COMMISSIONER OF INCOME TAX vs. TONY ELECTRONICS LTD

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ITA - 633 / 2010HC Delhi05 October 20154 pages
AI SummaryDismissed

What did the High Court hold?

The Delhi High Court held that the issue of deductions under Sections 80HH, 80I, and 80IA was covered by a previous decision in favor of the assessee. The court also found no substantial question of law regarding the disallowance of losses from Unit-I and Unit-II, deeming the ITAT's findings plausible based on facts.

What were the facts?

The Revenue appealed ITAT orders concerning assessment year 1996-97. The appeals raised questions regarding deductions under Sections 80HH, 80I, and 80IA, disallowance of losses from Unit-I and Unit-II, and depreciation on Namoli Unit.

What were the issues?

Whether the ITAT erred in allowing deductions under Sections 80HH, 80I, and 80IA, and in deleting/reducing disallowances of losses from various units, and allowing depreciation.

Which sections of the Income-tax Act were involved?

Section 80HH,Section 80I,Section 80IA

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* IN THE HIGH COURT OF DELHI AT NEW DELHI 26 & 30 + ITA 633/2010 THE COMMISSIONER OF INCOME TAX-III ..... Appellant Through: Mr. Rohit Madan, Senior Standing Counsel. versus TONY ELECTRONICS LIMITED Respondent Through: Mr. Satyen Sethi, Advocate. + ITA 1053/2010 THE COMMISSIONER OF INCOME TAX-III Appellant Through: Mr. Rohit Madan, Senior Standing Counsel. versus TONY ELECTRONICS LIMITED Respondent Through: Mr. Satyen Sethi, Advocate. CORAM: DR. JUSTICE S.MURALIDHAR MR. JUSTICE VIBHU BAKHRU ORDER % 05.10.2015 1. ITANo.633/2010 is an appeal bytheRevenue against the order dated 17^ July 2009, passed by the Income Tax Appellate Tribunal (ITAT) in ITA No.48/Del/2002 forthe Assessment Year(AY) 1996-97. ITA Nos.633 &1053/2010 Page 1of4 2015:DHC:11127-DB

2.

ITA No.1053/2010 is an appeal by the Revenue against the order dated 17'*^ July, 2009, passed by the ITAT in ITA No.4220/Del/2001 for the AY 1996-97. 3. In both the appeals, the Revenue seeks to urge the following questions for consideration by the Court:

(a) Whether onthe facts and inthe circumstances ofthe case, the Ld. ITAT erred in law and on merits in allowing deduction under Section 80HH of the Income Tax Act, 1961 (Rs.63,97,717) and under Section 801 of the Income Tax Act, 1961 (Rs.79,97,146) in respect of profitof Namoli Unit and deduction under Section 80IA of the Income Tax Act, 1961 (Rs.8,22,387) in respect ofMalanpur Unit?

(b) Whether on the facts and in the circumstances of the case, the Ld. ITAT erred in law and on merits in deleting the disallowance of loss in respect ofUnit-I amounting to Rs.6,40,398?

(c) Whether on the facts and in the circumstances of the case, the Ld. ITAT erred in law and on merits in reducing the disallowance of loss of Unit-II by Rs. 1,22,37,122?

(d) Whether on the facts and in the circumstances of the case, the Ld. ITAT erred in law and on merits in allowing depreciation of Rs.2,82,532 in respect ofNamoli Unit? 4. Question (a) is admittedly covered in favour of the Assessee and against the Revenue by the decision of this Court in CIT v. Tony Electronics Ltd.

(2015) 375ITR 431 (Del). Consequently the Courtis not inclined to frame a question oflaw on this issue. ITA Nos.633 &1053/2010 Page 2of4 2015:DHC:11127-DB

5.

Question (b) is common to both ITA Nos.633/2010 and 1053/2010. This question pertains to disallowance ofthe loss ofUnit-I, i.e. Noida Unit. In the earlier AY 1995-96 against the order ofthe AO ordering disallowance of Rs.66,25,885, the Commissioner of Income Tax (Appeals) [CIT(A)] had while disposing of the Assessee's appeal, sustained the disallowance to the extent of Rs.26,80,087. For the present AY, the loss was Rs.21,28,193 and here again the CIT(A) allowed only 1/3'^'^ relief. The ITAT has found that facts for AY 1996-97 were different from AY 1995-96. In this AY, i.e. 1996-97, commercial production had resumed forty (40) days after the trial production whereas in 1995-96, there was a gap ofmore than one (1) year. 6. The above finding of the ITAT appears to have been based on the facts and, therefore, the Court is of the view that no substantial question of law arises. 7. Question (c) pertains to disallowance of losses of Unit-II at Noida, which is involved in the production and sale of Video Magnetic Tapes. The Assessing Officer (AO) proposed an addition ofRs.4.05 crore on account of suppression of sales and closing stock because of which the Assessee had declared a loss. The CIT(A) noted the serious discrepancies in the order of the AO, which had resulted in directions being issued under Section 144A by the Additional CIT restricting disallowance to 10 per cent of the gross profit on sales. ITANos.633£ 1053/2010 Page 3 of4 2015:DHC:11127-DB

8.

The ITAT in the impugned order has noted that losses had been incurred in Unit-II in the earlier AY, i.e. 1995-96, as well as the succeeding AY, i.e. 1997-98. Accordingly, the addition sustained by the CIT(A) was entirely deleted by the ITAT. The view taken by the ITAT appears to be aplausible one in the facts ofthe case. 9. Question concerns (d) the disallowance of depreciation in respect of the Namoli Unit. The question is covered in favour of the Assessee and against the Revenue by the decision of this Court in CIT v. Tony Electronics Ltd.

(2015) 375ITR 431 (Del). 10. The appeals are accordingly dismissed. S.MURALIDHAR, J VIBHU BAKHRU, J OCTOBER 05,2015 b 'nesh ITANos.633 & 1053/2010 Page 4 of4 2015:DHC:11127-DB

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