ITO, Ludhiana V. M/s S.E. Exports, Ludhiana

ITA 413/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51549 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Section: 133A; 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 413/CHD/2011 ASSESSMENT YEAR: 2007-08 THE ITO, VS M/S S.E. EXPORTS, WARD-1(3), LUDHIANA LUDHIANA PAN NO. AACFS4051N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL RESPONDENT BY : SHRI ASHWANI KUMAR DATE OF HEARING : 01.11.2011 DATE OF PRONOUNCEMENT : 02.11.2011 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF CIT(A)-II, LUDHIANA DATED 21.2.2011 RELATING TO AS SESSMENT YEAR 2007- 08. 2. GROUND NOS. 1& 2 OF THE APPEAL READS AS UNDER:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N HOLDING THAT THE ADVANCEMENT OF THE INTEREST FREE LOAN BY THE ASSESSEE TO THIRD PARTIES AND PARTNERS, IS IN DUE COURSE OF BUSINESS, WHEN NO EVIDENCE HAD BEEN PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N HOLDING THAT THE ADVANCEMENT OF THE INTEREST FREE 2 LOAN BY THE ASSESSEE TO THIRD PARTIES AND PARTNERS, IS IN DUE COURSE OF BUSINESS, BY SIMPLY RELYING ON THE ORDER OF HON'BLE ITAT FOR ASSESSMENT YEAR 2006-07 IN ITA NO. 879/CHD/2009 DATED 29.3.2010 AND WITHOUT GOING INTO THE CIRCUMSTANCES IN THE PRESENT ASSESSMENT YEAR. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFAC TURING AND EXPORT OF GARMENTS. 4. ON EXAMINATION OF BOOKS OF ACCOUNT, THE ASSESSIN G OFFICER NOTICED THAT A DEDUCTION ON ACCOUNT OF INTEREST TO BANK IN THE PROFIT AND LOSS ACCOUNT WAS CLAIMED AT RS. 46,16,280/-, MAJOR OF W HICH RELATES TO SECURED LOAN RAISED FROM STATE BANK OF BIKANER & JAIPUR. ON THE OTHER HAND, IT WAS FOUND THAT THE ASSESSEE HAD MADE HUGE INTEREST FREE ADVANCES TO ITS PARTNER SHRI DHIRAJ SALUJA, M/S ASHOK KUMAR & COMPA NY, SHRI RAJINDER JAIN, M/S SAURABH KNITWEARS, M/S SALUJA INTERNATION AL AND M/S SALUJA COTEX PVT LTD. SINCE THE AMOUNT ADVANCED TO THE AB OVE PARTIES APPEARED TO HAVE BEEN ADVANCED FOR NON BUSINESS PURPOSES, TH E ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE PROPORT IONATE INTEREST SHOULD NOT BE DISALLOWED. AFTER RECEIVING REPLY DATED 8. 9.2009 FROM THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE CONTE NTION OF THE ASSESSEE THAT ADVANCES TO M/S ASHOK KUMAR & COMPANY, SHRI RA JINDER JAIN AND SAURABH KNITWEARS WERE BUSINESS ADVANCES, ARE NOT A CCEPTABLE IN THE ABSENCE OF DOCUMENTARY EVIDENCES. THEREFORE, THE ADVANCES MADE TO THESE CONCERNS WERE TREATED AS NON BUSINESS ADVANCE S AND INTEREST OF RS. 10,72,500/- ON THE AMOUNT ADVANCED / PERTAINING TO THE YEAR UNDER CONSIDERATION WAS WORKED OUT BELOW WAS DISALLOWED I N VIEW OF THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT: 3 M/S ASHOK KUMAR & CO. THE AMOUNT OF RS. 25.00 LACS REMAINED AS OUTSTANDIN G THROUGHOUT THE YEARS, AS IT WAS OPENING BALANCE AS ON 1.4.2006 . THE INTEREST ON IT @ 7.1% COMES TO RS. 1,77,500/-. SHRI RAJINDER KUMAR JAIN THE AMOUNT OF RS. 20.00 LACS REMAINED AS OUTSTANDIN G THROUGHOUT THE YEAR, AS IT WAS OPENING BALANCE AS ON 1.4.2006. THE INTEREST ON IT @ 7.1% COMES TO RS. 1,42,000/-. M/S SAURABH KNITWEARS THE AMOUNT OF RS. 52.30 LACS REMAINED AS OUTSTANDIN G THROUGHOUT THE YEAR, AS IT WAS OPENING BALANCE AS ON 1.4.2006. THE INTEREST ON IT @ 7.1% COMES TO RS. 3,72,750/-. 5. THE ASSESSING OFFICER TOOK THE VIEW THAT THE INT EREST BEARING FUNDS WERE ADVANCED TO THE PARTNER INTEREST FREE FOR NON BUSINESS PURPOSES. THE INTEREST ON THE ADVANCES MADE TO SHRI DHIRAJ SALUJA AND NEERAJ SALUJA WERE WORKED OUT AS PER ANNEXURE, FOR BEING PART OF ASSESSMENT ORDER WHICH COMES TO RS. 3,76,779/- AS THE FUNDS, OUT OF BORROWED FUNDS WERE NOT UTILIZED FOR BUSINESS PURPOSES. THE ASSESSING OFFICER ALSO DISALLOWED RS. 3,67,956/- U/S 36(1)(III) OF THE ACT WITH REGARD TO THE CASE OF M/S SALUJA COTEX PVT LTD. THE ASSESSING OFFICER TOOK THE VIEW THAT SHRI DHIRAJ SALUJA, SHRI NEERAJ SALUJA AND M/S SALU JA COTEAX PVT LTD TO WHOM THE FUNDS HAVE BEEN DIVERTED ARE SPECIFIED PER SONS U/S 40A(2)(B) OF THE ACT, THEREFORE, THE PROPORTIONATE EXPENDITURE I NCURRED ON INTEREST HAS BEEN DISALLOWED AMOUNTING TO RS. 7,44,735/- AS PER THE PROVISIONS OF SECTION 40A(2)(A) READ WITH SECTION 36(1)(III) OF T HE ACT. THUS, THE TOTAL 4 DISALLOWANCE ON ACCOUNT OF INTEREST FREE ADVANCES M ADE OUT OF INTEREST BEARING FUNDS CAME TO RS. 14,36,985/-. 6. ON APPEAL, THE CIT(A) DELETED THE ENTIRE ADDITIO N FOLLOWING THE DECISION OF THIS BENCH OF THE TRIBUNAL DATED 31.12. 2009 PASSED IN ITA NO. 876/CHD/2008 AND ITA NO. 799/CHD/2008 IN ASSESSEE C ASE FOR ASSESSMENT YEAR 2005-06. THE CIT(A) HAS ALSO OBSERVED THAT SI MILAR VIEW WAS TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 8 79/CHD/2009 FOR ASSESSMENT YEAR 2006-07. 7. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF CIT(A), LUDHIANA-II DATED 21.2.2011. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE PER USED THE ORDER OF TRIBUNAL DATED 29.3.2010 PASSED IN ITA NO. 879/CHD/ 2009 RELATING TO ASSESSMENT YEAR 2006-07 AND ALSO ORDER DATED 31.12. 2009 PASSED IN ITA NO. 876/CHD/2008 AND ITA NO. 799/CHD/2008 FOR ASSES SMENT YEAR 2005- 06. BOTH THE ORDERS WERE PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE. WE FIND THAT THE FACTS OF THE ASSESSEES CASE FOR T HE RELEVANT YEAR ARE IDENTICAL TO THE FACTS OF THE EARLIER YEARS IN THE CASE OF THE ASSESSEE. WHILE DECIDING THE SIMILAR ISSUE FOR ASSESSMENT YEA R 2005-06, THE TRIBUNAL HELD AS UNDER:- 38. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREF ULLY. BEFORE WE PROCEED TO ADJUDICATE THE DISALLOWANCE MA DE BY THE ASSESSING OFFICER, IT WOULD BE APPROPRIATE TO NOTIC E THE RELEVANT FACTS. THE ASSESSEE WAS FOUND TO HAVE INCURRED EXP ENDITURE BY WAY OF INTEREST OF RS.43,15,231/- IN RESPECT OF BOR ROWINGS MADE FROM BANKS AND OTHER CREDIT INSTITUTIONS. THE ASSES SEE IS A PARTNERSHIP FIRM AND IT WAS NOTICED BY THE ASSESSIN G OFFICER 5 THAT THERE WERE CERTAIN OVER-WITHDRAWALS MADE BY SO ME OF THE PARTNERS. IT IS FURTHER OBSERVED THAT EACH OF THE P ARTNERS IS MAINTAINING TWO ACCOUNTS, ONE BEING THE CAPITAL ACC OUNT AND OTHER BEING CURRENT ACCOUNT. THE CONTENTION OF THE ASSESSING OFFICER IS THAT THE DEBIT BALANCES APPEARING IN THE CURRENT ACCOUNT HAVE TO BE SEEN AS SUCH TO INFER THAT THERE IS OVERWITHDRAWAL BY THE PARTNERS. ON THE OTHER HAND, THE PLEA OF THE ASSESSEE IS THAT THE RESPECTIVE CAPITAL ACCOUNT S AND CURRENT ACCOUNTS BE NETTED OFF, TO EXAMINE WHETHER THERE EX ISTS ANY OVERWITHDRAWAL. ON THIS ASPECT, WE HAVE NO HESITAT ION IN ACCEPTING THE PLEA OF THE ASSESSEE WHICH IS REASONA BLE AND PRUDENT. 39. THE OTHER POINT OF DIFFERENCE IS THAT THE ASSES SEE CONTENDS THAT THE DEBIT BALANCES REMAINING IN THE CASE OF TW O OF THE PARTNERS IS TO BE SEEN IN THE FACE OF THE COMBINED CREDIT BALANCES OF THE OTHER PARTNERS AND AFTER COMBINING ALL THE ACCOUNTS, THERE REMAINS A CUMULATIVE CREDIT BALANCE ULTIMATELY. THE DETAILS, IN THIS REGARD HAVE BEEN TABULATED BY THE CIT(APPEALS) IN PAGE 7 OF HIS ORDER. ON THIS ASPEC T, FACTUALLY SPEAKING THERE IS NO DISPUTE THAT THE DEBIT BALANCE IN ACCOUNT OF TWO OF THE PARTNERS IS LESS THAN THE COMBINED CREDI T BALANCES OF THE OTHER PARTNERS. THE CONTROVERSY ON THIS ASPECT HAS BEEN A SUBJECT MATTER OF CONSIDERATION BY THE CHANDIGARH B ENCH OF THE TRIBUNAL IN A RECENT DECISION IN THE CASE OF M/S AN SYSCO (ITA NO.883/CHANDI/2008) FOR ASSESSMENT YEAR 2005-06, DA TED 17.09.2009. THE TRIBUNAL HAS MADE THE FOLLOWING DI SCUSSION : 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY. FROM THE ORDERS OF THE LOWER AUTHORITIE S, IT IS EVIDENT THAT RELIANCE HAS BEEN PLACED ON THE DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ABHISHEK INDUSTRIES LTD. (SUPRA) TO JUSTIFY THE IMPUGNED ADDITION. THE CIT(APPEALS) OBSERVES THAT IN TERMS OF THE DECISION OF ABHISHEK INDUSTRIES LTD. (SUPRA), WHEREVER ANY FUND GOES OUT TO THE KITTY OF THE BUSINESS FOR NON-BUSINESS PURPOSES , THEN THERE HAS TO BE DISALLOWANCE OF INTEREST. IN OUR CONSIDERED OPINION, BEFORE SUCH A PROPOSITION CAN B E APPLIED, THE FACT SITUATION OF THE CASE MUST WARRAN T ITS APPLICATION. IN OTHER WORDS, FIRST AND FOREMOST, IT IS REQUIRED TO BE DETERMINED WHETHER AT ALL, THERE IS A 6 DIVERSION OF INTEREST BEARING FUNDS FOR NON-BUSINES S PURPOSES. IN THIS CASE, THE CLAIM SET UP BY THE ASSESSEE IS THAT THE DEBIT BALANCE OF THE THREE PAR TNERS IS LESS THAN THE COMBINED CREDIT BALANCES OF THE OT HER PARTNERS, MEANING THEREBY THAT THE PARTNERS CAPITA L ACCOUNT CUMULATIVELY PRESENTS A CREDIT BALANCE. ACCORDING TO THE ASSESSEE, THE DEBIT AND CREDIT BALANCES OF ALL THE PARTNERS HAVE TO BE SETOFF AND IF IT DOES NOT RESULT IN A NET DEBIT BALANCE, THEN IT CAN NOT BE SAID THAT ANY BUSINESS FUNDS HAVE BEEN DIVERTED FOR NON-BUSINESS PURPOSES AND THEREFORE IN SUCH A SITUATION, ADDITION OF THE IMPUGNED NATURE CANNOT B E MADE. WE FIND AMPLE FORCE IN THIS PLEA OF THE ASSES SEE AND THE SAME IS SUPPORTED BY THE DECISION OF OUR CO - ORDINATE BENCH IN CASE OF UNITED TRADING CO. (SUPRA ). EVEN THE DECISION OF THE THIRD MEMBER IN THE CASE O F APOLLO TRADE LINKS (SUPRA) ALSO SUPPORTS THE ASSESS EE. THE FOLLOWING OBSERVATIONS IN THE HEAD NOTES ARE OF RELEVANCE: SECTION 36(1)(III) OF THE INCOME-TAX ACT, 1961 INTEREST ON BORROWED CAPITAL ASSESSMENT YEARS 1985-86 TO 1987-88 ONE OF FIVE PARTNERS OF ASSESSEE-FIRM WITHDREW A SUM OF RS.1,39,263 THEREBY INCREASING HER DEBIT BALANCE IN FIRMS ACCOUNT ASSESSEE-FIRM HAD EARLIER DRAWN FROM BANK CERTAIN AMOUNT OUT OF WHICH SAID SUM HAD BEEN PAID TO HER ITO HELD THAT FUNDS DRAWN FROM BANK WERE DIRECTLY CREDITED TO SAID PARTNER, THEREBY ESTABLISHING A DIRECT NEXUS BETWEEN BORROWED FUNDS AND AMOUNT PAID TO PARTNER HE ACCORDINGLY, DISALLOWED INTEREST ON BORROWED CAPITAL EQUAL TO AMOUNT OF INTEREST WHICH ASSESSEE-FIRM WOULD HAVE RECEIVED FROM PARTNER ANOTHER PARTNER A HAD ALSO WITHDRAWN LIKE AMOUNT BUT NO DISALLOWANCE OF INTEREST WAS MADE BECAUSE OF HIS ACCOUNT SHOWING CREDIT BALANCE-HOWEVER, OVERALL CAPITAL OF PARTNERS WAS IN EXCESS OF WITHDRAWAL MADE BY PARTNER WHETHER ALLOWING A.PARTNER HAVING DEBIT BALANCE, TO WITHDRAW AFORESAID SUM WITH CONSENT OF OTHER PARTNERS HAVING CREDIT BALANCES, WAS A BUSINESS PURPOSE, AND, THUS DISALLOWANCE OF INTEREST ON BORROWED FUNDS IN RESPECT OF AMOUNT SO WITHDRAWN WAS JUSTIFIED- HELD, NO. 20. IN THIS CASE, FACTUALLY SPEAKING, THE COMBINED BALANCE STANDING IN THE PARTNERS CAPITAL ACCOUNT I S IN CREDIT, AS EVIDENCED FROM THE DETAILS PLACED AT PAG E 24 OF THE PAPER BOOK. THIS SHOWS THAT THIS IS NOT A CA SE OF DIVERSION OF FUNDS FOR NON-BUSINESS PURPOSES IN VIE W OF AFORESAID PRECEDENTS. THEREFORE, THE PROPOSITION INVOKED BY THE LOWER AUTHORITIES ON THE BASIS OF TH E 7 DECISION IN THE CASE OF ABHISHEK INDUSTRIES LTD.(SU PRA), CANNOT BE APPLIED IN THIS CASE SINCE FACTUALLY THER E IS NO DIVERSION OF BUSINESS FUNDS FOR NON-BUSINESS PURPOS ES. HENCE, THE ADDITION SUSTAINED BY THE CIT(A) IS INCO RRECT AND DESERVES TO BE DELETED. WE ORDER ACCORDINGLY FOLLOWING THE AFORESAID PARITY OF REASONING, IN THE PRESENT CASE IT IS FOUND THAT THE COMBINED BALANCE STANDING IN THE PARTNERS CAPITAL ACCOUNT IS IN CREDIT AND THEREFORE, IT CANN OT BE CONSTRUED TO BE A CASE OF DIVERSION OF FUNDS FOR NON-BUSINESS PURPOSES. THE ADDITION, THEREFORE MADE BY THE ASSESSING OFFICER D ESERVES TO BE DELETED. WE HOLD SO. IN THE RESULT, THE ENTIRE AD DITION OF RS.43,15,231/- IS HEREBY SET ASIDE. 9. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL (SUPRA), WE DO NOT FIND ANY MERIT IN THE ABOVE GROUNDS AND CONSEQUENTL Y WE DISMISS GROUND NOS. 1 & 2 OF THE APPEAL. 10. GROUND NO. 3 OF THE APPEAL READS AS UNDER:- 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N DELETING THE ADDITION MADE ON ACCOUNT OF RESTRICTIN G THE DEDUCTION U/S 80IB TO RS. 70,41,940/- ON PROPORTIO NATE BASIS IN VIEWING THE PRODUCTION CONSTRAINTS, WHILE IGNORING THE FACT THAT THE ADDITION WAS MADE ON THE BASIS OF THE FACTS AND FIGURES NOTICED DURING THE COURSE OF SURVEY U/S 133A CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E AND THERE WAS NO SUBSTANTIAL CHANGE IN THE INFRASTRUCTU RE, MACHINERY AND MANPOWER ETC. AFTER THE DATE OF SURVE Y. 11. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, TH E ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT @ 100% OF THE AVAILABLE PROFIT BUT NOT EXCLUDED DUTY DRAW BACK AND DEPB FROM THE SAME. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE DEDUCTION MADE NOT BE RESTRICTED IN VIEW OF THE DECISION ON THE HON'BLE SUPREME COUR T IN THE CASE OF CIT VS STERLING FOODS 237 ITR 579 (SC) AND IN THE CASE OF M/S LIBERTY INDIA 8 293 ITR 520 (P&H) DECIDED BY THE HON'BLE PUNJAB & H ARYANA HIGH COURT. THE ASSESSING OFFICER ALSO OBSERVED THAT THE HON'BLE SUPREME COURT IN THE CASE OF M/S SEL MANUFACTURING CO. PVT. LTD (2009) 225 CTR (SC) 233 HAD UPHELD THAT DEPB/ DUTY DRAW BACKS WERE INCENTIVE PROFITS AND THESE WERE NOT PROFITS DERIVED FROM THE ELIGIBL E PROFIT U/S 80IB OF THE ACT AND RECOMPUTED THE ELIGIBLE PROFIT AT RS. 12,59 ,92,636/-. THE ASSESSING OFFICER CONCLUDED THAT THE DEDUCTION CLAI MED U/S 80IB OF THE ACT WAS NOT ELIGIBLE IN RESPECT OF THE EXPORT INCEN TIVE AND BANK INTEREST EARNED BY THE ASSESSEE. 12. ON APPEAL, THE CIT(A) HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE CONTENTION OF THE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. AS RIGHTLY POINTED OUT BY THE LD. COUNSEL FOR THE A PPELLANT, SIMILAR ISSUE CAME UP FOR DISCUSSION IN APPELLANTS OWN CASE FOR THE EARLIER ASSESSMENT YEARS I.E. A/Y 2005-06 A ND 2006- 07 FOR THE REASONS DISCUSSED IN THE ORDER DATED 8.7 .2008 IN APPEAL NO. 363-IT/CIT(A)-I/07-08 AND ALSO IN ITA NO . 39- IT/CIT(A)-108-109. FOR ASSESSMENT YEAR 2006-07 IT WAS, HOWEVER, HELD THAT THE APPELLANT COULD NOT MANUFACT URE 19.71 LAC PIECES FOR ASSESSMENT YEAR 2005-06 AND 16.85 LA CS PIECES FOR ASSESSMENT YEAR 2006-07. THE CLAIM OF THE APPE LLANTS BADDI UNIT FOR THE MANUFACTURE OF 10.21 LAC PIECE A ND 8.40 LAC PIECES IN ASSESSMENT YEARS 2003-04 AND 2004-05, RESPECTIVELY HAD ALSO BEEN ACCEPTED IN THE RESPECTI VE APPELLATE ORDERS. THEREFORE, ONCE THE CLAIM OF THE APPELLANT HAVING MANUFACTURED NUMBER OF PIECES MORE THAN THOS E CLAIMED TO HAVE BEEN MANUFACTURED IN THE ASSESSMENT YEAR UNDER CONSIDERATION HAS BEEN ACCEPTED, THERE IS NO JUSTIFICATION FOR HOLDING IN THE ASSESSMENT YEAR UN DER CONSIDERATION THAT THE APPELLANTS BADDI UNIT COULD NOT MANUFACTURE ONLY ONE LAC PIECES. THIS ISSUE WAS FU RTHER 9 RAISED BY THE DEPARTMENT BEFORE THE HON'BLE CHANDIG ARH BENCH OF THE ITAT AND HON'BLE CHANDIGARH BENCH IN I TA NO. 879/CHD/2009 VIDE ITS ORDER DATED 29.3.2010 DISMISS ED THE APPEAL OF THE REVENUE. COPY OF ORDER HAS BEEN PLAC ED ON RECORD BY THE LD. COUNSEL FOR THE APPELLANT. THEREF ORE, FOR THE REASONS GIVEN IN THE RESPECTIVE APPELLATE ORDER S OF THE APPELLANT FOR ASSESSMENT YEAR 2006-07 AND THE EARLI ER ASSESSMENT YEARS WHICH HAVE ALREADY BEEN UPHELD BY THE HON'BLE CHANDIGARH BENCH OF ITAT, IT IS HELD THAT T HE APPELLANTS BADDI UNIT WAS CAPABLE MANUFACTURING 17 .89 LAC PIECE DURING THE RELEVANT PERIOD. OTHERWISE ALSO TH E ASSESSING OFFICER, APART FROM RELYING ON THE PAST HISTORY HAS NOT BROUGHT ANY FRESH EVIDENCE ON RECORD TO NEGATE THE CLAIM OF THE APPELLANT. THE ACTION OF THE ASSESSING OFFI CER IN REFUSING THE CLAIM OF DEDUCTION U/S 80IB ON PROPORT IONATE BASIS IS, THEREFORE, NOT SUSTAINABLE. SINCE, IT IS A COVERED ISSUE, THEREFORE, RESPECTFULLY FOLLOWING THE HON'BL E ITATS ORDER THE RELIEF IS ALLOWED TO THE APPELLANT. THE ASSESSING OFFICE IS, ACCORDINGLY, DIRECTED TO ALLOW THE DEDUC TION U/S 80IB TO THE APPELLANT CONSIDERING THE ENTIRE PRODUC TION OF BADDI UNIT. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE AL SO PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE I SSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE B Y THE DECISION OF THE ITAT A BENCH, CHANDIGARH DATED 29.3.2010 OF THE T RIBUNAL PASSED IN ASSESSEES OWN CASE AND ITA NO. 879/CHD/2009 RELAT ING TO ASSESSMENT YEAR 2006-07. WHILE DECIDING A SIMILAR ISSUE, THE TRIBUNAL HELD AS UNDER:- 2. THE FIRST GROUND IS WITH REGARD TO THE ACTION OF THE ASSESSING OFFICER IN RESTRICTING THE DEDUCTION U/S 80IB OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT') AT RS.1,84,66,426/- AS AGAINST ASSESSEE'S CLAIM OF RS.11,13,58,701/- ON THE GROUND THAT THE INDUSTRIAL 10 UNDERTAKING OF THE ASSESSEE WAS NOT CAPABLE OF ACHI EVING PRODUCTION DECLARED BY THE ASSESSEE BY NOT ACCEPTIN G THE PRODUCTION DECLARED BY THE ASSESSEE, THEREBY NOT ACCEPTING THE PRODUCTION DECLARED BY THE ASSESSEE, ASSESSING OFFICER DENIED THE BENEFIT OF DEDUCTION U /S 80IB ON THE PROFITS DERIVED FROM THE UNACCEPTED PRODUCTI ON. THE CIT(APPEALS) HAS DELETED THE ADDITION BY FOLLOW ING AN EARLIER ORDER OF THE CIT(APPEALS) IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2005-06 DATED 8.7.2008. TH E CIT(APPEALS) NOTED THAT FOR THE ASSESSMENT YEARS 20 03-04 AND 2004-05, THE CLAIM OF THE ASSESSEE FOR HAVING MANUFACTURED THE DECLARED NUMBER OF PIECES HAS ALSO BEEN ACCEPTED AND THEREFORE, HE DID NOT FIND ANY JUSTIFI CATION TO HOLD TO THE CONTRARY IN THE YEAR UNDER CONSIDERA TION. ACCORDINGLY, THE ACTION OF THE ASSESSING OFFICER IN SCALING DOWN THE CLAIM OF DEDUCTION U/S 80IB ON PROPORTIONA TE BASIS WAS SET ASIDE. AGAINST SUCH A DECISION, THE REVENUE IS IN APPEAL BEFORE US. 3. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE APPEAL OF THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS) FOR THE ASSESSMENT YEAR 2005-06 HA S SINCE BEEN ADJUDICATED BY THE TRIBUNAL VIDE ITA NO. 876/CHANDI/2008 DATED 31.12.2009 IN FAVOUR OF THE ASSESSEE, A COPY OF THE ORDER WAS PLACED ON RECORD. THE TRIBUNAL IN ITS ORDER DATED 31.12.2009 HAS RELIED U PON ITS EARLIER DECISION IN IT(SS) NO. 108 & 109/CHANDI/200 5 DATED 18.09.2009 IN THE CASE OF M/S S.E.L. MANUFACT URING CO. P. LTD. FOLLOWING THE AFORESAID PRECEDENT, WHICH CONTINUES TO HOLD THE FIELD, WE FIND NO MISTAKE ON THE PART OF THE CIT(APPEALS) IN DELETING THE IMPUGNED ADDITI ON. AS A RESULT, THE GROUND OF THE REVENUE IS DISMISSED. 14. THE FACTS OF THE PRESENT YEAR ARE IDENTICAL TO THE FACTS OF THE EARLIER YEARS IN THE CASE OF THE ASSESSEE. RESPECTFULLY FO LLOWING THE ORDER OF THE 11 TRIBUNAL (SUPRA), WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL AND ACCORDINGLY GROUND NO.3 OF THE APPEAL IS DISMISSED. 15. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF NOVEMBER, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 2 ND NOVEMBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR