ITO, Parwanoo V. M/s Shree Triveni Foods, Parwanoo

ITA 192/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5471 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 25-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 80IB; 32; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL: B BENCH: CH ANDIGARH BEFORE SHRI D K SRIVASTAVA, AM AND MS. SUSHMA CHOWL A, JM ITAS NO. 192, 193, 194/CHANDI/2011 ASSESSMENT YEAR: 2005-0 6, 2006-07 & 2007-08 I.T.O. PARWANOO V M/S SHREE TRIVENI FOODS NH-22, SECTOR 6 PARWANOO PAN: AANFS 4378 J (APPELLANT-ASSESSEE) (RESPONDENT) APPELLANT BY: SMT. JAISHREE SHARMA RESPONDENT B Y: SHRI SURENDER BABBAR ORDER D K SRIVASTAVA: ALL THE THREE APPEALS FILED BY THE DEPARTMENT ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE LD. CIT(A) ON 3.12.2010. 2. THE FACTS AND THE ISSUES IN ALL THE THREE APPEAL S ARE IDENTICAL. WE, THEREFORE, FIND IT CONVENIENT TO DISPOSE OFF THE PRESENT BUNCH OF APPE ALS BY A CONSOLIDATED ORDER. 3. THE DEPARTMENT HAS TAKEN IDENTICAL GROUNDS OF AP PEAL (EXCEPT FOR THE DIFFERENCE IN AMOUNT IN ALL THE THREE APPEALS). FOR THE SAKE OF CONVENIENCE THE GROUNDS OF APPEAL TAKEN BY THE DEPARTMENT IN ITS APPEAL RELATING TO A.Y 200 5-06 ARE REPRODUCED BELOW:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES, THE LD. C IT(A) HAS ERRED IN HOLDING THAT MAKING BESAN BY GRINDING GRAM FLOUR AMOUNTS TO MANU FACTURE AND CONSEQUENTLY ALLOWING DEDUCTION U/S 80IB TO THE EXTENT OF RS. 2, 67,008/- ESPECIALLY IN VIEW OF THE HON'BLE SUPREME COURT JUDGMENT IN SACS EAGLE CHOICO RY V. CIT (255 ITR 178). 2 THE LD. CIT(A) HAS ERRED IN HOLDING THAT NO DEPR ECIATION COULD BE COMPUTED FOR YEARS PRIOR TO A.Y 2002-03 AND CONSEQUENTLY WRI TTEN DOWN VALUES OF ASSETS COULD NOT BE RECOMPUTED FOR THE PRESENT YEAR, ESPECIALLY IN VIEW OF THE MUMBAI HIGH COURT JUDGMENT IN INDIAN RAYON CORPORATION LTD V. CIT (26 1 ITR 98). 3 IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 4. A PERUSAL OF PARA 2 OF ASSESSMENT ORDER SHOWS TH AT THE ASSESSEE WAS ENGATED IN THE MANUFACTURING OF THE WHOLE WHEAT INSTANT DALIA, SOY A NUGGETS/PELLETS, SOYA BARI, SOYA MATTER, SOYA GRANULES, BESAN AND VERMICELLI, WHEAT FIBRE, SOYA POWDER, GRAM DISALLOWANCE, SUJI WERE USED AS RAW MATERIAL. THE ASSESSEE CLAIM ED DEDUCTION U/S 80IC OF INCOME-TAX ACT WHICH WAS DISALLOWED BY THE AO FOR TWO REASONS, (1) THE ACTIVITIES CARRIED BY THE ASSESSEE FELL WITHIN SCHEDULE 13 OF INCOME-TAX ACT AND THERE FORE, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 80IC (2)(A) OF INCOME-TAX ACT AND (2) THE ACTIVITIES CARRIED OUT BY THE ASSESSEE DID NOT AMO UNT TO MANUFACTURING IN VIEW OF THE JUDGMENT OF HON'BLE SUPREME COURT IN SACS EAGLES CH ICORY V. CIT, 255 ITR 178 (S.C) AND CIT V. GEM INDIA MANUFACTURING CO., 249 ITR 307 (S. C). THE AO THEREFORE, DENIED DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC OF INCOM E-TAX ACT. M/S SHREE TRIVENI FOODS, PARWANOO 192, 193 & 194/CHANDI/2011 2 5. ON PERUSING THE DETAILS FILED BY THE ASSESSEE, T HE AO NOTICED THAT THE ASSESSEE HAD NOT CLAIMED DEPRECIATION CORRECTLY FOR A.Y 2004-05. HE, THEREFORE, PROCEEDED TO RECALCULATE THE DEPRECIATION ADMISSIBLE TO THE ASSESSEE. 6. AGGRIEVED BY THE ORDER PASSED BY THE AO THE ASSE SSEE FILED AN APPEAL BEFORE THE LD. CIT(A). APROPOS THE ADMISSIBILITY OF DEDUCTION U/S 80IC, THE LD. CIT(A) RELIED UPON THE ORDER OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 200 4-05 IN ITAS NO. 1057 TO 1061/CHANDI/2007. FOLLOWING THE AFORESAID ORDER OF THE TRIBUNAL, THE LD. CIT(A) DIRECTED THE AO TO ALLOW DEDUCTION U/S 80IC OF INCOME-TAX ACT. APROPOS COMPUTATION OF DEPRECIATION BY THE AO THE LD. CIT(A) FOLLOWED THE AFORESAID ORDER OF THIS TRIBUNAL AND DIRECTED THE AO TO COMPUTE RELIEF U/S 80IC WITH DEDUCTING DEPRECIATION . 7. AGGRIEVED BY THE AFORESAID ORDER, THE DEPARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL. AT THE TIME OF HEARING, IT WAS SUBMITTED BY THE DR THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN FOLLOWING THE ORDER OF THIS TRIBUNAL IN A.Y 2000-01 TO 2004-05 IN THE CASE OF THE ASSESSEE AS THE AFORESAID ORDERS RELATING TO THE ADMISSIBILITY OF DEDUCTION U/S 80IB. SHE SUBMITTED THAT THE PROVISIONS OF SECTION 80IC WAS MATERIALLY DIFFE RENT FROM SEC 80IB. INVITING OUR ATTENTION TO THE PROVISIONS OF SECTION 80IC(2) (A) SHE SUBMIT TED THAT THE AO HAD DENIED DEDUCTION TO THE ASSESSEE AS THE ASSESSEE WAS NOT MANUFACTURING OF PRODUCTION OF ARTICLES OR THINGS NOT SPECIFIED IN SCHEDUL3E 13 OF INCOME-TAX ACT. SHE S UBMITTED THAT THE AO HAS SPECIFICALLY REFERRED TO SCHEDULE 13 AND THEREFORE, IT WAS NECES SARY ON THE PART OF THE LD. CIT(A) TO EXAMINE AS TO WHETHER ANY ARTICLE OR THINGS MANUFAC TURED BY THE ASSESSEE FELL WITHIN THE AMBIT OF ARTICLES OR THINGS SPECIFIED IN SCHEDULE 1 3. ACCORDINGLY TO HER THE LD. CIT(A) HAS NOT RECORDED ANY FINDING IN THIS BEHALF, THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) WAS LIABLE TO BE VACATED. 8. APROPOS THE ISSUE OF EXCLUSION OF DEPRECIATION F ROM THE PROFITS ELIGIBLE FOR DEDUCTION U/S CHAPTER VIIIA, THE DR INVITED OUR ATTENTION TO EXPLANATION 5 TOP SEC 32 OF INCOME-TAX ACT AND SUBMITTED THAT THE AFORESAID EXPLANATION HA S NOT AT ALL BEEN CONSIDERED BY THE LD. CIT(A) WHILE DISPOSING OFF THE ISSUE. 9. IN REPLY THE AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE SUPPORTED THE ORDER PASSED BY THE LD. CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CO NSIDERED THEIR SUBMISSIONS. PERUSAL OF SEC 80IC(2)(A) OF INCOME-TAX ACT SHOWS THAT THE BENEFIT OF SEC 80IC WOULD NOT BE AVAILABLE TO AN ENTERPRISE OR UNDERTAKING WHICH IS ENGAGED IN THE MANUFACTURING OF PRODUCTION OF ANY ARTICLE OR THING SPECIFIED IN SCH EDULE 13 OF INCOME-TAX ACT. THE AO HAS SPECIFICALLY REFERRED TO SCHEDULE 13 FOR DENYING TH E RELIEF TO THE ASSESSEE U/S 80IC. THE LD. CIT(A) HAS NOT RECORDED ANY FINDING WITH REGARDS TO WHETHER ANY ARTICLE OR THING MANUFACTURED BY THE ASSESSEE FALL WITHIN THE AMBIT OF SCHEDULE 13 OR NOT? IN THIS VIEW OF THE MATTER, THE ORDER PASSED BY THE LD. CIT(A) IS L IABLE TO BE SET ASIDE AND IS ACCORDINGLY SET ASIDE. THE MATTER IS RESTORED TO THE FILE OF LD. C IT(A) WITH THE DIRECTION TO EXAMINE AS TO WHETHER THE ACTIVITIES UNDER TAKEN BY THE ASSESSEE ARE HIT BY SCHEDULE 13 OR NOT? 11. APROPOS THE ISSUE OF DEPRECIATION IN THE CONTEX T OF DEDUCTION UNDER CHAPTER VIIIA, THE LD. CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF T HE ASSESSEE ON THE BASIS OF ORDER OF THIS TRIBUNAL. THE ISSUE UNDER APPEAL HAS ALREADY BEEN CONSIDERED BY FULL BENCH OF HON'BLE M/S SHREE TRIVENI FOODS, PARWANOO 192, 193 & 194/CHANDI/2011 3 BOMBAY HIGH COURT IN PLASTIBLENDS INDIA LTD V. ACIT & OTHERS, 318 ITR 352 (FB)(BOM).THE LD. CIT(A) HAS NOT EXAMINED THE ISSUE IN THE LIGHT OF THE AFORESAID JUDGMENT. IN THIS VIEW OF THE MATTER, IT IS CONSIDERED APPROPRIATE TO SET ASIDE THE ORDER OF LD. CIT(A) IN THIS BEHALF AND RESTORE THE MATTER TO HIS FILE FOR DECIDING THE ISSUE IN CONFORMITY WITH THE AFORESAID JUDGMENT AFTER GIVING REASONABLE OPPORTUNITY OF HEA RING TO BOTH THE PARTIES. 12. SINCE THE FACTS AND ISSUES INVOLVED IN ALL THE THREE APPEALS ARE IDENTICAL, ALL THE THREE APPEALS ARE RESTORED TO THE FILE OF LD. CIT(A) FOR AFRESH ADJUDICATION IN CONFORMITY WITH OUR DIRECTIONS, AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. ALL THE THREE APPEALS ARE TREATED AS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED ON APRIL, 2011 (SUSHMA CHOWLA) (D K SRIVASTAVA) JUDICIAL MEMBER ACCOUNTANT MEM BER CHANDIGARH: THE APRIL, 2011 SURESH COPY TO: 1. THE APPELLANT, I.T.O. PARWANOO 2. THE RESPONDENT, M/S SHREE TRIVENI FOODS, PARWANO O 3. THE CIT(A), SHIMLA 4. THE LD. CIT, SHIMLA 5. THE D.R, INCOME-TAX DEPARTMENT, CHANDIGARH TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH