M/s. Anand Food & Dairy Products, Anand V. The Income Tax Officer, Ward- 2, Anand

ITA 1828/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89594 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 18-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 16-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR SR DR
• Assessee Lawyers: S N DIVETIA
• Keywords: Reopening of assessment
• Section: 147

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ././ ./ ITA NOS. 1828 & 1829/AHD/2014 AND 1422/AHD/2013 / ASSESSMENT YEAR: 2007-08 TO 2009-10 M/S. ANAND FOOD & DAIRY PRODUCTS, CHIKHODRA-SARSA ROAD, AT : CHIKHODRA, TAL. & DIST : ANAND PAN : AAEFA 0212 E V/S. THE ITO, WARD 2M ANAND / // / (APPELLANT) !' !' !' !' / // / (RESPONDENT) ASSESSEE(S) BY : SHRI S.N. DIVETIA, AR REVENUE BY : SMT. SONIA KUMAR, SR. DR. #$ % &'/ // / DATE OF HEARING : 18/06/2015 () % &' / // / DATE OF PRONOUNCEMENT: 19/06/2015 *+ *+ *+ *+/ // / O R D E R PER G.D. AGRAWAL, VICE PRESIDENT: THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THREE SEPARATE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)- IV, BARODA DATED 21.04.2014, 21.04.2014 AND 05.02.2013 FOR ASSESSMEN T YEARS 2007-08, 2008-09 AND 2009-10 RESPECTIVELY. 2. GROUND NO.1 OF THE ASSESSEES APPEAL FOR ASSESSM ENT YEARS 2007-08 AND 2008-09 IS AGAINST THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 OF THE INCOME-TAX ACT. 3. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSE L FOR THE ASSESSEE DID NOT PRESS THIS GROUND IN BOTH THE ASSESSMENT YEARS. ACCORDINGLY, THE ITA NOS. 1828, 1829/AHD/2014 & 1422/AHD/2013 - ANAND FOOD & DAIRY PRODUCTS FOR AY 2007-08 TO 2009-10 2 GROUND NO.1 OF THE ASSESSEES APPEAL IN ASSESSMENT YEARS 2007-08 AND 2008- 09 ARE REJECTED. 4. THE ONLY OTHER GROUND IN ASSESSMENT YEARS 2007-0 8, 2008-09 AND 2009-10 IS AGAINST THE ALLOWING OF DEDUCTION U/S 80 IB(11A) @ 25% INSTEAD OF 100% OF THE PROFITS AND GAINS OF BUSINESS. 5. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS E NGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKING OF VEGETABLES AND FRUITS. FOR ALL THREE YEARS UNDER APPEAL, THE ASSESSEE CLAIMED THE DEDUCT ION U/S 80IB(11A) AT 100% OF THE PROFITS AND GAINS OF BUSINESS OF PROCES SING, PRESERVATION AND PACKAGING OF FRUITS/VEGETABLES. THE ASSESSING OFFI CER ACCEPTED THE ASSESSEES CLAIM OF ELIGIBILITY U/S 80IB(11A). HOW EVER, ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE WAS ENTITLED TO DED UCTION @ 25% AND NOT 100%. ADMITTEDLY, THE ASSESSEE COMMENCED ITS BUSIN ESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS/VEGETABLES WIT H EFFECT FROM 02.06.2001. THEREFORE, AS PER ASSESSING OFFICER, THE INITIAL AS SESSMENT YEAR WAS ASSESSMENT YEAR 2002-03 AND, BEGINNING WITH THIS YE AR, FIVE YEARS WOULD END BY ASSESSMENT YEAR 2006-07. THE ASSESSEE IS EN TITLED TO 100% DEDUCTION OF THE PROFIT FROM THE BUSINESS OF PROCESSING, PRES ERVATION AND PACKAGING OF FRUITS/VEGETABLES FOR THE PERIOD OF 5 YEARS, BEGINN ING WITH INITIAL ASSESSMENT YEAR. THEREAFTER, HE IS ENTITLED TO DEDUCTION OF 2 5% OF THE PROFIT. THEREFORE, THE ASSESSING OFFICER ALLOWED DEDUCTION U/S 80IB(11 A) AT 25% IN ALL THE THREE YEARS UNDER APPEAL BEFORE US AS AGAINST 100% CLAIMED BY THE ASSESSEE. THE SAME IS SUSTAINED BY THE CIT(A); HENCE, THIS AP PEAL BY THE ASSESSEE. 6. AT THE TIME OF HEARING BEFORE US, IT IS SUBMITTE D BY THE LD. COUNSEL THAT IN SECTION 80IB(11A) AN UNDERTAKING DERIVING P ROFIT FROM BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS/VE GETABLES HAS BECOME ITA NOS. 1828, 1829/AHD/2014 & 1422/AHD/2013 - ANAND FOOD & DAIRY PRODUCTS FOR AY 2007-08 TO 2009-10 3 ENTITLED TO DEDUCTION BY VIRTUE OF AMENDMENT IN THE SECTION BY THE FINANCE ACT, 2004, W.E.F. 01.04.2005. THUS, THE ASSESSEE B ECAME ENTITLED TO THIS DEDUCTION ONLY FOR AND FROM ASSESSMENT YEAR 2005-06 . THEREFORE, THE FIVE YEARS, BEGINNING WITH INITIAL ASSESSMENT YEAR, SHOU LD BE COUNTED FROM ASSESSMENT YEAR 2005-06 AND NOT ASSESSMENT YEAR 200 2-03. HE ALSO SUBMITTED THAT THE PROVISION OF SECTION 80IB(11A) I S AN INCENTIVE PROVISION AND THEREFORE, IT SHOULD BE INTERPRETED LIBERALLY. HE FURTHER STATED THAT THE INTENTION OF THE LEGISLATURE IS TO PROMOTE THE UNDE RTAKING IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS/VE GETABLES. IT IS ALSO THE INTENTION OF THE LEGISLATURE TO PROVIDE 100% FOR FI RST FIVE YEARS AND THEN 25% FOR NEXT FIVE YEARS. THE PROVISION OF THE SECTION S HOULD BE INTERPRETED IN SUCH A MANNER WHICH WILL GIVE BENEFIT TO THE ASSESS EE FOR THE PERIOD OF ALL TEN YEARS AS PROVIDED BY SECTION 80IB(11A). IF THE INTERPRETATION PUT FORTH BY THE REVENUE IS CONSIDERED, THE ASSESSEES SIMILAR TO ONE UNDER APPEAL BEFORE THE ITAT WOULD NOT BE ENTITLED TO 100% DEDUC TION IN ANY OF THE YEAR AND WOULD GET THE DEDUCTION ONLY FOR FIVE YEARS, TH AT TOO 25% OF THE PROFIT DERIVED FROM THE BUSINESS OF PROCESSING, PRESERVATI ON AND PACKAGING OF FRUITS/VEGETABLES. HE, THEREFORE, SUBMITTED THAT T HE ORDER OF THE CIT(A) SHOULD BE REVERSED AND THAT OF ASSESSING OFFICER MA Y BE RESTORED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE, ON THE OTHE R HAND, RELIED UPON THE ORDER OF THE ASSESSING OFFICER AS WELL AS CIT(A ) AND SHE POINTED OUT THAT THE LEGISLATURE HAS ALREADY DEFINED THE INITIAL ASS ESSMENT YEAR IN SECTION 80IB(14)(C)(IV). AS PER THIS DEFINITION, THE INITI AL ASSESSMENT YEAR WOULD BE THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR I N WHICH UNDERTAKING BEGINS SUCH BUSINESS. ADMITTEDLY, THE ASSESSEE BEGI NS THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS/VE GETABLES AS ON 02.06.2001 AND THEREFORE, THE INITIAL ASSESSMENT YE AR WOULD BE ASSESSMENT ITA NOS. 1828, 1829/AHD/2014 & 1422/AHD/2013 - ANAND FOOD & DAIRY PRODUCTS FOR AY 2007-08 TO 2009-10 4 YEAR 2002-03. SHE, THEREFORE, SUBMITTED THAT THE OR DER OF THE ASSESSING OFFICER WAS PERFECTLY JUSTIFIED AND WHICH WAS RIGHT LY UPHELD BY THE CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF BO TH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 80I B(11A), AS IT STOOD AT THE RELEVANT TIME, READS AS UNDER:- [(11A) THE AMOUNT OF DEDUCTION IN A CASE OF [AN U NDERTAKING DERIVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATIO N AND PACKAGING OF FRUITS OR VEGETABLES OR FROM] THE INTEGRATED BUSINESS OF H ANDLING, STORAGE AND TRANSPORTATION OF FOODGRAINS, SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH UNDERTAKING FOR FIVE ASSESS MENT YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THEREAFTER, TW ENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM THE OPERATION OF SUCH BUSINESS IN A MA NNER THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESS MENT YEARS AND SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGINS TO OPERA TE SUCH BUSINESS ON OR AFTER THE 1ST DAY OF APRIL, 2001.] 9. FROM THE ABOVE, IT IS EVIDENT THAT AN UNDERTAKIN G DERIVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAG ING OF FRUITS OR VEGETABLES IS ENTITLED TO 100% OF THE PROFIT AND GA INS DERIVED FROM SUCH UNDERTAKING FOR FIVE ASSESSMENT YEARS, BEGINNING WI TH THE INITIAL ASSESSMENT YEAR AND THEREAFTER 25% OF THE PROFIT AND GAINS DER IVED FROM SUCH UNDERTAKING. THUS, THE 100% DEDUCTION IS TO BE ALLO WED FOR FIVE YEARS, BEGINNING WITH THE INITIAL ASSESSMENT YEAR. THEREFO RE, THE CRUCIAL QUESTION IS - WHICH IS THE INITIAL ASSESSMENT YEAR? AS PER ASS ESSEE, THE INITIAL ASSESSMENT YEAR WOULD BE ASSESSMENT YEAR 2005-06, BECAUSE THE PROVISION GIVING THE BENEFIT OF SECTION 80IB(11A) TO THE UNDERTAKING DER IVING PROFIT FROM THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES CAME INTO FORCE FROM 01.04.2005. HOWEVER, WE FIND THAT THE ACT HAS ALREADY DEFINED THE WORD INITIAL ASSESSMENT YEAR IN SECTI ON 80IB(14)(C). THE SUB- CLAUSE (IV) OF THE ABOVE SECTION READS AS UNDER:- ITA NOS. 1828, 1829/AHD/2014 & 1422/AHD/2013 - ANAND FOOD & DAIRY PRODUCTS FOR AY 2007-08 TO 2009-10 5 [( IV) IN THE CASE OF AN UNDERTAKING ENGAGED [IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES OR] IN THE INTEGRATED BUSINESS OF HANDLING, STORAGE AND TRANSPORTATION OF FOODGRAINS, MEANS THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE UNDERTAKING BEGINS SUCH BUSINESS;] 10. THUS, AS PER THE DEFINITION, THE INITIAL ASSESS MENT YEAR FOR AN UNDERTAKING ENGAGED IN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES MEANS THE ASSESSM ENT YEAR RELEVANT TO PREVIOUS YEAR IN WHICH THE UNDERTAKING BEGINS SUCH BUSINESS. ADMITTEDLY, THE ASSESSEE HAS BEGUN THE BUSINESS OF PROCESSING, PRESERVATION AND PACKAGING OF FRUITS OR VEGETABLES WITH EFFECT FROM 02.06.2001. THEREFORE, THE ASSESSMENT YEAR RELEVANT TO PREVIOUS YEAR 01.04.200 1-31.03.2002 WOULD BE THE INITIAL ASSESSMENT YEAR. IN VIEW OF ABOVE, WE A GREE WITH THE FINDING OF THE LOWER AUTHORITIES THAT THE INITIAL ASSESSMENT Y EAR WAS ASSESSMENT YEAR 2002-03 AND THE ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION ONLY FOR FIRST FIVE YEARS, INCLUDING INITIAL ASSESSMENT YEAR. THI S WILL LAST UP TO ASSESSMENT YEAR 2006-07 AND THEREAFTER, THE ASSESSEE WOULD BE ENTITLED TO 25% DEDUCTION FOR THE NEXT FIVE YEARS. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE PROVISION OF THE ACT SHOULD BE I NTERPRETED IN A MANNER WHICH MAKES THE ASSESSEE ENTITLED FOR THE DEDUCTION FOR FULL TEN YEARS AS INTENDED BY SECTION 80IB(11A). HOWEVER, IN OUR OPI NION, WHEN THE ACT ITSELF HAS DEFINED THE INITIAL ASSESSMENT YEAR, THE N WE CANNOT PUT ANY ARTIFICIAL DEFINITION TO THE INITIAL ASSESSMENT YEA R BY HOLDING THAT THE INITIAL ASSESSMENT YEAR WOULD BE 2005-06, EVEN THOUGH THE A SSESSEE HAD COMMENCED THE BUSINESS WITH EFFECT FROM 02.06.2001. IT IS A SETTLED LAW THAT WHEN THE LANGUAGE OF THE STATUTE IS CLEAR AND UNAMB IGUOUS, THEN THERE SHOULD BE LITERAL INTERPRETATION I.E., AS PER THE P LAIN LANGUAGE OF THE STATUTE. IN THE CASE UNDER APPEAL BEFORE US, WE ARE OF THE O PINION THAT THE PROVISION OF STATUTE IS CLEAR AND UNAMBIGUOUS, THE INITIAL AS SESSMENT YEAR HAS BEEN ITA NOS. 1828, 1829/AHD/2014 & 1422/AHD/2013 - ANAND FOOD & DAIRY PRODUCTS FOR AY 2007-08 TO 2009-10 6 DEFINED IN THE ACT AND THEREFORE, THE DEDUCTION U/S 80IB(11A) IS TO BE ALLOWED AS PER THE PLAIN LANGUAGE OF THE SECTION AS WELL AS PLAIN LANGUAGE OF THE DEFINITION OF INITIAL ASSESSMENT YEAR. FROM THE PLAIN LANGUAGE OF DEFINITION OF INITIAL ASSESSMENT YEAR, IT IS EVIDEN T THAT INITIAL ASSESSMENT YEAR WOULD BE 2002-03 AND NOT 2005-06 AS CLAIMED BY LD. COUNSEL. IN VIEW OF ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFER E WITH THE ORDER OF THE CIT(A), ACCORDINGLY THE SAME IS SUSTAINED. 11. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMI SSED. ORDER PRONOUNCED IN THE COURT ON 19 TH JUNE, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (G.D. AGRAWAL) VICE-PRESIDENT AHMEDABAD; DATED 19/06/2015 BIJU T., PS *+ *+ *+ *+ % !&, -*,& % !&, -*,& % !&, -*,& % !&, -*,&/ COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. & #. / CONCERNED CIT 4. #. ( ) / THE CIT(A) 5. ,12 !& , , / DR, ITAT, AHMEDABAD 6. 2 4$ / GUARD FILE . *+# *+# *+# *+# / BY ORDER, TRUE COPY 5 55 5/ // / 6 6 6 6 ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD