Vinod Kumar Surana, Kolkata V. ITO, Wd-56(2), Kolkata, Kolkata

ITA 127/KOL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99686 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2004-2005
• Appeal Filed On: 22-01-2014
• Court: TRIBUNAL
• Section: 143(3); 80IB; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH SMC KOLKATA [BEFORE HON BLE S HRI MAHAVIR SINGH, JM ] ITA NO . 127 /KOL/2014 ASSESSMENT YEAR : 2004 - 05 ( A PPELLANT ) (RESPONDENT) VINOD KUMAR SURANA - VERSUS - I.T.O., WARD - 56(2 ) , KOLKATA KOLKATA (PAN: ALAPS 8237 L) FOR THE APPELLANT: NONE FOR THE RESPONDENT: SHRI SANJAY MUKHERJEE, JCIT DATE OF HEARING : 22 .07.2015 . DATE OF PRONOUNCEMENT : ORDER THIS APPEAL OF ASSESSEE ARISES FROM THE ORDER OF LD. CIT(A) - XX X VI , KOLKATA IN APPEAL NO . 16 /CIT(A) - XX X VI / KOL/WARD - 56(2 ) /09 - 10 DATED 30.11. 2013 . ASSESSMENT WAS FRAMED BY I.T.O., WARD - 56(2 ) U/S 154 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT ) FOR A.YR . 2004 - 05 VIDE ITS ORDER DATED 12.03.2009. 2. THE ONLY ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. AO AND LD. CIT(A) IS RIGHT IN REJECTING THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT IN PROCEEDINGS U/S 154 OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PR OPRIETOR OF M/S. MODERN INDUSTRIES HAVING A SMALL MANUFACTURING UNIT AT YANAM WHICH IS REGISTERED AS SMALL SCALE TINY UNIT AND GAVE EXEMPTION BY THE GOVT. OF PONDICHERRY INDUSTRIES DEPARTMENT. THE SAID UNIT IS SITUATED IN THE BACKWARD REGION VIDE NOTIFICAT ION ISSUED BY THE GOVT. OF INDIA AND HENCE 100% DEDUCTION ON THE INCOME DERIVED BY THE UNIT IS GRANTED U/S 80IB OF THE ACT FOR THE FIRST FIVE YEARS TO SUPPORT THE GROWTH OF MANUFACTURING ACTIVITIES IN THE BACKWARD REGION. THE UNIT IS ALSO GIVEN EXEMPTION F OR PAYMENT OF SALES TAX FOR THE FIRST FIVE YEARS. THE ASSESSEE CLAIMED DEDUC TION U/S 80IB OF THE ACT COMMENC ING FROM A.Y.2001 - 02, BEING THE INITIAL ASSESSMENT YEAR, WHICH WAS DULY GRANTED BY THE AO DURING THE SCRUTINY ASSESSMENT PROCEEDINGS. THE SAID DEDUC TION WAS ALSO GRANTED FOR A.YRS.2002 - 03 AND 2003 - 04 BY THE LD. AO IN THE SCRUTINY ASSESSMENT PROCEEDINGS. DURING THE A.Y. 2004 - 05, DEDUCTION U/S 80IB OF THE ITA NO. 127/KOL/2014 VINOD KUMAR SURANA . A.YR. 2004 - 05 2 ACT WAS ORIGINALLY GRANTED BY THE LD. AO IN 143(3) PROCEEDINGS AND LATER HE SOUGHT TO WITHDRAW THE SAME IN PROCEEDINGS U/S 154 OF THE ACT ON THE PREMISE THAT ASSESSEE HAD NOT EMPLOYED 10 OR MORE WORKERS DURING THE ASSESSMENT YEAR 2004 - 05 WHIC H IS ONE OF THE PRE - REQUISITE FOR CLAIMING DEDUCTION U/S 80IB OF THE ACT. AGGRIEVED AGAINST THIS 154 ORDER , TH E ASSESSEE CHALLENGED THIS ISSUE BEFORE THE LD. CIT(A), WHO UPHELD THE DISALLOWANCE ON THE GROUND THAT THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS AND ALSO ON THE GROUND THAT FROM THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE, NO E XPENSES TOWARDS TEMPORARY WAGES AND SALARY WHICH WERE DEBITED BY THE ASSESSEE AND HENCE IT WAS PROVED BEYOND DOUBT THAT THE ASSESSEE HAD EMPLOYED ONLY THREE WORKERS WHICH IS IN VIOLATION OF SECTION 80IB OF THE ACT. AGGRIEVED, THE A SSESSEE PREFERRED FURT HER APPEAL BEFORE THIS TRIBUNAL ON THE FOLLOWING GROUNDS : - 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRARY, ILLEGAL AND BAD IN LAW. 2. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO PASSED U/S 154 WHEN THE MISTAKE WAS NOT APPARENT FROM RECORD, REQUIRED INVESTIGATION OF FACTS AND AS SUCH THE PROVISIONS OF SEC.154 WERE NOT APPLICABLE. 3. FOR THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO DISALLOWING A DEDUCTION U/S 80IB PRESUMING THAT THE ASSESSEE WAS HAVING ONLY 3 EMPLOY EES IN THE INDUSTRIAL UNDERTAKING WHEN THE FACT WAS DULY ESTABLISHED AND ACCEPTED IN THE INITIAL YEAR. 4. FOR THAT THE LD.CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO WHEN THE EXEMPTION WAS DULY GRANTED IN THE INITIAL YEAR WAS NOT WITHDRAWN AND AS SUCH DIFFERENT STAND CANNOT BE TAKEN IN THE SUBSEQUENT YEAR. 5. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO PASSED UNDER SEC. 154. 6. FOR THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER OF THE CIT(A) BE MODIFIED AND THE ASSESSEE BE GIVEN THE RELIEF PRAYED FOR. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. SHRI SANJAY MUKHERJEE, JCIT, LD. DR APPEARED ON BEHALF OF THE REVENUE, WHO VEHEMENTLY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 5. I HAVE HEARD THE LD.DR AND PERUSED THE MATERIALS AVAILABLE ON RECORD. GROUND NO.1 IS GENERAL IN NATURE AND HENCE THE SAME DOES NOT REQUIRE ANY ADJUDICATION. ITA NO. 127/KOL/2014 VINOD KUMAR SURANA . A.YR. 2004 - 05 3 GROUND NOS. 2 TO 6 ARE IDENTICAL IN NATURE AND HENCE ARE TAKEN TOGETHER FOR THE PURPOSE OF ADJUDICATION HEREIN. THE ASSESSEE BEING A SMALL SCALE UNIT AS REGISTERED BY THE GOVT. OF PONDICHERRY INDUSTRIES DEPARTMENT HAD SET UP A MANUFACTURING UNIT IN THE BACKWARD REGION AND ACCORDINGLY IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. IT IS UNDI SPUTED THAT THE SAID UNIT STARTED COMMENCEMENT OF PRODUCTION IN A.Y.2001 - 02 BEING THE INITIAL ASSESSMENT YEAR AND DEDUCTION U/S 80IB OF THE ACT WAS GRANTED TO THE ASSESSEE BY THE LD. AO FOR A.YRS. 2001 - 02, 2002 - 03 AND 2003 - 04 DURING THE SCRUTINY ASSESSMEN T PROCEEDINGS. ADMITTEDLY, DEDUCTION U/S 80IB OF THE ACT WOULD NOT HAVE BEEN GRANTED BY THE AO IN THE INITIAL ASSESSMENT YEAR WITHOUT VERIFICATION OF COMPLIANCE OF ALL THE CONDITIONS CONTEMPLATED IN THE RELEVANT SECTION. THE LD. CIT(A) IN HIS ORDER HAS ST ATED THAT DURING THE A.Y.2004 - 05 THE ASSESEE HAD EMPLOYED ONLY THREE PEOPLE WHICH IS ALSO EVIDENT FROM THE DETAILS OF SALARY AND WAGES PROVIDED BY THE ASSESSEE BEFORE AO AND LD. CIT(A. THE LD. CIT(A) FURTHER OBSERVED THAT NO EXPENDITURE WAS INCURRED BY THE ASSESSEE TOWARDS PAYMENT OF WAGES TO TEMPORARY WORKERS, LABOURERS, IF ANY, WHICH SATISFY THE REQUIREMENT OF 10 OR MORE WORKERS IN TERMS OF SECTION 80IB OF THE ACT. NOW THE SHORT ISSUE THAT ARISES FOR OUR CONSIDERATION IS WHETHER THE LD. AO, HAVING GRANTED DEDUCTION U/S 80IB OF THE ACT IN THE INITIAL ASSESSMENT YEAR, IS ENTITLED TO WITHDRAW THE SAME IN THE SUBSEQUENT YEARS AND MORE SO WHETHER IT CAN BE DONE BY HIM IN THE PROCEEDINGS U/S 154 OF THE ACT. THE FACT OF WITHDRAWAL OF DEDUCTION U/ 80IB OF THE ACT IN THE SUBSEQUENT YEARS WHEN THE SAME WERE DULY GRANTED BY THE LD. AO IN THE INITIAL ASSESSMENT YEARS PER SE BECOMES A DEBATABLE ISSUE AND HENCE I HOLD THAT THE SAME CANNOT BE DONE IN THE PROCEEDINGS U/S 154 OF THE ACT AS THE SAME CANNOT BE CONSTRUED AS A PATENT, GLARING, OBVIOUS MISTAKE APPARENT FROM RECORD. I ALSO HOLD THAT THE REQUIREMENT OF COMPLIANCE OF PROVISION OF SECTION 80IB OF THE ACT SHOULD BE VERIFIED IN DETAIL BY THE LD. AO ONLY IN THE INITIAL ASSESSMENT YEAR I.E. A.Y.2001 - 02 AND HE NEED NOT ST RETCH OR TRAVEL BEYOND THAT YEAR FOR THE PURPOSE OF GRANT OF DEDUCTION IN SUBSEQUENT YEARS. DEDUCTION U/S 80IB OF THE ACT IS GRANTED TO THE ASSESSEE FOR PROMOTING THE GROWTH OF MANUFACTURING UNITS IN THE BACKWARD REGION BY THE GOVT. OF INDIA. IT BEING A BE NEFICIAL PROVISION, THE SAME HAS TO BE VIEWED LIBERALLY. EVEN OTHERWISE, WHETHER THE SAME HAD TO BE VIEWED LITERALLY OR LIBERALLY PER SE IS A ITA NO. 127/KOL/2014 VINOD KUMAR SURANA . A.YR. 2004 - 05 4 DEBATABLE ISSUE WHICH CANNOT BE THE SUBJECT MATTER OF RECTIFICATION U/S 154 OF THE ACT. IN FACT THE ISSUE OF GRANT ING OF DEDUCTION U/S 80IB OF THE ACT HAD REACHED THE CORRIDORS OF VARIOUS COURTS INCLUDING THE HON BLE SUPREME COURT ON VARIOUS GROUNDS AND ADMITTEDLY, THE GROUND OF DEDUCTION THEREIN DOES NOT BECOME AUTOMATIC UNLESS THE CONDITIONS STIPULATED IN THE SECTIO N HAVE FULLY COMPLIED WITH BY THEM IN LETTER AND SPIRIT BY THE ASSESSEE. VARIOUS DISPUTES HAVE CROPPED UP IN THE LIGHT OF THIS ISSUE AND EACH ISSUE HAD ITS OWN DISTINCT FACTS AND CIRCUMSTANCES AND HAD TO BE ADJUDICATED BY VARIOUS COURTS INCLUDING SUPREME COURT. THIS ITSELF MAKES THE ISSUE OF GRANT OF DEDUCTION U/S 80IB OF THE ACT HIGHLY DEBATABLE. HENCE, THE SAME CANNOT BE THE SUBJECT MATTER OF 154 PROCEEDINGS. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF T.S.B ALARAM & CO. VS VALKART BROS (1971) 82 ITR 50 (SC). WHEN TWO VIEWS ARE POSSIBLE, OBVIOUSLY IT BECOMES A DEBATABLE ISSUE. IT CANNOT BE THE SUBJECT MATTER OF RECTIFICATION PROCEEDINGS U/S 154 OF THE ACT. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF T HE CASE AND IN VIEW OF THE JUDICIAL PRECEDENTS, I HOLD THAT THE ACTION OF THE LD. AO IN DENYING THE DEDUCTION U/S 80IB OF THE ACT U/S 154 PROCEEDINGS IS BAD IN LAW. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSE E IS ALLOWED. ORDER PRONOUNC ED IN TH E COURT . SD/ - [MAHAVIR SINGH] JUDICIAL MEMBER DATE: 11.08.2015. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO : 1 . V INOD KUMAR SURANA, 35A, PRINCEP STREET, KOLKATA - 700072. 2 I.T.O., WARD - 56(2 ), KOLKATA. 3 . THE CIT, 4. THE CIT(A) - XX X VI , KOLKATA. 5 . DR, KOLKATA BENCHES, KOLKATA TRUE COPY , BY ORDER, DE PUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES ITA NO. 127/KOL/2014 VINOD KUMAR SURANA . A.YR. 2004 - 05 5