The Dy. Commissioner of Income-tax, Phagwara V. M/s. Friends Casting Pvt. Ltd, Phagwara

ITA 14/ASR/2013

• Counselvise Citation: 1420914 RSA 2013
• Duration Of Justice: 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 04-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHAVEER SINGH
• Assessee Lawyers: J S BHASIN
• Keywords: Wrong claim; Revised return
• Section: 143(3); 142(1); 80HHC; 80IB; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 PAN: AAACF2317G DEPUTY COMMISSIONER OF VS. M/S FRIENDS CASTI NG PVT. LTD. INCOME TAX, PHAGWARA CIRCLE, NURMAHAL ROAD, PHILLAUR, PHAGWARA PHAGWARA (APPELLANT) (RESPONDENT) DEPARTMENT BY: SH. MAHAVEER SINGH, SR. DR ASSESSEE BY: SH. J.S. BHASIN, ADVOCATE DATE OF HEARING: 25.07.2013 DATE OF PRONOUNCEMENT: 01.08.2013 ORDER PER BENCH 1) THE REVENUE HAS FILED THE PRESENT APPEAL A GAINST THE IMPUGNED ORDER DATED 15.10.2012 PASSED BY LEARNED CIT(A), JA LANDHAR, PERTAINING TO THE ASSESSMENT YEAR 2002-03 ON THE FOLLOWING GRO UNDS: I. DELETING ADDITION OF RS. 9,35,550/- MADE BY THE ASS ESSING OFFICER BY HOLDING THE DEDUCTION U/S 80I OF THE INCOME TAX, 19 61 BEYOND THE LIMITATIONS SPECIFIED IN THE RELEVANT SECTION OF IN COME TAX ACT. II. LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 80IB OF THE INCOME TAX ACT WITHOUT APPRECIATING THE FACT THAT T HE ASSESSEE IN ITS RETURN OF INCOME HAS CLAIMED DEDUCTIONS U/S 80I OF INCOME TAX ACT AND FAILED TO MAKE A REVISED CLAIM BY WAY OF FILING A REVISED RETURN. 2 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 DEDUCTION U/S 80I WAS ALLOWABLE FOR THE INITIAL ASS ESSMENT YEAR IN WHICH THE ASSESSEE BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS AND THEREAFTER FOR EACH OF THE SEVEN ASSESSMENT YEA RS IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR, WHICH HAS A LREADY BEEN EXPIRED PRIOR TO THE ASSESSMENT YEAR 2002-03. III. IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) BE SET-ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED. IV. THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AMEND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL AND DISPOSED OF. 2) THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME DECLARING A N INCOME OF RS. 11,09,370/- FOR THE ASSESSMENT YEAR 2002-03 ON 21.1 0.2002. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME-TA X ACT, 1961 (IN SHORT THE ACT) ON 17-02-2003. IN THIS RETURN OF I NCOME, THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION UNDER SECTION 80HHC O F THE ACT AT RS. 10,73,580/- AND UNDER SECTION 80-I OF THE ACT AT RS . 9,35,550/-. THEREAFTER, IT WAS DISCOVERED THAT THE ASSESSEE COM PANY HAD CLAIMED THE DEDUCTION (AS 8 TH YEAR) UNDER SECTION 80-I OF THE ACT AMOUNTING TO RS. 9,35,550/- DURING FINANCIAL YEAR 2001-02 RELEVANT T O THE ASSESSMENT YEAR 2002-03 WHICH MEANT THAT DEDUCTION WAS BEING CLAIME D SINCE 1995-96. AS THE COMPANY HAD STARTED FUNCTIONING BETWEEN 01.0 4.1990 TO 31.03.1991, DEDUCTION UNDER SECTION 80-I COULD HAVE BEEN CLAIMED ONLY 3 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 UP TO ASSESSMENT YEAR 1999-2000. IT WAS THEREFORE C LEAR THAT THE COMPANY HAD PUT UP A WRONG CLAIM OF DEDUCTION UNDER SECTION 80I OF THE ACT DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, W ITH THE PREVIOUS APPROVAL OF THE ADDITIONAL COMMISSIONER OF INCOME T AX, PHAGWARA RANGE, PHAGWARA WHICH WAS CONVEYED VIDE HIS OFFICE LETTER NO. 2552 DATED 17.03.2009, ASSESSMENT PROCEEDINGS UNDER 147 OF THE ACT WERE INITIATED AND NOTICE UNDER SECTION 148 OF THE ACT D ATED 17.03.2009 WAS ISSUED. IN RESPONSE TO THE SAID NOTICE, THE ASSESSE E COMPANY VIDE ITS LETTER DATED 08.04.2009 STATED THAT THE RETURN ORIGINALLY FILED ON 21.10.2002. THEREAFTER, NOTICES UNDER SECTIONS 142(1) AND 143(2 ) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAME, THE ASSESSEE COMPANY RAISED LEGAL OBJECTIONS VIDE H IS LETTER DATED 10.09.2009. THESE OBJECTIONS WERE SUITABLY DEALT WI TH IN THE OFFICE AND AFTER MEETING ITS LEGAL OBJECTIONS, THE ASSESSEE CO MPANY WAS ASKED TO FURNISH REPLY TO THE QUERIES IN THE QUESTIONNAIRE. IN COMPLIANCE TO THE SAME, THE ASSESSEE FURNISHED ITS WRITTEN REPLY. AFT ER CONSIDERING THE SAME, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS UN DERSTATED THE INCOME OR HAS CLAIMED EXCESSIVE LOSS, DEDUCTION, ALLOWANCE OR RELIEF IN THE RETURN AND IN THIS CASE, THE ASSESSEE HAS INTENTIONALLY PU T UP A FALSE CLAIM OF DEDUCTION U/S 80HHC OF THE ACT. HE FURTHER HELD THA T AS PER PROVISO TO 4 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 SECTION 80-I(1) OF THE ACT, DEDUCTION UNDER THIS SE CTION IS ALLOWABLE TO THOSE INDUSTRIAL UNDERTAKINGS WHICH BEGIN TO MANUFA CTURE ON OR AFTER THE 1 ST DAY OF APRIL, 1990 BUT BEFORE THE 1 ST DAY OF APRIL, 1991. AS PER THIS CONDITION, THE ASSESSEE COMPANY IS ENTITLED TO DEDU CTION UNDER SECTION 80-I FOR THE INITIAL ASSESSMENT YEAR AND SEVEN ASSE SSMENT YEARS IMMEDIATELY SUCCEEDING THE INITIAL ASSESSMENT YEAR IN VIEW OF PROVISIONS OF SUB-SECTION (5) TO SECTION 80-I OF THE ACT. THER EFORE, THE ASSESSEE COMPANY IS NOT ENTITLED TO DEDUCTION U/S 80-I OF TH E ACT FOR THE YEAR UNDER CONSIDERATION. LASTLY, HE DISALLOWED THE DEDUCTION AMOUNTING TO RS. 9,35,550/- CLAIMED UNDER SECTION 80-I OF THE ACT AN D COMPLETED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 1 47 OF THE ACT. 3) AGGRIEVED BY THE ASSESSMENT ORDER DATED 09.11.200 9 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, PHAGWARA CIR CLE, PHAWARA, FOR ASSESSMENT YEAR 2002-03, THE ASSESSEE FILED AN APPE AL BEFORE LEARNED CIT(A), JALANDHAR, WHO VIDE IMPUGNED ORDER DATED 15 .10.2012, ALLOWED THE APPEAL OF THE ASSESSEE. NOW, THE REVENUE BEING AGGRIEVED WITH THE ORDER OF LEARNED CIT(A), JALANDHAR, FILED THE PRESE NT APPEAL. 4) AT THE TIME OF HEARING, LEARNED DR RELIED UPON T HE ORDER DATED 09.11.2009 PASSED BY THE DEPUTY COMMISSIONER OF INC OME TAX, 5 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 PHAGWARA CIRCLE, PHAWARA, UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT. 5) ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE HAS RELIED UPON THE ORDER PASSED BY LEARNED CIT(A), JALANDHAR, AND REQUESTED THAT THE APPEAL FILED BY THE REVENUE MAY BE DISMISSED. 6) WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE WRITTEN SUBMISSIO N AS WELL AS THE IMPUGNED ORDER PASSED BY THE LEARNED FIRST APPELLAT E AUTHORITY. FOR THE SAKE OF CONVENIENCE, RELEVANT PORTION OF THE IMPUG NED ORDER I.E. PARAS 6 TO 10 ( PAGES 5 TO 7) ARE REPRODUCED AS UNDER: 6. I HAVE VERY CAREFULLY CONSIDERED THE ISSUE AND FIND:- A.) THE DEDUCTION THOUGH CLAIMED U/S 80I OF THE I.T. AC T BY THE ASSESSEE, THE CASE OF ASSESSEE WAS CLEARLY OUT OF T HE PURVIEW OF SECTION 80I OF I.T. ACT AS THE UNIT STAR TED PRODUCTION ON 08-03-1993 AND AS PER SECTION 80I OF I.T. ACT PROVISO 3 TO SECTION 80I(5) OF I.T. ACT READS A S UNDER:- { PROVIDED ALSO THAT IN THE CASE OF (I) AN INDUSTRIAL UNDERTAKING WHICH BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPE RATE ITS COLD STORAGE PLANT OR PLANTS, OR (II) A SHIP WHICH IS FIRST BROUGHT INTO USE; OR (III) THE BUSINESS OF A HOTEL WHICH STARTS FUNCTION ING. ON OR AFTER THE 1 ST DAY OF APRIL, 1990 (BUT BEFORE THE 1 ST DAY OF APRIL, 1991}, PROVISIONS OF THIS SUB-SECTION SHA LL HAVE 6 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 EFFECT AS IF FOR THE WORDS SEVEN ASSESSMENT YEARS , THE WORDS NINE ASSESSMENT YEARS HAD BEEN SUBSTITUTED. B.) MY LEARNED PREDECESSOR HAS ALLOWED THE DEDUCTION U/ S 80IA OF I.T. ACT HOLDING THAT THE MENTION OF SECTION 80I IN THE CLAIM WAS NOT CORRECT. HERE I MUST POINT OUT THAT E VEN SECTION 80IA OF THE I.T. ACT WAS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS IT DEALS IN DEDUCTION IN RESPEC T OF PROFIT AND GAINS FROM INDUSTRIAL UNDERTAKING OR ENTERPRISE S ENGAGED IN INFRASTRUCTURE. CLEARLY THE CASE OF THE ASSESSEE DOES NOT FALL UNDER SECTION 80IA. C.) THE ONLY SECTION APPLICABLE TO ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OF AUTO DIESEL ENGINE PARTS IN ITS INDUSTRIAL UNDERTAKING IS SECTION 80IB OF I.T. ACT. AS PER SECTION 80IB(3), THE DEDUCTION IS ALLOWABLE TO ASSE SSEE U/S 80IB(3) WHICH READS AS UNDER:- (3) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUSTRIAL UNDERTAKING SHALL BE TWENTY-FIVE PER CEN T (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR A PERIOD OF TEN CONSECUTIVE ASSESSM ENT YEARS ( OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHER E THE ASSESSEE IS A CO-OPERATIVE SOCIETY) BEGINNING WITH THE INITIAL ASSESSMENT YEAR SUBJECT TO THE FULFILLMENT OF THE FOLLOWING CONDITIONS, NAMELY:- (I) IT BEGINS TO MANUFACTURE OR PRODUCE, ARTICLES O R THINGS OR TO OPERATE SUCH PLANT OR PLANTS AT ANY TI ME DURING THE PERIOD BEGINNING FROM THE 1 ST DAY OF APRIL, 1991 AND ENDING ON THE 31 ST DAY OF MARCH, 1995 OR SUCH FURTHER PERIOD AS THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, SPECIFY WITH REFERENCE TO ANY PARTICULAR UNDERTAKING; 7. THERE IS NO DISPUTE NOT THAT THE INDUSTRIAL UNDERTA KING OF ASSESSEE FALLS IN NONE OTHER THAN SECTION 80IB OF I .T. ACT AND WAS DULY ALLOWED THE DEDUCTION UPTO ASSESSMENT YEAR 2001-02. 7 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 IT IS ONCE AGAINST STATED THAT THE DEDUCTION WAS WR ONGLY CLAIMED U/S 80I OF I.T. ACT. 8. AS FAR AS THE ABOVE OBSERVATIONS ARE CONCERNED T HE A.O., THE SAME ARE BROUGHT OUT FROM THE CASE RECORDS DURI NG THE HEARING ON 15.10.2012 IN PRESENCE OF THE A.O. CONCE RNED. IT IS ALSO NOT DISPUTED THAT SINCE THE PRODUCTION OF THE INDUSTRIAL UNDERTAKING STARTED ON 08.09.1993 THIS WOULD BE THE LAST YEAR OF THE CLAIM U/S 80IB OF I.T. ACT WHICH COULD BE ALLOW ED AND IT IS NOT ALLOWABLE FOR ANY FURTHER ASSESSMENT YEAR. 9. IN VIEW OF THE ABOVE, IT IS HELD THAT THE CLAIM U/S 80IB OF I.T. ACT @ 30%, THE ASSESSEE BEING A COMPANY, IS TO BE ALLOWED FOR THE YEAR UNDER CONSIDERATION. 10. IN THE RESULT, THE APPEAL IS HEREBY ALLOWED. 6. AFTER GOING THROUGH THE IMPUGNED ORDER PASSED BY LEARNED FIRST APPELLATE AUTHORITY, WE ARE OF THE VI EW THAT THE CASE OF THE ASSESSEE IS CLEARLY OUT OF THE PURVIEW OF SECTI ON 80I OF THE ACT AS THE UNIT STARTED PRODUCTION ON 08.03.1993 AND EVEN SECTION 80IA OF THE ACT IS NOT APPLICABLE IN THE CASE OF THE ASSESS EE AS IT DEALS IN DEDUCTION IN RESPECT OF PROFIT AND GAINS FROM INDU STRIAL UNDERTAKING OR ENTERPRISES ENGAGED IN INFRASTRUCTURE. THE ONLY SECTION APPLICABLE TO ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OF AUTO DIESEL ENGINE PARTS IN ITS INDUSTRIAL UNDERTAKING IS SECTI ON 80IB OF THE ACT. WE HAVE FOUND THAT THE LEARNED FIRST APPELLATE AUTH ORITY HAS ALSO APPRECIATED THE EVIDENCE PRODUCED BY THE ASSESSEE I N SUPPORT OF ITS 8 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 CLAIM IN DISPUTE, WHICH HAS NOT BEEN PROPERLY CONSI DERED BY THE ASSESSING OFFICER. 7. IN OUR VIEW THE CASE OF THE ASSESSEE FALLS UNDER SECTION 80IB OF THE ACT AND THE DEDUCTION UPTO THE ASSESSME NT YEAR 2001-02 WAS DULY ALLOWED WHICH WAS WRONGLY CLAIMED UNDER SE CTION 80I OF THE ACT. IT IS ALSO NOT DISPUTED THAT THE PRODUCTI ON OF THE INDUSTRIAL UNDERTAKING STARTED ON 08.09.1993 AND THIS WOULD BE THE LAST YEAR OF CLAIM UNDER SECTION 80IB OF THE ACT WHICH COULD BE ALLOWED AND IT IS NOT ALLOWABLE FOR ANY FURTHER ASSESSMENT YEAR. THE ASSESSEE BEING A COMPANY AND THE CLAIM UNDER SECTION 80IB OF THE ACT @ 30% IS TO BE ALLOWED FOR THE YEAR UNDER CONSIDERATION. LEARNED F IRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER; THEREFO RE, NO INTERFERENCE IS CALLED FOR. ACCORDINGLY, WE UPHOLD THE IMPUGNED ORDER DATED 15.10.2012 PASSED BY LEARNED CIT(A), JALANDHAR, AN D DISMISS THE APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST AUGUST, 2013 SD/./ SD/./- (B.P. JAIN) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 ST AUGUST, 2013 9 I.T.A. NO. 14(ASR)/2013 ASSESSMENT YEAR: 2002-03 /RK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES: M/S FRIENDS CASTING PVT. LTD., NURMA HAL ROAD, PHILLAUR, PHAGWARA 2. DEPUTY COMMISSIONER OF INCOME TAX, PHAGWARA CIRCLE , PHAGWARA 3. THE CIT(A), JALANDHAR 4. THE CIT, JALANDHAR 5. THE SR DR, I.T.A.T., AMRITSAR TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.