The ITO, Ward-4(4), Baroda V. Tonira Pharma Ltd.,

ITA 2469/AHD/2006

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8985 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-02-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 17-11-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C PANDIT
• Assessee Lawyers: S V AGARWAL
• Section: 10B

Judgement Text

1 ITA NO. 2469/AHD/2006 IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 2469/AHD./2006 ASSESSMENT YEAR : 2002-2003 INCOME TAX OFFICER, WARD-4(4), BARODA VS.- M/ S. TONIRA PHARMA LTD., BHARUCH (PAN : AABCT 0638 F) (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI M.C. PANDIT, SR . D.R. RESPONDENT BY : SHRI S.V. AGARWAL O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE DEPARTMENT IS AGAINST THE ORDER DATED 23.08.2006 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XIX, AHMEDABAD FOR THE ASSESSMENT YEAR 2002-03 IN DIRECTING THE A.O. TO ALLOW DEDUCTION UNDER SECTION 10B OF THE ACT TO THE ASSESSEE-COMPANY IN RESPECT OF 3 RD NEWLY ESTABLISHED UNDERTAKING SET UP ON PLOT NO. 4 731, GIDC, ANKLESHWAR. 2. AT THE OUTSET, SHRI S.V. AGARWAL APPEARING ON BE HALF OF THE ASSESSEE POINTED OUT THAT IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) HAS DIRECTED THE A.O. TO ALLOW THE DEDUCTION UNDER SECTION 10B IN RESPECT OF 3 RD NEWLY ESTABLISHED UNDERTAKING SET UP ON PLOT NO. 4731, GIDC, ANKLESHWAR FOLLOWING THE DECIS ION DATED 11.01.2008 OF THE HON'BLE ITAT, D BENCH, AHMEDABAD IN ASSESSEES OWN CASE IN ITA NOS. 3760 & 3761/AHD/2004 FOR THE ASSESSMENT YEAR 2000-01. IN THAT DECISION, THE TRIB UNAL HAS UPHELD THE ACTION OF A.O. BY ALLOWING THE DEDUCTION UNDER SECTION 10B FOR THE AS SESSMENT YEAR 2000-01, WHICH WAS THE FIRST YEAR FOR CLAIMING DEDUCTION UNDER SECTION 10B. THE RELEVANT PORTION OF THE SAID DECISION DATED 11.01.2008 AT PARA 6 IN PAGES 6-8 IS RE-PRODUCED HE REUNDER :- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND TH AT THE DEVELOPMENT COMMISSIONER, KONDALA HAS GIVEN PERMISSION TO MANUF ACTURE BULK DRUGS. THE DEVELOPMENT COMMISSIONER HAS ALSO APPROVED THE MANUFACTURING OF DRUGS IN THE UNIT ON PLOT NO.4731 GIDC, AKLESWAR, W E FIND THAT THE EXEMPTION UNDER SECTION 10B IS A SPECIAL PROVISION FN RESPECT OF NEWLY ESTABLISHED EXPORT ORIENTED UNDERTAKING WHEREBY EXE MPTION IS ADMISSIBLE ON FULFILLMENT OF CERTAIN CONDITIONS PRESCRIBED IN SECTION 10B(E) OF THE 2 ITA NO. 2469/AHD/2006 INCOME TAX ACT, 1961. THE ASSESSEE COMPANY IS MANUF ACTURING DRUGS FROM THREE UNITS BUT THE ASSESSES HAS CLAIMED DEDUCTION U/S. 10B ONLY FOR THE UNIT IN PLOT NO,4733, THE ASSESSEE WAS GRANTED REGISTRAT ION AS ECU BY THE DEVELOPMENT, KONDALA FREE TRADE ZONE. THE GOODS WER E MANUFACTURED AND CERTIFICATE WAS ISSUED BY FOOD & DRUGS CONTROL DEPARTMENT, GANDHINAGAR, THE ASSESSEE HAS ALSO GIVEN THE CLASSI FICATION OF THE SALES WHICH WAS DONE BY THE ASSESSEE IN RESPECT OF THE AS SESSMENT YEARS IN THE RESPECTIVE P & L ACCOUNT OF EXISTING UNITS AS WELL AS NEW UNIT. THE ASSESSEE HAS NOT OBTAINED NEW CONNECTION, HOWEVER, PERMISSIO N INCREASING THE LOAD WAS OBTAINED. THE ASSESSEE HAD NO NEW AFFLUENT TREA TMENT PLANT BECAUSE THE COMPANY HAS ENOUGH CAPACITY TO DISCHARGE THE AF FLUENT AND TREATMENT OF WASTAGES. THE ASSESSEE HAS PRODUCED NEW PRODUCTS AND DETAILS OF THE DRUGS MANUFACTURED BY EXISTING UNITS AS WELL AS NEW UNITS HAVE BEEN FURNISHED. THE ASSESSEE COMPANY HAS FULFILLED ALL T HE CONDITIONS STIPULATED IN SECTION 10B OF THE I.T. ACT WE FIND THAT DURING THE COURSE OF HEARING, THE LEANED AR OF THE ASSESSEE RELIED UPON MANY DECISION S. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. IND IA ALUMINIUM CO. LTD, (108 ITR 367) HAS HELD THAT ESTABLISHMENT OF A NEW INDUSTRIAL UNIT AS PART OF ALREADY EXISTING INDUSTRIAL ESTABLISHMENT MAY RE SULT IN EXPANSION OF INDUSTRY OR THE FACTORY BUT IF THE NEW ESTABLISHED UNIT ITSELF AN INTEGRATED AND INDEPENDENT UNIT IN WHICH NEW PLANT AND MACHINE RY IS PUT UP AND IS ITSELF INDEPENDENT OF THE OLD UNIT, CAPABLE OF PROD UCTION OF GOODS, THEN IT WAS CLASSIFIED AS NEWLY ESTABLISHED INDUSTRIAL UN DERTAKING. IN THE CASE OF CIT V. HINDUSTAN MALLEABLES & FORGINGS LTD (191 ITR 70) , HON'BLE PATNA HIGH COURT HAS LAID DOWN THE TESTS FOR ESTABLISHMEN T OF NEW UNITS AND IT HAS BEEN HELD THAT COMMON SOURCE OF POWER AND COMMO N BOOKS OF ACCOUNT IS NOT RELEVANT. THE ASSESSEE HAS TO ESTABLISH THAT THE INVESTMENT OF SUBSTANTIAL FRESH CAPITAL IN THE NEW INDUSTRIAL UND ERTAKING SET UP, EMPLOYMENT OF REQUISITE LABOUR THEREIN, MANUFACT URE OR PRODUCTION OF ARTICLES IN THE SAID UNDERTAKING, EARNING PROFIT CLEARLY ATTRIBUTABLE TO THE SAID NEW UNDERTAKING AND ABOVE ALL, A SEPARATE AND DISTINCT IDENTITY OF THE INDUSTRIAL UNIT SET UP, THE FACT THAT THERE WAS COM MON MANAGEMENT OR THE FACT THAT SEPARATE ACCOUNTS HAD NOT BEEN MAINTAINED OR THAT THERE WAS A COMMON SOURCE OF POWER WOULD NOT MEAN THAT IT WAS N OT A NEW UNDERTAKING. MOREOVER, HON'BLE DELHI HIGH COURT HAS ALSO LAID DOWN SIMILAR TESTS. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE ABOVE MENTIONED TESTS AS L AID DOWN BY DIFFERENT HIGH COURTS AND ALSO THE APEX COURT, WE ARE OF THE VIEW THAT THE CIT(A) IS PERFECTLY JUSTIFIED IN ALLOWING THE CLAIM OF THE AS SESSEE. THUS, WE DO NOT FIND ANY MERIT IN THE GROUNDS OF APPEAL RAISED BY T HE REVENUE IN THIS REGARD. THEREFORE, WE UPHOLD THE IMPUGNED ORDERS OF THE CIT(A) IN THIS REGARD AND DISMISS BOTH THE APPEALS OF THE REVENUE. 2.1. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMIT TED THAT IN ITA NO. 3639/AHD/2008 FOR THE ASSESSMENT YEAR 2003-04 AND IN ITA NO. 1456/AHD/200 9 FOR THE ASSESSMENT YEAR 2006-07 BOTH 3 ITA NO. 2469/AHD/2006 IN ASSESSEES OWN CASE ALSO, THE TRIBUNAL VIDE ORDE R DATED 16.01.2009 AND 07.08.2009 RESPECTIVELY BY FOLLOWING ITS THE AFORESAID DECISIO N DATED 11.01.2008 (SUPRA) FOR THE ASSESSMENT YEAR 2000-01 DISMISSED THE APPEAL OF THE REVENUE. 3. ON THE OTHER HAND, SHRI M.C. PANDIT, SR. D.R. AP PEARING ON BEHALF OF THE REVENUE COULD NOT CONTROVERT THE AFORESAID SUBMISSION OF THE LD. COUNSEL OF THE ASSESSEE. 4. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AS WEL L AS THE MATERIAL AVAILABLE ON RECORD. THE A.O. DISALLOWED THE CLAIM OF EXEMPTION UNDER SECTIO N 10B BY FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2001-02. IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) ALLOWED THE SAME FOLLOWING HIS ORDER FOR ASSESSMENT YEAR 2001-02. THE APPEAL OF REVENUE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR THE ASSESSMENT YEAR 2001-02 WAS DISMISSED BY ITAT, D BENCH, AHMEDABAD VIDE ORDER DATED 11.01.2008. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER O F LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BECAUSE NOW ISSUE STANDS COVERED IN TH E DECISION OF ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2001-02. RESULTANTLY, THE GROUN DS OF APPEAL TAKEN BY THE REVENUE ARE REJECTED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 12.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 12 / 02 / 2010 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 LAHA/SR.P.S.