Page 1 of 7 IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-II NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .No.-4345 & 4346/Del/2015 (ASSESSMENT YEAR-2009-10 & 2010-11) A.P. Processors, vs ITO, 10, Suraj Nagar, Azadpur, Delhi-110033. Ward-20(3), PAN-AAFFA8023J New Delhi. (APPELLANT) (RESPONDENT) Appellant by Sh. Ved Jain, Adv. Respondent by Ms. Anima Baranwal, Sr.DR Date of Hearing 04.08.2016 Date of Pronouncement 21.10.2016 ORDER Both these appeals have been filed by assessee assailing correctness of separate orders dated 25.02.2015 of CIT(A)-12, New Delhi pertaining to 2009- 10 and 2010-11 assessment years. 2. Ld. AR submitted right at outset that both appeals are largely covered in favour of assessee by virtue of orders of ITAT in assessee's own case dated 17.07.2015 in ITA No.3803/Del/2010 and ITA No.4117/Del/2010 pertaining to 2007-08 assessment year. Copy of said order, it was submitted is placed at pages 26 to 58 of Paper Book. 3. In said background, inviting attention to Ground No. 1 in ITA No.4345/Del/2015, it was submitted that issue has been considered by ITAT in para 12.10 and 12.11 at internal pages 25-26 of order (page 50-51 of Paper Book). Accordingly, it was submitted that claim deserves to be I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 2 of 7 allowed as facts and circumstances continue to remain same. Inviting attention to dates of impugned orders which is 25.02.2015 in both years it was submitted that order of ITAT is dated 17.07.2015 thus it was submitted that benefit of this order of ITAT was not available to CIT(A). 4. Considering material available on record and order of ITAT, Ld. Sr. DR though placed reliance upon impugned orders however submitted that facts, circumstances and position of law continue to remain same. 5. I have heard rival submissions and perused material available record. It is seen that assessee is relying upon following finding of ITAT:- 12.10. We have heard both parties and have perused records, we find that assessee has claimed additional depreciation of Rs.5,30,645/- under section 32(1)(iia) of Act. AO disallowed same on ground that assessee is neither manufacturer or producer of article or thing and it is only doing job work. appellant brought to notice of AO that Hon ble Supreme Court has held that textile dyeing and printing has been held to be manufacturing in case of Empire Industries Ltd. vs Union of India 162 ITR 846 (S.C). Thereafter, Hon ble Supreme Court in case of Ujagar Prints vs: UOI & Anr. has reconfirmed same. issue of job work is also seen to be covered in favour of assessee by judgment of jurisdictional Delhi High Court in case of CIT vs. Northern Aeromatics Ltd. (2005) 196 CTR (Del) 479. above decision has been followed in case of CIT vs. Sadhu Forging Ltd . (2011) 336 ITR 444 (Del.). In this judgment Court has framed following questions of law and has held as under:- "i) Whether income received from job work/labour charges on work done based on material supplied by customers qualifies for deduction under s. 80-IB of IT Act, 1961? (ii) Whether income received from job work/labour charges on work done on material "(supplied by customers is profits derived from industrial undertaking to be eligible for deduction under s. 80-IB of IT Act? 12.11. Thus, in view of above case laws, we find that activity of processing done by assessee was "manufacturing". It was immaterial that assessee was doing job of processing also for outside customers too and was charging them on job work basis or on basis of labour charges. We hold that it will still be qualified as carrying eligible business under s.32(1)(iia) of Act. ratio of decisions in cases of (i) CIT vs. Metalman Auto(P)m Ltd. ( 011) 52 DTR (P&H) 385; (ii) CIT vs. Vallabh Yams (P) Ltd. (2011) 51 DTR (P&H) 236; (iii) CIT vs. Impel Forge & I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 3 of 7 Allied Industries Ltd. (2010) 326 ITR 27 (P&H); (iv) CIT vs. Rane (Madras) Ltd. (1998) 148 CTR (Mad) 404 : (1999) 238 ITR 377 (Mad) and (v) Dy, CIT vs. Harjivandas Juthabhai Zaveri & Anr. (2002) 258 ITR 785 (Guj.) strengthens our aforesaid view. In view of above detailed discussions and precedents, we hold that assessee is manufacturer and eligible for deduction u/s 32(1)(iia) of Act and so we allow additional depreciation @20% on Rs. 49,83,575/- which comes Rs.9,96,715/- and accordingly decide ground no. 3 in favor of Assessee. 6. Considering same, I find where facts and circumstances continue to remain same and in absence of any infirmity pointed out in impugned order ground raised by assessee has to be allowed. Respectfully following order of ITAT, Ground No. 1 of assessee is allowed. 7. Addressing Ground No. 2, it was submitted by Ld. AR that said issue also came up for consideration before ITAT and facts and circumstances continue to remain same. said prayer was not objected to by Ld. Sr.DR. 8. Having heard submissions and perused material available record, it is seen that Co-ordinate Bench had occasion to restore issue back to file of Assessing Officer. facts continue to remain same as therein also claim under section 80IB was admittedly though made during assessment proceedings however AO did not address them and CIT(A) considering facts that issue had not been adjudicated upon by Assessing Officer also denied claim. Co-ordinate Bench considering fact that assessee had filed evidences before Assessing Officer in form of certificate of registration with SSI to satisfy that unit had started production before 31.03.2002 and that it was small-scale industry undertaking manufacturing fabric restored issue to AO holding that assessee having made claim has to prove that it is eligible as per 80 IB thereby directing Assessing Officer to examine claim I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 4 of 7 after giving assessee reasonable opportunity of being heard. In view of fact that no infirmity in said direction was pointed out by Ld. Sr.DR and considering admitted fact that there was no change in facts and circumstances respectfully following order of Co-ordinate Bench issue is restored to AO with identical direction. 9. issues raised in Ground Nos. 3 and 4, it was submitted by Ld. AR arise for first time in year under consideration as no disallowance in earlier years was made by AO on same facts and circumstances and this is first time that disallowance has been made. It was his submission that disallowance has been made on basis of pure estimates. Ld. Sr.DR relies upon impugned order. 10. I have heard rival submissions and perused material available on record. I find that assessee firm consisting of two partners Sh. Arvind Jain and Sh. Pankaj Gupta sharing equal profit ratio engaged in business of textile dying under name and style of M/s. A. P. Processors returned income of Rs.10,33,166/- and Rs.5,15,610/- respectively in years under consideration. business is stated to be carried out from factory situated at Plot No.103, Sector- 24, Faridabad. 1/5 of car expenses and telephone expenses in years amounting to Rs.52,985/- and Rs.37,919/- respectively Rs.40,053/- and Rs.29,569/- were added by way of disallowance on grounds of personal user by AO noting that no log book etc. or telephone register was maintained. 10.1. CIT(A) in appeal at internal page 27 in 2009-10 AY and page 17 in 2010- 11 AY refers that claim is in regard to following 3 cars:- I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 5 of 7 1. Honda City Card used by partner Sh.ARvind Jain 2. Honda City Car used by partner Sh. Pankaj Gupta 3. Alto Car, stated to be kept at factory. 10.2. Considering fact that neither log books were maintaining nor exclusive business user by any other evidence was filed addition was confirmed. I find that mere argument that addition made on estimates has been sustained in peculiar facts of present case is not of much help to assessee as admittedly no log book has been maintained. Considering fact that disallowance has been made for first time disallowance by way of estimated is restricted to one tenth of amount claimed. While so directing it is made clear that said estimate is based only on fact that these are first few years when such disallowance has been made as such assessee may not have been aware that assessee was required to maintain log book for claiming exclusive business user. Similarly for telephone expenses it is seen that addition by way of disallowance is made for first time wherein no Telephone Call Registers have been maintained disallowance in absence of evidence is restricted to one tenth of amount claimed again for similar reasoning. Accordingly Ground Nos.3 & 4 are partly allowed. 11. Addressing last Ground, Ld. AR submitted that direction to AO by ITAT that benefit of credit for TDS on verification may be allowed to assessee for which purposes issue had been remanded in earlier year. said prayer was not objected to by Ld. Sr.DR. Considering material on record and submission advanced respectfully following order of Co- I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 6 of 7 ordinate Bench, issue is restored to file of AO to verify and allow necessary relief qua TDS paid, if so warranted on facts. 12. In result, ITA No.4345/Del/2015 of assessee is partly allowed for statistical purposes. 13. It was common stand of parties before Bench that issues raised in ITA No.-4346/Del/2015 in 2010-11 assessment year are identical to facts, circumstances and position on law as in earlier year. Only sequence of grounds raised have been varied. 14. Whereas Ground Nos. 1 and 2 address disallowance made by way of estimation on telephone and car expenses which have been partly allowed in earlier year, facts, circumstances, arguments and position of law remain same. 15. Ground No. 3, it is seen is identical to Ground No. 1 in ITA No.4345/Del/2015 and Ground No. 4 in present appeal is identical to ground No. 2 in ITA No.4345/Del/2015 and Ground No. 5 is identical to Ground No.5 in ITA No.4345/Del/2015. Accordingly, following view taken in ITA No.4345/Del/2015, Ground No. 3 is allowed. 16. Ground No. 4 following view taken in aforesaid appeal is restored back to AO to arrive at decision on considered of facts and law. said ground is allowed for statistical purposes. 17. Ground No. 5 following precedent restored back to file of Assessing Officer to verify claim and allow necessary relief, if so warranted on facts. I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) Page 7 of 7 18. In result, appeals of assessee are partly allowed for statistical purposes. order is pronounced in open court on 21st of October, 2016. Sd/- (DIVA SINGH) JUDICIAL MEMBER *Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI I.T.A .No.-4345 & 4346/Del/2015 (A.P.PROCESSORS VS ITO) A.P. Processors v. ITO, Ward-20(3), New Delhi