DCIT, CHENNAI V. Hidesign India Pvt. Ltd., CHENNAI

ITA 3483/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4539 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2017
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 15-03-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2016
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: R VENKATARAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI . . . , !.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3483/MDS/2016 * * /ASSESSMENT YEAR: 2012-13 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(2), ROOM NO.512, 5 TH FLOOR, WANAPARTHY BLOCK, 121, M.G.ROAD, CHENNAI-600 034. VS. M/S.HIDESIGN INDIA PVT. LTD., OLD NO.57/4, NEW NO.20/4, FIRST NEW STREET, KAMRAJ AVENUE, ADYAR, CHENNAI-600 020. [PAN: AACCH 0586 R ] ( - /APPELLANT) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.A.V.SREEKANTH, JCIT ./- 0 /RESPONDENT BY : MR.R.VENKATARAMAN, SR.ADV. 0 /DATE OF HEARING : 15.03.2017 0 /DATE OF PRONOUNCEMENT : 26.05.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 25.10.2016 OF COMMISSIONER OF INCOME TAX (APPEALS)- 6, CHENNAI, IN ITA NO.161/CIT(A)-6/2015-16 FOR THE AY 2012-13. ITA NO.3483/MDS/2016 :- 2 -: 2.0 ALL THE GROUNDS OF THE APPEAL ARE RELATED TO TH E DISALLOWANCE OF DEDUCTION U/S 80IC OF INCOME TAX ACT. IN THE ASSES SMENT THE AO HAD DISALLOWED THE ASSESSEES CLAIM U/S 80IC AMOUNTING TO RS.2,82,95,977/-. 3.0 THE ASSESSEE IS ENGAGED IN MANUFACTURING O F LEATHER GOODS AND CLAIMED DEDUCTION U/S 80IC OF I.T ACT FOR UNITS AT BADDI, HIMACHAL PRADESH. THE ASSESSEE INITIALLY STARTED THE UNIT IN THE NAME PARTNERSHIP FIRM M/S HIDESIGN AND SUBSEQUENTLY ESTABLISHED THE BADDI UNIT IN M/S HIDESIGN INDIA PRIVATE LTD. THE ASSESSING OFFICER D URING THE ASSESSMENT PROCEEDINGS FOR THE A.Y.2010-11 FOUND CERTAIN DISCREPANCIES AND INCONSISTENCIES IN SETTING UP OF A NEW UNIT AT BADD I SUCH AS THE MACHINERIES WERE NOT PUT USE IN 80IC UNIT, THE ASS ESSEE HAS NOT CARRIED OUT ANY MANUFACTURING ACTIVITY IN 80IC UNIT BUT MAN UFACTURED SOMEWHERE ELSE AND ACCOUNTED THE SAME IN 80IC UNIT AND THE I NCONSISTENCIES WITH REGARD TO ESI, LEASE DEED, AND THE PLANT AND MACHIN ERY ETC. AND ACCORDINGLY DISALLOWED THE CLAIM OF THE ASSESSEE U/ S 80IC. 4.0 FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N THE AO HAS DISALLOWED THE DEDUCTION U/S 80IC BASING ON THE OBS ERVATION OF THE A.O. IN ASSESSMENT ORDER FOR THE A.Y. 2011-12, WHICH WAS DI SCUSSED BY THE LD.CIT(A) IN PARA NO.4 OF THE CIT(A) ORDER WHICH R EADS ASUNDER: 4. IN THE ASSESSMENT ORDER, THE AO HAS DISALLOWED TH E CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON THE FOLLOWING GROUNDS: (A) SIMILAR DEDUCTION WAS DISALLOWED FOR A.Y 2011-12, A ND AS PER THE AO THE SAME HAS A CASCADING EFFECT. (B) FOR THE AY 2011-12, THE AO HAD DISALLOWED THE CLAIM OF DEDUCTION THE FOLLOWINGS REASONS: 1. LEASE DEED EXECUTED BY THE APPELLANT ON 22.11.20 08 IS NOT ATTESTED BY NOTARY PUBLIC 2. THE PLANT AND MACHINERY WERE NOT NEW 3. ESI HAS NOT BEEN PAID TO ALL EMPLOYEES 4. COVERAGE OF THADA VILLAGE UNDER NOTIFICATION ITA NO.3483/MDS/2016 :- 3 -: 5.0 AGGRIEVED BY THE ORDER OF THE AO, THE ASSES SEE WENT ON APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) ALLOWED THE ASS ESSEES APPEAL. IN THE ORDER OF THE LD.CIT(A) THE LD.CIT HAS STATED THAT T HE ASSESSEE HAS PRODUCED THE NECESSARY EVIDENCE /NOTIFICATIONS TO B E ELIGIBLE FOR DEDUCTION U/S 80IC AND ACCORDINGLY ALLOWED THE ASSESSEES APP EAL. FOR THE SAKE OF CONVENIENCE WE EXTRACT THE RELEVANT PARAGRAPH OF TH E CIT(A) ORDER WHICH READS AS UNDER: 5. THE MATTER IS CONSIDERED. THE ISSUES INVOLVED HA S BEEN EXTENSIVELY CONSIDERED AND ADJUDICATED BY MY PREDECESSOR IN HIS ORDER DATED 21 .08.2014 (SUPRA). THE APPELLANT COMPANY HAS BEEN ABLE TO PRODUCE NECESSARY EVIDENCE S/NOTIFICATION OF CONFIRMING TO THE VARIOUS STIPULATIONS UNDER SECTION 80IC OF THE ACT. IT IS ALSO UNDISPUTED FACT THAT THE AO HIMSELF HAS CHANGED HIS POSITION AND ALLOWED DEDUCT ION UNDER SECTION 80IC OF THE ACT FOR AY 2013-14 AMOUNTING TO RS 2,54,96,800/-. IN VIEW O F THE FACTS AND CIRCUMSTANCES AS ABOVE, I AM OF THE VIEW THAT THE APPELLANT COMPANY IS ENTITLED TO THE CLAIM UNDER SECTION 80IC OF THE ACT. AS SUCH, THE DISALLOWANCE MADE BY THE AO STANDS DELETED. THE GROUNDS OF APPEAL SUCCEED. 6.0 AGGRIEVED BY THE ORDER OF THE AO, THE REVENUE I S IN APPEAL BEFORE THIS TRIBUNAL. APPEARING FOR THE REVENUE THE LD. D .R. ARGUED THAT THE ASSESSING OFFICER FOUND INCONSISTENCIES WITH REGARD TO LEASE OF LAND PURCHASE AND USE OF PLANT AND MACHINERY WHICH LED T O THE DISALLOWANCE OF CLAIM MADE U/S 80IC OF THE ACT FOR THE INITIAL ASSE SSMENT YEAR 2010-11. THE ASSESSMENT YEAR 2010-11 WAS THE FIRST YEAR OF S ETTING UP OF 80IC UNIT AND UNLESS IT IS ESTABLISHED IN THE INITIAL YEAR OF ESTABLISHMENT THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IC, THE DE DUCTION CANNOT BE ALLOWED IN THE SUBSEQUENT YEAR. THE SATISFACTION O F COMPLYING WITH THE CONDITION FOR ALLOWING THE DEDUCTION IN THE INITIAL YEAR IS UNDER SCRUTINY OF THE A.O., AS THE HONBLE ITAT REMITTED THE MATTER B ACK TO THE FILE OF THE ITA NO.3483/MDS/2016 :- 4 -: A.O. THE LD. CIT(A) IN THE APPELLATE ORDER STATE D THAT THE ASSESSEE HAS FURNISHED THE NECESSARY EVIDENCES AND NOTIFICATIONS CONFIRMING TO THE VARIOUS STIPULATIONS U/S 80IC OF THE ACT. NO SUCH EVIDENCES WERE PLACED BEFORE THE ASSESSING OFFICER. THE HONBLE ITAT REMI TTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE ISS UE FOR DE NOVO CONSIDERATION IN THE FIRST YEAR OF DEDUCTION 2010-1 1. THE LD. D.R. ARGUED THAT THE FIRST YEAR OF DEDUCTION HAS NOT REACHED TH E FINALITY SINCE THE ASSESSING OFFICER HAS NOT COMPLETED THE VERIFICATIO NS WITH REGARD TO THE ELIGIBILITY OF THE DEDUCTION U/S 80IC. THEREFORE, THE LD. D.R. ARGUED THAT THE CASE SHOULD BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE SATISFACTION OF THE CONDITIONS FOR GRANT ING RELIEF U/S 80IC. 7.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS PLACED BEFORE US. ON THE SAME ISSUE IN THE ASSESSEES OWN CASE FOR THE AY 2010-11 THE ITAT IN ITA NO.312/MDS/2014 DATED 02/03 /2016 REMITTED THE MATTER BACK TO THE FILE OF THE AO FOR DE NOVO C ONSIDERATION, WITH REGARD TO GRANTING RELIEF U/S 80IC. SINCE THE FACTS OF THE CASE ARE SAME AND THE OUTCO ME OF THE ASSESSMENT FOR THE AY 2010-11 HAS A CASCADING EFFEC T ON SUBSEQUENT ASSESSMENTS INCLUDING THE ASSESSMENT YEAR 2012-13, BOTH THE PARTIES (I.E. THE LD.AR AND THE LD. DR) HAVE AGREED FOR REM ITTING THE MATTER BACK TO THE FILE OF THE AO TO CONSIDER THE ISSUE AFRESH ON MERITS. 8.0 ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOW ER AUTHORITIES AND REMIT MATTER BACK TO THE FILE OF THE AO FOR DE NOVO CONSIDERATION OF GRANTING THE DEDUCTION U/S 80IC OF THE ACT. ITA NO.3483/MDS/2016 :- 5 -: 9.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ! . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 26 TH MAY, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF