ITO, NEW DELHI vs. M/S. RAJAT DEEP OVERSEAS (P) LTD., NEW DELHI

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ITA 4854/DEL/2014Status: DisposedITAT Delhi30 May 2016AY 2010-114 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision, stating that merely earning higher profits does not justify reducing a deduction claim. Previous ITAT orders and a High Court decision in the assessee's own case for earlier years were followed.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting an addition of Rs. 2,41,40,305/-. The addition was related to a deduction claimed under Section 80IC of the Income Tax Act. The CIT(A) had relied on previous ITAT orders in the assessee's own case.

What were the issues?

Whether the CIT(A) erred in deleting the addition by relying on previous ITAT orders and ignoring the fact that the department was in appeal before the High Court. Whether a high gross margin attributable to brand value disqualifies the deduction under Section 80IC.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘F’: NEW DELHI

Before: SHRI S.V. MEHROTRA, & SHRI CHANDRA MOHAN GARG

For Appellant: Shri Ved Jain, CA
Hearing: 12.05.2016Pronounced: 30.05.2016

PER CHANDRA MOHAN GARG, JUDICIAL MEMBER

1.

This appeal filed by the Revenue is directed against the order of the CIT(A)-XVIII, New Delhi, dated 10/06/2014 passed in first appeal No. 27/2013-14 for A.Y 2010-11.

2.

The Revenue has raised the following grounds of appeal:

“1. On the facts & in the circumstances of the case, the Ld CIT(A) has erred in deleting the addition of Rs.2,41,40,305/- relying on the decision of the Hon'ble ITAT in assessee’s own case

2. On the facts & in the circumstances of the case, the Ld CIT(A) has erred in deleting the above disallowance by not appreciating the fact that the assessee has shown high gross margin i.e 19.27% compared to the industry average of 3-5%, which is attributable to the brand value of the industrial Undertaking being not eligible for deduction u/s 80IC of the Act.”

3.

We have heard the rival submissions and have perused the relevant material on record. This appeal by the Revenue has been directed against the order of the ld. CIT(A) wherein deduction u/s 80IC of the Income tax Act, 1961 [for short, 'the Act'] was allowed to the assessee. The ld. Counsel for the assessee submitted that similar disallowance was made by the AO in the case of the assessee for A.Ys 2008-09 and 2009-10 and the said disallowance was deleted by the ITAT for A.Y 2008-09 in , 3235/Del2012 and for A.Y 2009- 10 in ITA No. 236/Del/2013 and ITA No. 883/Del/2014. The ld. AR further contended that the order of the Tribunal for A.Y 2009-10 has been upheld by the Hon'ble High Court of Delhi vide ITA No. 540/Del/2015 order dated 20.10.2015. Elaborating the facts of the case, the ld. AR also pointed out that the assessee’s case for A.Y 2007-08 reopened u/s 147 of the Act wherein similar disallowance of deduction u/s 80IC was made by the AO and vide order dated

3 11.3.2016, ITAT deleted the said disallowance made by the AO in ITA No. 145/Del/2015. The ld. AR vehemently pointed out that in view of the above judgments passed by the ITAT and further upheld by the Hon'ble Jurisdictional High Court of Delhi in assessee’s own case for earlier A.Ys, disallowance of deduction made by the AO has been rightly deleted by the ld. CIT(A) and thus the order of the ld. CIT(A) may be upheld.

4.

The ld. DR strongly supported the action of the AO and contended that the order of the ld. CIT(A) may kindly be set aside by restoring that of the AO. However, he could not controvert this fact that in the similar set of facts and circumstances of the case for similar deduction u/s 80IC of the Act, the order of the Tribunal for A.Y 2009-10 has been upheld by the Hon'ble High Court of Delhi vide order dated 20.10.2015 [supra].

5.

On careful consideration of the above rival submissions, from the operative part of the order of the ld. CIT(A), we note that the ld. CIT(A) has considered the order of the ITAT in assessee’s own case for A.Y 2008-09 dated 10.1.2014 wherein it has been held that merely because the industrial undertaking earned higher profits does not call for an inference that claim of deduction is to be wily nily reduced on presumptions. The Tribunal dismissing the appeal of the Revenue against the order of the ld. CIT(A) explicitly held that in consideration

4 of entirety of facts and circumstances of the case we see no justification the ld. CIT(A)’s order retaining the reduction of 10% from the deduction and same is deleted. In the present case also, the ld. CIT(A) has followed the order of the ITAT for A.Y 2008-09. Therefore, we are unable to see any perversity or any other valid reason to interfere with the conclusion drawn by the ld. CIT(A) and thus we uphold the same. Consequently, both the grounds of the Revenue being devoid of merits are dismissed.

6.

In the result, the appeal of the Revenue stands dismissed.

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