ACIT, Circle-53, Kolkata, Kolkata V. Sri Anandamoy Das, Kolkata

ITA 1326/KOL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87677 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 07-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-09-2012
• Court: TRIBUNAL
• Department Lawyers: KANAIYA LAL KANAK
• Assessee Lawyers: V N PUROHIT; HARSHVARDHAN
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA , AM ] I.T.A NO. 1326 /KOL/201 2 ASSESSMENT YEAR : 2009 - 10 ASSISTANT COMMISSIONER OF INCOME - TAX, VS. SHRI ANANDAMOY DAS, PROP. M/S. CIRCLE - 53, KOLKATA. INVOTECH ENGINEERS (PAN: ADOPD2327G) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 03 . 0 2 .201 5 DATE OF PRONOUNCEMENT: 06 . 0 2 .201 5 FOR THE APPELLANT: SHRI KANAIYA LAL KANAK, JCIT FOR THE RESPONDENT: SHRI V . N. PUROHIT & SHRI HARSHVARDHAN BHARDWAJ , CA / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF CIT (A) - X XXI II , KOLKATA IN APPEAL NO. 97/CIT(A) - X XXI II/ ACIT CIR - 53,KOL/11 - 12 DATED 09 . 0 7 .201 2 . ASSESSMENT WAS FRAMED BY ACIT, CIRCLE - 53 , KOLKATA U/S. 1 43(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 2009 - 10 VIDE HIS ORDER DATED 31 . 1 0 .20 11 . 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) IN ALLOWING DEDUCTION U/S 80IB OF THE ACT. FO R THIS REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) ERRED IN ACCEPTING THAT THE OLD UNIT ENGAGED IN PRODUCTION SINCE F.Y. 2000 - 01 TO GET BENEFIT OF DEDUCTION U/S 80IB WHEREAS THE UNIT WHICH IS A SMALL SCALE INDUSTRY(SSI) UNIT STARTED OPERATION ONLY IN F.Y.2002 - 03. 3. BRIEF FACTS ARE THAT THE ASSESSEE BEING AN INDIVIDUAL IS THE PROPRIETOR OF M/S INVOTECH ENGINEERS MANUFACTURING PRESSED STEEL RAD IATORS & SPECIAL PURPOSE MACHINES. THE A SSESSEE S CASE WAS PICKED UP FOR SCRUTINY ASSESSMENT UNDER CASS FOR THE RELEVANT AY 2009 - 10 AND NOTICE U/S. 143( 3 ) WAS ISSUED AND SERVED ON THE ASSESSEE. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSEE FURN I SHED BOOKS OF ACCOUNTS, AUDIT REPORT , OTHER DOCUMENTS , EVIDENCES AND ALSO FURNISHED OTHER DETAILS AND EXPLANATIONS AS CALLED FOR BY THE AO. THE AO DURING THE COURSE OF SCRUTINY PROCEEDINGS, ISSUED SHOW - CAUSE NOTICE DATED 18 - 11 - 2011 TO EXPLAIN HOW DEDUCTION U/S. 80IB(3) OF THE ACT IS ALLOWABLE TO THE ASSESSEE. THE RELEVANT QUERY TO THE ISSUE UN DER DISPUTE AS RAISED IN THE SHOW - CAUSE NOTICE READS AS UNDER: - 2 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 DURING THE COURSE OF SCRUTINY PROCEEDING UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, IT HAS BEEN FOUND ON THE BASIS OF MATERIAL AVAILABLE ON RECORD THAT: - (1) ASSESSEE HAS CLAIMED DEDU CTION UNDER SECTION 80IB(3) OF A SUM OF RS.18,16,678/ - WHEREAS ASSESSEE DOES NOT FULFILLED THE CONDITION OF SUB PARA (II) OF SUB SECTION (3) OF SECTION 80IB SUB PARA II) IS STIPULATED HEREIN BELOW - (II) WHERE IT IS AN INDUSTRIAL UNDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING, IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR TINGS OR TO OPERATE ITS COLD STORAGE PLANT [NOT SPECIFIED IN SUB - SECTION (4) OR SUB - SECTION (5)] AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1995 AND ENDING ON THE 31 ST DAY OF MARCH, 2002. ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 8IB(3) IN THE AY 002 - 03 AND BEFORE, THEREFORE, SUBSEQUENT YEARS ASSESSEE IS NOT ELIGIBLE TO GET DEDUCTION UNDER SECTION 80IB(3). ACCORDINGLY, IN THE ASSESSMENT YEAR I.E. 2009 - 10 UNDER CONSIDERATION, ASSESSEE IS NOT ELIGIBLE TO GET DEDUCTION UNDER SECTION 80IB(3) OF THE INCOME TAX ACT, 1961. THEREFORE, DEDUCTION A SUM OF RS.18,16,678/ - IS NOT ALLOWABLE. THE MAIN CONTENTION OF THE REVENUE IS THAT THE ASSESSEE IS NOT ENTIT LED FOR DEDUCTION U/S 80IB OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT ELIGIBLE TO SUCH DEDUCTION IN AY 2002 - 03 AND , THEREFORE , THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION IN SUBSEQUENT YEARS ALSO. THE ASSESSEE EXPLAINED THE SHOW - CAUSE NOTICE THAT IT HAS COMMENCED MANUFACTURING DURING THE FY 2000 - 01. ACCORDING TO ASSESSEE, IT WAS ENTITLED TO CLAIM DEDUCTION FOR THE AY 2001 - 02, WHICH IS THE INITIAL AY WITHIN THE MEANING OF SEC. 80IB OF THE ACT BUT FOR THE NON - FULFILLMENT OF THE RESTRICTIONS AS REGARDS TO NUMBER OF EMPLOYEES, THE ASSESSEE DID NOT MAKE CLAIM ORIGINALLY. BUT WHEN THIS CLAIM WAS MADE DURING ASSESSMENT PROCEEDINGS, THE AO DECLINED ON ACCOUNT OF RESTRICTION OF NUMBER OF EMPLOYEES. ACCORDINGLY, IN THE PRESENT ASSESSMENT YEAR ALSO, THE AO DISA LLOWED THE CLAIM OF THE DEDUCTION BY OBSERVING THAT, THE MAIN CONDITION IN THE INSTANT CASE (I) WHETHER INDUSTRIAL UNDERTAKING IS A SMALL SCALE INDUSTRIAL UNDERTAKING AND (II) BEGINS TO MANUFACTURE ARTICLES BETWEEN 01 - 04 - 1995 AND 31 - 03 - 2002. THE INDUSTRIA L UNDERTAKING UNDER CONSIDERATION HAS BECOME A SMALL SCALE INDUSTRIAL UNDERTAKING ONLY ON 05 - 09 - 2002. THEREFORE, PRIMA FACIE, HE IS QUALIFIED TO GET DEDUCTION ONLY IN YEAR 2002 - 03 AND NOT IN THE YEAR 2001 - 02. ASSESSEE HAS NOT BEEN FORMED WITHIN 31 - 03 - 2002. THEREFORE, ASSESSEE IS NOT QUALIFIED WITHIN THE EXTENDED DATED I.E. 31 - 03 - 2002 AND NOT ELIGIBLE TO GET THE BENEFIT OF SECTION 890IB(3) OF THE INCOME TAX ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). 4. THE CIT(A) ALLOWED THE CLAIM OF DEDUCTION U/S/80IB OF THE ACT BY OBSERVING IN PARA - 3.2 AS UNDER: - 3.2 I HAVE CONSIDERED FACTS OF THE ASSESSEE . IT HAS BEEN SEATED BY THE APPELLANT THAT THE UNIT HAD COME TO EXISTENCE IN FY 1999 - 2000 AT VILLAGE RAMCHANDRAPUR. AS THE SAID LOCATION W A S HAVING VARIOUS PROBLEMS, HE SHIFTED TO PREMISES AT PIYALI TOWN, BARUIPUR, 3 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 DIST - 24PGS. AT THIS PREMISE, NEWLY PURCHASED MACHINERY WAS INSTALLED AND AFTER OBTAI N ING TRADE LICENSE ON 25.09.2000, THE UNIT STARTED MANUFAC T UR I NG OPERATION AND THE FIRST BILL WA S RAISED ON 29.11.2000. IN THE FIRST YEAR I.E. F Y 2000 - 01, THE UNIT ACHIEVED TU RNOVER OF RS.18 LACS. THUS, THE UNIT HAD COMMENCED PRODUCTION IN FY 2000 - 01 AND NOT AFTER 31.03.2002 AS OBSERVED BY THE ASSESSING OFFICER. THE CONFUSION HAS ARISEN, BECAUSE THE APPELLANT HAD DUR I NG FY 2002 - 03 SHIFTED THE FACTORY IN LOCK, STOCK AND BARREL TO THE PRESENT PREMISES AT 20B, CHNDITALA MAIN ROAD. FOR THIS, NECESSARY PERMISSION WAS T AKEN FROM CENTRAL EXCISE AUTHORITY. A T THE NEW PREMISE THE APPELLANT CONTINUED TO CARRY O UT SAME MANUFACTURING OPERAT IO N WHICH W A S BEING DONE IN THE EARLIER LOCATION. HOW E VER, BECAUSE OF CHANGE OF ADDRESS, IT HAD TO APPLY FOR FRESH TRADE LICENSE FROM MUNICIPAL AUTHORITY AND THE SAME WAS RECEIVED ON 05.09.2002. SIMILARLY, IT GOT ITSELF REGISTER ED WITH D I R ECTORATE OF COTTAGE & SMALL SCALE INDUSTRIES, GOVERNMENT OF WEST BENGAL ON 07.05.2002. HOWEVER, THIS DOES NOT MEAN THAT THE UNIT STARTED OPERATION IN FY 2002 - 03 BECAUSE THE UNIT WAS ALREADY ENGAGED IN PRODUCTI O N SINCE FY 2000 - 01 AND ONLY SHIFTIN G TO NEW PREMISES TOOK PLACE IN FY 2002 - 03. IT WAS ALSO STATED THAT REGISTRATION WITH DIRECTORATE OF COTTAGE & SMALL SCALE INDUSTRIES, GOVT. OF WEST BENGAL W A S NOT A P R E - REQUISITE TO CLAIM DEDUCTI O N U/S. 80IB. THE APPELLANT HAS PRODUCED A NUMBER OF DOCUMEN TS SUCH AS TRADE LICENSE ISSUED FOR EARLIER PREMISES PIYALI TOWN, BARUIPUR, CENTRAL EXCISE REGISTRATI O N CERTIFICA T E FOR EA R LIER PREMISES, COPY OF FIRST INVOICE, COPY OF APPLICATION TO CENTRAL EXCISE AUTHORITY FOR SHIFTING OF FACTORY, COPY OF AMENDED REGIST RATION CE R TIFICATE ETC. ALL THESE DOCUMENTS WERE PRODUCED BEFORE TH E ASSE S SING OFFICER AS WELL. AFTER GOING THROUGH THE SAME, IT BECOMES CRYSTAL CLEAR THAT MANUFACTURING OPERATION OF THE APPELLANT S UNDERTAKING HAD STARTED WAY BACK DUR I NG FY 2000 - 01 WITH T HE FIST INVOICE FOR MANUFACTURED GOODS BEING DATED 29.112000. THIS IS QUITE EVIDENT FRO M THE FACT THAT THE APPELLANT IT HAS BEEN SHOWING MANUFACTURING TURNOVER AND ALSO PAY I NG EXCISE DUTY SINCE FY 2000 - 01. IF THE ASSESSING OFFICER S VIEW WAS CORRECT, THERE C O ULD HAVE BEEN NO SALE OF MANUFACTURED GOODS PRIOR TO FY 2002 - 03. THE ONLY SIGNIFICANT EVENT WHICH HAPPENED IN FY 2002 - 03 IS THAT THE ENTIRE MANUFACTURING OPERATION WAS SHIFTED TO NEW PREMISES WHICH ALSO INVOLVED SOME PRO C EDURE LIKE OBTAINING NEW TRADE L ICENSE. HOWEVER, THAT, IN NO WAY, MEANS THAT MANUFACTU RI NG ACTIVITY STARTED AFTER 31.03.2002. IT IS ALSO NOT A CASE, WHERE THE OLD UNDERTAKING WAS CLOSED AND A NEW UNDERTAKING WAS STARTED. RATHER, THE SAME PLANT AND MACHINERY AND OTHER ESTABLISHMENT WAS SH IFTED TO THE NEW PREMISES. SUCH SHIFTING OF OPERATION CAN ALSO NOT BE EQUATED WITH FORMATION OF UNDERTAKING BY WAY OF SPLITTING UP OR RECONSTRUCTION OF EXISTING BUSINESS. REGARDING REGISTRATION WITH DIRECTORATE OF COTTAGE SMALL SCALE INDUSTRY, SECTION 80IB (3) NOWHERE REQUIRES THAT IN ORDER TO CLAIM DEDUCTION U/S 80IB, THE UNIT SHOULD BE REGISTERED WITH DIRECTORATE OF COTTAGE & SMALL SCALE INDUSTRIES OF STATE GOVERNMENT. IT HAS BEEN CLARIFIED IN CLAUSE (G) OF 80IB(14) THAT: - THUS, AS LONG AS AN UNDERTAKING FULFILLS THE ABOVE CRITERION, IT IS TO BE TREATED AS SMALL SCALE INDUSTRIAL UNDERTAK I NG FOR PURPOSE OF CLAIMING DEDUCTION U/S. 80IB, IRRESPECTIVE OF WHETHER IT IS REGISTERED WITH THE STATE GOVERNMENT OR NOT. THERE IS NO DISPUTE OVER THE UNDERTAKING MEETIN G THE SAID CRITERION. THEREFORE, MY OPINION, THE ASSESSING OFFICER WAS NOT CORRECT IN DENYING CLAIM OF DEDUCTION U/S. 80IB(3) TO THE APPELLANT MERELY BECAUSE THE TRADE LICENSE FOR THE NEW PREMISE AND PROVISIONAL REGISTRATION BY DIRECTORATE OF COTTAGE & SMA LL SCALE INDUSTRIES OF STATE GOVERNMENT WAS AFTER 01.04.2002, WHEN THERE WAS CLEAR EVIDENCE BEFORE HIM THAT THE APPELLANT WAS ENGAGED IN MANUFACTURING ACTIVITY FROM FY 2000 - 01 ONWARDS. HERE IS NO DISPUTE THAT THE APPELLANT SATISFIES ALL OTHER ELIGIBILITY C ONDITIONS PRESCRIBED U/S. 80IB. THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S. 80IB(3) OF I.T. ACT, 1961, AS COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF LAW AFTER GOING THROUGH THE AUDIT REPORT AND OTHER RELEVANT MATERIAL. AGGRIE VED, NOW REVENUE IS IN APPEAL BEFORE US. 4 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS DISALLOWED ON THE PREMISE THAT THE ASSESSEE WAS QUALIFIED TO GET DEDUCTION U/S.80IB OF THE AC T ONLY IN AY 2003 - 04 AND NOT IN AY 2002 - 03 I.E. THE FY 2001 - 02. ON THIS ASPECT, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF BAJAJ TEMPO LTD. V. CIT (1992) 196 ITR 188 (SC), WHEREIN IT IS HELD THAT NON - FUL FILLMENT OF RESTRICTIVE CONDITION FOR CLAIMING TAX INCENTIVE IN THE INITIAL AY DOES NOT DISENTITLE THE ASSESSEE TO CLAIM THE BENEFIT IN SUBSEQUENT ASSESSMENT YEARS IF SUCH CONDITIONS ARE CAPABLE OF BEING FULFILLED IN SUCH SUBSEQUENT ASSESSMENT YEAR. EVEN O THERWISE, FOR THE SAKE OF CONSISTENCY THE ASSESSEE BEFORE US STATED THAT FOR AND FROM AY 2004 - 05 TO AY 2008 - 09 CLAIMED U/S.1 80IB WAS MADE BEFORE THE AO AS NUMBER OF EMPLOYEES WERE MORE THAN 10 IN THESE ASSESSMENT YEARS. THE CLAIM OF DEDUCTION WAS ALLOWED U/S. 143(1) OF THE ACT AS THE RETURNS OF INCOME FILED BY THE ASSESSEE WERE ACCEPTED AS IT IS WITHOUT ANY TINKERING WITH THE SAME. ON QUERY FROM THE BENCH, LD. SENIOR DR HAS NOT NEGATIVE THE CLAIM OF THE ASSESSEE THAT IN EARLIER YEARS THE CLAIM WAS ALLOWED. ACCORDING TO ASSESSEE, THE TRADE LICENSE WAS OBTAINED ON 25 - 09 - 2000 AND MACHINERIES WERE INSTALLED. THE ASSESSEE WAS ALSO APPLIED REGISTRATION UNDER CENTRAL EXCISE ACT AND STARTED MANUFACTURING OPERATION. THE FIRST BILL WAS RAISED FOR SALE OF THE PRODUCT ON 29 - 11 - 2000 FOR THE ITEM PRESSED STEEL RADIATOR . THE ASSESSEE STARTED COMMERCIAL OPERATION IN FY 2000 - 01 AND ACHIEVED A TURNOVER OF AROUND OF RS.18 LAKHS AND FILED THE FOLLOWING DOCUMENTS BEFORE AO IN SUPPORT OF ITS CONTENTIONS VIDE LETTER DATED 19 - 08 - 2011 : - A) COPY OF TRADE LICENCE ISSUED FOR FACTORY PREMISES AT PIYALI TOWN, BARUIPUR. B) COPY OF APPLICATION FOR CENTRAL EXCISE REGISTRATI O N WITH ALL ANNEXURE . C) COPY OF FORMAL CENTRAL EXCISE REGISTRATION CERTIFICATE. D) COPY OF APPLICATION TO CENTRAL EXCISE FOR PERMISSION TO ISSUE INVOICE. E) COPY OF FIRST INVOICE. F) COPY OF SOME OF INVOICES IN RESPECT OF PLANT & MACHINERY PURCHASED IN 1999 - 00 AND 2000 - 01. EVEN THESE FACTS HAVE NOT BEEN DENIED BY LD. SENIOR DR. SUBSEQUENTLY, WHEN THE FACTORY UNIT WAS SHIFTED AT THE PREMISES 20B, CHANDITALA MAIN ROAD, THE FOLLOWING DOCUMENTS WERE SUBMITTED IN SUPPORT OF THE SAME: - A) COPY OF APPLICATION TO CENTRAL EXCISE AUTHORITY FOR CHANGE OF FACTORY. B) COPY OF AMENDED REGISTRATION CERTIFICATE. C) COPY OF SSI REGISTRATION FOR 20B CHANDITALA MAIN ROAD. D) COPY OF TRADE LICENCE FOR 20B CHANDITALA MAIN ROAD FACTORY. 5 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE OF THE VIEW THAT ONCE THE ASSESSEE HAS STARTED MANUFACTURING IN FY 2000 - 01, AS IS EVIDENT FROM THE RECORDS, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S. 80IB OF THE ACT AND THE CLAIM WILL NOT FAIL FOR THE SIMPLE REASON THE ASSESSEE HAS NOT FULFILLED THE RESTRICTIVE CONDITIONS IN THE INITIAL ASSESSMENT YEAR. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF BAJAJ TEMP LTD. (SUPRA). 6. FURTHER, THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S 80IB OF THE ACT FOR AND FROM AY 2004 - 05 TO 2008 - 09 AND NOW IN AY 2009 - 10 THE CLAIM IS DECLINED. FOR THE SAKE OF CONSISTENCY THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT CANNOT BE DISALLOWED. FOR THIS PROPOSITION, WE ARE RELYING ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI PRESS PATRA PRAKASHAN LTD. (NO.2) (2013) 355 ITR 14 (DEL). WHEREIN IT HAS BEEN HELD AS UNDER: THE NEXT CON TROVERSY THAT NEEDS TO BE ADDRESSED IS WHETHER IT WAS OPEN FOR THE ASSESSING OFFICER TO DENY THE BENEFIT OF SECTION 80 - I OF THE ACT TO THE ASSESSEE HAVING ALLOWED THE BENEFIT TO THE ASSESSEE IN THE PRECEDING THREE YEARS. IT IS CONTENDED ON BEHALF OF THE AS SESSEE THAT IT WAS NECESSARY FOR THE ASSESSING OFFICER TO BE CONSISTENT WITH THE ASSESSMENT FOR THE EARLIER YEARS. THE QUESTION AS TO THE QUALIFICATION OF UNITS NOS. 2 AND 3 AS INDUSTRIAL UNDERTAKINGS AROSE IN THE EARLIER YEARS AND THE ASSESSING OFFICER HA D ACCEPTED THAT UNITS NOS. 2 AND 3 QUALIFIED FOR A DEDUCTION UNDER SECTION 80 - I OF THE ACT IN THE EARLIER YEARS. BY VIRTUE OF SECTION 80 - I(5) OF THE ACT DEDUCTION UNDER SECTION 80 - I OF THE ACT WAS AVAILABLE TO AN ASSESSEE IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INDUSTRIAL UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS (SUCH ASSESSMENT YEAR BEING THE INITIAL ASSESSMENT YEAR) AND EACH OF THE SEVEN ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YE AR. THIS NECESSARILY IMPLIED ONCE THE ISSUE AS TO ELIGIBILITY UNDER SECTION 80 - I OF THE ACT WAS EXAMINED AND ALLOWED IN THE INITIAL ASSESSMENT, THE SAME WAS ALLOWABLE IN THE SUBSEQUENT YEARS ALSO UNLESS THERE WAS ANY MATERIAL CHANGE IN THE SUCCEEDING YEARS . IT IS WELL SETTLED LAW THAT THE PRINCIPLES OF RES JUDICATA DO NOT APPLY TO INCOME - TAX PROCEEDINGS AND ASSESSMENT FOR EACH YEAR IS AN INDEPENDENT PROCEEDING. IT IS NOW EQUALLY WELL ESTABLISHED THAT ISSUES THAT HAVE BEEN SETTLED AND ACCEPTED OVER A PERIOD OF TIME SHOULD NOT BE REVISITED IN SUBSEQUENT ASSESSMENT YEARS IN THE ABSENCE OF ANY MATERIAL CHANGE WHICH WOULD JUSTIFY THE CHANGE IN VIEW. THE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG [1992] 193 ITR 321 (SC) HAS HELD THAT UNLESS THERE IS A MAT ERIAL CHANGE IN JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW THE EARLIER VIEW WHICH HAS BEEN SETTLED AND ACCEPTED OF A SEVERAL YEARS SHOULD NOT BE DISTURBED. THE RELEVANT EXTRACT FROM THE SAID JUDGMENT IS QUOTED BELOW (PAGE 329) : 'WE ARE AWARE OF T HE FACT THAT STRICTLY SPEAKING RES JUDICATA DOES NOT APPLY TO INCOME - TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFER ENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 6 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 ON THESE REASONINGS IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTER - AND, IF THERE WAS NOT CHANGE, IT WAS IN SUPPORT OF THE ASSESSEE - WE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO WH AT HAD BEEN DECIDED BY THE COMMISSIONER OF INCOME - TAX IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWERED IN THE A FFIRMATIVE, NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12 OF THE INCOME - TAX ACT OF 1961.' THE DECISION OF THE SUPREME COURT IN THE CASE RADHASOAMI SATSANG [1992] 193 ITR 321 (SC) WAS ON THE FACTS WHERE THE QUESTION AS TO THE ENTITLEMENT FOR EXEMPTION UNDER SECTION 4(3)(I) OF THE INDIAN INCOME - TAX ACT, 1922, HAD NOT BEEN GRANTED FOR THE ASSESSMENT YEAR 1939 - 40. THE ASSESSEE HAD CHALLENGED THE ASSE SSMENT ORDER WHICH WAS ACCEPTED BY THE APPELLATE ASSISTANT COMMISSIONER WHO UPHELD THE ASSESSEE'S CLAIM FOR EXEMPTION. THIS VIEW WAS CONSISTENTLY FOLLOWED BY THE SUCCESSIVE ASSESSING OFFICERS TILL 1963 - 64. IN THESE CIRCUMSTANCES, THE SUPREME COURT HELD THAT THE VIEW THAT HAD BEEN SETTLED AND ACCEPTED OVER A PERIOD OF YEARS SHOULD NOT BE ALLOWED TO BE DISTURBED. THIS COURT IN THE CASE OF CIT V. LAGAN KALA UPVAN [2003] 259 ITR 489 (DELHI), FOLLOWING THE DECISION OF THE SUPREME COURT IN THE CASE OF RADH ASOAMI SATSANG [1992] 193 ITR 321 (SC) HAS ALSO HELD THAT WHERE A PARTICULAR VIEW HAS BEEN ACCEPTED BY THE ASSESSING OFFICER TO SEVERAL YEARS THE SAME CANNOT BE PERMITTED TO BE DEPARTED FROM UNLESS THERE IS SOME MATERIAL FACTS THAT JUSTIFIED SUCH A CHANGE . SIMILAR VIEW HAS BEEN EXPRESSED BY THIS COURT IN THE CASE OF MODI INDUSTRIES LTD. [2010] 327 ITR 570 (DELHI). IN THIS CASE, WHILE CONSIDERING A CLAIM OF DEDUCTION MADE BY AN ASSESSEE UNDER SECTION 80J OF THE ACT, THIS HIGH COURT HELD AS UNDER (PAGE 57 3) : 'THE SECOND QUESTION RELATES TO THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80J OF THE INCOME - TAX ACT IN RESPECT OF ITS NEW UNIT, NAMELY, 10 TON FURNACE DIVISION AND STEEL UNIT 'B'. THIS CASE PERTAINS TO THE ASSESSMENT YEAR 1976 - 77. A PE RUSAL OF THE ORDER OF THE ASSESSING OFFICER WOULD REVEAL THAT FOR THE FIRST TIME, CLAIM UNDER SECTION 80J OF THE ACT WAS MADE BY THE ASSESSEE IN THE ASSESSMENT YEAR 1973 - 74. THE ASSESSEE WAS DENIED THAT CLAIM BY THE ASSESSING OFFICER. FOR THIS REASON, THE ASSESSING OFFICER DENIED THE CLAIM IN THIS ASSESSMENT YEAR AS WELL, TAKING NOTE OF THE FACT THAT THE MATTER PERTAINING TO 1973 - 74 WAS PENDING BEFORE THE INCOME - TAX APPELLATE TRIBUNAL. IT IS A MATTER OF RECORD THAT THE APPEAL FILED BY THE ASSESSEE F OR THE ASSESSMENT YEAR 1973 - 74 WAS ALLOWED BY THE INCOME - TAX APPELLATE TRIBUNAL. THE EFFECT THEREOF WAS THAT THE ASSESSEE WAS GRANTED THE REQUISITE DEDUCTION UNDER SECTION 80J OF THE ACT FOR THE ASSESSMENT YEAR 1973 - 74. THE DEPARTMENT HAS SOUGHT REFERE NCE UNDER SECTION 256(1) OF THE ACT WHICH REFERENCE APPLICATION WAS ALSO REJECTED BY THE TRIBUNAL. LIKEWISE, FOR THE ASSESSMENT YEARS 1974 - 75 AND 1975 - 76, THE CLAIMS OF THE ASSESSEE WERE ALLOWED. THE ASSESSEE, ONCE GIVEN THE DEDUCTION UNDER SECTION 80J OF THE ACT IS ENTITLED TO SUCH A DEDUCTION FOR A PERIOD OF FIVE YEARS. IF THE ASSESSEE HAS BEEN ALLOWED THE BENEFIT OF SECTION 80J IN THE LAST THREE PRECEDING YEARS, THERE IS NO REASON TO DENY THE SAME FOR THE INSTANT ASSESSMENT YEAR. WE, THEREFORE, ANS WER THIS ISSUE ALSO IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE.' 7 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 IN THE PRESENT CASE, THE CLAIM OF THE ASSESSEE UNDER SECTION 80 - I OF THE ACT WAS EXAMINED AND ALLOWED BY THE ASSESSING OFFICER FOR THREE YEARS PRECEDING THE ASSESSMENT YEAR 1991 - 92 . IT IS RELEVANT TO NOTE THAT ASSESSMENTS IN THE EARLIER YEARS, I.E., RELATING TO THE ASSESSMENT YEARS 1988 - 89, 1989 - 90 AND 1990 - 91 HAS NOT BEEN DISTURBED BY THE ASSESSING OFFICER AND THERE HAS BEEN NO CHANGE THAT COULD JUSTIFY THE ASSESSING OFFICER ADOP TING A DIFFERENT VIEW IN THE ASSESSMENT YEARS 1991 - 92 AND THEREAFTER. AS STATED HEREINBEFORE, IN CERTAIN CASES WHERE THE ISSUES INVOLVED HAVE ATTAINED FINALITY ON ACCOUNT OF THE SUBJECT MATTER OF DISPUTE HAVING BEEN FINALLY ADJUDICATED, THE QUESTION OF REOPENING AND REVISITING THE SAME ISSUE AGAIN IN SUBSEQUENT YEARS WOULD NOT ARISE. THIS IS BASED ON THE PRINCIPLE THAT THERE SHOULD BE FINALITY IN ALL LEGAL PROCEEDINGS. THE SUPREME COURT IN THE CASE OF PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 1 06 ITR 1 (SC) HAD HELD AS UNDER (PAGE 10) : '. . . THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOS E IN AND SET AT REST JUDICIAL AND QUASI - JUDICIAL CONTROVERSIES AS IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY.' IN THE FACTS OF THE PRESENT CASE, WHERE ALTHOUGH THE ASSESSING OFFICER HAS ALLOWED THE ASSESSEE DEDUCTION UNDER SECTION 80 - I OF THE ACT IN TH E PRECEDING YEARS, ONE MAY STILL HAVE CERTAIN RESERVATIONS AS TO WHETHER THE ISSUE OF ELIGIBILITY OF UNITS NOS. 2 AND 3 FULFILLING THE CONDITIONS HAS BEEN FINALLY SETTLED, SINCE THE QUESTION HAS NOT BEEN A SUBJECT MATTER OF ANY APPELLATE PROCEEDINGS IN THE YEARS PRECEDING THE ASSESSMENT YEAR 1991 - 92. HOWEVER, THERE IS YET ANOTHER ASPECT WHICH NEEDS TO BE CONSIDERED. BY VIRTUE OF SECTION 80 - I(5) OF THE ACT, DEDUCTION UNDER SECTION 80 - I OF THE ACT IS AVAILABLE TO AN ASSESSEE IN RESPECT OF THE ASSESSMEN T YEAR (REFERRED TO AS THE INITIAL ASSESSMENT YEAR) RELEVANT TO THE PREVIOUS YEAR IN WHICH THE INDUSTRIAL UNDERTAKING BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS, OR TO OPERATE ITS COLD STORAGE PLANT OR PLANTS OR THE SHIP IS FIRST BROUGHT INTO USE OR THE BUSINESS OF THE HOTEL STARTS FUNCTIONING OR THE COMPANY COMMENCES WORK BY WAY OF REPAIRS TO OCEAN - GOING VESSELS OR OTHER POWERED CRAFT. SUCH DEDUCTION IS ALSO AVAILABLE FOR THE SEVEN ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMEN T YEAR. SURELY IN CASES WHERE AN ASSESSEE IS HELD TO BE ELIGIBLE FOR DEDUCTION IN THE INITIAL ASSESSMENT YEAR, THE SAME CANNOT BE DENIED IN THE SUBSEQUENT ASSESSMENT YEARS ON THE GROUND OF INELIGIBILITY SINCE THE SET OF FACTS WHICH ENABLE AN ASSESSEE TO CLAIM TO BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80 - I OF THE ACT OCCUR IN THE PREVIOUS YEAR RELEVANT TO THE INITIAL ASSESSMENT YEAR AND HAVE TO BE EXAMINED IN THE INITIAL ASSESSMENT YEAR. IN SUCH CASES, WHERE THE FACTS ON THE BASIS OF WHICH THE DEDUCTI ONS ARE CLAIMED ARE SUBJECT MATTER OF AN EARLIER ASSESSMENT YEAR AND DO NOT ARISE IN THE CURRENT ASSESSMENT YEAR, IT WOULD NOT BE POSSIBLE FOR AN ASSESSING OFFICER TO TAKE A DIFFERENT VIEW IN THE CURRENT ASSESSMENT YEAR WITHOUT ALTERING OR REOPENING THE ASSESSMENT PROCEEDINGS IN WHICH THE ELIGIBILITY TO CLAIM THE DEDUCTION HAS BEEN ESTABLISHED. IN CASES WHERE DEDUCTION IS GRANTED UNDER SECTION 80 - I OF THE ACT, THE APPLICABILITY OF THE SECTION IS DETERMINED IN THE YEAR IN WHICH THE NEW INDUSTRIAL UNDE RTAKING IS ESTABLISHED. THE QUALIFICATION AS TO WHETHER ANY INDUSTRIAL UNDERTAKING FULFILS THE CONDITION AS SPECIFIED UNDER SECTION 80 - I OF THE ACT HAS TO BE DETERMINED IN THE YEAR IN WHICH THE NEW INDUSTRIAL UNDERTAKING IS ESTABLISHED. ALTHOUGH THE DED UCTION UNDER SECTION 80 - I OF THE ACT IS AVAILABLE FOR THE ASSESSMENT YEARS SUCCEEDING THE INITIAL ASSESSMENT YEAR, THE CONDITIONS FOR AVAILING OF THE BENEFIT ARE INEXTRICABLY LINKED WITH THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH THE NEW UNDERTAKING WAS FORMED. IN SUCH CIRCUMSTANCES, IT WOULD NOT BE POSSIBLE FOR AN ASSESSING OFFICER TO REJECT THE CLAIM OF AN ASSESSEE FOR DEDUCTION UNDER SECTION 80 - I OF THE ACT ON THE GROUND THAT THE INDUSTRIAL UNDERTAKING IN RESPECT OF WHICH DEDUCTION IS CLAIMED DID NOT FULFIL THE CONDITIONS AS SPECIFIED IN SECTION 80 - I(2) OF THE ACT, WITHOUT UNDERMINING THE BASIS ON WHICH THE DEDUCTION WAS GRANTED TO THE ASSESSEE IN THE INITIAL ASSESSMENT 8 