ITO 15(3)(3), MUMBAI V. GLOBAL ENERGY FOOD INDUSTRIES, MUMBAI

ITA 2837/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3620 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 26-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DEVENDRA MEHTA
• Keywords: Additional evidence
• Section: 10

Judgement Text

ITA NO.2837 /MUM/2012 GLOBAL ENERGY FOOD INDUSTRIES IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO.2837 /MUM/2012 (ASSESSMENT YEAR; - 2008-09) ITO 15(3), R. NO. 122, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI 400 007. VS. GLOBAL ENERGY FOOD INDUSTRIES C/O AIR LINK HOTEL, OFF NEHRU ROAD, NEAR SANTACRUZ AIR PORT, VILE PARLE MUMBAI 400 099. PAN:- AAGF0732R APPELLANT RESPONDENT DEPARTMENT BY: SHRI PAVAN VED ASSESSEE BY: SHRI DEVENDRA MEHTA DATE OF HEARING: 14/5/2013 DATE OF PRONOUNCEMENT: 14/5/2013 O R D E R PER RAJENDRA SINGH, A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 1.2.2012 OF CIT(A) FOR THE ASSESSMENT YEAR 2008-09. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL IS REGARDING A LLOWABILITY OF DEDUCTION U/S 10 B OF THE IT ACT. 1961. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FOR THE AS SESSMENT YEAR 2008-09, HAD CLAIMED DEDUCTION U/S 10 B AMOUNTING T O RS. 2,25,87,897/-. THE AO HOWEVER, NOTED THAT THE ASSES SEE HAD NOT FILED CERTIFICATE OF CHARTERED ACCOUNTANT IN THE PRESCRI BED FORM NO. 56G AS PROVIDED IN SECTION 10 B (5) REGARDING THE CORRECTN ESS OF CLAIM OF DEDUCTION, WHICH WAS MANDATORY. THE AO THEREFORE, D ISALLOWED THE CLAIM OF THE ASSESSEE. ITA NO.2837 /MUM/2012 GLOBAL ENERGY FOOD INDUSTRIES 3. THE ASSESSEE DISPUTED THE DECISION OF AO AND DURING THE APPELLATE PROCEEDING FILED CERTIFICATE IN FORM NO. 56G BEFORE CIT (A) WHICH WAS REMANDED TO THE AO FOR EXAMINATION AND RE PORT. IN THE REMAND REPORT THE AO RAISED THE NEW ISSUE THAT THE ASSESSEE WAS NOT ENTITLED FOR DEDUCTION U/S 10 B AS IT WAS A RE-CONS TRUCTION OF BUSINESS AS THE PARTNERS OF THE ASSESSEE FIRM WERE ALREADY D OING THE SAME BUSINESS. IN REPLY TO THE REMAND REPORT, THE ASSESS EE SUBMITTED THAT IT WAS THE PARTNERSHIP FIRM CONSISTING OF SHRI SURESH BHERWANI AND UNIVERSAL HOTELS PVT. LTD., ONE OF THE GROUP CONCER NS OF THE SHRI NARAYAN PAGARANI WHICH CAME INTO EXISTENCE ON 1-3-2 005. THE PARTNERSHIP FIRM SET UP A NEW 100% EXPORT ORIENTED INDUSTRIAL UNDERTAKING TO MANUFACTURE AND EXPORT BISCUITS AND OTHER CONFECTIONARY ITEMS OUT OF FUNDS INFUSED BY BOTH TH E PARTNERS. IT WAS TOTALLY A NEW INDUSTRIAL UNDERTAKING CONSTRUCTED IN A NEW FACTORY BUILDING IN WHICH NEW PLANT AND MACHINERIES HAD PUR CHASED AND USED. THEREFORE, THE CASE OF THE ASSESSEE COULD NOT BE CO NSIDERED AS RECONSTRUCTION OF BUSINESS BY ANY STRETCH OF IMAGIN ATION. CIT(A) AFTER CONSIDERING THE REMAND REPORT OBSERVED THAT THE AS SESSEE HAD FILED THE PRESCRIBED REPORT IN FORM 56G DURING THE APPELLATE PROCEEDINGS WHICH WAS MADE AVAILABLE TO THE AO IN THE REMAND REPORT A ND IN WHICH THE AO HAD NOT FOUND ANY DISCREPANCY. CIT (A), THEREFOR E, ALLOWED THE ADDITIONAL EVIDENCE IN THE FORM OF FORM 56G AND HEL D THAT THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. AS REGARDS THE OBJE CTION RAISED BY THE AO IN THE REMAND REPORT THAT IT WAS A CASE OF RECON STRUCTION OF BUSINESS, CIT (A) NOTED THAT THE AO HAD NOT DISALLO WED THE CLAIM ON THIS GROUND. MOREOVER, THE AO HIMSELF HAD ALLOWED T HE CLAIM IN THE ASSESSMENT YEAR 2007-08 IN THE SCRUTINY ASSESSMENT MADE. CIT(A) FURTHER OBSERVED THAT SIMPLY BECAUSE THE PARTNER OF THE ASSESSEE FIRM WAS IN THE SAME LINE OF BUSINESS IT COULD NOT BE HE LD THAT ALL SUBSEQUENT CONCERNS FLOATED BY SUCH PARTNER WILL BE TREATED AS RECONSTRUCTION OF BUSINESS. CIT (A) ACCORDINGLY REJ ECTED THE CLAIM OF THE ITA NO.2837 /MUM/2012 GLOBAL ENERGY FOOD INDUSTRIES AO AND ALLOWED THE CLAIM OF ASSESSEE FOR DEDUCTION. AGGRIEVED BY THE SAID DECISION, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ONLY ON THE GROUND OF RECONSTRUCTION OF BUSINESS. 4. BEFORE US, LEARNED CIT (DR), APPEARING FOR THE REVE NUE SUPPORTED THE PLEA OF THE AO TO DISALLOW THE CLAIM ON THE GROUND OF RECONSTRUCTION OF BUSINESS. HOWEVER, HE ADMITTED TH AT IT WAS A CASE OF NEW INDUSTRIAL UNDERTAKING CONSTRUCTED ON NEW PIECE OF LAND AND NEW PLANT AND MACHINERY WAS USED AND THERE WAS NO CASE OF ANY TRANSFER OF OLD PLANT AND MACHINERY FROM THE BUSINESS CARRIED O N BY THE PARTNER. THE LEARNED AR FOR THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT (A) WHICH WAS IN HIS FAVOUR. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATT ER CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF CLAIM OF DEDUCTION U/S 10 B ON THE GROUND OF RECONSTRUCTION OF BUSINES S. THE AO HAD DISALLOWED THE CLAIM OF DEDUCTION U/S 10 B ONLY ON TECHNICAL GROUND THAT THE CLAIM WAS NOT ACCOMPANIED WITH REPORT OF C HARTERED ACCOUNTANT IN THE PRESCRIBED FORM NO. 56G WHICH WAS MANDATORY FOR ALLOWING THE CLAIM AS PER SECTION 10 B (5). SUBSEQU ENTLY, THE ASSESSEE FILED THE PRESCRIBED FORM 56G BEFORE CIT (A) IN WHI CH NO DISCREPANCY HAD BEEN POINTED OUT BY THE AO. IT WAS THE ASSESSEE WHO WAS IN APPEAL BEFORE THE CIT (A) AND, THEREFORE, THE POSITION ALR EADY ACCEPTED BY THE AO COULD NOT BE CHALLENGED BY THE AO BEFORE CIT (A) . CIT (A) HAS, HOWEVER, POWERS, COTERMINOUS WITH THE AO ORDERS AND IN CASE HE CONSIDERS IT NECESSARY HE CAN ENHANCE THE ASSESSMEN T BY PROVIDING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. IN T HIS CASE THE CIT (A) HAS NOT INITIATED ANY ENHANCEMENT PROCEEDING AS HE WAS SATISFIED THAT THERE WAS NO RECONSTRUCTION OF BUSINESS. THERE IS N O DISPUTE THAT THE ASSESSEE HAD SET UP A NEW INDUSTRIAL UNDERTAKING SE PARATELY IN WHICH NEW PLANT AND MACHINERIES HAVE BEEN INSTALLED AND U SED. MERELY BECAUSE THE PARTNER OF THE ASSESSEE FIRM WAS DOING THE SAME BUSINESS ITA NO.2837 /MUM/2012 GLOBAL ENERGY FOOD INDUSTRIES INDEPENDENTLY AND IN HIS INDIVIDUAL CAPACITY, IT CO ULD NOT BE SAID THAT THE NEW UNDERTAKING STARTED BY THE PARTNERSHIP FIRM WAS A RECONSTRUCTION OF BUSINESS. THE PARTNERSHIP FIRM HA D NOT DONE ANY BUSINESS IN THIS LINE EARLIER. THEREFORE, WE SEE NO INFIRMITY IN THE ORDER OF CIT A) REJECTING THE ARGUMENT BASED ON RECONSTRU CTION OF BUSINESS. WE FIND NO MERIT IN APPEAL FILED BY THE REVENUE AND , THE SAME IS, THEREFORE, DISMISSED. 6. IN THE RESULT THE APPEAL OF THE REVENUE STANDS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E. 14 TH MAY 2013 SD/- SD/ - (AMIT SHUKLA ) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 14 TH MAY , 2013. SK SR. P.S. COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, K BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI.