ACIT 2(1) CITY-2, MUMBAI V. HINDUSTAN PENCILS LTD, MUMBAI

ITA 1877/MUM/2010

• Counselvise Citation: 187719914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 04-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A G NAYAK
• Assessee Lawyers: POONAM SOMAIYA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1877/MUM/2010 (ASSESSMENT YEAR: 2006-07) ACIT -2(1), AAYAKAR BHAVAN, R. NO.561, 5 TH FLOOR, M.K. ROAD, MUMBAI -400 020 ....... APPELLANT VS M/S. HINDUSTAN PENCILS LTD., 510, HIMALAYA HOUSE, 79, PALTON ROAD, MUMBAI -400 001 ..... RESPONDENT PAN: AAACH 0401 R APPELLANT BY: SHRI A.G. NAYAK RESPONDENT BY: MISS POONAM SOMAIYA O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-4, MUMBAI DATED 2.12.2009 FOR THE A.Y. 2006- 07. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUND:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW CIT (A) ERRED IN HOLDING THAT THE ASSESSEE IS E LIGIBLE FOR DEDUCTION U/S.80IA OF THE IT ACT, 1961, DESPITE A F INDING BY THE ASSESSING OFFICER THAT THE ASSESSEE WAS NOT ENG AGED IN MANUFACTURING OR PROCESSING OF ARTICLES OR GOODS AS REQUIRED BY SECTION 80IA OF THE IT ACT, 1961. 2. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL SUBM ITS THAT THE ISSUE ARISING IN THIS APPEAL IS COVERED BY THE DECI SION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE PRECEDING YEARS I.E. 2004-05 AND 2005- ITA 1877/MUM/2010 M/S. HINDUSTAN PENCILS LTD. 2 06. THE LD. COUNSEL ALSO FILED THE COPY OF THE COM MON ORDER IN ITA NO.844, 847, 2149 AND 2160/M/2008 DATED 06.08.2009. WE HAVE ALSO HEARD THE LD. D.R. WHO FAIRLY CONCEDED THAT TH E ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE, AS SUBMITTED BY THE LD. COUNSEL. 3. BRIEFLY STATED, THE FACTS ARE AS UNDER. THE ASS ESSEE-COMPANY IS ENGAGED IN THE MANUFACTURING AND PROCESSING OF STAT IONERY ITEMS AND THE ASSESSEE HAS CLAIMED THE DEDUCTION U/S.80IA IN RESPECT OF SILVASSA UNIT BUT NO DEDUCTION WAS CLAIMED IN RESPE CT OF JAMMU-II UNIT AS THERE WAS NEGATIVE PROFIT. THE A.O. WAS OF THE OPINION THAT THE ACTIVITY OF THE ASSESSEE-COMPANY ONLY INVOLVES PROC ESSING OR ASSEMBLING OR MOLDING OF ARTICLES/THINGS SUPPLIED B Y ITS ASSOCIATE CONCERNS IN UNFINISHED/SEMI-FINISHED CONDITION. IN SUM AND SUBSTANCE, THE ASSESSEE HAS NOT FULFILLED THE CONDI TIONS LAID DOWN IN SECTION 80IA AND 80IB AS NO MANUFACTURING ACTIVITY IS CARRIED OUT BY THE ASSESSEE. THE A.O. ALSO NOTED THAT THE ASSESSE E IS UNDERTAKING / UNIT IS FORM BY SPLITTING OR RESTRICTION OF BUSINES S ALREADY IN EXISTENCE, AS THE ASSESSEE TRANSFERRED SOME MACHINERY FROM ONE -COMPANY TO THE ANOTHER IN ITS GROUP. ON THE ABOVE REASON, THE A.O . DECLINED TO GRANT THE DEDUCTION CLAIMED BY THE ASSESSEE U/S. 80IA/80I B OF THE ACT. IN THE A.YS. 2004-05 AND 2005-06 THE ALLOWABILITY OF T HE DEDUCTION IN THE CASE OF THE PRESENT ASSESSEE REACHED BEFORE THE TRI BUNAL AND THE TRIBUNAL FOLLOWING THE ORDERS OF THE TRIBUNAL IN AS SESSEES OWN CASE FOR THE A.YS. 2001-02 AND 2002-03 ALLOWED THE CLAIM OF THE ASSESSEE. THE OPERATIVE PART OF THE TRIBUNAL ORDER IS AS UNDE R:- 10. IN THE LIGHT OF ABOVE DISCUSSION IF WE CONSIDE R THE FACTS OF THE CASE UNDER CONSIDERATION WE FIND THAT THE ASSES SEE ENGAGED IN MANUFACTURING OF STATIONERY ITEMS LIKE P VC, EASERS, CUTTERS, SHARPENERS AND SCALE. THE ASSESSE E HAS STARTED SOME NEW ITEMS OF SAME NATURE I.E. LIKE WAS RAYONS, POSTAL COLOURES, OIL PASTELS AND WATER COLO URS. FOR THAT PURPOSE THE ASSESSEE INSTALLED SOME NEW PLANT AND ITA 1877/MUM/2010 M/S. HINDUSTAN PENCILS LTD. 3 MACHINERY ALONG WITH OLD PLANT AND MACHINERY IN THE SAME UNIT AT SAME FACTORY SITE / PLOT WITHOUT BASIC CHAN GES IN THE ADMINISTRATIVE SET UP OR BUSINESS ORGANIZATION. TH US WE FIND THAT THE ASSESSEE STARTED MANUFACTURING SOME ADDITIONAL ITEMS OF STATIONERY OF SIMILAR NATURE TO THE EXISTING BUSINESS IN THE SAME UNIT, THEREFORE, SAME ARE PART AND PARTIAL OF EXISTING BUSINESS. THE DEDUCTION UN DER SECTION 80IA / 80IB IS ALLOWABLE AGAINST PROFIT OF ANY ELIGIBLE BUSINESS TO UNDERTAKING OR AN ENTERPRISE. THE ASSESSEES BUSINESS ACTIVITIES IS ELIGIBLE BUSINESS THEREFORE THEY ENTITLE TO BENEFIT UNDER SECTION 80IA / 80IB, WE ACCORDINGLY SET ASIDE THE ORDER OF CIT (A) AND DIRE CTED AO TO ALLOW THE CLAIM OF ASSESSEE UNDER SECTION 80IA T O THESE ITEMS. 4. AS THE FACTS ARE IDENTICAL IN THIS YEAR WE DO NO T FIND ANY REASON TO DIFFER FROM THE VIEW TAKEN BY THE LD. CIT (A). MOREOVER, THE LD. CIT (A) HAS FOLLOWED THE ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) IS CONFIR MED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH JULY 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 15TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)29, MUMBAI. 4) THE CIT-17, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR *CHAVAN I.T.A.T., MUMBAI ITA 1877/MUM/2010 M/S. HINDUSTAN PENCILS LTD. 4 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 05.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 05.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER