Dy. CIT, Kolhapur V. Aadi Plastic Industries P.Ltd, Kolhapur

ITA 2382/PUN/2012

• Counselvise Citation: 238224514 RSA 2012
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 12-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B C MALAKAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER. ITA.NO.2382/PN/2012 (ASSTT. YEAR : 2009-10) DY.CIT, CIRCLE-2, KOLHAPUR .. APPELLANT VS. AADI PLASTIC INDUSTRIES PVT. LTD., PLOT NO.791, KALANI COMPLEX, SHAHUPURI, 4 TH LANE, KOLHAPUR .. RESPONDENT PAN NO.AACCA3325K ASSESSEE BY : SHRI KISHOR PHADKE RESPONDENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 12-01-2015 DATE OF PRONOUNCEMENT : 18-02-2015 ORDER PER G.S. PANNU, AM : THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER OF THE CIT(A), KOLHAPUR DATED 24-09-2012 WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3) OF THE ACT DATE D 29-12-2011 PERTAINING TO A.Y. 2009-10. IN THIS APPEAL OF THE REVENUE, TH E ONLY DISPUTE IS WITH REGARD TO ASSESSEES CLAIM FOR DEDUCTION U/S.80IB O F THE ACT OF A SUM OF RS.48,78,682/-. 2. IN BRIEF, THE FACTS ARE THAT BEFORE THE ASSESSIN G OFFICER ASSESSEE CLAIMED THE BENEFIT OF SECTION 80IB(3) ON THE GROUN D THAT IT WAS A SMALL SCALE INDUSTRIAL UNDERTAKING. THE CLAIM WAS MADE I N TERMS OF SECTION 80IB(3)(II) OF THE ACT. IN THIS CONNECTION, ASSESS EE SUBMITTED THAT ITS INVESTMENT IN PLANT AND MACHINERY WAS RS.4,70,62,28 3/- AS ON 31-03-2009 AND HENCE THE PROVISIONS OF SECTION 7(1) OF MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT ACT, 2006 WAS APPLICABLE IN THIS CASE. THE 2 ASSESSING OFFICER HAS DISAGREED WITH THE ASSESSEE, THE RELEVANT PORTION OF THE DISCUSSION IN THE ASSESSMENT ORDER READS AS UND ER : 6.4 . . . . . . . . . . . . . . . . . .NOTIFICATIO N S.O.1642(E) DATED 29.09.2006 REPRODUCED ABOVE WHICH CLASSIFIES A SMALL ENTERPRIS E AS THE ONE WHOSE INVESTMENT IN EQUIPMENT (PLANT AND MACHINERY) IS MO RE THAN 10 LAKH RUPEES BUT DOES NOT EXCEED 2 CRORES RUPEES. SINCE THE ASSESSEE'S INVESTMENT IN PLANT AND MACHINERY, ADMITTEDLY AND E VEN AFTER EXCLUDING THE VALUE OF ELECTRIC FITTINGS CLAIMED BY THE ASSES SEE, FAR EXCEEDS RS. 2 CRORES (IT IS RS.4,70,62,283/-), IT CANNOT IN ANY W AY BE REGARDED AS A SMALL ENTERPRISE EVEN UNDER THE MICRO, SMALL AND MEDIUM E NTERPRISE DEVELOPMENT ACT, 2006 ON WHICH THE ASSESSEE HAS PLA CED RELIANCE. IT IS ALSO PERTINENT TO MENTION HERE THAT ALTHOUGH IT IS ABUNDANTLY CLEAR FROM SECTION 7(1) OF THE MICRO, SMALL AND MEDIUM ENTERPR ISE DEVELOPMENT ACT 2006 THAT THE CLASSIFICATION AS A SMALL ENTERPRISE COULD BE PROVIDED ONLY BY THE NOTIFICATION OF THE CENTRAL GOVERNMENT YET T HE ASSESSEE REFRAINED FROM FILING A COPY OF THE RELEVANT NOTIFICATION REP RODUCED ABOVE SINCE THE SAME NEGATIVES THE CLAIM OF THE ASSESSEE. IT MAY AL SO BE MENTIONED HERE THAT ON THE WEBPAGE/WEBSITE OF THE DEVELOPMENT COMM ISSIONER (MSME), MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES OF TH E GOVERNMENT OF INDIA, NO OTHER NOTIFICATION ENHANCING THE LIMITS O F INVESTMENTS FOR THE CLASSIFICATION OF INDUSTRIAL ENTERPRISES HAS BEEN F OUND. 3. AS PER THE ASSESSING OFFICER, SECTION 80IB(14) O F THE ACT DOES NOT REFER TO MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOP MENT ACT, 2006 AND THAT EVEN IF ASSESSEES PLEA WAS TO BE ACCEPTED, TH E PROVISIONS OF SECTION 7(1) OF THE MICRO, SMALL AND MEDIUM ENTERPRISE DEVE LOPMENT ACT, 2006 DO NOT APPLY TO THE PRESENT CASE BECAUSE AS PER THE RE LEVANT NOTIFICATION ISSUED IN THE SAID SECTION THE UPPER LIMIT OF INVES TMENT IN PLANT AND MACHINERY WAS RS.2 CRORES ONLY. IN THIS CONTEXT, H E HAS REFERRED TO THE NOTIFICATION IN RESPECT OF SECTION 7(1) IN S.O.1642 (E) DATED 29-09-2006 ISSUED BY THE GOVERNMENT OF INDIA. THE CIT(A), HOW EVER, NOTED THAT THE ASSESSING OFFICER HAD ERRONEOUSLY APPLIED THE CONDI TIONS OF THE NOTIFICATION DATED 29-09-2006 (SUPRA). AS PER THE CIT(A), THE PRESENT CASE SHALL BE GOVERNED BY CLAUSE (I)(B) OF THE NOTI FICATION DATED 29-09- 2006 (SUPRA). THE FOLLOWING DISCUSSION IN THE ORDE R OF THE CIT(A) IS RELEVANT IN THIS REGARD : 7. I HAVE GONE THROUGH THE ASSESSMENT ORDER. IT A PPEARS THAT THE ASSESSING OFFICER HAS ERRONEOUSLY READ THE NOTI FICATION IN THE MANNER IT HAS BEEN QUOTED IN THE ASSESSMENT ORDER. THE GAZETTE NOTIFICATION PERTAINING TO MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT ACT, 2006 IS AS UNDER : 3 MINISTRY OF SMALL SCALE INDUSTRIES NOTIFICATION NEW DELHI, THE 29 TH SEPTEMBER, 20O6 S.O. 1642(E). THE CENTRAL GOVERNMENT, IN EXERCISE OF THE POWERS CONFERRED BY SUB-SECTION (1) OF SECTION 7 OF THE MICRO, SMALL AND MEDIUM ENTERPRISE DEVELOPMENT ACT, 2006, AFTER HAVING OBTAINED THE RECOMMENDATIONS OF THE ADVISORY COMMITTEE UNDER SUB-SECTION (4) OF SECTION 7 OF THE ACT IN THIS REGARD, HEREBY NOTIFIES THE FOLLOWING ENTERPRI SES, WHETHER PROPRIETORSHIP, HINDU UNDIVIDED FAMILY, ASSOCIATION OF PERSONS, CO-OPERATIVE SOCIETY, PARTNERSHIP OR UNDERTAKING OR ANY OTHER LEGAL ENTITY, BY WHATEVER NAME CALLED : (I) IN THE CASE OF THE ENTERPRISES ENGAGED IN THE MANUFACTURE OR PRODUCTION OF GOODS PERTAINING TO AN Y INDUSTRY SPECIFIED IN THE FIRST SCHEDULE TO THE INDUSTRIES ( DEVELOPMENT AND REGULATION) ACT, 1951, AS (A) A MICRO ENTERPRISE, WHERE THE INVESTMENT IN PL ANT AND MACHINERY DOES NOT EXCEED TWENTY FIVE LAKH RUPEES; (B) A SMALL ENTERPRISE, WHERE THE INVESTMENT IN PL ANT AND MACHINERY IS MORE THAN TWENTY FIVE LAKH RUPEES BUT DOES NOT EXCEED FIVE CRORE RUPEES; OR (C) A MEDIUM ENTERPRISE, WHERE THE INVESTMENT IN PLANT AND MACHINERY IS MORE THAN FIVE CRORE RUPEES BUT DOES N OT EXCEED TEN CRORE RUPEES; (II) IN THE CASE OF THE ENTERPRISES ENGAGED IN PROV IDING OR RENDERING OF SERVICES, AS (A) A MICRO ENTERPRISE, WHERE THE INVESTMENT IN EQU IPMENT DOES NOT EXCEED TEN LAKH RUPEES; (B) A SMALL ENTERPRISE, WHERE THE INVESTMENT IN EQU IPMENT IS MORE THAN TEN LAKH RUPEES BUT DOES NOT EXCEED TWO C RORE RUPEES; OR (C) A MEDIUM ENTERPRISE, WHERE THE INVESTMENT IN EQUIPMENT IS MORE THAN TWO CRORE RUPEES BUT DOES NO T EXCEED FIVE CRORE RUPEES. (F.NO.4(L)/2006-MSME POLICY] JAWAHAR SIRCAR, ADDL. SECY. 8. IT APPEARS THAT THE ASSESSING OFFICER HAS ERRONE OUSLY APPLIED THE CONTENTS OF CLAUSE (II)(B) OF THE NOTIFICATION DATE D 29/09/2006 WHICH IS IN RELATION TO AN ENTERPRISE ENGAGED IN PROVIDING OR R ENDERING OF SERVICES. IN FACT, IN THE INSTANT CASE, THE CONTENTS OF CLAUSE ( I)(B) OF THIS NOTIFICATION WILL BE APPLICABLE, WHICH IS APPLIED IN THE CASES O F A MSME ENGAGED IN MANUFACTURE OR PRODUCTION OF GOODS. TO SUCH MSMES, THE PROVISIONS OF CLAUSE (I)(B) WHEREIN THE OUTER LIMIT OF CAPITAL IN VESTMENT IS RS. 5 CRORES, WILL BE RELEVANT. THEREFORE, THE CLAIM OF THE APPEL LANT IS CORRECT BECAUSE IT QUALIFIES AS A MSME TO WHOM CLAUSE (I)(B) OF NOTIFI CATION DATED 29/09/2006 APPLIES AND IS THEREFORE, ENTITLED TO DE DUCTION UNDER SECTION 80IB(3)(II). ACCORDINGLY, THE DISALLOWANCE MADE IS VACATED AND THIS GROUND OF APPEAL IS ALLOWED. 4 4. AT THE TIME OF HEARING, NO INFIRMITY IN THE AFOR ESAID FINDING OF THE CIT(A) HAVE BEEN BROUGHT OUT BY THE REVENUE AND THE REFORE WE FIND NO REASONS TO INTERFERE WITH THE CONCLUSION OF THE CIT (A), WHICH WE HEREBY AFFIRM. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED ON 18 TH FEBRUARY, 2015. SD/- SD/- (R.S.PADVEKAR ) ( G.S.P ANNU ) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH/SUJEET PUNE, DATED 18 TH FEBRUARY, 2015 COPY OF THE ORDER IS FORWARDED TO: 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A), KOLHAPUR. 4. THE CIT, KOLHAPUR. 5. THE DR B BENCH, PUNE. 6. GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR, ITAT, PUNE BENCHES, PUNE