ACIT, Hyderabad V. M/s Mahidhara Chemicals Pvt. Ltd., Patancheru

ITA 1687/HYD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3127 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 24-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VASUNDHARA SINHA
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Procedural lapse; Assessment record; Revised return; Unabsorbed depreciation
• Section: 80IB; 10

Judgement Text

IN THE INCOME TAX APPELLATE TREIBUNAL HYDERBAD BENCH A BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1687/HYD/2008 ASST.YEAR: 2004-05 ASST.COMMISSIONER OF VS. M/S MAHIDHARA CHEMICALS INCOME TAX, CIRCLE-8(1), (P)M LTD., PATANCHERU HYDERABAD. (PAN AABCM 3630 N) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. VASUNDHARA SINHA, DR RESPONDENT BY: SHRI S. RAMA RAO. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORD ER OF THE CIT(A)-III, HYDERABAD DT.22-09-2008 FOR THE ASSESSMENT Y EAR 2004- 05. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL . 2. THE LEARNED CIT (A) ERRED IN FACTS AND CIRCUMST ANCES OF THE CASE IN ALLOWING DEDUCTION U/S 80IB OF THE INCOME T AX ACT, 1961 TO THE ASSESSEE COMPANY. 3. THE LEARNED CIT (A) ERRED IN FACTS AND CIRCUMSTA NCES OF THE CASE IN ALLOWING THE CARRY FORWARD AND SET-OFF OF L OSSES AND UNABSORBED DEPRECIATION OF THE AMALGAMATED COMPANY . 3. THE MAIN GRIEVANCE OF THE DEPARTMENT IN THE FIRST GRO UND IS WITH REGARD TO ALLOWING OF DEDUCTION U/S 80 IB THOUGH THE ASSESSEE NOT FILED THE REQUIRED CERTIFICATE U/S 10 CCB A LONG ITA NO.1687/HYD/2008 M/S MAHIDHARA CHEMICALS P LTD. HYDERABAD 2 WITH THE ORIGINAL RETURN OF INCOME AND IT WAS ONLY FI LED ALONG WITH THE REVISED RETURN ON 21-10-2005. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS FILED FORM NO.10 CCB ON 21-10-2005 BEFORE COMPLETION OF THE ASSESSMENT AND THE ASSESSMENT WAS COMPLETED ON 20-12-2006. THE ASSESSING OFFICER WAS HAVING EVERY CHANCES OF GOING THROUGH THE CERTIFICATE TO EXAMIN E THE ENTITLEMENT OF THE ASSESSEES CLAIM U/S 80 IB AND THEREAFT ER HE CAN HAVE ANY GRIEVANCE. THE RIGHT OF THE A.O TO EN TERTAIN THE CERTIFICATE IS NOT AFFECTED, EVEN THOUGH IT HAS NOT BEEN FILED WITH THE RETURN AND TO GIVE BENEFIT OF DEDUCT ION U/S 80 IB. IT WAS HELD BY HONBLE P&H HIGH COURT IN THE CASE OF CIT VS. PUNJAB FINANCIAL CORPORATION WHILE DEALING WITH S IMILAR ISSUES HELD AS FOLLOWS: THE QUESTION AS TO WHETHER A STATUE IS MANDATORY O R DIRECTORY DEPENDS UPON THE INTENT OF THE LEGISLATUR E AND NOT UPON THE LANGUAGE IN WHICH THE INTENT IS CLOTHE D. THE MEANING AND INTENTION OF THE LEGISLATURE MUST GOVER N, AND THESE ARE TO BE ASCERTAINED NOT ONLY FROM THE PHRAS EOLOGY OF THE PROVISION BUT ALSO BY CONSIDERING ITS NATURE , ITS DESIGN AND THE CONSEQUENCES WHICH WOULD FOLLOW FROM CONSTRUING IT ONE WAY OR THE OTHER. THE USE OF THE WORD SHALL IN A STATUTORY PROVISIO N, THOUGH GENERALLY TAKEN IN A MANDATORY SENSE, DOES N OT NECESSARILY MEAN THAT IN EVERY CASE IT SHALL HAVE THAT EFFECT, THAT IS TO SAY, UNLESS THE WORDS OF THE STA TUE ARE PUNCTILIOUSLY FOLLOWED, THE PROCEEDING OR THE OUTCO ME OF THE PROCEEDING WOULD BE INVALID. ON THE OTHER HAND, IT IS NOT ALWAYS CORRECT TO SAY THAT WHERE THE WORD MAY HAS BEEN USED, THE STATUTE IS ONLY PERMISSIVE OR DIRECT ORY IN THE SENSE THAT NON-COMPLIANCE WITH THOSE PROVISIONS WILL NOT RENDER THE PROCEEDINGS INVALID. 5. IN VIEW OF THE ABOVE JUDGEMENT OF THE PUNJAB & HARYANA HIGH COURT, FILING OF CERTIFICATE U/S 10CCB OF THE IT ACT, AT THE TIME OF ITA NO.1687/HYD/2008 M/S MAHIDHARA CHEMICALS P LTD. HYDERABAD 3 ASSESSMENT IS SUFFICIENT COMPLIANCE OF THE RELEVANT PROVISION S OF THE LAW. 6. OTHER CONTENTIONS OF THE DEPARTMENTAL REPRESENTAT IVE IS THAT DUE TO THE AMALGAMATION OF M/S GAYATRI CHEMICALS (P) LTD., THERE WAS A RECONSTRUCTION OF BUSINESS OF THE ASSESSEE WHICH VIOLATED THE PROVISIONS OF SEC.80 IB OF THE ACT. IN OUR OPINION, T HE PROVISIONS OF SEC.80IB, IS ALLOWABLE TO THE INDUSTRIAL UNIT AND NOT TO THE ASSESSEE AS A WHOLE. THIS IS CLEAR FROM THE BOTH CIRCULAR IN F. NO.15/5/63-ITAI DATED 13/12/1963. IT IS ALSO MATTER OF RECORD THAT TH E IMPUGNED INDUSTRIAL UNIT OF THE ASSESSEE COMPANY, WAS GRANTED 80IB DEDUCTION FOR THE ASSESSMENT YEAR 1998-99 AS PER THE ORDER OF THE ITAT, HYDERABAD AND THIS FACT HAS NOT BEEN CONTROVERTED BY TH E DEPARTMENTAL REPRESENTATIVE. ONCE THE ELIGIBILITY TE ST IS FULFILLED BY SUCH UNIT, THE SAME IS ELIGIBLE FOR DEDUCTION FOR A PERI OD OF 10 ASSESSMENT YEAR . THE ACQUISITION OF OTHER INDUSTRIAL UNI TS WOULD NOT EFFECT OR MODIFY THE NATURE OF THE EXISTING UNIT. EV EN OTHERWISE, BOTH THE COMPANIES MAINTAINED THEIR SEPARATE IDENTITY BEFOR E THE DATE OF THE HIGH COURTS ORDER DATED 20/12/2004. THE PLANT A ND MACHINERY OF M/S GAYATRI CHEMICALS P LTD. WERE NOT TRANSFERRED TO T HE INDUSTRIAL UNIT OF THE ASSESSEE COMPANY ELIGIBLE FOR DEDUCTION U/S 80IBOF THE ACT. HENCE, THERE WAS NO RECONSTRUCTION OF THE SAID INDUSTRIAL U NIT. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS NOT CLAIMED 80I B DEDUCTION IN RESPECT OF INDUSTRIAL UNITS RUN BY M/S. GAYATRI CHEMICA LS P LTD. IT IS PERTINENT TO MENTION HERE THAT THE NET RESULT OF M/S GAYATRI CHEMICALS P LTD. IS A LOSS FOR THE YEAR UNDER CONSIDERATION AND TH EREFORE, THE CLAIM FOR SEC.80IB WAS MADE ON THE INCOME OF THE INDUST RIAL UNIT AFTER SET OFF OF THE LOSS M/S GAYATRI CHEMICALS P LTD. AN APP REHENSION WAS RAISED BY THE DEPARTMENTAL REPRESENTATIVE THAT THE EXPENDITURE IN THE ITA NO.1687/HYD/2008 M/S MAHIDHARA CHEMICALS P LTD. HYDERABAD 4 CASE M/S GAYATRI CHEMICALS P LTD., WAS OVER STATED RESULTI NG INTO HIGHER INCOME OF THE ASSESSEE COMPANY SO AS TO CLAIM HIGHER DEDUCTION U/S 80IB OF THE ACT. THIS APPREHENSION OF THE DR IS NOT SUBSTANTIATED BY ANY FACTS AND EVIDENCE ON RECORD. MOREO VER, THE ACCOUNTS OF BOTH THE COMPANIES WERE MAINTAINED SEPARATELY BEFORE THE DATE OF THE HIGH COURTS ORDER DATED 20/12/2004. BOT H THE COMPANIES MAINTAINED THEIR SEPARATELY IDENTITY. MOREOVER, AS ME NTIONED ABOVE, THE LOSSES OF M/S GAYATRI CHEMICALS P LTD. WERE SET OFF A GAINST THE INCOME OF THE ASSESSEE COMPANY BEFORE ALLOWING THE DEDUCTI ON U/S 80IB OF THE ACT. HENCE, EVEN IF IT IS PRESUMED THAT TH E INCOME OF THE ASSESSEE COMPANY IS INFLATED AT THE COST OF M/S GAYATRI CH EMICALS P LTD., THE NET RESULT REMAINS THE SAME ON WHICH THE DED UCTION WAS CLAIMED. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS CONFIRMED. 7. THE NEXT GROUND IN THE REVENUE APPEAL WITH REG ARD TO ALLOWING THE SET OFF OF LOSSES AND UNABSORBED DEPRECIATIO N OF M/S GAYATRI CHEMICALS P LTD., AMALGAMATED WITH THE ASSESSEE CO MPANY. 8. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THE REASON FOR DISALLOWANCE WAS THAT THE ASSESSEE DID NOT FILE THE P RESCRIBED CERTIFICATE IN FORM NO.62 ALONG WITH THE ORIGINAL RET URN OF INCOME AS REQUIRED U/S 72A (B) (III) OF THE ACT READ WITH RULE 9C(B). AS SEEN FROM THE ASSESSMENT RECORDS IT WAS FILED DURING THE COURSE O F ASSESSMENT PROCEEDINGS BEFORE THE COMPLETION OF ASSESSMENT U/S 143(3). NON FILING OF REQUIRED CERTIFICATE ALONG WIT H RETURN OF INCOME IS A PROCEDURAL IRREGULARITY WHICH CAN BE CURED BY FILING THE SAME BEFORE COMPLETION OF THE ASSESSMENT. AS OBSERVED BY US IN OUR EARLIER PARA IN THE CONTEXT OF 80IB DEDUCTION, FILING OF SUCH CERTIFICATE ONLY DIRECTORY ITA NO.1687/HYD/2008 M/S MAHIDHARA CHEMICALS P LTD. HYDERABAD 5 AND NOT MANDATORY IN CHARACTER. IN VIEW OF THIS, WE A RE COMPLETELY AGREEMENT WITH ORDER OF THE CIT(A) ON THIS ISSUE AND THE SAME IS CONFIRMED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 18 .6.201 0 SD/- SD.- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 18.6.2010 VNR COPY OF THIS ORDER FORWARDED TO: 1. THE ASSTT.COMMISSIONER OF INCOME TAX, CIRCLE 8(1) C-BLOCK , 8 TH FLOOR, IT TOWERS, OPP: MAHAVEER HOSPITAL, NEAR MASAB TANK, AC GUARDS, HYDERABAD. 2. M/S MAHIDHARA CHEMICALS (P) LTD., 18D, II PHASE-1, IDA PATANCHERU, MEDAK DISTT. 3. THE CIT (A),III HYDERABAD. 4. THE CIT-II HYDERABAD. 5. THE DR, ITAT, HYDERABAD.