SOLITAIRE INDUSTRIES, MUMBAI V. ITO 24(2)-4, MUMBAI

ITA 3159/MUM/2010

• Counselvise Citation: 315919914 RSA 2010
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 06-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS ASHIMA GUPTA
• Assessee Lawyers: ANIL THAKRAR
• Keywords: Opportunity of being heard; Rule of consistency; Set aside
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI D.K. AGARWAL (J.M.) AND SHRI RAJENDRA S INGH (A.M.) ITA NO. 3159/MUM /2010 ASSESSMENT YEAR 2006-07 SOLITAIRE INDUSTRIES, 111, CIEM INDL ESTATE, KANCHPADA, RAMCHANDRA LANE EXT., MALAD (WEST), MUMBAI 400 064. PAN : ABDFS7363L VS. I NCOME TAX OFFICER WARD 24(2)-4, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANIL THAKRAR RESPONDENT BY : MRS. ASHIMA GUPTA O R D E R PER D.K. AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.02.2010 PASSED BY THE LD. CIT (A) FOR THE A.Y. 2006-07. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FIRM IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND IMPORT AND EXPORT OF ACCESSORIES OF IMITATION JEWELLERY AND ALSO MANUFAC TURING AND TRADING OF PLASTIC BOX, PLASTIC BEADS AND METALIZING, FILED RE TURN DECLARING TOTAL INCOME OF ` NIL AFTER CLAIMING DEDUCTION U/S 80IB OF THE IN COME TAX ACT, 1961 (THE ACT) AT ` 8,93,644/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ASKED VARIOUS DETAILS INCLUDI NG THE JUSTIFICATION OF CLAIMING DEDUCTION U/S 80IB OF THE ACT. HOWEVER, TH E A.O. IN VIEW OF THE FOLLOWING ELABORATE REASONS DISALLOWED THE SAME:- ITA 3159/M/10 SOLITAIRE INDUSTRIES 2 I) THAT AS PER THE CERTIFICATE OF CHARTERED ACCOUNT ANT, THE ASSESSEE HAS COMMENCED OPERATION/ACTIVITY ON 1.10.2005 WHERE AS ACCORDING TO SECTION 80IB, THE ASSESSEE TO START TH E MANUFACTURING ACTIVITY DURING THE PERIOD BEGINNING ON THE IST DAY OF APRIL, 1993 AND ENDED ON 31 ST DAY OF MARCH, 2004. HENCE THE ASSESSEE HAS FAILED TO SATISFY THE PRELIMINARY CONDITION FOR CLA IMING DEDUCTION U/S 80IB OF THE ACT. II) AS PER SECTION 80IB (4) OR (5), THE MANUFACTURI NG ACTIVITY SHOULD BEGIN DURING THE PERIOD 1.4.1993 TO 31.3.2004. IN THE CASE OF THE ASSESSEE, MANUFACTURING BEGAN ON 15.7.1992 BY THE E RSTWHILE FIRM M/S SEA SCOPE INDUSTRIES AND ON 1.10.2005 BY THE AS SESSEE, THEREFORE, EVEN IF IT IS PRESUMED THAT THE ASSESSEE S NAME IS THE NEW NAME OF M/S SEA SCOPE INDUSTRIES, THE DEDUCTION U/S 80IB IS NOT ALLOWABLE. III) AS PER THE AUDIT REPORT, THE ASSESSEE IS NOT O NLY INTO MANUFACTURING BUSINESS BUT ALSO TRADING, IMPORTING AND EXPORTING. HOWEVER, THE ASSESSEES HAS CLAIMED DEDUCTION U/S 8 0IB ON THE ENTIRE NET PROFIT OF THE BUSINESS WHICH IS NOT ALLO WABLE U/S 80IB OF THE ACT. IV) THE ASSESSEE HAS FAILED TO PRODUCE ANY DOCUMENT S TO SHOW THAT MORE THAN TEN PERSONS WERE WORKING IN THE UNDERTAKI NG FOR MANUFACTURING. THE ASSESSEE HAS ALSO NOT FILED THE ORIGINAL WAGES REGISTER FOR VERIFICATION. V) AS PER SECTION 80IB(2)(II) OF THE ACT, THE INDUS TRIAL UNDERTAKING SHOULD NOT BE FORMED BY THE TRANSFER TO A NEW BUSIN ESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. THIS CONDITION IS ALSO NOT SATISFIED IN THE CASE OF THE ASSESSEE. ITA 3159/M/10 SOLITAIRE INDUSTRIES 3 ACCORDINGLY, THE A.O. DISALLOWED THE CLAIM OF DEDUC TION U/S 80IB OF ` 8,93,644/- AND COMPLETED THE ASSESSMENT AT AN INCOM E OF ` 8,93,640/- VIDE ORDER DATED 30.12.2008 PASSED U/S 143(3) OF TH E ACT. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH THE VIEW OF THE A.O., CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF DISALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT. 4. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT IN THIS CASE VIDE RETIREMENT CUM ADMISSION DEE D DATED 27 TH SEPTEMBER, 2005, ALL THE ASSETS OF EARLIER PARTNERS HIP FIRM M/S SEA SCOPE INDUSTRIES HAVE BEEN TRANSFERRED TO THE NEW F IRM M/S SOLITAIRE INDUSTRIES W.E.F. IST OCTOBER, 2005 AND IN SUPPORT HE FILED COPY OF THE SAID DEED AND ALSO REFERS TO THE DISCUSSION ON THIS ISSUE AT PAGE 3 OF THE ASSESSMENT ORDER. HE FURTHER SUBMITS THAT THE TRIB UNAL IN ASSESSEES OWN CASE FORMERLY KNOWN AS SEA SCOPE INDUSTRIES VS. ITO IN ITA NO. 6132 & 6153/M/08 FOR A.YRS. 2004-05 & 2005-06 VIDE ORDER DATED 16.09.2009 HAS RESTORED BACK THE MATTER TO THE A.O. WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IB, AND THE A.O. PURSUANT TO THE ORDER OF THE TRIBUNAL HAS ALLOWED THE DEDUCTION VIDE ASSESSMENT ORDERS DTD. 24.12.2010 PASSED U/S 143(3) R.W.S. 254 FOR THE A.Y RS. 2004-05 & 2005- 06. HE ALSO PLACED ON RECORD THE COPY OF THE SAID A SSESSMENT ORDERS. HE, THEREFORE, SUBMITS THAT THE CLAIM OF DEDUCTION U/S 80 IB BE ALLOWED TO THE ASSESSEE OR IN ALTERNATIVE THE MATTER MAY BE RE STORED BACK TO THE FILE OF THE A.O. 5. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND LD. CIT(A) AND THE OBSERVATIONS OF THE A.O . THAT ASSESSEE HAS ITA 3159/M/10 SOLITAIRE INDUSTRIES 4 COMMENCED OPERATION/ACTIVITY ON 1.10.2005 WHEREAS A CCORDING TO SECTION 80IB THE MANUFACTURING ACTIVITY SHOULD BEGI N DURING 1.4.93 TO 31.3.04 FURTHER SUBMITS THAT SHE HAS NO OBJECTION TO SET ASIDE THE ISSUE TO THE FILE OF THE A.O. TO EXAMINE THE ISSUE AFRESH . 6. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND MERIT IN THE PLEA OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TRIBUNAL IN T HE IMMEDIATELY PRECEDING YEARS I.E. A.YRS. 2004-05 & 2005-06 HAS S ET ASIDE THE ISSUE TO THE FILE OF THE A.O. TO EXAMINE THE ALLOWABLITY OF DEDUCTION U/S 80IB AFRESH AND THE A.O. AFTER EXAMINING THE SAME HAS AL LOWED THE DEDUCTION U/S 80IB OF THE ACT VIDE ASSESSMENT ORDERS DATED 24 .12.2010 PASSED U/S 143(3) R.W.S. 254 OF THE ACT. THIS BEING SO AND IN THE ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE A ND KEEPING IN VIEW THE RULE OF CONSISTENCY, WE CONSIDER IT FAIR AND RE ASONABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE A.O. AND ACCORDIN GLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS AC COUNT AND SEND BACK THE MATTER TO THE FILE OF THE A.O. WHO SHALL DECIDE THE SAME AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN TH E ORDER FOR THE A.YRS. 2004-05 & 2005-06 AND ACCORDING TO LAW AFTER PROVID ING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUNDS TAKEN BY THE ASSESSEE ARE THEREFORE PARTLY ALLOWED FOR STATISTIC AL PURPOSE. 7. IN THE RESULT, ASSESSEES APPEAL STANDS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 15.4.2011 SD/ - (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/ - (D.K. AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 15.4.2011 ITA 3159/M/10 SOLITAIRE INDUSTRIES 5 RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 34, MUMBA I 4. COMMISSIONER OF INCOME TAX, 24, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH J, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI ITA 3159/M/10 SOLITAIRE INDUSTRIES 6 1 DRAFT DICTATED ON 6. 4 .11 SR PS 2 DRAFT PLACED BEFORE AUTHO R ON 7.4.11 SR PS 3 DRAFT PROPOSED & PLACE BEFORE THE 2 ND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY 2 ND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR PS 7 FILE SENT TO THE BENCH CLERK SR PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DESPATCH SR PS