Income Tax Appellate Tribunal - Kolkata
C & E Limited, Kolkata vs Dcit, Cir-12(1), Kolkata, Kolkata on 6 September, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH : KOLKATA
[Before Hon'ble Shri A.T.Varkey, JM & Shri M.Balaganesh, AM ]
I.T.A Nos. 39, 1018 &1019/Kol/2015
Assessment Years : 2007-08 to 2009-10
M/s C & E Limited -vs- DCIT, Circle-12, Kolkata
[PAN: AACCC 5418 K]
(Appellant) (Respondent)
I.T.A. No. 89/Kol/2015
Assessment Year: 2007-08
DCIT, Circle-12(1), Kolkata -vs- M/s C & E Limited
[PAN: AACCC 5418 K]
(Appellant) (Respondent)
C.O. No. 17/Kol/2015
(a/o of I.T.A. No. 89/Kol/2015)
Assessment Year: 2007-08
M/s C & E Limited -vs- DCIT, Circle-12(1), Kolkata
[PAN: AACCC 5418 K]
(Cross Objector) (Respondent)
For the Assessee : Shri Srikumar Banerjee, FCA
For the Revenue : Shri Rabin Chaudhuri, Addl. CIT DR
Date of Hearing : 29.08.2017.
Date of Pronouncement : 06.09.2017
2
ITA Nos.39,1018,1019 & 89/Kol/2015
C.O. NO. 17/Kol/2015
M/s C & E Limited
A.Yrs.2007-08 to 2009-10
ORDER
Per Bench:
1. These three appeals by the Assessee and the appeal by the Revenue and cross objection by the Assessee arise out of the orders of the Learned Commissioner of Income Tax (Appeals), Kolkata [ in short the ld CITA] in Appeal Nos. 895/XII/Cir- 12/09-10 dated 16.10.2014 ; ITA Nos. 598 & 599/CIT(A)-9/Cir-12/2014-15/Kol dated 27.03.2015 respectively against the orders passed by the DCIT, Circle-12, Kolkata, [ in short the ld AO] under section 143(3) of the Act dated 30.12.2009, 30.12.2010, 29.12.2011 respectively for the Asst Years 2007-08 to 2009-10 respectively. As the issues involved in these appeals are identical, the same are taken up together and disposed of by a common order for the sake of convenience.
2. The first issue to be decided in all these appeals is as to whether the Ld. CIT(A) was justified in upholding the denial of deduction u/s 80IB and 80IC of the Act in respect of other income as not eligible thereon, in the facts and circumstances of the case.
3. The brief facts of this addition is that the assessee is engaged in the business of manufacturing of Leather Chemicals and Trading of Dyes and Chemicals. The assessee for the Asst Year 2007-08 in its computation, claimed deduction u/s 80IB of the Act of an amount of Rs. 40,22,521/- in respect of its unit-II at village-Judikalan, District-Solan, H.P. and also claimed deduction u/s 80IC of the Act of Rs. 95,44,128/- in respect of its unit-IV at village- Judikalan, District-Solan, H.P. Both these deductions were duly supported by audit report from a Chartered Accountant. The Ld. AO during the course of assessment proceedings called for details of administrative and other expenses and held that the same cannot be directly relatable to a particular unit and hence requires apportionment amongst the different units on a reasonable basis, as the assessee has been deriving income from five units including a trading unit. Besides above, the Ld. 2 3 ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10 AO observed that the assessee did not allocate the head office expenses to each of the units. The Ld. AO apportioned the administrative and other expenses on the basis of turnover of each unit and recalculated the deduction u/s 80IB and 80IC of the Act thereon.
4. The second issue to be decided in respect of all these appeals is with regard to other income derived by the assessee and whether the same would be eligible for deduction u/s 80IB and 80IC of the Act. The Ld. AO observed that the other income included interest receipts, duty drawback, interest from sundry debtors for late payments, liabilities written back, miscellaneous income etc. which are not directly derived from the respective eligible units and hence are not eligible for deduction u/s 80IB and 80IC of the Act. This action of the Ld. AO was upheld by the Ld. CIT(A).
5. The grounds raised by the assessee as well as by the Revenue in respect of aforesaid issues are as under:
I.T.A. No. 39/Kol/2015 for assessment year-2007-08
1. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by not considering the Other Income amounting to Rs. 4,34,411/- is an income from eligible business and therefore not considering for the purpose of deduction under Section 80IB and 80IC of the I.T. Act.
2. That the appellant cause leave, to add, alter, amend or modify and or all of the above grounds of appeal at or before the time of hearing of the appeal.
I.T.A. No. 1018/Kol/2015 for assessment year-2008-09
1. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other income of Rs. 3,32,001 for unit II and Rs. 63,447/- for unit IV as the income which was not derived from eligible business.
2. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other of Rs. 3,32,001 for unit II and Rs. 63,447/- for 3 4 ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10 unit IV as the income which was not derived from eligible business without examining the nature of each income.
3. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other of Rs. 3,32,001 for unit II and Rs. 63,447/- for unit IV on the ground that earlier CIT(A) has rejected the appellant's own case without considering the fact nature of earlier year's income are not the same of the current year.
4. That the appellant cause leave, to add, alter, amend or modify and or all of the above grounds of appeal at or before the time of hearing of the appeal.
I.T.A. No. 1019/Kol/2015 for assessment year-2009-10
1. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other income of Rs. 10,87,414/- for unit I and Rs. 2,04,522 for unit II as the income which was not derived from eligible business.
2. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other income of Rs. 10,87,414/- for unit I and Rs. 2,04,522 for unit II as the income which was not derived from eligible business without examining the nature of each income.
3. That the learned Commissioner of Income Tax (Appeal) has erred in law and in fact by confirming the other income of Rs. 10,87,414/- for unit I and Rs. 2,04,522 for unit II on the ground that earlier CIT(A) has rejected the appellant's own case without considering the fact nature of earlier year's income are not the same of the current year.
4. That the appellant cause leave, to add, alter, amend or modify and or all of the above grounds of appeal at or before the time of hearing of the appeal.
I.T.A. No. 89/Kol/2015 for assessment year-2007-08 - Revenue Appeal
1. That on the facts and circumstances of the case and as per law Ld. CIT(A) erred in deleting the addition under the head " Administrative and other expenses" amounting to Rs. 2,43,41,766/- relying on the decision of Ld. ITAT whereas the same issue for the A.Y. 2005-06 is pending before Hon'ble High Court for disposal.
4 5ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10
2. That on the facts and circumstances of the case and as per law Ld. CIT(A) erred in deleting the addition under the head " Administrative and other expenses" without considering the fact that department preferred appeal before Hon'ble High Court on the same issue.
C.O. No. 17/Kol/2015 for assessment year-2007-08(a/o I.T.A. No. 89/Kol/2015)
1. That on the facts and circumstances of the case and as per law Ld. CIT(A) is rightly allowed the addition made by the learned assessing officer after considering the fact on records on merit, under the head "Administrative and other expenses" amounting to Rs. 2,43,41,766/-.
2. That on the facts and circumstances of the case and as per law Ld. CIT(A) is rightly allowed the additions made by the learned assessing officer after considering the fact on records on merit, under the head "Administrative and other expenses".
3. That the appellant cause leave, to add, alter, amend or modify and or all of the above grounds of appeal at or before the time of hearing of the appeal.
6. The Ld. AR stated that the issue with regard to apportionment of common expenses is already covered by the order of this Tribunal in assessee's own case for the earlier years and placed orders thereon on record. With regard to other income derived by the assessee he placed the details of other income as under:
Overall Picture of other Income Assessment year/ Nature of other Income 2007-08 2008-09 2009-10 Duty Draw Back - 119346 419641 Interest on term deposits 81016 110326 197446 Scrap sale 66818 80635 90000 Sundry balances written off 44624 - -
Interest from debtors for late payments 196225 - - Insurance Claim Recd. 29432 8631 - Misc. Income 16296 76535 13052 Profit on Exchange Fluctuation - - 202666 Rental Income - - 114000 Interest on I T Refund - - 168193 Claim and Demurrage - - 76940 TOTAL 4,34,411 3,95,448 12,91,936 5 6 ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10
He argued that the Ld. AO has not mentioned any reasons in his assessment order as to why the aforesaid other income could not be considered as income from eligible business. He also placed reliance on various decisions in support of his claim for inclusion of aforesaid other income as eligible for deduction u/s 80IB and 80IC of the Act. He fairly submitted that in earlier years, this Tribunal had remanded the matter to the file of the Ld. CIT(A) for examination of eligibility of each of the aforesaid income for deduction u/s 80IB and 80IC of the Act and the Ld. CIT(A) had not listed those appeals for hearing. Accordingly, he prayed for setting aside of this issue to the file of the Ld. AO. The Ld. DR vehemently relied on the orders of the Ld. AO for all the orders.
7. We have heard the rival submissions and perused the material available on record. The fact stated hereinabove for the assessment year 2007-08 are taken up for adjudication and the decision rendered thereon would apply with equal force for assessment years 2008-09 and 2009-10 also except with variance in figures. We find that as far as the issue regarding apportionment of common expenses is concerned the same is squarely covered in favour of the assessee by the decision of this Tribunal in assessee's own case for assessment year 2003-04 in I.T.A. No. 01/Kol/2008 dated 17.04.2009 wherein it was held:
" 5. After hearing both the sides, we find that the assessee is maintaining separate books of accounts for its each unit. [Unit-I & II and trading division]. The purchase and sales of these units/business are separate. The AO allocated the expenses debited under the head Administrative & Other Expenses on the basis of turnover without pinpointing any mistake in the accounting system of the assessee company. The expenses like telephone, postal & courier, vehicle, upkeep, insurance and electricity charges are identifiable to a particular unit. There is no specific finding that these expenses are related to a particular unit and debited in other unit. Keeping these facts in view, we find no fault in the order of the Ld. CIT(A) in deleting the same. Thus, ground no. 1 taken by the Revenue is dismissed."
We find that the assessee has claimed deduction u/s 80IB for unit II and deduction u/s 80IC for unit IV. It is not in dispute that the assessee has maintained books of accounts 6 7 ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10 separately for each of the aforesaid units which has been rightly appreciated by this Tribunal in the case of assessee in earlier years as stated supra. We also find that similar disallowance made by the Ld. AO towards apportionment of common expenses for the assessment years 2009-10 and 2010-11 were deleted by the Ld. CIT(A) and no further appeal has been preferred by the Revenue before this Tribunal against the said order. We also find that no disallowance in this regard was made even by the Ld. AO commencing from assessment years 2001-12 to 2014-15 for which necessary assessment orders were placed on record by the ld. AR. In view of the aforesaid facts and findings, respectfully following the aforesaid decisions we dismiss the grounds raised by the Revenue in this regard for the assessment year 2007-08.
8. With regard to the treatment of other income as detailed (supra) as being eligible for deduction u/s 80IB and 80IC of the Act, we find that this Tribunal in the earlier years had remanded the matter to the file of the Ld. CIT(A) for adjudication of each of the issues and given a proper finding thereon. The facts of the case before us is no different from that prevailing in the earlier years. However, we find from the arguments of the Ld. AR that the Ld. CIT(A) had not taken any decision for the earlier years in this regard pursuant to the orders passed by this Tribunal. Hence, in order to reach finality, we deem it fit and appropriate to remand this matter to the file of the Ld. CIT(A) with a specific time frame directing him to dispose of these appeals on or before 28.02.2018. Accordingly, grounds raised in this regard by the assessee for various assessment years are allowed for statistical purposes.
9. C.O. No. 17/Kol/2015 raised by the assessee for assessment year 2007-08 is only supportive of the order of the Ld. CIT(A) and hence, the same is dismissed as infructuous.
7 8ITA Nos.39,1018,1019 & 89/Kol/2015 C.O. NO. 17/Kol/2015 M/s C & E Limited A.Yrs.2007-08 to 2009-10
10. In the result, the appeal of the revenue in I.T.A. No. 89/Kol/2015 is dismissed; C.O. No. 17/Kol/2015 by the assessee is dismissed; and appeals of the assessee in I.T.A. Nos. 39/Kol/2015 (A.Y. 2007-08), I.T.A. No. 1018/Kol/2015 (A.Y. 2008-09) and I.T.A No. 1019/Kol/2015 (A.Y. 2009-10) are allowed for statistical purposes.
Order pronounced in the Court on 06.09.2017
Sd/- Sd/-
[A.T.Varkey] [ M.Balaganesh ]
Judicial Member Accountant Member
Dated : 06.09.2017
SB, Sr. PS
Copy of the order forwarded to:
1. M/s C & E Limited, 95 Park Street, 2nd Floor, Kolkata-700016
2. DCIT, Circle-12, 7th Floor, Aayakar Bhawan, P-7, Chowringhee Square, Kolkata- 700069.
3..C.I.T.(A)- , Kolkata 4. C.I.T.- Kolkata.
5. CIT(DR), Kolkata Benches, Kolkata.
True copy By Order Senior Private Secretary Head of Office/D.D.O., ITAT, Kolkata Benches 8