M/s Mohan Milkline (P) Ltd., Ongole V. THE CIT, GUNTUR, Guntur

ITA 226/VIZ/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67379 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Keywords: Revision of order
• Section: 80IB; 148; 263

Judgement Text

ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , AND OTHERS NARASARAOPET IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.223 TO 225/VIZAG/2012 ASSESSMENT YEARS : 2003-04 TO 2005-06 HYMA MILK LINE (PVT) LTD NARASARAOPETA CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AAACH 5562K ITA NOS.226 TO 229/VIZAG/2012 ASSESSMENT YEARS : 2002-03 TO 2005-06 MOHAN MILKLINE (P) LTD. ONGOLE CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AABCM 5703C ITA NOS.230 TO 233/VIZAG/2012 ASSESSMENT YEARS : 2002-03 TO 2005-06 VIDYA MILKLINE (P) LTD. GUNTUR CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AAACV 7354D ITA NOS.234/VIZAG/2012 ASSESSMENT YEARS : 2006-07 PAMURU MILKLINE (P) LTD. PAMURU, PRAKASAM DIST. CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AACCP 1903E ITA NOS.235 TO 238/VIZAG/2012 ASSESSMENT YEARS : 2002-03 TO 2005-06 ONGOLE MILKLINE (P) LTD. ONGOLE CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AAACO 2546C ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 2 ITA NOS.239/VIZAG/2012 ASSESSMENT YEARS : 2005-06 HEMA MILKLINE (P) LTD. NARASARAOPET CIT GUNTUR (APPELLANT) VS. (RESPONDENT) PAN NO.AAACH 5583J APPELLANT BY: SHRI G.V.N. HARI, ADVOCATE RESPONDENT BY: SHRI K.V.N. CHARYA, CIT(DR) DATE OF HEARING : 03.05.2013 DATE OF PRONOUNCEMENT : 13.05.2013 ORDER PER BENCH:- ALL THESE APPEALS HAVE BEEN FILED BY THE RESPECTI VE ASSESSEES CHALLENGING THE ORDERS PASSED BY LEARNED CIT, GUNTU R U/S 263 OF THE INCOME- TAX ACT IN THEIR RESPECTIVE HANDS FOR THE ASSESSMEN T YEARS MENTIONED IN THE CAUSE TITLE AGAINST THEIR RESPECTIVE NAMES. SINCE A LL ASSESSEES ARE CHALLENGING THE VALIDITY OF REVISION ORDERS PASSED IN THEIR RES PECTIVE HANDS AND SINCE IT WAS SUBMITTED THAT THE LEARNED CIT(A) HAS PASSED THE IM PUGNED REVISION ORDERS ON IDENTICAL SET OF FACTS, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEES SUBMITTED THAT ALL THESE APPEALS ARISE OUT OF COMMON SET OF F ACTS AND HENCE THE FACTS BROUGHT TO THE NOTICE OF THE BENCH IN THE CASE OF H YMA MILKLINE PVT. LIMITED IN ITA NO.223/VIZ/2012 AND THE ARGUMENTS ADVANCED IN T HAT CASE CAN BE APPLIED TO ALL OTHER CASES ALSO. THE LEARNED D.R ALSO DID NOT RAISE ANY OBJECTION TO THE PLEA MADE BY THE LEARNED A.R. ACCORDINGLY, WE HEAR D THE PARTIES IN RESPECT OF THE APPEAL NUMBERED AS IITA NO.223/VIZ/2012. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSEE HEREIN IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF MILK. IT ALSO OPERATES A CHILLING PLANT FOR STORAGE OF MILK. IT FILED ITS R ETURN OF INCOME FOR THE YEARS UNDER CONSIDERATION AFTER CLAIMING DEDUCTION U/S 80 IB OF THE ACT IN RESPECT OF INCOME RELATABLE TO THE CHILLING PLANT CONSIDERING THE SAME AS A COLD STORAGE ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 3 FOR THE PURPOSES OF SECTION 80IB (3)(II) OF THE ACT . THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES HEREIN HA VE DECLARED THEIR NATURE OF BUSINESS AS PROCUREMENT, CHILLING, STORING IN COLD STORAGE AND SELLING OF MILK IN THEIR TAX AUDIT REPORT AS WELL AS IN THE NOTES F ORMING PART OF ACCOUNTS. THE RETURNS OF INCOME WERE INITIALLY ACCEPTED UNDER SEC TION 143(1) OF THE ACT. LATER THE IMPUGNED ASSESSMENTS WERE REOPENED BY THE ASSESSING OFFICER BY ISSUING NOTICES U/S 148 OF THE ACT. AFTER RECEIP T OF NOTICES U/S 148 OF THE ACT THE ASSESSEE ASKED FOR REASONS FOR REOPENING AND TH E ASSESSING OFFICER, VIDE HIS LETTER DATED 11.5.2009 HAS GIVEN THE REASONS FO R REOPENING AS UNDER: IN CONNECTION WITH THE ISSUE OF NOTICE U/S 148 OF T HE INCOME-TAX ACT, 1961, THE ASSESSEE HAS REQUESTED FOR SUPPLY OF THE REASONS FOR ISSUE OF THE SAME. IN THIS REGARD, IT IS TO INFORM THAT THE ASSESSEE COMPANY HAS ADMITTED THE INCOME FOR THE ASST. YEARS 2003-04 AT RS.1,80,380/- AFTER CLAIMING DEDUCTION U/S 80IB. T HE ASSESSEE COMPANY, IN FACT, IS NOT ENTITLED TO CLAIM THE DEDU CTION AS THE ASSESSEE IS NOT ENGAGED IN MANUFACTURE OR PRODUCTIO N OF ARTICLES OR THINGS WHILE IT IS ONLY ENGAGED IN PROCESSING OF MI LK. THAT IS WHY, THE NOTICE U/S 148 WAS ISSUED FOR REOPENING OF ASSE SSMENT FOR THE ASST. YEAR 2003-04. 4. THE LEARNED. COUNSEL SUBMITTED THAT THE ASSESSIN G OFFICER HAS REOPENED THE ASSESSMENTS ONLY FOR THE PURPOSE OF EXAMINING T HE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT. T HE LEARNED COUNSEL SUBMITTED THAT A SMALL SCALE INDUSTRIAL UNDERTAKING OPERATING COLD STORAGE PLANT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(3)(II) OF THE ACT. THE FACT THAT THE ASSESSEE HEREIN IS A SMALL SCALE UNDERTAKING WAS AC CEPTED BY THE ASSESSING OFFICER DURING THE COURSE OF REASSESSMENT PROCEEDIN GS. FURTHER, THE ASSESSEE FILED A DETAILED REPLY TO THE ASSESSING OFFICER WIT H REGARD TO ITS ELIGIBILITY TO CLAIM DEDUCTION U/S 80IB OF THE ACT. BY INVITING O UR ATTENTION TO THE ASSESSMENT ORDER SUBMITTED THAT THE ASSESSING OFFIC ER EXAMINED THE ISSUE IN DETAIL, AND HE HAS ALSO EXTRACTED THE SUBMISSIONS M ADE BY THE ASSESSEE IN THE BODY OF THE ASSESSMENT ORDER. BEFORE THE ASSESSING OFFICER, THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION RENDERED BY THE MUM BAI BENCH OF TRIBUNAL IN THE CASE OF SUMARAJ SEAFOODS (P) LTD. VS. ITO (2008 ) 112 ITD 177 AND THE ASSESSING OFFICER HAS ALSO EXTRACTED THE FOLLOWING OBSERVATIONS MADE BY THE TRIBUNAL IN THAT CASE IN RESPECT OF ELIGIBILITY OF COLD STORAGE PLANT FOR DEDUCTION U/S 80IB OF THE ACT. ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 4 IN THE CASE OF AN INDUSTRIAL UNDERTAKING WHICH OPER ATES ITS COLD STORAGE PLANT, THE PROFITS ELIGIBLE FOR DEDUCTION W OULD BE RESTRICTED TO THE PROFITS GENERATED FROM ACTIVITY OF OPERATING TH E COLD STORAGE PLANT WHICH WOULD INCLUDE (I) THE ACTIVITY OF STO RAGE OF GOODS BELONGING TO OTHERS AGAINST CHARGES, AND (II) ACTIV ITY OF STORAGE OF ITS OWN GOODS FOR SALE. SO LONG AS THE ACTIVITY OF OPE RATION OF COLD STORAGE IS DISTINCT AND INDEPENDENT SMALL SCALE IND USTRIAL UNIT, ITS INCOME EITHER BY JOB WORK OR ON ACCOUNT OF PURCHASE , STORAGE AND SALE OF GOODS HAVING A DIRECT NEXUS WITH COLD STORA GE PLANT WOULD BE ELIGIBLE FOR DEDUCTION U/S 80IB. THOUGH THE DISPUTE URGED BEFORE THE TRIBUNAL IN THE CASE OF SUMARAJ SEAFOODS PVT. LTD. (SUPRA) WAS WITH REGARD TO COMPUTATION OF DEDUCTION U/S 80 IB OF THE ACT, YET THE TRIBUNAL, WHILE EXAMINING THE ISSUE, H AVE GIVEN A CLEAR FINDING THAT THE ACTIVITY OF STORAGE OF ITS OWN GOODS FOR SALE I S ALSO ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. AFTER CONSIDERING THE EXPLANA TIONS OF THE ASSESSEE AS WELL THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL, T HE ASSESSING OFFICER ACCEPTED THE FACT THAT THE ASSESSEE HEREIN IS ELIGI BLE FOR DEDUCTION U/S 80IB OF THE ACT AND ACCORDINGLY ALLOWED THE CLAIM MADE BY T HE ASSESSEE. ACCORDINGLY, THE LEARNED A.R. SUBMITTED THAT THE ASSESSING OFFIC ER HAS APPLIED HIS MIND ON THE ISSUE AFTER DETAILED EXAMINATION AND FURTHER HI S VIEW IS ALSO SUPPORTED BY THE DECISION OF HON'BLE TRIBUNAL IN THE CASE OF SUM ARAJ SEAFOODS PVT. LTD. (SUPRA). THE LEARNED COUNSEL SUBMITTED THAT THE AS SESSEE HAS BEEN CLAIMING THE DEDUCTION UNDER SECTION 80IB OF THE ACT SINCE T HE ASSESSMENT YEAR 1994- 95. HOWEVER, THE LEARNED CIT HAS INITIATED PROCEED INGS ONLY FROM THE ASSESSMENT YEAR 2003-04 ONWARDS. BY PLACING RELIAN CE ON THE DECISION RENDERED BY HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. WESTERN OUTDOOR INTERACTIVE P LTD, THE LEARNED COUNSEL SUBM ITTED THAT THE BENEFIT OF DEDUCTION AVAILABLE FOR A NUMBER OF YEARS ON SATISF ACTION OF CERTAIN CONDITIONS CANNOT BE WITHDRAWN UNLESS THE RELIEF GRANTED FOR F IRST ASSESSMENT YEAR IN WHICH THE CLAIM WAS MADE AND ACCEPTED IS ALSO WITHD RAWN. ACCORDINGLY HE SUBMITTED THAT THE LEARNED CIT WAS ALSO NOT CORRECT IN LAW IN DIRECTING THE ASSESSING OFFICER TO WITHDRAW THE DEDUCTION UNDER S ECTION 80IB OF THE FOR THE ASSESSMENT YEARS UNDER CONSIDERATION ONLY, WHEN THE SAME DEDUCTION WAS ALLOWED IN THE EARLIER YEARS. HE FURTHER SUBMITTED THAT THE FACTS ON RECORD SHOW THAT THE ASSESSING OFFICER HAS TAKEN ONE OF TH E POSSIBLE VIEWS AFTER ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 5 PROPER APPLICATION OF HIS MIND AND HENCE THE LEARNE D CIT WAS NOT RIGHT IN LAW IN INITIATING THE IMPUGNED REVISION PROCEEDINGS. 5. THE LEARNED D.R, ON THE CONTRARY, INVITED OUR ATTENTION TO THE REVISION ORDER AND SUBMITTED THAT THE ASSESSEE IS OPERATING THE CHILLING PLANT AS A PART OF ITS BUSINESS ACTIVITY, WHERE AS THE STATUTE REQU IRES THAT THE ACTIVITY OF OPERATION OF COLD STORAGE SHOULD BE A DISTINCT AND INDEPENDENT UNIT. THE ASSESSING OFFICER HAS FAILED TO CONSIDER THIS IMPOR TANT POINT WHILE CONSIDERING THE CLAIM OF THE ASSESSEE AND HENCE THE IMPUGNED AS SESSMENT ORDERS ARE RENDERED ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALS O PERUSED THE RECORD. BEFORE PROCEEDING FURTHER, WE FEEL IT PERTINENT TO DISCUSS ON THE LEGAL POSITION RELATING TO THE REVISION PROCEEDINGS CARRIED OUT UN DER SECTION 263 OF THE ACT. THE HON'BLE BOMBAY HIGH COURT, IN THE CASE OF GRASI M INDUSTRIES LTD. V CIT (321 ITR 92) HAS DISCUSSED ABOUT THE SCOPE OF PROVI SIONS OF SECTION 263 AS UNDER: SECTION 263 OF THE INCOME-TAX ACT, 1961 EMPOWERS TH E COMMISSIONER TO CALL FOR AND EXAMINE THE RECORD O F ANY PROCEEDINGS UNDER THE ACT AND, IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN, BY THE ASSESSING OFFICER IS ERRONEO US IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, TO PASS AN ORDER UPON HEARING THE ASSESSEE AND AFTER AN ENQUIRY AS IS NEC ESSARY, ENHANCING OR MODIFYING THE ASSESSMENT OR CANCELING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. THE KE Y WORDS THAT ARE USED BY SECTION 263 ARE THAT THE ORDER MUST BE CONSIDERED BY THE COMMISSIONER TO BE ERRONEOUS IN SO FAR AS IT I S PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THIS PROVISION HAS B EEN INTERPRETED BY THE SUPREME COURT IN SEVERAL JUDGMENTS TO WHICH IT IS NOW NECESSARY TO TURN. IN MALABAR INDUSTRIAL CO. LTD. V . CIT [2000] 243 ITR 83, THE SUPREME COURT HELD THAT THE PROVISI ON CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE O R ERROR COMMITTED BY THE ASSESSING OFFICER AND IT IS ON LY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. T HE SUPREME COURT HELD THAT AN INCORRECT ASSUMPTION OF FACT OR AN INC ORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AN ORDER PASSED IN VIOLATION OF THE PRINCIPLES OF N ATURAL JUSTICE OR WITHOUT APPLICATION OF MIND, WOULD BE AN ORDER FALL ING IN THAT CATEGORY. THE EXPRESSION PREJUDICIAL TO THE INTERE STS OF THE REVENUE, THE SUPREME COURT HELD, IT IS OF WIDE IMP ORT AND IS NOT CONFINED TO A LOSS OF TAX. WHAT IS PREJUDICIAL TO T HE INTEREST OF THE ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 6 REVENUE IS EXPLAINED IN THE JUDGMENT OF THE SUPREME COURT (HEAD NOTE) : THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE RE VENUE HAS TO BE READ IN CONJUNCTION WITH AN ERRONEOUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CON SEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME- TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBL E IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW. THE PRINCIPLE WHICH HAS BEEN LAID DOWN IN MALABAR I NDUSTRIAL CO. LTD. [2000] 243 ITR 83 (SC) HAS BEEN FOLLOWED AND EXPLAINED IN A SUBSEQUENT JUDGMENT OF THE SUPREME COURT IN CIT V . MAX INDIA LTD. [2007] 295 ITR 282. 7. THERE MAY NOT BE ANY DISPUTE THAT THE REVISIO N PROCEEDING SHALL NOT LIE ON THE ISSUES ON WHICH THE ASSESSING OFFICER HAS TAKEN A PLAUSIBLE VIEW AFTER EXAMINING AND APPLYING HIS MIND ON IT. IN THE INST ANT CASE, WE NOTICE THAT THE ASSESSING OFFICER HAS RE-OPENED THE IMPUGNED ASSESS MENTS FOR THE PURPOSE OF EXAMINING THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION UNDER SECTION 80IB OF THE ACT. WE ALSO NOTICE THAT THE ASSESSEE HAS G IVEN A DETAILED REPLY DEMONSTRATING ITS ELIGIBILITY AND IT HAS ALSO DRAWN SUPPORT FROM THE DECISION RENDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF SUMARAJ SEAFOODS PVT. LTD. (SUPRA). WE ALSO NOTICE THAT TH E ASSESSING OFFICER HAS PASSED A SPEAKING ORDER BY DULY EXTRACTING THE REAS ONS RECORDED FOR RE- OPENING, THE REPLY GIVEN BY THE ASSESSEE, THE RELEV ANT OBSERVATIONS MADE BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE REFERR ED SUPRA. THUS, IT IS SEEN THAT THERE IS PROPER APPLICATION OF MIND ON THE PAR T OF THE ASSESSING OFFICER AND FURTHER THE VIEW TAKEN BY HIM IS ONE OF THE POSSIBL E VIEWS, SINCE IT IS IN ACCORDANCE WITH THE DECISION RENDERED BY THE TRIBUN AL. 8. IT IS NOW WELL SETTLED PROPOSITION OF LAW TH AT MERELY BECAUSE THE LEARNED CIT IS HAVING A DIFFERENT VIEW, THE SAME WOULD NOT ENTITLE HIM TO INITIATE ITA NOS.223 TO 239/VIZ/2012 HYMA MILK LINE (P) LTD. , NARASARAOPET 7 REVISION PROCEEDINGS, IF THE VIEW TAKEN BY THE ASSE SSING OFFICER IS ONE OF THE POSSIBLE VIEWS. 9. IN VIEW OF THE FOREGOING DISCUSSIONS, IN OUR CONSIDERED VIEW, THE LEARNED CIT WAS NOT RIGHT IN LAW IN INITIATING THE IMPUGNED REVISION PROCEEDINGS IN ALL THE CASES UNDER CONSIDERATION AND ACCORDINGLY, WE S ET ASIDE THE IMPUGNED ORDERS PASSED BY HIM. 10. IN THE RESULT, ALL THE APPEALS OF THE ASSESS EES ARE ALLOWED. PRONOUNCED ACCORDINGLY ON 13.05.2013 SD/- SD/- (D. MANMOHAN) (B.R. BASKARAN) VICE PRESIDENT ACCOUNTANT MEMBER VISAKHAPATNAM, DATED 13 TH MAY, 2013 VG/SPS COPY TO 1 M/S. HYMA MILKLINE (P) LTD., D.NO.12, RAJA RAJESW ARI NAGAR, PEDACHERUVU, NARASARAOPETA. 2 M/S. MOHAN MILKLINE (P) LTD., KURNOOL ROAD, ONGOL E, PRAKASAM DIST. 3 M/S. VIDYA MILKLINE (P) LTD., G-5, VISWAMBHARA AP ARTMENTS, CHANDRAMOULI NAGAR, GUNTUR 4 PAMURU MILKLINE (P) LTD., S.NO.420/1-5, KANDUKURU ROAD, PAMURU, PRAKASAM DIST. 5 ONGOLE MILKLINE (P) LTD., KURNOOL ROAD, ONGOLE, P RAKASAM DIST. 6 HEMA MILKLINE (P) LTD., D.NO.13, RAJA RAJESWARI N AGAR, PEDACHERUVU, NARASARAOPET. 7 THE CIT, GUNTUR 8 THE CIT(A), GUNTUR 9 THE DR, ITAT, VISAKHAPATNAM. 10 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM