The DCIT, Central Circle-2(2), Ahmedabad V. Daman Ganga Purity, Daman

ITA 2124/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6547 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-05-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 03-07-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K PATEL
• Keywords: Audit objection
• Section: 143(3); 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : AH MEDABAD ( BEFORE HONBLE SHRI T.K.SHARMA, J.M. & HONBLE SHRI A.N.PAHUJA, A.M.) I.T.A.NO. 2124/AHD./2009 : ASSESSMENT YEAR 200 3-04 DCIT, CENTRAL CIRCLE-2(2), AHMEDABAD VS- DA MAN GANGA PURITY, BHAVNAGAR (PAN : AACFD 0769R) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI A.K.PATEL, D.R. RESPONDENT BY: NONE O R D E R PER SHRI T.K.SHARMA, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT(A)-III, AHMEDABAD DATED 18.03.2009 DELETING THE ADDITION OF RS.48,75,000/- MADE BY THE AO ON ACCOUNT OF DEDUCTION UNDER SECTION 80IA (MODIFIE D SECTION 80IB) CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2003-2004. 2. DESPITE THE NOTICE OF HEARING SENT THROUGH REGIS TERED POST FIXING THE DATE FOR HEARING ON 31.05.2011, NEITHER ANYBODY APPEARED FRO M THE SIDE OF THE ASSESSEE NOR ANY APPLICATION FOR ADJOURNMENT WAS RECEIVED. WE, T HEREFORE, PROCEED TO DECIDE THIS APPEAL ON THE BASIS OF THE SUBMISSIONS MADE BY THE LD. D.R. AND THE MATERIALS AVAILABLE ON RECORD. 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S A FIRM. FOR THE ASSESSMENT YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARI NG NIL INCOME AFTER CLAIMING DEDUCTION UNDER SECTION 80IA OF RS.65,00,002/-. THE AO FRAMED THE ASSESSMENT UNDER SECTION 143(3) AT A TOTAL INCOME OF RS. NIL. SUBS EQUENTLY, THE AO ISSUED NOTICE UNDER SECTION 148 ON 7.3.2008 RECORDING THE REASONS FOR REOPENING THE CASE. THEREAFTER, HE FRAMED THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 147 ON 22.12.2008 AT A TOTAL INCOME OF RS.48,75,000/-. IN THIS ASSESSMENT YEAR, HE RESTRICTED 2 ITA NO.2124/AHD./2009 THE DEDUCTION CLAIMED UNDER SECTION 80IA TO 25% OF RS.65,00,002/- WHICH WAS WORKED OUT TO RS.16,25,002/- AND REMAINING AMOUNT O F RS.48,75,000/- IS DISALLOWED. THE REASONING GIVEN BY THE AO IN THE ASSESSMENT ORD ER IS THAT WHILE FURNISHING THE AUDITORS REPORT DATED 09.10.2003 IN FORM NO. 10CCB C, THE COLUMN NOS. 8 AND 9 I.E. DATE OF COMMENCEMENT OF OPERATION AND INITIAL ASSES SMENT YEAR OF THE UNDERTAKING WERE KEPT BLANK. HE ACCORDINGLY HELD THAT FINANCIAL YEAR 1997-98 WAS THE FIRST YEAR OF THE ASSESSEE FIRM AND THE BUSINESS BEING CONTINUED WITH ADDITIONAL ITEMS, THE ASSESSMENT YEAR 2003-04 WILL BE THE SIXTH YEAR. THU S, AS PER THE PROVISIONS OF SECTION 80IA, WHICH WAS MODIFIED AS 80IB(4), THE ASSESSEE F IRM IS ELIGIBLE FOR DEDUCTION/ EXEMPTION UNDER SECTION 80IA @25% AND NOT 100% AS C LAIMED BY THE ASSESSEE. 4. ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE CO NTENDED THAT THE ASSESSEE FIRM IS ENGAGED IN THE MANUFACTURING OF INDUSTRIAL OXYGE N GASES AT DAMAN, AN UNION TERRITORY AND ITS INCOME WAS ELIGIBLE FOR EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR THE FIRST FIVE ASSESSMENT YEARS FROM THE DATE OF IN ITIAL ASSESSMENT YEAR. THE ASSESSEE FIRM HAS FIRST SET UP THE MANUFACTURING UNIT FOR AQ UA MINERAL PACKAGED DRINKING WATER AND HAS COMMENDED THE PRODUCTION FROM MARCH, 1999 B UT DUE TO NON-AVAILABILITY OF TENDER OF RAILWAY FOR WHICH UNIT WAS SET UP, THE FI RM HAS COMMENCED THE NEW BUSINESS OF PRODUCING INDUSTRIAL OXYGEN GASES WHICH HAS NOT ANY TYPE OF CONNECTION WITH MANUFACTURING OF AQUA MINERAL PACKAGED DRINKING OF AQUA MINERAL WATER. NONE OF THE MACHINERIES AND RAW MATERIALS ARE IDENTICAL NOR ANY CLIENT CUSTOMER IS COMMON. IT WAS ALSO CLAIMED THAT THE ASSESSEE HAS PURCHASED TOTAL NEW MACHINES, HAS OBTAINED THE INDUSTRIAL LICENSE, HAS OBTAINED THE LICENSE FROM C ENTRAL GOVERNMENT EXPLOSIVE DEPARTMENT AND THEREAFTER FROM FEBRUARY 2000, IT HA S COMMENCED THE MANUFACTURING OF INDUSTRIAL OXYGEN AND NITROGEN GASES. UNDER THE CIRCUMSTANCES, THE FIRST INITIAL YEAR FOR THE BUSINESS OF INDUSTRIAL OXYGEN GASES WAS 200 0-2001 AND IN FACT, THE ASSESSMENT YEAR 2003-04 WAS THE FOURTH YEAR FROM THE INITIAL A SSESSMENT YEAR AS ENVISAGED UNDER THE PROVISIONS OF SECTION 80IB OF THE ACT. IT WAS F URTHER CLAIMED THAT THE ASSESSMENT HAS EXPLAINED ALL THESE FACTS ALONG WITH THE MATERI ALS AND DOCUMENTS BUT THE AO HAS NOT ACCEPTED THE TRUE FACTS AND BEING BIASED WITH AUDIT OBJECTION, DISALLOWED THE EXEMPTION UNDER SECTION 80-IB OF THE ACT. 3 ITA NO.2124/AHD./2009 4.1 AFTER CONSIDERING THE AFORESAID SUBMISSIONS, TH E LD. CIT(A) DELETED THE DISALLOWANCE MADE BY THE AO FOR THE DETAILED REASON S GIVEN IN PARA 8 OF THE IMPUGNED ORDER, WHICH READS AS UNDER: 8. ON MERITS, IT IS SEEN THAT THE A.O. HAS RELIED PRIMARILY ON THE FACT THAT THE LEASE FOR THE PREMISES AND APPROVAL OF THE PLANT WA S OBTAINED ON 21 ST JANUARY, 1997. THE A.O. ALSO REFERRED TO THE DATE OF PARTNER SHIP DEED. THE A.O. ALSO FELT THAT THE CHANGE OF PRODUCT LINE I.E. FROM MINERAL W ATER TO INDUSTRIAL OXYGEN AMOUNTED TO THE RECONSTRUCTION OF AN EXISTING BUSIN ESS, FOR WHICH APPARENTLY NO SEPARATE UNIT HAD BEEN CREATED. THUS, THE BUSINESS ACTIVITY HAD COMMENCED IN A. Y. 1998-99, DESPITE THE FACT THAT PERMISSION FOR MANUFACTURING INDUSTRIAL GAS WAS ACCORDED LATER, AND THEREFORE ASSESSMENT YEAR 2 003-04 WAS THE 6 1 YEAR AND IN WHICH THE DEDUCTION U/'S. 80IA(MODIFIED AS 8 0IB(4) ) WAS @ 25%. THIS ASSUMPTION OF THE A.O. IS HOWEVER NOT BACKED BY ADE QUATE EVIDENCE. ON THE CONTRARY THE APPELLANT HAS POINTED OUT THAT THE LIC ENCE BY THE DEPARTMENT OF INDUSTRY, DAMAN, WAS ISSUED MAY, 1999 AND THE TWO D IFFERENT PERMISSIONS OF THE CENTRAL GOVERNMENT WERE OBTAINED AND WERE EFFEC TIVE FROM FEBRUARY, 2000 ONWARDS ONLY. THE APPELLANT HAS ALSO POINTED OUT TH AT THE FACT OF THIS BEING 1 ST YEAR, WAS ALSO MENTIONED IN THE RETURN FILED THEN A ND EVEN IF THE DATE OF COMMENCEMENT OF MANUFACTURING IS ASSUMED FROM THE D ATE OF MANUFACTURING OF MINERAL WATER, THEN ALSO THE ASSESSMENT YEAR 2003-0 4 WOULD BE THE 5 TH YEAR AND NOT THE 6 TH YEAR AS STATED BY THE A.O. IT IS ALSO EVIDENT THAT THE MANUFACTURING OF INDUSTRIAL OXYGEN COULD TAKE PLACE ONLY AFTER REQUISITE CERTIFICATE OF THE EXPLOSIVE DEPARTMENT (DATED 9/2/ 2000) AND ALSO OF THE DEPARTMENT OF INDUSTRIES, DAMAN, FOR DOING BUSINESS OF OXYGEN MANUFACTURING, WHICH, INCIDENTALLY WAS GRANTED VIDE LETTER DATED 2 2/12/1999. THE RATIO OF THE CITED DECISIONS IN RESPECT OF WHAT WOULD CONSTITUTE NEW MANUFACTURING IS ALSO RELEVANT IN CASE OF THE APPELLANT. THUS THE A.O. HA S NOT BEEN ABLE TO PROVE THAT ASSESSMENT YEAR 2003-04 WAS THE 6 TH YEAR OF MANUFACTURING AND SO HIS ACTION OF RESTRICTING THE CLAIM U/S.80IA (MODIFIED AS SECTION 80IB) CANNOT BE SUSTAINED. THE DISALLOWANCE MADE BY THE A.O. IS THEREFORE DELE TED AND THE RELATED GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. AT THE TIME OF HEARING BEFORE US, ON BEHALF OF T HE REVENUE, SHRI A.K.PATEL APPEARED AND DREW OUR ATTENTION TO THE REASONING GI VEN BY THE AO, STATEMENT OF FACTS FURNISHED BEFORE THE LD. CIT(A) ALONG WITH THE APPE AL MEMO IN FORM NO.35 AS WELL AS 4 ITA NO.2124/AHD./2009 REASONING GIVEN BY THE AO IN THE ASSESSMENT ORDER. HE POINTED OUT THAT COMPLETE FACTS WERE NOT PLACED BEFORE THE AO. THE RELEVANT COLUMN OF AUDITORS REPORT IN FORM NO. 10CCBC, THE COLUMN NOS. 8 AND 9 I.E. DATE OF COMMEN CEMENT OF OPERATION AND INITIAL ASSESSMENT YEAR OF THE UNDERTAKING WERE KEPT BLANK. THE ONUS IS ON THE ASSESSEE TO PROVE WHAT ARE THE EXACT PRODUCES, THE ASSESSEE IS PRODUCING. IT APPEARS THAT DOCUMENTS, WHICH ARE FILED BEFORE THE LD. CIT(A), W ERE NOT FURNISHED BEFORE THE AO. HE ACCORDINGLY POINTED OUT THAT THE IMPUGNED ORDER OF LD. CIT(A) BE SET ASIDE AND MATTER BE RESTORED TO THE AO WITH THE DIRECTION THA T THE ASSESSEE SHOULD FURNISH THE COMPLETE DETAILS AND THE AO WILL EXAMINE THE SAME A SCERTAINED AND RE-ADJUDICATE THE DEDUCTION CLAIMED UNDER SECTION 80IA (MODIFIED SECT ION 80IB) AFRESH, IN ACCORDANCE WITH LAW. 6. AFTER HEARING THE LD. D.R., WE HAVE CAREFULLY GO NE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND CONSIDERABLE FORCE IN TH E SUBMISSIONS MADE BY THE LD. D.R. FROM THE PERUSAL OF THE STATEMENT OF FACTS FURNISHE D BEFORE THE LD. CIT(A) AND THE APPEAL MEMO IN FORM NO.35, IT IS CLEAR THAT THE ASS ESSEE HAS MENTIONED THAT THIS IS THE FOURTH YEAR OF PRODUCTION OF OXYGEN GASES. THE INIT IAL ASSESSMENT YEAR WAS 2000-01. KEEPING IN VIEW OF THE TOTALITY OF THE FACTS AND CI RCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMAND THIS ISSUE TO THE FILE OF THE AO WITH THE DIRECTION THAT THE ASSESSEE SHOULD FURNISH THE COMPLETE DETAILS AND DO CUMENTS/NECESSARY EVIDENCE, IN SUPPORT OF CLAIM OF DEDUCTION UNDER SECTION 80IA (M ODIFIED SECTION 80-IB). THE AO WILL EXAMINE THE SAME AND RE-ADJUDICATE THE ISSUE R EGARDING THE ALLOWANCE OF DEDUCTION AFRESH, IN ACCORDANCE WITH LAW. 7. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL OF THE REVENUE IS ALLOWED.. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2011 SD/- SD/- (A.N.PAHUJA) (T.K.SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03/06/2011 5 ITA NO.2124/AHD./2009 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE 2) THE DEPARTMENT 3) CIT(A) CONCERNED 4) CIT CONCERNED 5) D.R., ITAT, AHMEDABAD TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD TALUKDAR/SR.P.S.