DCIT (LTU), New Delhi V. M/s International Tractors Ltd., Delhi

ITA 3660/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86572 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-12-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation; Competent authority; Revised return
• Section: 80IB; 147

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI J.S.REDDY , ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 3660 /DEL/ 2013 (ASSESSMENT YEAR: 2006 - 07 ) DCIT (LTU) CIRCLE - 11(1) NEW DELHI VS. INTERNATIONAL TRACTORS LTD. SONALIKA HOUSE, 282, AGCR ENCLAVE, KARKARDOOMA, DELHI PAN:AAACI12270H (APPELLANT) (RESPONDENT) APPELLANT BY : SATPAL SINGH, SR. DR RESPONDENT BY : SH. NITIN MALHOTRA, ADV. SH. VINAY MALHOTRA, CA O R D E R PER A. T. VARKEY , JUDICIAL MEMBER THIS APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - XIII, NEW DELHI IV DATED 14.02.2013 RELATES TO ASSESSMENT YEAR 2006 - 07 . 2. GROUNDS OF APPEAL ARE AS FOLLOWS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE ISSUE OF DISALLOWANCE OF CLAIM OF DEDUCTION 801A/SOIB OF RS.3S,74,04,947/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE ISSUE OF ADDITION OF RS.3,72,29,219/ - ON ACCOUNT OF EXCISE DUTY CLAIM ON EXPORTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE ON THE ISSU E OF DISALLOWANCE OF DEPRECIATION OF RS.2,93,173/ - ON COMPUTER ACCESSORIES AND UPS. 3. APROPOS GROUND NO. 1 IS REGARDING CLAIM OF DEDUCTION U/S 80IA/80IB OF THE INCOME TAX ACT, 1961 (HEREIN AFTER THE ACT) OF RS.38,74,04,947/ - . 4. BRIEF FACTS OF THE CASE ARE THAT IN THE ORIGINAL RETURN OF INCOME DEDUCTION UNDER SECTION 80IB W AS CLAIMED AT RS.38,93,48,462/ - . IT WAS HOWEVER, REVISED TO RS.38,70,04,947 / - IN THE REVISED RETURN OF INCOME. THE ASSESSING OFFICER HOWEVER DISALLOWED THE CLAIM ON THE GROUND THAT DURING THE YEAR UNDER CONSIDERATION THE PAGE 2 OF 5 INVESTMENT IN PLANT AND MACHINERY IS WORTH RS.52,47,65,905/ - AND NOT RS.1,00,00,000/ - WHICH IS THE UPPER CEILI NG FOR SMALL SCALE INDUSTRY. ACCORDING TO THE AO, AS PER SECTION 80IA ONLY SMALL SCALE INDUSTRIAL UNDERTAKING IS ELIGIBLE FOR THE DEDUCTION AND SINCE THE APPELLANT WAS A MEDIUM SCALE INDUSTRY, THEREFORE, DISALLOWED THE CLAIM. 5. THE LD CIT(A) HOWEVER DEL ETED DISALLOWANCE FOLLOWING THE ORDER OF HIS PREDECESSOR AND ITAT IN THE CASE OF THE ASSESSEE , FOR ASSESSMENT YEAR 1998 - 99 TO ASSESSMENT YEAR 2005 - 06 ON THE VERY SAME ISSUE WHEREIN IT HAS BEEN HELD THAT AS PER THE ACT THE REQUIREMENT OF INVESTMENT OF RS.1, 00,000,00/ - IN PLANT AND MACHINERY IS RESTRICTED ONLY TO THE FIRST YEAR OF THE CLAIM AND NOT TO THE SUBSEQUENT YEARS. 6. IN THE IMPUGNED ORDER, THE LD CIT(A) HAS HELD AS UNDER: - IT IS SEEN THAT THE ISSUE IS IN DISPUTE HAS ALREADY BEEN DECIDED IN FAVOUR O F THE APPELLANT VIDE VARIOUS ORDERS OF THE HON'BLE ITAT DELHI. THE RECENT MOST ORDER BEING ITA NO.5817/DEL/2010 DATED 11.05.2012 FOR A Y 2005 - 06. THE ITAT HAS HELD THAT THE REQUIREMENT FOR AN ASSESSEE TO BE A SMALL SCALE INDUSTRY UNDERTAKING UNDER SECTION 80IA (12) IS ONLY FOR THE INITIAL YEAR AND NOT FOR THE SUBSEQUENT YEARS. THEREFORE EVEN IF THE INVESTMENT IN PLANT AND MACHINERY EXCEEDS RS. 1,00,00,0001 - , (WHICH IN THE PRESENT Y.EAR IS RS.52,47,65,905/ - ) THE APPELLANT WOULD BE ENTITLED TO THE 80IA DEDUCT ION. AS PER THE FACTS MENTIONED IN THE ASSESSING OFFICER'S ORDER IN THE INITIAL YEAR OF DEDUCTION I.E.1997 - 98, THAT INVESTMENT IN THE PLANT AND MACHINERY BY THE APPELLANT WAS MORE THAN THE LIMIT OF RS. 60 LACS FOR A SMALL SCALE INDUSTRIAL UNDERTAKING. THE REFORE THOUGH THE COMPANY WAS REGISTERED AS SSI ON 24.02.1997 THE VERY SAME REGISTRATION CERTIFICATE WAS CANCELLED BY THE DISTRICT CENTRE, HOSHIARPUR ON 12.11.1999. THEREFORE, EVEN AY 1997 - 98, THE APPELLANT WAS NOT HELD TO BE A SMALL SCALE INDUSTRIAL UNDER TAKING BY THE COMPETENT AUTHORITY. HOWEVER, THE ASSESSING OFFICER HAS NOT INDICATED WHETHER THE BENEFIT ALLOWED UNDER SECTION 80IA FOR A Y 1997 - 98 WAS SUBSEQUENTLY WITHDRAWN OR NOT UNDER SECTION 147 OF THE IT ACT, SO AS TO EFFECT THE FINDING GIVEN BY THE H ON'BLE ITAT THAT ONCE THE ELIGIBILITY OF SMALL SCALE INDUSTRIAL UNDERTAKING STANDS ESTABLISHED IN THE FIRST YEAR (I.E. A Y 1997 - 98, THEN SUBSEQUENT YEARS CLAIM IS TO BE ALLOWED IRRESPECTIVE OF INVESTMENT BEING MORE THAN THE PRESCRIBED CEILING TO BE TREATED AS SMALL SCALE INDUSTRIAL UNDERTAKING. IN VIEW OF THE FINDING GIVEN BY THE HONBLE ITAT IN EARLIER YEARS APPELLATE ORDERS HOLDING THE APPELLANT COMPANY AS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA, THE CLAIM OF DEDUCTION OF RS.38,74,04,947/ - IS ALLOWED TO THE APPELLANT AND DISALLOWANCE IS DELETED . 7. ON CONSIDERATION OF THE FACTS AND RIVAL SUBMISSION WE FIND THAT THE ISSUE BEFORE US STANDS DECIDED IN THE CASE OF THE ASSESSEE FOR PRECEDING ASSESSMENT PAGE 3 OF 5 YEAR 2005 - 06 BY AN ORDER OF THE CO - ORDINATE BENCH ON 11 T H MAY 2012, WHEREIN IT WAS HELD THAT ISSUE RAISED BY THE REVENUE HAS BEEN REPEATEDLY AND CONSISTENTLY HELD IN FAVOUR OF THE ASSESSEE FROM ASSESSMENT YEAR S 1998 - 99 TO 2004 - 05. SINCE THE FACTS AND CIRCUMSTANCES REMAIN THE SAME, WE RESPECTFULLY FOLLOW THE EAR LIER ORDERS OF THE CO - ORDINATE BENCH OF THE TRIBUNAL AND UPHOLD THE ORDER OF THE LD CIT(A) ALLOWING THE CLAIM OF THE DEDUCTION. THEREFORE THIS ISSUE OF THE REVENUE IS DISMISSED. 8. GROUND NO.2 IS REGARDING ADDITION OF RS.3,72,29,219 / - REPRESENTING EXCISE DUTY ON EXPORTS MADE DURING THE YEAR. 9. THE LD CIT(A) HAS DELETED THE ADDITION FOLLOWING THE ORDER OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005 - 06 BY CONCLUDING AS UNDER: - I HAVE CONSIDE RED THE SUBMISSION OF THE APPELLANT, COPY OF THE NOTIFICATION FILED, FROM PAGE 65 TO 71 OF THE PAPER BOOK AND SUBMISSION AND SHOW CAUSE NOTICE OF THE EXCISE AUTHORITIES ISSUED TO THE APPELLANT FILED FROM PAGE 72 TO 81 OF THE PAPER BOOK ABOUT THE REBATE CLA IMED IN EXCISE DUTY BY THE APPELLANT. ON CONSIDERATION OF THE SUBMISSIONS MADE BY THE APPELLANT AND ON PERUSAL ON THE PAPER BOOK FROM PAGE 65 TO 81, IT IS SEEN THAT A PART OF THE ABOVE CLAIMS WAS FILED IN FY 2005 - 06 OF RS. 78,34,825/ - AND BALANCE CLAIM OF RS.2,93,94,394/ - WAS FILED IN SUBSEQUENT FINANCIAL YEAR. THE APPELLANT CLAIMS THAT ABOVE CLAIM AS ACCRUED AND ASSESSED IN THE SUBSEQUENT YEARS THEREFORE SAME CANNOT BE INCLUDED DURING THE YEAR. THE CASE OF THE APPELLANT IS THAT MAKING OF A CLAIM SHOULD NOT BE TAKEN AS ACCRUAL OF INCOME AS THE CLAIM WAS SUBJECT TO UNCERTAINTIES. THAT AFTER MAKING EXPORTS THE APPELLANT ACQUIRES ELIGIBILITY TO MAKE A CLAIM FOR EXCISE DUTY REFUND WHICH IS ONLY AN INCOMPLETE ENTITLEMENT. THAT AFTER A CLAIM IS FILED THE CONCERNED AUTHORITY EXAMINES, VERIFIES AND PROCESSES THE SAME IN ACCORDANCE WITH THE GUIDELINES AS PRESCRIBED IN THE NOTIFICATION ISSUED BY CENTRAL EXCISE, (AS REFERRED ABOVE) AND THE CLAIM MAY BE ACCEPTED AND APPROVED AT FULL VALUE OR LOWER VALUE OR EVEN BE REJECT ED, IF THE PRESCRIBED PROCEDURE IS NOT FOLLOWED. THAT MAKING OF CLAIM ITSELF DOES NOT MEAN AUTOMATIC ACCEPTANCE THEREOF AND THEREFORE NO AMOUNT COULD BE SAID TO BE LEGALLY DUE TO THE APPELLANT UNTIL THE CLAIM WAS ACCEPTED. THAT IS ONLY UPON APPROVAL OF THE CLAIM FOR PAYMENT, THAT THE APPELLANT COMPANY ACQUI RES A LEGALLY ENFORCEABLE RIGHT OR ENTITLEMENT. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND THE LEGAL PROPOSITION RELIED UPON BY THE COUNSEL ON THE ISSUE AS TO THE POINT IN TIME WHEN IN COME CAN BE SAID TO HAVE ACCRUED TO THE APPELLANT. IN TERMS OF THE DECISION IN CASE OF ED SASSON (SUPRA) IF THE APPELLANT ACQUIRES A RIGHT TO RECEIVE THE INCOME, THE INCOME CAN BE SAID TO HAVE ACCRUED TO HIM. IN FACTS OF THE APPELLANT APPELLANT'S CASE WHIL E IT DOES BECOME ELIGIBLE FOR PAGE 4 OF 5 CLAIM OF REFUND OF EXCISE DUTY CONSEQUENT TO EXPORTS BUT IN TERMS OF THE NOTIFICATION THERE ARE FORMALITIES AND PROCEDURES TO BE FULFILLED AND TILL THAT TIME THE CONCERNED AUTHORITY DOES NOT APPROVE THE CLAIM, IT CANNOT BE SAI D THAT RIGHT TO RECEIVE THE REFUND HAS VESTED IN IT. RELIANCE IS ALSO PLACED ON THE DECISION OF DELHI ITAT IN THE CASE OF INDIAN ALUMINIUM CABLES LTD. 13 ITD 907 AND THE DECISION OF ITAT IN CASE OF PEARL POLYMERS P. LTD. 16 ITD 599. IN THE APPELLANTS OWN CASE FOR ASSESSMENT YEAR 2005 - 06 THE HONBLE ITAT VIDE ITA NO.5817/DEL/2010 HAS HELD THAT EXPORT BENEFITS ARE SUBJECT TO CERTAIN PROCEDURAL REQUIREMENT AND UNLESS THESE ARE COMPLIED WITH, IT CANNOT BE HELD THAT THESE BENEFITS HAVE ACCRUED TO THE APPELLANT IN TERMS OF SECTION 28. THE HON'BLE ITAT DISMISSED THE APPEAL OF THE DEPARTMENT WHEREIN DELETION OF THE ADDITION MADE BY THE CIT (A) ON ACCOUNT OF EXCISE REFUND ACCRUED WAS CHALLENGED BY THE DEPARTMENT. IN VIEW OF THE ABOVE DISCUSSIONS THE APPEAL IS ALLOWE D ON THIS ISSUE AND THE ADDITION FOR RS. 3,72,29,2191 - MADE ON THIS ACCOUNT IS DIRECTED TO BE DELETED. 10. WE FIND THAT THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2005 - 06 IN THE CASE OF THE ASSESSEE STANDS DISMIS SED BY THE HONBLE JURISDICTIONAL HIGH COURT VIDE JUDGMENT DATED 06 TH SEPTEMBER 2013. THE HONBLE HIGH COURT HAS HELD AS UNDER: - AS FAR AS QUESTION OF ACCRUAL OF INCOME ON DRAWBACK WHICH HAS NOT BEEN APPROVED AND QUANTIFIED BY THE GOVERNMENT AUTHORITIES IS CONCERNED, WE AGREE WITH THE FINDINGS RECORDED BY THE TRIBUNAL, WHICH READ AS UNDER: - DUTY DRAW BACK : AO HAS HELD THAT DUTY DRAW BACK BENEFITS ARE AUTOMATICALLY ACCRUED TO ASSESSEE THE MOMENT THE EXPORTS ARE EFFECTED. FROM THE FACTS EMERGING FROM RECORD, THE EXPORT BENEFIT ARE SUBJECT TO CERTAIN PROCEDURAL REQUIREMENT AND UNLESS THERE ARE COMPLIED WITH, IT CANNOT BE HELD THAT THESE BENEFITS HAVE ACCRUED TO ASSESSEE IN TERMS OF SEC.28. IN OUR CONSIDERED VIEW, LD. CIT (APPEALS) HAS RIGHTLY APPLIED THE RATIO OF DECISIONS OF HON'BLE SUPREME COURT IN THE CASES OF POONA ELECTRIC SUPPLY CO. LTD. (SUPRA) AND E.D. SASSOON AND CO. LTD. (SUPRA). WE SEE NO INFIRMITY IN THE ORDER OF LD. CIT (APPEALS), WHICH IS UPHELD. THIS GROUND OF REVENUE IS DISMISSED? THE DRAWBACK DOES NOT IMMEDIATELY ACCRUE ON EXPORT. DRAWBACK IS PAYABLE POST ACTUAL EXPORT. IT REQUIRES SUBMISSION OF AN APPLICATION, COMPLETION AND COMPLIANCE WITH FORMALITIES AND ACCEPTANCE. AFTER EXPORTS ARE AFFECTED, FOR CLAIMING DRAWBACK THE ASSESSEE HAS TO FILE APPLICATION WITHIN THE PRESCRIBED TIME BEFORE THE AUTHORITIES IN TERMS OF VARIOUS RULES AND REGULATION S. THE SAID RULES/REGULATIONS STIPULATE CONDITIONS WHEN DRAWBACK IS PAYABLE OR NOT PAYABLE. APPLICATION CLAIMING DRAWBACK IS MERELY A CLAIM. THE AMOUNT CLAIMED HAS TO BE VERIFIED, QUANTIFIED AND DETERMINED BY THE AUTHORITIES WHO ARE EMPOWERED UNDER THE STA TUTORY PROVISIONS. IN THESE CIRCUMSTANCES, WE ARE NOT INCLINED INTERFERE WITH THE ORDER AND ISSUE NOTICE ON THE THIRD AS PECT. PAGE 5 OF 5 11. RESPECTFULLY FOLLOWING THE ORD ER OF THE HONBLE HIGH COURT WE UPHOLD THE ORDER OF THE LD CIT(A) AND DISMISS THE APPEAL OF THE ASSESSEE. 12. GROUND NO.3 RELATES TO CLAIM OF DEPRECIATION OF COMPUTER ACCESSORIES. 13. THE LD CIT(A) HAS DELETED THE ADDITION FOLLOWING THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN CIT VS. BSES YAMUNA POWERS LTD. AND CIT VS. ORIENT CEREMIC INDUSTRI ES LTD. 14. IN VIEW OF THE ABOVE BINDING JUDICIAL PRECEDENT, WE UPHOLD THE ORDER OF THE LD CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 15. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 9 . 01 . 2014. - S D / - - S D / - ( J.S.REDDY ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 9 / 01 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI