Sh. Raju Chaudhary, Jammu V. The Dy.Commissioner of Income-tax, Jammu

ITA 359/ASR/2013

• Counselvise Citation: 35920914 RSA 2013
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 30-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: P N ARORA
• Keywords: Principle of natural justice
• Section: 133A; 80IB; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.358 & 359 (ASR)/2013 ASSESSMENT YEARS:2005-06 & 2006-07 PAN :ABSPK-3429J SH. RAJU CHOUDHARY PROP. VS. DY. COMMR. OF INCOME T AX, M/S. TAWI CHEMICAL INDUSTRY, RANGE-II, JAMMU. JAMMU. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.P.N.ARORA, ADVOCATE RESPONDENT BY:SH.AMRIK CHAND, DR DATE OF HEARING: 16/12/2013 DATE OF PRONOUNCEMENT:19/12/2013 ORDER PER BENCH ; THESE TWO APPEALS OF THE ASSESSEE ARISE FROM TWO D IFFERENT ORDERS OF THE CIT(A), JAMMU, EACH DATED 20.03.2013 FOR THE ASSESSMENT YEARS 2005- 06 & 2006-07. IN BOTH THE APPEALS, THE ASSESSEE HAS TAKEN IDENTICAL GROUNDS OF APPEAL EXCEPT THE AMOUNT OF DEDUCTION U/S 80IB OF THE ACT, WHICH IS IN DIFFERENT IN BOTH THE YEARS I.E. RS.18,80,365/- FOR THE ASSESSMENT YEAR 2005- 06 AND RS.9,64,636/- FOR THE ASSESSMENT YEAR 2006- 07. SINCE THE ISSUE IS ITA NOS. 358 & 359(ASR)/2013 2 IDENTICAL IN BOTH THE APPEALS, ACCORDINGLY WE TAKE UP BOTH THE APPEALS BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE . 2. FIRST OF ALL, WE TAKE UP APPEAL IN ITA NO.358(AS R)/2013 FOR THE ASSESSMENT YEAR 2005-06 AND OUR ORDER HEREINBELOW S HALL BE IDENTICALLY APPLICABLE IN ITA NO.359(ASR)/2013 FOR THE ASSESSME NT YEAR 2006-07 HAVING IDENTICAL FACTS, AS MENTIONED HEREINABOVE AND IN TH E GROUNDS OF APPEAL OF THE ASSESSEE. 3. ITA NO.358(ASR)/2013FOR THE A.Y. 2005-06 THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEA L: 1. THAT THE AUTHORITIES BELOW ERRED UNDER LAW AND FACTS IN NOT ALLOWING 100% DEDUCTION CLAIMED U/S 80IB IN THE CASE OF FURNACE- II(F-2) UNIT OF TAWI CHEMICALS INDUSTRIES AMOUNTING TO RS.18,80,365/- AND INSTEAD RESTRICTING THE SAME TO 25% AND THUS LIMITING THE AMOUNT OF DEDUCTION TO RS.4,70,091/- I NSTEAD OF RS.18,80,365/- CORRECTLY CLAIMED BY APPELLANT. 2. THAT APPELLANT IS ENTITLED TO FULL DEDUCTION OF RS.18,80,365/- IN AS MUCH AS FURNACE-II OF TAWI CHEMICAL INDUSTRIES I S AN INDEPENDENT MANUFACTURING UNIT HAVING SEPARATE PLANT & MACHINER Y/BUILDING AND THE ACCOUNTS OF VARIOUS ASSETS BELONGING TO FURNACE -II WERE KEPT SEPARATE RIGHT FROM THE DATE OF SETTING UP THE UNIT AND EVEN IF THE UNIT IS DEEMED AS AN EXPANSIONS OF EXISTING UNIT, THE E XPANDED UNIT HAS SEPARATE EXISTENCE AND IS STILL ENTITLED TO SEPARAT E DEDUCTION AS PER DECISIONS OF VARIOUS HIGH COURTS AND TRIBUNAL SINCE ACCOUNTS OF EXPANDED UNIT WERE SEPARATELY MAINTAINED AND SEPARA TE PROFIT OF THE IMPUGNED UNIT WAS COMPUTED BY DRAWING SEPARATE PROF IT & LOSS ACCOUNT. 3. THAT AUTHORITIES BELOW FAILED TO APPRECIATE TRUE FACT THAT PROFIT & LOSS ACCOUNT OF FURNACE-II HAS BEEN SEPARATELY DRAW N UP AND PROFIT OF THE UNIT HAS BEEN DETERMINED AND COMPUTED SEPARATEL Y AND SEPARATE ITA NOS. 358 & 359(ASR)/2013 3 AUDIT REPORT ON FORM 10CCB HAS BEEN OBTAINED FROM A UDITORS WHERE PROFIT OF FURNACE-II STAND CERTIFIED AND DEDUCTION U/S 80-IB @ 100% HAS BEEN CLAIMED ONLY ON PROFIT AMOUNTING TO RS.18, 80,365/- DERIVED BY THE UNIT IN QUESTION; 4. THAT AUTHORITIES BELOW FAILED TO APPRECIATE FACT S THAT FURNACE-II HAS BEEN SET UP WITH SEPARATE PERMISSION OF INDUSTR IES DEPTT. AND HAS AN INDEPENDENT SOURCE OF POWER. 5. THAT LD. CIT(A) HAS NOT CORRECTLY APPRECIATED TR UE FACTS BROUGHT TO HIS NOTICE IN THE FORM OF PAPER BOOK WHERE SEPAR ATE MUST ROLLS OF LABOUR EMPLOYED AND SEPARATE SALE RECORD DULY MAINT AINED BY THIS UNIT FURNACE-II AND IN VIEW OF THESE FACTS THE LD. CIT(A) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION ERRONEOUSLY MA DE A.O. 6. THAT THERE IS CONSIDERABLE GAP BETWEEN THE CLOSU RE OF THE 2 ND FURNACE OF TAWI CHEMICAL INDUSTRIES FOR STOPPAGE OF POWER SUPPLY AND THE TIME OF SURVEY SINCE WHEREAS FURNACE-2 ND WORKED ONLY DURING THE YEAR 2004-05 AND 2005-06 AND SURVEY WAS CONDUCT ED ON 14/03/2008 AFTER GAP OF TWO YEAR AND EMPLOYEES WHOS E STATEMENT RECORDED COULD NOT BE EXPECTED TO REMEMBER EACH DET AILS CONTAINED IN THEIR STATEMENTS RECORDED DURING SURVEY AND FURTHER STATEMENT OBTAINED U/S 133(A) ARE NOT LEGALLY RECOGNIZABLE SINCE THERE IS NO PROVISION THEREOF IN SEE 133(A) TO RECORD STATEMENTS ON OATH UNLIKE SEE 132(4) AND THUS HAVE NOT EVIDENTIARY VALUE UNLIKE SECTION 132 AND THUS STATEMENTS QUOTED AND OBTAINED U/S 133(A) ARE NOT LEGALLY TENABLE HAVING NO EVIDENTIARY VALUE. THAT STATEMENT OF APPE LLANT RAJU CHOWDHARY WAS NEITHER INCORPORATED NOR CONSIDERED N OR COMMENTED UPON AND NOR LOOKED INTO WHICH WAS RECORDED AT THE TIME OF SURVEY AND WHERE HE HAS GIVEN POINT TO POINT FORTHRIGHT AN SWERS TO EACH QUESTION AND SUCH A VITAL STATEMENT WAS NOT INCORPO RATED AND COMPLETELY IGNORED BY A.O. AND THUS RULE OF NATURAL JUSTICE WAS VIOLATED. 7. THE APPELLANT IS ENTITLED TO 100% DEDUCTION U/S 80IB IN CASE OF FURNACE-1(F-2) OF TAWI CHEMICAL INDUSTRIES AMOUNTIN G TO RS.18,80,365/- SINCE FURNACE-2 IS A SEPARATE AND IN DEPENDENT PRODUCTION UNIT HAVING MADE SEPARATE INVESTMENT IN PLANT AND MACHINERIES WHICH ARE INSTALLED IN SEPARATE FACTORY BUILDING AND UNIT MAINTAINS SEPARATE RECORD OF LABOUR EMPLOYED, SEPA RATE PRODUCTION ITA NOS. 358 & 359(ASR)/2013 4 RECORD AND RECORDS SEPARATE SALES WITH BILLS MARKE D F-2 AND THE DEDUCTION HAS BEEN RIGHTLY CLAIMED AND CIT(A) DID NOT APPRECIATE THESE FACTS AND THUS ACTED ERRONEOUSLY UNDER LAW AN D FACTS IN SUSTAINING THE DEDUCTION TO 25% INSTEAD OF APPELLA NT 100% BONAFIDE CLAIM AMOUNTING TO RS.18,80,365/- ; AND 8. THAT THE OTHER GROUND OR GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE FACTORY PREMISES OF M/S. TAWI CH EMICAL INDUSTRIES ON 14.03.2008. DURING THE COURSE OF SURVEY, IT WAS FOU ND BY THE DEPARTMENT THAT NO SEPARATE RECORDS FOR CONSUMPTION OF RAW MAT ERIAL OR THE PRODUCTION OF FINISHED GOODS HAVE BEEN MAINTAINED BY THE ASSES SEE , NO SALE BILLS ISSUED ALSO PERTAIN TO M/S TAWI CHEMICALS INDUSTRIES, WHIC H MAKE NO DISTINCTION BETWEEN GOODS OF THE FIRST UNIT AND SECOND UNIT MAD E AND EVEN THE PURCHASES ARE MADE AS A SINGLE UNDERTAKING INCLUDING PRODUCTI ON. STATEMENTS OF SOME TECHNICAL AND OTHER PERSONS DEALING WITH THE BUSINE SS WERE RECORDED DURING THE COURSE OF SURVEY IN THIS REGARD. THE AO. OBSERV ED THAT FURNANCE-I AND FURNACE-II OF M/S. TAWI CHEMICAL INDUSTRIES ARE INT EGRAL PART AND CANNOT BE SAID TO BE A SEPARATE UNDERTAKING AND ACCORDINGLY W ERE NOT ELIGIBLE FOR 100% DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 BUT OF 25% ONLY. 4. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ARGUED THAT THE ASSESSEE-FIRM IS MANUFACTURING FERRO CHROME IN FURN ACE-II AND NECESSARY ITA NOS. 358 & 359(ASR)/2013 5 AUDIT REPORT ALONGWITH BALANCE SHEET AND PROFIT & L OSS ACCOUNT OF THE SAID FURNACE-II IS PLACED IN THE PB 29 TO 37. THE FURNAC E-II IS ALTOGETHER AN INDEPENDENT UNIT WHICH CAME INTO EXISTENCE DURING T HE YEAR 2004-05 AND STARTED MANUFACTURING DURING THE YEAR 2005-06. THE BOOKS OF ACCOUNT INCLUDING THE BILLS ARE SEPARATELY MAINTAINED AND I N THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 38 OF THE PB THE ASSESSEE HAS PRODUCED PHOTOGRAPHS TO PROVE SEPARATE LOCATION OF BOTH THE UNITS AND SEPARATE RECORD OF FIXED ASSETS WITH COMPLETE ASSET S OF FURNACE-II, AVAILABLE AT PB-28. THE NECESSARY PERMISSION FROM DIC, JAMMU, SEVERAL RECORDS INDICATING SEPARATE MUSTER ROLL, ELECTRIC POWER AND PERMISSION FOR SEPARATE POWER LOAD OBTAINED FROM CHIEF ELECTRICAL INSPECTOR , WERE PRODUCED BEFORE THE AUTHORITIES BELOW. ALL THESE EVIDENCES WERE BE FORE THE LD. CIT(A) AND OUR ATTENTION WAS INVITED TO THE WRITTEN SUBMISSION S BEFORE THE LD. CIT(A) AVAILABLE AT PB 1 TO 7. THE ASSESSEE HAVING COMPLIE D WITH ALL THE CONDITIONS LAID DOWN UNDER SECTION 80IB OF THE ACT, THEREFORE, CANNOT BE DENIED DEDUCTION U/S 80IB OF THE ACT @ 100%, AS AGAINST AL LOWED BY THE AO @ 25% BEING AN INDEPENDENT UNIT. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N.ARORA, ADVOCATE, FURTHER ARGUED THAT STATEMENTS OF DEDUCTION U/S 133A OF THE ACT CANNOT BE RECORDED ON OATH AND SUCH STAT EMENTS CANNOT BE RELIED UPON, WHICH WERE TAKEN UNDER PRESSURE AND MENTAL T ENSION FROM THE ITA NOS. 358 & 359(ASR)/2013 6 PERSONS, WHO WERE NOT HAVING KNOWLEDGE OF THE FACT S OF THE CASE. HE RELIED UPON THE DECISION OF HONBLE KERALA HIGH COURT IN T HE CASE OF PAUL MATHEWS AND SONS VS. CIT REPORTED IN (2003) 263 ITR 101 (KE RALA) AND THE DECISION OF THE ITAT, AMRITSAR BENCH, IN THE CASE OF M/S. BA NARSI DI HATTI, BANASRSI SWEETS P. LTD. VS ITO WARD-1, PATHANKOT IN ITA NO. 470(ASR)/2011 ORDER DATED 07.10.2013 FOR THE A.Y. 2006-07, COPY OF THE SAID ORDER IS PLACED AT PB 40 TO 54. HE FURTHER RELIED UPON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ALKALIES & CHEMICALS LTD. VS. CIT REPORTED IN (2010) 350 ITR 94 IN THIS REGARD. FURTHER TO SUPPORT HIS CONTENTION, HE RELIED UPON DECISIONS OF VARIOUS CASE LAWS AS UNDER: I) CIT VS. INDIAN ALUMINIUM CO.LTD. (1977) 108 ITR 36 (SC) II) CIT VS. LAKHANPAL NATIONAL LTD. (2008) 304 ITR 365 (GUJ.) III) CIT VS. MAHAAN FOODS LTD. (2008) 216 CTR 148 IV) JCIT VS. ASSOCIATED CAPSULES (P) LTD. (2008) 114 IT D 189 (ITAT MUMBAI). 5.1. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, PRAYED TO ALLOW DEDUCTION UNDER SECTION 80IB OF THE ACT IN RESPECT OF FURNA CE-II WHICH IS IN INDEPENDENT UNIT @ 100%. 5.2. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF BOTH THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE IS MAINTAINING SEPARATE BALANCE SHEET, PROFIT & LOSS ACCOUNT AND AUDIT REPORT WHICH IS AVAILABLE AT PAGES 29 TO 37 W ITH RESPECT OF FURNACE-II, ITA NOS. 358 & 359(ASR)/2013 7 WHICH CAME INTO EXISTENCE DURING THE ASSESSMENT YEA R 2004-05. THE ASSESSEE IS MAINTAINING SEPARATE FIXED ASSETS REGISTER AND M USTER ROLL AND HAVE TAKEN SEPARATE ELECTRIC POWER CONNECTION AND PERMISSION F ROM DIC, JAMMU FOR THE SAID UNIT I.E. FURNACE-II. THE ASSESSEE HAS SATISFI ED THE CONDITIONS LAID DOWN UNDER SECTION 80IB OF THE ACT, WHICH ARE AS UNDER: 1. IT IS NOT FORMED BY SPLITTING UP OR THE RECONS TRUCTION OF BUSINESS ALREADY IN EXISTENCE. 2. IT IS NOT FORMED BY THE INSTALLATION OF ANY PLA NTS AND MACHINERY PREVIOUSLY USED. 3. IT MANUFACTURES ARTICLES OR THING; 4. ITS EMPLOYEES ARE NOT LESS THAN 10 WORKERS AND IT IS USING POWER. 6.1. THE STATEMENTS RECORDED OF THE VARIOUS PERSONN EL BY THE DEPARTMENT HAVE NO EVIDENTIARY VALUE AS ARGUED BY THE LD. COUN SEL FOR THE ASSESSEE IN VIEW OF THE DECISIONS RELIED UPON BY HIM IN THE FAC TS AND CIRCUMSTANCES AND THE DECISIONS RELIED UPON BY THE LD. COUNSEL FOR TH E ASSESSEE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED TO DEDUCTION U/ S 80IB @ 100% AS CLAIMED BY THE ASSESSEE. AND ACCORDINGLY WE REVERSE THE ORD ER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IB OF THE ACT TO THE ASSESSEE @ 100% AS CLAIMED. THUS, ALL THE GROUNDS O F APPEAL OF THE ASSESSEE ARE ALLOWED. ITA NOS. 358 & 359(ASR)/2013 8 7. NOW, WE TAKE UP APPEAL OF THE ASSESSEE IN ITA NO .359(ASR)/2013 FOR THE ASSESSMENT YEAR 2006-07. THE FACTS IN THE PRESE NT CASE ARE IDENTICAL TO THE CASE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 WHICH HAS BEEN DECIDED BY US HEREINABOVE IN ITA NO.358(ASR)/2 013. ACCORDINGLY, OUR DECISION HEREINABOVE, IN ITA NO.358(ASR)/2013 IS I DENTICALLY APPLICABLE IN THE PRESENT APPEAL AND ACCORDINGLY ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 8. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NOS. 358 & 359(ASR)/2013 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER., 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19TH DECEMBER, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. RAJU CHOUDHARY, JAMMU 2. THE DCIT, RANGE-2, JAMMU. 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.