Ita/100/2012 Of Commissioner Of Income Tax, Kottayam v. The Paragon Polymer Products Pvt.ltd

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN & THE HONOURABLE MR. JUSTICE ASHOK MENON FRIDAY ,THE 14TH DAY OF DECEMBER 2018 / 23RD AGRAHAYANA, 1940 ITA.No. 100 of 2012 AGAINST THE ORDER/JUDGMENT IN ITA 246(COCH)/2010 ofI.T.A.TRIBUNAL,COCHIN BENCH DATED 20-01-2012 APPELLANT/S:/RESPONDENT/REVENUE: THE COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI PKR MENON, SR. COUNSEL, GOI (TAXES)SRI.JOSE JOSEPH, SC, FOR INCOME TAX DEPT. RESPONDENT/S:/APPELLANT/ASSESSEE: THE PARAGON POLYMER PRODUCTS PVT.LTDP.B.NO. 61, PARAGON BUILDINGS, KOTTAYAM, PIN-686001. BY ADVS.SMT.PREETHA S.NAIRSRI.K.JOHN MATHAISRI.M.GOPIKRISHNAN NAMBIARSRI.P.BENNY THOMASSRI.P.GOPINATH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 14.12.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.VINOD CHANDRAN & ASHOK MENON, JJ. -------------------------------------------ITA No.100 of 2012 ------------------------------------------- Dated this the 14[th] day of December, 2018 J U D G M E N T Vinod Chandran, J. The appeal raises the following questions oflaw:- (1)Whether, on the facts and in thecircumstances of the case and admittedlythe Salem Unit being the eligible unitunder Sec.80IB and the sales recorded inthe separate books of Salem unit beingRs.19,53,96,288/-, the assessee isentitled to claim deduction underSec.80IB on the consolidated salesfigure, inclusive of the other unitalso? (2)Whether, on the facts and in thecircumstances of the case, the Tribunalis right in law in holding that theturnover from outlets located in areasother than the place where the eligibleunit is situated qualifies for deductionunder Sec.80IB when the Sales accountdoes not prove that the Sales frombranches is turnover of the eligibleunit?” 2.The assessee has two units; one at Salem and the other at Hyderabad, manufacturing chappals.The industrial undertaking of the assessee at Salem was entitled to deduction under Section 80IB of the IncomeTax Act, 1961 ('Act', for short) being an industrialundertaking covered by sub-Section (3) of Section 80IB.The particular issue in the case is as to the dis-allowance having been interfered with by the Income TaxAppellate Tribunal. In the subject assessment year2004-05, the profit and loss account of the Salem Unitshowed the eligible deduction under Section 80IB atRs.21,85,24,989/-. The consolidated profit and lossaccount of the units at Salem and Hyderabad showed thefigure at Rs.19,53,96,288/-. The first appellateauthority by Annexure-B computed the difference and thededuction at 30% as against the difference between thefigures were disallowed. Hence, the dis-allowance ofRs.69,38,609/- was confirmed. The Tribunal reversedthe same and directed the allowance to be granted infull as claimed in the profit and loss account of theSalem Unit. 3.The difference, according to theassessee, occurred due to the accounts having shownseparately, the sale from the retail business of the assessee, to which the manufactured items were stocktransferred from the Salem Unit. The learned counselfor the assessee, in fact, takes us to Section 80IB(13)to point out that sub-Sections (5) and (7) to (12) ofSection 80IA, would be applicable for Section 80IBalso. Sub-section (8) of Section 80IA indicates thatwhere any goods or services held for the purpose ofeligible business are transferred to any other businessor where any goods held for the purposes of any otherbusiness carried on by the assessee are transferred tothe eligible business, the consideration, if any, forsuch goods and services shall be computed, so as tocorrespond to the market value of such goods. In suchcircumstances, the provision recognises transfer ofgoods and services between businesses and even if thesale is made from the retail centers of the assesseeitself, it can be deemed to be the business of theeligible undertaking. 4.The Tribunal too has noticed the fact andspecifically referred to the no. of units produced atSalem and what is actually sold from the undertaking and that sold through different branches. On averification of the actual sale for the current year,the Tribunal has found that the claim for allowancemade by the assessee is proper. We, hence, find thatthe Tribunal has gone into the facts and allowed theallowance claimed. The sale figures taken is obviouslynot the consolidated figure of the Salem and Hyderabadunits and the question of law framed as (1) is notrelevant. We do not find any infirmity in the findingsof the Tribunal. We answer the question of law (2) infavour of the assessee and against the Revenue. TheIncome Tax Appeal stands dismissed. No costs. Sd/- K.VINOD CHANDRANJUDGESd/- ASHOK MENONJUDGE APPELLANT'S ANNEXURES APPENDIX jg