OLEOFINE ORGANICS (INDIA) P.LTD, MUMBAI V. DCIT CIR 10(2), MUMBAI

ITA 5831/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92384 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JEETENDRA KUMAR
• Assessee Lawyers: K K VED; N A PATADE
• Keywords: Question of law
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H , MUMBAI BEFORE SHRI R.C. SHARMA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO S . 5831 & 5832/M/2014 ASSESSMENT YEAR S : 2006 - 07 & 2010 - 11 M/S. OLEOFINE ORGANICS (INDIA) PVT. LTD., 10 1/B, FINE HOUSE, ANANDJI LANE, OFF. M.G. ROAD, GHATKOPAR (E), MUMBAI 400 077 PAN: AAACO 1352Q VS. THE DEPUTY COMM. OF INCOME TAX, CIRCLE 10(2), AAYAKAR BHAVAN, NEW MARINE LINES, MUMBAI - 400020 (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI K.K. VED, A.R. & N.A. PATADE, A.R. REVENUE BY : SHRI JEETENDRA KUMAR, D.R. DATE OF HEARING : 12.02 .201 5 DATE OF PRONOUNCEMENT : 17.04. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE TITLED TWO APPEALS RELEVANT TO ASSESSMENT YEARS 2010 - 11 & 2006 - 07 HAVE BEEN PREFERRED BY THE ASSESSEE AGAINST THE TWO DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) [ HEREINAFTER REFERRED TO AS THE CIT(A) ] BOTH DATED 07.07.2014. S INCE THE FACTS AND THE ISSUE INVOLVED THEREIN ARE IDENTICAL IN NATURE, HENCE THE SAME ARE TAKEN TOGETHER FOR DISPOSA L BY THIS COMMON ORDER. FIRST WE TAKE UP ASSESSEES APPEAL ITA NO.5832/M/2014 FOR AY. 2010 - 11. ITA NOS.5831 & 5832/M/2014 M/S. OLEOFINE ORGANICS (INDIA) PVT. LTD. 2 ITA NO.5832/M/2014 FOR A .Y. 2010 - 11 TH E ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED ASSESSING OFFICER & THE CIT(A) HAVE FAILED TO APPRECIATE THAT CONDITION AS REGARDS UNIT B E ING SMALL SCALE IS REQUIRED TO BE SATISFIED/EXAMINED ONLY IN THE FIRST/INITIAL YEAR OF CLAIMIN G OF DEDUCTION U/ S. 801B(3). 2. THE LEARNED ASSESSING OFFICER HAS ERRED ON FACTS AND IN LAW IN DENYING CLAIM OF DEDUCTION OF RS.4,13,58,579/ - MADE U/ S. 801B(3). THE CIT(A) HAS ERRED IN CONFIRMING THE SAME. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE OR WITHDRAW ONE OR MORE GROUNDS OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, IMPORTING & EXPORTING CHEMICALS ETC. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD CLAIMED DEDUC TION OF RS.4 , 13 , 58 , 579/ - UNDER SECTION 80IB(3). THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTICED THAT THE INITIAL ASSESSMENT YEAR FROM WHICH THE DEDUCTION WAS BEING CLAIMED BY THE ASSESSEE WAS A.Y. 2001 - 02. THE AO FURTHER NOTED THAT TH E VALUE OF PLANT & MACHINERY WAS SHOWN BY THE ASSESSEE AT RS.11 , 85 , 66 , 062/ - . HE OBSERVED THAT SINCE THE VALUE OF PLANT & MACHINERY HAD EXCEEDED RS.1 CRORE, THE ASSESSEE HAD CEASED TO FALL WITHIN THE PURVIEW OF SMALL SCALE INDUSTRIAL UNDERTAKING AND THEREF ORE THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB(3) OF THE INCOME TAX ACT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 3. THE LD. CIT(A), HOWEVER, UPHELD THE FINDINGS OF THE AO. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. 4. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS SUBMITTED THAT THE ISSUE IS NOW COVERED BY THE DECISION OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR 2009 - 10 PASSED IN ITA NO.3584/M/2013 VI DE ORDER ITA NOS.5831 & 5832/M/2014 M/S. OLEOFINE ORGANICS (INDIA) PVT. LTD. 3 DATED 22.08.2014. WE HAVE PERUSED THE SAID ORDER OF THE TRIBUNAL. THE TRIBUNAL VIDE THE SAID ORDER (SUPRA) RELYING UPON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT, IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD. VS. DCIT (2014) 49 TAXMAN N.COM 168 (KARNATAKA), HAS ON IDENTICAL FACTS ALLOWED THE CLAIM OF THE ASSESSEE OBSERVING AS UNDER: 5. IN THE ENTIRE PROVISION, THERE IS NO INDICATION THAT THESE CONDITIONS HAD TO BE FULFILLED BY THE ASSESSEE ALL THE 10 YEARS. WHEN ONCE THE BENEFIT OF 10 YEARS, COMMENCING FROM THE INITIAL YEAR, IS GRANTED, IF THE UNDERTAKING SATISFY ALL THESE CONDITIONS INITIALLY, THE UNDERTAKING IS ENTITLED TO . THE BENEFIT OF 10 CONSECUTIVE YEARS. THE ARGUMENT THAT, IN THE COURSE OF 10 YEARS, IF THE GROWTH OF THE INDUST RY IS FAST AND IT ACQUIRES MACHINERY AND THE TOTAL VALUE OF THE MACHINERY EXCEEDS RS. 1 CRORE, IT CEASES TO HAVE THE SAID BENEFIT, DO NOT FOLLOW FROM ANY OF THE PROVISIONS. IT IS TRUE THAT THERE IS NO EXPRESS PROVISION INDICATING EITHER WAY, WHAT WOULD BE THE POSITION IF THE SMALL SCALE INDUSTRY CEASES TO BE A SMALL SCALE INDUSTRY DURING THE SAID PERIOD OF 10 YEARS. BECAUSE OF THAT AMBIGUITY., A NEED FOR INTERPRETATION ARISES. IF WE KEEP IN MIND THE OBJECT OF THE LEGISLATURE PROVIDING FOR THESE INCENTIVES A ND WHEN A PERIOD OF 10 YEARS IS PRESCRIBED, THAT IS THE PERIOD, PROBABLY, WHICH IS REQUIRED FOR ANY INDUSTRY TO STABILIZE ITSELF. DURING THAT PERIOD THE INDUSTRY NOT ONLY MANUFACTURES PRODUCTS, IT GENERATES EMPLOYMENT AND IT ADDS TO THE WEALTH OF THE COUNT RY. MERELY BECAUSE AN INDUSTRY STABILIZES EARLY, MAKES PROFITS, MAKES FUTURE INVESTMENT IN THE SAID BUSINESS, AND IT GOES OUT OF THE DEFINITION OF THE SMALL SCALE INDUSTRY, THE BENEFIT UNDER SEC.80IB CANNOT BE DENIED. IF SUCH A LITERAL INTERPRETATION IS PL ACED ON THE SAID PROVISION, IT WOULD RUN COUNTER TO THE VERY OBJECT OF GRANTING INCENTIVES. IT WOULD KILL THE INDUSTRY. THEREFORE KEEPING IN MIND THE OBJECT WITH WHICH THESE PROVISIONS ARE ENACTED, KEEPING IN MIND THE INDUSTRIAL GROWTH WHICH IS REQUIRED TO BE ACHIEVED, IF TWO INTERPRETATIONS ARE POSSIBLE, THE COURTS HAVE TO LEAN IN FAVOUR OF EXTENDING THE BENEFIT OF DEDUCTION TO AN ASSESSEE WHO HAS AVAILED THE OPPORTUNITY GIVEN TO HIM UNDER LAW AND HAS GROWN IN HIS BUSINESS. THEREFORE WE ARE OF THE VIEW, IF A SMALL SCALE INDUSTRY, IN THE COURSE OF 10 YEARS, STABILIZES EARLY, MAKES FURTHER INVESTMENTS IN THE BUSINESS AND IT RESULTS IN IT'S GOING OUTSIDE THE PURVIEW OF THE DEFINITION OF A SMALL SCALE INDUSTRY, THAT SHOULD NOT COME IN THE WAY OF ITS CLAIMING BE NEFIT UNDER SEC.80IB FOR 10 CONSECUTIVE YEARS, FROM THE INITIAL ASSESSMENT YEAR.THEREFORE THE APPROACH OF THE AUTHORITIES RUNS COUNTER TO THE SCHEME AND THE INTENT OF THE LEGISLATURE. THEREBY THEY HAVE DENIED THE LEGITIMATE BENEFIT, AN INCENTIVE GRANTED TO THE ASSESSEE. BOTH THE SAID ORDERS CANNOT BE SUSTAINED. THEREFORE THE SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. HENCE WE PASS THE FOLLOWING: ORDER 1. THE APPEAL IS ALLOWED. THE IMPUGNED ORDER IS HEREBY SET ASIDE. THE ORIGINAL ORDER OF GRANTING THE BENEFIT OF DEDUCTION UNDER SEC. 80IB, IS RESTORED. ITA NOS.5831 & 5832/M/2014 M/S. OLEOFINE ORGANICS (INDIA) PVT. LTD. 4 ORDERED ACCORDINGLY. 5. SINCE THE FACTS AND ISSUE UNDER CONSIDERATION ARE IDENTICAL FOR THE YEAR UNDER CONSIDERATION, WE DO NOT FIND ANY REASON TO DIFFER FROM TH E ABOVE STATED FINDINGS OF THE TRIBUNAL GIVEN IN THE OWN CASE OF THE ASSESSEE FOR EARLIER ASSESSMENT YEAR. RESPECTFULLY FOLLOWING THE SAME, THE ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE ACCORDINGLY. THE APPEAL OF THE ASSESSEE IS THEREFORE ALLOWED. 6. NOW WE TAKE UP ASSESSEES APPEAL 5831/M/2014 FOR A.Y. 2006 - 07. IN THIS APPEAL, THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(3) WAS EARLIER ALLOWED BY THE AO. HOWEVER, THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT ON THE IDENTICAL GROUND THAT THE VALUE OF PLANT & MACHINERY HAD EXCEEDED THE LIMIT OF RS.1 CRORE. IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE ISSUE IS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE. THE ASSESSEE UNDER THE GIVEN CIRCUMSTANCES , IS HELD TO BE ENTITLED TO THE CLAIM OF DEDUCTION UNDER SECTION 80IB(3). HENCE, THIS APPEAL OF THE ASSESSEE IS ALSO ALLOWED ACCORDINGLY. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE HEREBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.04. 201 5 . SD/ - SD/ - ( R.C. SHARMA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 17.04.2015 . * KISHORE , SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMB AI ITA NOS.5831 & 5832/M/2014 M/S. OLEOFINE ORGANICS (INDIA) PVT. LTD. 5 THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.