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TMI Blog2015 (6) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 2(24)(x) r.w.s. 36(1)(va) of the Act." 2. The ld Assessing Officer observed that the assessee is engaged in the business of manufacturing and trading of paints, primer and allied products and manufacturing of PVC pipes. The assessee filed return at Rs. 30,33,498/- after claiming deduction U/s 80IC of the Income Tax Act, 1961 (hereinafter referred as the Act) at Rs. 37,70,488/- on 16/12/2009. The assessee had declared the profit U/s 115JB at Rs. 54,15,485/-. The assessee had declared income from business and profession at Rs. 68,03,986/- bearing claiming deduction U/s 80IC of the Act of Rs. 37,70,488/-. The case was scrutinized U/s 143(3) of the Act. The manufacturing activity was carried out by the assessee in its wholly owned unit M/s Hariganga Polymers situated at E-87, B.H.E.L., Industrial Area, Bahdrabad, Haridwar (Uttaranchal). The ld Assessing Officer observed that this unit became fully owned unit of M/s Glaze Paint Limited w.e.f. 06/09/2007 after dissolution of partnership w.e.f. close of the business hours of 05/09/2007. It is claimed that previously the assessee company was partner in M/s Hariganga Polymers with 50% share. During the course of assessment proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enth Schedule, deduction will be allowed. In Thirteenth Schedule point number 20 of part B mentioned the plastics and articles and thereof with their excise classification from 39.09 to 39.15. As per excise tariff there is no any name mentioned of PVC (Poly Vinyl Chloride) Pipe. But this item is mentioned under tariff item 39.17, which is not restricted through Schedule Thirteenth. As per sub clause (II) of clause (a) of sub-section (2) of Section 80I(C) if the items manufactured is not covered under Schedule Thirteenth and unit established in industrial area or industrial growth centre of specified states, then the benefits of section 80I(C) will be available to the assessee." The ld Assessing Officer after considering the assessee's reply found that this classification is made for excise purposes in Section 80IC, there is a clear mention that deduction of unit allowed in respect of the articles or things, which are mentioned in Schedule-13 and in this Schedule PVC is mentioned at serial No. 20. He was certain that no deduction U/s 80IC would be allowable on plastic and article. Accordingly, he disallowed 80IC deduction at Rs. 37,70,488/-. 3. Being aggrieved by the order of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p;Description of goods. 39.09 Amino-resins etc. 39.10 Silicones in primary forms 39.11 Petroleum resins etc. 39.12 Cellulose and its chemical derivatives etc. 39.13 Natural polymers and modified natural Polymers 39.14 Ion-exchangers based on polymers of heading No. 39.01 to 39.13, in primary forms 39.15 Waste, parings and scrap of plastics 39.17 Tubes, pipes and hoses and fittings There for (for example joints, elbows, Flanges, of plastics. I find that the appellant is assessed to central excise and as per return filed before the excise authorities, the description of goods is PVC pipes and the excise tariff item is 39.17 (39.17- 2310) which is not excluded in schedule XIII. Further, the appellant is not producing any article or thing excluded under schedule XIV Part C (applicable for the State of Uttaranchal). In view of the above discussion, I am of the considered opinion that appellant is manufacturing PVC pipes which do not fall in excise classification 39.09 to 39.15 of schedule XIII of the IT Act or under schedule XIV. Therefore, it is eligible for exemption u/s 80IC(2) of the Act., Further, I am inclined to agree with the submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 11,95,508/- to Rs. 77,690/-. The ld Assessing Officer observed that during the year under consideration, the company has declared gross profit of Rs. 1,26,68,380/- on total turnover/gross receipts of Rs. 4,62,90,109/- giving a G.P. rate of 27.36% as against last year's gross profit of Rs. 1,24,16,204/- on turnover of Rs. 4,14,49,005/- giving a GP rate of 29.95%. There was decline in G.P. rate. This gross profit also include interest income and other income. The assessee had declared net profit of Rs. 54,76,717/-. The Assessing Officer gave reasonable opportunity of being heard on decline of G.P.. It was submitted by the assessee that there was increase in the price of the raw materials, packing material and fuel. The goods manufactured by the assessee is excisable unit and all the purchases and sales are subject to excise. The Excise department also audits their books of account on regular basis. The assessee also submitted the copies of return filed before the Excise Department and argued that Excise Department had carried out their audit with reference to stocks and had not observed anything adverse. The Excise Department is much particular with the quantity as it affects ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GP rate from 29.95% in A.Y. 08-09 to 27.36% in A.Y. 09-10 and the assessee has failed to substantiate the claim with documentary evidences in the form of bills/vouchers for year under consideration and last year in respect of claimed increase in cost of raw material, packing material and fuel. (ii) The assessee company has made cash payment of Rs. 44,607/- on 04/07/2008 for quality certification expenses in violation of provisions of Section 40A(3). (iii) The assessee company has debited bogus purchases of raw material amounting to Rs. 13,864/- from M/s J.M. Chemicals Company and could not reconcile the differences in the balances of creditors i.e. S.B. Shah & Co. Pvt. Ltd., J.M. Chemical Co. Rejection of books of accounts: It has been submitted that the assessee has been maintaining the books of accounts, stock register, R.G. register as per guidelines prescribed under the Act and it cannot be said that correct income cannot be worked out on the basis of the same. The ld. A.O. has observed in the assessment order that in support of the claim, during the assessment proceedings, AR of the assessee has produced sale/purchase bills of raw material and finished goods along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o M/s J.M. Chemicals, not entered in the books of the assessee it has been submitted that said payment has been made on the presentation of cheque in the bank 17/04/09 and is verifiable from the bank statement of the appellant. Regarding the difference of Rs. 34,912/- with respect to the accounts of M/s J.M. Chemicals Co., it has been stated that this difference is only a matter of reconciliation. The difference of Rs. 34912/- stands reconciled in the books of the appellant by debit entry of Rs. 46505/- on 17/04/2009, on account of payment of the said amount on clearing of cheque by the HDFC bank and a credit entry of Rs. 11600/- made on 01/04/2010 by way of adjustment account. Cash payment of Rs. 44,607/- Regarding the cash payment of Rs. 44607/- on 04/07/2008 it has been submitted that the appellant had purchased a demand draft of Rs. 44607/- in favour of M/s Bureau of Indian Stadard, Ghaziabad payable at Delhi by paying cash vide No. 270496/- and this cannot be a ground for invoking the provisions of Section 145(3). A copy of confirmation from the Vijaya Bank dated 16/01/2012 has been submitted with the reply. Findings The two instances of the difference in the account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR of the assessee reiterated the arguments made before the ld CIT(A) and argued that the ld CIT(A) has considered all the aspects and has given reasoned order. Therefore, same may be confirmed. 11. We have heard the rival contentions of both the parties and perused the material available on the record. The assessee has shown G.P. rate during the year under consideration @ 27.36% as against 29.95% in immediate preceding year on gross turnover of Rs. 4,62,90,109/- during the year under consideration and Rs. 4,14,49,005/- in immediate preceding year. The assessee's item produced is under excisable items where excise audit has been done by it. The assessee has produced all the sale/purchase vouchers. There was a difference in account of some of the parties, which has been reconciled by the assessee before the ld CIT(A) and also explained the cash payment U/s 40A(3) of the Act. During the year, the assessee's sale also has gone up compared to preceding year and there is a marginal decline in the G.P. rate. The ld DR had not controverted the finding given by the ld CIT(A). Therefore, we uphold the order of the ld CIT(A). Accordingly, this ground of revenue is dismissed. 12. Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. (2009) 313 ITR 137. After considering the submissions of the AR and decisions on this issue, I am inclined to hold that the emp8loyees' contribution towards provident fund and ESI, even if paid beyond the due dates of the relevant Act, would be allowable as deduction if the same is paid before the filing of income tax return the disallowance of Rs. 49945/- is deleted. This ground is allowed." 14. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer and argued that the assessee not paid both the within grace period 5 days as per respective Act, therefore same may be confirmed. 15. At the outset, the ld AR of the assessee has drawn our attention on the decision of Hon'ble Rajasthan High Court in the case of Jaipur Vidyut Vitran Nigam Ltd. wherein the Hon'ble Court has held that if payment of ESI and PF has been made before due date of filing of return, is allowable U/s 43B of the Act. Therefore, he prayed to confirm the order of the ld CIT(A). 16. We have heard the rival contentions of both the parties and perused the material available on the record. The ld CIT(A) has considered the various case laws on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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