FIRDAUS JEHANGIR DADABHOY, MUMBAI V. ACIT CIR 16(1), MUMBAI

CO 103/MUM/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8952 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 1999-2000
• Appeal Filed On: 24-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: HRISHIKESH A PUROHIT
• Section: 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F , BENCH , MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI R.S.SYAL , A M TA NO S . 328 7 TO 3290 / MUM / 20 1 2 ( ASSESSMENT YEAR S : 1999 - 2000 TO 2002 - 20 03 ) ACIT CIR 16(1), MUMBAI - 07 VS. SMT. FIRDAUS J. DADABHOY, B - 603, SHALIMAR APARTMENT, CUMBALLA HILL, MUMBAI - 36 . PAN/GIR NO. : A ENPD 3721 N ( APPELLANT ) .. ( RESPONDENT ) AND NOS. 103 TO 106 /MUM/201 3 TA NOS.3287 TO 3290/MUM/2012) ( ASSESSMENT YEARS :1999 - 2000 TO 2002 - 2003 ) SMT. FIRDAUS J. DADABHOY, B - 603, SHALIMAR APARTM ENT, CUMBALLA HILL, MUMBAI - 36. VS. ACIT CIR 16(1), MUMBAI - 07 PAN/GIR NO. : A ENPD 3721 N ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. ANURAG SHRIVASTAVA /ASSESSEE BY : MR. HRISHIKESH A. PUROHIT DATE OF HEARING : 5 TH AUGUST , 201 3 DATE OF PRONOUNCEMENT : 21 ST AUGUST , 2013 O R D E R P ER BENCH THIS COMMON ORDER SHALL GOVERN THE DISPOSAL OF FOUR APPEALS FILED BY THE DEPARTMENT AS WELL AS FOUR CROSS OBJECTIONS FILED BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEARS 199 9 - 2000 TO 2002 - 03 , RESPECTIVELY. I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 2 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF C ONVENIENCE, ALL THE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . THE GRIEVANCE OF THE DEPARTMENT IN ITS APPEALS IS AGAINST ALLOWING DEDUCTION UNDER SECTION 80IA/80IB FOR ALL THE RELEVANT ASSESSMENT YEARS. THE DIFFERENCE IS ONLY OF FIGURES OTHERWISE THE ISSUE IS SAME IN ALL THE APPEALS OF THE DEPARTMENT. 4 . THE SUCCINCT LY STATED FACTS OF THE CASE ARE THAT ASSESSEE SMT. FIRDAUS JEHANGIR DADABHOY, IS BASICALLY AN ARCHITECT, WHO GOT A CONTRACT FOR MANUFACTURING MOULDED FURNITURE FROM TATA CONSULTANCY SERVICES (TCS). THIS CONTACT WAS EXECUTED FOR A PERIOD OF 2 TO 3 YEARS. THE AO ACCEPTED THE RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEARS UNDER SECTION 143(1) OF THE ACT. LATER, IN A SCRUTINY CASE FOR ASSESSMENT YEAR 2003 - 04, THE AO DEPUTED ONE INSPECTOR FOR CARRYING OUT ENQUIRIES REGARDING ALLEGED MANUFACTURING ACTIVITY OF THE ASSESSEE. THE INSPECTOR POINTED OUT THAT ALLEGED FACTORY WAS CLOSED DOWN FOR PAST FEW YEARS AND NO ACTIVITY WAS BEING CARRIED OUT. THE AO CAME TO THE CONCLUSI ON THAT NO GENUINE MANUFACTURING ACTIVITY WAS CARRIED OUT AND CONSEQUENTLY, THE ASSESSEE HAS BEEN ALLOWED EXCESS DEDUCTION UNDER SECTION 80IA/80IB OF THE ACT . ACCORDINGLY, HE REOPENED THE ASSESSMENT UNDER SECTION BY ISSUING NOTICES UNDER SECTION 148 OF THE ACT TO WITHDRAW DEDUCTION ALLOWED UNDER SECTION 80IA/80IB WRONGFULLY. IT WAS FURTHER SUBMITTED THAT THE APPEAL FOR ASSESSMENT YEAR 2003 - 04 I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 3 HAS ALSO BEEN SET ASIDE BY THE TRIBUNAL . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, LEARN ED CIT(A) UPHELD THE REOPENING OF THE ASSESSMENT, HOWEVER, HE ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE ON MERIT AS HE FOUND THAT THERE WERE GENUINE BUSINESS ACTIVITIES CARRIED OUT BY THE ASSESSEE. ACCORDINGLY, HE HELD THAT DEDUCTION UNDER SECTION 80IA/8 0IB IS ALLOWABLE. RELIANCE WAS PLACED ON VARIOUS CASE LAWS WHILE ALLOWING THE ISSUE IN FAVOUR OF THE ASSESSEE. 5 . AGAINST THIS ORDER OF LEARNED CIT(A), WHO ALLOWED THE DEDUCTION UNDER SECTION 80IA/80IB, THE DEPARTMENT IS IN APPEALS HERE BEFORE THE TRIBU NAL, WHEREAS THE ASSESSEE IS IN CROSS OBJECTIONS AGAINST REJECTING THE GROUND IN RESPECT OF REOPENING OF THE ASSESSMENT FOR ALL THESE FOUR YEARS. 6 . LEARNED DR FIRSTLY PLACED RELIANCE ON THE ORDER OF AO. IT WAS FURTHER SUBMITTED THAT THOUGH THE LEARNED CI T(A) WHILE DISPOSING THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2003 - 04 HAS HELD THAT THERE WAS A GENUINE BUSINESS ACTIVITY CARRIED OUT BY THE ASSESSEE, HOWEVER, THE AO HAS EXAMINED THE ISSUE AND AFTER TAKING INTO CONSIDERATION THE INSPECTORS REPORT, HAS FOUND THAT THE FACTORY OF THE ASSESSEE WAS LOCKED AND THERE WAS NO BUSINESS ACTIVITY AS EVEN THERE WAS NO MACHINERY WAS FIXED IN THE FACTORY PREMISES FOR PRODUCING ANY ARTICLE. I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 4 7 . ON THE OTHER HAND, LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON T HE ORDER OF LEARNED CIT(A) . IT WAS FURTHER SUBMITTED THAT THE ISSUE WAS EXAMINED WHILE DISPOSING THE APPEALS FOR THE YEAR UNDER CONSIDERATION AND FOUND THAT THERE WAS GENUINE BUSINESS ACTIVITIES CARRIED OUT BY THE ASSESSEE DURING THESE ASSESSMENT YEARS. FI NDINGS OF THE CIT(A) REMAINED UNCONTROVERTED AS NOTHING HAS BEEN BROUGHT ON RECORD TO ESTABLISH OTHERWISE, THEREFORE, THE ORDER OF THE LEARNED CIT(A) IN ALL THESE APPEALS ARE LIABLE TO BE CONFIRMED ON MERIT. LEARNED COUNSEL FURTHER SUBMITTED THAT IF THE AP PEALS OF THE DEPARTMENT ARE DISMISSED, THEN THE CROSS OBJECTIONS FILED BY THE ASSESSEE MAY BE TREATED AS NOT PRESSED AND IF THE APPEALS OF THE DEPARTMENT ARE ALLOWED THEN THE ASSESSEE SHOULD BE ALLOWED OPPORTUNITY TO ARGUE THE GROUNDS ON MERIT IN RESPECT TO REOPENING OF THE ASSESSMENT. 8 . WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS ADVANCED AT THE HANDS OF THE LEARNED DR AS WELL AS LEARNED COUNSEL FOR THE ASSESSEE. AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE F IND THAT LEARNED CIT(A) HAS ASCERTAINED THE FACTUAL ASPECT OF THE CASE AND FOUND THAT THERE WAS MANUFACTURING ACTIVITY CARRIED OUT BY THE ASSESSEE. LEARNED CIT(A) NOTED THAT THE AO HAS COME TO THE CONCLUSION THAT THERE WAS NO MANUFACTURING ACTIVITY CARRIE D OUT BY THE ASSESSEE AND AGAINST THIS FINDING LEARNED CIT(A) NOTED THAT THE ASSESSEE HAS GIVEN EVIDENCE WITH REGARD TO PURCHASE OF MACHINERY AT THE FACTORY AT SILVASSA, EVIDENCE IN THE FORM O F NUMBER OF WORKERS EMPLOYED AND THE ENTIRE MANUFACTURING ACCOUNT . THE I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 5 ASSESSEE HAS ALSO EXPLAINED IN DETAIL HIS BUSINESS ACTIVITY AND TRIED TO CLARIFY HOW THE PROCESSES FOLLOWED BY THE ASSESSEE NEEDED MINIMUM ELECTRICITY. THE CIT(A) FURTHER NOTED THAT INSTEAD OF CARRYING OUT ANY MEANINGFUL ENQUIRIES, THE AO HAS JUMPED TO THE CONCLUSION THAT THERE WAS NO MANUFACTURING ACTIVITY. LEARNED CIT(A) IN PARA 4 OF HIS ORDER HAS ALSO OBSERVED THAT THERE IS NOTHING ON RECORD BROUGHT OUT BY THE AO TO DISPROVE THAT NO MANUFACTURING ACTIVITY ACTUALLY TOOK PLACE AT SILVASSA AND THAT TH E ARGUMENT OF THE ASSESSEE HAS NO MERIT. ON THE OTHER HAND, THE ASSESSEE HAS BEEN ABLE TO PROVE THE REGISTRATION ISSUED BY THE DIRECTORATE OF INDUSTRIES, UNION TERRITORY OF DADRA & NAGAR HAVELI TREATING THE ASSESSEE AS SMALL SCALE MANUFACTURING, UNIT ENGAG ED IN MANUFACTURING OF SYS TEM FURNITURES VIZ. MODULAR OFFICE SYSTEM BY ASSEMBLY. THE ASSESSEE WAS ABLE TO SHOW THE SALE TAX RETURNS FILED WITH SILVASSA SALES TAX OFFICE IN SUPPORT OF HIS ARGUMENTS. THE CIT(A) FURTHER NOTED THAT THE SUPPLIES WERE MADE TO TC S. THE CIT(A) FURTHER NOTED THAT THE RAW MATERIAL WERE PROCURED FROM THE MARKET. MONEY WAS RECEIPT FROM TCS AGAINST SALE MADE BY THE ASSESSEE. THE CIT(A) FURTHER FOUND THAT THIS ISSUE HAS BEEN EXAMINED BY HIM WHILE PASSING THE ORDER FOR ASSESSMENT YEAR 20 03 - 04. THE FINDING GIVEN DURING THE ASSESSMENT YEAR 2003 - 04 ARE ALSO REPRODUCED BY THE CIT(A) AT PAGE 8 OF HIS ORDER. AFTER CONSIDERING THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE AND THE ORDER OF CIT(A) FOR ASSESSMENT YEAR 2003 - 04, THE CIT(A) CONCLUDED THAT THE ASSESSEE HAS FURNISHED THE PURCHASE BILL FOR MACHINERY, EVIDENCE OF I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 6 SUPPLY OF RAW MATERIAL AT THE FACTORY AT SILVASSA, RECORDS FILED WITH THE STATUTORY AUTHORITIES, REGISTRATION WITH THE DIRECTORATE OF INDUSTRIES AS SMALL SCALE INDUSTRY . ACCORDINGLY, HE HELD THAT THERE WAS NO MERIT IN THE FINDING OF THE AO THAT NO MANUFACTURING ACTIVITY TOOK PLACE AT SILVASSA. ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE FOR ALL THE FOUR ASSESSMENT YEARS. 9 . THE FINDING S OF THE CIT(A) , IN OUR CONSIDERED VIEW, ARE FINDINGS OF FACT, WHICH REMAINED UNCONTROVERTED. THEREFORE, WE SEE NO REASON TO INTERFERE IN THE FINDINGS OF THE LEARNED CIT(A) . WE FURTHER NOTED THE CIT(A) HAS ALLOWED DEDUCTION UNDER SECTION 80IA/80IB ON THE A MOUNT RECEIVED AGAINST MANUFACTURED ITEMS, HOWEVER, LEARNED CIT(A) HAS DENIED DEDUCTION UNDER SECTION 80IA/80IB ON THE GROUND OF INTEREST EARNED ON FIXED DEPOSIT. THE ASSESSEE HAS NOT CHALLENGED THE DENIAL OF DEDUCTION IN RESPECT OF INTEREST AS THE ASSESS EE HAS CHALLENGED THROUGH ITS CROSS OBJECTIONS ONLY IN RESPECT OF REOPENING OF THE ASSESSMENT . IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) IN ALLOWING THE DEDUCTION UNDER SECTION 80IA/ 80IB FOR ALL THE F OUR RELEVANT ASSESSMENT YEARS . 10 . SINCE WE HAVE DISMISSED THE APPEALS OF THE DEPARTMENT, THEREFORE, WE DISMISS THE CROSS OBJECTIONS OF THE ASSESSEE AFTER TAKING INTO CONSIDERATION THE SUBMISSION OF THE LEARNED AR ON BEHALF OF THE ASSESSEE THAT IF THE APP EALS OF THE DEPARTMENT ARE DISM ISSED, THEN THE CROSS OBJECTIONS OF THE ASSESSEE MAY BE TREATED AS NOT PRESSED. I TA NO S . 3287 TO 3290 /20 1 2 & CO NOS. 103 TO 106/2013 7 11 . RESULTANTLY , APPEALS OF THE DEPARTMENT AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST D AY OF AUG . 201 3 . SD/ - ( ) ( R.S.SYAL ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21/08 / 2013 /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE C I T(A) , MUMBAI . 4. / C I T 5. / DR, ITAT, MUMBAI . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( /ASSTT. REGISTRAR) / ITAT, MUMBAI