M/s. Colourflex Laminators Ltd., Ahmedabad V. The Dy.CIT.,Range-1, Ahmedabad

ITA 2587/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85798 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 19-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Assessee Lawyers: R D SHAH
• Keywords: Question of law; Wrong claim
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI ACCOUNTANT MEMBER ITA NO .2587 /AHD/2011 A. Y . 200 4 - 0 5 M/S. COLOURFLEX LAMINATORS LTD., FF - 130, SHUKAN MALL, NR. PANCHAMRUT BUNGLOW - I, SCIENCE CITY, SOLA, AHMEDABAD. PAN: AAACC 4768L VS DCIT RANGE - 1, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI ROOPCHAND, SR.D.R. . ASSESSEE(S) BY : SHRI R.D. SHAH , A.R. / DATE OF HEARING : 0 3 / 0 3 /201 5 / DATE OF PRONOUNCEMENT: 13 / 0 3 /201 5 / O R D E R PER: MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF L EARNED CIT(A) - VI , AHMEDABAD DATED 08 .0 9 .2011 CONFIRMING THE PENALTY LEVIED U/S.271(1)(C) OF RS.3,06,789/ - . 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT OR DER PASSED U/S. 143(3) DATED 26.12.2006 AND THE PENALTY ORDER U/S.271(1)(C) DATED 30 TH OF MARCH, 2010 WERE THAT THE ASSESSEE COMPANY WAS IN THE BUSINESS OF MANUFACTURING OF FLEXIBLE PACK AG ING MATERIAL. THE ASSESSEE HAD CLAIMED A DEDUCTION U/S.80IB(3) OF RS.7,85,826/ - . AS PER AO, THE SAID DEDUCTION WAS AVAILABLE ON THE PROFITS AND GAINS D ERIVED FROM AN INDUSTRIAL UNDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING WHICH ITA NO. 2587 /AHD /201 1 M/S. COLOURFLEX LAMINATORS LTD. VS. DCIT RANGE - 1, AHMEDABAD FOR A.Y. 200 4 - 0 5 - 2 - HAS STARTED MANUFACTURING OF ARTICLES DURING THE PERIOD BEGINNING FROM 1 ST APRIL, 1995 TO 31 ST MARCH, 2002. THERE WAS A LIMIT IN RESPECT OF INVESTMENT IN PLANT AND MACHINER Y UPTO RS.60 LAC ONLY. THAT LIMIT, AS PER AO, WAS SUBSEQUENTLY REVISED BY THE MINISTRY TO RS.300 LAC VIDE NOTIFICATION DATED 10.12.1997 BUT REDUCED TO RS.100 LAC VIDE NOTIFICATION DATED 31.12.1999. FROM THE BALANCE SHEET DRAWN AS ON 31.03.2004 , IT WAS FOUN D BY THE AO THAT THE INVESTMENT WAS RS.3,35,54,896/ - . ACCORD I NG TO AO, THE SAID INVESTMENT HAD EXCEEDED THE MAXIMUM LIMIT PRESCRIBED. AFTER ASSIGNING THOSE REASONS , THE AO HAS DISALLOWED THE CLAIM OF DEDUCTION U/S.80IB OF THE ACT. THE MATTER WAS CARRIED BE FORE THE FIRST APPELLATE AUTHORITY AND FURTHER THE MATTER WAS CARRIED BEFORE THE TRIBUNAL . T HE ITAT B BENCH AHMEDABAD VIDE ITA NO.459/AHD/2009 FOR A.Y.2004 - 05 VIDE AN ORDER DATED 21.09.2012 IN THE CASE OF THE ASSESSEE HAS AFFIRMED THE DISALLOWANCE OF DEDU CTION U/S.80IB. WITH THESE BRIEF FACTUAL BACKGROUND, LEARNED AR, MR. R.D. SHAH HAS PLEADED THAT ON IDENTICAL FACTS FOR A.Y.2001 - 02 PENALTY WAS DELETED BY LEARNED CIT(A) FOR A.Y.2001 - 02 IN ASSESSEE S OWN CASE VIDE AN ORDER DATED 5.12.2013. LEARNED A.R. HAS DRAWN OUR ATTENTION ON THE REASONING GIVEN BY LEARNED CIT(A) THAT DISALLOWANCE U/S.80IB IS DEPENDENT UPON VARIOUS FACTS AND CONDITIONS WHERE THERE ARE MORE THAN ONE VIEW IS POSSIBLE. THE ISSUE ABOUT THE LIMIT IMPOSED FOR INVESTMENT WAS A DEBATABLE ISSUE. L EARNED A.R. HAS ALSO POINTED OUT THAT IN THE CASE OF DYNAMIC PRODUCTS LTD. (TAX APPEAL NO.649) THE HON BLE HIGH COURT HAS OPINED THAT EVEN IF ULTIMATELY THE ASSESSEE WAS CONSIDERED AS NOT ENTITLED FOR THE BENEFIT U/S.80IB NO PENALTY COULD BE IMPOSED IF TH ERE WAS NO SUPPRESSION OF MATERIAL FACTS. LEARNED A.R. HAS ALSO PLACED RELIANCE ON THE ORDER OF RELIANCE PETRO PRODUCTS, 322 ITR 158 (SC). FURTHER HE HAS INFORMED THAT ONLY ON 9 TH OF APRIL, 2007 THE DISTRICT INDUSTRIES CENTRE, GANDHINAGAR HAS ITA NO. 2587 /AHD /201 1 M/S. COLOURFLEX LAMINATORS LTD. VS. DCIT RANGE - 1, AHMEDABAD FOR A.Y. 200 4 - 0 5 - 3 - C ANCELLED THE SSI CERTIFICATE OTHERWISE IN THE PAST IT WAS TREATED AS SSI UNIT VIDE DISTRICT INDUSTRIES ORDER DATED 24 TH OF AUGUST, 2002. 3. FROM THE SIDE OF THE REVENUE - DEPARTMENT, LEARNED SR.D.R. HAS PLACED RELIANCE ON THE ORDERS OF THE AO AND LEARNED CIT(A). HE HAS PLEADED THAT THE CLAIM OF DEDUCTION U/S.80IB WAS MALA FIDE IN NATURE BECAUSE THE ASSESSEE WAS AWARE THAT THE LIMIT OF INVESTMENT HAD EXCEEDED AS PRESCRIBED BUT EVEN THEN THE DEDUCTION WAS CLAIMED. 4. HEARD BOTH THE SIDES AT SOME LENGTH. THE SHORT ISSUE I S THAT IN A SITUATION WHEN THE ASSESSEE HAS CLAIMED A DEDUCTION U/S.80IB OF IT ACT WHICH WAS DENIED BY THE AO AND THAT ORDER OF THE AO HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL, WHETHER THE PENALTY U/S.271(1)(C) IS LEVIABLE OR NOT. IN THIS REGARD, WE HAVE CA REFULLY PERUSED THE QUANTUM PROCEEDINGS AND NOTED THAT THE FACTS IN RESPECT OF THE CLAIM OF DEDUCTION U/S.80IB WERE PLACED BEFORE THE AO AND THERE WAS NO ALLEGATION THAT THOSE FACTS WERE EITHER WRONG OR FALSE IN NATURE. THE ONLY ALLEGATION OF THE REVENUE D EPARTMENT WAS THAT THE ASSESSEE HAD MADE THE CLAIM OF DEDUCTION U/S.80IB KNOWINGLY THAT THE SAME WAS NOT AS PER LAW. THAT ASPECT HAS NOW BEEN EXAMINED BY US. WE HAVE FOUND THAT THE LIMITS OF INVESTMENT WERE NOT STATIC BUT KEPT ON FLUCTUATING YEAR AFTER YEA R. IN SOME OF THE YEARS, IT WAS RS.60 LACS ONLY AND RAISED TO RS.3 CRORE BUT LATER ON REDUCED TO RS.1 CRORE. DEFINITELY SUCH FREQUENT CHANGES WOULD HAVE CREATED A CONFUSION IN THE MIND OF THIS TAX PAYER . AN ANOTHER INTERESTING FEATURE WAS THAT THE SSI (T HE PRESCRIBED AUTHORITY) HAVE ALSO GRANTED THE REGISTRATION IN THE BEGINNING ALTHOUGH AT TH AT POINT OF TIME THE KNOWN FACTS WAS THAT THE INVESTMENT IN THE PLANT AND MACHINERY HAD EXCEEDED THE LIMIT OF RS.1 CRORE. HOWEVER, LATER ON IN THE YEAR 2007 THAT SSI ITA NO. 2587 /AHD /201 1 M/S. COLOURFLEX LAMINATORS LTD. VS. DCIT RANGE - 1, AHMEDABAD FOR A.Y. 200 4 - 0 5 - 4 - REGISTRATION CERTIFICATE WAS REVOKED. CONSIDERING THIS FACT IN MIND , IT IS NOW EVIDENT THAT SINCE THE YEAR UND ER CONSIDERATION IS A.Y.2004 - 05, THEREFORE , IT CAN BE SAFELY HELD THAT THE ASSESSEE HAD MADE A CLAIM OF DEDUCTION U/S.80IB UNDER A BONA FIDE IMPR ESSION THAT BEING AN SSI REGISTERED UNIT WAS ENTITLED FOR THE SAID CLAIM. ALMOST ON IDENTICAL CIRCUMSTANCES , THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. M/S. DYNAMIC PRODUCT LTD. (TAX APPEAL NO.649 OF 2010) DATED 27 TH OF MARCH, 2012 HAS HELD AS U NDER: 5. EVEN IF WE ASSUME FOR THE SAKE OF ARGUMENT THAT THE ASSESSEE WAS NOT ENTITLED TO THE BENEFIT UNDER SECTION 80IB OF THE - ACT, IT WAS NOT A CASE OF MISSTATEMENT OF ANY MATERIAL IN RETURN NOR IT IS A CASE OF SUPPRESSION OF MATERIAL FACT OR NON - DISCLO SURE OF ANY MATERIAL IN SPITE OF DEMAND BY THE ASSESSING OFFICER. AT THE MOST, THE ASSESSEE MADE AN UNTENABLE CLAIM WHICH IS NOT PERMISSIBLE UNDER SECTION 80IB OF THE ACT. 6. THEREFORE, WE ARE OF THE VIEW THAT EVEN IF IT IS ULTIMATELY HELD THAT THE ASSES SEE IS NOT ENTITLED TO THE BENEFIT UNDER SECTION 80IB OF THE ACT, FOR THAT REASON, NO PENALTY CAN BE IMPOSED IN THE FACTS OF THE PRESENT CASE. 7. WE THUS FIND THAT NO SUBSTANTIAL QUESTION OF LAW IS INVOLVED IN THIS APPEAL. 8. WE MAKE IT CLEAR THAT WIT HIN THE NARROW SCOPE OF THIS APPEAL AS TO INTERPRETATION UNDER SECTION 27 1 ( 1 )(C) OF THE ACT, WE HAVE NOT GONE INTO THE QUESTION WHETHER IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS REALLY ENTITLED TO THE BENEFIT UNDER SECTION 80IB OF THE ACT. 5. EV EN WE HAVE PERUSED THE ORDER OF THE ITAT B BENCH FOR A.Y. 2004 - 05 IN ASSESSEE S OWN CASE DATED 21.09.2012 (SUPRA) THROUGH WHICH THE DENIAL OF CLAIM OF EXEMPTION U/S.80IB WAS CONFIRMED B UT THERE WAS NO SUCH RECORDING OF FACT THAT THE ASSESSEE WAS CONCEAL ING THE FACT ABOUT THE INVESTMENT OR DELIBERATELY MADE A FALSE CLAIM OF DEDUCTION. IN THE SAID ORDER OF THE TRIBUNAL O NLY TECHNICAL ASPECTS HAVE BEEN DISCUS S ED ABOUT THE REGULATION WHICH WERE CHANGED TIME AND AGAIN AND WHAT WE RE THE INVESTMENTS WHICH WE RE REQUIRED TO BE CONSIDERED FOR THE PURPOSE OF ITA NO. 2587 /AHD /201 1 M/S. COLOURFLEX LAMINATORS LTD. VS. DCIT RANGE - 1, AHMEDABAD FOR A.Y. 200 4 - 0 5 - 5 - REGISTRATION AS SSI UNIT. THEREFORE, IT IS APPARENT THAT THE CLAIM WAS DENIED MERELY ON CERTAIN TECHNICAL REASONS AND THOSE TECHNICAL REASONS WERE OTHERWISE CONTROVERSIAL IN NATURE. SINCE, THE IMPUGNED CLAIM OF DEDUCTION U/S.80IB WAS ALSO A DEBATABLE ISSUE, CONSIDERING THE PAST LITIGATION INVOLVED IN THIS CASE WE HEREBY HOLD THAT THE REVENUE AUTHORITIES WERE NOT JUSTIFIED IN PENALIZING THIS ASSESSEE FOR CONCEALMENT OF INCOME U/S.271(1)(C) OF THE ACT. RESULTAN TLY, WE HEREBY REVERSE THOSE FINDINGS AND DIRECT TO DELETE THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. SD/ - SD/ - ( ANIL CHATURVEDI ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13 / 0 3 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . S / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD