Income Tax Appellate Tribunal - Kolkata
Sheo Sakti Coke Industries, Kolkata vs Department Of Income Tax
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IN THE INCOME TAX APP ELLATE TRIBUNAL,
KOLKATA 'A' BENCH, KOLKATA
Coram : Shri Mahavir Singh (Judicial Member)
and Shri Abraham P. George (Accountant Member)
I.T .A. No.: 631/K ol./ 2012
Assessment year : 2007-2008
Assi stant Commissio ner of Income Tax, ................................... .Ap pellant
Circle-39, Kolkata,
8 t h floor, Pod dar Court,
18, Rabind ra S arani ,
Kolkata-700 001
-Vs.-
M/s.Sheo S akti Coke Industries,..............................................Res pondent
115, College Street,
Kolkata-700 012
[PAN : A AHFS 4971 J]
Appearances by:
Shri Saboorul Hasan Usmani, Sr. D.R., for the Department
Shri H.N. Dubey, Advocate, fo r the assessee
Date of co ncluding the hearing : Novemb er 07, 2013
Date of pronouncing the orde r : Novemb er 21, 2013
O R D E R
Per Bench:
1. This appeal filed by the Revenue is against an order dated 25 t h January, 2012 of Commissioner of Income Tax (Appeals)-IV, Kolkata for assessment year 2007-08.
2. Grievance raised by the Revenue in its appeal is that ld.
CIT(A ppeals) granted deduction under section 80IC of the Income Tax Act, 1961 (in short 'The Act') on transport charge expenses of Rs.87,12,741/- disallowed by the Assessing Officer under section 40(a)(ia) of the Act.
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3. Facts apropos are that assessee, claiming to have started a business of manufacturing and selling of LAM Coke, had filed its return of income for the impugned assessment year, preferring deduction under section 80IC of the Act on a Rs.23,36,680/-, from such manufacturing operation. There was a claim of expenditure of Rs.87,12,747/- on account of transportation charges. This comprised of Rs.61,38,987/- to M/s. Om Transport Co. and Rs.7,59,250/- to Gauhati Bhopal Transport Co. Pvt. Ltd. On being asked by the Assessing Officer, assessee could not produce any evidence for deduction of tax at source on such payment. In absence of any details, Assessing Officer was of the opinion that section 40(a)(ia) of the Act stood attracted. Assessing Officer also denied the claim of deduction under section 80IC of the Act for a reason that the assessee had not commenced production before 1 s t April, 2007. Assessment was accordingly completed.
4. Assessee's appeal before CIT(A ppeals) in so far as its claim of deduction under section 80IC of the Act was successful. However, ld. CIT(A ppeals) confirmed the disallowance of transport charges of Rs.87,12,747/-, on which tax was not deducted at source. Nevertheless, according to him, disallowance of such expenditure onl y went to increase the income chargeable to tax, which could be given 100% deduction under section 80IC of the Act.
5. Now before us, ld. D.R. submitted that, though disallowance under section 40(a)(ia) was sustained by the ld. CIT(Appeals), he nevertheless held such amount also to be eligible for deduction under section 80IC of the Act. As per ld. D.R., such directions were given without property considering the said section. Ld. D.R. submitted that by allowing a claim for deduction on an amount otherwise not allowable under section 40(a)(ia) of the Act, the latter provision was rendered otiose.
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6. Against this, ld. A.R. on behalf of the assessee submitted that once a disallowance of business expenditure was made, it went to increase the profit, which was eligible for claim of deduction under section 80IC of the Act. According to him, this view was supported by decision of Hon'ble Gujarat High Court in the case of ITO -vs.- Keval Construction reported in (2013) 354 ITR 13, wherein it was held that "even when disallowance was required to be made under section 40(a)(ia) o f the Act, the ultimate profit after considering such disallowance would be eligible for deduction".
7. We have heard the submissions of both the parties and perused the material available on record. From the record, we find that assessee had filed its return of income first year for the impugned assessment year and the declared income was nil. It is not disputed that the assessee had started a business of manufacturing of LAM Coke, though initially its claim for deduction under section 80IC was disallowed by the Assessing Officer for a reason that production had not commenced before 1 s t A pril, 2007. In its appeal before ld. CIT(A ppeals), said deduction was directed to be allowed. Since the assessee had claimed deduction under section 80IC on the net profit of Rs.23,36,680/- on its LAM Coke business, we cannot say that the claim of transportation charges of Rs.87,12,747/- was not related to its business of manufacturing LAM Coke. There is nothing on record to show that assessee was doing anything else. There is also no finding by the Assessing Officer that the transportation charges were not required for the purpose of the manufacturing business of the assessee. It was disallowed onl y for a reason that deduction of tax was not made as required under section 194C of the Act. Hon'ble Gujarat High Court in the case of Keval Construction (supra), rel ied by the ld. A .R., has held that where a disallowance of expenditure was made for want of deduction of tax at source, it coul d not be denied that such disallowance would ultimately go to increase the profit of assessee and whatever be the ultimate profit computed, after making disallowance, such profit would still qualify for deduction under section 80IB(10) of the Act. The I .T.A . N o . : 6 3 1/ Kol. / 2 0 1 2 A s s es s m e n t y e a r : 2 0 0 7 - 0 8 Pa ge 1 to 4 deduction here claimed by the assessee is under section 80IC of the Act and this also falls under the same Chapter VI-A of the Income Tax Act, where under section 80IB also lies. Therefore, we are of the view that the principle of law enunciated by the Hon'ble Gujarat High Court in the abovementioned decision woul d pari passu appl y here also. We cannot therefore find fault in the direction given by the ld. CIT(A ppeals) that the assessee would be eligible to get the claim of deduction under section 80IC of the Act on its profits including the disallowance under section 40(a)(ia) of the Act.
8. In the result, the appeal filed by the Revenue stands dismissed.
Order pronounced in the open court on 21 s t day of November, 2013.
Sd/- Sd/-
Mahavir Singh Abraham P. George
(Judicial Member) (Accountant Member)
Kolkata, the 21 s t day of November, 2013
Copies to : (1) The appellant
(2) The respondent
(3) CIT
(4) CIT(A)
(5) The Departmental Representative
(6) Guard File
By o rder etc
Assistant Registrar
Income Tax Appellate Tribunal
Kolkata benches, Ko lkata
Laha/Sr. P.S.