DCIT 9(2), MUMBAI V. M/s. KONKAN POLYMERS & ADDITIVES P. LTD, MUMBAI

ITA 4176/MUM/2008

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4078 (ITAT-MUMBAI)
• Duration Of Justice: 12 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2005-2006
• Appeal Filed On: 12-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: J D MISTRI
• Keywords: Depreciation; Unabsorbed depreciation; Set aside
• Section: 143(3); 80IB; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI MAHAVIR SINGH (VICE PRESIDENT) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 4176/MUM/2008 ASSESSMENT YEAR: 2005-06 DCIT 9(2), AAYAKAR BHAVAN, R. NO. 218, 2 ND FLOOR, M.K. ROAD, MUMBAI-400020. VS. M/S KONKAN POLYMERS AND ADDITIVES P. LTD., 10/301, PAWAN BAUG, CHINCHOLI CROSS ROAD, S.V. ROAD, MALAD (W), MUMBAI-64 PAN NO. AABCK6738K APPELLANT R ESPONDENT ITA NO. 3932/MUM/2009 ASSESSMENT YEAR: 2006-07 & ITA NO. 9172/MUM/2010 ASSESSMENT YEAR: 2004-05 INCOME TAX OFFICER 9(2)-2, AAYAKAR BHAVAN, R. NO. 225, 2 ND FLR. M.K. ROAD, MUMBAI-400020. VS. M/S KONKAN POLYMERS AND ADDITIVES P. LTD., 10/301, PAWAN BAUG, CHINCHOLI CROSS ROAD, S.V. ROAD, MALAD (W), MUMBAI - 4000 64 PAN NO. AABCK6738K APPELLANT R ESPONDENT REVENUE BY : MR. R. BHOOPATHI , DR ASSESSEE BY : MR. J.D. MISTRI , SR. ADVOCATE & MR. DHARMESH SHAH, AR DATE OF HEARING : 21 /10/2020 DATE OF PRONOUNCEMENT : 02/11/2020 M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 2 ORDER PER N.K. PRADHAN, A.M. THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I X, MUMBAI [IN SHORT CIT(A)] AND ARISE OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961 (THE ACT). AS COMMON ISSUES ARE INVO LVED, WE ARE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. WE BEGIN WITH THE ASSESSMENT YEAR (AY) 2005-06. ITA NO. 4176/MUM/2008 ASSESSMENT YEAR: 2005-06 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT (A) ERRED IN ALLOWING DEDUCTION U/S.80IB AMOUNTING TO R S.4,36,38,391/- MERELY BASED ON THE APPELLATE ORDER IN THE CASE OF THE ASS ESSEE FOR A.Y 2003-04 WITHOUT CONSIDERING THE DIVERSE CIRCUMSTANCES PREVA ILED IN THE ASSESSEE'S OWN CASE FOR A.Y.2005-06 WHERE THE FACTS WERE DIFFE RENT FROM THE FACTS FOR A.Y. 2003-04. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE'S CASE IS THE CA SE OF TRANSFER OF UNDERTAKING AND NOT OF RESTRUCTURING OF EXISTING BU SINESS WITHOUT CONSIDERING THE DETAILS SUCH AS DATE OF LICENSE, TH E SUBSEQUENT TRANSFER OF LICENSE, THE UNABSORBED DEPRECIATION AS ON 31.03.20 03 AND THE OPENING WDV OF PLANT & MACHINERY DURING A.Y.2003-04 ETC. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT D URING THE AY 2005-06, THE ASSESSEE-COMPANY FILED A RETURN OF INCOME OF RS. NI L AFTER CLAIMING DEDUCTION OF RS.4,36,38,691/- U/S 80IB OF THE ACT. THE ASSESS ING OFFICER (AO) DISPUTED M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 3 THE SAID CLAIM ON THE GROUND THAT (I) THAT THE ACTU AL PRODUCTION STARTED DURING AY 2002-03 IS NOT ESTABLISHED BY THE ASSESSEE AS IT WAS NOT IN POSSESSION OF LICENSES TO START A FACTORY, (II) THE BUSINESS OF A SSESSEE WAS FORMED BY RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE AND HENCE THE ASSESSEE IS NOT ENTITLED TO DEDUCTION, (III) THE BUSINESS WAS INITI ALLY CARRIED OUT BY THE PROPRIETARY CONCERN M/S KONKAN PLASTICS ; THIS WAS BASED ON THE APPLICATION MADE BEFORE THE LICENSING AUTHORITY FOR LICENSE TO WORK A FACTORY WHERE THE SAID PROPRIETARY CONCERN HAD SHOWN THE NATURE OF BU SINESS WHICH WAS SIMILAR TO THE BUSINESS CARRIED OUT BY THE ASSESSEE, (IV) S INCE THE SAID PROPRIETARY CONCERN WAS SUBSEQUENTLY TAKEN OVER BY THE ASSESSEE , IT WAS A CASE OF RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE F ILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT VIDE ORDER DATED 28.03.2008, THE LD. CIT(A) OBSERVED THAT (I) THE ISSUE OF DEDUCTION U/S 80IB WAS ALSO S UBJECT MATTER OF APPEAL FOR AY 2003-04, WHEREIN IT WAS HELD THAT THE ASSESSEE H AD CARRIED OUT THE MANUFACTURING ACTIVITY AND WAS ELIGIBLE FOR DEDUCTI ON ; HOWEVER, THE ISSUE OF RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE WAS NOT RAISED DURING THE SAID YEAR, (II) M/S KONKAN PLASTICS HAD OBTAINED LICENSE FOR RUNNING THE FACTORY, HOWEVER, NO BUSINESS ACTIVITIES WERE CARRIED ON IN THE HANDS OF M/S KONKAN PLASTICS ; THERE WERE NO MANUFACTURING ACTIVITIES I N THE HANDS OF THE SAID PROPRIETARY CONCERN ; THERE WAS NO BUSINESS AS SUCH IN EXISTENCE, (III) LATER, THE ENTIRE UNDERTAKING OF THE SAID M/S KONKAN PLASTICS WAS TRANSFERRED ON GOING CONCERN BASIS TO THE ASSESSEE-COMPANY; THE BUSINESS UNDERTAKING CONTINUED AND ONLY THE OWNERSHIP OF THE UNDERTAKING CHANGED H ANDS. WITH THE ABOVE OBSERVATIONS, THE LD. CIT(A) HELD T HAT : M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 4 2.7 IN MY VIEW THE TRANSFER OF UNDERTAKING CANNOT RESULT IN THE RECONSTRUCTION OF BUSINESS. THE RECONSTRUCTION OF AN EXISTING BUSIN ESS MUST NECESSARILY INVOLVE THAT THE UNDERTAKING MUST CONTINUE TO CARRY ON THE SAME BUSINESS BUT IN SOME ALTERED OR VARIED FORM. IF THE ALTERATIONS AND CHANGES ARE SUB STANTIAL, IT MAY BE CALLED AS THE RECONSTRUCTION OF BUSINESS. IN THE PRESENT CASE, IT IS NOTICED THAT THE APPELLANT COMPANY HAD TAKEN OVER THE BUSINESS UNDERTAKING OF M/S. KONKAN PLASTICS. THE APPELLANT HAS FILED THE COPY OF THE ORDER OF GOA IN DUSTRIAL DEV. CORP. EVIDENCING THE CHANGE IN CONSTITUTION. THIS ASPECT IS NOT DISPUTED BY THE AO. IN FACT, THE AO HIMSELF OBSERVED THAT M/S. KONKAN PLASTIC WAS ALSO SET UP T O CARRY ON THE IDENTICAL BUSINESS AS CARRIED OUT BY THE APPELLANT. 2.8 THE PROPRIETARY CONCERN, M/S. KONKAN PLASTIC DI D NOT CARRY ON ANY MANUFACTURING ACTIVITY AND IT HAD MERELY OBTAINED T HE LICENSE TO RUN THE FACTORY. THE AR HAS FILED THE BALANCE SHEET OF THE APPELLANT COM PANY SOON AFTER TAKEOVER OF THE RUNNING BUSINESS, I.E. FOR FY 2000-01. ON PERUSAL O F THE SAID BALANCE SHEET, IT IS NOTICED THAT THERE ARE NO FIXED ASSETS. ALSO NO MAN UFACTURING ACTIVITY WAS CARRIED ON IN THE SAID BUSINESS UNDERTAKING. THE APPELLANT ACQ UIRED MACHINERIES AND ALSO STARTED MANUFACTURING ACTIVITY DURING A.Y. 2002-03. IT IS THUS, NOTICED THAT THERE IS NO CHANGE IN THE FORM OF BUSINESS. IT IS MERELY A C ASE OF CHANGE OF OWNERSHIP OF BUSINESS. IN THE PRESENT CASE, THE EVIDENCES ON REC ORD PROVE THAT THERE WAS NO ACTIVITY CARRIED ON IN THE HANDS OF THE PROPRIETARY CONCERN. THE ACTIVITY STARTED ONLY IN THE HANDS OF THE APPELLANT COMPANY. 2.9 IN MY VIEW, THERE CANNOT BE RECONSTRUCTION OF B USINESS WHEN THERE WAS NO BUSINESS CARRIED ON IN THE HANDS OF M/S. KONKAN PLA STICS, PROPRIETARY CONCERN. THE AO HAS PROCEEDED TO DISALLOW THE DEDUCTION ON THE I NCORRECT FACTUAL MATRIX AND WITHOUT NOTICING THAT THERE WAS NO BUSINESS CARRIED ON THE HANDS OF M/S. KONKAN PLASTICS SO AS TO CALL IT A RE-CONSTRUCTION. IN MY VIEW THEREFORE THE DISALLOWANCE DESERVES TO BE DELETED ON THE ABOVE GROUND. 2.10 THE AO HAS ALSO OBSERVED THAT NO EVIDENCE IS P RODUCED THAT THE NEW MACHINERY WAS ACQUIRED BY THE APPELLANT. THE AO HAS ALSO OBSE RVED THAT EVEN THOUGH THE SAME TYPE OF PLANT AND MACHINERY AND MAN POWER WAS REQUI RED FOR MANUFACTURING OF M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 5 ARTICLES, THE ASSESSEE COMPANY PURCHASED THE NEW PL ANT AND MACHINERY AND ALSO EMPLOYED NEW WORK FORCE FOR CARRYING OUT THE SAME A CTIVITY WHICH IT WAS CARRYING OUT AS A PROPRIETARY CONCERN IN THE NAME OF M/S. KO NKAN PLASTIC. IT IS NOTICED THAT THE SAID OBSERVATIONS ARE WITHOUT CONSIDERING THE E VIDENCES ON RECORD. THE APPELLANT HAS FILED THE LETTER DATED 23.11.2007 BEA RING NO. 70/11/M/KVM/DM/MD/08 FILED BEFORE THE AO, A COPY OF WHICH IS ALSO FILED BEFORE ME, GIVING THE DETAILS OF PLANT AND MACHINERY AND T HE BILLS EVIDENCING THE PURCHASE OF THE SAME. IT IS ALSO NOTICED THAT PRIOR TO THE S AID PURCHASE, THE APPELLANT OR THE PROPRIETARY CONCERN DID NOT OWN ANY PLANT AND MACHI NERY. IN LIGHT OF THE SAME, THE OBSERVATIONS ARE MADE BY THE AO WITHOUT ANY EVIDENC E ON RECORD AND HENCE DEVOID OF MERITS. HENCE, EVEN THE SAID OBSERVATIONS DO NOT JUSTIFY THE DISALLOWANCE OF DEDUCTION U/S. 80-IB MADE BY THE AO. 2.11 IN MY VIEW AND FOR THE REASONS GIVEN ABOVE, TH E APPELLANT IS ENTITLED TO DEDUCTION U/S. 80-IB OF THE ACT SINCE THERE WAS NO RECONSTRUCTION OF BUSINESS. THE AO IS ACCORDINGLY DIRECTED TO ALLOW THE DEDUCTION U /S. 80-IB OF THE ACT AMOUNTING TO RS.4,36,38,691/-. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) RELIES ON THE ORDER OF THE AO DATED 05.12.2007 AND EXPLAINS THAT (I) TH E ASSESSEE-COMPANY IN ITS RETURN OF INCOME FOR THE AY 2003-04 SUBMITTED THE D ETAILS REGARDING THE CERTIFICATE ISSUED BY THE CHIEF INSPECTOR OF FACTOR Y AND BOILERS, GOVERNMENT OF GOA, WHEREIN THE CHIEF INSPECTOR HAS ISSUED CERTIFI CATE OF LICENSE TO THE FACTORY ON 21.01.2003 ; THEREFORE, THE ASSESSEES CLAIM THA T THE ACTUAL PRODUCTION STARTED IN AY 2002-03 CANNOT BE ESTABLISHED AS IT W AS NOT IN POSSESSION OF NECESSARY LICENSES TO CARRY OUT THE PRODUCTIONS/MAN UFACTURING ACTIVITY AT ITS FACTORY PREMISES, (II) THAT THE ASSESSEE-COMPANY HA S CHANGED ITS NAME FROM M/S KONKAN PLASTICS TO M/S KONKAN POLYMERS & ADDITI VES PVT. LTD., AS IT WAS NOT ELIGIBLE TO CLAIM DEDUCTION U/S 80-IB(4) OF THE ACT, WHEN IT WAS CARRYING M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 6 OUT THE BUSINESS ACTIVITY IN THE NAME OF M/S KONKAN PLASTICS, (III) THE LIST OF ITEMS AUTHORIZED BY THE GOVERNMENT OF GOA TO M/S KO NKAN PLASTICS INCLUDED THE MANUFACTURING OF BLOW AND INJECTION MOULDED ART ICLES ; THE SAME ACTIVITY HAS ALSO BEEN CARRIED OUT BY THE ASSESSEE-COMPANY A ND THERE IS ABSOLUTELY NO DIFFERENCE BETWEEN THE MANUFACTURING ACTIVITY CARRI ED OUT BY M/S KONKAN PLASTICS AND THE ASSESSEE-COMPANY, (IV) IT IS IMPRO BABLE THAT EVEN THOUGH SAME TYPE OF PLANT & MACHINERY AND MANPOWER WAS REQ UIRED FOR MANUFACTURING OF BLOW AND INJECTION MOULDED ARTICLE S, THE ASSESSEE-COMPANY PURCHASED NEW PLANT & MACHINERY AND EMPLOYED NEW WO RK FORCE FOR CARRYING OUT THE SAME ACTIVITY, WHICH IT WAS CARRYING OUT AS A PROPRIETARY CONCERN IN THE NAME OF M/S KONKAN PLASTICS. THUS THE LD. DR SUBMITS THAT THE ORDER PASSED BY T HE AO BE RESTORED. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE SUBMITS THAT IT WAS ALREADY EXPLAINED BEFORE THE AO AS WELL AS CIT(A) T HAT PRIOR TO THE ELECTRIC CONNECTION FROM RELIANCE ENERGY, THE ASSESSEE WAS A VAILING THE ELECTRICITY CONNECTION FROM THE GOVERNMENT OF GOA; ALTHOUGH THE CERTIFICATE FOR LICENSE TO WORK HAS BEEN ISSUED TO THE ASSESSEE ON 21.03.2003, THE DATE OF ISSUE OF SUCH LICENSE HAS NO BEARING ON WHETHER MANUFACTURING HAD COMMENCED AND SEVERAL EVIDENCES ARE ON RECORD WHICH PROVES THAT THE MANUF ACTURING ACTIVITY HAD STARTED DURING MARCH 2002 ITSELF. IN THIS RESPECT, THE LD. COUNSEL REFERS TO THE EVIDENCES OF MANUFACTURING ACTIVITY BEING CARRIED O UT BY THE ASSESSEE WHICH WERE FILED IN THE FORM OF EXCISE RETURNS BEFORE THE EXCISE AUTHORITIES FOR THE PERIOD FROM MARCH 2002 TO MARCH 2003 AS WELL AS THE SALES TAX RETURNS FOR THE QUARTERS PERTAINING TO FY 2002-03, WHICH PROVE THAT MANUFACTURING ACTIVITY AND THE CORRESPONDING SALES WAS CARRIED OU T BY THE ASSESSEE SINCE AY M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 7 2002-03. THUS IT IS STATED THAT IT CANNOT BE SAID T HAT THE MANUFACTURING ACTIVITY OF THE ASSESSEE HAD NOT STARTED TILL THE RECEIPT OF THE FACTORY LICENSE. IT IS STATED THAT THE ASSESSEE HAD STARTED THE MANUFACTURING ACT IVITY DURING AY 2002-03 ; IN THE NOTES TO THE COMPUTATION OF INCOME FOR AY 20 02-03, IT WAS CLARIFIED THAT THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT FROM AY 2002-03 ; THE LEDGER ACCOUNT OF THE PLANT & MACHINERY IN THE BOOKS OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2002 ALONG WITH THE COPIES OF THE BILLS/INVOICES ALSO SHOWS PURCHASE OF NEW MACHINERY DURING THE SAID PER IOD ; THEREFORE, THE BLOCK OF ASSET HAD STARTED DURING THE AY 2002-03 AN D THE FIXED ASSET STATEMENT OF THE ASSESSEE FOR THE AY 2003-04 WOULD SHOW OPENING WDV. THE LD. COUNSEL SUBMITS THAT THE COPY OF THE APPLI CATION TO THE DIRECTORATE OF INDUSTRIES AND MINES, GOA WOULD INDI CATE THAT THE SAID APPLICATION IS THE INSTRUCTION MANUAL EXPLAINING AS TO HOW TO FILL UP THE FORM ; WHILE GIVING THE ILLUSTRATION AND FILLING UP THE NA ME OF THE UNIT, THEY HAVE USED A DUMMY/ILLUSTRATIVE FICTITIOUS NAME OF KAMAL ENTE RPRISES/G.K. ENTERPRISES; ALTHOUGH THE APPLICATION WAS ORIGINALLY MADE BY M/S KONKAN PLASTICS, THE APPLICATION WAS ONCE AGAIN MADE BY THE ASSESSEE ON 30.03.2002 WHICH IS EVIDENT FROM PAGE 2 OF THE SAID APPLICATION. IT IS FURTHER EXPLAINED BY THE LD. COUNSEL THAT ALTHOUGH THE ORIGINAL CERTIFICATE WAS GRANTED TO M/S KONKAN PLASTICS, NO BUSINESS WAS EVER CARRIED OUT BY THE S AID ENTITY SO MUCH SO THAT NEITHER ANY PLANT & MACHINERY WAS ACQUIRED BY THE S AID ENTITY NOR ANY BUSINESS ACTIVITY WAS COMMENCED BY THEM. FINALLY, THE LD. COUNSEL EXPLAINS THAT THE SSI REG ISTRATION WAS INITIALLY OBTAINED BY M/S KONKAN PLASTICS ; THE NAME OF THE S AID CONCERN WAS LATER CHANGED TO M/S MYSTIC PLASTIC MOULDS ; NO BUSINESS WAS CARRIED OUT BY THE M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 8 SAID ENTITY EVER ; THE SAID ENTITY WAS LATER TAKEN OVER BY THE ASSESSEE ALONG WITH ITS PRE-EXISTING LEASE HOLD RIGHTS OF THE PLOT OF LAND ASSIGNED BY MIDC GOA ; THEREAFTER, FRESH APPLICATION FOR SSI REGISTRATIO N WAS MADE BY THE ASSESSEE ; PURSUANT TO THE SAID TAKEOVER, THE ASSESSEE HAD ALS O REQUESTED FOR CHANGE OF NAME IN THE ELECTRICITY METER FROM M/S MYSTIC PLAST MOULDS TO THE ASSESSEE; THIS ONLY ESTABLISHES THAT THE EARLIER ENTITY WAS T AKEN OVER BY THE ASSESSEE WITH ITS PRE-EXISTING LAND RIGHTS ; HOWEVER, THE SA ID FACT CANNOT RESULT INTO DISALLOWANCE OF DEDUCTION U/S 80IB OF THE ACT, AS T HERE IS NO RE-STRUCTURING OF ANY BUSINESS IN EXISTENCE. THUS THE LD. COUNSEL SUBMITS THAT THE DEDUCTION CL AIMED BY THE ASSESSEE WAS RIGHTLY ALLOWED BY THE LD. CIT(A) AND THAT NO I NTERFERENCE IS REQUIRED IN RESPECT OF THE SAME. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. WE HAVE EXAMINED THE DOCUMENTS FILED BEFORE THE AO AS WELL AS CIT(A) NAMELY (I) COPIES OF THE ELECTRICITY BILLS OF ELECT RICITY DEPARTMENT, GOVERNMENT OF GOA, (II) LETTER DATED 30.03.2000 FROM ASST. ELE CTRICAL ENGINEER CERTIFYING THE CHANGE IN NAME OF THE COMPANY, (III) APPLICATIO N FOR LICENSE TO USE BUILDING AS FACTORY, (IV) COPIES OF EXCISE RETURNS IN FORM R T12 FOR THE PERIOD FROM APRIL 2002 TO MARCH 2003, (V) COPY OF THE SALES TAX RETUR NS FILED WITH THE SALES TAX DEPARTMENT, GOA FOR THE FOUR QUARTER DURING AY 2003 -04, (VI) PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WITH RELEVANT SCHEDULES F OR THE YEAR ENDING 31.03.2001 AND 31.03.2005. M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 9 AN EXAMINATION OF THE ABOVE DOCUMENTS CLEARLY INDI CATES THAT PRIOR TO THE ELECTRIC CONNECTION FROM RELIANCE ENERGY, THE A SSESSEE WAS AVAILING ELECTRICITY CONNECTION FROM THE GOVERNMENT OF GOA ; THE APPLICATION FOR LICENSE TO WORK WAS MADE BY THE ASSESSEE ON 22.03.2002; THE PROVISIONS OF SECTION 6 & 7 OF THE FACTORIES ACT, 1948 CLEARLY INDICATE THA T THERE IS NO BAR IN OCCUPYING THE FACTORY PREMISES, USING IT FOR MANUFACTURE AND COMMENCING THE PRODUCTION THERE FROM BEFORE OBTAINING THE FINAL LI CENSE FROM THE PRESCRIBED AUTHORITY; IN THE SAID APPLICATION DATED 22.03.2002 IT WAS ALSO DECLARED THAT THE MANUFACTURING PROCESS IS ALREADY COMMENCED BY T HE ASSESSEE ON 19.03.2002, THE COMPUTATION OF INCOME FOR AY 2002-0 3 FILED ALONG WITH THE RETURN ALSO STATED THAT IT WAS THE FIRST YEAR OF CL AIM AND THAT DEDUCTION WAS NOT CLAIMED SOLELY DUE TO LOSS. A PERUSAL OF THE EXCISE RETURNS FILED BEFORE THE E XCISE AUTHORITIES FOR THE PERIOD FROM MARCH 2002 TO MARCH 2003 AS WELL AS SAL ES TAX RETURNS BEFORE THE SALES TAX AUTHORITIES FOR THE QUARTERS PERTAINING T O THE FINANCIAL YEAR 2002-03, CLEARLY INDICATES THAT MANUFACTURING ACTIVITY AND C ORRESPONDING SALES WAS CARRIED OUT BY THE ASSESSEE. THUS IT CANNOT BE SAID THAT THE MANUFACTURING ACTIVITY OF THE ASSESSEE HAD NOT STARTED TILL THE R ECEIPT OF THE FACTORY LICENSE. THE LEDGER ACCOUNT OF THE PLANT & MACHINERY IN THE BOOKS OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2002 ALONG WITH COPIES OF THE BILLS/INVOICES ALSO INDICATES PURCHASE OF NEW MACHINERY DURING THE SAID PERIOD. IT IS FURTHER EVIDENT THAT THE BLOCK OF ASSET HAD STARTED DURING AY 2002-03 AND FIXED ASSET STATEMENT OF THE ASSESSEE FOR THE AY 2003-04 WOULD SHOW OPENING WDV. WE FIND MERIT IN THE CONTENTIONS OF THE LD. COUNSE L THAT THE COPY OF THE APPLICATION TO THE DIRECTORATE OF INDUSTRIES AND MI NES, GOA IS FILED AT PAGE 32- M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 10 42 OF THE P/B FOR AY 2005-06. PAGE 1 OF THE SAID AP PLICATION IS THE INSTRUCTION MANUAL EXPLAINING AS TO HOW TO FILL UP THE FORM. WH ILE GIVING THE ILLUSTRATION AND FILLING UP THE NAME OF THE UNIT, THEY HAVE USED A DUMMY/ILLUSTRATIVE FICTITIOUS NAME OF KAMAL ENTERPRISES/G.K. ENTERPRI SES. SIMILARLY, FOR OTHER DETAILS ON THE PAGE, DUMMY DETAILS HAVE BEEN TYPED. THE DETAILS PERTAINING TO THE APPELLANT HAD BEEN FILED AT PAGE 2 OF THE SAID APPLICATION. WE ALSO FIND MERIT IN THE CONTENTIONS OF THE LD. C OUNSEL THAT ALTHOUGH THE ORIGINAL CERTIFICATE WAS GRANTED TO M/S KONKAN PLASTICS, NO BUSINESS WAS EVER CARRIED OUT BY THE SAID ENTITY ; EXCEPT THE SS I LICENSE AND THE LEASE HOLD RIGHTS IN THE PLOT, NO ACTIVITY WAS EVER CARRIED OU T BY THE SAID ENTITY. THE EXCISE RETURNS AND SALES TAX RETURNS FILED BY THE ASSESSEE CLARIFY THE ISSUES IN THE INSTANT CASE. THE PLANT & MACHINERIES , AS EVIDENCED BY THE INVOICES, HAVE BEEN PURCHASED BY THE ASSESSEE ; THE MANUFACTURING ACTIVITY WAS CARRIED OUT BY THE ASSESSEE AT ITS OWN PREMISES . IN THE CASE OF CIT V. WESTERN OUTDOOR INTERACTIVE P. LTD . (2012) 349 ITR 309 (BOM), THE HONBLE BOMBAY HIGH COURT HAS HELD T HAT WHERE A BENEFIT OF DEDUCTION IS AVAILABLE FOR A PARTICULAR NUMBER OF Y EARS ON SATISFACTION OF CERTAIN CONDITIONS UNDER THE PROVISIONS OF THE INCO ME TAX ACT, 1961, THEN UNLESS RELIEF GRANTED FOR THE FIRST YEAR IN WHICH T HE CLAIM WAS MADE AND ACCEPTED IS WITHDRAWN OR SET ASIDE, THE INCOME TAX OFFICER CANNOT WITHDRAW THE RELIEF FOR SUBSEQUENT YEARS. MORE PARTICULARLY SO, WHEN THE REVENUE HAS NOT EVEN SUGGESTED THAT THERE WAS ANY CHANGE IN THE FACTS WARRANTING A DIFFERENT VIEW FOR SUBSEQUENT YEARS. M/S KONKAN POLYMERS ITA NOS. 4176/M/2008 & ORS. 11 IN VIEW OF THE ABOVE FACTS AND POSITION OF LAW, WE AFFIRM THE ORDER OF THE LD. CIT(A). FACTS BEING IDENTICAL, OUR DECISION FOR THE AY 2005-06 APPLIES MUTATIS MUTANDIS TO AYS 2004-05 AND 2006-07. 8. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/11/2020. SD/- SD/- ( MAHAVIR SINGH ) (N.K. PRADHAN) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI; DATED: 02/11/2020 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY/ASST. REGISTRAR) ITAT, MUMBAI