The ACIT,Vapi Circle, Vapi V. M/s Bhagat Textile Engineers, Dadra

ITA 3307/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80407 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 26-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 14-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.3307/AHD/2010 ( / ASSESSMENT YEAR : 2007-08) ASST.CIT VAPI CIRCLE VAPI / VS. M/S.BHAGAT TEXTILES ENGINEERS 122/6, GROUND FLOOR WAGHDHARA, DADRA ' ./ ./ PAN/GIR NO. : AAFFB 8401 R ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) AND CO NO.11/AHD/2011 FOR AY 2007-08 ( IN ITA NO.3307/AHD/2010 FOR AY 2007-08 ) M/S.BHAGAT TEXTILES ENGINEERS VS. THE A SST.CIT WAGHDHARA, DADRA VAPI (CROSS OBJECTOR) ... (RESPONDENT) REVENUE BY : SHRI ROOPCHAND SR.DR ASSESSEE BY : SHRI S.N. SOPARKAR, AR () / DATE OF HEARING 26/09/2014 *+,-) / DATE OF PRONOUNCEMENT 15/10/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THE REVENUE AND THE ASSESSEE BOTH HAVE CHALLENGED THE ORDER OF THE COMMISSIONER-OF INCOME TAX (APPEALS)-VALSAD (C IT(A) IN SHORT) DATED 30/09/2010 BY WAY OF APPEAL AND CROSS-OBJECTI ON RESPECTIVELY. ITA NO.3307/AHD/2010 (BY REVENU E) AND CO NO.11/AHD/2011(BY ASSESSEE) ACIT VS. BHAGAT TEXTILE ENGINEERS ASST.YEAR 2007-08 - 2 - BOTH THE APPEAL AND THE CROSS OBJECTION ARE TAKEN U P TOGETHER AND ARE BEING DISPOSED OF BY A CONSOLIDATED ORDER FOR THE S AKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE APPEAL FILED BY THE REVENU E, I.E. ITA NO.3307/AHD/2010 FOR AY 2007-08. THE REVENUE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN TREATING THE ACTIVITY O F THE ASSESSEE AS MANUFACTURING ACTIVITY SOLELY BASED ON THE APPEL LATE ORDER FOR A.Y. 2005-06 & 2006-07 AND NOT APPRECIATING THE NEW FINDINGS DISCUSSED IN THE ASSESSMENT ORDER. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) HAS ERRED IN TREATING THE ACTIVITY O F THE ASSESSEE AS MANUFACTURING ACTIVITY AND OBSERVING THAT THE AS SESSEE IS ELIGIBLE FOR DEDUCTION U/S.80IB OF THE I.T. ACT, 19 61. 3. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LEARN ED CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. THE APPELLANT CRAVES TO ADD, ALTER OR AMEND ANY GRO UNDS OF APPEAL. 2. THE EFFECTIVE GROUND OF REVENUES APPEAL IS AGAI NST DELETION OF DISALLOWANCE OF DEDUCTION U/S.80IB OF THE ACT. BRIE FLY STATED FACTS ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT ,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DAT ED 31/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT) DISALLO WED THE CLAIM OF THE ASSESSEE IN RESPECT OF DEDUCTION U/S.80IB OF THE AC T AMOUNTING TO RS.5,78,41,219/-. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ITA NO.3307/AHD/2010 (BY REVENU E) AND CO NO.11/AHD/2011(BY ASSESSEE) ACIT VS. BHAGAT TEXTILE ENGINEERS ASST.YEAR 2007-08 - 3 - FOLLOWING THE EARLIER ORDER OF THE CIT(A) PASSED FO R AYS 2005-06 AND 2006-07 ALLOWED THE APPEAL. AGGRIEVED BY THE ORD ER OF THE LD.CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD.SR.DR SHRI ROOPCHAND VEHEMENTLY ARGUED AN D REITERATED THE SUBMISSIONS AS WERE MADE IN THE STATEMENT OF FA CTS. 3.1. ON THE CONTRARY, IT IS POINTED OUT BY THE LD.C OUNSEL FOR THE ASSESSEE THAT FOR THE AY 2006, WHICH HAS BEEN FOLLOWED BY TH E LD.CIT(A), THIS TRIBUNAL (ITAT A BENCH AHMEDABAD) VIDE ORDER DATE D 15/02/2013 HAS RESTORED THE APPEAL TO THE FILE OF LD.CIT(A) FOR CO NSIDERING THE ADDITIONAL FACTS. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS WERE MADE BEFORE THE LD.CIT(A) AND SUBMITTED THAT THE LD .CIT(A) WAS RIGHT IN DELETING THE ADDITION. 4. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE LD.CIT(A) HAS FOLLOWED THE EARLIER DECISION PASSED BY THE LD.CIT(A) FOR AYS 2005-06 & 2006-07. THE REVENUE HAD CHALLENGED THE ORDER OF THE LD.CIT(A) PASSED FOR AYS 2005-06 & 2006-07. THIS T RIBUNAL (ITAT A BENCH AHMEDABAD) IN ITA NO.294/AHD/2009 FOR AY 2005 -06 IN ASSESSEES OWN CASE VIDE ORDER DATED 15/02/2013 HA D DISMISSED THE APPEAL OF THE REVENUE RELYING ON THE JUDGEMENT OF T HE HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT VS. SOPHISTI CATED MARBLES & GRANITE INDUSTRIES (2010) 187 TAXMAN 251 (DELHI). HOWEVER, THIS TRIBUNAL (ITAT A BENCH AHMEDABAD) FOR AY 2006-07 IN ITA ITA NO.3307/AHD/2010 (BY REVENU E) AND CO NO.11/AHD/2011(BY ASSESSEE) ACIT VS. BHAGAT TEXTILE ENGINEERS ASST.YEAR 2007-08 - 4 - NO.986/AHD/2009 (REVENUES APPEAL) IN ASSESSEES OW N CASE VIDE ORDER DATED 15/02/12013 HAD RESTORED THE ISSUE TO THE FIL E OF LD.CIT(A) FOR FRESH DECISION ON THE GROUND THAT THE AO HAD BROUGHT CERT AIN ADDITIONAL FACTS ON RECORD WHICH OUGHT TO HAVE BEEN CONSIDERED BY TH E LD.CIT(A). WE FIND THAT THE AO IN PARA-2 OF HIS ORDER HAS OBSERVE D THAT IN THE ASSESSMENT YEARS 2005-06 & 2006-07, THE CLAIM OF DE DUCTION U/S.80IB OF THE ACT WAS REJECTED ON THE BASIS THAT THE ASSESSEE WAS NOT HAVING THE INSTALLED CAPACITY TO MANUFACTURE THE MACHINERIES S OLD BY IT. THE ASSESSEE IS GETTING THE MACHINERY PARTS MANUFACTURE D THROUGH OUTSIDE AGENCIES, WHICH ARE ALREADY IN THE LINE OF BUSINESS AS THE ASSESSEE IS MERELY ASSEMBLING THE MACHINERY PARTS MANUFACTURED THROUGH THE OUTSIDE AGENCIES. THE ASSEMBLING OF THE MACHINERY PARTS WERE ALSO GOT DONE THROUGH OUTSIDE AGENCIES. THE AO HAS DENIED DEDU CTION ON THE GROUND THAT THE ACTIVITY CARRIED OUT BY THE ASSESSEE IS NO T A MANUFACTURING ACTIVITY BUT MERELY OF ASSEMBLING ACTIVITY. THE CO NTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT THE FINDING OF THE AO IS ILL-FOUNDED. WE FIND THAT THE LD.CIT(A) HAS RECORDED THE SUBMISS IONS OF THE ASSESSEE IN HIS ORDER VIDE PARA-6.3, WHICH ARE IN THE FOLLOW ING TERMS:- 6.3 CONCLUSION :- THE ISSUE RAISED BY THE APPELLANT IN THE GROUND OF APPEAL FOR THE YEAR UNDER CONSIDERATION IS IDENT ICAL WITH THE APPELLANTS OWN CASE FOR THE ASSTT. YEARS 2005-06 A ND 2006-07. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF MY PRE DECESSOR VIDE APPELLATE ORDERS (1) NO.CIT(A)/VLS/318/07-08 DATED 26.11.2008 & (2) NO.CIT(A)/VLS/224/08-09 DATED 30.01.2009 FOR THE A. Y. 2005-06 & 2006-07 RESPECTIVELY. THE FACTUAL MATRIX OF THE CAS E REMAINS UNALTERED. RESPECTFULLY FOLLOWING THE SAID ORDERS, I DIRECT TH E AO TO GRANT RELIEF TO THE APPELLANT IN THIS GROUND OF APPEAL. THUS, THIS GROUND OF APPEAL IS ALLOWED. ITA NO.3307/AHD/2010 (BY REVENU E) AND CO NO.11/AHD/2011(BY ASSESSEE) ACIT VS. BHAGAT TEXTILE ENGINEERS ASST.YEAR 2007-08 - 5 - 4.1. WE FIND THAT IN THE PRESENT ASSESSMENT YEAR, N O ADDITIONAL FACTS HAVE BEEN BROUGHT BY THE AO EXCEPT THAT THE ACTIVIT Y UNDERTAKEN BY THE ASSESSEE IS NOT A MANUFACTURING ACTIVITY, BUT ONLY ASSEMBLING ACTIVITY. THIS TRIBUNAL FOR AY 2005-06 IN ITA NO.294/AHD/2009 (SUPRA) HAS TAKEN A VIEW THAT THE ASSESSEE HAS CARRIED OUT MANUFACTUR ING ACTIVITY FOLLOWING THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERE D IN THE CASE OF CIT VS. SUNILBHAI KAKAD IN INCOME TAX APPEAL NO.1287 O F 2010 AND OTHER CASE-LAWS. THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A). RESPECTFULLY FOLLOWING THE EARLIER DECISION OF THE COORDINATE BENCH PASSED FOR AY 2005-06(SUPRA), WE HEREBY REJECT THIS GROUND OF REVENUES APPEAL. 5. AS A RESULT, REVENUES APPEAL IS DISMISSED. 6. NOW, WE TAKE UP THE CROSS OBJECTION NO.11/AHD/20 11 FOR AY 2007-08 FILED BY THE ASSESSEE (OUT OF ITA NO.3307/A HD/2010 FOR AY 2007-08 REVENUES APPEAL). THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS IN ITS CROSS-OBJECTION. 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD.CIT(A) HAS RIGHTLY TREATED THE ACTIVITY AS MANUF ACTURING ACTIVITY AND ALLOWED THE CLAIM OF 80IB TO THE ASSES SEE. 2. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE ORDER OF THE LD.AO IS NOT ENTITLED TO BE RESTORED. 3. YOUR RESPONDENT CRAVES TO ADD, AMEND, ALTER, H ANGE, DELETE OR SUBSTITUTE, ANY GROUNDS OF APPEAL AT THE TIME OF HE ARING OF CROSS OBJECTION. ITA NO.3307/AHD/2010 (BY REVENU E) AND CO NO.11/AHD/2011(BY ASSESSEE) ACIT VS. BHAGAT TEXTILE ENGINEERS ASST.YEAR 2007-08 - 6 - 7. AT THE OUTSET, LD.COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE CO FILED IN SUPPORT OF THE ORDER OF THE LD.CIT(A) AND HE DOES NOT WISH TO PRESS THE SAME. IN VIEW OF THE STATEMENT MADE BY T HE LD.COUNSEL FOR THE ASSESSEE, THE CROSS-OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 8. IN THE COMBINED RESULT, REVENUES APPEAL IS DISM ISSED AND ASSESSEES CROSS-OBJECTION IS DISMISSED AS NOT PRES SED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/10 /2014 1..,.../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 234 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-VALSAD 5. 67& 34 , 34- , 2 / DR, ITAT, AHMEDABAD 6. 79:;( / GUARD FILE. ! / BY ORDER, '6 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD