ITO, Baddi V. M/s Sri Ram Print N Pack, Solan

ITA 399/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80819 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Depreciation
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 399/CHD/2014 ASSESSMENT YEAR: 2010-11 THE I.T.O, VS. M/S SRI RAM PRINT N PACK BADDI BADDI PAN NO. ABFFS4545L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. J.S. NAGAR RESPONDENT BY : SHRI. TEJ MOHAN SINGH DATE OF HEARING : 24/07/2014 DATE OF PRONOUNCEMENT : 05/08/2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 27/01/2014 OF CIT(A) SHIMLA. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L : I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION OF RS. 48,72,087/- TO THE ASSESSEE WHICH WAS DISALLOWED BY THE A.O. U/S 80IC OF THE INCOME TAX ACT, 1961. II. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SE T-ASIDE AND THAT OF THE A.O. RESTORED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT ASSESSEE HAS PURCHASED CERTAIN MACHINERY WHICH WAS SECOND HAND MACHINERY A S PER FOLLOWING DETAILS. S.NO. BILL NO. & DATE PARTICULARS QTY. AMOUNT 1 002 DT. 07/12/05 ONE SET OF USED SECOND HAND HEIDELBERG 72 VS. FOUR, COLOR PRINTING MACHINE WITH STANDARD ACCESSORIES 1 36,40,000/- 2 26 DT. 05/04/06 HEIDEC BERG SORM SINGLE COLOR USED PRINTING MACHINE WITH STANDARD ACCESSORIES. 1 8,32,000/- 3 29 DT. 03/02/07 ONE SET OF USED SECOND HAND SEYPA 36 PAPER CUTTING MACHINE WITH STANDARD ACCESSORIES 1 3,64,000/- TOTAL RS. 48,36,000 4. AO FURTHER OBSERVED THAT MACHINERY INSTALLED BY THE ASSESSEE WAS PREVIOUSLY USED AND THEREFORE ASSESSEE WAS NOT ENTI TLED FOR DEDUCTION U/S 80IC IN TERMS OF SUB SECTION 4 OF THE SAID SECTION. THE ASSESSEE WAS DIRECTED TO SHOW CAUSE WHY THIS DEDUCTION SHOULD NO T BE DENIED. IN RESPONSE IT WAS MAINLY SUBMITTED THAT MACHINERY WAS PURCHASED FROM M/S PRINTERS PARK CHENNAI WHO HAVE GIVEN A CERTIFICATE THAT THESE MACHINES WERE NOT USED IN INDIA. AN AFFIDAVIT TO THIS EFFECT FROM THIS PARTY WAS ALSO FILED. HOWEVER ASSESSING OFFICER DID NOT FIND FORCE IN THESE SUBMISSIONS AND FOLLOWING THE EARLIER YEAR ORDER DENIED THE DEDUCTI ON. 5. ON APPEAL THE LD. CIT (A) FOLLOWING THE ORDER OF TRIBUNAL IN ASSESSEES CASE IN ITA NO. 1203/CHD/2012 AND ALLOWE D THE DEDUCTION. 6. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESS EE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 AND HE FURNISHED THE COPY OF THE ORDER OF TRIBUNAL. 8. AFTER CONSIDERING THE RIVAL SUBMISSION WE FIND T HAT THIS ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL AND SAME WAS DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARA 9 TO 12 WHICH IS AS UNDER : 9. WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY A ND FIND THAT DEDUCTION U/S 80IC WAS DENIED VIDE ASSESS MENT ORDER PASSED U/S 143(3) EVEN IN ASSESSMENT YEAR 200 7-08 ON THE SAME FOOTING, COPY OF WHICH IS PLACED AT PAG ES 43 TO 46 OF THE PAPER BOOK IN THAT YEAR EVEN AN AFFID AVIT OF M/S PRINTERS PARK, CHENNAI WAS SUBMITTED BEFORE THE ASSESSING OFFICER. THE CONTENTS OF THE AFFIDAVIT H AVE BEEN EXTRACTED BY ASSESSING OFFICER IN ASSESSMENT Y EAR 2007-08 AS UNDER:- WE HAVE IMPORTED THE SEYPA 36 PAPER CUTTING MACHINE FROM M/S SOUTH EAST TRADING INC OF USA FOR RE- SALE AND WE HAVE NOT USED THIS MACHINE FOR ANY KIND OF CUTTING OR ANY OTHER PRODUCTION IN INDIA AFTER THE IMPORT. WE SOLD THE ABOVE MACHINE TO M/S SHRI RAM PRINT N PACK VIDE OUR INVOICE NO. 29 DATED 02-02-2007 10. EVEN THE BILLS OF LADING WERE FILED BUT STILL T HE ASSESSING OFFICER DID NOT ACCEPT THE SAME. THE LD. CIT(A) ADJUDICATED THE ISSUE THROUGH HER APPELLATE ORDER, COPY OF WHICH IS PLACED AT PAGES 47 TO 50 OF THE PAPER B OOK WHEREIN VIDE PARAS 4 & 4.1 WHICH ARE AS UNDER:- 4. THE RIVAL SUBMISSIONS HAVE BEEN CAREFULLY CONSIDERED WITH REFERENCE TO THE FACTS OF THE CASE. IT IS NOTED THAT HE APPELLANT HAD DULY SUBMITTED THE BILLS OF PURCHASE OF THE MACHINERY UNDER CONSIDERATION ALONGWITH THE COPIES OF THE BILL OF LADING FROM U.S. NATIONAL LINES INC. IT HAD ALSO SUBMITTED THE AFFIDAVIT FROM THE PRINTERS PARK, FRO M WHOM THE SAID MACHINERY WAS PURCHASED WHEREIN IT WAS CERTIFIED THAT THE MACHINERY WAS IMPORTED FROM USA FOR RE-SALE AND THAT THE MACHINERY WAS NOT USED FOR ANY KIND OF CUTTING OR ANY OTHER PRODUCTION IN INDIA AFTER THE IMPORT. THE APPELLANT ALSO FURNISHE D A CERTIFICATE OF IMPORTED EXPORTER CODE (IEC) IN THE NAME OF THE PRINTERS PARK. BUT THE LD. A.O WAS NOT SATISFIED WITH THE DOCUMENTS FURNISHED BY THE APPELLANT. HE WENT ON TO CONCLUDE THAT THE AFFIDAVI T GIVEN BY THE PRINTERS PARK WAS SILENT ABOUT HE USES OF THE MACHINE AND THEREFORE THE APPELLANT HAD NOT COMPLIED WITH SECTION 80IC(4) OF THE ACT. IT IS NOT UNDERSTOOD AS TO HOW THE LD. A.O. ARRIVED AT THIS CONCLUSION EVEN AFTER THE SUBMISSION OF THE COMPLETE DOCUMENTARY EVIDENCE REGARDING THE PURCHASE OF THE MACHINERY BY THE APPELLANT, THE IMPORT OF THE MACHINERY BY THE PRINTERS PARK THE BI LLS OF IMPORT THE BILLS OF LADING AND THE AFFIDAVIT OF THE PRINTERS PARK, CHENNAI. IF THE LD. A.O. HAD SUSPECT ED ANY OF THE FACTS STATED BY THE APPELLANT OR THE PRINTERS PARK, HE SHOULD HAVE CONDUCTED INDEPENDENT ENQUIRIES AND BROUGHT SOMETHING TANGIBLE ON RECORD TO CONTROVERT THE CLAIM OF THE APPELLANT. HOWEVER, THE LD. A.O. HAS DONE NOTHING IN THIS REGARD. HE HAS SIMPLY PROCEED ON THE BASIS OF SURMISES AND CONJECTURES AND ASSUMED THAT THE MACHINERY WAS PUT TO USE IN INDIA AFTER THE IMPORT BEFORE THE APPELLANT BOUGHT THE SAME FROM THE PRINTERS PARK. 4.1 FURTHER ENQUIRIES WERE GOT CONDUCTED THROUGH THE ASSESSING OFFICER DURING THE COURSE OF APPELLAT E PROCEEDINGS. AS PER THE REPORT SUBMITTED BY THE ASSESSING OFFICER, THE BUSINESS OF M/S. PRINTERS PA RK IS TO IMPORT THE USED PRINTING MACHINES AND TO SELL TH E SAME. THEY HAVE GOT NOTHING TO DO WITH THE PRINTING IN INDIA AFTER IMPORT M/S. PRINTERS PARK HAVE ALSO FURNISHED A FRESH AFFIDAVIT DATED 24.10.2011 TO THI S EFFECT TO THE LD. A.O. AS PER THE ENQUIRIES CONDUCTED FROM THE O/O THE ZONAL JOINT DIRECTOR GENERAL OF FOREIGN TRADE, CHENNAI, THE IEC NUMBER IS MANDATORY ONLY AT THE TIME OF THE CLEARANCE OF THE IMPORTED GOODS, BUT THE PROCESS OF IMPORT, I.E. PLACING THE ORDER, FILING OF BILL OF LADING ETC. CA N TAKE PLACE EVEN WITHOUT AN IEC NUMBER. IT IS NOTED THAT THE IMPORTED GOODS IN QUESTION WERE CLEARED AFTER THE RECEIPT OF THE IEC NUMBER BY M/S. PRINTER S PARK. THUS THERE IS NOTHING ON RECORD TO ESTABLISH THAT THE MACHINES PURCHASED BY THE APPELLANT FROM M/S. PRINTERS PARK. WHICH, IN TURN IMPORTED THE SAME FRO M THE USA, WERE PUT TO USE IN INDIA AFTER THE IMPORT AND PRIOR TO THE PURCHASE BY THE APPELLANT. THEREFORE, THE DENIAL OF DEDUCTION U/S 80-IC BY THE LD. A.O. IS NOT FOUND TO BE SUSTAINABLE. THE LD. A. O. IS ACCORDINGLY DIRECTED TO ALLOW THE DEDUCTION U/S 80-IC OF THE ACT TO THE APPELLANT . 11. THE ABOVE CLEARLY SHOWS THAT SUFFICIENT EVIDENC E WAS THERE TO PROVE THAT PLANT AND MACHINERY PURCHAS ED FROM M/S PRINTERS PARK WAS NOT USED PREVIOUSLY IN I NDIA. SIMILAR ENQUIRIES WERE ALSO CONDUCTED BY LD. CIT(A) WHICH GAVE THE SAME RESULTS. WE FURTHER FIND THAT EXPLAN ATION TO SECTION 80IA (3) OF THE ACT READS AS UNDER:- EXPLANATION 1. FOR THE PURPOSES OF CLAUSE (II), AN Y MACHINERY OF PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINER Y OR PLANT PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLO WING CONDITIONS ARE FULFILLED, NAMELY :- (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PREVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA: AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESPECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATION OF MACHINERY OR PLANT BY THE ASSESSEE. FURTHER, THE EXPLANATION TO SECTION 80IC(4) READS A S UNDER:- EXPLANATION- THE PROVISIONS OF EXPLANATIONS 1 AND 2 TO SUB- SECTION (3) OF SECTION 80-IA SHALL APPLY FOR THE PU RPOSES OF CLAUSE(II) OF THIS SUB-SECTION AS THEY APPLY FOR TH E PURPOSES OF CLAUSE (II) OF THAT SUB-SECTION. 12. THUS, THROUGH THIS CLARIFICATION IN RESPECT OF USAGE OF PLANT AND MACHINERY U/S 80IC (4) HAS BEEN ADOPTED I N AS GIVEN IN EXPLANATION TO SECTION 80IA(3). THE EXPLA NATION MAKES IT CLEAR THAT PLANT WHICH WAS USED OUTSIDE IN DIA BY A PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGAR DED AS PLANT AND MACHINERY PREVIOUSLY USED FOR ANY PURPOSE . SINCE IN THE CASE BEFORE US, THE PLANT AND MACHINER Y WAS NEVER USED WITHIN INDIA, AS PER THE DOCUMENTS SUBMI TTED BY THE ASSESSEE AND ENQUIRIES MADE BY LD. CIT(A). THOUGH THE MACHINERY WAS SECOND HAND BUT IT WAS NOT USED BY THE ASSESSEE OUTSIDE INDIA, THEREFORE, IT C ANNOT BE SAID THAT MACHINERY WAS PREVIOUSLY USED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80IC(4) OF THE A CT. WE FIND NO FORCE IN THE SUBMISSIONS OF THE LD. DR T HAT DOCUMENTS WERE NOT FILED BEFORE THE ASSESSING OFFIC ER. THE READING OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2006-07 CLEARLY SHOW THAT DOCUMENTS WERE FILED BEFO RE THE ASSESSING OFFICER ALSO. IN THESE CIRCUMSTANCES , WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 9. FOLLOWING THE ABOVE ORDER WE DECIDE THE ISSUE AG AINST THE REVENUE. 10. IN THE RESULT REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05.08.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 05 TH AUGUST, 2014 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A),THE DR