DCIT CC 11, MUMBAI V. JAGDISHPRASAD MOHANLAL JOSHI, MUMBAI

ITA 1632/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78990 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOURYA PRATAP
• Section: 80IB; 263

Judgement Text

, , INCOME TAX APPELLATE TRIBUNAL MUMBAI - J BENCH MUMBAI , , / , BEFORE S/SH. VIJAY PAL RAO, JUDICIAL MEMB ER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 1632/MUM/2013, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR2009-10 DCIT CC 11, ROOM NO. 804, 8 TH FLOOR, OLD CGO BUILDING (ANNEX), M.K.ROAD, MUMBAI-400020 VS. JAGDISHPRASAD MOHANLAL JOSHI, 604, GATEWAY PLAZA, CENTRAL AVENUE ROAD, HIRANANDANI, POWAI, MUMBAI-400076 PAN: AAAPJ5006B ( #$ / APPELLANT) ( %&#$ / RESPONDENT) #$ ' / APPELLANT BY : SHRI MOURYA PRATAP %&#$ ( ' / RESPONDENT BY :NEELKANTH KHANDELWAL. ! ! ! ! ( (( ( )* )* )* )* / DATE OF HEARING :28-05-2014 +,' ( )* / DATE OF PRONOUNCEMENT :28- 05- 2014 ! ! ! ! , 1961 ( (( ( 254 )1( )-) )-) )-) )-) . . . . ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! ! ! ! PER RAJENDRA,A.M: CHALLENGING THE ORDER DATED 07.08.2012 OF THE CIT(A )-24,MUMBAI,ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW,THE LD CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S.80IB WITHOUT CONSIDERING THE FACT AND DISREGARDING THE PROVISIONS OF SEC 80IB (2)(I) THAT THE BUSINESS OF THE ASSESSEE WAS SET UP BY SPL ITTING UP OR RECONSTRUCTION OF THE BUSINESS OF AN EXISTING CONCERN HAVING THE SAME NATURE OF BUSINESS AND MANUFACTURING SIMILAR ITEMS CONTROLLED BY THE SAME PROMOTORS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW,THE LD CIT(A) FAILED TO APPRECIATE THAT THE TRANSACTION OF SALE AND PURCHASE WAS ENTIR ELY WITH M/S J.M. ESSENTIAL OIL CO. AND M/S SACHIN PERFUMERY COSMETICS BEING PROPRIETARY CONCER N AND THUS, BETWEEN TWO ARMS OF THE SAME BUSINESS OF THE ASSESSEE. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR AL TER ANY GROUND OR ADD A NEW GROUND THAT MAY BE NECESSARY. 2. THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETOR OF J.M.ENTERPRISES(JME),J.M.MARKETING (JMM), J.M. PERFUMERY(JMP),J.M.ESSENTIAL OIL CO.(JMEOC)AND SACHIN PERFUMERY & COSMETIC (SPC). HE FILED HIS RETURN OF INCOME ON 30.09.2009,DECLARI NG INCOME OF RS.5.41 CRORES.AO FINALISED THE ASSESSMENT U/S.143(3)OF THE ACT ON 19.12.2011 DETER MINING THE INCOME OF THE ASSESSEE AT RS.5.83 CRORES. FIRST GROUND OF APPEAL IS ABOUT ALLOWING THE DEDUCT ION U/S.80IB ALLOWING THE DEDUCTION U/S.80IB OF THE ACT.DURING THE ASSESSMENT PROCEEDINGS,AO FOU ND THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S.80IB OF THE ACT IN RESPECT OF ITS BUSINESS OF SPC.THE AO WAS OF THE OPINION THAT THE NEW UNIT,SPC,HAD BEEN FORMED BY SPLITTING UP OR RECONST RUCTION OF THE ORIGINAL UNIT JMP.RELYING UPON 2 ITA NO. 1632/MUM/2013 JAGDISHPRASAD MOHANLAL JOSHI THE ORDER FOR THE YEAR 2002-03,HE HELD THAT THE ASS ESSEE WAS NOT ELIGIBLE FOR CLAIMING DEDUCTION U/S.80IB OF THE ACT.HE DISALLOWED THE CLAIM, AMOUNT ING TO RS.38. 42 LAKHS MADE BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE CARRI ED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY(FAA).AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND FOLLOWING THE ORDERS OF HIS PREDECESSOR FOR THE AY.2003-04 TO 2007-08,HE DELETE D THE ADDITION MADE BY THE AO. 4. DURING THE COURSE OR HEARING BEFORE US,DEPARTMENTAL REPRESENTATIVE (DR)SUPPORTED THE ORDER OF THE AO.AUTHORISED REPRESENTATIVE(AR)STATED THAT SIM ILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL THAT WAS DELI VERED FOR EARLIER YEARS.WE HAVE HEARD THE RIVAL SUBMISSIONS.WE FIND THAT SIMILAR ISSUE HAD ARISEN I N THE EARLIER AYS.ALSO.ONE OF US,WAS PARTY TO THOSE ORDERS. DISMISSING THE APPEALS FILED BY THE A O FOR THE AY.2000-01,2002-03,2003-04 TO 2006-07(ITA NOS.5224 AND 5081/M12012,5225 AND 5082/ M/2012, AND 6630 TO 6634)VIDE ORDER DATED 26.03.2014TRIBUNAL HAD DEALT THE ISSUE AS UND ER: 2.IN ALL THE APPEALS, THE COMMON GROUND RAISED BY THE REVENUE READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW,THE LD CIT(A) ERRED IN ALLOWING THE DEDUCTION U/S.80IB WITHOUT CONSIDERING THE FACT AND DISREGARDING THE PROVISIONS OF SEC 80IB (2)(I) THAT THE BUSINESS OF THE ASSESSEE WAS SET UP BY SPL ITTING UP OR RECONSTRUCTION OF THE BUSINESS OF AN EXISTING CONCERN HAVING THE SAME NATURE OF BUSINESS AND MANUFACTURING SIMILAR ITEMS CONTROLLED BY THE SAME PROPRIETOR. 9.WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE ORDERS OF THE LOWER AUTHORI - TIES AND THE RELEVANT MATERIAL EVIDENCES BROUGHT ON RECORD. IT IS AN ADMITTED FACT THAT JMP STARTED OPERATION FROM 1996-97AND WHILE IT WAS IN EXISTENCE , THE JME STARTED ITS OPERATION IN A.Y 1998-99 AND WHILE BOTH JMP AND JMB WERE IN EXISTENCE, SACHI N PERFUMERY & COSMETIC STARTED OPERATIONS IN A.Y. 2001-02.IT IS ALSO AN UNDISPUTED FACT THAT IN A.Y. 1998-99, THE AU HAS ALLOWED THE CLAIM OF DEDUCTION IN CASE OF JMP AND JME AND IN A.Y.2001-02 , THE CLAIM OF DEDUCTION WAS ALLOWED IN RESPECT OF ALL THE THREE UNITS ALTHOUGH THE CIT INV OKING HIS POWERS U/S. 263 DIRECTED THE AU TO DISALLOW THE CLAIM. HOWEVER, THE SAID ORDER OF THE CIT WAS SET ASIDE BY THE TRIBUNAL IN ITA NO.2949/ MUM/ DT.25.1.2012.THESE UNDISPUTED FACTS O N RECORD CLEARLY SHOW THAT NEW TWO UNITS HAVE NOT BEEN FORMED AFTER SPLITTING OF OR RECONSTR UCTION OF JMP. IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT THE BAR AS PROVIDED U/S. 80IB (2) (I) IS TO BE CONSIDERED ONLY FOR THE FIRST YEAR OF CLAIM FOR DEDUCTION U/S. 80IB.ONCE THE ASSESSEE IS ABLE TO SHOW THAT IT HAS USED NEW PLANT AND MACHINERY WHICH HAS NOT BEEN PREVIOUSLY USED FOR AN Y PURPOSE AND THE NEW UNDERTAKING IS NOT FORMED BY SPLITTING OR RECONSTRUCTION OF BUSINESS A LREADY IN EXISTENCE, IT IS ENTITLED TO THE U/S. 80I B FOR SUBSEQUENT YEARS. SINCE THE ASSESSEE HAS BEEN C LAIM OF DEDUCTION IN A.Y. 1998-99 IN RESPECT OF JME AND IN A.Y. 2001-02 IN RESPECT OF SACHIN PERFUM ERY & COSMETIC CONSEQUENTLY IT CANNOT BE DENIED DEDUCTION FOR THE SUBSEQUENT YEARS INASMUCH AS RESTRAIN OF SECTION 80IB (2)(1) CANNOT BE CONSIDERED FOR EVERY YEAR OF CLAIM OF DEDUCTION BUT CAN BE CONSIDERED ONLY IN THE YEAR OF FORMATION OF BUSINESS. 10. THE HONBL JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS PAUL BROTHERS 216 TTR 548 HAS HELD THAT: WHERE RELIEF GRANTED U/S. 80HH OR 80J FOR AN EARLIE R ASSESSMENT YEAR ON THE SAME GROUND HAS BECOME FINAL,SAME RELIEF CANNOT BE WITHHELD FOR SUB SEQUENT ASSESSMENT YEARS WITHOUT WITHDRAW - ING RELIEF FOR EARLIER ASSESSMENT YEAR. 11.CONSIDERING ALL THESE FACTS IN TOTALITY, WE DO N OT FIND ANY REASON TO INTERFERE WITH THE FINDINGS O F THE LD. CIT(A).THE COMMON GROUND IN ALL THE APPEALS BY THE REVENUE ARE DISMISSED. 3 ITA NO. 1632/MUM/2013 JAGDISHPRASAD MOHANLAL JOSHI AS THE ISSUE BEFORE US,HAS ALREADY BEEN DECIDED BY THE ORDERS FOR THE EARLIER YEARS,SO,FOLLOWING THE SAME,WE DECIDE GROUND NO.1 AGAINST THE AO. 5.NEXT GROUND IS ABOUT TRANSACTION OF SALE AND PURC HASE BETWEEN JMEOC AND SPC.BEFORE US AR AND DR FAIRLY CONCEDED THAT THE GROUND WAS NOT ARIS ING OUT OF THE ORDER OF THE AO OR THE FAA, THAT TRANSACTION IN QUESTION WAS THERE IN THE EARLI ER YEARS, THAT FOR THE YEAR UNDER APPEAL ISSUE WAS NOT DISCUSSED OR DECIDED BY THE FAA.THEREFORE, WE D ISMISS GROUND NO.2,FILED BY THE AO. AS A RESULT,APPEA L FILED BY THE AO STANDS DISMISSED. /)0 !1) * 2 3 ( - ! 4 ( ) 56 . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY,2014. . ( +,' 7 8! 28 , 2014 , ( - : SD/- SD/- ( / VIJAY PAL RAO ) ( / RAJENDRA ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8! /DATE:28.05.2014 SK . . . . ( (( ( %) %) %) %) ; ') ; ') ; ') ; ') / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT (A) / < = , 4. THE CONCERNED CIT / < = 5. DR J BENCH, ITAT, MUMBAI / >- %)! , . . . 6. GUARD FILE/ - / &) &) &) &) %) %)%) %) //TRUE COPY// .! / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI