ACIT 1(3), MUMBAI V. GIVAUDAN FLAVOURS (INDIA) P.LTD, MUMBAI

ITA 1667/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5715 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S D SRIVASTAVA
• Keywords: Depreciation; Benefit of exemption
• Section: 143(3); 115JB; 80IB; 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI , , , BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMBER . / ITA NO. 8007 /MUM./ 2011 ( / ASSESSMENT YEAR : 2002 03 ) DY. COMMISSIONER OF INCOME TAX 1(3) AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .. / APP ELLANT V/S M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 401, AKRUTI CENTRE POINT 4 TH FLOOR, MIDC CENRAL ROAD MIDC, ANDHEIR (E), MUMBAI 400 093 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACL1013D . / ITA NO. 1667 /MUM./ 2011 ( / ASSESSMENT YEAR : 2004 05 ) DY. COMMISSIONER OF INCOME TAX 1(3) AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .. / APP ELLANT V/S M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 401, AKRUTI CENTRE POINT 4 TH FLOOR, MIDC CENRAL ROAD MIDC, ANDHEIR (E), MUMBAI 400 093 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AAACL1013D M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 2 . / C.O. NO. 220 /MUM./2012 ( . 8007 /MUM./201 1 ) ( ARISING OUT OF ITA NO. 8007 /MUM./201 1 ( / ASSESSMENT YEAR : 200 2 03 ) M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 401, AKRUTI CENTRE POINT 4 TH FLOOR, MIDC CENRAL ROAD MIDC, ANDHEIR (E), MUMBAI 400 093 .. / CROSS OBJECT OR V/S ASSTT. COMMISSIONER OF INCOME TAX 1(3) AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACL1013D . / C.O. NO. 169/MUM./2013 ( . 1667 /MUM./201 1 ) ( ARISING OUT OF ITA NO. 1667 /MUM./201 1 ( / ASSESSMENT YEAR : 20 04 05 ) M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 401, AKRUTI CENTRE POINT 4 TH FLOOR, MIDC CENRAL ROAD MIDC, ANDHEIR (E), MUMBAI 400 093 .. / CROSS OBJECTOR V/S ASSTT. COMMISSIONER OF INCOME TAX 1(3) AAYAKAR BHAVAN, 101, M.K. ROAD MUMBAI 400 020 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACL1013D / ASSESSEE BY : MR. DHANESH BAFNA A/W MR. ARPITA AGARWAL / RE VENUE BY : MR. S.D. SRIVASTAVA / DATE OF HEARING 2 3 .0 1 .201 4 / DATE OF ORDE R 31.01.2014 M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 3 / ORDER / PER BENCH THE PRESENT APPEAL S HA VE BEEN PREFERRED BY THE REVENUE CHALLE NGING THE IMPUGNED SEPARATE ORDER S DATED 22 ND SEPTEMBER 2014, FOR THE ASSESSMENT YEAR 2002 03 AND ORDER DATED 22 ND DECEMBER 2012 , FOR THE ASSESSMENT YEAR 2004 05, PASSED BY THE LEARNED COMMISSIONER (APPEALS) II, MUMBAI. THE ASSESSEE HAS ALSO RAISED CROSS O BJECTIONS WHICH ARE ARISING OUT OF THE AFORESAID APPEALS PREFERRED BY THE REVENUE. 2 . SINCE THE GROUNDS RAISED BY REVENUE IN ITS APPEALS AND THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIONS FOR BOTH THE YEARS UNDER APPEAL ARE COMMON, THEREFORE, AS A MATTER OF CONVENIENCE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. WE FIRST PROCEED TO DISPOSE OF THE APPEALS PREFERRED BY THE REVENUE, VIDE WHICH, FOLLOWING GROUNDS HAVE BEEN RAISED: GROUNDS RAISED IN THE AS SESSMENT YEAR 2002 03 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IB OF THE ACT IN RESPECT OF ALL THE UNITS OF INDUSTRIAL UNDERTAKING WITHOUT APPRECIATING THE FACTS THAT ( I ) THE INDUSTRIAL UNDERTAKINGS HAVE BEEN SET UP BY THE ASSESSEE BY PURCHASE OF PLANT AND MACHINERY ALREADY USED BY ANOTHER PERSON, AND ( II ) THE ITAT HAS ALLOWED THE ASSESSEES CLAIM FOR DEDUCTION U/S 80IB ON TECHNICAL GROUNDS AND N OT ON THE MERITS, IN EARLIER APPEALS FOR A.Y. 2004 05. M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 4 GROUNDS RAISED IN THE ASSESSMENT YEAR 200 4 05 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN DIRECTING TO ALLOW CLAIM OF DEDUCTION U/S 80IB. 3 . SINCE THE FACTS & CIRCUMSTANCES AS WELL AS THE GROUNDS RAISED IN BOTH THE YEARS UNDER APPEAL BEING IDENTICAL, HOWEVER, IN ORDER TO UNDERSTAND THE IMPLICATION, IT WOULD BE NECESSARY TO TAKE NOTE OF FACTS OF ONE APPEAL AND, ACCORDINGLY, WE ARE NARRATING THE FACTS, AS THEY APPEAR IN ITA NO. 8007 /MUM./201 1 , FOR THE ASSESSMENT YEAR 2002 03 . 4 . BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE, A T THE OUTSET SUBMITTED THAT ON MERITS, THE ISSUE OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB HAS BEEN DECIDED IN FAVOUR OF THE AS SESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 05 AND 2005 06 PASSED IN ITA NO.266 AND 267/MUM./2009, VIDE ORDER DATED 11 TH MARCH 2010. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, THOUGH ACCEPTED THIS FACT, HOWEVER, STRONGLY RELIED UPON THE FINDINGS GIVEN BY THE ASSESSING OFFICER. 5 . FACTS IN BRIEF : THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME ON 30 TH OCTOBER 2002, DECLARING NIL INCOME. HOWEVER, THE BOOK PROFIT UNDER SECTION 115JB WAS SHOWN AT ` 9,22,68,000. T HE SAID RETURN OF INCOME WAS SUBJECTED TO SCRUTINY UNDER SECTION 143(3) , WHEREIN, T HE ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB AND THE DEPRECIATION CLAIMED W ERE EXAMINED. THE ASSESSING OFFICER, WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE, HEL D THAT DEPRECIATION IS ALLOWABLE FOR THE YEAR WHICH IS TO BE ALLOWED FROM THE PROFITS AVAILABLE AND THE CLAIM OF DEDUCTION UNDER SECTION 80IB WILL BE ALLOWED ONLY FROM M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 5 THE GROSS TOTAL INCOME AFTER SETTING OF THE DEPRECIATION. THE INCOME WAS COMPUTED AT NI L . HOWEVER, THE INCOME WAS ASSESSED AND TAX WAS CALCULATED UNDER SECTION 115JB , AS THE BOOK PROFIT WAS MORE THAN THE NORMAL COMPUTATION OF INCOME. THEREAFTER, THE ASSESSEES CASE WAS RE OPENED UNDER SECTION 147 AND VIDE ORDER DAED 20 TH DECEMBER 2007, PASS ED UNDER SECTION 143(3) R/W 148 AN ADDITION OF ` 23.62 LAKHS WAS MADE TO THE CLOSING STOCK ON ACCOUNT OF UNUTILISED CENVAT CREDIT AND ` 351.61 LAKHS WAS MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENDITURE. HOWEVER, THE INCOME WAS AGAIN DETERMINED AT N IL AND THE ASSESSED BOOK PROFIT WAS THE SAME. SUBSEQUENTLY, SECOND TIME NOTICE UNDER SECTION 148 WAS ISSUED TO THE ASSESSEE ON 25 TH MARCH 2009 FOR REOPENING THE CASE IN ORDER TO DISALLOW THE CLAIM OF DEDUCTION UNDER SECTION 80IB , WHICH W AS ALREADY ALLOWED BY THE ASSESSING OFFICER. THIS RE OPENING HAS BEEN DONE AFTER THE EXPIRY OF MORE THAN FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. 6 . BESIDES CHALLENGING THE RE OPENING FOR THE SECOND TIME UNDER SECTION 147, THE ASSESSEE MADE A VERY DETAIL SUBMI SSIONS ON MERITS WHICH ARE AS UNDER : THE BUSINESS UNIT ELIGIBLE FOR DEDUCTION U/S 80IB WAS PURCHASED AS A GOING CONCERN FOR A SLUMP PRICE FROM THE ERSTWHILE COMPANY HINDUSTAN LEVER LTD. (HLL) IN 2001. THE PLANT AND MACHINERIES WERE PURCHASED BY HLL AND USED IN THE BUSINESS UNIT WHEN THE SAME WAS SET UP BY THE ERSTWHILE COMPANY HLL AND THE SAME CONTINUES TO BE USED IN THE SAME BUSINESS UNIT EVEN AFTER TRANSFER OF THE BUSINESS UNIT AS A GOING CONCERN TO QUEST INTERNATIONAL INDIA LTD. (QIIL), THE ASSESSEE C OMPANY. THEREFORE THERE IS NO QUESTION OF THE ASSESSEE COMPANY BEING FORMED AFTER PURCHASE OF PLANT & MACHINERY WHICH WERE ALREADY USED BY ANOTHER COMPANY AS ALLEGED IN THE NOTICE. IN FACT THE AGREEMENT FOR ASSIGNMENT OF THE UNDERTAKING WAS MADE ON 28 MARC H 2001 AND THE COPY THEREOF WAS ALSO SUBMITTED AND KEPT ON RECORDS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THIS CONNECTION KINDLY REFER TO PARA 3 OF ASSESSMENT ORDER FOR AY 2002 03 U/S.143(3) OF IT ACT. THEREFORE, THE ALLEGATION THAT THERE HAS BEEN FAILURE ON.JHE PART OF THE ASSESSEE' TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS IS BASELESS AND TOTALLY INCORRECT. THE COMPANY CLAIMED DEDUCTION U/S.80IB OF IT ACT AFTER SATISFYING ALL THE CONDITIONS M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 6 U/S.80IB OF IT ACT FOR THE UNDERTAKINGS WHICH ARE E LIGIBLE FOR THE CLAIM U/S.80IB OF IT ACT. AS ALREADY STATED THE UNDERTAKINGS WHICH WERE ELIGIBLE FOR THE BENEFIT U/S 80IB WERE TRANSFERRED AS A GOING CONCERN TO THE COMPANY BY HINDUSTAN LEVER LTD. (HLL) IN 2001 AND ARE HENCE ELIGIBLE 10 AVAIL OF CLAIM U/S. 80IB OF IT ACT FOR THE BALANCE PERIOD OF THE TEN ASSESSMENT YEARS AS PROVIDED U/S 80IB, BEGINNING WITH THE INITIAL ASSESSMENT YEAR. IT IS PERTINENT TO NOTE THAT THE BENEFIT OF EXEMPTION U/S 80IB OF THE ACT IS AVAILABLE TO AN UNDERTAKING AND NOT THE OWNER A S HAS BEEN HELD BY BOMBAY TRIBUNAL IN ITO VS HINDUSTAN PETROLEUM LTD. (LTAT BOM BENCH 16 ITO 574).THE SAME PRINCIPLE WAS CONFIRMED IN CIT VS TYRESOLES CONCESSIONARIES PVT. LTD 213 ITR 660(BOM).THE FACT OF THE UNDERTAKINGS OF THE COMPANY BEING PURCHASED FRO M HLL AND THE COMPLETION ON 29.6.2001 OF THE TRANSFER AND ASSIGNMENT OF THE UNDERTAKINGS BY HLL TO QIIL WAS FULLY DISCLOSED DURING THE COURSE OF ASSESSMENT FOR AY 2002 03. IN FACT, A DETAILED QUESTIONNAIRE WAS ALSO ISSUED BY THE ASSESSING OFFICER (AO) DURI NG THE ASSESSMENT AND THE REASONS FOR MAKING CLAIM U/S.80IB OF IT ACT WERE CLEARLY EXPLAINED IN THE WRITTEN SUBMISSION FILED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. A COPY OF AGREEMENT FOR ASSIGNMENT OF THE UNDERTAKINGS DT . 28.3.2001 W AS ALSO SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH HAS ALSO BEEN RECORDED IN THE ASSESSMENT ORDER. THE AO AFTER SATISFYING HERSELF WITH THE DISCLOSURES MADE DURING THE COURSE OF SCRUTINY ASSESSMENT ALLOWED THE CLAIM FOR U/S.80IB OF IT ACT IN A.Y. 2002 03 AS WELL AS IN A.Y. 2004 05.THEREFORE IT IS TOTALLY INCORRECT TO SAY THAT AT THE TIME OF COMPLETION OF ASSESSMENT FOR A Y 2005 06 IT CAME TO LIGHT THAT THE ASSESSEE COMPANY HAS BEEN FORMED AFTER PURCHASING PLANT AND MACHINERY ALONG WITH PR EMISES AND OTHER ASSETS WHICH WERE ALREADY USED BY ANOTHER COMPANY AND HAD CLAIMED DEDUCTION U/S.80IB'. 7 . HOWEVER, THE ASSESSING OFFICER REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT THE ASSESSEE COMPANY HAS BEEN FORMED AFTER PURCHASING PLANT AND MACHINERIES ALONG WITH PREMISES AND OTHER ASSETS, WHICH WERE ALREADY USED BY THE EARLIER COMPANY I.E., HINDUSTAN LEVER LIMITED. THIS IS IN VIOLATION OF THE PROVISIONS OF SECTION 80IB. ACCORDINGLY, HE DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB. 8 . BEFORE THE LEARNED COMMISSIONER (APPEALS), IT WAS SUBMITTED THAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 06, THE LEARNED COMMISSIONER (APPEALS) HAS DELETED THE ADDITION ON MERITS. THIS HAS BEEN FOLLOWED IN THE ASSESSMENT YEAR 2006 07 ALSO . THE LEARNED COMMISSIONER (APPEALS) DELETED THE ADDITION ON MERITS AND ALLOWED THE M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 7 DEDUCTION AFTER FOLLOWING THE TRIBUNAL ORDER DATED 11 TH MARCH 2010, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 05 AND 2005 06. 9 . AFTER CAREFULLY CONSIDERING THE SUBMISSI ONS AND THE MATERIAL ON RECORD, WE FIND THAT SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004 05 AND 2005 06 CITED SUPRA, WHEREIN THE TRIBUNAL HAS CONFIRMED THE ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IB. ONCE SUCH A CLAIM HAS BEEN ALLOWED IN THE CASE OF THE ASSESSEE BY THE TRIBUNAL , THEN THE SAME DEDUCTION HAS TO BE ALLOWED IN THIS YEAR AS A MATTER OF CONSEQUENCE THEREOF BECAUSE SAM E FACTS ARE PERMEATING THROUGH IN THIS YEAR ALSO . THUS, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS GIVEN BY THE LEARNED COMMISSIONER (APPEALS) FOR BOTH THE ASSESSMENT YEARS I.E., 2002 03 AND 2004 05 AND DECLINE TO INTERFERE IN THE MATTER AS SUC H. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE FOR THE YEARS UNDER APPEAL ARE TREATED AS DISMISSED. 10 . 2002 03 2004 05 10. IN THE RESULT, REVENUES APPEALS FOR THE ASSESSMENT YEAR 2002 03 AND 2004 05 ARE TREATED AS DISMISSED. WE NOW TAKE UP ASSESSEES CROSS OBJECTIONS FOR THE ASSESSMENT YEAR 2002 03 AND 2004 05, WHICH ARE ARISING OUT OF THE APPEALS PREFERRED BY THE REVENUE. 11 . THE ASSESSEE HAS RAISED THE ISSUE OF RE OPENING UNDER SECTION 147 FOR BOTH THE ASSESSMENT YEARS. M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 8 12 . AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINION THAT SINCE THE ADDITION HAS BEEN DELETED ON MERITS AND THE CLAIM OF DEDUCTION UNDER SECTION 80IB HAS BEEN ALLOWED IN FAVOUR OF THE ASSESSEE, THE ISSUE RAISED IN THE CROSS OBJECTIONS WITH REGARD TO THE VALIDITY OF RE ASSESSM ENT BECOMES PURELY ACADEMIC AND CONSEQUENTLY, T HE SAME IS TREATED AS INFRUCTUOUS. ACCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS DISMISSED. 13 . 2002 03 2004 05 1 3. IN THE RESULT, ASSESSEES CROSS OBJECTIONS FOR THE A.Y. 2002 03 AND 2004 05 ARE TREATED AS DISMISSED. 14 . 2002 03 2004 05 2002 03 2004 05 14. TO SUM UP, REVENUES APPEALS FOR THE A.Y. 2002 03 AND 2004 05 AND THE ASSESSEES CROSS OBJECTION FOR THE A.Y. 2002 03 AND 2004 05 ARE TREATED AS DISMISSED. 31 ST JANUARY 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JANUARY 2014 SD/ - RAJENDRA ACCOUNTANT M EMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 31 ST JANUARY 2014 M/S. GIVAUDAN FLAVOURS INDIA PVT. LTD. 9 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI