DCIT 1(1), MUMBAI V. GOOD VALUE MARKETING CO. LTD, MUMBAI

ITA 4149/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4161 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 1996-1997
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARTI M SINGH
• Assessee Lawyers: SUDHIR J MEHTA
• Keywords: Principle of natural justice; Additional evidence
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BE NCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER / I .TA NO.4149/MUM/2014 ( / ASSESSMENT YEAR:1996-97 THE DCIT(OSD) - 1, AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. GOOD VALUE MARKETING CO. LTD., INDUSTRIAL ASSURANCE BLDG., MUMBAI-400 020 ./ ./ PAN/GIR NO. AAACG 4925D ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: MS. BHARTI M. SINGH / RESPONDENT BY: SHRI SUDHIR J. MEHTA / DATE OF HEARING :01.02.2016 !' / DATE OF PRONOUNCEMENT :05.02.2016 / O R D E R PER C.N. PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE O RDER OF THE LD. CIT(A)-1, MUMBAI DATED 14.03.2014 PERTAINING TO AS SESSMENT YEAR 1996-97. 2. THE ONLY ISSUE IN THE APPEAL OF THE REVENUE IS T HAT THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S. 80IA OF THE ACT AS CLAIMED BY THE ASSESSEE IN RESPECT OF DAMAN UNIT. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBMITS THAT AN IDENTICAL ISSUE IN ASSESSEES OWN CASE COME UP BEFO RE HONBLE TRIBUNAL, MUMBAI BENCH FOR ASSESSMENT YEAR 1994-95 IN ITA NO. ITA NO.4149/M/2014 2 6397/M/2002. THE LD. COUNSEL SUBMITS THAT BY ORDER DATED 31.12.2008, THE CO-ORDINATE BENCH ALLOWED THE CLAIM OF THE ASSESSEE U/S. 80IA IN RESPECT OF THE UNIT AT DAMAN. HE PRAY S THAT THE APPEAL OF THE REVENUE MAY BE DISMISSED FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR . 4. THE LD. DEPARTMENTAL REPRESENTATIVE PLACED RELIA NCE ON THE ASSESSMENT ORDER IN DENYING THE DEDUCTION U/S. 80IA OF THE ACT. 5. WE HAVE PERUSED THE ORDERS OF THE LOWER AUTHORIT IES AND ALSO PERUSED THE ORDER OF THE CO-ORDINATE BENCH IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 1994-95, WHEREIN IT WAS HEL D THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S. 80IA OF THE ACT. WHILE HOLDING SO, THE CO-ORDINATE BENCH HELD AS UNDER: REGARDING GROUND NO. 1 THE A.O. HELD THAT THE ASSES SEE COMPANY HAD ESTABLISHED A UNIT BY REORGANIZATION OF EXISTING BUSINESS BY AMALGAMATION OF ECOMAX AGRO SYSTEM AND BIOSENSE CROP PROTECTION WHICH WAS SANCTIONED ON 27.01.1994 BY HON'BLE BOMBAY HIGH COURT, HENCE, ASSESSEE IS NOT ENTITLED FOR DEDUCTION IN VIEW OF PROVISIONS OF SECTION 80IA(2)(I)(II). HE ALSO HELD THAT NO PRODUCT WAS MANUFACTURED BY THE NEW UNIT. DEDUCTION UNDER SECTION 80I IS NOT ALLOWABLE IN CASE OF ASSESSEE WH O MANUFACTURES OR PRODUCES ARTICLE AFTER 31.03.1991. SINCE THE ASS ESSEE BEGAN MANUFACTURING FROM 01.05.1993 DEDUCTION WAS NOT AVA ILABLE. 3. ON APPEAL THE LEARNED CIT(A) DELETED THE DISALLOWANCE STATING THAT THE A.O. HAS CONFUSED BET WEEN SECTION 80I AND 80IA. THE DATE OF COMMENCEMENT OF PRODUCTIO N WAS APPARENTLY TAKEN FROM SECTION 80I INSTEAD OF 80IA. DEDUCTION UNDER SECTION 80I IS NOT AVAILABLE TO MANUFACTURER OF PRODUCER WHO BEGINS MANUFACTURE AFTER 31.03.1991 BUT DEDUCTI ON UNDER SECTION 80IA WAS ELIGIBLE TO MANUFACTURER WHO BEGIN S MANUFACTURE OR PRODUCES BETWEEN 01.04.1993 TO 31.03 .2000. HE FURTHER HELD THAT THE A.O. WAS ALSO CONFUSED ABOUT ASSESSEE COMPANY AND THE INDUSTRIAL UNDERTAKING OF COMPANY A T DAMAN. THAT THREE OTHER UNITS AMALGAMATED WITH ASSESSEE CO MPANY BY ITA NO.4149/M/2014 3 ITSELF WILL NOT DISENTITLE THE ASSESSEE COMPANY FRO M CLAIMING DEDUCTION UNDER SECTION 80IA. WHAT IS IMPORTANT IS THAT UNIT SET UP BY THE ASSESSEE COMPANY AT DAMAN SHOULD BE ELIGI BLE FOR DEDUCTION UNDER SECTION 80IA(7) AND (9). UNDER SECT ION 80IA (7) THE BUSINESS OF INDUSTRIAL UNDERTAKING HAS TO BE TR EATED SEPARATE FROM OTHER UNIT OF BUSINESS OF THE COMPANY AND SECT ION 80IA(9) EMPOWERS A.O. TO COMPUTE PROFIT OF THE UNIT IF HE F INDS THAT THE DEDUCTION HAS BEEN CLAIMED AT A HIGHER FIGURE THROU GH INTER UNIT TRANSACTIONS. THEREFORE AMALGAMATION OF THREE OTHER COMPANIES WITH ASSESSEE COMPANY IN 1994 DOES NOT BY ITSELF EF FECT THE DEDUCTION UNDER SECTION 80IA AVAILABLE TO DAMAN UNI T OF ASSESSEE COMPANY. FURTHER THE ASSESSMENT DONE UNDER SECTION 143(3) FOR ASSESSMENT YEAR 1995-96 AND 1996-97 ALSO SHOW THAT A.O. HAS ACCEPTED THE ELIGIBILITY CLAIM OF THE ASSESSEE'S UN IT AT DAMAN. 4. THE LEARNED D.R. PLACED STRONG RELIANCE ON THE FINDINGS OF THE ASSESSING OFFICER. HE SUBMITTED THA T THE COMPANY NAMELY BIOSENSE CROP PROTECTION INCORPORATED ON 27. 03.1992, ECOMAX AGRO SYSTEM INCORPORATED ON 16.12.1991 AND G OOD VALUE AGRO PRODUCTS LTD. HAVE MERGED WITH ASSESSEE COMPAN Y WITH APPOINTED DATE 01.08.1993. AS PER AMALGAMATION SCHE ME APPROVED BY HON'BLE BOMBAY HIGH COURT ALL ASSET AND LIABILITIES OF ALL THREE UNITS COMPANIES STAND TRANSFERRED TO A SSESSEE W.E.F. 01.08.1993. HE FURTHER SUBMITTED THAT AS PER THE FI NDINGS OF THE A.O. VIDE PARA 5 OF HIS ORDER, BOISENSE COMPANY WAS HAVING A PHEROMONE TRAP FACTORY UNIT A DAMAN AND ECOMAX WAS HAVING CDA SPRAYER UNIT AT DAMAN. THE MACHINERY, PLANTS AN D OTHER FIXED ASSETS WERE TAKEN OVER BY THE ASSESSEE COMPAN Y AT ITS DAMAN UNIT. THUS THE DAMAN UNIT OF ASSESSEE WAS FOR MED WITH THE TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE (SECTION 80IA(2) (II)). THUS THE ASSESSEE C OMPANY INCLUDING DAMAN UNIT WAS FORMED BY SPLITTING UP AND RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. TH US CONDITION LAID DOWN IN SECTION 80IA(9)(2)(I) AND (II) ARE NOT SATISFIED, THEREFORE, THE A.O. HAS RIGHTLY HELD THAT ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 80IA. HE FURTHER SUBMITTED THAT AS PER THE FINDING OF THE A.O. IN LAST PARA OF HIS ORDER, THE DAMAN UNIT OF BIOSENSE AND ECOMAX WERE EARMARKED FOR PRODUCTION O F PHEROMONE TRAP AND CDA SPRAYERS AND A.O. HELD FURTH ER THAT IT NOTICED THAT ASSESSEE HAS NOT PRODUCE ANY NEW PRODU CT AFTER ESTABLISHING A NEW INDUSTRIAL UNDERTAKING. THUS THE INCOME OF DAMAN UNIT SHOWN AND CLAIMED AS DEDUCTION UNDER SEC TION 80IA WHICH WAS EARNED BY THESE UNITS AFTER AMALGAMATION. THE ITA NO.4149/M/2014 4 LEARNED CIT(A) WITHOUT CALLING REMAND REPORT FROM T HE A.O. HAS ACCEPTED THE CLAIM OF ASSESSEE AT THE BACK OF A.O. THE NEW VERSION SUBMITTED BY THE ASSESSEE WITHOUT REFERRING FOR THE VERIFICATION HENCE THERE IS VIOLATION OF NATURAL JUSTICE AND AMO UNTS TO ADMISSION OF ADDITIONAL EVIDENCE. HE RELIED ON THE DECISION OF HON'BLE GAUHATI HIGH COURT IN CIT VS. RANJIT KUMAR CHOUDHURY (2007) 288 ITR 179 (GAU.) WHICH HELD THAT WHERE THE RE WAS NO REASON FOR FAILURE TO ADDUCE EVIDENCE BEFORE A.O. DOCUMENT NOT ADMISSIBLE AS EVIDENCE BEFORE LEARNED CIT(A) UNDER RULE 46A LEARNED CIT(A) GOT POWER NOT TO ADMIT EVIDENCE. HE FURTHER SUBMITTED THAT THE CLAIM OF THE ASSESSEE THAT IN SU BSEQUENT ASSESSMENT YEAR THE A.O. ALLOWED CLAIM OF ASSESSEE , IT IS SUBMITTED THAT IN SUBSEQUENT YEAR IT MAY BE THE INC OME FROM DAMAN UNIT OF ASSESSEE SET UP ORIGINALLY AND NOT FO RMED BY RECONSTRUCTION/SPLITTING. MOREOVER THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TAX PROCEEDINGS. EVERY ASS ESSMENT YEAR IS AN INDEPENDENT ASSESSMENT AND HENCE EVEN WHERE A PARTICULAR ISSUE WAS NEVER EXAMINED BY THE ASSESSING OFFICER I N EARLIER YEARS, THE A.O. IS NOT DEBARRED FROM ADJUDICATING S AID ISSUE IN RELEVANT ASSESSMENT YEAR. (DCIT VS. RAM GOPAL & SON S 155 TAXMAN 223 ITAT MUMBAI 'G' BENCH.). FURTHER DOCTRIN E OF ESTOPPEL DOES NOT APPLY IN CASE OF SUCCESSIVE ASSES SMENTS, THAT AN ASSESSMENT IS COMPLETE IN ITSELF AND THE TAXING AUT HORITIES ARE NOT BOUND BY ANY CONTENTION IT TOOK UP ON ONE ASSESSMEN T, WHEN THE QUESTION ARISES WITH REGARD TO DIFFERENT ASSESSMENT ( KANTILAL CHIMANLAL SHAH 26 ITR 303 (BOM)). 5. WITHOUT PREJUDICE THE LEARNED D.R. ALSO SUBMITTE D THAT THE ASSESSEE HAD OTHER INCOMES BY WAY OF TECHNICAL TRAN SFER FEE, DIVIDEND, INTEREST INCOME TOTALLING TO RS.15,85,118 /- WHICH SHOULD NOT BE CONSIDERED AS UNIT INCOME TO ALLOW DE DUCTION UNDER SECTION 80IA. 6. THE LEARNED COUNSEL SUBMITTED THE FACTS WITH THE SUPPORT OF PAPER BOOK AND AFFIDAVITS THAT THE UNIT AT DAMAN WAS SEPARATE AND DISTINCT AND THE CLAIM WAS MADE CORREC TLY. 7. WE HAVE CONSIDERED THE ISSUE. THE LEARNED CIT(A) HAS GIVEN THE FOLLOWING FINDINGS: - '4.4 I HAVE CAREFULLY CONSIDERED THE ABOVE. IT APPEARS THAT THE ASSESSING OFFICER IS CONFUSED BETW EEN SECTION 80I AND 80IA OF THE ACT. AT SOME PLACES HE IS REFERRING TO SECTION 80I AND SOME OTHER PLACES HE I S REFERRING TO SECTION 80IA. THE DATE OF COMMENCEMENT OF ITA NO.4149/M/2014 5 PRODUCTION HAS BEEN TAKEN APPARENTLY FROM SEC. 80I, INSTEAD OF SEC. 80IA. SECONDLY, THE ASSESSING OFFIC ER IS ALSO CONFUSED ABOUT THE APPELLANT COMPANY AND THE INDUST RIAL UNIT OF THE APPELLANT COMPANY AT DAMAN. THE THREE O THER UNITS AMALGAMATED WITH THE APPELLANT COMPANY, BY IT SELF WILL NOT DISENTITLE THE APPELLANT CO. FROM CLAIMING THE DEDUCTION U/S. 80IA OF THE ACT. WHAT IS IMPORTANT I S THAT THE UNIT SET UP BY THE APPELLANT COMPANY AT DAMAN SHOULD BE ELIGIBLE FOR THE DEDUCTION U/S. 80IA OF T HE ACT. THE SUB-SECTIONS 80 IA(7) AND (9) THEMSELVES MAKE T HIS POSITION CLEAR. 4.6 U/S. 80 IA(7), THE BUSINESS OF THE INDUSTRIA L UNIT HAS TO BE TREATED AS ONE, SEPARATE FROM THE OT HER UNITS OF BUSINESS OF THE APPELLANT FOR COMPUTING TH E ELIGIBLE PROFIT AND THE ALLOWABLE DEDUCTION. SEC. 8 0 IA(9) EMPOWERS THE ASSESSING OFFICER TO COMPUTE THE PROFI T OF THE UNIT IF HE FINDS THAT THE DEDUCTION HAS BEEN CL AIMED AT A HIGHER FIGURE THROUGH INTER-UNIT TRANSACTIONS. THEREFORE, THE AMALGAMATION OF THREE OTHER COMPANIES WITH THE APPELLANT COMPANY IN 1994 DOES NOT BY ITSELF AFFECT THE DEDUCTION U/S. 80IA AVAILA BLE TO THE DAMAN UNIT OF THE APPELLANT COMPANY . THE REGULAR ASSESSMENTS DONE U/S. 143(3) OF THE ACT FOR A.YS. 1995-96 AND 1996-97 ALSO SHOW THAT THE ASSESSING OFFICER HAVE IN THOSE ASSESSMENTS ACCEPTED THE ELIG IBILITY OF THE APPELLANT'S UNIT AT DAMAN FOR THE DEDUCTION, FOR THE POST-AMALGAMATION PERIODS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE OF DEDU CTION U/S. 80 IA OF THE ACT DONE BY THE ASSESSING OFFICER IS NOT SUSTAINABLE FOR NON-APPLICATION OF MIND TO THE FACT S OF THE CASE AND MISAPPLICATION OF LAW AS DISCUSSED ABO VE. ACCORDINGLY, IT IS DELETED. THIS GROUND OF APPEAL I S ALLOWED.' AS SEEN FROM THE FACTS ON THE RECORD, WE ARE OF THE OPINION THAT THE A.O. HAS INDEED MISLED HIMSELF IN CONSIDER ING THE MERGER OF OTHER UNITS IN DIFFERENT PERSPECTIVE. SO WE ARE IN AGREEMENT WITH THE FINDINGS THAT THE UNIT IS ENTITLED FOR DED UCTION U/S. 80IA. HOWEVER, AS FAR AS THE QUANTUM OF DEDUCTION IS CONC ERNED, EVENTHOUGH THE A.O. RAISED QUESTION ABOUT THE OTHER INCOME INCLUDED IN THE P & L ACCOUNT, THESE WERE NOT EXAMI NED AS HE DISALLOWED THE CLAIM ENTIRELY. IN THE INTEREST OF J USTICE, WE RESTORE ITA NO.4149/M/2014 6 THE ISSUE OF CONSIDERING THE NATURE OF OTHER INCOME AND WHETHER THEY CAN BE PART OF UNIT INCOME WHILE CONSIDERING T HE DEDUCTION UNDER SECTION 80IA. TO THIS LIMITED EXTENT THE MATT ER IS RESTORED TO A.O. TO CONSIDER THESE OTHER INCOMES AFRESH. GRO UND PARTLY ALLOWED. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL , WE UPHOLD THE ORDER OF THE LD. CIT(A) AND ALLOWING THE CLAIM OF DEDUCTION U/S. 80IA OF THE ACT TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2016. SD/- SD/- (RAJESH KUMAR) (C.N. PRASAD ) # / ACCOUNTANT MEMBER %&# /JUDICIAL MEMBER MUMBAI; )# DATED : 5 TH FEBRUARY, 2016 . & . ./ RJ , SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)- 4. * / CIT 5. +,-&&./ , ./' , / DR, ITAT, MUMBAI 6. -012 / GUARD FILE. / BY ORDER, +& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI