AO sought speci fi c e xpl anati on from the assessee, for not maki ng the cl ai m u/s 80I B of the Act, i n the rel evant return of i ncome fi l ed for the ass essment year i n questi on. The a ssessee vi de l etter dated 15.12.2008, e xpl ai ned and admi tted that after goi ng through return and rel evant record, i t i s submi tted that deducti on u/s 80I B of the Act was not cl ai med due to cl eri cal mi stake and by mi stake, amou nt was fi l l ed as NI L agai nst col umn of deduc ti on u/s 80I B of the Act. I t i s a dded that i n ma jori t y of the paragraphs of t he sai d l etter, t he assessee rei terated that the i mpugned cl ai m was not made due to cl eri cal mi stake. I t was submi tted i n para 9 of the sai d l etter by the assessee that the return be treated revi sed or recti fi cati on ma y be carri ed out u/s 154 of the Act.
10. The Hon'bl e I TA T, Amri tsar Ben ch i n the l atest deci si on i n the case of Bal ki shan Dha wan, HUF Prop. of M/s BKD Enterpri ses, Amri tsar V I TO, War d-1, 5( 1) Amri tsa r i n I TA No. 235-236/ASR/2011 assessment year 2006-07 and 2007-0 8 vi de order dated 16.12.2011, di sal l o wed the cl ai m of the assessee u/s 80I B of the Act, i n the conte xt of th e provi si ons of Secti on 80A C; hol di ng suc h statutor y pr ovi si ons as 10 mandator y. I n the conte xt of present case, the provi si ons of Secti on 80A( 5) a re al so speci fi c and mandator y i n character. Further, the deci si on as rel i ed up on by the l d. 'AR ' i n the case of M/s El econ Packet V I TO i n I TA No. 421/Chd /2001 dated 17.11.2011 i s no t appl i cabl e to t he facts of the p resent case, as i n that case t he assessee fi l ed revi sed return, i n whi ch the cl ai m was made. I n the present case, no revi sed return was fi l ed by the assessee. On the contrar y, the assessee admi tted non-cl ai m of the sai d deducti on u/s 80I B of the Act due to cl eri cal mi stake on i ts part. I t i s settl ed proposi ti on that no i nterpretati ve process can be resorted to where the l anguage of the provi si on i s si mpl e, pl ai n and cl ear. Hence, the speci fi c l egi sl ati ve i ntent enshri ned in Secti on 80A( 5) of the Act deserves to be gi ven ful l -effect, i n the matter und er reference. The CI T( A) fai l ed to appreci ate the cl ear l egi sl ative contai ned i n the provi si ons of Secti on 80A( 5 ) whi l e adjudi cati ng the i ssue i n questi on.
11. I n vi e w of the above l egal and factual di scussions, we are of the consi dered opi ni on that the order of the CI T( A) , cannot be sustai ned. Hence, the appeal of the revenue i s al l o wed.
12. I n Cross Objecti on No.24/Chd/2010 fi l ed by the assessee, the assessee chal l enged the disal l o wance of Rs.3,31,572/- made by the AO u/s 80I B of the Act and uphel d by the CI T( A) , i n respect of mi scel l aneous i ncome earned by the assessee. 12( 1) . The l d. CI T( A) cl earl y hel d that the i ncome from sal e of drums, i nsurance for stock l oss and recover y from transporter for damage to materi al woul d consti tute 11 i ndependent source of i ncome be yond the fi rst degree ne xus bet ween the profi ts and the i ndustri al undertaki ng. The l d. CI T( A) pl aced rel iance to arri ve at such fi ndi ng on the deci si on of the Hon'bl e S upreme Court i n the case of Li b ert y I ndi a V CI T 317 I TR 218 ( S.C) . We are i n ful l agreement with the fi ndi ngs of the l d. CI T( A) . Ho we ver, as the asse ssee i s not el i gi bl e for deducti on u/s 80I B i n vi e w of the fi ndi ngs recorded i n respect of Ground No.1 & 2 rai sed by the revenue i n i ts appeal , the Cross Objecti ons taken by the assessee deserve to be di smi ssed and hence, the same are di smi ssed.
14. I n the resul t, appeal of the revenue i s al l o wed and Cross Objecti ons of the assessee are di smi ssed.
Order pronounced i n the Open Court on 29 t h Dec.,2011.
Sd/- Sd/-
( H.L.KARWA) ( MEHAR SI NGH)
VI CE PRESI DEN T ACCOUN TA N T MEMBER
Dated: 29 t h Dec.,2011.
'Poonam'
Copy to:
The Appel l ant, The Respondent, The CI T( A) , The CI T,DR Assi stant Regi strar, I TAT Chandi garh