PRINCIPAL COMMISSIONER OF INCOME TAX 4 vs. SYNPOL PRODUCTS PVT LTD

C/TAXAP/526/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 526 of 2018 With R/TAX APPEAL NO. 527 of 2018 ========================================================== PRINCIPAL COMMISSIONER OF INCOME TAX 4 Versus SYNPOL PRODUCTS PVT LTD ========================================================== Appearance: MRS MAUNA M BHATT(174) for the PETITIONER(s) No. 1 MR.BANDISH SOPARKAR, ADVOCATE for the RESPONDENT(s) No. 1 ========================================================== CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MR.JUSTICE B.N. KARIA

Date : 11/06/2018

ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. These appeals filed by the Revenue arise out of the   common   judgment   of   the   Income   Tax   Appellate Tribunal concerning the same respondent assessee and pertained to the assessment year 2007­08. 2. Following questions have been presented for our consideration: “[A] Whether   the   Appellate   Tribunal   has substantially erred in law and on facts in deleting the disallowance of excess claim of exemption

Rs.30,87,259/­[80,19,695­ 49,32,336] u/s of 10B of the Income Tax Act? [B] Whether   the   Appellate   Tribunal   has substantially erred in law and on facts in deleting the disallowance of Rs.48,637/­ u/s Page 1 of 3

C/TAXAP/526/2018 ORDER 14A of the the Income Tax Act, 1961? [C] Whether   the   Appellate   Tribunal   has substantially erred in law and on facts in deleting the disallowance of Rs.11,29,452/­ u/s 40(a)(ia) for non­deduction of TDS ?” 3. In a separate order passed today in Tax Appeal No.524   of   2018   and   connected   appeal,   we   have considered   all   these   three   questions   in   following manner: “3. Question­A pertains to disallowance of claim of exemption under section 10B of the Income Tax Act, 1961 ('the Act' for short), ordered   by   the   Assessing   Officer   on   the ground   that  the   assessee   had  inflated   the profit of the unit eligible for exemption, being   an   EOU   unit.     The  Commissioner   of Income

Tax

(Appeals) examined

the individual   heads   where   the   Assessing Officer   had   found   inflation   and   partially confirmed   the   Assessing   Officer's   finding while   giving   partial   relief   to   the assessee.     The   Tribunal  in   further   appeal by   the   assessee,   deleted   the   entire disallowance,   inter   alia,   observing   that the assessee had maintained separate books of   accounts   for   both   the   units;   eligible and   ineligible.     The   Assessing   Officer ought   to   have   pointed   out   a   particular expenditure incurred for earning income in the   EOU.   He   could   not   have   artificially apportioned   the   expenditure   merely   on   the basis   of   production   of   the   stakes.     The Tribunal   also   noted   that   in   the   earlier years, the accounting method adopted by the assessee was not disturbed by the Assessing Officer. 4. From   the   perusal   of   the   materials   on record, it can be seen that entire issue is factual   in   nature.   The   Tribunal   having Page 2 of 3

C/TAXAP/526/2018 ORDER found   that   the   accounts   of   the   assessee were properly maintained and could not have disturbed   by   the   Assessing   Officer mechanically   applying   the   ratio   of production   or   sell   of   two   units,   no question of law arises. 5. Question­B pertains to a sum which is extremely small and we are therefore do not entertain this question on this ground. 6. Question­C   pertains   to   disallowance under section 40(a)(ia) on the ground that on   several   payments   made   in   excess   of Rs.50,000/­   though   required,   tax   was   not deducted at source.   The Tribunal in this respect   confirmed   the   view   of   the Commissioner of Income Tax (Appeals) and to that extent held in favour of the Revenue. While doing so, the Tribunal provided that the   Assessing   Officer   would   separate   out those   disallowances   pertaining   to   the   EOU unit.     If   a   particular   disallowance   of expenditure   pertains   to   EOU   unit,   the profit   of   such   unit   would   increase   and resultantly,   the   claim   of   exemption   may also go up.   We find no error in the view of the Tribunal. 7. In the result, both the Tax Appeals are dismissed.” 4. In   the   result,   both   the   Tax   Appeals   are dismissed. (AKIL KURESHI, J) (B.N. KARIA, J) ANKIT SHAH Page 3 of 3