ACIT, Haridwar V. M/s. Aron Hurley Koncepts Pvt. Ltd., Haridwar

ITA 5502/DEL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6798 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: ABHISHEK ANAN

Judgement Text

1 IN THE INCOME TAX APPELLATE TRI BUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.-3518/D EL/2011 (A.Y 2006-07) & I.T.A .NO.-5502/D EL/2011 (A.Y 2008-09) I.T.A .NO.-5503/D EL/2011 (A.Y 2007-08) ACIT CIRCLE HARDWAR, D-29 & 30, INDUSTRIAL AREA HARIDWAR (APPELLANT) VS ARON HURLEY KONCEPTS PVT. LTD. C-18, INDUSTRIAL ESTATE, RAMNAGAR ROORKEE AAECA4084F (RESPONDENT) APPELLANT BY SH. S. K. JAIN, DR RESPONDENT BY SH. RAKESH GUPTA, ADV, SH SOMIL AGARWAL, ADV & ABHISHEK ANAND, ADV ORDER PER SUCHITRA KAMBLE, JM THESE THREE APPEALS ARE FILED FOR ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 BY THE DEPARTMENT AGAINST THE ORD ERS DATED 15/2/2011, 19/9/2011 & 19/9/2011 PASSED BY CIT(A) I I, DEHRADUN. DATE OF HEARING 21.07.2016 DATE OF PRONOUNCEMENT 26.07.2016 2 2. THE ISSUES INVOLVED IN THE APPEAL IS COMMON. THE FIRST GROUND IS RELATED TO THE CLAIM OF DEDUCTION U/S 80IC OF TH E INCOME-TAX ACT. THE SECOND GROUND IS RELATED TO INTEREST INCOME FOR WHICH THE LD. AR SUBMITTED THAT THE SAME IS AGAINST THE ASSESSEE. HENCE GROUND NO. 2 IS ALLOWED IN FAVOUR OF REVENUE. 3. THE ASSESSEE IS ENGAGED IN MANUFACTURE AND SELL OF ELECTRONICS AND MECHANICAL EQUIPMENTS AND WAS ALLOWED DEDUCTION U/S 80IC IN THE ASSESSMENT YEAR 2004-05 & 2005-06 BUT THE ASSES SMENT YEAR UNDER CHALLENGE HEREIN, THE ASSESSING OFFICER HAS R ECORDED THAT THE ASSESSEE HAS SOLD ONE AMPLIFIER WHICH WAS PURCHASED FROM SISTER CONCERN NAMELY M/S SARASWATI DYNAMICS, ROORKEE AND, THEREFORE, THE YEAR UNDER WHICH THE SURVEY TOOK PLACE THE ASSE SSEE WAS NOT ENGAGED IN MANUFACTURING ACTIVITIES. THUS, THE A.O DISALLOWED THE CLAIM OF SECTION 80IC OF THE ACT. 4. BEING AGGRIEVED BY THE SAME THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEALS O F THE ASSESSEE. HENCE THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT THE A.O HAS RIGHTLY DI SALLOWED THE CLAIM U/S 80IC OF THE ACT, AS ASSESSEE WAS NOT HAVI NG ANY MANUFACTURING ACTIVITIES DURING RELEVANT ASSESSMENT YEARS. 6. THE LD. AR SUBMITTED THAT IN EARLIER ASSESSMENTS YEARS 2004- 05 & 2005-06 THE TAX DEPARTMENT ACCEPTED THE SALES AND PURCHASES 3 AND CONSEQUENTLY THE PRODUCTION AND MANUFACTURING A CTIVITY WAS IN CARRIED OUT IN THE FACTORY WITH ALL THE REQUIRED IN FRASTRUCTURE OF THE ASSESSEE COMPANY. INCIDENTALLY, ONE OF THESE TWO A SSESSMENTS HAVE BEEN COMPLETED BY THE AO (BY NAME) WHO HAS COMPLETE D THE PRESENT ASSESSMENT AND HAS NOW MADE SEVERAL UNCALLE D FOR AND ARBITRARY UNSUBSTANTIATED, UNSUPPORTED ALLEGATION D ESPITE SUBMITTING AND PRODUCING OF VARIOUS CERTIFICATES AN D LICENSES ISSUED BY THE CENTRAL GOVERNMENT BEFORE THE ASSESSING OFFI CER. THESE HAVE NOT BEEN FOUND TO BE FALSE, INCORRECT, BOGUS OR FAK E. THE AO HAD ALSO NOT STATED THAT HE HAD TAKEN A WRONG DECISION IN THE PAST. 7. THE LD. AR FURTHER SUBMITTED THAT FOLLOWING DOCU MENTS WERE SUBMITTED TO THE A.O DURING ASSESSMENT PROCEEDINGS: (A) GOVERNMENT OF UTTARANCHAL, DIRECTORATE OF INDU STRIES, HAS ISSUED A CERTIFICATE OF PERMANENT REGISTRATION TO A SSESSEE VIDE ITS CERTIFICATE DATED 9/12/04 CERTIFYING THAT ARON HURLEY CONCEPS (P) LTD. IS PERMANENTLY REGISTERED AS SSI U NIT FOR THE MANUFACTURE OF VIBRATION SOCKER SYSTEM, DIGITAL AMPLIFIER ETC. THE CERTIFICATE CONTAINED OTHER VARIOUS DETAIL S SUCH AS OFFICE ADDRESS ETC. (B) NQAQSR HAS ISSUED A CERTIFICATE OF REGISTRATIO N VIDE CERTIFICATION DATED 26/8/05 VALID UPTO 25/8/08 HOLD ING THAT THE HOLDER HAS BEEN ASSESSED AND FOUND TO COMPLY WI TH THE REQUIREMENTS OF ISO 9001 : 2000 AND IS ISO 9001 : 2 000. (COPY ENCLOSED). NAVAL SCIENCES AND TECHNOLOGICAL LABORATORY, VISHAKAPATNAM, VIDE ITS CERTIFICATE DAT ED 4 9/12/05 HAS APPROVED YOUR ASSESSEE PETITIONER AS AN APPROVED VENDOR. (C) SIMILARLY, RESEARCH CENTER IMARAT VIGNYANA KAN CHAPO, HYDERABAD HAS RECOGNIZED THE ASSESSEE PETITIONER AS APPROVED VENDOR VIDE ITS LETTER DATED 5/4/05. (COPY ENCLOSED). AS PER THIS REGISTRATION CERTIFICATE, TH E ASSESSEE COMPANY HAS INFORMED THAT IT HAS BEEN REGISTERED AS AN APPROVED SUPPLIER. (D) A LETTER FROM MINISTRY OF SMALL CENTRAL INDUSTR Y, GOVERNMENT OF INDIA, DATED 27/1/05 INFORMING THE ASSESSEE THAT THE OFFICERS OF THE INSTITUTE OF SMALL INDUSTRY SERVICE INSTITUTE WOULD BE VISITING THE ASSESSEES UNIT AT C-18, INDU STRIAL ESTATE, ROORKEE ON 1/2/05. (E) THE NATIONAL SMALL INDUSTRIES CORPORATION LTD. HAS ISSUED US A REGISTRATION NO: NSIC/NOIDA/GP/RS/07/AN-102 DA TED 17/3/05 MENTIONING THE QUALITATIVE AND QUANTITATIVE CAPACITY OF VARIOUS SPECIFICATION AND VARIOUS STORE S OF THE ASSESSEE PETITIONER AT ITS FACTORY SITUATED AT C-18 ,INDUSTRIAL ESTATE, ROORKEE. A COPY OF THE LETTER DATED 17.2.05 AND A COPY OF PERMANENT AND ENLISTMENT CERTIFICATE WAS SU BMITTED BEFORE THE ASSESSING OFFICER. (F) THE NATIONAL SMALL INDUSTRY CORPORATION LTD. (W HICH IS A GOVT. INDIA ENTERPRISES) HAS ISSUED A CERTIFICATE D ATED 13/6/07 WHEREBY NET SALE TURNOVER HAS BEEN STATED F OR 5 VARIOUS YEARS. IT CONSIST THE ADDRESS OF THE ASSESS EES FACTORY AND ALSO THE NAME OF THE DIRECTORS. IT ALSO CONTAIN S THE REGISTRATION NUMBER AND SEVERAL OTHER DETAILS SUCH AS CAPACITY AND QUANTITY ETC. (G) THE ASSESSEE-COMPANY IS A MANUFACTURER CUM PRO DUCER AND ACTUALLY ENGAGED IN THE MANUFACTURE & ENCLOSED A PRE- DISPATCH INSPECTION REPORT DATED 19/9/05 SIGNED BY SCIENTIFIC OFFICER DECLARING THE ASSESSEE COMPANY A S THE MANUFACTURER AND THE BUYER WAS BHABHA AUTOMATIC RESEARCH CENTRE (BARC). THE PLACE OF INSPECTION WAS THE FACTORY PREMISE OF THE ASSESSEE COMPANY AT ROORKEE AND THE DATE OF INSPECTION WAS WITHIN THE RELEVANT ACCO UNTING PERIOD. IT HAS BEEN CERTIFIED THAT ALL THE ITEMS IN SPECTED WERE FOUND SATISFACTORY. THE VIBRATOR WAS ACCEPTED AND CLEARED FOR DISPATCH AS PER THE TERMS OF PURCHASE O RDER. THE PURCHASE ORDER WAS DATED 27/6/2005. THIS CONTAINS A CERTIFICATE REGARDING PERFORMANCE. (H) SIMILARLY, THERE IS ANOTHER PRE DISPATCH INSPEC TION REPORT DATED 23/6/05 AND IT HAS BEEN SIGNED BY DIRECTOR, K . JAGDISHAN AND ALSO VIPUL ARON, B RECTOR. THIS PRE D ISPATCH INSPECTION REPORT SIGNED ON BEHALF OF THE GOVERNMEN T OF INDIA. THE PLACE OF INSPECTION AGAIN IS THE FACTORY PREMISES AT ROORKEE AND DATE OF INSPECTION IS WITHIN THE REL EVANT ACCOUNTING PERIOD. IT STATES THAT CONSIGNMENT IS IN SPECTED AS PER SUPPLY ORDER AND FAT. IT WAS FOUND TO BE PER FORMING 6 SATISFACTORILY AND WAS CLEARED FOR DISPATCH. (I) THERE IS ANOTHER PRE DISPATCH INSPECTION TEST R EPORT. THIS WAS SIGNED BY SHRI MUKESH KUMAR, REP.ASL, HYDERABAD . (J) THERE IS ANOTHER PRE DISPATCH INSPECTION REPORT SIGNED BY BVPS RAO SCIENTIST E NSTL DATED 14/3/06. AGAIN EV EN AT THE COST OF REPETITION, THE PLACE OF INSPECTION IS THE FACTORY PREMISES AT ROORKEE AND DATE OF INSPECTION IS RELEV ANT ACCOUNTING PERIOD. THE NAME OF THE MANUFACTURER MENTIONED THEREIN IS OF ASSESSEE COMPANY. THE DESCR IPTION OF ITEM IS THE VIBRATION SYSTEM AS DECLARED AND STA TED BY THE DIRECTOR AT THE TIME OF THE SURVEY DURING THE C OURSE OF HIS STATEMENT. THE ADDRESS OF THE COMPANY IS AGAIN THE SAME E C-18, INDUSTRIAL ESTATE, ROORKEE. (K) THERE IS A CERTIFICATE IN WHICH MENTIONED IN T HE REMARKS COLUMN THAT THE CONSIGNMENT HAS SEEN INSPECTED AND IT WAS PERFORMING SATISFACTORILY AND WAS CLEARED FOR DISPA TCH TO NSTL, VISHAKAPATNAM. (L) THE ASSESSEE ENCLOSED A STAGE INSPECTION OF 240 KVA POWER AMPLIFIER BY SDSC-SHAR. THIS REPORT IS SIGNED BY J V RAO, ENGINEER SDSC, SHAR. THIS REPORT CONTAINS VARIOUS D ETAILS RELATING TO THE MANUFACTURED ITEMS. THIS IS SIGNED BY THE DIRECTOR AN ALSO THE GOVERNMENT FUNCTIONARIES. THIS ALSO DECLARES THE PLACE AND TEST I.E. ROORKEE AND THE PE RIOD OF TEST IS AGAIN THE RELEVANT ACCOUNTING PERIOD. 7 8. THE LD. AR FURTHER SUBMITTED THAT IN VIEW OF THE CERTIFICATES, CLARIFICATIONS, INSPECTIONS, REGISTRATION BY THE GO VERNMENT AUTHORITIES, IT IS CLEAR THAT THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING ACTIVITIES DURING THE RELEVANT ASSESS MENT YEARS. 9. WE HAVE PERUSED ALL THE RECORDS AND TAKEN INTO A CCOUNT THE SUBMISSIONS OF BOTH THE PARTIES. THE CIT(A) HAS R IGHTLY POINTED OUT THAT THE A.O HAS ALLOWED DEDUCTION U/S 80IC OF THE ACT IN THE IMMEDIATELY PRECEDING YEARS. SURVEY SHOULD HAVE BE EN DONE BEFORE ALLOWING DEDUCTION U/S 80IC OF THE ACT IN THE VERY FIRST YEAR OF ITS CLAIM, BUT THE REVENUE HAS CONDUCTED THE SAME IN 20 08. THE SURVEY TEAM FAILED TO COLLECT THE EVIDENCES DURING THE SURVEY AS TO HOW THE BUSINESS WAS CLOSED FOR THE ASSESSMENT YEAR 2008-09. THE OPERATION WAS CLOSED IN NOVEMBER 2008 BECAUSE OF TH E NATURAL CALAMITIES. THE PRODUCTION OF ALL THE DOCUMENTS WE RE PRODUCED BY THE ASSESSEE COMPANY BEFORE THE ASSESSING OFFICER R ELATED TO THE BUSINESS OF THE ASSESSEE TO THE GOVERNMENT ORGANIZA TION TILL SEPTEMBER 2006. THESE DOCUMENTS HAS CATEGORICALLY R EVEALED THAT THE VERY FOUNDATION OF THE ASSESSING OFFICERS ORDE R WAS NOT JUSTIFIED AS THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 20 06-07 HAS MADE A CLEAR FINDINGS THAT THE ASSESSEE HAS PURCHASED DI GITAL POWERS SUB ASSEMBLIES FOR WHICH INVOICE HAS BEEN RAISED BY M/S SARASWATI DYNAMICS PVT. LTD DATED 8/3/2006 AT PAGE 8 PARA 8 O F THE ASSESSMENT ORDER. THUS THE SUB ASSEMBLIES CANNOT BE TERMED AS THE AMPLIFIER AS A WHOLE. IN THE SAME PARA, THE ASS ESSING OFFICER MENTIONED THAT ASSESSEE HAD SOLD AMPLIFIER TO SHAR CENTRE, SRIHARIKOTA FOR RS.1,27,51,250/- FOR WHICH INVOICE HAS BEEN RAISED 8 DATED 06.03.2006. BUT WHILE COMPUTING THE TOTAL IN COME THE ASSESSING OFFICER HAS MADE DISALLOWANCE FOR THE REC EIPT FOR AMPLIFIER FROM THE TOTAL INCOME AMOUNTING TO RS.1,27,51,250/- AND AS RELATES TO TOTAL EXPENSES HAS DISALLOWED PURCHASE OF AMPLIF IERS AS TO RS.57,20,000/-. THERE WAS MANUFACTURING ACTIVITY G OING ON DURING THE RELEVANT ASSESSMENT YEARS. THE DISALLOWANCE WAS NOT PROPER AND THE REASON FOR DISALLOWANCE OF THE BENEFIT UNDE R SECTION 80IC DOES NOT SUSTAIN. THUS, THE CIT(A) HAS RIGHTLY HELD THAT A.O WAS NOT CORRECT WHILE DISALLOWING THE BENEFIT UNDER SECTION 80IC OF THE ACT. 10. IN THE RESULT, APPEALS ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT 26 TH OF JULY 2016. SD/- SD/- (R.S. SYAL) (SU CHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/07/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 9 ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 21.07.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 22.07.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 26.07.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 26.07.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.