SOEX INDIA P.LTD, MUMBAI V. ASST CIT CEN CIR 44, MUMBAI

ITA 3874/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8182 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Bench Allotted: H
• Next Hearing Date: 31-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 15-05-2013
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: DR K SIVRAM
• Section: 153A; 10B; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.3874/MUM/2013 - A.Y. 2006-07 I.T.A. NO.3875/MUM/2013 - A.Y. 2007-08 I.T.A. NO.3876/MUM/2013 - A.Y. 2008-09 I.T.A. NO.3877/MUM/2013 - A.Y. 2009-10 I.T.A. NO. 402 /MUM/2015 - A.Y. 2011-12 M/S SOEX INDIA PVT LTD NIRMAL, 21 ST FLOOR, NARIMAN POINT MUMBAI-21 VS DY.CIT, CIR.2(1), MUMBAI PAN NO. AAGCS0625Q ( APPELLANT) (RESPONDENT) APPELLANT BY SHRI DR. K SIVRAM & RAHUL HAKANI RESPONDENT BY SHRI M.C. OMI NINGSHEN DATE OF HEARING : 09-01-2017 DATE OF ORDER : 15 -02-2017 O R D E R PER ASHWANI TANEJA, AM:- THESE APPEALS PERTAIN TO SAME ASSESSEE FOR DIFFERE NT ASSESSMENT YEARS INVOLVING IDENTICAL ISSUES; THEREFORE THESE WERE HE ARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2. FIRST, WE SHALL TAKE UP APPEAL FOR A.Y.2006-07, FILED AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-38, MUMBAI [HE REINAFTER CALLED CIT(A)] DATED 28-02-2013 PASSED AGAINST THE ORDER U/S 143(3 ) R.W.S. 153A DATED 31.12.2010 ON THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ORDER OF LEA RNED ASSESSING OFFICER DENYING CLAIM OF ASSESSEE U/S. 10 B OF 2 ITA 38764-3877/MUM/2013 ITA 402/MUM/2015 RS.65,06,583/- WITHOUT APPRECIATING THAT ASSESSEE H AS COMPLIED WITH ALL CONDITIONS PRESCRIBED U/S. 10B AN D THERE IS NO VIOLATION OF CONDITION PRESCRIBED U/S. 10B(2) (III) AS NEW UNDERTAKING OF THE ASSESSEE IS NOT FORMED BY THE TR ANSFER OF PLANT AND MACHINERY PREVIOUSLY USED BY THE ASSESSEE AND HENCE ASSESSEE CLAIM U/S.10B MAY BE ALLOWED. 1.1 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH E DECISION OF THE DELHI HIGH COURT IN CIT VS. ORISSA CEMENT LTD. (2002) 254 ITR 24 WHICH WHILE DEALING WITH DEDUCTION U/S. 80J HELD THAT THE CONDITION THAT THE UNDERTAKING IS NOT FORMED BY TRA NSFER TO NEW BUSINESS OF MACHINERY AND PLANT PREVIOUSLY USED MEA NS MACHINERY AND PLANT MUST HAVE BEEN PREVIOUSLY USED BY THE ASSESSEE AND HENCE, THE SAID DECISION WAS DIRECTLY IN FAVOUR OF ASSESSEE AND THERE WAS NO OTHER CONTRARY DECISIO N AND HENCE ASSESSEE CLAIM U/S.10B MAY BE ALLOWED. 2. WITHOUT PREJUDICE TO ABOVE, THE LEARNED CIT(A) E RRED IN CONFIRMING ORDER OF LEARNED ASSESSING OFFICER DENYI NG ASSESSEE CLAIM U/S. 10B OF RS.65,06,583/- WITHOUT APPRECIATI NG THAT VALUE OF OLD/SECOND HAND PLANT AND MACHINERY HAS DI PPED BELOW 20% OF TOTAL PLANT AND MACHINERY DURING THE C URRENT ASSESSMENT YEAR AND ALL CONDITIONS OF S. 10B ARE SA TISFIED IN THE CURRENT ASST. YEAR & ASSESSEE HAS MADE CLAIM U/S. 1 0B FOR THE FIRST TIME IN THE CURRENT ASSESSMENT YEAR AND HENCE ASSES SEE CLAIM U/S. 10B MAY BE GRANTED FROM CURRENT ASSESSMENT YEA R WHICH WOULD BE THE RELEVANT ASSESSMENT YEAR IN VIEW OF EXPLANATION 2(V) OF S. 10B 9(A). 2.1 THE LEARNED CIT(A) ERRED IN NOT APPRECIATING TH E DECISION OF GUJARAT HIGH COURT IN CIT VS. SATELLITE ENGINEER ING LTD. 113 ITR 208 (GUJ.) WHICH WHILE DEALING WITH DEDUCTION U /S. 80J HELD THAT UNDERTAKING NOT FULFILLING CONDITION FOR RELIEF IN FIRST YEAR AFTER COMMENCEMENT OF PRODUCTIONS FULFILLS THE CONDITION IN SUBSEQUENT YEARS IS ENTITLED TO RELIEF IN SUBSEQUENT YEARS AND THE SAID DECISION WAS DIRECTLY IN FAVOUR OF ASSESSEE AND THERE WAS NO OTHER CONTRARY DECISIO N AND HENCE ASSESSEE CLAIM U/S. 10B MAY BE GRANTED IN CUR RENT YEAR WHEREIN ASSESSEE HAS FULFILLED ALL CONDITIONS PRESCRIBED U/S.10B. ADDITIONAL GROUND 3. THE LEARNED CIT(A) & A.O. FAILED TO APPRECIATE THAT CLAIM U/S.10B 3 ITA 38764-3877/MUM/2013 ITA 402/MUM/2015 IS TO BE ALLOWED BEFORE SETTING OFF UNABSORBED LOSS ES OF EARLIER YEARS. 3. THE SOLITARY ISSUE RAISED IN ALL THESE GROUNDS IS A BOUT ALLOWABILITY OF DEDUCTION U/S 80IB. THE AO DENIED THE BENEFIT OF D EDUCTION U/S 10B INTER-ALIA ON THE GROUND THAT ASSESSEES ELIGIBLE UNIT WAS FOR MED BY TRANSFER OF PLANT & MACHINERY WHICH WAS PREVIOUSLY USED AND IT WAS NOT NEW PLANT & MACHINERY. THE CIT(A) ALSO UPHELD THE ORDER OF THE AO. 4. DURING THE COURSE OF HEARING BEFORE US, THE LD. COU NSEL OF THE ASSESSEE VEHEMENTLY SUBMITTED THAT FIRST YEAR OF FORMATION O F THE UNIT WAS AY 2003-04. THUS, AY 2006-07 WAS THIRD YEAR BUT NO DEDUCTION WA S CLAIMED IN EARLIER TWO YEARS AND IT WAS FOR THE FIRST TIME WHEN THIS CLAIM WAS MADE IN AY 2006-07. ADMITTEDLY, PERCENTAGE OF OLD PLANT & MACHINERY IN AY 2003-04 WAS 32% AND THUS IT WAS MORE THAN 20% AND, THEREFORE, BENEFIT O F DEDUCTION WAS NOT ALLOWABLE TO THE ASSESSEE IN AY 2003-04 AND THE SAM E WAS NOT CLAIMED BY THE ASSESSEE ALSO BECAUSE THE ASSESSEE HAD INCURRED HUG E LOSSES IN AY 2003-04 AND AY 2005-06. BUT IN AY 2006-07, THE PERCENTAGE OF OLD PLANT AND MACHINERY CAME DOWN TO LESS THAN 20%. THEREFORE, B ENEFIT OF DEDUCTION SHOULD BE ALLOWED TO THE ASSESSEE FROM AY 2006-07 O NWARDS BECAUSE THE CONDITIONS HAVE BEEN COMPLIED WITH FROM THIS YEAR O NWARDS. AS PER THE LD. COUNSEL, THE ASSESSEE IS ELIGIBLE FOR THE BENEFIT O F DEDUCTION FOR THE REMAINING YEARS FROM THE YEAR WHEN ALL THE CONDITIONS ARE FUL FILLED. IT IS NOT NECESSARY THAT IF THE CONDITIONS ARE NOT FULFILLED IN THE FIR ST YEAR OF FORMATION OF UNIT, THEN ASSESSEE BECOMES DEPRIVED OF ITS ELIGIBILITY T O CLAIM THE BENEFIT IN ANY SUBSEQUENT YEAR. RELIANCE WAS PLACED BY HIM ON THE FOLLOWING JUDGMENTS:- 1. CIT VS ORISSA CEMENT LTD (2002) 254 ITR 24 (DEL) 4 ITA 38764-3877/MUM/2013 ITA 402/MUM/2015 2. CIT VS SATELLITE ENGINEERING LTD (1978) 113 ITR 208 (GUJ) 3. CIT VS GOPAL PLASTICS (P) LTD (1995) 215 ITR 136 (M AD) 4. CIT VS MICRO INSTRUMENTS CO (2016) 388 ITR 46 (P&H) 5. ADVANI OERLIKON PVT LTD VS CIT 18 TAXMANN 106 (BOM) , 5. PER CONTRA, THE LD. DR VEHEMENTLY OPPOSED THE ARGUM ENTS OF THE ASSESSEE AND SUBMITTED THAT NO FINDING HAS BEEN REC ORDED BY ANY OF THE AUTHORITIES BELOW THAT PERCENTAGE OF OLD PLANT & MA CHINERY IN THE YEAR 2006-07 CAME DOWN TO LESS THAN 20%. THE ASSESSEES CLAIM I N THIS REGARD REMAINED UNVERIFIED AND UNSUBSTANTIATED. IT WAS FURTHER SUB MITTED THAT IN LAW ALSO, THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THE DEDUCTION IN SUBSEQUENT YEAR S IF THE CONDITIONS ARE NOT FULFILLED IN THE FIRST YEAR ITSE LF IN VIEW OF THE FOLLOWING JUDGEMENTS:- 1. SAMI LABS LTD VS ACIT 334 ITR 157 9(KAR) 2. ACIT VS OMAX TEST EQUIPMENTS (P) LTD 23 ITR (T) 187 (CHEN) 3. JCIT, SR 70 VS NALCO CHEMICALS (I) LTD 97 ITD 34 8 (KOL) 4. CIT VS MAYUR LAMINATORS 211 ITR 646 (RAJ) 5. KANHAIYALAL RAMESHWAR DASS VS CIT 156 ITR 463 (R AJ) 6. GHODAVAT PAN MASALA (INDIA) P LTD VS JCIT 108 TT J 905 (PUNE) IT WAS ALSO SUBMITTED BY HIM THAT IN ANY CASE, THIS MATTER MAY BE SENT BACK TO THE LOWER AUTHORITIES FOR VERIFICATION OF FACTS AND DECIDING THE SAME IN ACCORDANCE WITH LAW. 6. IN THE REJOINDER, THE LD. COUNSEL OF THE ASSESSEE A LSO FAIRLY STATED THIS ISSUE MAY BE SENT BACK TO THE FILE OF THE AO FOR DE CIDING THE SAME AFTER VERIFYING THE FACTS AND IN ACCORDANCE WITH LAW. 7. WE HAVE GONE THROUGH THE ORDERS PASSED BY LOWER AUT HORITIES AND FIND THAT THE REQUISITE FINDING OF FACT TO DECIDE THE IS SUE BEFORE US IS CONSPICUOUSLY 5 ITA 38764-3877/MUM/2013 ITA 402/MUM/2015 MISSING; THEREFORE WE SEND THE MATTER TO THE FILE O F THE AO. THE ASSESSEE SHALL SUBMIT ALL THE REQUISITE DETAILS AND EVIDENCES TO S HOW COMPLIANCE OF ALL THE CONDITIONS OF SECTION 10B INCLUDING THE CONDITION O F OLD PLANT AND MACHINERY BEING LESS THAN 20%. THE AO SHALL TAKE INTO ACCOUN T THE FACTS OF THE CASE AND ALSO JUDGEMENTS PLACED BY BOTH THE SIDES BEFORE US TO DECIDE WHETHER THE ASSESSEE WOULD BE ELIGIBLE TO CLAIM THE DEDUCTION I N A.Y. 2006-07 (THIRD YEAR OF FORMATION OF UNIT) PARTICULARLY WHEN ALL THE CONDIT IONS WERE NOT FULFILLED IN AY 2003-04, BEING FIRST YEAR OF THE FORMATION. THE AS SESSEE SHALL BE FREE TO RAISE ALL THE LEGAL AND FACTUAL ISSUES IN THIS REGARD. W ITH THESE DIRECTIONS, ALL THE GROUNDS ARE SENT BACK TO THE FILE OF THE AO AND MAY BE TREATED AS ALLOWED, FOR STATISTICAL PURPOSES. 8. IT IS NOTED THAT ISSUES INVOLVED ARE IDENTICAL IN A LL THE REMAINING APPEALS ARE IDENTICAL. THEREFORE, ISSUES IN THESE APPEALS ARE ALSO SENT BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH ALONG WITH SAME DIRECTI ONS AS GIVEN ABOVE. 9. FURTHER, IN AY 2009-10, THE ASSESSEE HAS RAISED ONE DIFFEREN T ISSUE IN GROUND NO.3 WITH REGARD TO ADDITION ON ACCOUNT OF E XCESSIVE STOCK. IT IS NOTED THAT THIS ISSUE HAS BEEN DECIDED BY THE LOWER AUTHO RITIES WITHOUT VERIFYING PROPER FACTS. FURTHER, IN ANY CASE, THIS ISSUE IS DEPENDENT UPON ALLOWABILITY OF DEDUCTION U/S 10B. THEREFORE, THIS ISSUE ALSO IS R EQUIRED TO BE EXAMINED AND DECIDED AFRESH BY THE AO. THEREFORE, THIS ISSUE IS ALSO SENT BACK TO THE FILE OF THE AO. THIS GROUND MAY ALSO BE TREATED AS ALLOWED , FOR STATISTICAL PURPOSES. 10. THUS, ALL THE ISSUES RAISED BEFORE US IN ALL THESE APPEALS ARE SENT BACK TO THE FILE OF THE AO TO BE DECIDED AFRESH. 6 ITA 38764-3877/MUM/2013 ITA 402/MUM/2015 11. IN THE RESULT, ALL THE APPEALS ARE TREATED AS ALLOW ED, FOR STATISTICAL PURPOSE. ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSIO N OF THE HEARING. SD/- SD/- (D.T. GARASIA) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 15 TH FEBRUARY, 2017 PATEL/PS COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , H-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES