Income Tax Appellate Tribunal - Chandigarh
Scott Edil Pharmacia Limited, ... vs Addl. Cit, Chandigarh on 21 November, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.217/Chd/2014
(Assessment Year : 2010-11)
Scott Edil. Pharmacia Limited, Vs. The Addl.C.I.T.,
Plot No.54-55, Industrial Area-II, Range I,
Chandigarh. Chandigarh.
PAN: AAHCS1643K
(Appellant) (Respondent)
Appellant by : Shri Pariskshit Aggarwal
Respondent by : Shri Manjit Singh, DR
Date of hearing : 09.08.2016
Date of Pronouncement : 21.11.2016
O R D E R
PER ANNAPURNA GUPTA, A.M. :
The appeal filed by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals), Chandigarh dated 31.12.2013 for assessment years 2010-11.
2. The assessee has raised the following grounds :
"1. That the order of the Learned Commissioner of Income Tax (Appeals) is bad, against facts and law.
2. That the learned Commissioner of Income Tax [Appeals] without appreciating the facts and circumstances of the case erred in sustaining the addition of Rs. 1,05,23,200.00 on account of increase in the Gross Profit on the basis of pre and post survey periods. The addition 2 is based on suspicion, inferences, surmises, presumptions and conjectures. The addition be deleted.
3. That the appellant craves leave to add, amend or delete any of the grounds of appeal before the same are taken up for final disposal."
3. Besides the above, an additional ground was raised before us, which reads as under :
"4. That on the facts, circumstances and legal position of the case, the Ld. AO made a serious error by not allowing the enhanced deduction u/s 80IC for addition to business income derived from manufacturing activity on erroneous assumption that appellant has agreed for it and so has failed to apply the law in true spirit. Further, the Worthy CIT(A) allowed the contention that the addition was not agreed but has erred in not allowing the consequential benefit of allowance of deduction u/s 8O-IC on enhanced business profits."
4. The learned counsel for the assessee requested that since the ground related to the legality of eligibility of deduction under section 80IC of the Act on income enhanced by making addition, the same be admitted following the Hon'ble Apex Court decision in the case of CIT Vs. NTPC Ltd.
5. Having heard the contentions we admit the additional ground raised since it is a legal ground which can be adjudicated on the basis of facts available on record.
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6. Having admitted the additional ground, we shall first deal with the same.
7. Briefly facts relating to the issue are that during the year survey under section 133A of the Act was carried out on the business premises of the assessee on 19.8.2009. During the course of assessment proceedings thereafter, on perusal of the trading, manufacturing and Profit & Loss Account of the assessee, the Assessing Officer found that the GP returned by the assessee for the pre-survey period was 17.98%, which went down to 15.95% as at the end of the year i.e. on 31.3.2010. On being confronted with the same, the assessee offered explanation which was found correct to some extent by the Assessing Officer but in the absence of complete detail and working, the plea was rejected. Thereafter, the Assessing Officer held that though the difference in the GP was 2.03%, the assessee had agreed to an increase in gross profit of 0.90% with the undertaking that no additional deduction under section 80IC of the Act would be claimed. Accordingly, an addition of Rs.1,05,23,200/- was made to the income of the assessee and no deduction under section 80IC of the Act was allowed.
8. The learned CIT (Appeals) dealt with the issue on merits and upheld the disallowance made without adjudicating upon the disallowance of deduction under section 80IC of the Act on the enhanced gross profit. 4
9. Before us, the learned counsel for the assessee stated that the assessee had never agreed to the addition and denial of deduction under section 80IC of the Act of the same, which is evident from the finding of the learned CIT (Appeals) also at para 4.3 of his order, where he has held that the addition was not an agreed addition. Further, the learned counsel for the assessee stated that the fact the assessee was eligible for deduction under section 80IC of the Act, is not disputed and the same cannot, therefore, be denied for the reason that the assessee consented to not claim the same.
10. The learned D.R., on the other hand, stated that the assessee was bound by the surrender of the claim made by it to the Assessing Officer and could not now retract from the same.
11. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. We hold that the assessee should be allowed deduction under section 80IC of the Act on the enhanced gross profits of the assessee. The fact that the assessee is eligible to deduction under section 80IC of the Act on the enhanced profits is not disputed since the Assessing Officer has himself admitted to the same, while holding that the assessee had surrendered his claim of the same. Further, the learned CIT (Appeals) has also given a categorical finding that the assessee did not give consent 5 to any such addition to the Assessing Officer. Therefore, the assessee is entitled to claim deduction under section 80IC of the Act on the enhanced gross profits. Being a legal claim, the allowability of the same is not to be denied merely on the whims and fancies of the assessee, which is any case is factually considered.
12. This ground of appeal raised by the assessee is, therefore, allowed.
13. Since we have allowed the assessee's claim of deduction under section 80IC of the Act on the addition made, the ground No.2 raised by the assessee challenging the addition made becomes irrelevant and was also not pressed before us. The same is, therefore, treated as dismissed.
14. In the result, the appeal of the assessee is partly allowed.
Order pronounced in the open court.
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACOUNTANT MEMBER
Dated : 21 s t November, 2016
*Rati*
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT
5. The DR
Assistant Registrar,
ITAT, Chandigarh
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