M/s. Jolly Polymers, Mumbai V. The Income tax Officer,Vapi Ward-4., Daman

ITA 1611/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2009 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 17-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 19-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Keywords: Depreciation; Set aside
• Section: 80IB; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI A.N.PHAUJA, ACCOUNTANT MEMBER ITA NO.1611& 2481/AHD/2009 ASSESSMENT YEARS:2005-06 & 2006-07 DATE OF HEARING:17.12.09 DRAFT ED:22.12.09 M/S./ JOLLY POLYMERS, 65, SHANTI INDUSTRIAL ESTATE, S.N. ROAD, NR. TAMBE NAGAR, MULUND (W), MUMBAI-400 080 PAN NO.AAEFJ2211Q V/S. INCOME TAX OFFICER, VAPI WARD-4, DAMAN (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI TUSHAR P HEMANI, AR REVENUE BY:- SHRI C.K. MISHRA, SR.DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THESE TWO APPEALS BY THE ASSESSEE ARE ARISING OUT OF THE ORDERS OF COMMISSIONER OF INCOME-TAX(APPEALS)-I, SURAT IN APP EAL NO.CAS/I(V)/18 & 41/08-09 OF DIFFERENT DATE 16-03-2009 AND 03-07-2009. THE AS SESSMENTS WERE FRAMED BY THE ITO VAPI WARD-4, DAMAN U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 26-1 2-2007 FOR THE ASSESSMENT YEARS 2005-06 AND 2006-07 RESPECTIVELY. 2. THE FIRST COMMON ISSUE IN THESE APPEALS OF THE A SSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEDUCTI ON OF RS.20,13,891/- U/S.80-IB OF THE ACT MADE BY THE ASSESSING OFFICER. FOR THIS, T HE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1 IN ASSESSMENT YEAR 2005-06:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION O F RS.20,13,891/- THAT WAS CLAIMED UNDER SECTION 80IB OF THE I. TAX ACT, 1961 HOLDING THAT THE APPELLANT ITA NO.1611 & 2481/AHD/2009 A.YS.05-06 & 06-07 M/S. JOLLY POLYMERS V. ITO VAPI, WD-4, DAMAN PAGE 2 STARED THE PRODUCTION / MANUFACTURING IN VIOLATION OF THE FACTORY ACT AND THE DEDUCTION IS AVAILABLE ONLY TO A LINCENSED UNDERTAK ING. THE APPELLANT HAVING COMPLIED WITH ALL THE CONDITIONS UNDER SECTION 80IB OF THE I. TAX ACT. 1961 THE DISALLOWANCE OF THE CLAIM IS BAD IN LAW AND THE CLA IM OF THE APPELLANT NEEDS TO BE ALLOWED. IN ASSESSMENT YEAR 2006-06, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.2 :- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION O F RS.60,97,671/- THAT WAS CLAIMED UNDER SECTION 80IB OF THE INCOME TAX ACT, 1 961 FOLLOWING THE APPELLATE ORDER OF A.Y.2005-06 PASSED ON 16.03.2009 (APPEAL NO.CAS- I(V)/18/08-09) IN THE CASE OF THE ASSESSEE. THE APP ELLANT HAVING COMPLIED WITH ALL THE CONDITIONS UNDER SECTION 80IB OF THE I. TAX ACT 1961 THE DISALLOWANCE OF HE CLAIM IS BAD IN LAW AND THE CLAIM OF THE APPE LLANT NEEDS TO BE ALLOWED. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE RECORDS. WE HAVE ALSO PER USED THE CASE RECORDS INCLUDING THE ASSESSMENT ORDERS AS WELL AS THE ORDER OF CIT(A ). THE BRIEF FACTS LEADING TO THE ABOVE COMMON ISSUE ARE THAT THE ASSESSING OFFICER I N HIS ASSESSMENT ORDERS NOTED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF FA CTORIES ACT AND COULD NOT HAVE STARTED THE MANUFACTURING / PRODUCTION ON OR BEFORE 31-03-2004 AND HENCE THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT BEFORE THE CIT(A) THE ASSESSEE FILED THE DETAILS WITH RESPECT TO SALES, R EGISTRATION OF POWER, REGISTRATION FOR SSI WHICH ALL GOES TO PROVE THAT THE PRODUCTION HAS STARTED BEFORE 31-03-2004. THE CIT(A) ONLY NOTED THAT THE LICENCE OF THE FACTORY W AS ISSUED MUCH LATER THAN 31 ST MARCH OF THE RELEVANT YEAR AND ACCORDINGLY THE ACTI ON OF THE ASSESSING OFFICER WAS CONFIRMED. THE LD. COUNSEL FOR THE ASSESSEE BEFORE US FILED COPY ITAT ORDER EXACTLY ON SIMILAR ISSUE IN ITA NO.1006/AHD/2009 DATED 05-06-2009 IN THE CASE OF ITO VAPI V. SAMRATH HEALTH CARE , IN ITA NO.1004-1005/AHD/2009 DATED 05-06-2009 IN THE CASE OF ITO V. M/S. PADMEY IMPEX AND ALSO IN ITA NO.1329/AHD/2009 DATED 18-09- 2009 IN THE CASE OF NISSAN COPPER LTD. V. ACIT, . THE TRIBUNAL IN THE CASE OF ITO VAPI V. SAMRATH HEALTH CARE (SUPRA) HAS ALLOWED THE CLAIM OF THE ASSESSEE IN PARA- 7 AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DR AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITI ES. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF T HE LEARNED CIT(A). THE LEARNED CIT(A) HAS RIGHTLY MENTIONED THAT TO OBTAIN FACTORY LINCENSE IS NO A CONDITION PRECEDENT FOR CLAIMING DEDUCTION U/S.80 I B OF THE ACT. IF WE PRESUME HAT THIS CONDITION IS ALSO REQUIRED TO BE FULFILLED BY THE ASSESSEE, THEN IT WOULD AMOUNT TO LEGISLATION BY INSERTING ANOTHER CONDITIO N IN SECTION 80 IB FOR ITA NO.1611 & 2481/AHD/2009 A.YS.05-06 & 06-07 M/S. JOLLY POLYMERS V. ITO VAPI, WD-4, DAMAN PAGE 3 ALLOWING DEDUCTION UNDER THAT SECTION THOUGH NOT PR OVIDED IN THE STATUTE. THE AO DID NOT DOUBT ABOUT RAW MATERIAL CONSUMPTION, PO WER CONSUMPTION, SALES AND EMPLOYMENT OF WORKERS. FURTHER NO DOUBT WAS ALS O EXPRESSED BY THE AO THAT ASSESSEE DID NOT CARRY ANY MANUFACTURING ACTIV ITY. NONETHELESS, THE ASSESSEE HAS APPLIED FOR FACTORY LICENSE PRIOR TO C OMMENCEMENT OF PRODUCTION THOUGH IT WAS GRANTED SUBSEQUENTLY. THE ASSESSEE HA S BEEN GIVEN A PERMANENT REGISTRATION AS A SMALL SCALE INDUSTRIAL UNDERTAKING AND HAS REGISTERED WITH THE SALES TAX AND EXCISE AUTHORITIE S. FOR CLAIMING DEDUCTION U/S.80 IB OF THE ACT ONLY THE CONDITIONS LAID DOWN UNDER THAT SECTION ARE REQUIRED TO BE FULFILLED AND NO MORE. THE REQUIREME NT UNDER OTHER STATUTES CANNOT BE BORROWED FOR ALLOWING / REFUSING DEDUCTIO N UNLESS IT IS SO PROVIDED IN THE IT ACT ITSELF. FOR EXAMPLE, THE LEGISLATURE THOUGHT IT FIT TO BRING THE CONDITION OF EMPLOYMENT OF 10 OR MORE WORKERS IF MANUFACTURING ACTIVITIES ARE CARRIED OUT WITH THE HELP OF POWER OR MORE THAN 20 WORKERS WITHOUT THE HELP OF POWER. SIMILARLY, IF THE LEGISLATURE THOUGHT IT FIT TO OBTAIN FACTORY LICENSE BEFORE ALLOWING DEDUCTION U/S.80 IB OF THE ACT THEN THEY W OULD HAVE SO PROVIDED. IN FACT, THERE ARE SEVERAL OTHER REQUIREMENTS IN DIFFE RENT ACT APPLICABLE TO AN INDUSTRY BUT ALL THESE REQUIREMENTS ARE NOT TO BE C OMPLIED WIDTH FOR CLAIMING DEDUCTION U/S.80 IB OF THE ACT. WHAT IS ESSENTIAL I S THAT THE ASSESSEE SHOULD MANUFACTURE OR PRODUCE AN ARTICLE OR THING. IF THER E IS ANY VIOLATION OF ANY PROVISIONS OF OTHER STATUTES THEN THE ASSESSEE HAS TO EXPLAIN THE SAME TO THE AUTHORITIES EXECUTING THOSE ACTS / STATUTES. FURTHE R FOR VIOLATION OF HE PROVISIONS UNDER OTHER ACTS THE ASSESSEE MAY FACE P ENAL PROVISIONS AS PROVIDED UNDER THOSE ACTS. BUT FOR THAT COMMISSIONS / OMISSION UNDER OTHER ACTS THE DECISION UNDER THE IT ACT CANNOT BE AFFECT ED UNLESS SO PROVIDED UNDER THE IT ACT. WE HOWEVER, NOTICE THAT THIS APPE AL IS FOR AY 2005-06 AND AS PER FACTS STATED IN THE ORDER BY THE LEARNED CIT (A) THE ASSESSEE HAS OBTAINED FACTORY LICENSE ON 6-5-2004 WHICH IS FINAN CIAL YEAR 2004-05. THEREFORE, THERE SHOULD BE NO CASE FOR DISALLOWING THE CLAIM OF THE ASSESSEE U/S.80 IB ON THE QUESTION OF NOT OBTAINING FACTORY LICENSE. AS A RESULT, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 4. WE FIND THAT THE ABOVE COMMON ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE, AS THE FACTS ARE EXACTLY IDENTICAL, RESPECTFULLY FOLLOWING THE ABOVE TRIBUNALS DECISIONS, WE ALLOW THE CLAIM OF THE ASSESSEE. THIS COMMON ISSUE IN BOTH THE APPEAL OF THE ASSESSEE IS ALLOWED. 5. THE NEXT COMMON ISSUE IN THESE APPEALS OF THE AS SESSEE IS AS REGARDS TO THE DISALLOWANCE OF DEPRECIATION. THE ASSESSEE HAS RAI SED THE FOLLOWINGS GROUNDS IN BOTH THE ASSESSMENT YEARS:- 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE CLAIM O F DEPRECIATION OF RS.1,51,812/- ON AIR CONDITIONERS INSTALLED AT THE ADMINISTRATIVE OFFICE AT MULUND, MUMBAI. ITA NO.1611 & 2481/AHD/2009 A.YS.05-06 & 06-07 M/S. JOLLY POLYMERS V. ITO VAPI, WD-4, DAMAN PAGE 4 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF THE CLAIM O F DEPRECIATION OF RS.29,578/- ON AIR CONDITIONERS INSTALLED AT THE AD MINISTRATIVE OFFICE AT MULUND, MUMBAI FOLLOWING THE APPELLATE ORDER OF A.Y.2005-06 PASSED ON 16.03.2009 (APPEAL NO.CAS-I(V)/18/08-09) IN THE CASE OF THE AS SESSEE. 6. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE A S WELL AS LD. SR. DR FAIRLY AGREED THAT THIS COMMON ISSUE NEED VERIFICATION OF FACTS AND ACCORDINGLY, THE SAME CAN BE SET ASIDE TO THE FILE OF ASSESSING OFFICER. AS BOTH THE PARTIES AGREED FOR SENDING BACK THE MATTER TO THE FILE OF ASSESSING OF FICER, WE SET ASIDE THIS COMMON ISSUE TO THE FILE OF ASSESSING OFFICER. ACCORDINGL Y, THIS COMMON ISSUE OF THE ASSESSEES APPEALS IS ALLOWED FOR STATISTICAL PURPO SES. 7. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IN ASS ESSMENT YEAR 2005-06 IS AS REGARDS TO ADDITION CONFIRMED BY CIT(A) ON ACCOUNT OF UNSECURED LOAN ADDED U/S.68 OF THE ACT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.25,000/- MAD E UNDER SECTION 68 OF THE I. TAX ACT, 1961 IN RESPECT OF ALLEGED LOAN TAKEN FROM PINAL K SHAH AND ERRED IN NO APPRECIATING THE TYPOGRAPHICAL ERROR IN THE REPO RT. 8. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE F AIRLY STATED THAT THE FACT REGARDING TYPOGRAPHICAL ERROR IS TO BE VERIFIED BY THE ASSESSING OFFICER AND ACCORDINGLY REQUESTED FOR SENDING MATTER BACK TO TH E FILE OF ASSESSING OFFICER. THE LD. DR HAS NOT OBJECTED TO THE SAME. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION. ACCORDINGLY , THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 23/12/2009 SD/- SD/- (A.N.PHAUJA) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED :23/12/2009 *DKP COPY OF THE ORDER FORWARDED TO :- ITA NO.1611 & 2481/AHD/2009 A.YS.05-06 & 06-07 M/S. JOLLY POLYMERS V. ITO VAPI, WD-4, DAMAN PAGE 5 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-I, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD