Baroda Precimould Pvt. Ltd., Baroda V. The ACIT., Circle-1, Baroda

ITA 1342/AHD/2005

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9713 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 09-09-2010
• Assessment Year: 1999-2000
• Appeal Filed On: 06-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K M MAHESH
• Assessee Lawyers: S N SOPARKAR
• Section: 80IB; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD C BENCH (BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER AND N.S. SAINI , ACCOUNTANT MEMBER) ITA.NO.1342/AHD/2005 [ASSTT.YEAR : 1999-2000] BARODA PRECIMOULD PVT. LTD. B/15/16, RAMIN PARK NR.TVS SHOWROOM OLD PADRA ROAD, BARODA. VS. ACIT, CIR.1 BARODA. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N.SOPARKAR REVENUE BY : SHRI K.M. MAHESH O R D E R MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER : THIS APPEAL IS BY THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF T HE COMMISSIONER OF INCOME-TAX (APPEALS)-I, BARODA DATED 24.3.2005. TH E ONLY ISSUE AS PER THE GROUND NO.1 READS AS UNDER: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS HAS CONFIRMED THE DISALLOWANCE OF DEDUCTION AMOUNTING TO RS.7,29, 876/- CLAIMED UNDER SECTION 80IA OF THE INCOME TAX ACT, 1961 THER EBY UPHOLDING THE FLIMSY CONTENTION OF THE ASSESSING OFFICER THAT THE APPELLANT COULD NOT PRODUCE THE FINAL CERTIFICATE OF REGISTRA TION AS AN SSI UNIT. 2. THE IMPUGNED ORDER OF THE AO IS AN ORDER GIVING EFFECT TO THE CIT(A)S ORDER WHEREIN THE QUESTION OF ALLOWABILITY OF DEDUC TION UNDER SECTION 80IA WAS RESTORED BACK WITH THE DIRECTION TO FURNISH THE DETAILS IN RESPECT OF ASSESSEES UNDERTAKING WHETHER FALL WITHIN THE AMBI T OF SMALL SCALE INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF DEDUCTION UNDER SECT ION 80IA. IN COMPLIANCE OF THE SHOW CAUSE NOTICE, IT WAS EXPLAINED THAT THE ASSESSEE IS ENGAGED IN THE MOULDING OF TOOTH BRUSH HANDLES. IT WAS EXPLAINED THAT THE SAID UNIT HAD FALLEN ITA.NO.1342/AHD/2005 -2- UNDER THE GENERAL CATEGORY OF SSI AS DECLARED BY TH E GOVERNMENT OF GUJARAT. HOWEVER, IT WAS EXPLAINED THAT THE INVESTMENT AS ON 31-3-1998 WAS LESS THAN RS.3 CRORES AS PRESCRIBED UNDER SECTION 11B OF THE INDUSTRIES (D&R) ACT, 1951 HENCE ELIGIBLE FOR THE DEDUCTION. HOWEVER, THE AO WAS NOT CONVINCED PRIMARILY ON THE GROUND THAT THE APPELLANT HAD FAIL ED TO PRODUCE REGISTRATION CERTIFICATE OF THE DISTRICT INDUSTRIES CENTRE. ACC ORDING TO THE AO ALL THE INDUSTRIES WERE REQUIRED TO GET THEMSELVES REGISTER ED UNDER THE SAID ACT. BY REFERRING CERTAIN SECTIONS OF INDUSTRIES ACT, THE A O HAS HELD THAT SINCE THE REGISTRATION CERTIFICATE AS PRESCRIBED THEREIN WAS NOT PRODUCED, HENCE NOT ENTITLED FOR CLAIM OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE SAME ARGUMENTS WERE REITERATED AND INFORMED THAT EA RLIER SUCH DEDUCTION WAS DISALLOWED ON THE GROUND THAT THE APPELLANT DID NOT MANUFACTURE ANY ARTICLE OR THING. HOWEVER, AT THAT TIME, THE LEARNED CIT(A) H AS HELD THAT THE MOULDING OF TOOTH BRUSH HANDLES WAS WELL WITHIN THE MEANING OF MANUFACTURING ACTIVITIES. HOWEVER, AT THAT TIME THE CIT(A) HAS DIRECTED TO VE RIFY THE STATUS OF THE ASSESSEE WHETHER AN SSI UNIT OR NOT FOR THE PURPOSE OF CLAIM UNDER SECTION 80IA. IT HAS ALSO BEEN INFORMED THAT THE ASSESSEE GOT REGISTERED AS AN SSI UNIT WITH THE DIC VIDE CERTIFICATE NO.041812225 DATED 4- 8-1995 AND ALLEGED THAT THE SAID CERTIFICATE WAS FURNISHED BEFORE THE AO. IT W AS ALSO ALLEGED THAT THE AO HAS NOT MENTIONED ANYTHING ABOUT THE SAID CERTIFICA TE. IT HAS ALSO BEEN CLARIFIED THAT THE ASSESSEE HAD APPLIED FOR REGISTRATION AS A N SSI UNIT, BUT ISSUED ONLY A PROVISIONAL CERTIFICATE FOR REGISTRATION. ON AN EN QUIRY, THE DIC OFFICE HAS STATED THAT THE SAID PROVISIONAL CERTIFICATE MAY BE TREATE D AS FINAL CERTIFICATE OF REGISTRATION. IT HAS ALSO BEEN INFORMED THAT THE P LANT AND MACHINERY FOR THE INVESTMENT PURPOSE DID NOT EXCEED RS.3 CRORES AS PR ESCRIBED FOR QUALIFICATION OF AN SSI. IT WAS ALSO INFORMED THAT BEING AN SSI UNI T, THE ASSESSEE WAS GRANTED EXEMPTION FROM EXCISE DUTY. THE LEARNED CIT(A) WAS NOT CONVINCED AND FINALLY HELD THAT THE RELEVANT CERTIFICATE FROM DIC WAS NOT FURNISHED, THEREFORE, THE APPELLANT WAS NOT AN SSI UNIT, HENCE, THE AO HAS RI GHTLY REJECTED THE CLAIM. ITA.NO.1342/AHD/2005 -3- 4. NOW BEFORE US, AN ORDER OF THE RESPECTIVE CO-ORD INATE BENCH C OF THE ITAT, AHMEDABAD IN THE CASE OF KHS MACHINERY PVT. L TD. VS. ITO, ITA NO.2278/AHD/2006 DATED 19-12-2008 IS PLACED ON RECO RD WHEREIN VIDE PARA-9, AN OBSERVATION HAS BEEN MADE THAT THE REGISTRATION IS NOT A PRE-CONDITION TO AVAIL THE BENEFIT OF DEDUCTION UNDER SECTION 80IB O F THE ACT. THE RELEVANT PORTION IS REPRODUCED BELOW: 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, WE MAY ADVERT TO THE CONTENTI ON OF THE LD. DR THAT REGISTRATION OF AN INDUSTRIAL UNDERTAKING AS AN SSI IS NECESSARY FOR CONFERRING THE BENEFIT U/S.80IB OF THE ACT. WE DO NOT FIND ANY SUCH REQUIREMENT I THE SECTION 80IB OF THE ACT NOR THERE IS ANY FINDING ON THIS ASPECT IN THE IMPUGNED ORDER. THE REGISTRATION OF AN INDUSTRIAL UNDERTAKING AS AN SSI MAY ENTAIL CERTAIN BENEFITS U NDER THE INDUSTRIAL AND LABOUR LAWS. THERE IS NO SUCH PRECONDITION OF REGISTRATION TO AVAIL THE BENEFIT OF DEDUCTION U/S.80IB OF THE ACT. THER EFORE, THE CONTENTION OF THE LD. DR BEING DEVOID OF MERITS IS REJECTED. THE ONLY DISPUTE BEFORE US IS AS TO WHETHER THE TAXPAYER IS A SMALL SCALE INDU STRIAL UNDERTAKING WITHIN THE MEANING OF PROVISO TO SEC. 80IB(2)(III) READ WITH CLAUSE (G) OF SEC.80IB(14) OF THE ACT. THE RELEVANT CLAUSE (G) D EFINES SMALL SCALE INDUSTRIAL UNDERTAKING (SSI) IN THE FOLLOWING TERMS : XXXXX IN ADDITION TO THE ABOVE DECISION OF THE RESPECTIVE CO-ORDINATE BENCH, WE HAVE ALSO BEEN INFORMED THAT IN ASSESSEES OWN CASE FOR THE SAME ASSESSMENT YEAR, THE REVENUE HAS CHALLENGED CERTAIN FINDINGS OF THE FIRST APPELLATE AUTHORITY PASSED IN THE FIRST ROUND OF THE APPEAL, AS REFERRE D ABOVE, THROUGH WHICH THE MATTER WAS REMANDED BACK TO THE AO WITH CERTAIN DIR ECTIONS. HOWEVER, THE TRIBUNAL HAS CONFIRMED ALL THESE FINDINGS IN APPEAL IN ITA NO.3356/AHD/2003 (A.Y.1999-2000) ORDER DATED 10-10-2006 (BENCH B, AHMEDABAD). THE RELEVANT PORTION IS REPRODUCED BELOW: LEARNED COUNSEL FOR THE ASSESSEE, IN REPLY CONTEND S THAT ASSESSEE IS MANUFACTURER OF TOOTH BRUSH HANDLES FROM PLASTIC GR ANULES, WHICH IS RAW-MATERIAL. THESE GRANULES ARE PUT TO MANUFACTUR ING PROCESS AND VARIOUS TYPES OF HANDLES MANUFACTURED WHICH IN TURN ARE SOLD TO VARIOUS ITA.NO.1342/AHD/2005 -4- TOOTH BRUSH MANUFACTURING UNIT WHO PUT IN DIFFERENT TYPE OF BRISTLES TO MAKE TOOTH BRUSHES. IT WAS CONTENDED THAT SIMILAR ISSUE AROSE IN THE CASE OF SISTER CONCERN OF THE ASSESSEE VIZ. RUBY MO ULDERS PVT. LTD. CIT(A) HELD THIS TO BE MANUFACTURING AND ALLOWED CL AIM OF DEDUCTION UNDER SECTION 80IA. WHILE DECIDING THIS APPEAL, CI T(A) HAS RELIED ON THE CASE OF RUBY MOULDERS PVT. LTD. AGAINST WHICH D EPARTMENT HAS NOT FILED ANY APPEAL. LEARNED DR COULD NOT CONTROVERT ARGUMENTS OF LEARN ED COUNSEL THAT IN THE CASE OF RUBY MOULDERS PVT.LTD. DEPARTMENT HAS N OT FILED ANY APPEAL. 3. IN THE GIVEN FACTS AND CIRCUMSTANCES, IT EMERGES FROM RECORD THAT DEPARTMENT HAS ACCEPTED FINDINGS OF CIT(A) IN SISTE R CONCERN CASE HOLDING SIMILAR ACTIVITY I.E. MANUFACTURE OF TOOTH BRUSH HANDLES FROM GRANULES AS MANUFACTURING ACTIVITY, ON WHICH CLAIM UNDER SECTION 80IA HAS BEEN ALLOWED. IN VIEW THEREOF, WE FIND NO INFIR MITY IN THE ORDER OF CIT(A) ALLOWING SIMILAR CLAIM. THOUGH FROM THE SIDE OF THE REVENUE, THE LEARNED DR HAS TRIED TO EXPLAIN THAT AS PER THE SAID SCHEME, IT WAS NECESSARY TO OBTAIN REGISTRATION BUT WE ARE NOT EXAMINING THE CLAIM OF REGISTRATION OF SSI UNIT AS PER THE GOVT. OF GUJARAT, INDUSTRIES AND MINES DEPARTMENT. RATHER, WE ARE EX AMINING THE PROVISIO OF SECTION 80IA WHEREIN VIDE CLAUSE (F) OF SUB-SECTION 12 OF SECTION 80IA HAS DEFINED THE DEFINITION OF SMALL SCALE UNDERTAKING AS FOLLOWS: (F) SMALL-SCALE INDUSTRIAL UNDERTAKING MEANS AN I NDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PRE VIOUS YEAR, REGARDED AS A SMALL-SCALE INDUSTRIAL UNDERTAKING UN DER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951). 5. IF WE CAREFULLY EXAMINE THIS SUB-CLAUSE, AS EMPH ASIZED BY THE LEARNED AR, THE TERM INDUSTRIAL UNDERTAKING IS TO BE REGA RDED AS AN SSI UNDER SECTION 11B OF THE INDUSTRIAL (DEVELOPMENT AND REGULATION) ACT. THE QUALIFYING WORD IS NOT REGISTERED, BUT THE WORD IS REGARDED. T HEREFORE, THE LEARNED AR VEHEMENTLY ARGUED THAT IT WAS AN ADMITTED FACT THAT THE DIC HAS REGARDED THIS UNDERTAKING AS A SMALL INDUSTRIAL UNIT BY ISSUING A PROVISIONAL CERTIFICATE, BUT SOMEHOW THE FINAL CERTIFICATE OF REGISTRATION COULD NOT BE ISSUED BY THE DEPARTMENT, NEVERTHELESS, THE ASSESSEE HAD ALWAYS B EEN REGARDED AS AN SSI UNIT ITA.NO.1342/AHD/2005 -5- BY ALL THE DEPARTMENTS, INCLUDING EXCISE DEPARTMENT . WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED AR AND CONSIDERING THE VIE W ALREADY TAKEN BY THE RESPECTIVE CO-ORDINATE BENCH, AS STATED ABOVE, WE H EREBY HOLD THAT THE ASSESSEE MUST NOT BE DENIED THE CLAIM OF DEDUCTION UNDER SEC TION 80IA MERELY ON THIS TECHNICAL GROUND. WE HEREBY DIRECT THE AO TO ALLOW THE CLAIM AS PER THE LAW. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 17 TH SEPTEMBER, 2010. SD/- SD/- (N.S. SAINI ) ACCOUNTANT MEMBER (MUKUL KUMAR SHRAWAT) JUDICIAL MEMBER PLACE : AHMEDABAD DATE : 17-09-2010 COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD