The ACIT, 2(1), Bhopal V. M/s. Kilpest India Ltd., Bhopal

ITA 175/IND/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1921 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 03-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S S DESH
• Keywords: Revised return; Reassessment proceedings
• Section: 143(3)

Judgement Text

ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 175/IND/2014 A.Y.2004-05 ASSTT.COMMR. OF INCOME-TAX 3(1) BHOPAL ::: APPELLANT VS M/S KILPEST INDIA LIMITED BHOPAL ::: RESPONDENT APPELLANT BY SHRI R.A. VERMA RESPONDENT BY SHRI S.S. DESHPANDE DATE OF HEARING 14.9.2015 DATE OF PRONOUNCEMENT 2 1 .9.2015 O R D E R PER SHRI B.C. MEENA, AM THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 2.12. 2013. ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 2 2. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IA OF RS.16,71,579/-. THE ASSESSEE PREFERRED APPEAL AND THE LEARNED CIT(A) GRANTED RELIEF T O THE ASSESSEE RELYING UPON THE DECISION OF THE ITAT IN TH E ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 WHEREIN THE ITAT HAS FOUND ASSESSEE AS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA ON UNIT-2 RELATING TO MANUFACTURING OF MICRO NUTRIENT FERTILIZERS. THE RE LEVANT PARA OF THE ORDER OF THE ITAT IN ITA NO. 14/IND/2013 DATED 19.6.2013 IS REPRODUCED HEREUNDER :- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVA NT PORTION OF THE ORDER OF THE LEARNED CIT(A) :- 4.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. AS EXPLAINED BY THE APPELLANT, UNIT-II WAS SETUP ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 3 FOR MANUFACTURING OF MICRONUTRIENT FERTILIZERS DURING A.Y. 1997-98 AND THE OLD UNIT WAS ENGAGED IN THE MANUFACTURING OF A DIFFERENT PRODUCT I.E. PESTICIDES AND INSECTICIDES SINCE 19743-74. UNIT-II IS A SEPARATE AND INDEPENDENT UNIT FROM UNIT-I, BOTH ARE MANUFACTURING DIFFERENT PRODUCTS AND CONTROLLED BY DIFFERENT LAWS. THUS, IT CANNOT BE SAID THAT UNIT-II WAS AN EXPANSION OF EXISTING UNIT-I. IT IS ALSO NOTICED THAT THE APPELLANT WAS MAINTAINING SEPARATE ACCOUNTS FOR BOTH THE UNITS WHICH WERE DULY AUDITED. THE APPELLANT HAS FURNISHED AUDIT REPORT IN FORM NO. 10CCB DURING REASSESSMENT PROCEEDINGS AND, THEREFORE, FULFILLED THE CONDITION LAID DOWN UNDER SECTION 80IA(7). IT IS A WELL SETTLED LAW NOW THAT THE REQUIREMENT OF FILING THE AUDIT REPORT IN FORM NO. 10CCB ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 4 ALONGWITH THE RETURN OF INCOME 3 IS NOT MANDATORY BUT DIRECTORY AND IF THE SAID AUDIT REPORT IS FILED DURING ASSESSMENT PROCEEDINGS, IS NOT MANDATORY BUT DIRECTORY AND IF THE SAID AUDIT REPORT IS FILED DURING ASSESSMENT PROCEEDINGS, THE REQUIREMENT OF SECTION 80IA(7) WOULD BE MET AND DEDUCTION U/S 80IA(7) CANNOT BE DENIED ON THIS ACCOUNT. THE HONBLE DELHI HIGH COURT IN CIT VS. CONTIMETERS ELECTRICALS PVT. LTD. (2009) 317 ITR 249 (DEL) HAD AN OCCASION TO CONSIDER THIS DECISION AND IT WAS HELD BY THE HONBLE HIGH COURT THAT REQUIREMENT OF FILING THE AUDIT REPORT ALONGWITH THE RETURN IS NOT MANDATORY BUT DIRECTORY AND IF THE AUDIT REPORT IS FILED AT ANY TIME BEFORE THE FRAMING THE ASSESSMENT, REQUIREMENT OF SECTION 80IA(7) WOULD BE MET. THUS, THE APPELLANT HAD ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 5 SET UP AN INDEPENDENT UNDERTAKING UNIT-II FOR MANUFACTURING OF MICRONUTRIENT FERTILIZER, WHICH WAS NOT AN EXPANSION OF EARLIER UNIT AND ALSO FULFILS OTHER CONDITIONS OF SECTION 80IA(2) OF THE ACT. THEREFORE, IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE APPELLANT WAS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA. HENCE, THE A.O. IS DIRECTED TO ALLOW DEDUCTION U/S 80IA OF RS. 11,10,057/-. ACCORDINGLY, THESE GROUNDS OF APPEAL ARE ALLOWED. 2.1. THE FACTS, IN BRIEF, ARE THAT, DURING THE RELEVANT PERIOD, THE ASSESSEE COMPANY WAS CARRYING ON THE BUSINESS OF FORMULATION OF PESTICIDES AND INSECTICIDES SINCE 1973-74. THE ASSESSEE SET UP A NEW UNIT IN 1997-98 TO MANUFACTURE MICRONUTRIENT FERTILIZERS AND HAD BEEN CLAIMING DEDUCTION U/S 80IA SINCE THEN WHICH WAS ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 6 ALLOWED BY THE DEPARTMENT. THE LEARNED CIT(A) PERUSED THE ASSESSMENT ORDER FRAMED U/S 143(3) FOR THE A.YS. 2001-02 AND 2002-03 WHEREIN THE CLAIMED DEDUCTION U/S 80IA(2) OF THE ACT WAS ALLOWED TO THE ASSESSEE. HOWEVER, VIDE ASSESSMENT ORDER DATED 23.12.2010 THE LEARNED ASSESSING OFFICER DISALLOWED THE CLAIMED DEDUCTION ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH THE AUDIT REPORT IN FORM NO. 10CCB. THE ASSESSEE APPROACHED THE LEARNED CIT(A) WHO AFTER EXAMINING THE FACTS 4 ALLOWED THE CLAIM WHICH IS UNDER CHALLENGE BEFORE THIS TRIBUNAL. WE FIND THAT THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORDER (PARA 4.3) THAT THE AUDIT REPORT WAS FILED AN D THE REQUIREMENT OF SECTION 80IA(7) OF THE ACT HAS BEEN DULY MET WITH. UNIT-II WAS SEPARATE AND INDEPENDENT UNIT FROM THE EXISTING UNIT AND THE ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 7 NEW UNIT COMMENCED ITS PRODUCTION DURING A.Y. 1997- 98. THE MANUFACTURING OF MICRONUTRIENT FERTILIZERS EVEN HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. IT IS NOT THE CASE THAT THE UNIT IN DISPUTE IS PART OF EARLIER UNIT OR ITS EXPANSION. THERE IS AN UNCONTROVERTED FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE WAS MAINTAINING SEPARATE ACCOUNTS FOR BOTH THE UNITS WHICH ARE DULY AUDITED. SINCE THE ASSESSEE HAS DULY FULFILLED THE REQUIREMENTS OF SECTION 80IA(7) OF THE ACT BY FILING THE AUDIT REPORT BEFORE FRAMING T HE ASSESSMENT, WE ARE OF THE VIEW THAT THE ASSESSING OFFICER WRONGLY DISALLOWED THE CLAIM OF THE ASSESSEE. AS PER PROVISIONS OF SECTION 80IA(7), REQUIRING FILING OF AUDIT REPORT ALONGWITH THE RETU RN IS NOT MANDATORY RATHER IT IS DIRECTORY AND IF THE AUDIT REPORT IS FILED AT ANY TIME BEFORE FRAMING TH E ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 8 ASSESSMENT, THE REQUIRED CONDITIONS ARE CONSIDERED TO BE FULFILLED. OUR VIEW IS FORTIFIED B Y THE DECISION IN CIT VS. ACE MULTITAXES SYSTEMS (P) LTD. (2009) 317 ITR 307 (KAR.); CIT VS. MEDICAPS 5 LIMITED (2010) 323 ITR 554 (MP); AKS ALLOYS PVT. LTD. (2012); 18 TAXMAN.COM 25(MAD.); CIT VS. A.N. ARUNACHALAM; 75 TAXMAN 529 (MAD.). THE SUM AND SUBSTANCE OF THESE DECISIONS IS THAT AUDIT REPORT CAN BE FILED WITH THE REVISED RETURN OR AT ANY STAGE UP TO FRAMING OF ASSESSMENT. IN VIEW OF THESE FACTS AND JUDICIAL PRONOUNCEMENTS, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE IMPUGNED ORDER. OUR VIEW IS FURTHER FORTIFIED BY THE DECISIO N FROM DELHI HIGH COURT IN CIT VS. CONTIMETER ELECTRICALS PVT.LTD.; 317 ITR 249. IN VIEW OF THESE FACTS, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED. ACIT VS. M/S KILPEST INDIA LTD ITA NO. 175/IND/2014 9 3. SINCE THE RELIEF HAS BEEN GRANTED ON THE BASIS OF THE DECISION OF THE ITAT IN THE IMMEDIATELY PRECEDING YE AR AND FACTS REMAIN THE SAME, THEREFORE, RESPECTFULLY FOLLOWI NG THE ORDER OF THE TRIBUNAL, WE SUSTAIN THE ORDER OF THE LE ARNED CIT(A) IN ALLOWING RELIEF U/S 80IA OF THE ACT TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 21 ST SEPTEMBER, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 21 ST SEPTEMBER, 2015 DN/-