M/s Leben Laboratories Pvt Ltd, Akola V. Asstt Commissioner of Income Tax Akola Circle, Akola

ITA 290/NAG/2012

• Counselvise Citation: [2013] 129 COUNSELVISE.COM (IT) 9965 (ITAT-NAGPUR)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR M BHUSARI
• Assessee Lawyers: S C THAKKAR; C J THAKKAR
• Keywords: Revised return
• Section: 143(3); 80IB; 263; 10; 2

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR , BENCH , ( E - COURT), MUMBAI , BEFORE SHRI R.K.GUPTA , J M & SHRI D.KARUNAKAR RAO , A M ITA NO S . 2 88 TO 290 / N AG / 20 1 2 ( ASSESSMENT YEAR S : 2005 - 06, 2006 - 07 & 2007 - 08 ) M/S LEBEN LABORATORIES PVT. LTD., PLOT NO.L - 4, PHASE - III, MIDC, AKOLA - 444 104 (M.S) VS. ACIT, CIRCLE AKOLA, AKOLA - 444 001 PAN/GIR NO. : A AACL 2524 M ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. C.J.THAKKAR & MR. S.C.THAKKAR /REVENUE BY : DR. M. BHUSARI DATE OF HEARING : 11 TH MARCH ., 201 3 DATE OF PRONOUNCEMENT : 03/04/ 201 3 O R D E R P ER BENCH : THESE THREE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE BEFORE THE ITAT NAGPUR BENCH, NAGPUR, AGAIN ST THE ORDER OF LEANE D CIT(A) - I , NAGPUR (MAHARASHTRA) RELATING TO THE ASSESSMENT YEARS 200 5 - 06, 2006 - 07 & 2 007 - 08 , RESPECTIVELY, WHICH HAVE BEEN HEARD THROUGH E - COURT, MUMBAI. \ 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE , THESE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. 3 . THE FIRST ISSUE IN ALL THESE THREE APPEALS OF THE ASSESSEE IS AGAINST DENIAL OF DEDUCTION UNDER SECTION 80IB OF RS. 3,37,250/ - , RS. 12,73,686/ - AND RS. 24,91,748/ - , RESPECTIVELY. ITA NO. 288 TO 290 /20 1 2 2 4 . THE ASSE SSEE FILED ITS RETURN FOR ALL THE THREE YEARS CLAIMING DEDUCTION UNDER SECTION 80IB . FOR ASSESSMENT YEAR 2005 - 06, ORIGINALLY DEDUCTION WAS CLAIMED AT RS. 12,19,826/ - , HOWEVER SUBSEQUENTLY BY FILING REVISED RETURN, THE SAME WAS REDUCED TO RS. 3,37,250/ - . THE D EDUCTIONS CLAIMED FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08 WERE TO THE TUNE OF RS. 12,73,686/ - AND RS.24,91,748/ - . WHILE DISCUSSING THE ISSUE IN DETAIL FOR ASSESSMENT YEAR 2005 - 06, THE AO OBSERVED THAT THE ASSESSEE COULD NOT SATISFY WITH THE CO NDITION FOR CLA IMING DEDUCTION UNDER SECTION 80IB FOR UNIT. THE ISSUE WAS DISCUSSED IN DETAIL AND FOUND THAT THE UNIT WAS RECONSTRUCTED BY SEPARATING THE EARLIER UNITS , THEREFORE, THE CONDITIONS HAVE NOT BEEN SATISFIED. THE OBSERVATION OF THE AO HAS BEEN DISCUSSED BY THE CIT(A) IN PARA 2.1 AT PAGE 1 TO 3 OF HIS ORDER. THE AO OBSERVED THAT WHILE CLAIMING DEDUCTION FOR FINANCIAL YEAR 2000 - 01 & 2001 - 02 , THE ASSESSEE HAS NOT MENTIONED ANY THING IN RESPECT TO UNIT V . THEREFORE, HE ANALYSED THE ISSUE AFRESH AND FOUND THAT THE AS SESSEE HAS NOT STARTED ANY UNIT V AS MERELY CLAIMING DEDUCTION UNDER SECTION 80IB , HE HAS SHOWN THE U NIT V . THE AO ALSO OBSERVED THAT THE ASSESSEE HAS ALREADY AVAILED DEDUCTION FOR 10 YEARS UNDER SECTION 80IB UPTO ASSESSMENT YEAR 1998 - 99 . THEREFORE, THE AS SESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB FOR THE YEAR UNDER CONSIDERATION. 5 . BEING AGGRIEVED WITH THE ORDER OF THE AO, ASSESSEE PREFERRED APPEAL BEFORE THE LEARNED CIT(A) . DETAILED WRITTEN SUBMISSIONS WERE FILED BEFORE THE CIT(A) . THE REM AND REPORT WAS ALSO SOUGHT FROM THE ITA NO. 288 TO 290 /20 1 2 3 AO . THEREAFTER CONSIDERING THE REMAND REPORT, STATEMENT OF THE ASSESSEE AND REPLY IN RESPECT TO REMAND REPORT , LEARNED CIT(A) IN PARA 7 HAS OBSERVED THAT THE CRUCIAL ISSUE THAT IS REQUIRED TO BE RESOLVED IS WHETHER IT CA N BE ASCERTAINED AS TO WHAT IS THE DATE OF COMMENCEMENT OF OPERATIONS OF UNIT V AND WHETHER THE CONDITIONS OF SECTION 80IB(3) ARE FULFILLED AND NOT MERELY WHETHER THERE EXISTS A U NIT WHICH CAN BE CLASSIFIED AS A NEW UNIT AND WHAT IS THE VALUE OF PLANT AND MACHINERY OF THE NEW UNIT. THE DIRECTOR S REPORT WAS ALSO SOUGHT BY THE LEARNED CIT(A) AND LEARNED CIT(A) FOUND THAT AS PER DIRECTORS REPORT, IT HAS BEEN STATED THAT PRODUCTION ACTIVITY OF UNIT V HAS BEEN COMMISSIONED OF 8 - 3 - 2002. HOWEVER, SINCE THE ASSES SEE HAS NOT CLAIMED ANY DEDUCTION UNDER SECTION 80IB FOR 2002 - 03, THEREFORE, LEARNED CIT(A) OBSERVED THAT IT IS NOT ASCERTAINABLE THAT PRODUCTION OF UNIT V WAS COMMENCED FROM 8 - 3 - 2002. ACCORDINGLY, HE HELD THAT IT HAS NOT BEEN ESTABLISHED CATEGORICALLY AND VERIFIABLE DOCUMENTARY PROOF THAT NEW UNIT FULFILLING THE CONDITION S UNDER SECTION 80IB ( 2) AND SECTION 80IB(3) HAS BEEN COMMENCED PRODUCTION BEFORE 31 - 3 - 2002 , THEREFORE, HE CONFIRMED THE ACTION OF THE AO DENYING THE DEDUCTION UNDER SECTION 80IB FOR ALL THE THREE YEARS. 6 . THE CONTENTIONS RAISED BEFORE THE LOWER AUTHORITIES WERE REITERATED HERE BEFORE THE TRIBUNAL BY LEARNED AR OF THE ASSESSEE. IT WAS SUBMITTED THAT IN FACT IN REMAND REPORT IT HAS BEEN CATEGORICALLY STATED BY THE AO, WHO SENT THE REMAND REPORT THAT COMMERCIAL PRODUCTION WAS STARTED W.E.F. 8 - 3 - 2002. ATTENTION OF THE BENCH WAS ITA NO. 288 TO 290 /20 1 2 4 DRAWN ON COPY OF REMAND REPORT PLACED IN THE COMPILATION AT PAGES 57 T O 65 . IT WAS FURTHER SUBMITTED THAT ASSESSMENT FOR ASSESSMENT YEAR 2003 - 04 AND 2004 - 05 WERE PASS ED UNDER SECTION 143(3) AND WHILE PASSING THE ASSESSMENT UNDER SECTION 143(3) FOR ASSESSMENT YEAR 2003 - 04, UNIT NO.V IS MENTIONED AND THE AO HAS ALLOWED THE DEDUCTION UNDER SECTION 80 I B TO THE EXTENT OF RS. 5,12, 429/ - . THE ATTENTION OF THE BENCH WAS ALSO DRA WN ON COPY OF ASSESSMENT ORDER PLACED IN THE PAPER BOOK AT PAGES 23 TO 42 AND COPY OF ASSESSMENT ORDER FOR ASSESSMENT YEAR 2004 - 05 AT PAGES 53 TO 56. ACCORDINGLY, IT WAS SUBMITTED THAT IN VIEW OF THE DECISION OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PA U L BROTHERS , REPORTED IN 216 ITR 548 AND IN CASE OF CIT VS. DINSHAW FORZEN FOOD LIMITED, NAGPUR, PASSED BY THE NAGPUR BENCH OF THE HONBLE BOMBAY HIGH COURT IN IT A NO. 32/2003 , VIDE ORDER DATED 29 - 9 - 2007 , WHEREIN IT HAS BEEN HELD THAT ONCE THE DE DUCTION HAS ALREADY BEEN ALLOWED, THAT CANNOT BE WITHDRAWN IN SUBSEQUENT YEAR. COPY OF THE JUDGMENT OF THE HON BLE BOMBAY HIGH COURT ARE ALSO PLACED ON RECORD. 7 . ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF THE AO AND THE CIT(A) . 8 . A FTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN ALL THESE THREE APPEALS IN RESPECT TO DEDUCTION UNDER SECTION 80IB . THE COPY OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2003 - 04 IS PLACE D AT PAPER BOOK AT PAGES 23 TO 42. AT PAGE 9 OF THE ASSESSMENT ORDER FOR THE ITA NO. 288 TO 290 /20 1 2 5 ASSESSMENT YEAR 2003 - 04 , COPY OF WHICH IS PLACED AT 31 OF THE PAPER BOOK, THE AO HAS NOTED IN PARA 7.1 THAT THE ASSESSEE COMPANY HAS CLAIMED DEDUCTION UNDER SECTION 80IB TO TUNE OF RS. 6,02,825/ - , RS. 5,55,870/ - AND RS. 8,71,103/ - IN RESPECT OF UNIT - III , UNIT - IV AND UNIT - V , RESPECTIVELY AND THEREAFTER DISCUSSING THE ISSUE IN DETAIL, THE TOTAL DEDUCTION ALLOWED BY THE AO WAS COMPUTED AT RS. 5,12, 429/ - . THE COMPUTATION OF DEDUCTION IS T ABULATED IN THE ORDER OF THE AO AT PAGE 14. COPY OF THE SAME IS PLACED AT PAGE 36 OF THE PAPER BOOK. SIMILARLY, WE NOTED THAT DEDUCTION UNDER SECTION 80IB WAS ALLOWED FOR ASSESSMENT YEAR 2004 - 05 AT RS. 5,12, 429/ - . FROM THIS FACT ALONE, IT EMERGES THAT ALLOW ABILITY OF DEDUCTION UNDER SECTION 80IB FOR UNIT - V HAS ALREADY BEEN DISCUSSED WHILE COMPLETING ASSESSMENT UNDER SECTION 143(3) IN RESPECT TO UNIT - V . IT IS FURTHER SEEN THAT IN THE REMAND REPORT, COPY OF WHICH IS PLACED AT PAGES 57 TO 59 AND AT PAGE 59 OF T HE REMAND REPORT, IN PARA 3, IT HAS BEEN STATED THAT THE ASSESSEE HAS FURNISHED EVIDENCE OF BATCHWISE COMPUTATION INCLUDING THE REQUISITION SLIPS, CONSUMPTION OF RAW MATERIAL AND RAW MATERIAL STOCK ETC. THESE ARE ALL INTERNAL PRODUCTION RELATED DOCUMENTS. THESE DOCUMENTS INDICATE THAT THE UNIT HAD COMMENCED THE COMMERCIAL PRODUCTION W.E.F. 8 - 3 - 2002 I.E. BEFORE 31 - 3 - 2002. THUS, ONE OF THE CONDITIONS OF PROVISIONS OF SECTION 80IB (3) OF THE ACT REGARDING COMMENCEMENT OF THE MANUFACTURING/PRODUCTION OF ARTICLES HAS APPARENTLY BEEN FULFILLED BY THE ASSESSEE. FROM THIS FACT, IT ESTABLISHES THAT THE COMMENCEMENT OF PRODUCTIO N OF UNIT - V WAS COMMENCED W.E.F. 8 - 3 - 2002 WHICH FALLS UNDER ITA NO. 288 TO 290 /20 1 2 6 ASSESSMENT YEAR 2002 - 03 . HOWEVER, NO DEDUCTION WAS CLAIMED IN RESPECT OF UNIT - V FOR ASSESSMENT YEAR 2002 - 03 AS THERE WAS NO SALE DURING THIS YEAR. NEXT YEAR I.E IN ASSESSMENT YEAR 2003 - 04, THE SALE OF PRODUCTION WAS AFFECTED AND ACCORDINGLY DEDUCTION UNDER SECTION 80IB WAS ALLOWED BY ASCERTAINING THAT CONDITIONS ARE SATISFIED. 9 . NOW, FOR SUBSEQUENT YEAR I.E. FOR ASSESSMENT YEAR 2005 - 06 TO ASSESSMENT YEAR 2007 - 08 , WHICH ARE UNDER CONSIDERATION HERE BEFORE US, WITHDRAWAL OF DEDUCTION UNDER SECTION 80IB , IN OUR CONSIDERED VIEW, IS NOT JUSTIFIED. 10 . THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF DINSHAW FROZEN FOOD LTD (SUPRA) , AFTER TAKING INTO CONSIDERATION THE EARLIER ORDER OF THE BOMBAY HIGH COURT IN THE CASE OF PAUL BROTHERS (SUPRA) , HAS HELD THAT ALTHOUGH THE ORDER OF THE ASSESSMENT FOR THE YEAR 1992 - 93 WAS S UBSEQUENTLY REVISED BUT AS ON THE DATE WHEN THE CIT EXERCISED ITS JURISDICTION UNDER SECTION 263 THE REVISIONAL JURISDICTION COULD NOT HAVE BEEN EXERCISED FOR THE ASSESSMENT YEAR 1996 - 97 SINCE THERE WAS A VALID EXISTING ORDER OF THE ASSESSMENT YEAR 1992 - 93 . IN THE PRESENT CASE ALSO THERE IS A VALID ORDER FOR ASSESSMENT YEAR 2003 - 04 AND ASSESSMENT YEAR 2004 - 05 BY WHICH DEDUCTION UNDER SECTION 80IB IN RESPECT TO UNIT - V HAS ALREADY BEEN ALLOWED, THEREFORE, IN OUR VIEW, DEDUCTION UNDER SECTION 80IB SHOULD NOT HAVE BEEN WITHDRAWN FOR ASSESSMENT YEAR 2005 - 06 TO 2007 - 08 AS THE ASCERTAIN MENT OF THE PRODUCTION STARTED ON 8 - 3 - 2002 HAS ALREADY BEEN ITA NO. 288 TO 290 /20 1 2 7 EXAMINED WHILE ALLOWING DEDUCTION UNDER SECTION 80IB FOR ASSESSMENT YEAR 003 - 04 . 11 . IN CASE OF PAUL BROTHERS (SUPRA), THE HON BLE HIGH COURT FOLLOWING THE DECISION OF VARIOUS OTHER HIGH COURTS HAS HELD THAT THE ORDER PASSED UNDER SECTION 263 WAS NOT JUSTIFIED AS THE AO FOLLOWED HIS OWN ORDER FOR EARLIER YEAR. WHILE HOLDING SO, THE DECISION OF THE H O N BLE CALCUTTA HIGH COURT IN THE CASE OF RUSSELL PROPERTIES, REPORTED IN ITR 109 229 AND THE DECISION OF THE H O N BLE ALLAHABAD HIGH COURT IN THE CASE OF K.N.AGARWAL , REPORTED IN 189 ITR 769 , WHERE THE ITOS ORDER IS PASSED ON THE BASIS OF BINDING DECISION, REVISIONAL PO WER UNDER SECTION 263 CANNOT BE EXERCISED TO UNDO THE SAID ORDER. IN FACT, IN THIS CASE, THE DEDUCTION UNDER SECTION 80 - HH WAS ALLOWED IN EARLIER YEAR, HOWEVER, THIS DEDUCTION WAS WITHDRAWN FOR SUBSEQUENT YEAR FOR BREACH OF CERTAIN CONDITIONS. ACCORDINGLY , ACTION UNDER SECTION 263 WAS TAKEN. THEREAFTER THE HON BLE HIGH COURTS HAVE HELD THAT UNLESS RELIEF GRANTED FOR ASSESSMENT YEAR 1980 - 81 WAS WITHDRAWN, THE ITO COULD NOT HAVE WITHHELD THE RELIEF FOR SUBSEQUENT YEAR. SIMILAR VIEW HAS BEEN EXPRE SSED IN CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CIT , REPORTED IN 123 ITR 669 . 12 . THE RATIO OF THESE DECISION ARE SQUARELY APPLICABLE ON THE FACTS OF THE PRESENT CASE AS ON ACCOUNT OF CERTAIN DEFICIENCIES , THE AO CONCLUDED THAT THE DEDU CTION UNDER SECTION 80IB WAS NOT ALLOWABLE FOR ASSESSMENT YEAR 2005 - 06 ONWARDS, WHEREAS THE DEDUCTION UNDER SECTION 80IB IN RESPECT TO UNIT - V HAS ALREADY BEEN GRANTED WHILE ITA NO. 288 TO 290 /20 1 2 8 PASSING THE ASSESSMENT ORDER UNDER SECTION 143(3) . THEREFORE, IF THE ORDER OF THE AO FOR ASSESSMENT YEAR 2003 - 04 OR 2 004 - 05 WAS WRONG, THEN THOSE ORDERS WERE TO BE RECTIFIED FIRST, AND THEREAFTER THE DEDUCTION UNDER SECTION 80IB COULD HAVE BEEN WITHHELD FOR ASSESSMENT YEAR 2005 - 06 ONWARDS. ACCORDINGLY, WE HELD THAT THE DISALLOWANCE OF DED UCTION UNDER SECTION 80IB FOR ASSESSMENT YEAR 2005 - 06 TO 2007 - 08 WERE NOT CORRECT. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE DEDUCTION UNDER SECTION 80IB FOR THESE THREE YEARS. 13 . THERE IS ONE MORE GROUND FOR ASSESSMENT YEAR 2005 - 06 I.E. AGAINST CONFIRM ING THE ADDITION OF RS. 7,76, 296/ - BY ADDING UNAVAILED MODVAT CREDIT TO VALUE OF CLOSING STOCK UNDER SECTION 145A . 1 3.1 LEARNED COUNSEL OF THE ASSESSEE STATED THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YEAR 2003 - 04, COPY OF WHICH IS PLACED AT PAGE 74 OF THE PAPER BOOK. 1 3.2 ON THE OTHER HAND, LEARNED DR PLACED RELIANCE ON THE ORDER OF THE AO AND THE CIT(A) . 1 3.3 AFTER CONSIDERING THE ORDER OF THE AO AND CIT(A) AND THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSE LF FOR ASSESSMENT YEAR 2003 - 04, DECIDED IN ITA NO. 337/NAG/2008, VIDE ORDER DATED 21 - 4 - 2 011 , WE FOUND THAT THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE TRIBUNAL . FOR ASSESSMENT YEAR 2003 - 04 ALSO THE ADDITION OF RS. 60,061/ - WAS MADE ON ACCOUNT OF UNUTIL IZED CREDIT IN MODVAT ACCOUNT IN VIEW OF THE PROVISION OF SECTION 145A . THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE AO DECIDING THE ISSUE AFTER CONSIDERING THE DECISION OF THE ITA NO. 288 TO 290 /20 1 2 9 HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MAHALAXMI G LASS WORKS (P) LTD., REPORTED IN (2009) 318 ITR 116 (BOM) . ACCORDINGLY, WE ALSO RESTORE THIS ISSUE TO THE FILE OF THE AO TO PASS A FRESH ORDER IN THE LIGHT OF THE DIRECTION OF THE TRIBUNAL GIVEN FOR ASSESSMENT YEAR 2003 - 04 . 14 . THERE IS NO OTHER GROUND IN THE APPEAL OF THE ASSESSEE FOR ALL THE THREE YEARS . 15 . RESULTANTLY , APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 IS ALLOWED IN PART AND PART L Y FOR STATISTICAL PURPOSES, WHEREAS APPEALS FOR ASSESSMENT YEARS 2006 - 07 & 2007 - 08 ARE ALLOWED . 2005 - 06 200 6 - 07 & 2007 - 08 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF APR. 201 3 . 201 3 SD/ - SD/ - ( ) ( D.KARUNAKAR RAO ) ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 0 3 / 0 4 / 201 3 . /PKM , PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI / NAGPUR . 4. / CIT 5. / DR, ITAT, MUMBAI / NAGPUR . 6. GUARD FILE. //TRUE COPY// / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI