D.C.I.T CC - XX,kolkata, Kolkata V. M/s Todays Writting Products Ltd, Kolkata

ITA 1773/KOL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5049 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-04-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2013
• Court: TRIBUNAL
• Department Lawyers: DAVID Z CHOWNGTHU
• Assessee Lawyers: SUMIT KUMAR MEHARI A
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI WASE EM AHMED, AM] I.T.A NO. 1773/KOL/20 13 ASSESSMENT YEAR : 2007-0 8 D.C.I.T., CENTRAL CIRCLE-XX, -VS.- M/S. TODA YS WRITING PRODUCTS LTD. KOLKATA KOLKATA [PAN : AABCT1487E) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : DAVID Z.CHOWNGTHU, JCIT FOR THE RESPONDENT : SHRI SUMIT KUMAR MEHARI A, FCA DATE OF HEARING : 17.03.2016. DATE OF PRONOUNCEMENT : 6.4.2016 ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 22.03.2013 OF CIT(A)- CENTRAL-III, KOLKATA, RELATING TO AY 2007-08. 2. GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS FOLLOWS :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED BOTH IN FACTS AS WELL AS IN LAW IN ALLOWING THE ASSESSEES APPEAL FOR DEDUCT ION U/S 80IB WITHOUT APPRECIATION OF FACT AND IGNORING THE ASSESSEES FAILURE TO PROVIDE ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM DURING THE ASSESSMENT STAGE AS WELL AS DURING THE REMAND PROCEEDINGS. 2. THAT THE DEPARTMENT CRAVES LEAVE TO ALTER, AMEND AND/.OR MODIFY ANY OR ALL GROUNDS OF APPEAL. 3. AS CAN BE SEEN FROM THE GROUNDS OF APPEAL, THE O NLY GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE A SSESSEE'S CLAIM FOR DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 (ACT). 4. THE FACTS ARE THAT THE ASSESSEE IS A COMPANY. I T IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING IN BALL POINT PENS, REFIL LS AND ALLIED COMPONENTS AND STATIONERY ITEMS. FOR AY 07-08, THE ASSESSEE FILE D ITS RETURN OF INCOME DECLARING INCOME OF RS. 8,87,40,846/-. THE RETURN WAS SELECTE D FOR SCRUTINY AND CONSEQUENT ASSESSMENT WAS COMPLETED ON 04/05/2009 U/S 143(3) A T INCOME OF RS. 9,29,10,089/-. 2 ITA NO.1773/KOL/2013 M/S. TODAYS WRITING PRODUCTS LTD. A.YR.2007-08 2 SUBSEQUENTLY, THAT ASSESSMENT WAS REVIEWED BY THE C OMMISSIONER OF INCOME TAX, CENTRAL - III, KOLKATA (THE CIT) IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT THE CIT SET ASIDE THE ASSESSMENT ORDER AND DIRECTED TO REFRAME THE ASSESSMENT AFTER VERIFYING AND EXAMINING THE FACTS MENTIONED IN FORM NO. 10CCB, RE GARDING THE ASSESSEE'S CLAIM OF DEDUCTION U/S 80LB OF THE ACT. 4. THE ASSESSMENT U/S.143(3) READ WITH SEC.263 OF T HE ACT WAS FRAMED BY THE AO IN COMPLIANCE OF THE DIRECTION OF THE CIT GIVEN U/S 263. IN THE ORIGINAL ASSESSMENT THE ASSESSEE HAD BEEN ALLOWED DEDUCTION OF RS. 4,74,25, 603/- U/S 80IB. THE AUDITORS IN COLUMN 8 THE AUDIT REPORT HAD REPORTED THE DATE OF COMMENCEMENT OF OPERATION/ACTIVITY BY UNIT - III OF THE ASSESSEE AS 08/03/1994 AND IN COLUMN 9 OF THE SAID REPORT THEY HAD MENTIONED THAT 1995-96 WAS THE INITIAL ASSESSMENT YEAR FROM WHEN DEDUCTION U/S 80IB IN RESPECT OF UNIT - III WAS BEI NG CLAIMED BY THE ASSESSEET. THE AO WAS OF THE VIEW THAT UNDER SUB-SECTION (4) OF SECTI ON 80IB OF THE ACT READ WITH FIRST PROVISO THEREOF, DEDUCTION UNDER THAT SECTION SHAL L BE AVAILABLE TO AN ASSESSEE FOR TEN CONSECUTIVE ASSESSMENT YEARS STARTING FROM THE INIT IAL ASSESSMENT YEAR IN WHICH SUCH DEDUCTION WAS ALLOWED FOR THE FIRST TIME. SINCE, TH E AUDITORS HAD REPORTED THAT INITIAL ASSESSMENT YEAR OF ALLOWANCE OF DEDUCTION U/S 80IB TO BE 1995-96, THE A.O. WAS OF THE VIEW THAT DEDUCTION U/S 801B COULD BE ALLOWED TO TH E ASSESSEE ONLY UPTO ASSESSMENT YEAR 2004-05. THEREFORE, THE A.O. DISALLOWED THE AP PELLANT'S CLAIM OF DEDUCTION U/S 80IB IN RESPECT OF APPELLANT'S UNIT - III. ACCORDIN GLY, HE DISALLOWED THE CLAIM OF DEDUCTION TO THE EXTENT OF RS. 4,74,25,603/-. 5. BEFORE CIT(A), THE ASSESSEE POINTED OUT THAT IT WAS INCORPORATED ON 29.4.1992. IT SET UP ITS FIRST UNIT AT DADRA AND NAGAR HAVELLI WHICH STARTED TRIAL RUN PRODUCTION ON 8.3.1994 AND COMMERCIAL PRODUCTION FROM ASST YEAR 1 995-96. AS SUCH ASST YEAR 1995- 96 WAS THE INITIAL YEAR FOR WHICH DEDUCTION U/S 80L A OF THE INCOME TAX ACT WAS CLAIMED. THE RELEVANT CERTIFICATE IN FORM 10CCB FOR THE INITIAL YEAR WAS ALSO FILED BEFORE CIT(A). THE ASSESSEE FURTHER POINTED OUT TH AT IT SET UP ITS SECOND UNIT AT DADRA AND NAGAR HAVELLI WHICH STARTED COMMERCIAL PRODUCTI ON FROM ASST YEAR 1997-98 WHICH 3 ITA NO.1773/KOL/2013 M/S. TODAYS WRITING PRODUCTS LTD. A.YR.2007-08 3 WAS THE INITIAL YEAR FOR UNIT II AND CLAIMED DEDUCT ION U/S 80IA FROM ASST YEAR 1997-98. THE RELEVANT CERTIFICATE IN FORM 10CCB FOR THE INIT IAL YEAR WAS ALSO FILED BEFORE CIT(A). THE ASSESSEE FURTHER POINTED OUT TO THE CI T(A) THAT IT HAD SET UP THE THIRD UNIT AT DADRA AND NAGAR HAVELLI WHICH STARTED COMMERCIAL PRODUCTION FROM A.Y.2002-03 WHICH WAS THE INITIAL YEAR FOR UNIT III AND THE ASS ESSEE WAS CLAIMING DEDUCTION U/S 80LB FROM ASST YEAR 2002-03. THE ASSESSEE POINTED O UT THAT THE YEAR UNDER APPEAL WAS THE SIXTH YEAR OF DEDUCTION U/S 80LB AND ACCORDINGL Y ASSESSEE CLAIMED THE DEDUCTION. THE ASSESSEE ALSO POINTED OUT THAT WHILE ISSUING C ERTIFICATE IN FORM 10CCB THE AUDITOR DUE TO INADVERTENCE MENTIONED THE DATE OF COMMENCEM ENT OF COMMERCIAL PRODUCTION OF UNIT-III AS 8.3.1994 IN PLACE OF 1.4.2001 AND THE I NITIAL ASSESSMENT YEAR AS 1995-96 IN PLACE OF A. Y 2002-03. THE ASSESSEE CLARIFIED THAT THE ABOVE DATES WERE THE DATES PERTAINING TO UNIT I AND NOT UNIT III. THE ASSESSEE ALSO FURTHER SUBMITTED THAT AS SOON AS THE MISTAKE WAS POINTED OUT TO THE AUDITOR, THE AUD ITOR ISSUED A CERTIFICATE CONFIRMING THE FACT THAT THE DATES MENTIONED IN THE CERTIFICAT E ARE INCORRECT AND THE CORRECT DATES ARE 1.4.2001 FOR COMMENCEMENT OF PRODUCTION AND ASST YE AR 2002-03 IS THE CORRECT YEAR FOR INITIAL ASSESSMENT YEAR FOR UNIT-III. IT WAS A LSO POINTED OUT THAT THE SAID CERTIFICATE WAS FILED BEFORE THE AO. BUT THE LD. AO IN COMPLETE DISREGARD OF THE CERTIFICATE OF AUDITOR AND ENTIRE FACTS AVAILABLE ON RECORD, ON TH E PRETEXT OF INCORRECT DATES DISALLOWED THE DEDUCTION U/S 80IB FOR UNIT III CLAIMED BY THE ASSESSEE. THE ASSESSEE ALSO DREW ATTENTION OF THE CIT(A) TO THE FACT THAT THE AO HAS ALLOWED THE DEDUCTION U/S 80IB OF THE ACT FOR UNIT III FOR THE SUBSEQUENT ASSESSMENT YEAR, I.E. ASST YEAR 2008-09. 6. A COPY OF THE A/R'S SUBMISSIONS WAS SENT BY THE CIT(A) TO THE A.O. FOR A REMAND REPORT. IN HIS REMAND REPORT THE A.O. HAD REPORTED THAT EXAMINATION OF THE ASSESSMENT ORDER AND OTHER DOCUMENTS FOR DIFFERENT YEARS REVEALED THAT UNIT - III OF THE APPELLANT HAD COMMENCED ITS PRODUCTION FROM 01-04-2 001, RELEVANT TO ASSESSMENT YEAR 2002-03 AND NOT FROM 08/03/1994 AS MENTIONED IN THE AUDITOR'S REPORT. IT WAS ALSO POINTED OUT THAT 08/03/1994 WAS THE DATE OF COMMENC EMENT OF UNIT-I OF THE ASSESSEE. THE A.O. FURTHER REPORTED THAT FROM THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 4 ITA NO.1773/KOL/2013 M/S. TODAYS WRITING PRODUCTS LTD. A.YR.2007-08 4 2001-02 IT WAS EVIDENT THAT DURING THE PREVIOUS YEA R RELEVANT TO THAT ASSESSMENT YEAR 01-02 ONLY UNIT-II OF THE ASSESSEE COMPANY EXISTED AND UNIT -III BECAME ELIGIBLE FOR DEDUCTION U/S 80IB FOR THE FIRST TIME IN ASSESSMENT YEAR 2002-03. 7. THE CIT(A) ON A CONSIDERATION OF THE ABOVE REMAN D REPORT OF THE AO AND TAKING NOTE OF OTHER DOCUMENTARY EVIDENCE ON RECORD ALLOWE D DEDUCTION U/S.80-IB OF THE ACT ON PROFITS OF UNIT-III, AS CLAIMED BY THE ASSESSEE. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE CIT(A): SINCE, THE A.O. HAS CONFIRMED THAT THE INITIAL YE AR FOR ALLOWANCE OF DEDUCTION U/S 80IB FOR THE FIRST TIME IN RESPECT OF UNIT-III WAS ASSESSMENT YEAR 2002-03, THE APPELLANT IS FOUND TO BE ELIGIBLE FOR SIMILAR D EDUCTION FOR THE ASSESSMENT YEAR UNDER APPEAL ALSO IN RESPECT OF THAT UNIT AS T EN CONSECUTIVE YEARS FROM THE ASSESSMENT YEAR IN WHICH SUCH DEDUCTION WAS ALLOWED FOR THE FIRST TIME IN RESPECT OF THAT UNIT HAD NOT EXPIRED BEFORE THE ASSESSMENT YEAR UNDER APPEAL. ACCORDINGLY, THE APPELLANT IS ALLOWED THE CLAIM OF DEDUCTION U/S 80IB. HENCE, DISALLOWANCE OF RS.4,74,25,603/- MADE BY THE A.O. I S DELETED. THIS APPEAL, IS ACCORDINGLY, ALLOWED. 8. AGGRIEVED BY THE ORDER OF CIT(A) THE REVENUE HA S PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 9. WE HAVE HEARD THE SUBMISSIONS OF THE LEARNED DR, WHO RELIED ON THE ORDER OF AO. THE LEARNED COUNSEL FOR THE ASSESSEE FILED BEFO RE US A COPY OF THE REMAND REPORT FILED BY AO BEFORE CIT(A) IN WHICH CIT(A) ACCEPTED THAT UNIT-III HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT FOR THE FIRST TIME ON LY IN A.Y.2002-03. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS CLEAR FROM THE ORDER OF CIT(A) AND THE REMAND REPORT OF THE AO DATED 27.02.2012 FI LED BEFORE CIT(A) THAT THE DEDUCTION WAS CLAIMED IN RESPECT OF PROFITS DERIVED BY UNIT-III U/S 80IB OF THE ACT. THE ONLY REASON WHY THE AO DENIED THE CLAIM OF THE ASSE SSEE FOR SUCH DEDUCTION WAS THAT UNIT-I HAD CLAIMED DEDUCTION U/S 80IB FROM A.Y.1995 -96 AND THE PERIOD OF 10 YEARS EXPIRED IN A.Y.2004-05. IT IS CLEAR FROM THE ORDER OF CIT(A) THAT THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT CLAIMED IN RESPECT OF PROFITS OF UNIT-III WHICH BECAME ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT FOR THE FIRST TIME IN A.Y.2002-03. THERE WAS 5 ITA NO.1773/KOL/2013 M/S. TODAYS WRITING PRODUCTS LTD. A.YR.2007-08 5 NO DISPUTE WHATSOEVER WITH REGARD TO THE FACT THAT THE PROFITS WERE REALLY MADE BY UNIT- III. GROUNDS OF APPEAL RAISED BY THE REVENUE IS THE REFORE MISCONCEIVED. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE REMAND REPORT OF THE AO FILED BEFORE CIT(A) THERE CANNOT BE ANY DISPUTE WITH REGARD TO THE CLAIM FOR DEDUCTI ON U/S 80IB OF THE ACT IN RESPECT OF PROFITS OF UNIT-III FOR A.Y.2007-08 BECAUSE THE FIR ST TIME IN WHICH DEDUCTION U/S 80IB OF THE ACT WAS ALLOWED FOR A.Y.2002-03. 11. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE ORDER OF CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 12. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE CO URT ON 6.4.2016. SD/- SD/- [WASEEM AHMED] [ N.V.VASUDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 6.4.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. TODAYS WRITING PRODUCTS LTD., 13, BRABOURNE ROAD, KOLKATA-700001. 2D.C.I.T., CENTRAL CIRCLE-XX, KOLKATA. 3. CIT(A)-CENTRAL-III, KOLKATA 4. CIT-III, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES 6 ITA NO.1773/KOL/2013 M/S. TODAYS WRITING PRODUCTS LTD. A.YR.2007-08 6