M/s. Sagar Springs Pvt. Ltd., Baroda V. The Dy.CIT, Circle-4, Baroda

ITA 1526/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2060 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 15-04-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR
• Assessee Lawyers: M J SHAH
• Keywords: Period of limitation; Additional evidence
• Section: 143(3); 80IB

Judgement Text

ITA NO 1526/AHD/2010 . A.Y. 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T. A. NO. 1526 /AHD/2010 (ASSESSMENT YEAR: 2006-07 SAGAR SPRINGS PVT. LTD. 4, MANISHA PRODUCTIVITY ROAD, DODSAL SOCIETY, BARODA. (APPELLANT) VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4, BARODA (RESPONDENT) PAN:AACCS 5494 F APPELLANT BY : SHRI M.J. SHAH A.R. RESPONDENT BY : SHRI T. SANKAR SR. D.R. ( )/ ORDER DATE OF HEARING : 15.4.201 3 DATE OF PRONOUNCEMENT : 10 -05-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-III, BARODA DATED 5.2.2010 FOR ASSESSMENT YEAR 2006-07. 2. THE FACTS AS CULLED OUT FROM THE ORDERS OF THE L OWER AUTHORITIES ARE AS UNDER. 3. ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF COLD COILED HELICAL SPRINGS. IT ELECTR ONICALLY FILED ITS RETURN OF INCOME ON 29.12.2006 DECLARING TOTAL INCO ME OF RS. ITA NO 1526/AHD/2010 . A.Y. 2006-07 2 1,39,21,770/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAMED UNDER 143(3) VIDE ORDER D ATED 19.12.2008 AND THE TOTAL INCOME WAS DETERMINED AT R S. 2,18,76,389/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) V IDE ORDER DATED 5.2.2010 DISMISSED THE APPEAL OF THE ASSESSE E. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFECTIVE GR OUND:- [1] THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80 IB OF THE INCOME TAX ACT, 1961. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASS ESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION UN DER 80IB OF RS. 79,54,619/- BEING 30% OF ELIGIBLE PROFIT OF RS. 2,65,15,398/-. HE FURTHER NOTED THAT THE ASSESSEE HAD CLAIMED DEDU CTION UNDER 80 IB, FOR THE FIRST TIME IN ASSESSMENT YEAR 1998-9 9 AND THE ASSESSEES CLAIM WAS REJECTED UP TO ASSESSMENT YEAR 2005-06. HE FURTHER NOTED THAT SINCE THE FACTS OF THE CASE W ERE SIMILAR TO THOSE INVOLVED IN EARLIER YEARS, THE CLAIM OF ASSES SEE OF DEDUCTION UNDER SECTION 80 IB(4) WAS REJECTED. HE FURTHER NO TED THAT THE VALUE OF PLANT AND MACHINERY USED IN THE BUSINESS W AS RS. 1,02,47,952/- WHICH WAS ABOVE THE LIMIT OF 1 CRORE AND THEREFORE THE ASSESSEE WAS NOT AN S.S.I. UNIT AND FOR THIS RE ASON ALSO, THE ASSESSEE WAS NOT ELIGIBLE TO CLAIM DEDUCTION U/S. 80 IB. HE THEREFORE, REJECTED THE CLAIM OF THE ASSESSEE. 5. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASS ESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) RELYING ON THE HON. TR IBUNAL DECISION ITA NO 1526/AHD/2010 . A.Y. 2006-07 3 IN THE ASSESSEES OWN CASE (ORDER NO. ITA 996/A/200 6 DATED 19.12.2008) FOR ASSESSMENT YEAR 2005-06 HELD THAT T HE ASSESSEE WAS ELIGIBLE FOR DEDUCTION UNDER 80 IB OF THE ACT. HE ACCORDINGLY HELD THAT DEDUCTION UNDER 80 IB CANNOT BE DENIED TO THE ASSESSEE ON THE GROUND THAT NO NEW AND IDENTIFYING UNDERTAKE N DISTINCT FROM THE EXISTING UNIT WAS SET UP. HOWEVER, HE FURTHER NOTED THAT SINCE THE ASSESSEES INVESTMENT IN PLANT AND MACHINERY WA S IN EXCESS OF RS. 1 CRORE THE ASSESSEE WAS NOT ENTITLED TO D EDUCTION U/S. 80 IB. THE ACCORDINGLY CONFIRMED THE ADDITION BY HOLD ING AS UNDER:- [4.3] BEFORE ME, THE APPELLANT HAD REITERATED THE SAME ARGUMENTS AS GIVEN BEFORE THE ASSESSING OFFICER. ACCORDING T O THE APPELLANT THE LIMIT FOR INVESTMENT IN P&M FOR THE PURPOSE OF SSI UNIT WAS INCREASED TO RS. 3 CRORES VIDE NOTIFICATION DATED 1 0.12.1997. HOWEVER, LATER ON VIDE NOTIFICATION DATED 29.12.199 9, THE LIMIT WAS AGAIN REDUCED [TO RS. 1 CRORE. ON 14.3.2000, A CLA RIFICATION WAS ISSUED TO THE FOLLOWING EFFECT. [I] THE UNITS THAT HAVE OBTAINED PERMANENT REGISTR ATION ON THE ORDER DATED 10.12.1997 WOULD CONTINUE TO REMAIN AS SSI UNITS IN SPITE OF THE ORDER DATED 24.12.1999 REDUCING THE IN VESTMENT LIMIT TO RS. 1 CRORE. [II] THE UNITS WHICH HAD SWITCHED OVER TO THE SSI STATUS BASED ON THE ORDER DATED 10.12.1997 WOULD CONTINUE TO REMAIN AS SSI IN SPITE OF THE ORDER DATED 24.12.1999, AND [III] THE UNITS WHICH HAVE GOT PROVISIONAL REGISTR ATION WITH THE STATE AUTHORITIES FOR THEIR SSI STATUS WOULD CONTINUE TO REMAIN AS SSI UNITS INSPITE OF THE ORDER DATED 24.12.1999, PROVID ED THE PROVISIONS REGISTRATION HAD TAKEN PLACE WITHIN THE PERIOD OF LIMITATION OF 180 DAYS SPECIFIED IN THE ORDER DATED 10.12.1997. [4.4] THE APPELLANT HAS HOWEVER NOT FILED COPY OF SUCH NOTIFICATION. BE THAT IT MAY, THE APPELLANT HAS ALSO FILED FOLLOW ING TWO DOCUMENTS IN SUPPORT OF ITS CLAIM. [I] RENEWAL CER TIFICATE FOR SSI UNIT DATED 17.10.1994 WHICH SHOWS THAT THE SSI CERT IFICATE DATED 30.10.1982 WAS RENEWED AND IT WAS VALID UPTO 30.10. 1994. IT WAS FURTHER NOTED IN THE CERTIFICATE THAT THE CERTIFICA TE IS VALID FOR TWO ITA NO 1526/AHD/2010 . A.Y. 2006-07 4 YEARS FROM THE DATE OF ITS RENEWAL. THUS, THIS CERT IFICATE IS NOT RELEVANT FOR THE PRESENT PROCEEDINGS, (II) THE SECO ND DOCUMENT IS DATED 01.02.2010 IN THE FORM OF ' TO WHOMSOEVER IT MAY CONCERN 'CERTIFICATE . THIS WAS ISSUED BY AN UNNAMED GENERA L MANAGER OF DISTRICT INDUSTRIES CENTRE, PANCHMALIAL . THIS CERTIFICATE SAYS : AS PER THE NOTIFICATION NO.SO.857(E) DATED 1 0.12.1997, THE SAME UNIT HAD INSTALLED PLANT & MACHINERY WAS NOT M ORE THAN 3 CRORE DURING THE SPECIFIED PERIOD. DURING THE PERIO D PRODUCTION WAS CONTINUED. APART FROM THE FACT THAT THIS IS A VERY VAGUE CERTIFICATE ISSUED BY AN UNNAMED GENERAL MANAGER ON A PLAIN PAP ER, THE CERTIFICATE DOES NOT SERVE THE PURPOSE BECAUSE IT S IMPLY SAYS THAT THE VALUE OF P&M WAS NOT MORE THAN RS.3 CRORES. IT DOES NOT MENTION THE DATE OR PERIOD AND ALSO DOES NOT MENTIO N WHETHER VALUATION IS REFERABLE TO ACTUAL COST OR DEPRECIATE D VALUE. THE ISSUE INVOLVED IS WHETHER PRIOR TO THE NOTIFICATION DATED 10.12.1997, WHAT WAS THE TOTAL VALUE OF PLANT AND M ACHINERY INSTALLED. THE BENEFIT OF RS.3 CRORES WORTH OF PLAN T AND MACHINERY WAS GIVEN TO THOSE SSI UNIT WHO OBTAINED PERMANENT REGISTRATION NUMBER ON THE ORDER DATED 10.12.1997. IF THE TOTAL VALUE OF P&M'WAS MORE THAN RS.L CRORE BEFORE 10.12.1997 THE UNIT COULD NOT BE SSI UNIT. IN THE CASE OF THE APPELLANT, IT H AD PLANT AND MACHINERY WORTH MORE THAN RS.L CRORE BEFORE 1 0.12.1997. IN THIS REGARD, THE OBSERVATION OF THE HON. ITAT IN ASSESSEES CASE FOR ASSESSMENT YEAR 1998-99 TO 2004-05 IN ITA NO. 9 96/A/ IS RELEVANT WHICH IS REPRODUCED AS UNDER. THE LEARNED AR BEFORE US POINTED OUT THAT THE ASS ESSEE SUBMITTED ADDITIONAL EVIDENCE BY WAY OF LETTER DATE D 16.04.2006 FROM SHANTI CONSULTING ENGINEERS STATING THEREIN TH AT THE ASSESSEE WHO WAS INTO THE MANUFACTURING OF THE SPRI NGS FOR SCOOTERS ONLY SINCE 1981AND HAD INSTALLED A NEW UNI T BY INSTALLING NEW MACHINERIES UTILIZING WORKSHOP FLOOR SPACE OF S IZE 31,28 M X 17,59 M REFERRED TO ABOVE AS OLD UNIT IN 1996 FOR M ANUFACTURING OF SPRINGS FOR TWO WHEELERS, MOTOR BIKES AND FOUR WHEE LERS ADJOINING TO THE EXISTING UNIT. THE ELECTRICAL LOAD WAS ALSO ENHANCED. HE POINTED OUT THAT DURING THE PERIOD 1995 TILL DECEMB ER,1997 THE MACHINERIES FOR THE SUM OF RS.L,10,87,516/- WERE IN STALLED'. AS ADMITTED BY THE APPELLANT BEFORE THE ITAT UP TO DECEMBER, 1997 IT HAD PUT UP ADDITIONAL PLANT AND MACHINERY W ORTH RS.L, ITA NO 1526/AHD/2010 . A.Y. 2006-07 5 10,87,51/- IN THE NEW UNIT WHICH .WAS OVER AND AB OVE THE EXISTING PLANT AND MACHINERY. THUS, THE ASSESSEE WA S NOT AN SSI UNIT IN VIEW OF THE FACT THAT THE NEW UNIT WAS SET UP IN THE YEAR 1998-99 BEFORE THE NOTIFICATION. IT IS ALSO TO 'BE NOTED THAT THE ASSESSEE HAS NOT FURNISHED COMPLETE DETAILS OF PLAN T ARID MACHINERY IN THE OLD AND NEW UNIT SO AS TO ARRIVE A T THE CORRECT FIGURE AND THEREFORE EVEN THE CONTENTION THAT TOTAL INVESTMENT IN PLANT AND MACHINERY WAS LESS THAN RS.3 CRORES IS A LSO NOT ESTABLISHED . THUS, ON THIS COUNT ALSO, THE CLAIM I S NOT ALLOWABLE. ACCORDINGLY, THE DISALLOWANCE MADE BY THE AO IS UPH ELD AND THE APPEAL IS DISMISSED. 6. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE I S NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LEARNED A.R. SUBMITTED THAT THE A SSESSEE HAD CLAIMED DEDUCTION UNDER 80 IB FOR THE FIRST TIME IN ASSESSMENT YEAR 1998-99. HE FURTHER SUBMITTED THAT THE LAST DAY OF PREVIOUS YEAR FOR ASSESSMENT YEAR 1998-99 WAS 31 ST MARCH, 1998 AND AS PER THE NOTIFICATION DATED 10.12.1997, THE LIMIT FOR INVEST MENT IN PLANT AND MACHINERY WAS INCREASED TO RS. 3 CRORE AND, THEREFO RE, THE LIMIT OF RS. 3 CRORE BECOME APPLICABLE TO THE ASSESSEE. HE FURTHER POINTED TO THE CLARIFICATION DATED 14.3.2000 WHICH IS REPRODUCED BY CIT(A) WHEREIN IT HAS BEEN CLARIFIED THAT THE UN ITS WHICH HAVE GOT REGISTRATION WITH THE STATE AUTHORITIES FOR THE IR SSI STATUS WOULD CONTINUE TO REMAIN AS S.S.I. UNITS, DESPITE THE OR DER DATED 24.12.1999 WHERE THE LIMIT OF PLANT AND MACHINERY W AS REDUCED TO RS. 1 CRORE. HE FURTHER SUBMITTED THAT FOR THE PUR POSES OF INCOME- TAX, THE REGISTRATION OF AN INDUSTRIAL UNDERTAKING AS AN S.S.I. UNIT IS NOT NECESSARY AND FOR WHICH HE RELIED ON THE DECISI ON OF AHMEDABAD TRIBUNAL IN THE CASE OF K.H. S. MACHINERY PRIVATE ITA NO 1526/AHD/2010 . A.Y. 2006-07 6 LIMITED (ITA NO. 2289 OF 2006 ORDER DATED 19.12.200 8.) HE ALSO FURTHER PLACED ON RECORD, THE COPY OF THE CERTIFICA TE ISSUED BY DISTRICT INDUSTRY CENTRE WHEREIN IT WAS CERTIFIED T HAT THE PLANT AND MACHINERY INSTALLED IN THE ASSESSEES PREMISES FOR NOT MORE THAN RS. 3 CRORE. THE LEARNED A.R. FURTHER SUBMITTED THA T THE ASSESSEES CLAIM OF DEDUCTION UNDER 80 IB HAS BEEN ALLOWED IN THE EARLIER YEARS. HE THEREFORE SUBMITTED THAT ONCE THE DEDUCTION HAS BEEN ALLOWED TO THE ASSESSEE IN THE PAST THEN I N SUBSEQUENT YEARS, THE DEDUCTION CANNOT BE DISALLOWED ON THE SA ME GROUND. FOR THIS PROPOSITION, HE PLACED RELIANCE AND THE DE CISION OF AHMEDABAD BENCH IN THE CASE OF GATEWAY TECHONOLABS PRIVATE LIMITED (ITA NO. 2473 AND 2519 ORDER DATED 4.3.2009 ) AND THE DECISION OF HON. GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LIMITED VS. CIT 1980 123 ITR 669 (GUJ). HE THEREFORE URGED THAT THE ASSESSEE BE GRANTED DEDUCTION UNDER 80IB 8. THE LEARNED D.R. ON THE OTHER HAND SUBMITTED THA T THE PLANT AND MACHINERY IN THE CASE ASSESSEE WAS IN EXCESS OF RS . 1 CRORE PRIOR TO 10.12.1997 AND THEREFORE THE ASSESSEE WAS NOT EL IGIBLE FOR DEDUCTION UNDER 80 IB. HE THUS SUPPORTED THE ORDER OF ASSESSING OFFICER AND CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER 80 IB FOR THE FIRST TIME IN ASSESSM ENT YEAR 1998- 99 AND THE ASSESSEES CLAIM WAS ALLOWED BY APPELLAT E AUTHORITIES. WITH RESPECT TO THE LIMIT OF VALUE OF PLANT AND MAC HINERY, CIT(A) IN THIS ORDER HAS NOTED THAT THE LIMIT FOR INVESTMENT IN PLANT AND ITA NO 1526/AHD/2010 . A.Y. 2006-07 7 MACHINERY FOR THE PURPOSE OF S.S.I. UNIT OF RS. 3 C RORES (VIDE NOTIFICATION DATED 10.12.1997) WAS REDUCED TO RS. 1 CRORE. (VIDE NOTIFICATION DATED 29.12.1999). LATER ON 14.3.2000 A CLARIFICATION WAS ISSUED TO THE FOLLOWING EFFECT. [I] THE UNITS THAT HAVE OBTAINED PERMANENT REGISTR ATION ON THE ORDER DATED 10.12.1997 WOULD CONTINUE TO REMAIN AS SSI UNITS IN SPITE OF THE ORDER DATED 24.12.1999 REDUCING THE IN VESTMENT LIMIT TO RS. 1 CRORE. [II] THE UNITS WHICH HAD SWITCHED OVER TO THE SSI STATUS BASED ON THE ORDER DATED 10.12.1997 WOULD CONTINUE TO REMAIN AS SSI IN SPITE OF THE ORDER DATED 24.12.1999, AND [III] THE UNITS WHICH HAVE GOT PROVISIONAL REGISTR ATION WITH THE STATE AUTHORITIES FOR THEIR SSI STATUS WOULD CONTINUE TO REMAIN AS SSI UNITS INSPITE OF THE ORDER DATED 24.12.1999, PROVID ED THE PROVISIONS REGISTRATION HAD TAKEN PLACE WITHIN THE PERIOD OF LIMITATION OF 180 DAYS SPECIFIED IN THE ORDER DATED 10.12.1997. 10. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE WAS GRANTED S.S.I. CERTIFICATE ON 17.10.1994 AND WHICH WAS VALID UP TO 30.10.1994. THERE IS NOTHING ON RECORD TO PROVE THAT THE AFORES AID SSI CERTIFICATE HAS BEEN WITHDRAWN BY THE COMPETENT AUT HORITIES. IN THE CASE OF KHS MACHINERY PRIVATE LIMITED (SUPRA) THE COORDINATE BENCH HAS HELD THAT THERE IS NO PRE-CONDITION OF RE GISTRATION OF AN UNIT AS S.S.I. UNIT FOR AVAILING THE BENEFIT OF DED UCTION UNDER 80 IB OF THE ACT. THE ASSESSEE HAS ALSO PLACED ON RECORD THE CERTIFICATE FROM DISTRICT INDUSTRY CENTRE WHEREIN IT HAS BEEN C ERTIFIED THAT THE PLANT AND MACHINERY WAS NOT MORE THAN 3 CRORES. TH E AFORESAID FACTS HAVE NOT BEEN CONTROVERTED BY THE REVENUE BY BRINGING ANY CONTRARY MATERIAL ON RECORD. ITA NO 1526/AHD/2010 . A.Y. 2006-07 8 11. IN THE CASE OF SAURASHTRA CEMENT AND CHEMICAL I NDUSTRIES LIMITED (SUPRA) THE HON. HIGH COURT HAS HELD THAT DEDUCTIO N CANNOT BE DENIED IN SUCCEEDING YEAR WITHOUT DISTURBING THE RELEVANT RELIEF GRANTED IN THE INITIAL YEAR. THE ITO CANNOT EXAMINE THE QUESTION AGAIN AND DECIDE TO WITHHOLD OR WITHDRAWAL THE RELI EF WHICH HAS BEEN ALREADY ONCE GRANTED 12. CONSIDERING THE TOTALITY OF THE FACTS AND RELY ING ON THE AFORESAID DECISIONS OF THE HON. H.C. AND RESPECTFULLY FOLLOWI NG THE DECISION OF THE COORDINATE BENCH OF TRIBUNAL, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER 80 IB OF TH E ACT. 13. THUS THIS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 05 - 2013. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDA BAD