Shri Himatlal Manjee Patel, Pondicherry V. DCIT, Pondicherry

ITA 1027/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2498 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-04-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 10-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR
• Keywords: Depreciation
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 1027/MDS/2012 ASSESSMENT YEAR : 2007-08 SHRI HIMATLAL MANJEE PATEL, PROP. M/S. SRI KRISHNA TIMBERS, NO. 34/4, PULIANCHALAL ROAD, PILLAITHOTTAM, PONDICHERRY 605 013. [PAN : AAEPJ9441J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE I, INCOME TAX DEPARTMENT, DEIVANAYAGAM PILLAI THOTTAM, MAHATMA GANDHI ROAD, MUTHIALPET, PONDICHERRY 605 003. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.S. JAYAKUMAR RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 10.04.2013 DATE OF PRONOUNCEMENT : 06.05.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS ASSESSEES APPEAL IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII, CHENNAI D ATED 22.02.2012 IN ITA NO. 242/2009-10 FOR ASSESSMENT YEAR 2007-08, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 [IN SHORT THE ACT]. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE PRODUCTION OF WOODEN DOORS AND WINDOWS AND FURNITUR E FROM WOODEN LOGS. THE ASSESSEE HAD FILED ITS RETURN OF INCOME B Y DECLARING TOTAL I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1027 1027 1027 1027/M/ /M/ /M/ /M/12 1212 12 2 INCOME OF ` .7,31,462/-. THE RETURN FILED BY THE ASSESSEE WAS I NITIALLY PROCESSED UNDER SECTION 143(1) AND SUBSEQUENTLY AFT ER FOLLOWING DUE PROCESS, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 80IB OF ` .11,23,429/-. IT IS SEEN FROM THE AUDIT REPORT FILE D BY THE ASSESSEE THAT IN FORM 10CCB, FOR 80IB CLAIM, TH E DATE OF COMMENCEMENT OF THE OPERATION/ACTIVITY BY INDUSTRIA L UNDERTAKING BASED ON THE DIRECTOR OF INDUSTRIES CERTIFICATE IS 13.03.2002. HENCE, THE INITIAL ASSESSMENT YEAR AS EVIDENCED FROM FORM 10CCB IS 2002- 03. ACCORDINGLY, THE ASSESSMENT YEAR 2007-08 IS THE SIXTH YEAR OF 80IB CLAIM FOR WHICH THE ASSESSEE IS ELIGIBLE ONLY AT TH E RATE OF 25% AND THEREFORE, THE ASSESSING OFFICER HAS RESTRICTED ONL Y 25% OF THE CLAIM AS AGAINST 100% CLAIMED BY THE ASSESSEE. 3. THE ASSESSEE HAS ALSO RECEIVED INTEREST OF ` .95,620/- AND THE SAME WAS ADDED FOR THE PURPOSE OF 80IB DEDUCTION. H OWEVER, THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTIO N 80IB FOR THE INTEREST INCOME RECEIVED ON THE GROUND THAT IT IS N OT DERIVED FROM THE INDUSTRIAL UNDERTAKING. 4. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE CIT(APPEALS). I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1027 1027 1027 1027/M/ /M/ /M/ /M/12 1212 12 3 THOUGH THE ASSESSEE HAS RAISED A SPECIFIC GROUND WI TH REGARD TO DISALLOWANCE OF INTEREST INCOME OF ` .95,620/-, THE CIT(APPEALS) HAS NOT AT ALL DEALT WITH THE ISSUE IN HIS ORDER. 5. SO FAR AS 80IB CLAIM IS CONCERNED, IT WAS CONTE NDED BEFORE THE CIT(APPEALS) THAT THE ASSESSEE HAD UNDERTAKEN ONLY TRIAL RUN AND THE ACTUAL COMMERCIAL PRODUCTION STARTED DURING THE FIN ANCIAL YEAR 2002-03 AND FOR THE PURPOSE OF 80IB DEDUCTION, THE ASSESSME NT YEAR 2003-04 SHOULD BE RECKONED AS FIRST ASSESSMENT YEAR. THE CI T(A) HAS NOT AGREED WITH THE SUBMISSIONS OF THE ASSESSEE. HE HAS OBSERVED THAT THE ASSESSEE HAD ALREADY CLAIMED DEPRECIATION FOR T HE ASSESSMENT YEAR 2002-03 AND AS PER THE CERTIFICATE ISSUED BY T HE DIRECTOR OF INDUSTRIES; 13.03.2002 IS THE DATE OF COMMENCEMENT OF OPERATION OF THE UNDERTAKING. ACCORDINGLY, THE CIT(APPEALS) HAS HELD THAT THE ASSESSMENT YEAR 2002-03 IS THE FIRST YEAR FOR THE P URPOSE OF 80IB CLAIM AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. BEING AGGRIEVED BY THE ORDER OF THE CIT(APPEALS ), THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED THE FIRST GROUND WITH REGARD TO DISALLOWANCE OF INTEREST INCOME AND SUBMI TTED THAT THE CIT(APPEALS) HAS NOT BEEN DEALT WITH AND DECIDED TH E ISSUE INSPITE OF I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1027 1027 1027 1027/M/ /M/ /M/ /M/12 1212 12 4 THE SPECIFIC GROUND I.E. GROUND NO. 8 RAISED BEFOR E THE CIT(APPEALS). WE ALSO FIND FROM THE ORDER OF THE CIT(APPEALS) THA T HE HAS NOT DECIDED THE ISSUE. THEREFORE, WE DIRECT THE CIT(APP EALS) TO DECIDE THE ISSUE OF INTEREST INCOME ELIGIBLE FOR 80IB DEDUCTIO N, AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, KEEPING IN VIEW THE DECISIONS RELIED ON BY THE DR IN THE CASE OF CIT V. N.S.C. SHOES [258 ITR 749 (MAD)] AND PANDIAN CHEMICALS LTD. V. CIT [2 62 ITR 278 (SC)]. 8. SO FAR AS ASSESSMENT YEAR FOR THE PURPOSE OF 80 IB CLAIM IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT ON 13.03.2002, ONLY A TRIAL RUN WAS CONDUCTED BY THE U NDERTAKING AND THE ASSESSEE HAS NOT STARTED ANY COMMERCIAL PRODUCTION. THEREFORE, THE ASSESSMENT YEAR FOR THE PURPOSE OF 80IB CLAIM IS 20 03-04 AND NOT 2002-03. IN SUPPORT OF HIS SUBMISSIONS, HE RELIED O N THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. NEST OR PHARMACEUTICALS LTD. [322 ITR 631]. 9. THE LD. DR HAS STRONGLY SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND SUBMITS THAT NO EVIDENCE WAS PRODUCED BEFORE TH E LOWER AUTHORITIES THAT THE ASSESSEE HAS CONDUCTED ONLY TR IAL RUN. THEREFORE, THE HONBLE DELHI HIGH COURTS DECISION HAS NO APPL ICATION TO THE FACTS OF THE CASE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1027 1027 1027 1027/M/ /M/ /M/ /M/12 1212 12 5 10. WE HAVE HEARD BOTH SIDES, PERUSED THE ORDERS O F LOWER AUTHORITIES AND CASE LAW RELIED UPON BY THE ASSESSE E. THE ONLY DISPUTE INVOLVED IN THIS ISSUE IS WHETHER THE ASSESSMENT YE AR FOR THE PURPOSE OF 80IB CLAIM IS 2002-03 OR 2003-04. ACCORDING TO T HE ASSESSEE, THE INDUSTRIAL UNDERTAKING HAS CONDUCTED A TRIAL RUN IN THE ASSESSMENT YEAR 2002-03 AND COMMERCIAL PRODUCTION WAS STARTED IN TH E ASSESSMENT YEAR 2003-04. ACCORDING TO THE REVENUE, THE DIRECTO R OF INDUSTRIES ISSUED A CERTIFICATE ON 13.03.2002 THAT THE ASSESSE E COMMENCES ITS OPERATION FROM THAT DATE. THEREFORE, BASED ON THE A BOVE CERTIFICATE ISSUED BY THE DIRECTOR OF INDUSTRIES, THE REVENUE C AME TO A CONCLUSION THAT THE ASSESSEE HAS STARTED THE COMMERCIAL OPERAT ION FROM 13.03.2002 I.E. IN THE ASSESSMENT YEAR 2002-03. HOW EVER, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE COM MERCIAL PRODUCTION WAS STARTED ONLY IN THE ASSESSMENT YEAR 2003-04 AND AGREED TO PRODUCE RELEVANT MATERIAL BEFORE THE CIT( APPEALS) TO SUBSTANTIATE ITS CLAIM. ON PERUSAL OF THE CASE FILE , WE COULD NOT FIND ANYTHING FROM THE RECORD AS TO WHETHER THE ASSESSEE HAS STARTED ONLY TRIAL RUN ON 13.03.2002 OR STARTED COMMERCIAL OPERA TION. MERELY TRIAL RUN WILL NOT BE REGARDED AS BEGINNING TO MANUFACTURE OR PRODUCE ARTICLES. THIS ISSUE REQUIRES DETAILED VERIFICATION BASED ON RELEVANT MATERIAL I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.1027 1027 1027 1027/M/ /M/ /M/ /M/12 1212 12 6 EVIDENCE. WE, THEREFORE, IN THE INTEREST OF JUSTICE , REMIT THE MATTER BACK TO THE FILE OF THE CIT(APPEALS) TO EXAMINE THE ISSU E AFRESH AFTER RECEIVING RELEVANT MATERIALS FROM THE ASSESSEE AND DECIDE THE ISSUE KEEPING IN VIEW THE DECISION IN THE CASE OF CIT V. NESTOR PHARMACEUTICALS LTD. (SUPRA) AND IN ACCORDANCE WITH LAW AFTER AFFORDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THIS ISSUE. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON MONDAY, THE 6 TH OF MAY, 2013 AT CHENNAI. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 06.05.2013 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.