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

ITA 1669/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1850 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 20-06-2016
• Court: TRIBUNAL

Judgement Text

KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 1 OF 11 , , IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . ./ I.T.A. NOS.1668 & 1669/AHD/2016/SRT / ASSESSMENT YEARS : 2005-06 & 2006-07 KOSAL POLYMERS, 336/2/2, NR.CRICKET GROUND, KACHIGAM, NANI-DAMAN. [PAN: AAGFK 5559 A] VS. THE INCOME TAX OFFICER, VAPI WARD-4, DAMAN. APPELLANT /RESPONDENT /ASSESSEE BY SHRI BHAVIN TALATI CA /REVENUE BY SHRI B.P.K.PANDA SR.DR / DATE OF HEARING: 18 . 0 2 .201 9 /PRONOUNCEMENT ON: 21 .0 2 .2019 /O R D E R PER O.P.MEENA, AM: 1. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- VALSAD, (IN SHORT THE CIT (A)) DATED 21.03.2016 PERTAINING TO ASSESSMENT YEARS 2005-06 & 2006-07, WHICH IN TURN HAS ARISEN FROM THE ORDERS DATED 31.12.2009 AND 08.12.2008 PASSED BY THE INCOME TAX OFFICER, VAPI WARD-4, DAMAN (IN SHORT THE AO ) UNDER SECTION 143 (3) AND U/S.143(3) OF INCOME TAX ACT,1961 ( IN SHORT THE ACT) RESPECTIVELY. 2. CONDONATION OF DELAY : THE LD.COUNSEL SUBMITTED THAT THE APPEAL BEFORE THE ITAT AGAINST THE ORDER OF THE LD.CIT(A), VALSAD DATED 05.06.2016 WAS FILED ON 20.06.2016 WITH THE DELAY OF 15 DAYS. SHRI JHABAR MAL SHARMA, PARTNER KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 2 OF 11 OF THE ASSESSEE FIRM, SUBMITTED IN HIS AFFIDAVIT DATED 16.02.2019 THAT THEIR FIRM HAVE ENTRUSTED THE FILING OF APPEAL WORK TO THEIR EMPLOYEE, SHRI RAKESH JAIN, RESIDENT OF VAPI WHO PREPARED THE APPEALS AND STATEMENT OF FACTS AND GROUNDS OF APPEAL ON 10.05.2016 WELL WITHIN THE TIME. HOWEVER, DUE TO HEALTH PROBLEM OF HIS EMPLOYEE HE WAS ABSENT FROM WORK AND HE KEPT THE PAPERS WITH HIM THEREFORE THE APPEAL COULD NOT BE FILED IN TIME, THEREFORE, THE DELAY OF 15 DAYS WAS OCCURRED. THEREFORE, THE LD.COUNSEL SUBMITTED THAT THERE WAS SUFFICIENT REASON FOR DELAY WHICH IS NOT DELIBERATE, THEREFORE IT WAS REQUESTED THAT THE DELAY MAY KINDLY BE CONDONED. 3. PER CONTRA, THE LD.SENIOR DEPARTMENTAL REPRESENTATIVE (SR.DR) OPPOSED THE CONDONATION OF DELAY. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SETTLED LAW THAT THE COURTS AS QUASI-JUDICIAL BODIES ARE EMPOWERED TO CONDONE DELAY, IF THE LITIGANT SATISFIES THE COURT THAT THERE WAS SUFFICIENT REASON FOR THE AVAILING THE REMEDY AFTER THE EXPIRY OF THE LIMITATION. SUCH A REASONING SHOULD BE TO THE SATISFACTION OF THE COURT. 5. IN THE PRESENT CASE, SHRI JHABAR MAL SHARMA, PARTNER OF THE ASSESSEES FIRM HAS DEPOSED IN HIS AFFIDAVIT ON OATH THAT THE PREPARATION OF APPEAL FILING WORK WAS ENTRUSTED TO SHRI RAJESH JAIN, RESIDENT OF MITHUN PARK, VAPI DAMAN ROAD, VAPI AND WHO HAS DULY PREPARED THE STATEMENT OF FACTS AND GROUNDS OF APPEAL ON 10.05.2016 AS IS EVIDENT FROM THE DATE MENTIONED IN THE STATEMENT KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 3 OF 11 OF FACTS AND GROUNDS OF APPEAL AS 10.05.2016. HOWEVER, THE APPEAL WAS FILED ON 20.06.2016 BY DELAY OF 15 DAYS AS HE WAS ABSENT FOR DUTY DUE TO HEALTH PROBLEM. THEREFORE, ON THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS BEEN ABLE TO DEMONSTRATE SUFFICIENT REASON FOR SMALL DELAY OF 15 DAYS IN FILING OF APPEAL, ACCORDINGLY WE DEEM IT FIT TO CONDONE THE DELAY OF 15 DAYS IN RESPECT OF BOTH APPEALS FOR A.Y.S 2005-06 AND 2006- 07 AND ADMIT THE APPEAL FOR ADJUDICATION ON MERITS. ITA NO.1668/AHD/2016 FOR A.Y. 2005-06 : 6. THE ASSESSEE RAISED GROUNDS OF APPEAL WHICH READ AS UNDER : 1.1 THE ORDER PASSED U/S.250 ON 21.03.2016 FOR A.Y. 2005-06 BY CIT(A), VALSAD IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT, APART FROM VIOLATING THE DIRECTIONS GIVEN BY HON'BLE. TRIBUNAL. 2.1 THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING HE DISALLOWANCE OF DEDUCTION U/S.80-IB OF RS.13,01,602/-. 2.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S.80-IB OF RS.13,01,602/-. 3.1 THAT BOTH THE LOWER AUTHORITIES HAVE FAILED TO APPRECIATE THAT THE APPELLANT HAD NOT EMPLOYED LESS THAN WORKERS, THE PRODUCTION WAS COMMENCED WITH THE DG SETS AND THE PRODUCTION HAD COMMENCED DURING THE PERIOD RELEVANT TO A.Y. 2004-05. 7. THE ABOVE GROUNDS OF APPEAL RELATES TO DENYING OF DEDUCTION U/S.80IB, HENCE BEING CONSIDERED TOGETHER. 8. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF ALL KINDS OF PLASTIC GRANULES. THE AO NOTICED THAT THE WAGE KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 4 OF 11 REGISTER SHOWED THAT 9 WORKERS WERE EMPLOYED THROUGHOUT THE YEAR EXCEPT FOR THE MONTH OF APRIL 2005 AND HENCE, ONE OF THE CONDITIONS FOR CLAIMING DEDUCTION U/S.80IB WAS NOT FULFILLED. IT WAS FURTHER NOTICED BY THE AO THAT THE POWER CONNECTION WAS GRANTED ON 21.03.2005 AND FIRST BILL WAS PAID ON 03.05.2005. THE AO ALSO NOTICED REFERRING FROM NO.10CCB, THAT THE INITIAL YEAR OF COMMENCEMENT OF BUSINESS WAS SHOWN AS FINANCIAL YEAR 2003-04 BUT THE PRODUCTION HAD STARTED 31.03.2004 AS PER THE ASSESSEE. THEREFORE, THE AO OBSERVED THAT THE ASSESSEE HAD EMPLOYED ONLY 7 WORKERS FOR ONLY THE INITIAL MONTH AND THE MANUFACTURING ACTIVITIES ARE CARRIED OUT WITHOUT AID OF POWER AND THE NUMBER OF EMPLOYEES DURING THE YEAR ARE LESS THAN 10 WORKERS. THEREFORE, THE AO HELD THAT THE ASSESSEE HAS NOT MANUFACTURED ANY GOODS IN THE UP TO THE MONTH OF MARCH 2014 AND WORKERS EMPLOYED ARE LESS THAN 10 WORKERS, HENCE IN ABSENCE THIRD PARTLY EVIDENCE FOR PRODUCTION STARTED BEFORE 31.03.2004, THE CLAIM OF DEDUCTION U/S.80IB (10) WAS WITHDRAWN. 9. BEING AGGRIEVED, THE ASSESSEE HAS CARRIED THE MATTER BEFORE THE LD.CIT(A) WHEREIN IT WAS CONTENDED THAT THE ASSESSEE HAD EMPLOYED ALWAYS MORE THAN 10 LABOURERS BUT ON ACCOUNT OF CONTINUED SICKNESS OF ONE OF THEM THE NUMBER HAS BEEN REDUCED. THE ASSESSEE HAS ALSO POINTED OUT THAT THE PRODUCTION IN THE MONTH OF MARCH 2014 WAS COMMENCED BY USING DG SET. THE ASSESSEE HAS ALSO RELIED UPON THE DECISION OF MUMBAI BENCH OF ITAT IN THE KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 5 OF 11 CASE OF SHRI PAR FRAGRANCE PVT. LTD., HOWEVER, THE CIT(A) REJECTED THE PLEA OF THE ASSESSEE. THE ASSESSEE THEREAFTER PREFERRED AN APPEAL BEFORE ITAT IN RESPECT OF A.Y. 2005-06 TO 2007-08 BEING ITA NO.2423, 2424 & 410/AHD/2011 WHICH WAS DISPOSED BY THE ORDER DATED 11.09.2015 BY WAY OF RESTORING THE APPEAL TO THE FILE OF LD.CIT(A) TO DISPOSE THEM WITH THE POINT FOR DETERMINATION AND REASONS FOR SUPPORT. ACCORDINGLY, THE SAID APPEAL WERE CAME UP AS FRESH BEFORE HEARING BEFORE THE LD.CIT(A) WHEREIN THE ASSESSEE HAS JUSTIFIED ITS CLAIM OF DEDUCTION WITH SUPPORTING DOCUMENTS. HOWEVER, THE LD.CIT(A) HAS ONCE AGAIN PASSED THE ORDER HOLDING THAT THE ASSESSEE HAS NOT MAINTAINED THE STRENGTH OF TEN WORKERS THROUGHOUT THE YEAR AND THE POWER CONNECTION WAS GRANTED ONLY ON 21.03.2005 WHICH MEANS NO PRODUCTION TOOK PLACE FOR THE YEAR ENDING 31.03.2004. HENCE, THE CONDITION PRESCRIBED UNDER THE ACT WAS NOT SATISFIED. THE LD.CIT(A) FURTHER OBSERVED THAT FROM THE REGISTER PRODUCED, IT EMERGED THAT THE PRODUCTION WAS STARTED FROM THE MONTH OF AUGUST 2004 AND ONLY A SIX WORKERS WERE EMPLOYED DURING THAT MONTH BUT THE STRENGTH OF WORKERS INCREASED MORE THAN TEN IN THE LATER MONTHS, HENCE, THE ASSESSEE HAS NOT FULFILLED THE CONDITION OF EMPLOYING MINIMUM TEN WORKERS FOR CLAIMING DEDUCTION 80IB OF THE ACT, ACCORDINGLY THE DISALLOWANCE U/S.80IB WAS UPHELD. 10. BEING AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL AGAIN BEFORE THIS TRIBUNAL. THE LD.COUNSEL FOR THE ASSESSEE REFERRING THE KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 6 OF 11 FINDINGS OF THE LD.AO IN THE ORIGINAL ASSESSMENT FOR A.Y. 2005-06 SUBMITTED THAT THE AO HAS ACCEPTED THAT ASSESSEE HAD STARTED HIS MANUFACTURING ACTIVITY FROM THE ACCOUNTING PERIOD RELEVANT TO A.Y. 2004-05 AND THE ASSESSEE WAS UNDER CONSIDERATION IS BEING THE SECOND YEAR OF MANUFACTURING ACTIVITY, THE DEDUCTION U/S.80IB OF THE ACT HAS BEEN RIGHTLY CLAIMED AND ALLOWED. HOWEVER, THE CASE WAS REOPENED BY WAY OF ISSUE OF NOTICE U/S.148 OF THE ACT. THE AO OBSERVED IN PARA 4 OF THE ASSESSMENT ORDER THAT THE MANUFACTURING ACTIVITY WAS STARTED ON 31.03.2004 AS CLAIMED BY THE ASSESSEE IN FORM NO.10CCB RELEVANT TO ASSESSMENT YEAR 2004- 05. HOWEVER, ON VERIFICATION OF POWER CONNECTION, LATER THE AO NOTED THE POWER WAS GRANTED ON 21.03.2005 AND BILL WAS RAISED ON 20.05.2005, HENCE, THE AO HELD THAT THE PRODUCTION WAS NOT COMMENCED BEFORE 31.03.2004. HOWEVER, THE ASSESSEE HAS FURNISHED HIS SUBMISSION VIDE LETTER DATED 21.11.2009 WHEREIN IT WAS SUBMITTED THAT SALES TAX ASSESSMENT ORDER FOR YEAR 2003-04 ALLOWING THE EXEMPTION OF SALES TAX ON THE BASIS OF ACTUAL PRODUCTION IN THE YEAR 2003-04. FURTHER, THE ASSESSEE HAS FILED A BILL OF DG SET USED AND CONFIRMATION LETTER FROM THE PARTY, AND SALES BILLS AND COPY OF C FORM ISSUED BY THE PARTY AND COPY OF PLANT MANUFACTURING, THEREFORE IT WAS CONTENDED THAT THE MANUFACTURING ACTIVITY WERE STARTED BY USING DG SET IN ABSENCE OF POWER. THE LD.COUNSEL REFERRED PARA 5.1 OF THE ASSESSMENT ORDER WHEREIN THE AO HAS OBSERVED THAT EVEN IN THE CASE, THE STATEMENT ACCEPTED KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 7 OF 11 THAT ASSESSEE HAS USED DG SET IN ABSENCE OF POWER, IT IS NOTICED THAT THE ASSESSEE HAS EMPLOYED ONLY 7 WORKERS IN THE INITIAL MANUFACTURE AS PER SUBMISSION OF THE ASSESSEE. THEREFORE, THE AO HAS ACCEPTED THE PRODUCTION DATE AS ON 31.03.2004, BUT HAS SOLELY DENIED THE DEDUCTION CLAIMED ON THE GROUND THAT THE ASSESSEE HAS EMPLOYED LESS THAN 10 EMPLOYEES. HOWEVER, THE LD.COUNSEL SUBMITTED A TABLE IN HIS WRITTEN SUBMISSION WHICH IS REPRODUCED AS UNDER : MONTHS EMPLOYEE AS PER LABOUR REGISTER EMPLOYEE IN PLANT MAINTENANCE WORK TOTAL NO OF EMPLOYEES APRIL, 2004 TO JULY, 2004 1 - 1 AUGUST, 2004 6 - 6 SEP, 2004 TO MARCH, 2005 12 - 12 1.1 IN MONTH OF APRIL, 2004 TO JULY 2004 TOTAL 1 LABOURER WAS THERE AS PRODUCTION AND SALE WERE NOT PICKED UP IN SPITE OF STARTING BUSINESS. HOWEVER, FROM AUGUST 2004, BUSINESS PICKED UP MOMENTUM AND THEREAFTER, NUMBERS OF EMPLOYEE WERE MORE THAN 10 THROUGHOUT THE YEAR. 1.2 IN OTHER WORDS, IN THE NORMAL SITUATION, THE APPELLANT HAS EMPLOYED MORE THAN 10 EMPLOYEES AND FULFILLED THE CONDITIONS MENTIONED IN SEC.80IB. HOWEVER, NUMBERS OF EMPLOYEES WERE LESS IN THE SITUATION WHICH WAS NOT CONSIDERED AS NORMAL AND THERE WERE NO SALES AND PURCHASES. 2. THE APPELLANT SUBMITS THAT OUT OF NUMBERS OF PROVISIONS, CLAUSES AND PROVISO, THE APPELLANT HAD COMPLIED WITH ALL THE CONDITIONS MENTIONED IN THIS SECTION. ALL THE PROVISIONS WERE COMPLIED AND OUT OF CLAUSES (I) TO (V) OF SUB SEC.(2) TO SEC.80IB, THE APPELLANT HAD FULFILLED CONDITIONS OF MOST OF ALL SUB CLAUSES. AS REGARDS SUB CLAUSE (IV), THE APPELLANT HAD FULFILLED THE SAME IN 8 MONTHS OF THE YEAR. AND THEREFORE, THE APPELLANT HAS SUBSTANTIALLY COMPLIED WITH THE PROVISION OF SEC. 80IB. 11. THUS, THE COUNSEL HAS CONTENDED THAT IN THE MONTH OF APRIL 2004 TO JULY 2004 ONE LABOUR WAS THERE AS PRODUCTION AND SALES WERE NOT PICKED UP. THE LD.COUNSEL FURTHER SUBMITTED THAT THE ASSESSEE HAS EMPLOYED MORE THAN 10 EMPLOYEES AND HENCE FULFILLED THE CONDITIONS MENTIONED IN THE SECTION 80IB OF THE ACT. KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 8 OF 11 THEREFORE, IT WAS CONTENDED THE ASSESSEE HAS COMPLIED CLAUSE (I) TO (IV) OF SUB-SECTION(2) OF SECTION 80IB. FURTHER, THE CONDITION LAID DOWN IN CLAUSE 4 OF SECTION 80IB(2), THE ASSESSEE HAS FULFILLED THE SAME IN 8 MONTHS OF THE YEAR, HENCE, SUBSTANTIALLY COMPLIED WITH THE PROVISIONS OF SECTION 80IB OF THE ACT. THE LD.COUNSEL HAS ALSO SUPPORTED HIS VIEW BY PLACING RELIANCE IN THE CASE OF ACIT VS. MS RICHA CHADHA (2005) 97 TTJ 0910 : 96 ITD 0325, CIT VS. HARIT SYNTHETICS FABRICS (P) LTD 162 ITR 0640, CIT VS. ORMERODS INDUSTRIES (P) LTD. 56 CCH 0626 MUMBAI HIGH COURT : (1989) 176 ITR 0470, CIT VS. JYOTI PLASTIC WORKS (P) LTD. 339 ITR 491, CIT VS. B NARANIA & CO (2001) 171 CR (GUJ) 416 : 252 ITR 884 (GUJ) AND CIT VS. INDIAN RESIN & POLYMERS (1999) 235 ITR 5 (KERALA). 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FROM THE ORIGINAL ASSESSMENT ORDER FOR A.Y. 2005-06 AND THE SALES TAX ASSESSMENT ORDER AND THE EVIDENCES IN THE FORM OF COPY OF BILLS OF DG SET THAT THE ASSESSEE HAS STARTED MANUFACTURING BEFORE 31.03.2004 WHICH IS EVIDENCE BY FORM NO.10 CCB RELEVANT TO ASSESSMENT YEAR 2004-05. THE AO HAS ALSO ACCEPTED THIS FACT THAT EVEN WHEN HE SAYS IF THE VERSION OF THE ASSESSEE HAS ACCEPTED THAT DG SET HAS BEEN USED IN ABSENCE OF POWER, THUS WE FIND THAT THE AO HAS DISALLOWED THE DEDUCTION ONLY ON THE GROUND THAT THE ASSESSEE IS EMPLOYED ONLY SEVEN WORKERS FOR THE INITIAL MONTH. HOWEVER, FROM THE TABLE AS GIVEN BY THE LD.COUNSEL WHICH IS REPRODUCED IN HIS SUBMISSION AS ABOVE, WE FIND KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 9 OF 11 THAT THE ASSESSEE HAS EMPLOYED 12 EMPLOYEES AS PER LABOUR REGISTER FROM THE SEPTEMBER 2004 TO MARCH 2005 WHEN THE BUSINESS OF THE ASSESSEE WAS PICKED UP MOMENTUM. THEREFORE, THE ASSESSEE HAS MADE SUBSTANTIALLY COMPLIANCE, AND NOT STRICT COMPLIANCE. FURTHER, IN ORDER TO QUALIFY FOR RELIEF AND SATISFY THE REQUIREMENT OF THE PROVISION FOR AN UNDERTAKING HAVING EMPLOYED OF 10 OR MORE WORKERS, SUBSTANTIALLY DURING THE PERIOD FOR WHICH RELIEF WAS CLAIMED THERE COULD BE NO HARD AND FAST RULE BY WHICH ONE COULD DETERMINE WHETHER THERE HAD BEEN SUBSTANTIAL COMPLIANCE. THE LD.COUNSEL HAS PLACED RELIANCE ON THE DECISION OF CO-ORDINATE BENCH IN THE CASE OF RICHA CHADHA (SUPRA) WHEREIN THE CO-ORDINATE BENCH HAS HELD AS UNDER : THERE CAN BE SUBSTANTIAL COMPLIANCE AND NOT STRICT COMPLIANCE. IT IS NOT NECESSARY FOR THE PURPOSE OF GETTING BENEFIT UNDER S. 80-IA THAT THERE SHOULD BE LITERAL AND COMPLETE COMPLIANCE OF CL. (V) I.E., FOR ALL THE TIME IN THE FINANCIAL YEAR, THERE SHOULD BE TEN OR MORE WORKERS IF THE FACTORY IS RUNNING WITH AID OF POWER. THE NEED FOR SUBSTANTIAL COMPLIANCE WILL ALSO ARISE IN CASE OF A FACTORY WHICH IS SEASONABLE OR WHICH IS TEMPORARILY CLOSED DUE TO LOCKOUT OR STRIKE OR DUE TO SOME OTHER NATURAL CALAMITY. IN THAT SITUATION THERE CANNOT BE A COMPLETE COMPLIANCE OF THE CONDITION LAID DOWN IN CL. (V) OF S. 80-IA(2). IF THERE WERE TEN OR MORE WORKERS EMPLOYED FOR SUBSTANTIAL PART OF WORKING PERIOD OF THE FACTORY CARRYING ON MANUFACTURING PROCESS, THEN IT WOULD BE SUFFICIENT COMPLIANCE OF THE CONDITION LAID DOWN IN S. 80- IA(2)(V). IN THE PRESENT CASE OF THE ASSESSEE THERE WERE TEN OR MORE WORKERS EMPLOYED IN THE FACTORY AND TEN OR MORE WORKERS WERE PRESENT FOR MORE THAN 50 PERCENT OF THE WORKING DAYS OF THE FACTORY FOR ALL THE MONTHS IN THE YEAR EXCEPT THREE MONTHS. THUS, THERE WAS SUBSTANTIAL COMPLIANCE OF THE CONDITION. THE ABSENCE OF TEN WORKERS FOR SOME PART OF THE MONTHS WILL NOT BE FATAL. THERE COULD BE ABSENCE OF WORKERS FOR VARIOUS REASONS. SOME OF THEM MAY HAVE BEEN EXPELLED FROM THE FACTORY AND NEW ONES MAY HAVE BEEN EMPLOYED. THERE IS NO MERIT IN THE ARGUMENT THAT IF THERE WAS HIRING AND FIRING OF CASUAL WORKERS OR THAT THEY WERE NOT REGULAR, THEY SHOULD BE EXCLUDED FROM THR RECKONING. CASUAL WORKER IS ALWAYS CASUAL. HE CAN BE FIRED AT ANY TIME AND HIORED AS REQUIRED BY THE EMPLOYER. THERE IS NO SUCH REQUIREMENT IN THR LAW THAT ONLY THOSE WORKERS IN WHOSE CASE PF/INSURANCE IS DEDUCTED SHOULD ONLY BE CONSIDERED FOR COUNTING. ONE CANNOT PUT ANOTHER CONDITION IN THE STATUTE IF IT DOES NOT EXIST. QUALITY, TYPE OR CATEGORY OR WORKERS IS NOT MENTIONED IN THE STATUTE. HENCE, ALL TYPES OF WORKERS, WHETHER THOSE IN WHOSE CASE PF/INSURANCE IS CONSIDERED BY THE EMPLOYER OR THOSE IN WHOSE CASE SUCH DEDUCTION IS NOT MADE LIKE CASUAL/TEMPORARY WORKERS, SHOULD BE CONSIDERED FOR THE PUROSE OF COUNTING THE NUMBER TEN. IN A BENEFICIAL PROVISION, ADDITIONAL CONDITION SHOULD NOT BE READ IF THEY ARE NOT SPECIFICALLY PROVIDED BY KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 10 OF 11 THE LEGISLATURE. IF BY NORMAL INTERPRETATION OF THE PROVISION, BENEFIT IS AVAILABLE TO THE TAXPAYER THEN SUCH BENEFIT SHOULD NOT BE DENIED BY PUTTING A CONDITION WHICH DOES NOT EXIST. FINALLY, EVEN THE DEPARTMENT HAS ALLOWED THE CLAIM OF THE ASSESSEE IN THE EARLIER AND SUBSEQUENT YEARS AFTER REOPENING THE CASE ON THE SAME ISSUE. THE DEPARTMENT REPRESENTATIVE COULD NOT POINT OUT HOW THE FACTS OF THIS CASE ARE DIFFERENT FROM THOSE OF EARLIER AND SUBSEQUENT YEARS. FOLLOWING THE PRINCIPLE OF CONSISTENCY THE CLAIM OF THE ASSESSEE IS ALSO ALLOWABLE. CIT VS. ORMERODS (I)(P) LTD. (1989) 75 CTR (BOM) 192 : (1989) 176 ITR 470 (BOM), CIT VS. K.G.YEDIYURAPPA & CO. (1984) 43 CTR (KAR) 234 : (1985) 152 ITR 152 (KAR), CIT VS. ABHIRAMI COTTON MILLS (P) LTD. (1996) 134 CTR (AP) 123 : (1996) 220 ITR 84 (AP) AND CIT VS. TALUYA ENTERPRISES (P) LTD. (2001) 170 CTR (DEL) 438 : (2001) 250 ITR 675 (DEL) RELIED ON. 13. SIMILARLY, IN THE CASE OF CIT VS. HARIPT SYNTHETICS FABRICS (P) LTD., (SUPRA) THE CASE LAWS AS DISCUSSED ABOVE SUPPORTS THE CLAIM OF THE ASSESSEE. THEREFORE, CONSIDERING THE ABOVE FACTS, AND LAW, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB IF THE ACT, ACCORDINGLY, SAME IS THEREFORE ALLOWED. CONSEQUENTLY, THE ABOVE GROUND OF APPEALS OF THE ASSESSEE ARE ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 IS ALLOWED. ITA NO.1669/AHD/2016/SRT FOR A.Y. 2006-07 : 15. THE GROUNDS OF APPEAL FOR A.Y. 2006-07 RAISED BY THE ASSESSEE WERE SAME AS IN THE ASSESSMENT YEAR 2005-06 EXCEPT THE QUANTUM OF DEDUCTION CLAIMED OF RS.7,74,805/- U/S.80IB OF THE ACT. 16. SINCE THE FACTS FOR A.Y. 2006-07 ARE IDENTICAL AS OF FACTS AS IN THE A.Y.2005-06, THEREFORE, THE REASONING AND FINDINGS GIVEN A.Y. 2005-06 WOULD MUTATIS-MUTANDIS APPLY TO THIS YEAR ALSO. KOSAL PLOYMERS VS. ITO, VAPI WARD-4, DAMAN /ITA NOS.1668 & 1669/AHD/2016/A.Y.2005-06 & 06-07 PAGE 11 OF 11 THEREFORE, FOLLOWING THE SAME WE ALLOW THE APPEAL OF THE ASSESSEE IN RESPECT OF ALL GROUNDS OF APPEAL. 17. IN THE RESULT, APPEAL OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS 2005-06 AND 2006-07 ARE ALLOWED. 18. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.02.2019. SD/- SD/- (KUL BHARAT) (O.P.MEENA) ( /JUDICIAL MEMBER) ( /ACCOUNTANT MEMBER) / SURAT, DATED : 21 ST FEBRUARY , 2019/ S.GANGADHARA RAO, SR.PS COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT