ITO, New Delhi V. M/s. International Cylinders Pvt. Ltd., New Delhi

ITA 551/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8485 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 02-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR VIJAY KUMAR CHADHA SENIOR
• Keywords: Difference of opinion; Change of opinion; Set aside
• Section: 80IC; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.551/DEL./2016 (ASSESSMENT YEAR : 2009-10) ITO, WARD 11 (4), VS. M/S. INTERNATIONAL CYLINDERS PVT. LTD., NEW DELHI. D 14, 2 ND FLOOR, PREET VIHAR, DELHI 110 032. (PAN : AAACI7605J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT GOEL, CA SHRI NIPPUN MITTAL, CA REVENUE BY : DR. VIJAY KUMAR CHADHA, SENIOR DR DATE OF HEARING : 12.09.2019 DATE OF ORDER : 10.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ITO, WARD 11 (4), NEW DELHI (HEREINAFTE R REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUG HT TO SET ASIDE THE IMPUGNED ORDER DATED 27.11.2015 PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS)-4, NEW DELHI QUA THE ASSESS MENT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- 1. WHETHER ON FACTS & CIRCUMSTANCES OF THE CASE LD . CIT(A) GROSSLY ERRED IN QUASHING THE ASSESSMENT U/S 147 BY IGNORING THE FACT THAT FORM NO.10CCB FOR A.Y. 09-10 FALSELY STAT ES THAT DATE OF COMMENCEMENT OF OPERATION BY THE UNDERTAKING IS 30/03/2009 WHEREAS THE TRUTH IS THAT FORM NO. 10CCB FOR EARLIE R A.Y. 08-09 ITA NO.551/DEL./2016 2 STATES THAT DATE OF COMMENCEMENT OF OPERATION BY TH E UNDERTAKING WAS 29/11/2003. 2. THE ID. CIT (A) HAS GROSSLY ERRED IN QUASHING TH E ASSESSMENT U/S 147 BY HOLDING THAT THERE WAS NO NEW MATERIAL IGNORING THE FACT THAT FALSE INFORMATION WAS GIVEN TO THE AO DURING ASSESSMENT PROCEEDINGS AND ALSO THE FACT THA T FOR EARLIER FIVE ASSESSMENT YEARS THE ASSESSEE HAD ALREADY CLAI MED DEDUCTION U/S 80-IC OF THE ACT WAS NEITHER KNOWN TO THE AO NOR DID THE ASSESSEE DISCLOSE THE SAME DURING ASSESSMEN T PROCEEDINGS. 3. THE LD. CIT(A) ERRED IN HOLDING THAT DEDUCTION @ 100% CAN BE ALLOWED EVEN BEYOND 5 YEARS IF THE ASSESSEE UNDERTAKES SUBSTANTIAL EXPANSION AND ALSO ERRED IN HOLDING THA T THE INITIAL ASSESSMENT YEAR CAN BE RE-FIXED UPON UNDERTAKING OF SUBSTANTIAL EXPANSION IGNORING THE LEGAL PROVISIONS THAT INITIA L ASSESSMENT YEAR CAN ONLY BE THAT ASSESSMENT YEAR IN WHICH THE ASSESSEE CLAIMS BENEFITS OF SECTION 80-IC FOR THE FIRST TIME . 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE IS INTO THE BUSINESS OF MANUFAC TURING AND SELLING OF LPG GAS CYLINDERS AND DURING THE YEAR UNDER ASSESSM ENT, HE HAS CLAIMED DEDUCTION UNDER SECTION 80IC OF THE INCOME- TAX ACT, 1961 (FOR SHORT THE ACT) OF RS.3,32,30,544/-. ASSESSING O FFICER (AO) NOTICED THAT THE ASSESSEE HAS CLAIMED 100% DEDUCTION DURING THE YEAR UNDER ASSESSMENT BY TREATING ASSESSMENT YEAR 2009-10 AS I TS INITIAL ASSESSMENT YEAR BUT IN AY 2008-09 THE ASSESSEE HAD MENTIONED INITIAL AY AS 2004-05. AO PROCEEDED TO CONCLUDE THAT SINCE DEDUCTION @ 100% OF THE PROFIT AND GAINS OF THE INDUSTRIAL UNDE RTAKING IS ALLOWABLE FOR THE FIRST FIVE YEARS COMMENCING WITH THE INITIA L ASSESSMENT YEAR AND FOR THE NEXT FIVE YEARS, THE ASSESSEE IS ENTITLED F OR DEDUCTION @ 25% (30 IN CASE OF COMPANY) AND THEREBY DISALLOWED THE DEDU CTION OF RS.3,32,30,544/- AND ASSESSED THE TOTAL INCOME AT R S.3,46,10,371/-. ITA NO.551/DEL./2016 3 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS ALLOWED THE DEDUCTION CLAIMED BY THE AS SESSEE BY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COM E UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, AFTER FRAMING THE INITIAL ASS ESSMENT U/S 143 (3), THE AO REOPENED THE ASSESSMENT U/S 147 OF THE ACT WITH REGARD TO THE DEDUCTION CLAIMED U/S 80IC OF THE ACT . IT IS ALSO NOT IN DISPUTE THAT THE REOPENING HAS BEEN QUASHED AS N O MATERIAL HAD COME ON RECORD ENABLING THE AO TO REOPEN THE ASSESS MENT, HENCE TREATING THE REOPENING AS CHANGE OF OPINION, THE AS SESSMENT HAS BEEN QUASHED BY LD. CIT (A). THE REVENUE HAS FAILE D TO CONTROVERT THE FINDINGS RETURNED BY THE LD. CIT (A) THAT THERE WAS NO NEW MATERIAL ON THE BASIS OF WHICH ASSESSMENT CAN BE RE OPENED. LD. DR FOR THE REVENUE RELIED UPON THE ORDER PASSED BY THE AO. 6. EVEN OTHERWISE, ASSESSEE IS ENTITLED FOR DEDUCTI ON U/S 80IC ON MERITS BECAUSE IN THE PRECEDING AS WELL AS SUCCE EDING YEARS AS WELL AS IN THE ORIGINAL ASSESSMENT U/S 143 (3), THE DEDUCTION HAD BEEN ALLOWED. MORESO, ISSUE IN CONTROVERSY IS SQUA RELY COVERED IN ITA NO.551/DEL./2016 4 FAVOUR OF THE ASSESSEE BY THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF PR. CIT VS. AARHAM SOFTRONICS (2019) 102 TAXMANN.COM 343 (SC) . OPERATIVE PART OF THE JUDGMENT IS EXTRACTED FOR READY PERUSAL AS UNDER :- 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLO WING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BINDING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION 'INITIAL ASSESSMENT YEAR' CONTAINED IN S ECTION 80- IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE D EFINITION CONTAINED IN SECTION 80-IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINITIONS OF 'INITIAL ASSESSMENT YEAR' IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIA LLY DIFFERENT. THE DEFINITION OF 'INITIAL ASSESSMENT YE AR' UNDER SECTION 80-IC HAS MADE ALL THE DIFFERENCE. THEREFOR E, WE ARE OF THE OPINION THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET UP A NEW UNIT BETWEEN 7 TH JANUARY, 2003 AND 1 ST APRIL, 2012 IN STATE OF HIMACHAL PRADESH OF THE NATURE MENTIONED I N CLAUSE (II) OF SUB-SECTION (2) OF SECTION 80-IC, WO ULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PR OFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE 'INITIAL ASSESSMENT YEAR'. FOR THE NEXT FIVE YEARS, THE ADMI SSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE I S A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARR IED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SEC TION 80-LE BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AF ORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME 'I NITIAL ASSESSMENT YEAR', AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL PERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EX AMPLE, IF THE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE CO MPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100% ITA NO.551/DEL./2016 5 DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTH ER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 1 00% DEDUCTION FOR THE FIRST FIVE YEARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8 TH YEAR AS THIS YEAR BECOMES 'INITIAL ASSESSMENT YEAR ' ONCE AGAIN. HOWEVER, THIS 100% DEDUCTION WOULD BE F OR REMAINING THREE YEARS, I.E., 8TH, 9 TH AND 10 TH ASSESSMENT YEARS. 7. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND IN VIEW OF THE LAW LAID DOWN BY HONBLE SUPREME COURT, WE FIND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), HENCE THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED . ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 10 TH DAY OF OCTOBER, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-4, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.