CCL Products (india) Limited., Hyderabad V. Asst. Commissioner of Income Tax, Circle-1(2), Hyderabad

ITA 1357/HYD/2013

• Counselvise Citation: 135722514 RSA 2013
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: VSRK HANUMAN
• Section: 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NOS. 1357, 1358 & 1359/HYD/2013 ASSESSMENT YEAR : 2008-09, 2009-10 & 2010-11 CCL PRODUCTS (INDIA) LTD., APPELLANT HYDERABAD. (PAN AAAC9552G) VS. ASST. COMMISSIONER OF INCOME-TAX, RESPONDEN T CIRCLE 1(2), HYDERABAD. APPELLANT BY : SHRI VSRK HANUMAN RESPONDENT BY : SHRI P. SOMA SEKHAR REDDY DATE OF HEARING : 16/01/2014 DATE OF PRONOUNCEMENT : 07/02/2014 ORDER PER SAKTIJIT DEY, J.M.: THESE THREE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF CIT(A)-II, HYDERABAD DATED 12/08/2013 FOR THE ASSESSMENT YEARS 2008-09, 2009- 10 AND 2010-11. AS IDENTICAL ISSUE IS INVOLVED IN T HESE THREE APPEALS, THEY WERE CLUBBED AND HEARD TOGETHER AND, THEREFORE A COMMON ORDER IS PASSED FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL, WHICH ARE COMMON IN ALL THE THREE APPEALS: 1. THAT THE CIT(A) ERRED IN CONCLUDING 10 YEAR PERIOD MENTIONED IN SECTION 10B (1) WILL BE RECKONED FROM THE ASSESSMENT YEAR 1995-96 AND NOT FROM ASSESSMENT YEA R 2000- 01 AND THAT ON A TRUE CONSTRUCTION OF SECTION 10B O F THE ACT, SECTION IS APPLICABLE TO AN 100% EOU AND HENCE THE EARLIER ITA NOS. 1357, 1358 & 1359/HYD/2013 CCL PRODUCTS (INDIA) LTD. 2 PERIOD OF ITS OPERATION AS AN ORDINARY UNIT/NON-EOU IS NOT RELEVANT FOR APPLYING/COMPUTING 10 YEAR PERIOD OF E XEMPTION. 2. THAT THE CIT(A) ERRED IN NOT ENTERTAINING THE GR OUND THAT THE INVESTMENTS IN NEW PLANT AND MACHINERY MADE AFTER 0 1/04/2001 CONSTITUTED AN INDEPENDENT NEW INDUSTRIAL UNDERTAKI NG IN ITSELF AND HENCE ELIGIBLE FOR DEDUCTION U/S 10B. 3. THE CIT(A) ERRED IN NOT APPRECIATING THE FACT T HAT TWO (2) NEW INDUSTRIAL UNDERTAKINGS HAVE BEEN FORMED IN THE YEAR 2001- 02 AND 2004-05, WHICH ARE DISTINCT FROM THE EXISTIN G UNIT AND ARE CAPABLE OF BEING OPERATED INDEPENDENTLY AND ACC ORDINGLY AS PER SECTION 10B THE BENEFIT HAS TO BE SEPARATELY EX TENDED TO EACH SEPARATE UNDERTAKING. 3. GROUND NOS. 1, 2 & 3 RELATE TO THE ISSUE OF DED UCTION CLAIMED U/S 10B OF THE ACT. 4. AT THE VERY OUTSET, THE LEARNED AR FAIRLY SUBMIT TED THAT THE MAIN ISSUE OF CLAIM OF DEDUCTION U/S 10B ALONG WITH OTHE R RELATED ISSUES AS RAISED IN THIS GROUND HAVE BEEN DECIDED AGAINST THE ASSESSEE BY THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASES RELATING TO AY 2006-07 VIDE ORDER DATED 14/12/2011 IN ITA NO. 4 87/HYD/2011 AND ALSO TO AY 2007-08 VIDE ORDER DATED 13/09/2013 IN ITA NO. 840/HYD/2013. THE LEARNED AR NEVERTHELESS SUBMITTED BEFORE US THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S 10B IN CA SE OF NEW UNITS AS IT HAS FILED SEPARATE AUDITED FINANCIAL STATEMENT I N RESPECT OF EACH UNIT. 5. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUPP ORTING THE ORDER OF THE CIT(A) SUBMITTED THAT AS THE ISSUE HAS BEEN SQUARELY COVERED BY THE DECISION OF ITAT IN ASSESSEES OWN C ASES FOR AY 2006-07 AND 2007-08 BOTH ON THE ISSUE OF CLAIM OF D EDUCTION U/S 10B AS WELL AS WITH REGARD TO AVAILABILITY OF 10B DEDUC TION IN CASE OF EXPANSION MADE WHICH HAS BEEN CLAIMED TO BE NEW UNI T, HENCE, THE ORDER OF CIT(A) SHOULD BE UPHELD. 6. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE RE VENUE AUTHORITIES. ITA NOS. 1357, 1358 & 1359/HYD/2013 CCL PRODUCTS (INDIA) LTD. 3 AS CAN BE SEEN FROM THE ASSESSMENT ORDER, THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS REJECTED BY THE AO ON THE GROUND THAT A PERIOD OF 10 YEARS SHOULD BE RECKONED FROM THE ASSESSMENT YEA R 1996-97 WHEREIN COMMENCING OF MANUFACTURE/PRODUCTION STARTE D. THE CIT(A) ALSO SUSTAINED THE FINDING OF THE AO BY FOLLOWING T HE ORDER OF THE ITAT IN ITA NO. 487/HYD/2011 RELATING TO THE ASSESSMENT YEAR 2006-07 IN ASSESSEES OWN CASE. ON A PERUSAL OF THE ORDER DATE D 13/09/2013 IN ITA NO. 840/HYD/2013 OF THE COORDINATE BENCH RELATI NG TO THE AY 2007-08, WE FIND THAT COORDINATE BENCH HAS DECIDED THE ISSUE FOLLOWING ITS DECISION IN AY 2006-07 IN ASSESSEES OWN CASE. THE COORDINATE BENCH IN AY 2007-08, HELD IN THE FOLLOW ING MANNER: 6. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND PERUSED MATERIALS ON RECORD AS WELL AS THE ORDERS O F THE REVENUE AUTHORITIES. AS CAN BE SEEN FROM THE ASSESS MENT ORDER, THE CLAIM OF DEDUCTION U/S 10B OF THE ACT WAS REJEC TED BY THE AO ON THE GROUND THAT A PERIOD OF 10 YEARS SHOULD B E RECKONED FROM THE ASSESSMENT YEAR 1996-97 WHEREIN COMMENCING OF MANUFACTURE/PRODUCTION STARTED. THE CIT(A) ALSO SUS TAINED THE FINDING OF THE AO BY FOLLOWING THE ORDER OF THE ITA T IN ITA NO. 487/HYD/2011 RELATING TO THE ASSESSMENT YEAR 2006-0 7 IN ASSESSEES OWN CASE. ON A PERUSAL OF THE ORDER DATE D 14/12/2011 IN ITA NO. 487/HYD/2011 OF THE COORDINAT E BENCH RELATING TO THE AY 2006-07, WE FIND THAT COORDINATE BENCH WHILE CONSIDERING IDENTICAL ISSUE HELD IN THE FOLLOWING M ANNER: 21. ON MERIT, THE FIRST MOOT QUESTION ARISING OUT OF THIS APPEAL IS WHETHER THE PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS IS TO BE RECKONED FROM THE DATE OF COMMENCEMENT OF THE MANUFACTURING AS A DTA UNIT OR FROM THE DATE OF COMMENCEMENT OF MANUFACTURE AS A EOU UNIT. WE FIND THAT THAT CBDT IN ITS CIRCULAR NUMBER1 DATED 6- 1-2005 HAS CL EARLY CLARIFIED THAT IN CASE OF A DTA UNIT, WHICH CONVERT S INTO AN EOU UNIT, THE UNIT CAN AVAIL THE DEDUCTION UNDER SECTIO N 10B OF THE ACT FROM THE YEAR IN WHICH IT RECEIVES THE EOU STAT US APPROVAL. GIVEN THE FACT THAT THE SAID CBDT CIRCULAR RECOGNIZ E THE CONVERSION, IT SHOULD BE POSSIBLE TO CLAIM AND INCO ME TAX EXEMPTION POST CONVERSION. HOWEVER, GIVEN THE PROVI SIONS OF THE ACT UNDER CIRCULAR ANY UNIT WHICH HAS BEEN SET UP BEFORE APRIL 1 1999 WOULD NOT BE ELIGIBLE FOR THE SAME TAX DEDUCTION, IRRESPECTIVE OF WHEN THE CONVERSION HAPPENS. HENCE IT IS VERY CLEAR THAT THE INTENTION OF THE CIRCULAR IS TO RECK ON THE TEN YEARS EXEMPTION PERIOD WHICH STARTS FROM THE YEAR OF COMM ERCIAL PRODUCTION IRRESPECTIVE OF WHEN THE CONVERSION HAPP ENS. WHEN THERE IS AN AMBIGUITY IN THE INCENTIVE PROVISION, I T SHOULD BE ITA NOS. 1357, 1358 & 1359/HYD/2013 CCL PRODUCTS (INDIA) LTD. 4 LIBERALLY CONSTRUED BUT AT THE SAME TIME WHEN THERE IS NO AMBIGUITY THERE IS NO QUESTION OF LIBERAL CONSTRUCT ION. SINCE THE AFORESAID CIRCULAR IS VERY CLEAR AND AMBIGUITY, IT IS TO BE FOLLOWED PLAINLY. WE ALSO DISAGREE WITH THE ARGUMEN TS OF LEARNED COUNSEL FOR THE ASSESSEE THAT THE AFORESAI D CIRCULAR IS NOT SPEAKING ONE AND DOES NOT CONTAIN ANY REASON WH ATSOEVER AND THE SAME IS NOT BINDING ON THE ASSESSEE. IT IS PERTINENT TO NOTE THAT ALL THE CIRCULARS ISSUED BY THE CBDT ARE BINDING ON THE ASSESSING OFFICER AND ALSO THE JUDGMENTS RELIED ON BY THE DEPARTMENTAL REPRESENTATIVE ALSO SUPPORTS OUR VIEW. THE AFORESAID CIRCULAR IS VERY CLEAR AND THE INTENTION OF THE CIRCULAR IS THAT THE RECKONING OF THE TEN YEAR PERIOD STARTS FROM THE DATE OF COMMERCIAL PRODUCTION EITHER AS A DTA UNIT OR AS AN EOU UNIT. THE TAX BENEFIT WOULD BE AVAILABLE FOR THE RE MAINING PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS BEGINNIN G FROM THE PERIOD IT STARTED MANUFACTURING IN THE DOMESTIC TAR IFF AREA. THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE T HAT SINCE THE ASSESSEE HAS AVAILED DEDUCTION UNDER SECTION 10 B OF THE ACT FOR ONLY ONE ASSESSMENT YEAR 2000-01, THE BENEF IT IS AVAILABLE FOR BALANCE 9 YEARS IS NOT CORRECT AS WE FIND THAT, ON PLAIN READING OF THE AFORESAID CIRCULAR, THE EXEMPT ION PERIOD ENDS AT THE TENTH YEAR OF ITS COMMISSIONING WHETHER AS DTA UNIT OR EOU UNIT. WE ALSO FIND THAT THE AFORESAID CIRCUL AR, CERTAIN ILLUSTRATIONS WERE GIVEN TO CLARIFY THE INTENTION O F THE CIRCULAR AND EVEN FROM SUCH ILLUSTRATIONS IT IS CLEAR THAT T HE TEN YEAR PERIOD IS TO BE RECKONED FROM THE DATE OF ITS ORIG INAL COMMERCIAL PRODUCTION. HENCE, THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE HEREBY REJECTED. 22. NOW, WE TURN INTO THE ISSUE WHETHER THE ASSESSE E CAN MAKE A FRESH CLAIM DURING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. IT IS WELL SETTLED LAW THAT THE ASSESSEE CANNO T MAKE ANY FRESH CLAIM DURING THE PROCEEDINGS UNDER SECTION 26 3 OF THE ACT, BECAUSE THE PROCEEDINGS UNDER SECTION 263 OF THE AC T ARE INITIATED FOR THE BENEFIT OF REVENUE. HENCE, THE C IT WAS RIGHT IN REJECTING THE FRESH CLAIM MADE BY THE ASSESSEE THAT IT HAS GONE FOR MASSIVE EXPANSION AND HENCE, THE SAME SHOULD BE CONSIDERED AS SETTING UP OF NEW UNIT WHICH WOULD BE ENTITLED FOR DEDUCTION UNDER SECTION 10B OF THE ACT. EVEN OTHERW ISE, ON EXPANSION, SUCH BENEFIT CANNOT BE CLAIMED WHATEVER MAY BE THE ADDITION TO PLANT AND MACHINERY OR ENHANCEMENT OF THE PRODUCTION CAPACITY. THE CIT ALSO CATEGORICALLY FOU ND THAT THE ASSESSEE HAD ONLY SINGLE UNIT ON VERIFICATION OF TH E RECORDS. IT IS ARGUMENTS OF THE LEARNED COUNSEL FOR THE ASSESSEE T HAT A NEW UNIT HAS COME INTO EXISTENCE ON EXPANSION ON ACCOUN T OF HUGE INVESTMENT IN PLANT AND MACHINERY AND INCREASE IN P RODUCTION CAPACITY AND HENCE, THE BENEFIT OF DEDUCTION UNDER SECTION 10B OF THE ACT IS TO BE GIVEN FOR EXPANDED UNIT, IS NOT CORRECT. THE INTENSION OF LEGISLATION CLEARLY STATES THAT THE BE NEFIT IS ADMISSIBLE ONLY TO A NEW UNDERTAKING AND NOT FOR TH E EXPANSION. ITA NOS. 1357, 1358 & 1359/HYD/2013 CCL PRODUCTS (INDIA) LTD. 5 HENCE, EVEN ON THIS GROUND, THE ASSESSEE FAILS. AFT ER CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, INOUR CONSIDERED OPINION, THE ASSESSING OFFICER ALL OWED THE DEDUCTION UNDER SECTION 10B OF THE ACT WRONGLY AND HENCE, THE CIT RIGHTLY ASSUMED HIS JURISDICTIONS UNDER SECTION 263 OF THE ACT IN DENYING THE DEDUCTION UNDER SECTION 10B OF T HE ACT. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT. 7. ON PERUSAL OF THE AFORESAID EXTRACTED PARAS FROM THE ORDER PASSED BY THE COORDINATE BENCH, IT BECOMES CL EAR THAT NOT ONLY THE ITAT HAS HELD THAT 10 YEAR PERIOD OF DEDUC TION U/S 10B SHOULD COMMENCE FROM AY 1996-97 DURING WHICH THE AS SESSEE STARTED ITS PRODUCTION/MANUFACTURE, THE TRIBUNAL AL SO CATEGORICALLY HELD THAT EXTENSION OF EXISTING UNIT CANNOT BE TREATED AS A NEW UNIT. THE AFORESAID DECISION OF TH E COORDINATE BENCH BEING BINDING ON US, WE RESPECTFULLY FOLLOW T HE SAME AND HOLD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 10B OF THE ACT. THE ORDER OF THE CIT(A) IS ACCORDINGLY UPH ELD AND GROUNDS RAISED ON THIS ISSUE ARE DISMISSED. 7. AS THE ISSUE IN DISPUTE IN ALL THE APPEALS UNDER CONSIDERATION ARE MATERIALLY IDENTICAL TO THAT OF THE CASES DECID ED BY THE COORDINATE BENCH OF TRIBUNAL, HYDERABAD IN ASSESSEES OWN CASE S FOR AY 2006- 07 & 2007-08, RESPECTFULLY FOLLOWING THE DECISION O F THE TRIBUNAL IN THOSE YEARS, WE HOLD THAT THE ASSESSEE IS NOT ENTIT LED TO DEDUCTION U/S 10B OF THE ACT AND THE ORDER OF THE CIT(A) IS ACCOR DINGLY UPHELD IN ALL THE THREE YEARS UNDER CONSIDERATION AND THE GROUNDS RAISED ARE DISMISSED. 8. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 07/02/2014. SD/- SD/- (B. RAMAKOTAIAH ) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMB ER HYDERABAD, DATED: 7 TH FEBRUARY, 2014 KV ITA NOS. 1357, 1358 & 1359/HYD/2013 CCL PRODUCTS (INDIA) LTD. 6 COPY TO:- 1) CCL PRODUCTS (INDIA) LTD., 7-1-24/2D, GREENDALE, AMEERPET, HYDERABAD 500 016. 2) ASST. CIT, CIRCLE 1(2), HYDERABAD 3) CIT(A)-II, HYDERABAD. 4) CIT-I, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T ., HYDERABAD.