ACIT, Circle - 29, Kolkata, Kolkata V. Bharat Kumar K. Shah, Kolkata

ITA 1679/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54606 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S MONDAL
• Assessee Lawyers: S L KOCHAR
• Section: 143(3); 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #$ #$ #$ #$ / I.T.A NO. 1679/KOL/2009 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. BHARAT K UMAR K. SHAH CIRCLE-29, KOLKATA. (PAN AJWPS 8300 E) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) FOR THE APPELLANT: SHRI A. S. MONDAL FOR THE RESPONDENT: SHRI S. L. KOCHAR DATE OF HEARING: 28.09.2011 DATE OF PRONOUNCEMENT: 21.10.2011 . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), XVI, KOLKATA IN APPEAL. NO. 250/CIT(A)-XVI/R-29/08-09 DATED 29.06.2009. ASSESS MENT WAS FRAMED BY ADDL. CIT, RANGE- 29, KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 31.12. 2008. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST ORDER OF CIT(A) ALLOWING DEDUCTION U/S. 80IB OF THE ACT ON TOYO PLASTIC PRODUCT UNIT-I I TO THE ASSESSEE. FOR THIS, REVENUE HAS RAISED FOLLOWING TWO GROUNDS: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING DEDUCTION U/S. 80IB OF THE ACT, 1961 TO TOYO PLASTI C PRODUCT UNIT-II. 2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE L D. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.9,62,510/- TAKEN AS INCOME OF TO YO PLASTIC PRODUCT UNIT-II. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 FILED ITS RETURN OF INCOME ON 31.10.2006 AN D CASE WAS SELECTED FOR SCRUTINY BY ISSUING NOTICE U/S. 143(2) OF THE ACT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER REQUIRED THE ASSESSEE TO JUSTIFY THE CLAIM OF DEDUC TION U/S. 80IB OF THE ACT. ASSESSING OFFICER AFTER CONSIDERING THE FACTS OF THE CASE CAME TO CON CLUSION THAT ASSESSEES BUSINESS ACTIVITY WAS MAINLY OF LABOUR CONTRACT THAN THAT OF MANUFACTURER DURING RELEVANT ASSESSMENT YEAR AS REVEALED FROM THE P&L ACCOUNT, AUDIT REPORT FILED ALONG WITH THE RETURN OF INCOME, HENCE NO BENEFIT IS TO BE ALLOWED U/S. 80IB OF THE ACT FOR EARNING OF L ABOUR CONTRACT RECEIPTS IN BUSINESS ACTIVITIES 2 ITA 1679/K/2009 BHARAT KUMAR K. SHAH, A.Y.06-07 ON BEHALF OF NEHA PLASTO WEAR PARAG MOULD ETC. AC CORDINGLY, HE DISALLOWED DEDUCTION U/S. 80-IB OF THE ACT IN THE CASE OF TOYO PLASTIC PRODUC TS UNIT-II. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND HE ALLOWED THE CLAIM OF AS SESSEE BY DISCUSSING FACTS IN PARAS 15 AND 16 OF HIS APPELLATE ORDER AS UNDER: 15. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE DOCUMENTS AND STATEMENTS FILED BY HIM. I HAVE ALSO CONSIDERED TH E REASONS GIVEN BY THE A.O. FOR DISALLOWANCE OF CLAIM U/S. 80IB WITH RESPECT TO TOY O PLASTIC PRODUCT UNIT-II. IN THE SAID UNIT, THE APPELLANT IS ENGAGED IN THE BUSINESS OF M ANUFACTURING OF INJECTION PLASTIC MOULDED ITEMS AS WELL AS THE PLASTIC HOUSEHOLD PROD UCTS. AS PER FORM NO. 10CCB, THE DATE OF COMMENCEMENT OF OPERATION BY THE UNDERTAKIN G HAS BEEN MENTIONED AS JULY, 2003 AND THE INITIAL ASSESSMENT YEAR FROM WHEN DEDUCTION U/S. 80IB IS BEING CLAIMED HAS BEEN REPORTED AS ASSESSMENT YEAR 2004-05. ON PERUSAL OF MANUFACTURING ACCOUNT OF TOYO PLASTIC PRODUCT UNIT-IL FOR THE RELEVANT PREVIOUS Y EAR, IT IS OBSERVED THAT THE SALES OF PLASTIC ITEMS WAS OF RS.30,44,357/- AND THE RECEIPT ON ACCOUNT OF LABOUR CHARGES WAS OF RS.24,58,228/-. THUS, THE TOTAL TURNOVER OF UNIT-I L WAS OF RS.55,02,585/-. THE APPELLANT HAS EARNED A NET PROFIT OF RS.9,62,510/- WHICH WAS CLAIMED AS DEDUCTION U/S. 80-LB OF THE ACT. THE HEADING OF SECTION 80-LB IS DEDUCTION IN RESPECT OF PROFITS & GAINS FROM CERTAIN INDUSTRIAL UNDERTAKING OTHER THAN INFRASTRUCTURE DE VELOPMENT UNDERTAKINGS. THE DEDUCTION U/S. 80-LB IS ALLOWABLE TO SUCH INDUSTRIA L UNDERTAKING WHICH FULFILLS ALL THE CONDITIONS MENTIONED IN SUB-SECTION (2) OF SECTION 80-IB, NAMELY IT IS NOT FORMED BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS AL READY IN EXISTENCE; IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE; IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, NOT BEING AN ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA. SUB-SECTION (4) OF SECTION 80-LB PROVIDES THAT THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN INDU STRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE 100% OF THE PROFIT & GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WIT H THE INITIAL ASSESSMENT YEAR. 16. IN THE CASE OF APPELLANT THE INDUSTRIAL UNDERTA KING I.E. M/S. TOYO PLASTIC PRODUCT UNIT-II IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND PRODUCTION OF AN ARTICLE OR THING I.E. INJECTION PLASTIC MOULDED ITEMS AND HOUSEHOLD PRODUCTS, IT HAS NOT BEEN FORMED BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS AL READY IN EXISTENCE AND IT HAS NOT BEEN FORMED BY TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. THE INDUSTRIAL UNDERTAKING IS LOCATED IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE. IN THE ASSESSMENT ORDER, THE A.O. HAS OBSERVED THAT M/S. TOYO PLASTIC PRODUCT AND M/S. TOYO PLASTIC PRODUCT UNIT-IL ARE THE ONE AND SAME B ECAUSE THE SALES TAX REGISTRATION NUMBER OF BOTH THE UNITS ARE SAME. IN MY OPINION, T HE A.O. WAS NOT CORRECT IN HIS OBSERVATION BECAUSE AS PER FORM S.T.V WHICH IS A C ERTIFICATE OF REGISTRATION FOR A DEALER HAVING MORE THAN ONE PLACE OF BUSINESS IN TH E UNION TERRITORY OF GOA, DAMAN & DIU, IT IS SEEN THAT THOUGH THE REGISTRATION NUMBE R IS SAME BUT IT HAS BEEN SPECIFICALLY MENTIONED IN THE CERTIFICATE ISSUED BY ASSISTANT SA LES TAX OFFICE, DAMAN WARD, DAMAN THAT THE UNIT-II HAS COME INTO EXISTENCE W.E.F. 03. 07.2003. THE SAID CERTIFICATE OF REGISTRATION WAS ISSUED BY THE SALES TAX REGISTERIN G AUTHORITY TO THE APPELLANT ON 07.10.2003. THUS, THE DOUBT RAISED IN THE MIND OF T HE A.O. THAT IF THE UNIT-II CAME INTO EXISTENCE W.E.F. JULY, 2003, THE SALES TAX REGISTRA TION COULD NOT BE W.E.F. 20.09.1996, IS NOT CORRECT. ON PERUSAL OF FORM S.T.V, IT APPEARS T HAT IN THE UNION TERRITORY OF GOA, DAMAN & DIU, IF A PERSON IS HAVING MORE THAN ONE PL ACE OF BUSINESS IN THE UNION TERRITORY, THE SALES TAX REGISTRATION NUMBER REMAIN ED SAME FOR ALL PLACES OF BUSINESS OF THAT PERSON. FROM THE RECORDS, IT IS ALSO OBSERVED THAT THE APPELLANT HAS GOT THE POWER CONNECTION FOR M/S. TOYO PLASTIC PRODUCT UNIT-II VI DE LETTER DATED ED/EE/T-12/147 DATED 25.06.2003 ISSUED BY THE EXECUTIVE ENGINEER, ELECTR ICITY DEPARTMENT, NANI DAMAN. THE APPELLANT HAS GOT LAND ON LEASE, OBTAINED THE POLLU TION CONTROL CERTIFICATE AND INSTALLED NEW PLANT & MACHINERY PURCHASED FOR AN AMOUNT OF RS .30,00,000/- FROM DGP WINDSOR INDIA LIMITED. IN VIEW OF ABOVE, I AM OF THE OPINIO N THAT THE A.O. WAS NOT CORRECT IN HOLDING THAT M/S. TOYO PLASTIC PRODUCT AND M/S. TOY O PLASTIC PRODUCT UNIT-II ARE THE ONE 3 ITA 1679/K/2009 BHARAT KUMAR K. SHAH, A.Y.06-07 AND SAME AND THE UNIT-II WAS NOT A NEW AND SEPARATE UNDERTAKING. THE PRODUCTS OF BOTH THE UNITS ARE DIFFERENT AND UNIT-II WAS ESTABLISHED ALTOGETHER BY PURCHASING NEW ASSETS/PLANT & MACHINERY ETC. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT IN THE CASE OF ASSESSEE THE IND USTRIAL UNDERTAKING I.E. M/S. TOYO PLASTIC PRODUCT UNIT-II IS ENGAGED IN THE BUSINESS OF MANUF ACTURING AND PRODUCTION OF AN ARTICLE OR THING I.E. INJECTION PLASTIC MOULDED ITEMS AND H OUSEHOLD PRODUCTS. WE FIND THAT THERE IS NO CHARGE BY THE REVENUE THAT IT HAS NOT BEEN FORME D BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE AND IT HAS NOT B EEN FORMED BY TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. IT IS A FACT THAT THIS INDUSTRIAL UNDERTAKING IS LOCATED IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE AND A.O. HAS OBSERVED THAT M/S. TOYO PLASTIC PRODUCT AND M/S. TO YO PLASTIC PRODUCT UNIT-IL ARE THE ONE AND SAME BECAUSE THE SALES TAX REGISTRATION NUM BER OF BOTH THE UNITS ARE SAME. WE, AFTER GOING THROUGH THE FACTS OF THE CASE FIND THAT AS PER FORM S.T.V WHICH IS A CERTIFICATE OF REGISTRATION FOR A DEALER HAVING MO RE THAN ONE PLACE OF BUSINESS IN THE UNION TERRITORY OF GOA, DAMAN & DIU, IT IS SEEN TH AT THOUGH THE REGISTRATION NUMBER IS SAME BUT IT HAS BEEN SPECIFICALLY MENTIONED IN THE CERTIFICATE ISSUED BY ASSISTANT SALES TAX OFFICE, DAMAN WARD, DAMAN THAT THE UNIT-II HAS COME INTO EXISTENCE W.E.F. 03.07.2003. THE SAID CERTIFICATE OF REGISTRATION WA S ISSUED BY THE SALES TAX REGISTERING AUTHORITY TO THE ASSESSEE ON 07.10.2003. WE ARE OF THE VIEW THAT IT IS ONLY THE DOUBT RAISED IN THE MIND OF THE A.O. THAT IF THE UNIT-II CAME INTO EXISTENCE W.E.F. JULY, 2003, THE SALES TAX REGISTRATION COULD NOT BE W.E.F. 20.09.19 96, WHICH REMAINS ONLY THE DOUBT AND IT IS NOT CORRECT FACT. ON PERUSAL OF FORM S.T.V, I T APPEARS THAT IN THE UNION TERRITORY OF GOA, DAMAN & DIU, IF A PERSON IS HAVING MORE THAN O NE PLACE OF BUSINESS IN THE UNION TERRITORY, THE SALES TAX REGISTRATION NUMBER REMAIN ED SAME FOR ALL PLACES OF BUSINESS OF THAT PERSON. FROM THE RECORDS, IT IS ALSO OBSERVED THAT ASSESSEE HAS GOT THE POWER CONNECTION FOR M/S. TOYO PLASTIC PRODUCT UNIT-II VI DE LETTER DATED ED/EE/T-12/147 DATED 25.06.2003 ISSUED BY THE EXECUTIVE ENGINEER, ELECTR ICITY DEPARTMENT, NANI DAMAN AND ALSO GOT LAND ON LEASE, OBTAINED THE POLLUTION CONT ROL CERTIFICATE AND INSTALLED NEW PLANT & MACHINERY PURCHASED FOR AN AMOUNT OF RS.30,00,000/- FROM DGP WINDSOR INDIA LIMITED. IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT REVENUE W AS NOT CORRECT IN HOLDING THAT M/S. TOYO PLASTIC PRODUCT AND M/S. TOYO PLASTIC PRODUCT UNIT-II ARE THE ONE AND SAME AND THE UNIT-II WAS NOT A NEW AND SEPARATE UNDERTAKING. THE PRODUCTS OF BOTH THE UNITS ARE DIFFERENT AND UNIT-II WAS ESTABLISHED ALTOGETHER BY PURCHASING NEW ASSETS/PLANT & MACHINERY ETC. EVEN OTHERWISE, THIS IS NOT THE FIRS T YEAR AND THE ASSESSEE WAS ALLOWED 4 ITA 1679/K/2009 BHARAT KUMAR K. SHAH, A.Y.06-07 DEDUCTION U/S. 80IB OF THE ACT BY TREATING THE ASSE SSEE AS MANUFACTURER IN AY 2005-06 AND QUA THAT ASSESSMENT WAS FRAMED U/S. 143(3) OF T HE ACT BY ADDL. CIT, RANGE-29, KOLKATA VIED ORDER DATED 31.12.2007 IN RESPECT TO I NCOME FROM TOYO PLASTIC PRODUCTS UNIT-II ALLOWING DEDUCTION TO THE EXTENT OF RS.3,37 ,376/-. ONCE THE DEDUCTION IS ALLOWED IN EARLIER YEARS, WITHOUT ANY COGENT REASONS THE DE DUCTION CANNOT BE WITHDRAWN IN FUTURE YEARS. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW T HAT THE CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE OF DEDUCTION AND WE CONFIRM THE SAME. APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 6. ORDER IS PRONOUNCED IN OPEN COURT ON 21.10.2011. SD/- SD/- . . ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 21ST OCTOBER, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT, CIRCLE-29, KOLKATA. 2 ,-*+ / RESPONDENT, SHRI BHARAT KUMAR K. SHAH, 19B, HARIS H MUKHERJEE ROAD, KOL-25. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA. 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .