DCIT 24(3), MUMBAI V. NARENDRA POLYPLAST, MUMBAI

ITA 2977/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2141 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2014
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH SONKAR
• Assessee Lawyers: SUBHASH SHETTY
• Keywords: Reopening of assessment; Reassessment proceedings
• Section: 143(3); 80IB; 147; 148; 12

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ./ ITA NO. 2977/ MUM/20 1 4 ( / ASSESSMENT YEAR : 200 6 - 07 ) DCIT - 24(3), MUMBAI VS. M/S NARENDRA POLYPLAST, 3, VAKIL INDL. ESTATE, WALBHAT ROAD, GOREGAON EAST, MUMBAI - 400063 ./ ./ PAN/GIR NO. : A A A FN 0900 E ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI PEEYUS H SONKAR /ASSESSEE BY : SHRI SUBHASH SHETTY / DATE OF HEARING : 30 / 11 /2015 / DATE OF PRONOUNCEMENT 30/11 /2015 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF CIT(A) - MUMBAI, DATED 28 - 2 - 2014, FOR THE ASSESSMENT YEAR 2006 - 07 , IN THE MATTER OF ORDER PASSED U/S. 143(3) R.W.S.147 OF THE I.T.ACT. 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY ACTION OF CIT(A) FOR HOLDING THE REOPENING OF ASSESSMENT AS BAD IN LAW AND ALSO FOR ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S.80IB IN RESPECT OF ITS JOB WORK INCOME. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE ASSESSEE FIRM IS ENGA GED IN THE BUSINESS OF MANUFACTURING, MANUFACTURING ON LABOUR JOB BASIS FOR OTHERS, DEALING & EXPORTS OF ITA NO. 2977/2014 2 POLYPROPELENE SHEETING & BAGS AND TRADING IN PLASTIC POWDER. THE CASE OF ASSESSEE WAS SCRUTINIZED AND AFTER VERIFYING ALL DETAILS ASSESSMENT WAS COMPLETED ON 15 - 12 - 2008 U/S 143 (3) OF THE ACT, ACCEPTING ASSESSEES CLAIM OF DEDUCTION U/S.80IB IN RESPECT OF JOB WORK INCOME. SUBSEQUENTLY ASSESSING OFFICER WAS OF THE VIEW THAT INCOME DERIVED FROM LABOUR JOB WORK FOR MANUFACTURING OF PRODUCTS WAS NOT ELIGIBLE FOR DEDUCTION U /S .80IB OF I T. ACT, 1961 AND THEREFO RE PROCEEDING U/S L47 OF I.T.ACT, 1961 WERE INITIATED. IN THE REASSESSMENT PROCEEDINGS, THE AO DISALLOWED ASSESSEES CLAIM OF DEDUCTION U/S.80IB IN RESPECT OF JOB WORK INCOME. 4. BY THE IMPUGNED ORDER, THE CIT(A) HELD THAT REOPENING WAS NOT VALID AFTER HAV ING THE FOLLOWING OBSERVATION : - 3.6. I HAVE CAREFULLY' GONE THROUGH THE ORIGINAL ASSESSMENT ORDER COMPLETED U/S 143 (3) OF I.T.ACT,1961 DATED' 15 - 12 - 2008 AND ALSO ASSESSMENT ORDER PASSED BY ACIT IN RE - OPENED PROCEEDINGS U/S 148, SUBMISSIONS MADE 'BY LEAR NED AR OF THE APPELLANT AND FACTS OF THE CASE FIND FROM THE FACTS' AND AUDITED PROFIT AND LOSS ACCOUNT THAT LABOUR CHARGES' RECEIPTS AND INCOME DERIVED FROM SUCH LABOUR RECEIPTS WERE, IN THE KNOWLEDGE AND, POSSESSION OF DCIT WHEN HE COMPLETED THE ORIGINAL ASSESSMENT U/S 143(3) OF I.T.ACT,1961 AND ALLOWED DEDUCTION U/ S 801B OF I.T.ACT,1961 OF I.T.ACT,1961. ON PERUSAL OF RECORDS I FURTHER FIND THAT NO NEW AND FRESH FACTS, TAN GI BLE MATERIALS OR INFORMATION WITH REGARD TO INCOME DERIVED FROM MANUFACTURE OF PLAST IC ARTICLES OR THINGS, FOR' OTHERS ENTITLED TO DEDUCTION U/S 80 IB OF THE ACT HAS COME TO THE 'KNOWLEDGE OF ASSESSING, OFFICER AFTER COMPLETION OF ORIGINAL ASSESSMENT U/S 143 (3).OF THE ACT, TO WARRANT TO INITIATE PROCEEDINGS U/S 148 R/W SECTION 147 OF THE INCOME TAX ACT, 19 6 1. HENCE I HOLD THA T INITIATION OF PROCEEDINGS U/S 148 R/W SECTION ,147 OF THE INCOME TAX ACT, 1961 IS I NVAL I D AND BAD IN LAW, THEREFORE ASSESSMENT FRAMED U/S 143(3) R/W, SECTION 147 OF IT ACT 1961 IS CANCELLED. 5. ON MERIT ALSO, THE CIT(A) ALLOWED ASSESSEES CLAIM AFTER OBSERVING AS UNDER : - 4 .3. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT; VARIOUS CASE LAWS AND THE IMPUGNED ASSESSMENT ORDER ON THIS CASE. IN THE CASE OF THE APPELLANT, THE PLANT AND MACHINERY WHICH WAS USE D - FOR MANUFACTURI N G PLASTIC BAGS AND POLY PROPELENE. SHEETS WERE ALSO USED TO CARRY OUT THE JOB WORK FOR OTHERS. ,THE INCOME ARISING OUT OF JOB WORK IS NOTH ING BUT A 'DERIVED INCOME' FROM THE ITA NO. 2977/2014 3 INDUSTRIAL UNDERTAKING AS PER PROVIS I ONS OF SECTION 801B OF THE I .T.ACT. AS PER VARIOUS JUDICIAL PRONOUNCEMENTS, MENTIONED ABOVE THIS SECTION DOES NOT DIFF ERENTIATE THE INCOME WHETHER DERIVED OUT OWN' M ANUFACTURIN G OR OUT OF JOB WORK. HENCE, IT HAS TO' BE REGARDED THAT DOING JOB WORK AMOUNTS TO CARRYING OUT MANUFACTURIN G ACTIVITY B Y INDUSTRIAL UNDERTAKING AND HENCE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 80 IB OF I.T.ACT. , THIS ISSUE HAD COME UP IN APPEAL IN THE APPELLANTS OWN CASE FOR THE A.Y.2008 - 09 AND MY PREDECESSOR CIT(A) - 34 MUMBAI VIDE ORDER IN APPEAL NO,CIT(A)/34 /277/2010 - 11 DATED 25 - 04 -- 2012 HAS ALLOWED THE APPELLANT'S APPEAL FOR A.Y.2008 - 09. HENCE THE ORDER OF MY 'PREDECESSOR CIT(A) 34,MUMBAI IN APPEAL NO.CIT(A)/34/277 /2010 - 11 - . DATED - 25 - 04 - 2012 FOR A.Y.20,08 - 09 IS' FOLLOWED AND CONCLUSION DRAWN BY MY PREDECESS OR C IT (A) DO NOT' REQUIRE ANY INTERFERENCE 'FROM MY SIDE . ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED 6. AT THE OUTSET LD. AR PLACED ON RECORD ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 - 09, ORDER DATED 19 - 12 - 2014, WHERE IN ASSESSEES CLAIM OF DEDUCTION U/S.80IB WAS ALLOWED AFTER HAVING FOLLOWING OBSERVATION : - 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ALSO ON THE PERUSAL OF THE FINDINGS GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT THE ASSESSEES CLAIM FOR DEDUCTION U/ S 80IB IS MAINLY ON ACCOUNT OF JOB WORK WHICH WAS CARRIED OUT FROM THE PLANT AND MACHINERIES INSTALLED BY THE ASSESSE FOR ITS OWN MANUFACTURING PURPOSES. THE VARIOUS COURTS HAVE HELD THAT THE ONLY REQUIREMENT FOR CLAIM OF DEDUCTION U/S 80IB IS THAT, INCOME SHOULD BE DERIVED FROM THE INDUSTRIAL UNDERTAKING AND ASSESSEE IS LIBERTY TO MANUFACTURE THE GOODS FOR ITSELF OR FOR OTHERS. THE SECTION DOES NOT MAKE ANY DIFFERENCE FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB. IF THE JOB WORK HAS BEEN DONE FROM THE RA W MATERIAL SUPPLIED BY THE CUSTOMERS AND ASSESSEE HAS MANUFACTURED THE GOODS FROM THOSE RAW MATERIALS, THEN IT AMOUNTS TO MANUFACTURING FROM THE INDUSTRIAL UNDERTAKING. IN ALL THE DECISIONS AS HAVE BEEN REFERRED BEFORE US, THE HONBLE HIGH COURTS HAVE REIT ERATED THE SAME PROPOSITION. A FINDING OF FACT HAS BEEN RECORDED BY THE LD.CIT(A) THAT THE PLANT AND MACHINERY WERE USED FOR MANUFACTURING OF PLASTIC BAGS AND POLYPROPYLENE SHEETS TO CARRY OUT THE JOB WORK FOR OTHERS. THE ONLY DIFFERENCE IS THAT ASSESSEE I NSTEAD OF ITS OWN RAW MATERIAL, HAS USED RAW MATERIAL SUPPLIED BY OTHERS. THUS SUCH AN INCOME FROM JOB WORK IS NOTHING, BUT INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AS PER THE PROVISIONS OF SECTION 80IB. THUS THE FINDING OF THE LD.CIT(A) IS INCORPORATED ABOVE AS AFFIRMED AND ACCORDINGLY GROUND NO. 1 AND 2 RAISED BY THE REVENUE IS DISMISSED. 7. WE HAD GONE THROUGH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE DATED 19 - 12 - 2014 AND FOUND THAT EXACTLY SIMILAR ISSUE WAS DEALT BY ITA NO. 2977/2014 4 THE TRIBUNAL EXTENSIVELY AT PARA 6 AND ASSESSEES CLAIM OF DEDUCTION IN RESPECT OF JOB WORK WAS ALLOWED. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE VIS - - VIS VARIOUS DECISION OF HONBLE HIGH COURT DEALT BY THE CIT(A) IN HIS ORDER, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR ALLOWING ASSESSEES CLAIM OF DEDUCTION U/S.80IB IN RESPECT OF JOB WORK INCOME. THUS, GROUND NO.2 TAKEN BY THE REVENUE IS DISMISSED. 8. AS WE HAVE ALREADY DECIDED THE MERIT OF THE APPEAL IN ASSESSEES FAVOUR, WE ARE NOT TOUCHING UPON THE LEGALITY OF REOPENING WHICH HAS BEEN ANNULLED BY CIT(A) AFTER GIVING DETAILED REASONING AT PARA 3.6 OF HIS APPELLATE ORDER. 9 . IN THE RESULT, APPEAL OF REVENUE IS D ISMISSED, IN TERMS INDICATED HEREINABOVE . O RDER PRONOUNCED IN THE OPEN COURT ON THIS 30/11 / 201 5 . SD/ - ( R AM LAL NEGI ) SD/ - ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 30/11 /2015 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//