THE ITO, Ward-4(2), Ahmedabad V. KADAM EXPORTS PVT. LTD., Ahmedabad

ITA 467/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5469 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 26-07-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 08-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 10B

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI MUKUL KUMAR SHRAWAT, JM AND D.C.AGRAW AL, AM INCOME-TAX OFFICER, WARD-4(2), AHMEDABAD. VS. KADAM EXPORTS (P) LTD., F-101, ASAVARI APARTMENT, NR. RUN REPUBLIC, SATELLITE, AHMEDABAD. (APPELLANT) .. (RESPONDENT) REVENUE BY :- SHRI K. MADHUSUDAN, SR.DR ASSESSEE BY:- SHRI TUSHAR P. HEMANI, AR O R D E R PER D. C. AGRAWAL, ACCOUNTANT MEMBER . THESE ARE TWO APPEALS FILED BY THE REVENUE FOR ASS T. YEARS 2002- 03 & 2004-05 AGAINST THE ORDERS OF LD. CIT(A) DATE D 15.11.2007. 2. THE COMMON ISSUE INVOLVED IN THESE TWO APPEALS I S AS TO WHETHER ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 10B . THE AMOUNT INVOLVED IN ASST. YEAR 2002-03 IS RS.42,10,891/- AND IN ASST . YEAR 2004-05 IS RS.42,22,267/-. 3. THE FACTS OF THE CASE ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING PSYLLIUM HUSK. A VERIFICA TION OF THE RETURN INDICATED THAT ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 10B OF THE I.T. ACT, 1961. ACCORDING TO THE AO THE ASSESSEE IS NOT ENTITLED TO SUCH DEDUCTION BECAUSE ASSESSEE COMPANY HAS TAKEN OVER A N OLD INDUSTRIAL ITA NOS.467 & 468/AHD/2008 ASST. YEARS :2002-03 & 2004-05 2 UNDERTAKING ENGAGED IN THE SIMILAR LINE OF BUSINESS . ALL THE ASSETS OF EXISTING EARLIER BUSINESS WERE USED BY THE ASSESSEE . THUS IT WAS A CASE OF RECONSTRUCTION. THE ASSESSEE HAD TAKEN OVER THE PLA NT AND MACHINERY FROM M/S BHAGIRATH SEEDS PROCESSING (P) LTD., GIDC, MEHS ANA. THUS THE ASSESSEE COMPANY DID NOT FULFILL THE CONDITIONS LAI D DOWN UNDER SECTION 10B(2)(II) AND 10B(2)(III) AS IT WAS A CASE OF RECO NSTRUCTION, INDUSTRIAL UNDERTAKING IS FORMED BY TRANSFER OF MACHINERY AND PLANT PREVIOUSLY USED AND OLD PLANT AND MACHINERY CONTRIBUTED MORE THAN 2 0% OF THE ENTIRE VALUE OF THE PLANT AND MACHINERY. THE LD. CIT(A) FO LLOWING HIS ORDER FOR ASST. YEAR 2001-02 AND 2003-04 ALLOWED THE CLAIM OF ASSESSEE ON THE GROUND THAT OLD PLANT AND MACHINERY CONSTITUTE LESS THAN 20% OF TOTAL VALUE OF PLANT AND MACHINERY INSTALLED BY THE ASSES SEE. THE ISSUE CAME UP BEFORE THE TRIBUNAL IN ASST. YEAR 2001-02 AND THE T RIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE VIDE PARA 10 OF THEIR ORDER I N ITA NO.1044/AHD/2005 PRONOUNCED ON 17.10.2008 AS UNDER :- 10. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CA REFULLY GONE THROUGH THE IMPUGNED ORDERS OF THE AUTHORITIES BELOW AND ALSO T HE PAPER BOOK FILED BY THE ASSESSEE. THE ASSESSEE CLAIMED DEDUCTION UNDER SECT ION 10B OF THE ACT, WHICH WAS REJECTED BY THE AO ON THE GROUND THAT THE INDUSTRIA L UNDERTAKING FORMED BY RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE. TH E INDUSTRIAL UNDERTAKING FORMED BY TRANSFER OF PLANT AND MACHINERY PREVIOUSLY USED AND THUS THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISIONS OF SECTION 10B(II) AND 10B(III) OF THE ACT. IT IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS PURCH ASED PLANT AND MACHINERIES FROM BHAGIRATH. AS ON 31.3.2000 THE GROSS COST OF PLANT AND MACHINERY IS RS.56,08,229/- AND AS ON 31.3.20001 IT IS RS.58,60, 194/- AND THER EFORE, THE COST OF THE PLANT & MACHINERY PURCHASED FROM BHAGIRATH IS LESS THAN 20% OF THE TOTAL VALUE OF PLANT & MACHINERY BLOCK OF THE COMPANY. THIS IS CLEARLY EVI DENT FROM THE DETAILS GIVEN BY THE ASSESSEE ON PAGE 6 OF THE PAPER BOOK. THE ASSESSEE CONVERTED INTO DOMESTIC TARRIF AREA UNIT INTO EOU ON 26.12.2000 AND SINCE THE ASSE SSEE BECAME ELIGIBLE FOR THE FIRST TIME IN F.Y 2000-01 RELEVANT TO ASST. YEAR 2001-02 AND THUS THE ASSESSEE IN OUR VIEW, HAS CORRECTLY CLAIMED U/S 10B IN THE CURRENT YEAR O N HAVING SATISFIED AND COMPLIED WITH THE PROVISIONS OR SECTION 10B OF THE ACT. IN T HIS VIEW OF THE MATTER, THE LD. CIT(A) IN OUR VIEW HAS CORRECTLY ALLOWED THE CLAIM OF THE ASSESSEE BY RELYING ON THE CBDT CIRCULAR NO.1/2005 DT.6.1.2005(F.NO.149/194/2004-TO L) AND ALSO PLACING RELIANCE ON THE DECISION OF HON. GUJARAT HIGH COURT IN THE C ASE OF SATELLITE ENGINEERING LTD. (SUPRA). THE LD. CIT(A) HAS PASSED A VERY REASONED ORDER, WHICH WE MADE PART OF THIS ORDER IN VIEW OF THE ABOVE, WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS GROUND NO.1 RAISED BY THE REVENUE. 3 4. THE TRIBUNAL FURTHER ALLOWED THE CLAIM OF THE AS SESSEE IN ASST. YEAR 2003-04 FOLLOWING THE ORDER OF TRIBUNAL IN ASS T. YEAR 2001-02. 5. WE HAVE HEARD THE PARTIES AND CAREFULLY PERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE ISSUE IS NOW SET TLED BY THE TRIBUNAL IN ASST. YEAR 2001-02 BY HOLDING THAT OLD PLANT AND MA CHINERY CONSTITUTE ONLY LESS THAN 20% OF THE TOTAL PLANT AND MACHINERY AND, THEREFORE, THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 10 B. RESPECTFULLY FOLLOWING ABOVE JUDGMENT, WE ALLOW THE CLAIM OF ASS ESSEE. 6. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 30/7/2010 SD/- SD/- (MUMUL KR. SHRAWAT) (D.C.AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBE R AHMEDABAD, DATED : 30/7/2010 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD