The DCIT Circle-2(1)(2), Vadodara V. M/s. Manpasand Beverages Pvt.Ltd., Vadodara

ITA 1631/AHD/2019

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0942 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Revised return
• Section: 143(3); 80IB; 80G

Judgement Text

आयकर अपीलीय अिधकरण, अहमदाबाद ᭠यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ B’’ BENCH, AHMEDABAD BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER And SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos. 1630-1631/AHD/2019 िनधाᭅरण वषᭅ/Asstt. Years: 2012-13 & 2013-14 D.C.I.T., Circle-2(1)(2), Vadodara. Vs. M/s. Manpasand Beverages Pvt. Ltd., E-62, Manjusar GIDC, Manjusr-Savli Road,, Vadodara. PAN: AAHCM1210E (Applicant) (Respondent) Revenue by : Shri James Kurian, CIT. D.R with Shri Abhimanyu Singh Yadav, Sr.D.R Assessee by : None सुनवाई कᳱ तारीख/Date of Hearing : 25/05/2022 घोषणा कᳱ तारीख /Date of Pronouncement: 27/05/2022 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of the Revenue against the separate orders of the Learned Commissioner of Income Tax (Appeals)- 2, Vadodara, of even dated 14/08/2019 (in short “Ld. CIT(A)”) arising in the matter of assessment order passed under s. 143(3) r.w.s 263 of the Income Tax Act 1961 (here-in-after referred to as "the Act") relevant to the Assessment Years 2012-13 & 2013-2014. ITA nos.1630-1631/AHD/2019 A.Ys. 2012-13 & 2013-14 2 ITA No. 1630/Ahd/2019, an appeal by the Revenue for A.Y. 2012-13 2. The Revenue has raised the following grounds of appeal: 1. Ld CIT(A) has erred in law and on facts in holding that the appeal has become infructuous and not deciding the issue on merits. 2. Ld CIT(A) has erred in law in not deciding the issues of appeal on merits without considering the legal issue that order of Hon'ble ITAT quashing order u/s. 263 of the PCTT is erroneous in law in view of the Hon'ble Supreme Court judgment in the case of Commissioner of Customs (Import) Mumbai Vs M/s Dilip Kumar and Company and others in CIVIL APPEAL No. 3327 of 2007 wherein it was held that 'when there is an ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue". 3. The appellant craves leave to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal. 3. When the matter was called out for hearing, none appeared on behalf of the assessee. However, we have perused the order of the authorities below and found that the matter in appeal can be disposed of without the assistance of the assessee. Accordingly, we decided to proceed to adjudicate the issue raised by the Revenue after hearing the learned DR. 3.1 The assessee in the present case is a private limited company and engaged in the manufacturing business of beverages. The assessee has filed its return of income dated 30 September 2012 which was subsequently revised dated 11 February 2013. The assessee in the revised return of income has declared an income of ₹ 31,70,230.00 after claiming the deduction of ₹ 6,30,86,410 and ₹1,25,000 under the provisions of section 80IB and 80G of the Act respectively. However, the assessment was framed under section 143(3) of the Act determining the total income at ₹ 7,02,48,624 vide order dated 28 October 2015. 3.2 However, subsequently the learned PCIT under section 263 of the Act revised the assessment order with the direction to make the fresh assessment vide order dated 23 rd of March 2018. Accordingly, the assessment was revised inconsequence to the direction of the learned PCIT under section 263 of the Act by the AO vide ITA nos.1630-1631/AHD/2019 A.Ys. 2012-13 & 2013-14 3 order dated 16 November 2018. Against the order of the AO, the assessee preferred an appeal to the learned CIT-A who held that the appeal filed by the assessee as infructuous on the reasoning that the ITAT has quashed the order framed under section 263 of the Act by the learned PCIT vide order dated 24-6-2019. According to the learned CIT-A, the appeal filed by the assessee was not maintainable and thus infructuous. 4. Being aggrieved by the order of the learned CIT-A, the Revenue is in appeal before us. 5. The learned DR before us vehemently supported the order of the AO. 6. We have heard the ld. DR and perused the materials available on record. There is no dispute to the fact that the impugned appeal filed by the Revenue is arising in consequence to the direction passed by the PCIT under section 263 of the Act vide order dated 23 March 2018. Admittedly, the order of the ld. PCIT has been quashed by the ITAT vide ITA No. 1208/AHD/2018 dated 24 June 2019. The relevant extract of the order is reproduced as under: Learned PCIT's objection is that when the process is carried out by different units, deduction under section 801B(11 A) will not be available to both the units, as "simultaneous deductions [under section 80IB (11A)] to two or more undertakings for successive processing in any manner is not allowable". That approach, however, is not understandable. In our considered view, when the process of making fruit drink from fruit is such that it can be split into different segments and such different segments of work are carried out by different units, entire work so done is integral part of fruit processing- even if carried out by both the units separately. The work done by these different units cannot be considered in isolation in view of its interdependence and artificial split of the integrated process. The work done by the unit processing fruit drinks from fruit pulp is an extension, and natural extension, of the work done by converting fruit pulp from fruits inasmuch as fruit pulp is only an intermediate product and not the end product. If fruit processing involves taking the fruit from stage A to stage C, and this journey has a stop at an intermediate stage B where the hands processing fruits change, the nature of work from stage B to stage C will not be any different. The character of the work remains the same. As for the apprehension of the learned PCIT is that it will amount to double deduction of Section 80IB (HA) is not really correct inasmuch as the deduction will be admissible only for the profit of the respective units and it is the total of profits earned by all the units involved in the process, where the units involved are more than one, that is to be termed as profits derived from processing of fruits. There is no double deduction as such, and the activity of all the related units involved in the chain of activities involving fruit processing is fruit processing activity. In our considered view, the deduction under section 80IB (11 A) is admissible for the assessee even though the assessee was ITA nos.1630-1631/AHD/2019 A.Ys. 2012-13 & 2013-14 4 engaged in only a part, though integral part, of the whole process of processing fruit from the basic stage to the end consumption stage. As regards learned PCIT's analysts about strict interpretation of exemption provisions, and reliance on Novopan decision (supra) on this issue it is not really relevant inasmuch as the provision that we are dealing with is an incentive provision for deduction- not exemption. There is a qualitative difference between exemption and deduction provisions, and these expressions • cannot be used interchangeable as the learned PCIT has chosen to do. The exception, laid down in Littman v. Barren 1952 (2) AIR 393 and followed by apex Court in Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commr. ofCCT [1992] Suppl. (1) SCC 21 and Novopa India Ltd. v. CCE & C 1994 (73) ELT 769 (SC) has been summed up in the words of Lord Lohen, in case of ambiguity, a taxing statute should be construed in favour of a. tax-payer does not apply to a provision giving tax-payer relied in certain cases from a section clearly imposing liability. That is not the case before us. It is not an exemption provision that is being invoked in the present case. What is before us is an incentive provision providing for deduction m the case involving a particular type of activity, and there is no doubt that the nature of activities of the assessee involve that activity. There can hardly be any dispute that the incentive provisions need to interpreted liberally to advance the purpose for which these are enacted, and. therefore, once there is no dispute that the assessee is involved in activity which is integral part of the fruit processing, it is a plausible view of the matter that the deduction is admissible to the assessee. Such a view cannot be disturbed in the course of revision proceedings under section 263 of the Act. 10. In view of these discussions, as also bearing in mind entirety of the case, we hold that the impugned revision order passed by the learned PCIT deserves to be vacated. We direct so. 11. In the result, the appeal is allowed. Pronounced in the open court today on the 24 th day of June, 2019. 6.1 In view of the above, there remains no ambiguity that the order i.e. u/s 263 of the Act based on which, the proceedings were initiated by the Revenue were not maintainable. It is for the reason that, the order of the learned PCIT has been quashed by the ITAT as discussed above. As such, the appeal filed by the Revenue does not require any separate adjudication, thus it becomes infructuous. Hence, the appeal filed by the revenue is hereby dismissed. 6.2 In the result, the appeal filed by the revenue is hereby dismissed. Coming to ITA No. 1631/Ahd/2019 an appeal by the Revenue for A.Y. 2013-14. 7. The Revenue has raised following grounds of appeal: 1. Ld CIT(A) has erred in law and on facts in holding that the appeal has become infructuous and not deciding the issue on merits. ITA nos.1630-1631/AHD/2019 A.Ys. 2012-13 & 2013-14 5 2. Ld CIT(A) has erred in law in not deciding the issues of appeal on merits without considering the legal issue that order of Hon'ble ITAT quashing order u/s. 263 of the PCTT is erroneous in law in view of the Hon'ble Supreme Court judgment in the case of Commissioner of Customs (Import) Mumbai Vs M/s Dilip Kumar and Company and others in CIVIL APPEAL No. 3327 of 2007 wherein it was held that 'when there is an ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the assessee and it must be interpreted in favour of the revenue". 3. The appellant craves leave to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal. 8. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the A.Y 2013-14 are identical to the issues raised by the Revenue in ITA No. 1630/Ahd/2019 for the assessment year 2012-13. Therefore, the findings given in 1630/Ahd/2019 shall also be applicable for the year under consideration i.e. AY 2013-14. The ground appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph No.6 to 6.2 of this in against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the grounds of appeal filed by the Revenue is hereby dismissed. 14.1 In the result appeal of the Revenue is hereby dismissed. 15. In the combined result both the appeal of the Revenue is hereby dismissed. Order pronounced in the Court on 27/05/2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 27/05/2022 Manish