ABHITECH ENERGYCON LTD, MUMBAI V. ACIT CC 20, MUMBAI

ITA 2797/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9043 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMCHADRAN
• Assessee Lawyers: JITENDRA SINGH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G.S.PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S. ABHITECH ENERGYCON LTD. A-1020, OBEROI GARDEN ESTATE, CHANDIVALI FARM ROAD, CHANDIVALI, ANDHERI (E), MUMBAI- 400 072. PAN:- AABCA3856C VS. THE DCIT CC - 20, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. JITENDRA SINGH & MS. NEHA PARANJPE RESPONDENT BY : SHRI. A. RAMCHADRAN DATE OF HEA RING: 07/09 /201 6 DATE OF PRONOUNCEMENT: 13/01/2017 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST IMPUGNED ORDER DATED 09/01/2013, PASSED BY THE LD. CIT(APPEALS)-14 , MUMBAI, FOR THE ASST. YEAR 2009-10,WHEREBY THE LD. CIT(A) DISMISSED THE A PPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER DATED 26/12/2011 PASSED UN DER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EN GAGED IN THE BUSINESS OF MANUFACTURING OF FUEL ADDITIVES FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING THE TOTAL INCOME OF RS. 19,8 7,347/-. THE RETURN WAS 2 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 PROCESSED AND ASSESSMENT ORDER WAS PASSED U/S 143(3 ) OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 3,38,03,390 /-AFTER MAKING DISALLOWANCE OF RS.3,18,07,827/-CLAIMED BY THE ASSESSEE U/S 80IC OF THE ACT. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT( A), HOWEVER, THE LD. CIT(A) FOLLOWING THE DECISION OF THE FIRST APPELLATE AUTHO RITY PASSED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09, AFFIRMED THE ACTION OF THE AO AND DISMISSED THE APPEAL OF THE ASSESSEE. STILL AGGRIEV ED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. INITIALLY THE ASSESSEE WAS HAV ING MANUFACTURING UNIT AT WADA IN MAHARASHTRA WHICH WAS SHIFTED TO BADDI IN H IMACHAL PRADESH. ACCORDINGLY, THE ASSESSEE CLAIMED DEDUCTION U/S 80I B OF THE ACT WHICH WAS REJECTED BY THE REVENUE AUTHORITIES. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. CIT APPEAL ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTIONS U/S 80IC OF RS. 3,18,07,827/- MADE BY ASSESSING OFFICER. 2. ON THE FACTS AND CIRCUMSTANCES AND IN LAW, THE L D. CIT APPEAL ERRED IN CONCLUDING THAT SHIFTING OF UNIT FROM WADA , MAHARASHTRA TO BADDI, HIMACHAL PRADESH AMOUNT TO RECONSTRUCTION O F BUSINESS. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS CASE IS COVERED BY THE ORDER OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE ITA NO 8721/MUM/2011 FOR THE ASSESSMENT YEAR 2 008-09 AND TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. THE LD. DR DID NOT CONTROVERT THE SAID FACT. 3 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 5. WE HAVE PERUSED THE MATERIAL PLACED ON RECORD IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE. WE FIND THAT THE COORDI NATE BENCH HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE IN ASSESSEES OWN CASE REFERRED ABOVE. THE RELEVANT PART OF THE ORDER READS AS UNDER:- 6. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. THE SUB. SEC.1,2, AND 4 OF SEC. 80IC READ AS UNDER :- SPECIAL PROVISIONS IN RESPECT OF CERTAIN UNDERTAKI NGS OR ENTERPRISES IN CERTAIN SPECIAL CATEGORY STATES. 80-IC . (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE I NCLUDES ANY PROFITS AND GAINS DERIVED BY AN UNDERTAKING OR AN E NTERPRISE FROM ANY BUSINESS REFERRED TO IN SUB-SECTION (2), THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE, A DED UCTION FROM SUCH PROFITS AND GAINS, AS SPECIFIED IN SUB-SECTION (3). (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE, (A) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY AR TICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THI RTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PER IOD BEGINNING (I) ON THE 23 RD DAY OF DECEMBER, 2002 AND ENDING BEFORE THE 1 ST DAY OF APRIL, 2007 IN ANY EXPORT PROCESSING ZONE OR INT EGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BEF ORE THE 1ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZONE OR INTEG RATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR 4 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZONE O R INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GRO WTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PARK OR SOFTWARE TE CHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, AS NOTIFIED BY THE B OARD IN ACCORDANCE WITH THE SCHEME FRAMED AND NOTIFIED BY T HE CENTRAL GOVERNMENT IN THIS REGARD, IN ANY OF THE NORTH-EAST ERN STATES; (B) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR C OMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANU FACTURES OR PRODUCES ANY ARTICLE OR THING, SPECIFIED IN THE FOU RTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING (I) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, 2007, IN THE STATE OF SIKKIM; OR (II) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2012, IN THE STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL; OR (III) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BEFORE THE 1ST DAY OF APRIL, 2007, IN ANY OF THE NORTH-EASTERN STA TES. (3) (4) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENTE RPRISE WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY: (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECONS TRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF AN UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B , IN THE CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. 5 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 EXPLANATION. THE PROVISIONS OF EXPLANATIONS 1 AND 2 TO SUB-SECTION (3) OF SECTION 80-IA SHALL APPLY FOR THE PURPOSES OF CLAUSE (II) OF THI S SUB-SECTION AS THEY APPLY FOR THE PURPOSES OF CLAUS E (II) OF THAT SUBSECTION. A CAREFUL PERUSAL OF THE ABOVE SAID PROVISIONS WOUL D SHOW THAT THE DEDUCTION UNDER THIS SECTION SHALL BE AVAILABLE TO ANY UNDERTAKING OR ENTERPRISE WHICH MANUFACTURES OR PRODUCES ANY ARTIC LE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE THIRTEE NTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING..... 7. THERE IS NO DISPUTE WITH REGARD TO THE FACT THA T THE ARTICLE OR THING MANUFACTURED BY THE ASSESSEE DOES NOT FALL UN DER THIRTEENTH SCHEDULE. THERE IS ALSO NO DISPUTE THAT THE ASSESSE E IS MANUFACTURING OR PRODUCING AN ARTICLE OR THING. HEN CE, THE ASSESSEE SHOULD BE ELIGIBLE FOR DEDUCTION U/S 80IC OF THE AC T, IF IT UNDERTAKES SUBSTANTIAL EXPANSION. THE DETAILS OF PLANT AND MAC HINERY AVAILABLE WITH THE ASSESSEE AS ON 1.4.2007 AND THE VALUE OF N EW PLANT & MACHINERY PURCHASED BY THE ASSESSEE DURING THE FINA NCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR 2008-09 WOU LD SHOW THAT THE ASSESSEE HAS CARRIED OUT SUBSTANTIAL EXPANSION OF ITS UNDERTAKING, SINCE THE VALUE OF NEW MACHINERY EXCEE DS BY MORE THAN 50% OF THE BOOK VALUE OF PLANT & MACHINERY AS ON 1.4.2007. 8. WE HAVE NOTICED THAT THE TAX AUTHORITIES HAVE R EJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESS EE HAS ESTABLISHED THE UNIT AT BADDI BY RECONSTRUCTION OF THE EXISTING UNIT. THE ASSESSEE HAS FURNISHED THE DETAILS OF EMPLOYEES , ELECTRICITY BILLS AND WATER BILLS ISSUED BY THE HIMACHAL PRADESH STAT E INDUSTRIAL DEVELOPMENT CORPORATION LTD. THE ASSESSEE HAS ALSO FURNISHED THE LETTER ISSUED BY THE DEPUTY DIRECTOR OF INDUSTRIES, BADDI, DIST. SOLAN (H.P) ALLOCATING THE UNDERTAKING OF THE ASSESSEE AS MICRO/SMALL/MEDIUM SCALE ENTERPRISE FOR MANUFACTURI NG OF ADDITIVES. BY PLACING RELIANCE ON THESE DOCUMENTS, THE LD A.R SUBMITTED THAT THE ASSESSEE HAS SET UP A NEW UNDERT AKING AT A NEW PLACE AND IN THAT PROCESS IT HAS USED CERTAIN OLD P LANT AND MACHINERY ALSO. HE SUBMITTED THAT THE PROVISIONS OF SEC. 80IC ALSO 6 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 PROVIDE FOR USING OF OLD PLANT AND MACHINERY UP TO A CERTAIN LIMIT. ACCORDINGLY HE SUBMITTED THAT THE NEW UNDERTAKING S ET UP AT BADDI CANNOT BE CONSIDERED AS RECONSTRUCTION OF THE UNIT. HE SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC OF THE ACT IN VIEW OF SUBSTANTIAL EXPANSION OF THE UNIT AND NOT ON ACC OUNT OF SETTING UP OF THE UNIT. 9. WE FIND MERIT IN THE SAID SUBMISSIONS OF THE LD A.R. WE HAVE EARLIER NOTICED THAT THE ASSESSEE QUALIFIES UNDER T HE CATEGORY OF SUBSTANTIAL EXPANSION OF THE UNIT AND HENCE WE AR E OF THE VIEW THAT THE PROVISIONS OF SEC. 80IC(4) SHALL NOT COME IN THE WAY OF THE ASSESSEE IN CLAIMING DEDUCTION U/S 80IC OF THE ACT. 10. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF LD CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80IC OF THE ACT. 6. THE FACTS AND THE ISSUES INVOLVED IN THE PRESENT CASE ARE IDENTICAL TO THE FACTS AND ISSUES INVOLVED IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 AND THE COORDINATE BENCH HA S DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE. HENCE, R ESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN THE ABOVE REFER RED CASE, WE DECIDE THE SOLE ISSUE RAISED IN THE APPEAL IN FAVOUR OF TH E ASSESSEE AND ALLOW THE APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2017 SD/- SD/- ( G.S.PANNU ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER 7 ITA NO.2797/MUM/2013 ASSESSMENT YEAR: 2009-10 MUMBAI; DATED : 13/01/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA