COOLDECK AQUA SOLUTIONS P. LTD, MUMBAI V. ITO 8(1)-2, MUMBAI

ITA 5329/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49398 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S SAMUEL
• Assessee Lawyers: SANJAY R PARIKH
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI B RAMAKOTAIAH, ACCOUNTANT MEMBER I T A NO: 5329/MUM/2009 (ASSESSMENT YEAR: 2006-2007) M/S COOLDECK AQUA SOLUTIONS PVT. LTD.,MUMBAI APPE LLANT (PAN: AACCC5224H) VS INCOME TAX OFFICER 8(1)-2, MUMBAI RESPONDENT ASSESSEE BY: MR SANJAY R PARIKH REVENUE BY: MR V S SAMUEL O R D E R R V EASWAR, PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE ASSESSEE IS A PRI VATE LIMITED COMPANY MANUFACTURING COOLING TOWER COMPONENTS AND PROVIDING COMMISSIONING AND INSTALLATION SERVICES FOR COOLING TOWERS. THE APPEAL ARISES OUT OF THE ASSESSMENT ORDER PASSED ON 22.12.2008 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. GROUND NO:2, WHICH IS DIRECTED AGAINST THE DISAL LOWANCE OF ` 47,055/- ON THE GROUND OF NON DEDUCTION OF TAX IS D ISMISSED AS NOT PRESSED. 3. THAT LEAVES US WITH GROUND NO:1, WHICH RELATES T O THE DEDUCTION UNDER SECTION 80-IB OF THE ACT. THE ASSE SSEE COMPANY CLAIMED DEDUCTION OF ` 44,68,098/- UNDER SECTION 80-IB. WHILE ITA NO: 5329/MUM/2009 2 COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER DI SALLOWED THE CLAIM FOR DEDUCTION MAINLY ON THE FOLLOWING GROUNDS : - (1) THAT THE ASSESSEE DID NOT FILE THE SSI REGISTRATION CERTIFICATE; (2) THAT THE AUDIT CERTIFICATE WAS NOT FILED ALONG WITH THE RETURN OF INCOME AS REQUIRED BY THE SECTION, THOUGH IT WAS FILED LATER IN THE COURSE OF THE ASSESSMENT PROCEEDINGS; (3) THAT THE ASSESSEE WAS ALSO CARRYING ON NON MANUFACTURING ACTIVITIES; AND (4) THAT THE OBJECTS CLAUSE IN THE MEMORANDUM OF ASSOCIATION DID NOT PERMIT ANY MANUFACTURING ACTIVITY. ON THE AFORESAID GROUNDS, THE ASSESSING OFFICER DIS ALLOWED THE CLAIM FOR DEDUCTION. ON APPEAL, THE CIT(A) ENDORSE D THE VIEW TAKEN BY THE ASSESSING OFFICER AGAINST WHICH THE AS SESSEE HAS COME IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE CONSIDERED THE FACTS AND THE RIVAL CONTE NTIONS. AS REGARDS THE FILING OF THE SSI REGISTRATION CERTIFIC ATE, WE FIND FROM PAGE 4 OF THE STATEMENT OF FACTS FILED BY THE ASSES SEE BEFORE THE CIT(A) ALONG WITH THE MEMORANDUM OF APPEAL IN FORM NO:35 THAT THE ASSESSEE HAS SPECIFICALLY STATED THAT THE CERTI FICATE WAS PRODUCED BEFORE THE ASSESSING OFFICER FOR HIS PERUS AL IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THIS ASSERTION OF F ACT HAS NOT BEEN FOUND INCORRECT BY THE CIT(A); HE HAS HOWEVER HELD THAT THE ITA NO: 5329/MUM/2009 3 EVIDENCE TO SHOW THAT THE ASSESSEE WAS ALSO REGISTE RED AS A SSI WAS FILED EVEN DURING THE APPELLATE PROCEEDINGS, BU T HE REJECTED THE SAME ON THE GROUND THAT IT IS NEW EVIDENCE. EVEN I F THE EVIDENCE WAS FRESH EVIDENCE, THERE WAS NO BAR ON THE CIT(A) ADMITTING THE SAME BY VIRTUE OF THE VAST POWERS CONFERRED UPON HI M WHILE DISPOSING OF THE APPEAL. IT IS ALSO SEEN THAT HE H AS NOT QUESTIONED THE EVIDENCE ON MERITS. THEREFORE, WE DO NOT SEE A NY MERIT IN THE OBJECTION OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE DID NOT ADDUCE ANY EVIDENCE TO SHOW THAT IT WAS A SSI. 5. AS REGARDS THE FILING OF THE AUDIT REPORT IN FOR M NO:10CCB, IT WAS FILED WHEN THE ASSESSING OFFICER ASKED FOR THE SAME IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE OBJECTIO N, HOWEVER, IS THAT IT WAS NOT FILED ALONG WITH THE RETURN OF INCO ME AS REQUIRED BY SUB-SECTION (13) OF SECTION 80-IB READ WITH SUB-SEC TION (7) OF SECTION 80-IA. THIS OBJECTION IS ALSO WITHOUT ANY MERIT. THE HONBLE BOMBAY HIGH COURT HAS HELD IN CIT VS. SHIVANAND ELE CTRONICS (1994) 209 ITR 63 (BOM) THAT THE REQUIREMENT OF FUR NISHING THE AUDIT REPORT IS MANDATORY BUT THE FURTHER REQUIREME NT THAT IT SHOULD BE FURNISHED ALONG WITH THE RETURN OF INCOME IS ONL Y DIRECTORY AND THEREFORE EVEN IF THE ASSESSEE FURNISHES THE AUDIT REPORT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS SO AS TO FACIL ITATE THE ASSESSING OFFICER TO EXAMINE THE CLAIM IN THE LIGHT OF THE AUDIT REPORT, IT WOULD AMOUNT TO COMPLIANCE WITH THE SECT ION. SINCE THE PRESENT ASSESSEE HAS SUBMITTED THE AUDIT REPORT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS, THERE IS NO MERIT IN TH E OBJECTION OF THE DEPARTMENTAL AUTHORITIES, IN THE LIGHT OF THE J UDGMENT OF THE ITA NO: 5329/MUM/2009 4 HONBLE JURISDICTIONAL HIGH COURT CITED SUPRA. AS REGARDS THE OBJECTION THAT THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY DID NOT PERMIT ANY MANUFACTURING ACTIVITY, HERE GAIN THERE IS NO MERIT IN THE OBJECTION BECAUSE THE ASSESSEE C OMPANY WAS INCORPORATED WITH THE MAIN OBJECT OF TAKING OVER AN D RUNNING THE BUSINESS OF THE WORKING PARTNERSHIP FIRM OF M/S AYU SHI INDUSTRIES ALONG WITH THE ASSETS AND LIABILITIES. THIS IS CLE ARLY PROVIDED IN THE MAIN OBJECTS CLAUSE NO:1 OF THE MEMORANDUM OF ASSOC IATION. IT IS NOT IN DISPUTE THAT THE ERSTWHILE PARTNERSHIP FIRM WHICH COMMENCED OPERATIONS IN THE PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT YEAR 2004-05 WAS ALLOWED THE DEDUCTION UNDER SECTION 80- IB FOR THE ASSESSMENT YEAR 2005-06. THE RETURN OF INCOME FILE D BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE AND WE HAVE PERUSED THE SAME. THE ASSESSEE DISCLOSED GROSS TOTAL INCOME OF ` 2,19,998/- WHICH CONSISTED ONLY OF PROFITS AND GAINS FROM BUSINESS, BEING THE PROFITS FROM THE INDUSTRIAL UNIT SITUATED IN DAMAN, WHICH W AS A BACKWARD AREA. THE ENTIRE GROSS TOTAL INCOME WAS CLAIMED AS DEDUCTION UNDER SECTION 80-IB(4) WITH THE SPECIFIC NARRATION BEING AN INDUSTRIAL UNIT (SSI) SITUATED IN DAMAN (UT), THE B ACKWARD DISTRICT AS PER AUDIT CERTIFICATE IN FORM NO:10CCB ATTACHED . THE TAXABLE INCOME WAS SHOWN AT ` NIL AND THE SAME WAS ACCEPTED BY THE REVENUE AUTHORITIES. THEREFORE, THE OBJECTION THAT THE MEMORANDUM OF ASSOCIATION OF THE ASSESSEE COMPANY DID NOT AUTH ORIZE THE CARRYING ON OF ANY MANUFACTURING ACTIVITY IS WITHOU T MERIT SINCE THE ITA NO: 5329/MUM/2009 5 VERY PURPOSE OF INCORPORATING THE ASSESSEE COMPANY WAS TO TAKE OVER THE BUSINESS OF THE ERSTWHILE PARTNERSHIP FIRM . THERE IS NO DISPUTE THAT THE BUSINESS OF THE ERSTWHILE PARTNERS HIP FIRM CONSISTED OF MANUFACTURING ACTIVITY. WE ALSO FIND FROM PAGE 107 OF THE PAPER BOOK THAT THE ERSTWHILE FIRM M/S AYUSHI INDUSTRIES CLAIMED DEDUCTION UNDER SECTION 80-IB FOR THE ASSESSMENT YEAR 2004-05 , WHICH WAS ALSO ALLOWED. FOR THE ASSESSMENT YEAR 2005-06 ALSO THE SAID FIRM HAD CLAIMED DEDUCTION UNDER THAT SECTION WHICH WAS ALSO NOT DISPUTED. 6. AS REGARDS THE OBJECTION THAT THE ASSESSEE ALSO CARRIED ON NON MANUFACTURING ACTIVITIES, THE LEARNED COUNSEL F OR THE ASSESSEE SUBMITTED, WITHOUT PREJUDICE, THAT AT BEST THE ONLY COURSE OPEN TO THE ASSESSING OFFICER WAS TO EXCLUDE THE PROFITS FR OM SUCH ACTIVITIES FROM THE SCOPE OF THE DEDUCTION AND THAT THE ENTIRE CLAIM CANNOT BE DISALLOWED. THERE IS FORCE IN THE CONTENTION. 7. FOR THE ABOVE REASONS WE ACCEPT THE ASSESSEES C ONTENTION THAT IT IS ENTITLED TO THE DEDUCTION UNDER SECTION 80-IB(4). HOWEVER, THE QUANTUM OF SUCH DEDUCTION, IN THE LIGHT OF THE EXISTENCE OF NON MANUFACTURING ACTIVITIES, WILL HAVE TO BE DETERMINE D AFRESH BY THE ASSESSING OFFICER. FOR THIS LIMITED PURPOSE OF QUA NTIFYING AND EXCLUDING THE PROFITS FROM THE NON MANUFACTURING AC TIVITIES, IF ANY, THE MATTER WILL GO BACK TO THE ASSESSING OFFICER. THE ASSESSEE SHALL BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD BEFORE A DECISION IS TAKEN. GROUND NO:2 IS THUS ALLOWED SUB JECT TO THE ABOVE REMARKS. ITA NO: 5329/MUM/2009 6 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY 2011. SD/- SD/- (B RAMAKOTAIAH) (R V EASWAR) ACCOUNTANT MEMBER PRESIDE NT MUMBAI, DATED 8 TH JULY 2011 SALDANHA COPY TO: 1. M/S COOLDECK AQUA SOLUTIONS PVT. LTD. UNIT NO.121, 1 ST FLOOR ANDHERI INDUSTRIAL PREMISES CO-OP. SOC. 22, VEERA DESAI ROAD, ANDHERI (WEST) MUMBAI 400 058 2. ITO 8(1)-2, MUMBAI 3.CIT-VIII, MUMBAI 4. CIT(A)-VIII, MUMBAI 5.DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI