Sealion Sparkle Port and Terminal Services (Dahej) Ltd., Hyderabad V. Dy.CIT-3(1), Hyderabad

ITA 1412/HYD/2013

• Counselvise Citation: 141222514 RSA 2013
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 28-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: A V RAGHURAM
• Keywords: Additional evidence
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1413/HYD/13 : ASSESSMENT YEAR 2007 - 08 M/S. S E ALION SPARKLE PORT & TERMINAL SERVICES (DAHEJ) LTD., HYDERABAD ( PAN - AAHCS 0841 D ) V/S. DY. COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 3(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.V.RAGHURAM RESPONDENT BY : SHRI B.YADAGIRI DR DATE OF HEARING 27.2.2014 DATE OF PRONOUNCEMENT 0 2. 0 4.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) - IV, HYDERABAD DATED 12.8.2013, FOR THE ASSESSMENT YEAR 2007 - 08. 2. EFFECTIVE GROUNDS OF THE ASSESSEE IN THIS APPEAL ARE AS FOLLOWS 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN UPHOLDING THE DISALLOWANCE OF CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.50,61,920 U/S. 80A OF THE ACT. 2. THE LEARNED CIT(A) OUGHT TO HAVE NOTED THAT THE APPELLANT HAS COMP LIED WITH THE SUBSTANTIAL REQUIREMENTS OF S.80IA AND THEREFORE THE DEDUCTION SHOULD NOT HAVE BEEN DENIED ON PROCEDURAL OR EXTRANEOUS GROUNDS. 3. THE LEARNED CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE FILED IN THE FORM LETTERS FROM THE DEVELOP ERS OF THE PORT, AS IT IS ESSENTIAL FOR THE PURPOSE OF UNDERSTANDING THE FACTS OF THE CASE FULLY, AND FURTHER ADMISSION OF SUCH ADDITIONAL EVIDENCE IS IN THE INTERESTS OF JUSTICE AND EQUITY AND AS PERMITTED UNDER THE PROVISIONS OF THE ACT. ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 2 3 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TOYAGE, COMPREHEN S IVE PORT MANAGEMENT SE R VI C ES, MARIN E EN V IRONMENTAL S E R V ICES, TU G OPERATION S AND SUPPLY OF TUGS. IT FILED I T S RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007 - 08 ON 30.10.20907 DECLARING NIL INCOME. IN THE COURSE OF SCRUTINY ASSESSMENT, IT WAS NOTICED THAT ONE M/S. P ET RONET LNG LTD. (PLL) WAS A COMPANY ENGAGED IN DEVELOPING A TERMINAL FOR RECEIPT, STORAGE AND RE - GASIFICATION OF LNG AT DAHEJ PORT. THE ASSESSEE HAD ENTERED INTO A CONTRACT WITH POL AS AN O P ERATOR TO PRO VID E TU G BOATS, MARINE CRAFTS AND PERSONNEL FOR THIS WORK. THE ASSESSEE H A D CLAIMED DEDUCTION UNDER S.80IA OF RS.50,61,920 WITH REGARD TO THE S E R V ICES RENDERED BY IT AT DAHEJ LNG PORT, CLAIMING IT TO B E OPERATION AND MAINTENANCE OF PORTS,. THE ASSESSING OFFICER DI S ALLOWED THE SAID CLAIM, OBSERVING THAT THE ASSESSEE HAS CON D U C TED THE PORT OPERATIONS THROUGH A CONTRACT VIDE AGREEMENT DATED 26.11.2003 READ WITH AGREEMENT DATED 12.11.2002 WITH PLL FOR I TS PORT OPERATIONS, AND CONSEQUENTLY, IT HAS NOT COMPLIED WITH THE CONDITIONS SPECIFIED IN S.80IA(4)A) AT (A), (B) AND ( C) OF THE AC T; AND FURTHER, THE ASSESSEE HAS NOT FILED FORM 10CCB IN TERMS OF S.80IA(7), AND THUS HAS NOT COMPLIED WITH TH E STATUTORY REQUIREMENT AS WELL, TO CLAIM DEDUCTION UNDER S.80IA OF THE ACT. THE ASSESSING OFFICER, ACCORDINGLY DISALLOWING, AMONG OTHER CLAIMS, THE CLAIM UNDER S.80IA OF THE ACT, COMPLETED THE ASSESSMENT ON A TOTAL INCOME OF RS.1,31,44,310, VIDE OR D ER OF ASSESSMEN T DATED 14.12.2009 PASSED UNDER S.143(3) OF THE AC T. 4. IN THE COURSE OF APPELLATE PROCEEDINGS, BEFORE THE CIT(A), THE ASSESSEE SOUGHT TO FILE THE AUDIT REPORT IN FORM 10CCB VIDE LETTER DATED 25.8.2011, AND IT WAS SUBMITTED T HAT THE SAID AUDIT REPO R T HAS NO T BEEN FILED ALONGWITH THE RETURN DUE TO OVERSIGHT AND THAT ON R E ALISING SUCH ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 3 OMISSION A F TER BEING POINTED OUT BY THE ASSESSING OFFICER, IT HAD OBTAINED THE REQUISITE REPORT ON 30.07.2011. CONSIDERING THE ORDER OF TH E CIT(A) FOR THE ASSESSMENT YEAR 2008 - 09 DATED 27.3.2012 , AND THE REASONS FOR WHICH, CORRESPONDING ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAIM FOR DEDUCTION UNDER S.80IA FOR THAT YEAR, HAS NOT ADMITTED, AND FURTHER OBSERVING THAT THE FILIN G OF THE AUDIT REPORT IN FORM 10 CCB , IS NOT A R OUTINE EXERCISE, THE CIT(A) HELD THAT THE SAID ADDITIONAL EVIDENCE CANNOT BE ADMITTED AT SUCH BELATED STAGE, THAT TOO WHEN THE ASSESSEE COULD NOT EXPLAIN THE CIR C UMSTANCES IN WHICH IT FAILED TO FILE THE EVI DE NCE EARLIER, AND HOW THOSE CIRCUMSTANCES SATISFY THE CONDITION S IMPOSED BY RULE 46A. EVEN OTHERWISE, FOLLOWING T H E SETTLED POSITION OF LAW, ENUNCIATED BY V ARIOUS COURTS IN SIMILAR CASES, INCLUDING THE JURISDICTIONAL HIGH COURT IN THE CA S E OF CIT V/S. HEMSONS I NDUSTRIES ( 251 ITR 693), IT WAS HELD BY THE CIT(A) THAT WHEN THE LAW EXPECTS SUCH AUDIT REPORT TO BE FILED ALONGWITH THE RETURN, THE SAME SHOULD AT LEAST , BE FILED BEFORE THE COMPLETION OF THE ASSESSMENT, SO AS TO DEEM THE ASSESSEE AS HAVING COMPLIED WITH THE STATUTORY REQUIREMENT UNDER S.80IA(7) O F THE ACT. THE CIT(A) ACCORDINGLY UPHOLD THE DISALLOWANCE OF CLAIM UNDER S.80IA MADE BY THE ASSESSING OFFICER. 5 . AGGRIEVED, ASSESSEE PREFERRED THIS SECOND APPEAL BEFORE US. 6 . WE HEARD BOTH SIDES AND PERUSED THE IMPUGNED ORDERS OF THE R E VENU E AUTHO R ITI E S AND OTHER MA T E R IAL ON RECORD. WE HAVE ALSO GONE THROUGH THE DETAILED PAPER - BOOK FILED AND THE DECISIONS RELIED UPON BY THE PARTIES BEFORE US. IT IS AN UNDISPUTED FACT THAT THE AUDIT REPORT IN FORM 10CCB, WHICH IS A STATUTORY REQUIREMENT SO AS TO BE ELIGIBLE FOR RELIEF UNDER S.80IA, HAS NOT BEEN FILED BY THE ASSESSEE AT ANY POINT OF ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 4 TIME BEFORE THE COMPLETION OF ASSESSMENT. THOUGH THE SAME HAS BEEN FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT(A) BY WAY OF ADDITIONAL EVIDENCE, A ND THE OMISSION TO DO SO BEFORE THE ASSESSING OFFICER WAS CLAIMED TO BE ON ACCOUNT OF INADVERTENCE ON THE PART OF THE ACCOUNTANT, THE CIT(A), IN THE FIRST PLACE, DID NOT ADMIT THE SAID ADDITIONAL EVIDENCE, SINCE THE HE WAS NOT SATISFIED WITH THE REASONING GIVEN BY THE ASSESSEE FOR NOT FURNISHING THE SAME EARLIER, AND EVEN IF IT IS ADMITTED, ACCORDING TO THE CIT(A), THAT WOULD NOT AMOUNT TO COMPLIANCE WITH THE PROVISIONS OF S.80IA(7) WHICH MANDATES FURNISHING OF THE SAME ALONGWITH THE RETURN. IT IS THE CASE OF THE ASSESSEE THAT FURNISHING OF AUDIT REPORT IN FORM 10CCB IS ONLY A PROCEDURAL REQUIREMENT, AND OMISSION TO COMPLY WITH THE SAID REQUIREMENT, ON ACCOUNT OF AN INADVERTENT MISTAKE, CANNOT BE FATAL TO THE VERY CLAIM FOR RELIEF, IF ALL OTHER CONDITIONS A RE SATISFIED. A NUMBER OF DECISIONS HAVE BEEN CITED IN THIS BEHALF. WHILE IN A NUMBER OF SUCH CASES RELIED UPON BY THE ASSESSEE, THE AUDIT REPORT WAS FILED, THOUGH NOT WITH THE RETURN OF INCOME, BUT AT A LATER STAGE DURING THE ASSESSMENT PROCEEDINGS ITSE LF, AND TAKING A LENIENT VIEW OF THE MATTER AND CONSIDERING THE FACT THAT REQUIREMENT OF AUDIT REPORT ALOGNWITH THE RETURN WAS ONLY A PROCEDURAL REQUIREMENT, ASSESSEE WAS HELD TO BE ELIGIBLE FOR RELIEF UNDER S.80IA, IF OTHER CONDITIONS ARE SATISFIED, IN T HE CASE OF ZEST AROMAS PVT. LTD. V/S. CIT (135 ITD 123), WHEREIN THE AUDIT REPORT IN FORM 10CCB IN SUPPORT OF CLAIM FOR RELIEF UNDER S.80IB WAS FILED ONLY DURING THE PROCEEDINGS UNDER S.263 OF THE ACT, IT WAS PLEADED BY THE LEARNED COUNSEL FOR THE ASSESSE E AS FOLLOWS - 6 COMING TO NOT FILING OF AUDIT REPORT IN SUPPORT OF ITS CLAIM U/S 80IB OF THE ACT, THE LEARNED COUNSEL OF THE ASSESSEE RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ZENITH PROCESSORS [219 ITR 721], WHEREIN THE AUD IT REPORT FILED DURING THE COURSE OF 263 PROCEEDINGS WAS HELD TO BE VALID AND IN THE CASE OF MAYUR FOUNDATIONS ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 5 [274 ITR 562] IT WAS HELD THAT EVEN THE PROCEEDINGS BEFORE THE ITAT WERE CONTINUATION OF ASSESSMENT PROCEEDINGS AND, THEREFORE, EVEN IF THE AUDIT REPORT WAS FILED AT A LATER STAGE, WOULD NOT DISENTITLE THE ASSESSEE FROM CLAIMING THE BENEFIT OF DEDUCTION. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE ITAT AHMEDABAD BENCH - D IN THE CASE OF HANUMAN FILAMENTS PVT. LTD. VS. DCIT [ITA NO.188/AHD/2010, O RDER DATED 31 - 20 - 2011], WHEREIN IT WAS HELD THAT MERE NON - FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INCOME WILL NOT DEPRIVE THE RIGHT OF THE ASSESSEE TO CLAIM DEDUCTION ELIGIBLE UNDER THE SCHEME OF THE ACT. THE LEARNED COUNSEL OF THE ASSESSEE ALSO R ELIED ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF AMIT VEGETABLES LTD. VS. CIT [158 TAXMAN 36] AND THE DECISION OF HON'BLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. CLOUGH ENGINEERING LTD. [300 ITR 435], WHEREIN IT WAS HELD THAT A SSESSMENT ORDER CANNOT BE TREATED AS ERRONEOUS ON THE GROUND THAT THE ASSESSEE HAD NOT FILED AUDIT REPORT ALONG WITH THE RETURN OF INCOME. CONCLUDING HIS ARGUMENTS, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ORDER PASSED BY THE LEARNED CIT U/S 263 OF THE ACT BE QUASHED. CONSIDERING THE ABOVE CONTENTIONS OF THE ASSESSEE, THE TRIBUNAL, THOUGH UPHELD THE ORDER OF THE COMMISSIONER OF INCOME - TAX PASSED UNDER S.263, GAVE THE FOLLOWING DIRECTIONS TO THE ASSESSING OFFICER - 11 BEFORE WE DEPART, IT IS MADE CLEAR THAT SINCE THE AUDIT REPORT HAS BEEN FILED BY THE ASSESSEE BEFORE THE LEARNED CIT DURING 263 PROCEEDINGS AND HAS ALSO BEEN FILED BEFORE US, WE ARE OF THE VIEW THAT THE AO WHILE FRAMING THE FRESH ASSESSMENT, WILL EXAMI NE THE ADMISSIBILITY OF THE CLAIM OF DEDUCTION U/S 80IB TAKING INTO CONSIDERATION THE AUDIT REPORT FILED BEFORE THE LEARNED CIT. THIS VIEW OF OURS GET SUPPORT FROM THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF ZENITH PROCESSORS (219 ITR 721 ), WHEREIN THE AUDIT REPORT FILED DURING THE COURSE OF 263 PROCEEDINGS WAS HELD TO BE VALID. 7. SIMILARLY, I N THE CASE OF IVRCL INFRASTRUCTURE PROJECTS LTD. V/S. ACIT IN ITA NO.1237/HYD/2004 (2008 TIOL - 202 - ITAT - HYD - SB), BEFORE THE SPECIAL BENCH( HYDERABAD) OF THE TRIBUNAL, THE CIT(A) REFUSED TO ADMIT THE ADDITIONAL EVIDENCE, FILED BY THE ASSESSEE, IN THE CONTEXT OF DENIAL OF RELIEF UNDER S.80IA . THE TRIBUNAL ON APPEAL , ADMITTED THE ADDITIONAL EVIDENCE AND RESTORED THE ENTIRE APPEAL TO THE FILE O F THE ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE ALLOWABILITY OF DEDUCTION UNDER S.80IA OF THE ACT. ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 6 8. IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT WHEN THE ASSESSEE, THOUGH NOT FILED THE AUDIT REPORT IN FORM 10CCB ALONGWITH THE RETURN OR EVEN DURING THE ASSESSMENT PROCEEDINGS, WHEN THE SAME IS FILED EVEN DURING THE APPELLATE PROCEEDINGS, SUCH ADDITIONAL EVIDENCE AND CONTENTIONS, TAKEN IN THAT BEHALF GO TO THE ROOT OF THE MATT E R, AND BECOME LEGAL CONTENTIONS. AS SUCH, THE SAME HAVE TO BE ADMITTED AND THE MATTER HAS TO BE SENT BACK TO THE ASSESSING OFFICER FOR FRESH EXAMINATION IN THE LIGHT OF SUCH ADDITIONAL EVIDENCE AND LEGAL CONTENTIONS. IN THIS VIEW OF THE MATTER, THE CIT(A) IN OUR CONSIDERED OP9NIOJN IS NOT JUSTIFIED IN NO T ADMITTING THE AUDIT REPORT IN FORM 10CCB FIELD BY THE ASSESSEE BY WAY OF ADDITIONAL EVIDENCE BEFORE HIM. WE ACCORDINGLY SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH EXAMINATION OF THE C LAIM OF THE ASSESSEE FOR RELIEF UNDER S.80IA OFTEH ACT, IN THE LIGHT OF THE AUDIT REPORT IN FORM 10CCB, AND ALLOW THE SAME IF OTHER CONDITIONS ARE FULFILLED. THE ASSESSING OFFICER SHALL OF COURSE, ALLOW REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AN D REDETERMINE THE ISSUE IN ACCORDANCE WITH LAW. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 2 ND APR I L, 2014 SD/ - SD/ - (B.RAMAKOTAIAH) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 2 ND APRIL , 2014 ITA NO. 1 412 / HYD/20 1 3 M/S. SEALION PORT AND TERMINAL SERVICES(DAHEJ) LTD HYDERABAD 7 COPY FORWARDED TO: 1. M/S. S E ALION SPARKLE PORT & TERMINAL SERVICES (DAHEJ) LTD., 1 ST FLOOR, 128 SRINAGAR COLONY, HYDERABAD 2. DY COMMISSIONER OF INCOME - TAX, CIRCLE 3(1) , HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) I V, HYDERABAD COMMISSIONER OF INCOME - TAX I II HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S