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 YEAR. THIS, IN OUR VIEW, WOULD NOT BE PERMISSIBLE UNLESS THE PAST ASSESSMENTS ARE ALSO DISTURBED. THE ASSESSING OFFICERS OVER A PERIOD OF THREE YEARS BEING ASSESSMENT YEARS 1988 - 89, 1989 - 1990 AND 1990 - 1991 HAVE CONSISTENTLY ACCEPTED THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80 - I OF THE ACT AND IT WOU LD NOT BE OPEN FOR THE ASSESSING OFFICER TO DENY THE DEDUCTION UNDER SECTION 80 - I OF THE ACT ON THE GROUND OF NON - FULFILMENT OF THE CONDITIONS UNDER SECTION 80 - I(2) OF THE ACT WITHOUT DISTURBING THE ASSESSMENT FOR THE ASSESSMENT YEARS RELEVANT TO THE PR EVIOUS YEAR IN WHICH THE UNITS NOS. 2 AND 3 WERE ESTABLISHED. THIS VIEW HAS ALSO BEEN ACCEPTED BY A DIVISION BENCH OF THE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. [1980] 123 ITR 669 (GUJ). IN THAT CASE, THE GUJAR AT HIGH COURT HELD THAT WHERE RELIEF OF A TAX HOLIDAY HAD BEEN GRANTED TO AN ASSESSEE IN AN INITIAL ASSESSMENT YEAR IN WHICH THE CONDITIONS FOR GRANT OF TAX HOLIDAY HAD TO BE EXAMINED, DENIAL OF RELIEF IN THE SUBSEQUENT YEARS WOULD NOT BE PERMISSIBLE W ITHOUT DISTURBING THE ASSESSMENT IN THE INITIAL ASSESSMENT YEAR. THE RELEVANT EXTRACT FROM THE DECISION OF THE GUJARAT HIGH COURT IN SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. [1980] 123 ITR 669 (GUJ) IS QUOTED BELOW (PAGE 675) : 'THE NEXT QUESTION TO WHICH THE TRIBUNAL ADDRESSED ITSELF, AND IN OUR OPINION RIGHTLY, WAS WHETHER THE INCOME - TAX OFFICER WAS JUSTIFIED IN REFUSING TO CONTINUE THE RELIEF OF TAX HOLIDAY GRANTED TO THE ASSESSEE - COMPANY FOR THE ASSESSMENT YEAR 1968 - 69, IN THE ASSESSMENT YEAR UNDER REFERENCE, THAT IS, 1969 - 70, WITHOUT DISTURBING THE RELIEF GRANTED FOR THE INITIAL YEAR. IT SHOULD BE STATED THAT THERE IS NO PROVISION IN THE SCHEME OF SECTION 80J SIMILAR TO THE ONE WHICH WE FIND IN THE CASE OF DEVELOPMENT REBATE WHICH COULD B E WITHDRAWN IN SUBSEQUENT YEARS FOR BREACH OF CERTAIN CONDITIONS. NO DOUBT, THE RELIEF OF TAX HOLIDAY UNDER SECTION 80J CAN BE WITHHELD OR DISCONTINUED PROVIDED THE RELIEF GRANTED IN THE INITIAL YEAR OF ASSESSMENT IS DISTURBED OR CHANGED ON VALID GROUN DS. BUT WITHOUT DISTURBING THE RELIEF GRANTED IN THE INITIAL YEAR, THE INCOME - TAX OFFICER CANNOT EXAMINE THE QUESTION AGAIN AND DECIDE TO WITHHOLD OR WITHDRAW THE RELIEF WHICH HAS BEEN ALREADY ONCE GRANTED.' THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF PAUL BROTHERS [1995] 216 ITR 548 (BOM) HAS ALSO ADOPTED THE VIEW EXPRESSED BY THE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. [1980] 123 ITR 669 (GUJ). 7 . IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE C ASE AND PROPOSITION OF LAW IN RESPECT TO CONSISTENCY, AS DISCUSSED ABOVE, WE CONFIRM THE ORDER OF CIT(A) ALLOWING THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT. THIS ISSUE OF REVENUE S APPEAL IS DISMISSED. 8 . IN THE RESULT, APPEAL OF REVENU E IS DISMISSED . 9 . ORDER IS PRONOUNCED IN THE OPEN COURT ON 06 - 0 2 - 2015 . SD/ - SD/ - , , ( SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 06TH FEBRUARY , 201 5 9 ITA NO. 1326 /K/201 2 SHRI ANANDAMOY DAS, AY 2009 - 10 DKP, PS COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ACIT, CIRCLE - 53, KOLKATA 2 RESPONDENT SHRI ANANDAMOY DAS, PROP. M/S. INVOTECH ENGINEERS, 58, PALLY SHREE, KOLKATA - 700092 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, ASSTT. REGISTRAR .