Venus Hotelware (P) Ltd., New Delhi vs Department Of Income Tax

Dy. Commissioner of Income Vs. M/s Venus Hotelware (P) Ltd. Tax, Circle-17(1), New Delhi WZ-1, Basai Nazafgarh Road, New Delhi (PAN:AAACV0339A) (Appellant) (Respondent)

Appellant by : Sh. J.P. Chandrakar, Sr.DR Respondent by: Sh. Siddharth Kohli, CA

Date of hearing: 12.02.2015 Date of pronouncement: 13.02.2015

ORDER

PER I.P. BANSAL, JM:

1. The present appeal is filed by the Revenue and it is directed against

the order passed by learned CIT(A) dated 6th March, 2013 for the assessment

year 2004-05.

2. The grounds of appeal read as under:

i. Learned CIT(A) in law and on the facts of the case in directing the A.O. to rework the computation of deduction u/s 80HHC of the I.T. Act as per Circular No. 2 of 2006 which is not applicable to the facts of the case. ii. Learned CIT(A) erred in not following the ratio of the judgment of the Hon'ble Supreme Court in the case of M/s IPCA Laboratories Ltd. Vs. CIT 266 ITR 521 (SC) as applied by the A.O. 2 ITA No. 3790/Del/2013 AY: 2004-05

iii. The appellant craves for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of appeal.

3. The impugned assessment is order dated 30th December, 2011

passed under Section 143(3)/147 of the Income-tax Act, 1961 (for short "the

Act"). The assessment was reopened on the ground that the deduction claimed

by the assessee under Section 80HHC amounting to Rs. 8,96,199/-, was wrongly

allowed to the assessee as there was negative profit. In the re-assessment

proceedings an amount of Rs. 8,96,199/- is added to the earlier assessed income.

Thus, in the present case, the addition which has been made in the assessment

order is only a sum or Rs. 8,96,199/-. Learned CIT(A) has decided this issue as

per para 4.2 of the impugned order which read as under:

"4.2 In his submissions, the appellant argued that deduction u/s 80HHC was allowable and relied on Circular No. 2/2006. The submissions of the appellant and the facts have been carefully considered. The appellant has relied on Circular no. 2/2006 however, complete details of the computation for deduction u/s 80HHC have not been furnished. The appellant has stated that in his submissions dated 21.10.2011 during reassessment proceedings, he had placed reliance on Circular no. 2/2006 but this has not been considered in the asstt. order. Considering the facts, the A.O. is directed to examine his record and work out the allowable deduction u/s 80HHC after also considering Circular no. 2/2006. The Grounds are partly allowed with these remarks."

3 ITA No. 3790/Del/2013

AY: 2004-05

4. At the outset, it was submitted by learned AR that the tax effect in

the present case is less than Rs. 3 lacs and therefore, the departmental appeal

should not be entertained on this ground alone.

5. It was further submitted by learned AR that learned CIT(A) has not

granted direct relief to the assessee and he has directed the A.O. to examine the

records and work out the deduction allowable under Section 80HHC of the Act

after considering the Circular. It was submitted by learned AR that there is

nothing wrong in the direction give by learned CIT(A) and therefore, the

departmental appeal is liable to be dismissed.

6. On the other hand, it was submitted by learned DR that the grant of

deduction under Section 80HHC is contrary to the decision of Hon'ble Supreme

Court in the case of M/s IPCA Laboratories Ltd. Vs. CIT 266 ITR 521 (SC) and

learned CIT(A) also did not have power to set aside the issue to the file of A.O.

Thus, it was submitted by learned DR that the departmental appeal should be

allowed.

7. We have heard both the parties and their contentions have

carefully been considered. The departmental appeal is liable to be

dismissed not only on account of low tax effect, which in the present

case is less than Rs. 3 lacs, but also on the ground that though the

learned CIT(A) may not have power to set aside the issue but

ultimately he has directed the A.O. to work out the allowable deduction 4 ITA No. 3790/Del/2013 AY: 2004-05

under Section 80HHC which direction does not mean that he has allowed the

relief to the assessee and the A.O. has all the powers to apply the relevant law.

8. In view of the above discussion, we do not find any merit in the

departmental appeal. Accordingly, the same is dismissed.

9. In the result, the appeal of the Revenue is dismissed.

The decision is pronounced in the open court on 13th February, 2015.

Sd/- Sd/- (N.K. Saini) (I.P. Bansal) Accountant Member Judicial Member Dated: 13th February, 2015. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi