M/s. Vimoni India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1510/DEL/2015

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 7490 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 15-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KATARIA
• Keywords: Corroborative evidences; Competent authority
• Section: 43B; 143(3); 143(1); 251; 80IC; 80IC; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’ NEW DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA No.1510/Del/2015 Assessment Year: 2010-11 M/s. Vimoni India Pvt. Ltd., 3-D, Vandana Building, 11 Tolstoy Marg, New Delhi Vs. Deputy Commissioner of Income-tax, Circle-17(1), New Delhi PAN :AAACV3859K (Appellant) (Respondent) ORDER PER SAKTIJIT DEY, JM: This is an appeal by the assessee against order dated 07.11.2017 of learned Commissioner of Income Tax (Appeals)-19, New Delhi, pertaining to assessment year 2010-11. 2. Grounds raised by the assessee are as under: 1. The order dated 30.10.2014 passed by the learned Commissioner of Income-tax (Appeal) is bad in law and in facts. 2. That the Ld. CIT(A) has erred in upholding the disallowance of Rs 55,00,000/- of fixed assets written off in profit and loss account. Appellant by Sh. Ajay Wadhwa, CA Ms. Bharti Sharma, CA Respondent by Sh. Vijay Kataria, Sr. DR Date of hearing 10.05.2022 Date of pronouncement 14.07.2022 2 ITA No. 1510/Del/2015 3. That the Ld. CIT(A) has erred in upholding the addition of Rs 1,85,559/- u/s 43B on account of nonpayment contribution to PF/ESI. 4. That the Ld. CIT(A) has erred in upholding disallowance of claim made u/s 80IC without considering the fact that the similar claim has been accepted in earlier years. 5. The appellant craves leave to alter, amend or add any other ground of appeal either 3. Grounds no. 1 to 5, being general grounds, do not require specific adjudication. 4. Since ground no. 4 will have a bearing on ground nos. 2 and 3, at the outset, we proceed to decide ground no. 4. The issue raised in ground no. 4 relates to disallowance of assessee’s claim of deduction under section 80IC of the Income-tax Act, 1961 (in short ‘the Act’). 5. Briefly the facts are, the assessee, a resident company, is engaged in the business of manufacturing of plastic packaging products such as PET and HDPE bottles, jars, caps and closures. For the assessment year under dispute, the assessee filed its return of income on 15.10.2010 declaring nil income. In course of assessment proceeding, the Assessing Officer, while verifying the return of income filed by the assessee, noticed that the assessee had claimed deduction of Rs.86,63,158/- under section 80IC of the Act. Noticing this, the Assessing Officer called upon the assessee to furnish supporting evidence to justify the deduction claimed. In 3 ITA No. 1510/Del/2015 response, the assessee filed a detailed submission along with supporting evidences stating that it has set up a manufacturing unit at Barotiwala, Himachal Pradesh, which has fulfilled all the conditions of section 80IC of the Act. After perusing the documents filed and considering the submissions made, the Assessing Officer was of the view that the products manufactured by the assessee are in the nature of goods and articles specified in the 13 th Schedule of the Act. Thus, he held that the assessee is not eligible to claim deduction under section 80IC of the Act, in view of the conditions imposed under section 80IC(2)(a) of the Act. Accordingly, he disallowed assessee’s claim of deduction. Contesting the disallowance of deduction claimed under section 80IC of the Act, assessee preferred an appeal before learned Commissioner (Appeals). 6. Being satisfied with the submissions of the assessee that as per the decision of the Hon’ble Delhi High Court in case of Ajay Kumar Sharma Vs. CIT, 351 ITR 428, deduction under section 80IC is allowable on PET and HDPE bottles, learned Commissioner (Appeals) held that the Assessing Officer’s view that section 80IC deduction is not allowable on the products manufactured by the assesse is unsustainable. However, he upheld the disallowance of 4 ITA No. 1510/Del/2015 deduction claimed under Section 80IC of the Act on the reasoning that the assessee failed to furnish the required details to substantiate that the conditions of section 80IC of the Act were fulfilled. 7. Before us, Sh. Ajay Wadhwa, learned Counsel appearing for the assessee, submitted, the assessee had commenced its manufacturing process in the financial year relevant to the assessment year 2005-06 and deduction was claimed for the first time in assessment year 2005-06. He submitted, assessee’s claim of deduction under section 80IC of the Act has been allowed from assessment year 2005-06 till 2009-10. He submitted, in the financial year 2006-07, the assessee had undertaken substantial expansion of the unit by investing an amount of Rs. 3,99,49,251/- . He submitted, all relevant and necessary documents relating to setting up of unit, the investment made in substantial expansion of the unit, approval of the competent authority, registration under the Central Excise Act as well as returns filed under the Central Excise Act were also furnished before the departmental authorities. Drawing our attention to section 80IC of the Act, learned Counsel submitted that all the conditions of the said provision, including the conditions relating to substantial expansion have been fulfilled 5 ITA No. 1510/Del/2015 by the assessee. He submitted, fulfillment of conditions for claiming deduction under section 80IC of the Act has to be examined in the first year of claim of deduction. He submitted, once, the issue is examined in the first year of claim and the Assessing Officer, having factually examined the issue, if comes to a conclusion that all the conditions of section 80IC of the Act are satisfied, the matter ends there and fulfillment of conditions under section 80IC cannot be examined in any future assessment year. He submitted, assessee’s claim of deduction under section 80IC of the Act was not only examined in assessment year 2005-06, the first year of claim, but, was also examined in subsequent assessment years. Rebutting the observations of the departmental authorities that in subsequent years, the assessments have been made under section 143(1) and not under section 143(3), learned counsel drew our attention to the assessment order passed under section 143(3) of the Act for the assessment year 2007-08, wherein the Assessing Officer, after examining assessee’s claim of deduction under section 80IC of the Act, has allowed. Thus, he submitted, deduction claimed under section 80IC off the Act should be allowed. In support of such contention, learned counsel relied upon the following decisions: 6 ITA No. 1510/Del/2015 1. CIT Vs. International Tractor Ltd. {2017} 397 ITR 696 (Delhi High Court) 2. CIT Vs. Tata Communications Interned Services Ltd. [2012] 251 CTR 290 (Delhi High Court) 3. CIT Vs. Delhi Press Patra Prakashan Ltd. [2013] 355 ITR 14 (Delhi High Court) 4. M/s. Hughes Communications India Ltd. Vs. DCIT (ITA No.2346/Del/2014 along with other appeals, dated 14.09.2021) 5. Shree Veer Aromatics Herbs Products Vs. ITO [2014] 147 ITD 86 (Delhi ITAT)] 6. ACIT Vs. M/s. LVP Foods Pvt. Ltd. (ITA No. 937/Del/2017). 7. M/s. Ace Multi Axes Systems Ltd. Vs. DCIT (ITA No. 477 of 2013) 8. DCIT Vs. Selvel Advertising (P.) Ltd. [2015] 58 taxmann.com 196 (Kolkata –Trib.) 8. Learned Departmental Representative strongly relied upon the observations of learned Commissioner (Appeals). 9. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. Undisputedly, the assessee has set up a manufacturing unit for manufacture of PET, HDPE bottles etc. at Barotiwala, Himachal Pradesh. As per form No. 10CCB, a copy of which, is placed at page 61 of the paper-book, the date of commencement of manufacturing activity is 17.06.2004 and the first year of claim of deduction under section 80IC of the Act is assessment year 2005-06. It is further evident, the assessee had undertaken expansion of the unit in financial year 2007-08 and has invested an amount of about Rs. 4 crores in plant and machinery. On a careful reading of the assessment order, it is evident, the only reason on which the Assessing Officer has rejected assessee’s claim of deduction under section 80IC of the Act 7 ITA No. 1510/Del/2015 is, the products manufactured by the assessee come within Schedule 13 of the Act, hence, do not fulfill the condition of section 80IC(2)(a) of the Act. The Assessing Officer has not specifically assigned any other reasons for denying assessee’s claim of deduction under section 80IC of the Act. While deciding the issue in appeal, learned Commissioner (Appeals) has held that the finding of the Assessing Officer that the products manufactured by the assessee come within Schedule 13 of the Act is unsustainable in view of the decision of the Hon’ble Delhi High Court. Admittedly, against the aforesaid observation of learned Commissioner (Appeals), the Revenue has not come in appeal. 10. Be that as it may, there is no other specific reason or observation by the departmental authorities for denial of assessee’s claim of deduction under section 80IC of the Act. Of course, learned Commissioner (Appeals) has made a general observation that the assessee failed to furnish required details without specifying, what are the details required to be furnished by the assessee. Of course, one more reason learned Commissioner (Appeals) has assigned for denying assessee’s claim of deduction is, on earlier assessment years the fulfillment of condition of section 80IC were not examined as the returns of income filed by the assessee were processed under 8 ITA No. 1510/Del/2015 section 143(1) of the Act. From the materials placed before us, the aforesaid finding of learned Commissioner (Appeals) and the Assessing Officer are found to be not borne out from record. 11. On the contrary, it is a fact on record that assessee’s claim of deduction under section 80IC of the Act was not only examined in the first year of claim, i.e., assessment year 2005-06 but also in assessment year 2007-08, wherein, the assessment was completed under section 143(3) of the Act vide order dated 31.12.2009. A reading of the aforesaid assessment order would clearly reveal that the Assessing Officer has specifically examined the issue relating to assessee’s claim of deduction under section 80IC of the Act. Thus, when assessee’s claim of deduction under section 80IC of the Act was thoroughly examined in the preceding assessment years and after getting satisfied that the conditions prescribed for claiming deduction have been fulfilled, the Assessing Officer allowed the deduction claimed, such claim of deduction in a subsequent assessment year cannot be rejected without bringing any new fact and material on record, that too, purely on general observations. The decisions cited before us by learned counsel for the assessee support this view. 9 ITA No. 1510/Del/2015 12. In view of the aforesaid, we hold that the disallowance of deduction claimed by the assessee under section 80IC of the Act is unsustainable. Accordingly, we direct the Assessing Officer to allow assessee’s claim of deduction under section 80IC of the Act. This ground is allowed. 13. In ground nos. 2 and 3, assessee has challenged disallowance of Rs. 55,00,000/- representing fixed assets written off and Rs.1,85,559/- representing non-payment of contribution to PF and ESI. Though, in the grounds raised, the assessee has challenged the disallowance on merits, however, at the time of hearing, the limited submission of learned counsel for the assessee is, since, the disallowances made go to increase the profits, the assessee is entitled to claim deduction under section 80IC of the Act, in respect of such enhanced profit. In this context, he drew our attention to Circular No. 37 of 2016 , dated 2 nd November, 2016 issued by CBDT. Further, he relied upon the following decision: 1. CIT Vs. Gem Plus Jewellery India Ltd. [2010] 233 CTR 248 (Bombay High Court) 2. Sanghvi Jewellery Mfg. Co. (P.) Ltd. Vs. ITO [2012] 145 ttj 137 (Mumbai ITAT) 3. ITO Vs. Anthelio Business Technologies (P.) Ltd. [2017] 78 taxmann.com 203 (Mumbai –Trib.) 4. Patni Telecom Solutions (P.) Ltd. Vs. ITO [2013] 58 SOT 146 (Hyd.- ITAT) 10 ITA No. 1510/Del/2015 14. Learned Departmental Representative relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 15. Having considered rival submissions in the light of decisions relied upon, in principle, we agree with the submissions made by the learned counsel for the assessee. The disallowance made by the Assessing Officer, which are subject matter of dispute, have the effect of enhancing the profit of the assessee. That being the case, the assessee remains entitled to claim deduction under section 80IC of the Act in respect of such enhanced profit. Therefore, we direct the Assessing Officer to allow assessee’s claim of deduction under Section 80IC of the Act on the aforesaid additions. Grounds are allowed. 16. In the result, the appeal is allowed, as indicated above. Order pronounced in the open court on 14 th July, 2022 Sd/- Sd/- (PRADIP KUMAR KEDIA) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 14 th July, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi