ITO 17(3)(2), MUMBAI V. KUTUB B DHARIWLA, MUMBAI

ITA 4456/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55114 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 27-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARSHASARATHI NAIK
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI. PRAMOD KUMAR (A.M.) AND SHRI. VIJAY PA L RAO (J.M) ITA NO.4456/MUM/2009 ASSESSMENT YEAR : 2001-2002 I.T.O. 17(3)(2) R.NO.611, 6 TH FLR., PIRAMAL CHAMBERS, MUMBAI 400 012. VS. KUTUB B. DHARIWALLA PROP. M/S. EVEREST TRADING CORP. 213, MA ROAD, MUMBAI 400 008. PAN : AAHPD6694A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARSHASARATHI NAIK. RESPONDENT BY : SHRI K. GOPAL. O R D E R PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 04.05.2009 OF CIT(A)-XXVIII, MUMBAI FOR THE ASSESSM ENT YEAR 2001-2002. 2. THE REVENUE HAS RAISED THE ONLY GROUND IN THIS A PPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED IN ALLOWING DEDUCT ION U/S.80IA/80IB OF THE I.T. ACT, 1961 AS CLAIMED BY T HE ASSESSEE WITHOUT APPRECIATING THE FACTS BROUGHT ON RECORD BY THE ASSESSING OFFICER. 3. THE ASSESSEE IS AN INDIVIDUAL HAVING THREE PROPR IETARY CONCERNS AND ENGAGED IN THE BUSINESS OF TRADING METALIC SHEETS, MANUFACTURING OF TIN CONTAINERS, AND MANUFACTURING PLASTIC JARS RESPECTI VELY. THE ASSESSEE FILED ITS RETURN OF INCOME AND CLAIMED DEDUCTION U/S.80IB OF ` 33,66,204/-, THE RETURN WAS PROCESSED U/S.143(1) AND SUBSEQUENTLY RE OPENED BY ISSUING NOTICE U/S.148 IN THE REASSESSMENT ORDER. THE ASSE SSING OFFICER DISALLOWED THE DEDUCTION U/S.80IB ON THE GROUND THAT THE ASSES SEE PURCHASED A SECOND HAND MACHINERY. ON APPEAL, THE LEARNED CIT(A) ALL OWED THE CLAIM OF THE ASSESSEE BY FOLLOWING THE DECISION OF HONBLE JURIS DICTIONAL HIGH COURT IN THE CASE OF CIT VS. PENWALT INDIA LTD. (1992) 196 I TR 813. ITA NO.4456/MUM/2009 A. Y.: 2001-2002 2 4. WE HAVE HEARD THE LEARNED DR AS WELL AS LEARNED AR AND CONSIDERED THE RELEVANT RECORD. THE LEARNED DR SUBMITTED THAT UNDISPUTEDLY THE ASSESSEE HAS PURCHASED SECOND HAND MACHINERY IN VIO LATION OF CONDITION OF SECTION 80IB THEREFORE, THE ASSESSEE BECOME DISENTI TLED FOR THE CLAIM OF 80IB. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFIC ER. ON THE OTHER HAND THE LEARNED AR OF THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF COORDINATE BENCH OF TH E TRIBUNAL IN CASE I.T.O. VS. LAXMI PACKERS (2007) 14 SOT 303 AS THE VALUE OF THE OLD MACHINERY IS LESS THAN 20% OF TOTAL MACHINERY USED IN THE BUSINE SS. 5. HAVING REGARD TO THE FACTS OF THE CASE IT IS PER TINENT TO NOTE THAT AS PER THE EXPLANATION 2 OF SUB SECTION (2) OF S.80IB, T HE MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE IS PERMITTED TO TRA NSFER TO THE NEW BUSINESS IF THE VALUE OF THE SAID MACHINERY SO USED DOES NOT EXCEED 20% OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINES S. THE LEARNED CIT(A) HAS ADJUDICATED THE ISSUE IN PARA 4.6 AS UNDER: I HAVE CAREFULLY CONSIDERED THE INFORMATION ON RE CORD. THE ASSESSING OFFICER IS NOT CORRECT DISALLOWING THE DE DUCTION U/S.80IB ON THE GROUND THAT THE APPELLANT HAD PURCH ASED SECOND HAND MACHINERY. EVEN AS PER SE.80IB, THE AP PELLANT CAN INCLUDE SECOND HAND MACHINERY TO THE EXTENT OF 20% OF THE PLANT AND MACHINERY. THIS APART THE CONTENTION OF THE APPELLANT THAT MOULDS DO NOT FORMS PART OF THE MACH INERY. THE HONBLE ITAT MUMBAI BENCH D IN THE CASE OF ITO-21 (1)(2) VS. LAXMI PACKERS IN APPEAL NO.7878/MUM/03 FOR ASSESSME NT YEAR 2001-02 ORDER DATED 23.02.2007, IT WAS HELD TH AT ONLY AT THE TIME OF COMMENCEMENT OF PRODUCTION THE ASSESSEE SHOULD NOT HAVE MORE THAN 20% OF SECOND HAND MACHINERY. H OWEVER, SECOND HAND MACHINERY CAN BE PURCHASED IN THE SUBSE QUENT YEARS. IN SUCH CASES THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S.80IA/IB. MOREOVER, IN THE PRESENT CASE THE AS SESSEES MACHINERY IS NOT EXCEEDING 20%. FURTHER THE ISSUE OF ALLOWING DEDUCTION U/S.80IB EVEN THOUGH ONE OR TWO COMPONENT S ARE MANUFACTURED OUTSIDE THE FACTORY PREMISES WERE DISC USSED IN DETAIL IN ASSESSMENT YEAR 2000-01. RELYING ON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. PENWALT IN DIA LTD. (1992) 196 ITR 813, THE APPELLANT IS ENTITLED FOR D EDUCTION U/S.80IB. 6. THE CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE S SECOND HAND MACHINERY IS NOT EXCEEDING 20% OF THE TOTAL VALUE O F THE MACHINERY USED IN ITA NO.4456/MUM/2009 A. Y.: 2001-2002 3 THE BUSINESS. NOTHING CONTRARY HAS BEEN BROUGHT BE FORE US. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORD ER OF THE LEARNED CIT(A). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED ON THIS 30 TH DAY OF AUGUST, 2011. SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) SD/- (VIJAY PAL RAO) (JUDICIAL MEMBER) MUMBAI, DATED 30.08.2011. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- , MUM BAI 4. COMMISSIONER OF INCOME TAX, CITY- , MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH , MUM BAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI