The ITO,Vapi Ward-4, Nani Daman V. M/s. Gaurav Udyog, Nani Daman

ITA 1952/AHD/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85589 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: RONAK N PAREKH
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER ITA NO S . 3133, 1593, 3134 /AHD/20 1 0, 2025/AHD/2011 & 1952/AHD/2013 A. Y S . 2004 - 05 , 2005 - 06, 2007 - 08, 2008 - 09, 2010 - 11 ITO VAPI, WARD - 4, DAMAN . VS M/S. GAURAV UDYOG GALA NO.3 & 4, SHAKTI INDL. ESTATE, RINGANWADA, NANI DAMAN. PAN: AAEFG 6626S (APPELLANT) (RESPONDENT) REVENUE BY : SMT. SONIA KUMAR , SR. D.R. , ASSESSEE(S) BY : SHRI RONAK N. PAREKH , A.R. / DATE OF HEARING : 2 8 / 01 /201 5 / DATE OF PRONOUNCEMENT: 30 / 01 /201 5 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER A LL THESE FIVE APPEALS HAVE BEEN FI LED BY THE REVENUE ARISING FROM THE ORDER S OF LEARNED CIT(A), VALSAD FOR A.Y. 2004 - 05, 2005 - 06, 2007 - 08, 2008 - 09 AND 2010 - 11, RESPECTIVELY DATED 30 TH JULY, 2010 , 15 TH DECEMBER, 2009, 30 TH JULY, 2010, 24 TH JUNE, 2011 AND 30 TH APRIL, 2013. THE COMMON ISSUE F OR ALL THESE YEARS RAISED BY THE ASSESSEE IS IN RESPECT OF ALLOWING OF DEDUCTION BY LEARNED CIT(A) U/S.80IB OF IT ACT. FOR READY REFERENCE GROUND AS RAISED IN ONE OF THE APPEAL (A.Y.2004 - 05) REPRODUCED BELOW: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S.80IB OF THE ACT STATING THAT DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE WAS NOT HAVING FACTORY LICENSE BEFORE IT STARTED MANUFACTURING A CTIVITIES IS WITHOUT ANY MERITS. ITA NO S . 3133, 1593, 3134 /AHD/201 0, 2025/AHD/2011 & 1952/AHD/2013 ITO, VAPI WARD - 4, DAMAN VS. M/S. GAURAV UDYOG . FOR A.Y S . 20 04 - 05 , 2005 - 06, 2007 - 08, 2008 - 09 & 2010 - 11 - 2 - 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE POINT THAT THE ASSESSEE HAS FAILED TO PROVE THAT IT HAS COMMENCED THE MANUFACTURING ACTIVITY ON OR BEFORE 31.03.2 004, AS STIPULATED IN SECTION 80IB OF THE ACT. 1.1 AT THE OUTSET, BEFORE WE PROCEED TO DECIDE THE ISSUE , WE HAVE NOTED THAT A QUERY HAS BEEN RAISED AS PER THE ORDER SHEET IN RESPECT OF THE POSITION OF APPEAL FOR A.Y. 2009 - 10 IN THE CASE OF THIS ASSESSEE. NOW , THE REVENUE DEPARTMENT HAS FILED A LETTER DATED 15.11.2014 AND INFORMED THAT FOR THAT YEAR NO SECOND APPEAL WAS PREFERRED BY THE REVENUE DEPARTMENT. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDERS WERE THAT RETURN OF INCOME WAS FILED IN WHICH A CLAIM OF DEDUCTION U/S.80IB WAS MADE . H OWEVER , THE CASES WERE RE - OPENED U/S.148 OF IT ACT. IT WAS MENTIONED BY THE AO THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF CORRUGATED BOXES. THE MANUFACTURING UNIT WAS LOCATED IN THE UNION T ERRITORY OF DAMAN. ASSESSMENT YEARS 2004 - 05 WAS THE FIRST YEAR OF THE MANUFACTURING ACTIVITY. ON PERUSAL OF A REPORT ON FORM 10CCB , IT WAS NOTED BY THE AO THAT THE COMMENCEMENT OF THE PRODUCTION WAS STATED TO BE STARTED W.E.F. 9 TH JANUARY, 2004. HOWEVER, I T WAS NOTED BY THE AO THAT THE FACTORY CHIEF INSPECTOR HAD ISSUED THE REQUISITE LICENSE TO WORK ON 19 TH MAY, 2004. ACCORDING TO AO, THE PROVISIONS OF SECTION 80IB WERE NOT FOLLOWED. THE AO S MAIN OBJECTION WAS THAT THE LICENSE WAS ISSUED BY CHIEF INSPECTOR OF FACTORY WAS DATED 15 TH MAY, 2004 TO START THE MANUFACTURING ACTIVITY THEN HOW THE ASSESSEE HAD STARTED THE MANUFACTURING ACTIVITY AS ON 31.03.2004. THE NEXT OBJECTION OF THE AO WAS THAT SOME OF THE BILLS WERE DATED 2 ND OF MARCH, 2004 WHICH WERE AT MUMB AI; HENCE COULD NOT BE DELIVERED AT THE ITA NO S . 3133, 1593, 3134 /AHD/201 0, 2025/AHD/2011 & 1952/AHD/2013 ITO, VAPI WARD - 4, DAMAN VS. M/S. GAURAV UDYOG . FOR A.Y S . 20 04 - 05 , 2005 - 06, 2007 - 08, 2008 - 09 & 2010 - 11 - 3 - MANUFACTURING SITE. THE NEXT OBJECTION OF THE AO WAS OF ELECTRICITY CONSUMPTION AT RS.759/ - FOR A. Y .2004 - 05. HE HAS CONCLUDED THAT THE CONSUMPTION OF THE ELECTRICITY WAS VERY LESS ; HENCE THERE WAS NO COMMENCEMENT OF THE PRODUCTION ON OR BEFORE 31.03.2004. THE AO HAS ALSO RAISED AN OBJECTION THAT AS PER FORM 10CCB THE INFORMATION OF EMPLOYEES WAS NOT FURNISHED. HE HAS ALSO DOUBTED THE WAGES ACCOUNT ON THE GROUND THAT THE AVERAGE MONTHLY WAGES WAS VERY LESS. HE HAS FINA LLY HELD THAT ON ACCOUNT OF THOSE OBJECTIONS AND IN THE ABSENCE OF ANY RELIABLE EVIDENCE IN RESPECT OF COMMENCEMENT OF THE MANUFACTURING ACTIVITY UNDERTAKEN ON OR BEFORE 31 ST OF MARCH, 2004 THE CLAIM OF DEDUCTION U/S.80IB WAS NOT ALLOWED. ACCORDING TO HIM, THE MANUFACTURING ACTIVITY HAD ONLY STARTED ON 19 TH MAY, 2004 WHEN THE ASSESSEE HAS OBTAINED FACTORY LICENSE. AGAINST THE REJECTION OF THE CLAIM OF DEDUCTION U/S.80IB THE ASSESSEE PREFERRED AN APPEAL. 3. LEARNED CIT(A) HAS EXAMINED ALL THOSE ASPECTS AND THEREUPON HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE ORDER OF THE A.O. AND THE SUBMISSION MADE BY THE LEARNED A.R. OF THE APPELLANT. THE A.O. DENIED THE CLAIM OF 8 0 IB BENEFIT WITH A REASON THAT THE APPELLANT HAD NOT OBTAINED FACTORY LICENSE BEFORE THE COMMENCEMENT OF THE MANUFACTURING PRIOR TO 31.03.2004, WHICH IS INDICATIVE THAT THE APPELLANT HAD NOT DONE MANUFACTURING ON OR BEFORE 31.03.2004. THIS MATTER OF FACTORY LICENSE HAS BEEN DECIDED BY THE JURISDICTIONAL HON'BLE ITAT, AHMEDABAD IN THE CASE M/S . SAMARTH HEALTH CARE VIDE ORDER NO.ITA NO.L006/AHD/2009 FOR THE ASSTT. YEAR 2005 - 06, WHEREIN, IT WAS HELD THAT TO OBTAIN FACTORY LICENSE IS NOT A CONDITION PRECEDENT FOR CLAIM OF DEDUCTION U/S. 8 0 IB OF THE I.T. ACT. RESPECTFULLY FOLLOWING THE ORDER OF THE HON'BLE I.T.A.T., AHMEDABAD, I DIRECT THE A.O. TO ALLOW 80IB DEDUCTION TO THE APPELLANT. THUS, THIS GROUND OF APPEAL IS ALLOWED. 4. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., SMT. SONIA KUMAR HAS REITERATED ALL THOSE OBJECTIONS ON THE BASIS OF WHICH THE AO HAS REJECTED THE CLAIM OF 80IB DEDUCTION, SUCH AS INADEQUATE ELECTRICITY ITA NO S . 3133, 1593, 3134 /AHD/201 0, 2025/AHD/2011 & 1952/AHD/2013 ITO, VAPI WARD - 4, DAMAN VS. M/S. GAURAV UDYOG . FOR A.Y S . 20 04 - 05 , 2005 - 06, 2007 - 08, 2008 - 09 & 2010 - 11 - 4 - CONSUMPTION, NUMBER OF EMPLOYEES, NON - AVAILABILITY OF FACTOR Y LICENSE AND THE PURCHASE OF MACHINERY PARTS FROM BOMBAY, ETC. SHE HAS VEHEMENTLY OBJECTED THE MANNER IN WHICH LEA RNED CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. 5. FROM THE SIDE OF THE RESPONDENT - ASSESSEE, THE LEARNED AR, MR. RONAK N. PAREKH APPEARED AND AT THE OUTSET INFORMED THAT RESPECTED ITAT B BENCH AHMEDABAD IN ITA NO.1452/AHD/2009 FOR A.Y.2006 - 07 ORDER DAT ED 30 TH OF JUNE, 2014 HAS EXAMINED ALL THESE FACTS AND THEREUPON BY FOLLOWING M/S. JOLLY POLYMERS (TAX APPEAL NO.1387 OF 2010)(GUJARAT) DIRECTED THE AO TO DELETE THE DISALLOWANCE AND ALLOW THE CLAIM OF DEDUCTION U/S.80IB OF IT ACT. FURTHER, HE HAS ALSO PLE ADED THAT THERE WAS NO SUCH DISCREPANCY AS POINTED OUT BY THE AO . I N SUPPORT LEARNED AR HAS REITERATED CERTAIN EVIDENCES AS FURNISHED BEFORE LEARNED CIT(A) DETAILED BELOW: THE AR OF THE APPELLANT THUS ARGUED THAT AO IS NOT JUSTIFIED IN MAKING ASSUMPTION TH AT COMMENCEMENT HAS IN ACTUAL STARTED FROM 19.05.04. ACCORDING TO THE AR, THE AO HAS COMPLETELY IGNORED OTHER DOCUMENTS AND ERRED IN DRAWING THE CONCLUSION THAT AS THE DATE MENTIONED ON FACTORY LICENSE IS 19.05.2004, ACTIVITY IS NOT IN FACT STARTED BEFORE THE APPROVAL. THE AR ARGUED THAT OTHER DOCUMENTS OTHER THAN FACTORY LICENSE SUBMITTED AND EVEN ON THE RECORD OF THE DEPARTMENT, CANNOT BE IGNORED WHILE DECIDING THE ISSUE OF DATE OF COMMENCEMENT OF PRODUCTION. THE INCOME TAX ACT DOES NOT SPECIFICALLY MENTI ON THAT FACTORY LICENSE IS CONCLUSIVE EVIDENCE IN ORDER TO DECIDE WHETHER ANY MANUFACTURING ACTIVITY AND ALLOW DEDUCTION U/S.8 0 IB. IT IS ALSO EQUALLY IMPORTANT TO CONSIDER OTHER DOCUMENTS EVIDENCING COMMENCEMENT OF PRODUCTION AND CANNOT BE REJECTED AS SUCH WITHOUT FINDING ANY DEFECT OR ERROR. THE AR VEHEMENTLY ARGUED THAT AO SHOULD HAVE CONSIDERED PROVISIONAL CERTIFICATE AS WELL AS PERMANENT DIC/SSI CLEARLY MENTIONING THE DATE OF COMMENCEMENT TO BE 18.03.2004 AND WITHOUT GIVING ANY REASON TO REJECT THE SAME . THE AO HAS COMPLETELY IGNORED THE VALIDITY OF THE FOLLOWING LISTED DOCUMENTS WHICH ACCORDING TO THE AR JUSTIFY THE CLAIM OF THE APPELLANT THAT IT STARTED MANUFACTURING ACTIVITY WELL WITHIN THE DATE SPECIFIED IN SEC.8 0 - IB OF THE I.T. ACT, 1 96 1 : (I) PROVISIONAL AND PERMANENT DIC/SSI CERTIFICATE. (II) SALES INVOICES DATED ON OR BEFORE 31.03.2004. (III) PURCHASE DEED FOR THE FACTORY PREMISES ITA NO S . 3133, 1593, 3134 /AHD/201 0, 2025/AHD/2011 & 1952/AHD/2013 ITO, VAPI WARD - 4, DAMAN VS. M/S. GAURAV UDYOG . FOR A.Y S . 20 04 - 05 , 2005 - 06, 2007 - 08, 2008 - 09 & 2010 - 11 - 5 - (IV) CERTIFICATE OF REGISTRATION UNDER THE CENTRAL SALES TAX (V) SANCTION AND POWER RELEASE ORD ER BEFORE 31.03.2004 (VI) LABOUR REGISTER (VII) PURCHASE INVOICES FOR RAW MATERIAL AND MACHINERY (VIII) ELECTRICITY CONSUMPTION BILL (IX) PROOFS FOR INCURRING VARIOUS EXPENSES IN RESPECT OF DAY TO DAY EXPENSES (X) CERTIFICATE FROM POLLUTION CONTR OL DEPARTMENT. 6. LEARNED AR HAS ALSO PLACED RELIANCE ON COPY OF SALE INVOICES, COPY OF ELECTRICITY BILL, COPY OF THE WAGE REGISTER, EVIDENCE OF POWER CONNECTION, PURCHASE OF RAW MATERIAL AND SSI REGISTRATION CERTIFICATE, AS PLACED IN THE COMPILATION. HE HAS DRAWN OUR ATTENTION ON SALES TAX REGISTRATION CERTIFICATE AND AN ASSESSMENT ORDER PASSED BY THE SALES TAX DEPARTMENT. LEARNED AR HAS ALSO PLACED RELIANCE ON THE DECISION OF HON BLE GUJARAT HIGH COURT OF JOLLY POLYMERS (SUPRA). 7. HAVING HEARD THE SUB MISSIONS OF BOTH THE SIDES AND AFTER CONSIDERING ALL THE EVIDENCES AS PLACE ON RECORD, WE ARE OF THE VIEW THAT THERE WERE SUFFICIENT EVIDENCE TO DEMONSTRATE THAT THE PRODUCTION HAS IN FACT STARTED ON OR BEFORE 31 ST OF MARCH, 2004 AS PRESCRIBED U/S.80IB OF IT ACT. THE MAJOR OBJECTION OF THE AO WAS THAT THE PRESCRIBED LICENSE WAS NOT GRANTED ON OR BEFORE THE SAID DATE. HOWEVER, THE UNDISPUTED FACT IS THAT THE LICENSE WAS GRANTED ON 19 TH OF MAY, 2004 BY THE PRESCRIBED AUTHORITY. THIS LEGAL ISSUE HAS NOW BEEN S ETTLED BY THE HON BLE HIGH COURT IN THE CASE OF JOLLY POLYMERS ORDER DATED 17.01.2012 WHEREIN IT WAS HELD THAT IN CASES WHERE THE APPLICATION FOR LICENSE HAD ALREADY MADE BEFORE 31.03.2004 BUT OBTAINED SHORTLY , T HEREAFTER, THE LAPSE MUST BE VIEWED AS PUREL Y A TECHNICAL ONE AND THAT QUESTION OF GRANT OF EXEMPTION U/S.80IB HELD IN FAVOUR OF THE ASSESSEE. IN ADDITION TO THIS ORDER OF THE JURISDICTIONAL HIGH COURT , IT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT IN ITA NO S . 3133, 1593, 3134 /AHD/201 0, 2025/AHD/2011 & 1952/AHD/2013 ITO, VAPI WARD - 4, DAMAN VS. M/S. GAURAV UDYOG . FOR A.Y S . 20 04 - 05 , 2005 - 06, 2007 - 08, 2008 - 09 & 2010 - 11 - 6 - A.Y.2006 - 07 RESPECTED CO - ORDINATE BENCH B AHMEDA BAD VIDE ORDER DATED 30 TH OF JUNE, 2014 (SUPRA) IN ASSESSEE S OWN CASE HAS ALSO ALLOWED THE CLAIM OF DEDUCTION U/S.80IB ON IDENTICAL CIRCUMSTANCES. RESPECTFULLY FOLLOWING THESE PRECEDENTS FOR ALL THESE YEARS , WE FIND NO FORCE IN THE GROUND OF THE REVENUE A ND REJECT THE SAME BY UPHOLDING THE VIEW TAKEN BY LEARNED CIT(A). 8. IN THE RESULT, ALL THE APPEALS OF THE REVENUE ARE DISMISSED. S D/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 30 / 01 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD