The ITO,Vapi Ward - 4, Nani Daman V. M/s Padmey Impex, Nani Daman

ITA 2765/AHD/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1675 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 28-09-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U S RAINA SRDR
• Keywords: Additional evidence
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI D.K. TYAGI, HONBLE JUDICIAL MEMBER AND SHRI A.N.PHAUJA, HONBLE ACCOUNTANT MEMBER ITA NO.2765/AHD/2010 ASSESSMENT YEAR:2007-08 DATE OF HEARING:18.3.11 DRAFTED:22.3.11 INCOME TAX OFFICER, VAPI, WARD-4, DAMAN V/S. M/S.PADMEY IMPEX, SURVEY NO.143/1, F/7, VEERA INDUSTRIAL ESTATE, DABHEL, NANI DAMAN PAN NO.AAIFP1052F (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI U.S. RAINA, SR-DR RESPONDENT BY:- NONE O R D E R PER D.K. TYAGI, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL AGAINST THE ORDER OF COMM ISSIONER OF INCOME- TAX(APPEALS)-VALSAD IN APPEAL NO. CIT(A)/VLS/365/09 -10 DATED 20-07-2010 FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S.80IB OF THE ACT STATING THAT DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE WAS NOT HAVING FACTORY LICENSE BEFORE IT STARTED MANUFACTURING ACTIVITIES IS WITHOUT ANY MERITS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN NOT CONSIDERING THE POINT THAT THE ASSESSEE HAS FAILED TO PROVE THAT IT HAS COMMENCED THE MANUFACTURING ACTIV ITY ON OR BEFORE 31.03.2004, AS STIPULATED IN SECTION 80IB OF THE AC T. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF U/S 40(A)(IA) RS.1,94,000/- AS THE ASSESSEE HAS NOT SUBMITTED THE DOCUMENTARY EVIDENCE OF TDS DURING THE ASSESSMENT PROCEEDINGS. ITA NO.2765/AHD/2010 A.Y. 2007-08 ITO VLS WD4 DAMAN, V. M/S PADMEY IMPEX PAGE 2 NON APPEARED ON BEHALF OF ASSESSEE NOR ANY APPLICAT ION FOR ADJOURNMENT WAS FIELD AT THE TIME OF HEARING. SINCE REGISTERED NOTICE HAS BE EN SERVED UPON THE ASSESSEE. WE PROCEED TO DECIDE THE ISSUE AFTER HEARING LD. SR-DE PARTMENTAL REPRESENTATIVE. 3. THE GROUND NO.1 AND 2 RELATE TO DISALLOWANCE OF CLAIM OF DEDUCTION U/S.80IB OF THE ACT OF RS.50,81,533/- AND RS.1.94 LAKH U/S 4 0(A)(IA) OF THE ACT. 4. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD RECEIV ED LICENSE TO WORK A FACTORY FROM CHIEF INSPECTOR OF FACTORY ON 17-06-2004 AND A S PER SECTION-6 R.W.R 3 & 4 OF FACTORY ACT, FACTORY RULES, NO PERSON CAN START MAN UFACTURING WITHOUT PRIOR APPROVAL OF THE FACTORY INSPECTOR. THEREFORE, MANUFACTURING ACTIVITY IS AN ILLEGAL UNLAWFUL ACTIVITY. IT WAS FURTHER OBSERVED THAT ASSESSEE CLA IMED DATE OF COMMENCEMENT OF OPERATION AS ON 30-03-2004 AND IN SUPPORT OF ITS CL AIM OF MANUFACTURING BEING STARTED ON 30-03-2004 SUBMITTED THE DOCUMENTS WHICH WERE CREATED BY ASSESSEE. THE ASSESSEE HAS NOT SUBMITTED ANY DOCUMENTS FROM T HIRD PARTY TO PROVE THAT MANUFACTURING ACTIVITY WAS STARTED ON OR BEFORE 31- 03-2004. ACCORDING TO ASSESSING OFFICER, ASSESSEE FAILED TO PROVE THE SAME. ON THE CONTRARY, IT CAN BE SEEN FROM THE LICENCE ISSUED BY THE FACTORY INSPECTOR THAT IT WAS ISSUED ON 17-06-2004. FACTORY LICENCE BEING THIRD PARTY EVIDENCE, WHICH PROVES TH AT PRODUCTION WAS STARTED ON 17- 06-2004. THE ASSESSING OFFICER THEREFORE DISALLOWED THE CLAIM OF ASSESSEE. 5. IN APPEAL LD. CIT(APPEALS) HAS FOLLOWED THE DECI SION OF ITAT AHMEDABAD BENCH IN THE CASE OF ITO VAPI V. SAMRATH HEALTH CARE IN ITA NO.1006/AHD/.2009 DATED -5-06-2008 DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF DEDUCTION U/S.80IB OF THE ACT. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE THE TRIB UNAL. 6. AFTER HEARING LD. DR WE FIND THAT ISSUE IS NOW C OVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE ORDER OF ITAT IN THE CASE OF SAMRATH HEALTH CARE (SUPRA), WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DR AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW THERE IS NO ITA NO.2765/AHD/2010 A.Y. 2007-08 ITO VLS WD4 DAMAN, V. M/S PADMEY IMPEX PAGE 3 CASE FOR INTERFERENCE IN THE ORDER OF THE LEARNED C IT(A). THE LEARNED CIT(A) HAS RIGHTLY MENTIONED THAT TO OBTAIN FACTORY LINCEN SE IS NO A CONDITION PRECEDENT FOR CLAIMING DEDUCTION U/S.80 IB OF THE A CT. IF WE PRESUME HAT THIS CONDITION IS ALSO REQUIRED TO BE FULFILLED BY THE A SSESSEE, THEN IT WOULD AMOUNT TO LEGISLATION BY INSERTING ANOTHER CONDITION IN SE CTION 80 IB FOR ALLOWING DEDUCTION UNDER THAT SECTION THOUGH NOT PROVIDED IN THE STATUTE. THE AO DID NOT DOUBT ABOUT RAW MATERIAL CONSUMPTION, POWER CON SUMPTION, SALES AND EMPLOYMENT OF WORKERS. FURTHER NO DOUBT WAS ALSO EX PRESSED BY THE AO THAT ASSESSEE DID NOT CARRY ANY MANUFACTURING ACTIVITY. NONETHELESS, THE ASSESSEE HAS APPLIED FOR FACTORY LICENSE PRIOR TO COMMENCEME NT OF PRODUCTION THOUGH IT WAS GRANTED SUBSEQUENTLY. THE ASSESSEE HAS BEEN GIV EN A PERMANENT REGISTRATION AS A SMALL SCALE INDUSTRIAL UNDERTAKIN G AND HAS REGISTERED WITH THE SALES TAX AND EXCISE AUTHORITIES. FOR CLAIMING DEDU CTION U/S.80 IB OF THE ACT ONLY THE CONDITIONS LAID DOWN UNDER THAT SECTION AR E REQUIRED TO BE FULFILLED AND NO MORE. THE REQUIREMENT UNDER OTHER STATUTES CANNO T BE BORROWED FOR ALLOWING / REFUSING DEDUCTION UNLESS IT IS SO PROVI DED IN THE IT ACT ITSELF. FOR EXAMPLE, THE LEGISLATURE THOUGHT IT FIT TO BRING TH E CONDITION OF EMPLOYMENT OF 10 OR MORE WORKERS IF MANUFACTURING ACTIVITIES ARE CA RRIED OUT WITH THE HELP OF POWER OR MORE THAN 20 WORKERS WITHOUT THE HELP OF POWER. SIMILARLY, IF T HE LEGISLATURE THOUGHT IT FIT TO OBTAIN FACTORY LICENS E BEFORE ALLOWING DEDUCTION U/S.80 IB OF THE ACT THEN THEY WOULD HAVE SO PROVID ED. IN FACT, THERE ARE SEVERAL OTHER REQUIREMENTS IN DIFFERENT ACT APPLICA BLE TO AN INDUSTRY BUT ALL THESE REQUIREMENTS ARE NOT TO BE COMPLIED WIDTH FOR CLAIMING DEDUCTION U/S.80 IB OF THE ACT. WHAT IS ESSENTIAL IS THAT THE ASSESS EE SHOULD MANUFACTURE OR PRODUCE AN ARTICLE OR THING. IF THERE IS ANY VIOLAT ION OF ANY PROVISIONS OF OTHER STATUTES THEN THE ASSESSEE HAS TO EXPLAIN THE SAME TO THE AUTHORITIES EXECUTING THOSE ACTS / STATUTES. FURTHER FOR VIOLAT ION OF HE PROVISIONS UNDER OTHER ACTS THE ASSESSEE MAY FACE PENAL PROVISIONS A S PROVIDED UNDER THOSE ACTS. BUT FOR THAT COMMISSIONS / OMISSION UNDER OTH ER ACTS THE DECISION UNDER THE IT ACT CANNOT BE AFFECTED UNLESS SO PROVIDED UN DER THE IT ACT. WE HOWEVER, NOTICE THAT THIS APPEAL IS FOR AY 2005-06 AND AS PER FACTS STATED IN THE ORDER BY THE LEARNED CIT(A) THE ASSESSEE HAS OB TAINED FACTORY LICENSE ON 6-5-2004 WHICH IS FINANCIAL YEAR 2004-05. THEREFORE , THERE SHOULD BE NO CASE FOR DISALLOWING THE CLAIM OF THE ASSESSEE U/S.80 IB ON THE QUESTION OF NOT OBTAINING FACTORY LICENSE. AS A RESULT, WE CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REV ENUE. IN VIEW OF ABOVE, THE ORDER PASSED BY LD. CIT(A) IS HEREBY CONFIRMED. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. THE THIRD GROUND RELATES TO ADDITION OF RS.1.94 LAKH U/S 40(A)(IA) OF THE ACT. 8. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. ASSESSING OFFICER OBSERVED THAT ASS ESSEE MADE PAYMENTS OF RS.1.94 LAKH ON ACCOUNT OF CONSULTANCY CHARGES BUT THE TDS WAS NOT DEDUCTED ON THE SAME. ASSESSING OFFICER ASKED THE ASSESSEE TO E XPLAIN THE ABOVE DEFAULT FOR ITA NO.2765/AHD/2010 A.Y. 2007-08 ITO VLS WD4 DAMAN, V. M/S PADMEY IMPEX PAGE 4 NON-DEDUCTION OF TDS. THE ASSESSEE FAILED TO EXPLAI N THE SAME AND AGREED FOR DISALLOWANCE OF ABOVE EXPLANATION. BEFORE LD. CIT(A ) ASSESSEE SUBMITTED THAT THE TDS WAS DEDUCTED AND PAID INTO GOVERNMENT ACCOUNT B EFORE 31-03-2007 AND IN SUPPORT OF THIS CLAIM ASSESSEE FILED COPY OF ANNUAL RETURN FORM NO.26Q CHALLAN AND DETAILS OF PAYMENT MADE WITH STATE BANK OF INDI A ON 31-03-2007. TAKING INTO CONSIDERATION THIS ADDITIONAL EVIDENCE LD. CIT(A) D IRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION U/S.40(A)(IA) OF THE ACT. 9. AFTER HEARING LD. DR WE FIND THAT LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSEE ON THE BASIS OF ADDITIONAL EVIDENCE PRODUCED BEFORE HIM. THIS ADDITIONAL EVIDENCE WAS NOT CONFRONTED TO ASSESSING OFFICER. IN OUR CON SIDERED OPINION LD. CIT(A) SHOULD HAVE SOUGHT COMMENTS OF THE AO ON THIS ADDITIONAL E VIDENCE. SINCE IT HAS NOT BEEN DONE IN THIS CASE, THE MATTER IS RESTORED BACK TO T HE FILE OF AO FOR FRESH ADJUDICATION AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVID ENCE NOW RELIED BY ASSESSEE. THIS GROUND REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 31/03/2011 SD/- SD/- (A.N.PHAUJA) (D.K. TYA GI) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 31/03/2011 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VALSAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD