M/s. Surya Vinayaka Industries Ltd., New Delhi V. CIT, New Delhi

ITA 1898/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65940 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-09-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Assessment record
• Section: 143(3); 80IB; 263; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ( I.T.A .NO. 1898/DEL/2012) ASSESSMENT YEAR: 2003-04 M/S SURYA VINAYAKA INDUSTRIES LTD. VS. CIT (CENTRAL)-1 (AMALGAMATED COMPANY OF AMALGAMATING NEW DELHI. COMPANY M/S GLOBAL BUSINESS INDIA PVT. LTD.) E-3, 1 ST FLOOR, MANGOLPURI INDUSTRIAL AREA, PHASE-II, DELHI-110034 PAN: AABCG4576F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RAJIV SAXENA, & ORS. ADV. RESPONDENT BY: SHRI NIRANJ AN KOULI, CIT, DR. HEARING ON 13/09/2012 PRONOUNCED ON THE DATE: 12.12.2012 ORDER PER I.C.SUDHIR, JM: THE ASSESSEE HAS QUESTIONED ORDER PASSED U/S 263 OF THE ACT ON THE FOLLOWING GROUNDS: 1. THAT ORDER OF THE CIT U/S 263 REVISING THE ORDER DA TED 27.03.2006 U/S 143 (3) ON ACCOUNT OF ALLOWABILITY OF CLAIM U/S 80 IB IS BAD IN LAW. ITA NO.1898/DEL/2012 2 A) BECAUSE IT IS BARRED BY LIMITATION AS THE ORDER WAS PASSED AFTER ABOUT 6 YEARS I.E. 4 YEARS LATER THAN THE TIME ALLOWED U/S 263. B) BECAUSE IT IS NOT ERRONEOUS AS THE ISSUE OF CLAIM U /S 80 IB WAS INITIALLY IN AY 2002-03 SETTLED BY THE HONBLE ITAT AGAINST WHICH NO APPEAL WAS PREFERRED BY THE CIT. C) BECAUSE THE ORDER IS NOT PREJUDICIAL TO THE REVENUE AS THE AO IN PASSING ORDER U/S 153C / 143 (3) HAS DISALLOW ED THE CLAIM U/S 80IB. 2. THAT THE REASONS TAKEN BY THE CIT FOR DISALLOWIN G DEDUCTION UNDER 80 IB WERE ALREADY TAKEN DURING AY 2002-03 D ECIDED AGAINST THE REVENUE AND ACCEPTED BY THE REVENUE, A NY DISALLOWANCE THEREAFTER IS CONTRARY TO RULE OF CON SISTENCY. 2. THE ABOVE GROUNDS ARE REVISED/ADDITIONAL GROUNDS WH ICH HAVE BEEN REQUESTED TO BE ALLOWED IN PLACE OF THE REVISIONAL GROUNDS WHEREIN VALIDITY OF ORDER PASSED U/S 263 HAD BEEN QUESTIONED. IN THE ORIGINAL GROUNDS, THE VALIDITY OF THE ORDER PASSED U/S 263 HAS BEEN QUEST IONED MAINLY ON THE BASIS THAT THE DEDUCTION U/S 80IB WAS ALREADY DENIED IN T HE ASSESSMENT ORDER PASSED ON 30.12.2009 HENCE THE LD. CIT WAS NOT JUST IFIED IN REVISING THAT ORDER SINCE THE SAME WAS NOT ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE. 3. IN THE PROPOSED REVISED / ADDITIONAL GROUNDS REPROD UCED HEREINABOVE TWO ISSUES HAVE BEEN RAISED. FIRSTLY, THE ORIGINAL ORDER IS BARRED BY LIMITATION AND SECONDLY THE ISSUE OF ALLOWABILITY OF DEDUCTION U/S 80 IB WAS ALREADY TAKEN UP DURING ASSESSMENT YEAR 2002-03 WHICH WAS D ECIDED AGAINST THE REVENUE AND REVENUE HAD NOT QUESTIONED IT. HENCE AN Y DISALLOWANCE MADE IN ITA NO.1898/DEL/2012 3 THE SUCCEEDING ASSESSMENT YEAR 2003-04 IS CONTRARY TO RULE OF CONSISTENCY. THE LD. DR OPPOSED THE REQUEST. WE HOWEVER, AGREE W ITH THE SUBMISSION OF THE LD. AR THAT THE ISSUES RAISED IN THE REVISED / ADDITIONAL GROUNDS ARE LEGAL IN NATURE WHICH GO TO THE ROOT OF THE MATTER AND AD JUDICATION OF WHICH DOES NOT REQUIRE CONSIDERATION OF FRESH MATERIAL OUT SID E THE RECORD, HENCE THESE ADDITIONAL GROUNDS ARE ALLOWABLE FOR THE ADJUDICATI ON OF THE BENCH. IT IS ORDERED ACCORDINGLY. 4. WE FIND THAT THE BASIC ISSUE IN THE PRESENT APPEAL IS AS TO WHETHER LD. CIT WAS JUSTIFIED IN INVOKING THE PROVISIONS OF SEC TION 263 OF THE ACT, AGAINST THE ASSESSMENT ORDER FRAMED U/S 153 C / 143 (3) OF THE ACT WHEREBY THE ASSESSING OFFICER HAD ALREADY DISALLOWED THE CL AIMED DEDUCTION U/S 80 IB OF THE ACT. THE RELEVANT UNDISPUTED FACTS ARE TH AT FOR ASSESSMENT YEAR 2003-04, FIRSTLY THE ASSESSMENT U/S 143 (3) WAS FRA MED ON 27.3.2006 WHEREIN DEDUCTION CLAIMED U/S 80 IB OF THE ACT WAS ALLOWED. SECOND ASSESSMENT PURSUANT TO AN ACTION TAKEN U/S 132 OF THE ACT WAS FRAMED U/S 153 C / 143 (3) OF THE ACT ON 30.12.2009 WHEREBY THE DEDUCTION CLAI MED U/S 80 IB OF THE ACT WAS NOT ALLOWED. THE LD. CIT VIDE NOTICE DATED 12/16/8/2011 PROPOSED INVOCATION OF PROVISIONS U/S 263 OF THE ACT, CONTEN TS WHEREOF ARE BEING REPRODUCED HEREUNDER: IT HAS BEEN NOTICED DURING THE COURSE OF EXAMINATI ON OF THE ASSESSMENT RECORDS OF YOUR CASE FOR THE ASSESSMENT YEAR 2003-04 THAT ITA NO.1898/DEL/2012 4 THE ASSESSMENT IN YOUR CASE WAS COMPLETED U/S 153C /143(3) OF THE INCOME TAX ACT, 1961 AT AN INCOME OF RS.1,37,37,01 0/- ON 27.03.2006 AFTER ALLOWING DEDUCTION OF RS.7,25,20, 022/- U/S 80 IB OF THE INCOME TAX ACT, 1961. 2. ON GOING THROUGH THE ASSESSMENT RECORDS IT HAS B EEN NOTICED THAT LESS THAN 20 WORKERS WERE ENGAGED BY THE ASSESSEE COMPANY FOR ITS BUSINESS AND NO POWER WAS USED IN THE PRODUCTION O F SANDALWOOD OIL. AS SUCH, THE ASSESSEE DOES NOT SATISFY THE CONDITI ONS LAID DOWN IN CLAUSE VI TO SUB SECTION 2 OF SECTION 80 IB OF THE I.T.ACT. THE AO HAS FAILED TO CONSIDER THE SAME AND HAS WRONGLY ALLOWE D DEDUCTION U/S 80 IB. THEREFORE THE ORDER OF THE ASSESSING OFFICER C OMPLETED ON 30.12.2009 U/S 143(3) R.W.S. 153C OF THE ACT IS ER RONEOUS IN SO FAR, AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. YOU ARE HEREBY GIVEN AN OPPORTUNITY TO STATE HOU R OBJECTIONS, IF ANY, TO THE PROPOSED ACTION EITHER PERSONALLY OR T HROUGH AN AUTHORIZED REPRESENTATIVE ON 18.08.2011 AT 3:30 P. M IN MY OFFICE ROOM NO. 338,3 RD FLOOR, A.R.A CENTRE, JHANDEWALAN EXTENSION, NEW DELHI FAILING WHICH THE CASE WILL BE DECIDED ON ME RITS. --SD-- (S.M. ASHRAF) COMMISSIONER OF INCOME TAX DELHI, CENTRAL-1, NEW DELHI 5. THE ASSESSEE OBJECTED THE SAME ON THE BASIS THAT TH E AO HAS NOT ALLOWED THE CLAIMED DEDUCTION U/S 80 IB OF THE ACT. THE LD. CIT DID NOT AGREE AND HELD THAT THE ORDER DATED 30.12.2009 PASS ED U/S 153 C READ WITH 143 (3) IS NOT ONLY ERRONEOUS IN SO FAR AS PREJUDIC IAL TO THE INTEREST OF THE REVENUE AS THE AO HAS NOT APPLIED HIS MIND ON THE S UBJECT MATTER OF ALLOWABILITY OF DEDUCTION U/S 80 IB WITH REGARD TO AN ISSUE OF EMPLYING REQUIRED NUMBER OF EMPLOYEES. THE LD. CIT OBSERVED THAT THE NUMBER OF EMPLOYEES WITH THE ASSESSEE COMPANY WAS MORE THAN T HE LIMITS PRESCRIBED. ITA NO.1898/DEL/2012 5 THE LD. CIT ACCORDINGLY SET ASIDE THE ASSESSMENT OR DER FOR A LIMITED PURPOSE REGARDING REQUIRED NUMBER OF EMPLOYEES. 6. LD. AR HAS ALSO QUESTIONED THE VALIDITY OF REVISION AL ORDER ON THE BASIS OF LIMITATION. HE SUBMITTED THAT THE ORDER U/ S 263 HAS BEEN PASSED AFTER AROUND 6 YEARS I.E. 4 YEARS LATTER ON THE TIME ALLO WED U/S 263 OF THE ACT. 7. HAVING GONE THROUGH THE ORDER IMPUGNED WE FIND THAT THE SIMILAR ISSUE WAS ALSO RAISED BEFORE THE LD. CIT. THE LD. C IT HAS HELD THAT THE ORDER PASSED BY THE AO U/S 153 C READ WITH 143 (3) DATED 30.12.2009 IS THE SUBJECT MATTER OF THE REVISION U/S 263 OF THE ACT A ND NOT ORDER PASSED U/S 143 (3) ON 27.3.2006 HENCE THE REVISIONAL ORDER PASSED U/S 263 OF THE ACT ON 22.2.2012 IS NOT BARRED BY LIMITATION. THESE FINDIN G OF THE LD. CIT HAVE NOT BEEN REBUTTED BY THE LD. AR HENCE WE DO NOT FIND SU BSTANCE IN THE CONTENTION OF THE LD. AR ON THE ISSUE RAISED IN GROUND NO. 1(A ) OF THE ACT. 8. IN SUPPORT OF THE OTHER GROUNDS THE LD. AR REITERAT ED THE SUBMISSION MADE BEFORE THE CIT. HE SUBMITTED THAT IN THE PRESE NT CASE THE AO WHILE PASSING THE ORDER U/S 143 (3) READ WITH SECTION 153 C HAS ALREADY DISALLOWED THE CLAIMED DEDUCTION U/S 80 IB WITH THIS FINDING T HAT THE ASSESSEE IS NOT ENGAGED IN THE BUSINESS OF MANUFACTURING THUS THE O RDER CANNOT BE STATED TO BE ERRONEOUS BECAUSE ONCE THE AO DID NOT FIND ASSES SEE COVERED UNDER SAME CLAUSES OF SUB-SECTION (2) TO SECTION 80 IB OF THE ACT, THE OTHER CONDITIONS ITA NO.1898/DEL/2012 6 PROVIDED IN THE REMAINING CLAUSES OF THE SUB-SECTIO N NEED NOT TO GO INTO. HE SUBMITTED FURTHER THAT IN THE ASSESSMENT YEAR 20 02-03 WHILE COMPLETING THE ASSESSMENT ON THE SAME DATE THE AO BEING FULLY AWARE OF THE FACTS AS WELL AS ORDER OF THE TRIBUNAL DID NOT OPT TO TAKE T HAT CONDITION OF NUMBER OF EMPLOYEES FOR DISALLOWING THE DEDUCTION. THE TRIBUN AL HAD ALREADY ALLOWED THE CLAIM ON THAT REASON OF NUMBER OF EMPLOYEES AND DEPARTMENT HAD NOT PREFERRED APPEAL BEFORE THE HIGH COURT. THUS THE FI RST CONDITION THAT THE ORDER SHOULD BE ERRONEOUS IS NOT FULFILLED. THE ERR OR IF ANY WAS COMMITTED BY THE AO IN THE REVISIONAL ASSESSMENT ORDER PASSED U/ S 143 (3) ON 27.3.2006 BUT IT IS BARRED BY LIMITATION FOR THE PURPOSE OF I NVOCATION OF SECTION 263 OF THE ACT AGAINST THAT ORDER. 9. THE LD. AR SUBMITTED FURTHER THAT THE SECOND CONDIT ION THE ORDER SHOULD BE PREJUDICIAL TO THE INTEREST OF REVENUE IS ALSO NOT FULFILLED BECAUSE THE AO HAS ALREADY DISALLOWED THE DEDUCTION U/S 80 IB AND PREFERRED APPEAL AGAINST THE ORDER OF LD. CIT (A) BEFORE THE TRIBUNA L FILED ON 13.6.2011 BEARING ITA NO. 3155/DEL/2011. THUS THERE IS NO GRI EVANCE LEFT AS THE REVENUE IS ALREADY IN APPEAL. THE LD. CIT WHO PERMI TTED THE PREFERENCE OF APPEAL AGAINST THE FIRST APPELLATE ORDER HAS NOT TA KEN UP ANY SUCH GROUND AND THE SAME CIT SUBSEQUENTLY JUST AFTER TWO MONTHS HAS ISSUED NOTICE U/S 263 OF THE ACT. THE LD. AR SUBMITTED FURTHER THAT THE OBSE RVATION OF LD. CIT THAT ITA NO.1898/DEL/2012 7 ASSESSEE SHOULD HAVE 20 PERSONS OR MORE IS INCORREC T WHICH IS REQUIRED ONLY WHEN THERE IS NO AID OF POWER WHILE IT IS NOT DISPU TED THAT HUGE MACHINES ARE INSTALLED FOR MANUFACTURING SANDALWOOD OIL FROM SAN DALWOOD OR ITS CHIPS. 10. THE LD. AR SUBMITTED FURTHER THAT EVEN EXTENDED POW ERS UNDER EXPLANATION -C TO SECTION 263 EMPOWERS CIT FULLY TO ENTERTAIN THOSE ISSUES WHICH HAD NOT BEEN THE SUBJECT MATTER OF ANY APPEAL , WHILE IN THE PRESENT CASE IT IS CLEAR THAT AS AGAINST THE ASSESSMENT PRO POSED TO BE REVISED AND THEREAFTER REVISED, THE LD. CIT HIMSELF HAD FILED A PPEAL ON THE SAME SUBJECT OF DEDUCTION U/S 80 IB. HE SUBMITTED FURTHER THAT T HE LD. CIT HAS NOT BROUGHT ANY FRESH MATERIAL AS POINTED OUT WHICH WAS IGNORED BY THE AO WHILE COMPUTING THE ASSESSMENT. THE LD. AR ALSO CONTENTED THAT A.Y. 2002-03 WAS INITIAL YEAR AND IN THAT YEAR THE TRIBUNAL HAS ALRE ADY HELD THAT THE ASSESSEE WAS FULFILLING THE PRESCRIBED CONDITION OF NUMBER O F EMPLOYEES UNDER CLAUSE (IV) TO SECTION 80IB (2) OF THE ACT. THUS IN THE SU CCEEDING YEARS THIS ISSUE CANNOT BE GONE INTO. HE ALSO POINTED OUT THAT EVEN IN A.Y. 2004-05, THE DEDUCTION HAS BEEN ALLOWED ACCEPTING THE SUBMISSION OF THE ASSESSEE REGARDING REQUISITE NUMBER OF EMPLOYEES. HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1. MALABAR INDUSTRIES CO. LTD. VS. CIT, 243 ITR 83 (SC ), 2. ALAGENDRAN FINANCE LTD. 2007-TIOL-IT 3. ASHOK BUILDCON LTD. VS. CIT 2010-TIOL-300-HC-MUM-IT ITA NO.1898/DEL/2012 8 4. SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CI T 123 ITR 669 (GUJ) 11. THE LD. DR ON THE OTHER HAND, TRIED TO JUSTIFY THE REVISIONAL ORDER IN QUESTION. HE SUBMITTED THAT EVERY YEAR IS AN INDEPE NDENT UNIT HENCE NUMBER OF RES JUDICATA IS NOT APPLICABLE IN THE INCOME TAX MATTERS. IN THIS REGARD HE PLACED RELIANCE ON THE FOLLOWING DECISIONS: 1. ARVEE INTERNATIONAL VS. ADDL. CIT 101 ITD 495 (MUM) 2. RAM PYARI DEVI SARAOGI VS. CIT 67 ITR 84 (SC) 3. MALABAR INDUSTRIAL CO. LTD. VS. CIT 243 ITR 83 (SC) 12. CONSIDERING THE ABOVE SUBMISSIONS, WE IN ABSENC E OF ANY EVIDENCE IN SUPPORT, FIND IT DIFFICULT TO ACCEPT THE SUBMISSION OF THE LD. AR THAT THE AO BEING FULLY AWARE OF THE FACT AS WELL AS ABOUT THE ORDER OF THE TRIBUNAL PASSED IN THE ASSESSMENT YEAR 2002-03 DID NOT OPT T O TAKE THAT CONDITION OF PRESCRIBED NUMBER OF EMPLOYEES U/S 80IB(2) (IV) FOR DISALLOWING THE DEDUCTION. SUCH ARGUMENT MAY BE ADVANCED BY DRAWING AN INFERENCE BUT THERE IS NO POSITIVE EVIDENCE ON RECORD REFERRED BY THE LD. AR, THAT WHILE MAKING DISALLOWANCE U/S 80IB OF THE ACT, THE AO HAD ALSO EXAMINED THE CONDITION OF FULFILLMENT OF PRESCRIBED NUMBER OF EM PLOYEES LAID DOWN IN CLAUSE (IV) TO SECTION 80IB (2) OF THE ACT. WE THUS DO NOT AGREE WITH THE CONTENTION OF THE LD. AR THAT THE ASSESSMENT ORDER DATED 30.12.2009 IN ABSENCE OF EXAMINATION OF THE ABOVE CONDITION BY TH E AO WAS NOT ERRONEOUS. WE HOWEVER, FIND SUBSTANCE IN THE CONTENTION OF THE LD. AR THAT THE ITA NO.1898/DEL/2012 9 ASSESSMENT ORDER DATED 30.12.2009 WAS NOT PREJUDICI AL TO THE INTEREST OF THE REVENUE SINCE THE A.O. HAD ALREADY DISALLOWED THE C LAIMED DEDUCTION U/S 80IB OF THE ACT ON NON-FULFILLMENT OF SOME OTHER CO NDITIONS BY THE ASSESSEE. BESIDES IT IS AN ADMITTED FACT THAT THE REVENUE IS ALREADY IN APPEAL (ITA NO. 3155/DEL/2011) AGAINST THE DISALLOWANCE DELETED BY THE LD. CIT (A). THUS THE SUBJECT MATTER IS ALSO SUBJUDICE BEFORE THE TRI BUNAL. UNDER THESE CIRCUMSTANCES WE FIND THAT EVEN THOUGH ERROR COMMIT TED BY THE AO IN THIS REGARD AS DISCUSSED HEREINABOVE WAS THERE, NO PREJU DICE TO THE INTEREST OF REVENUE HAS BEEN CAUSED DUE TO NOT MAKING THE DISAL LOWANCE OF THE CLAIMED DEDUCTION U/S 80IB OF THE ACT ON THE BASIS OF NON-F ULFILLMENT OF CONDITION IF ANY, UNDER CLAUSE (IV) TO SECTION 80IB BY THE AO. I T IS AN ESTABLISHED PROPOSITION OF LAW THAT FOR INVOCATION OF THE PROVI SIONS OF SECTION 263 OF THE ACT, BOTH THE CONDITIONS I.E. THE ORDER PROPOSED TO BE REVISED IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ARE REQU IRED TO BE FULFILLED. AS DISCUSSED ABOVE IN THE PRESENT CASE IN OUR VIEW CIT HAS NOT BEEN ABLE TO ESTABLISH THAT THE ORDER REVISED WAS PREJUDICIAL TO THE INTEREST OF REVENUE, HENCE WE HOLD THAT THE LD. CIT WAS NOT JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT, IN THE PRESENT CASE. SETTIN G ASIDE THE SAME AS AN INVALID ORDER WE THUS RESTORE THE ASSESSMENT ORDER. THE GROUND NOS. 1(B), 1(C) AND (2) ARE THUS ALLOWED. ITA NO.1898/DEL/2012 10 12. IN RESULT APPEAL IS ALLOWED. 13. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 12/12/ 2012 SD/- SD/- ( SHAMIM YAHYA ) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12/12/2012 *AK VERMA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR