ACIT, Faridabad V. Sh. Sunil Prakash, Faridabad

ITA 5902/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3438 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Section: 143(3); 80IB

Judgement Text

1 ITA NO. 5902/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 5902/DEL/201 4 ( A.Y 2011-12) ACIT CIRCLE-II FARIDABAD (APPELLANT) VS SUNIL PRAKASH PLOT NO. 62, SECTOR-25 FARIDABAD AFVPP5777K (RESPONDENT) APPELLANT BY SH. S. S. RANA, CIT DR RESPONDENT BY SH. TARUN KUMAR, ADV & SH. DEEPESH GARG, ADV ORDER PER SUCHITRA KAMBLE THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER DATED 26/08/2014 PASSED BY CIT(A)-2, FARIDABAD. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIONS OF RS .25,89,048/- AND RS.34,59,319/- MADE BY THE AO BY DISALLOWING THE CL AIM OF DEDUCTIONS CLAIMED U/S 80IB & 80IC OF THE I.T. ACT, 1961 SINCE THE ASSESSEE WAS NOT MANUFACTURING ANY ARTICLE OR THING, THE DEDUCTION C LAIMED BY HIM U/S 80IB AND 80IC OF THE I.T. ACT, 1961 ON PROFITS IN RESPEC T OF UNITS SET UP IN JAMMU AND KASHIPUR WERE NOT ALLOWABLE AS IT DOES NO T SATISFY THE DATE OF HEARING 11.01.2018 DATE OF PRONOUNCEMENT 21.02.2018 2 ITA NO. 5902/DEL/2014 REQUIREMENTS OF THE AFOREMENTIONED SECTION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN ALLOWING DEDUCTIONS U/ S 80IB & 80IC OF THE I.T. ACT, 1961, DISREGARDING THE FACT THAT THE UNIT IS NOT DOING MANUFACTURING BUT IS DOING ASSEMBLING OF INPUTS SUC H AS ENGINE, BATTERY, ALTERNATOR AND THE END PRODUCT I.E. .D.G. SET IS CO MBINATION OF ABOVE INPUTS AND THUS NO NEW PRODUCT HAS COME INTO EXISTENCE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN ALLOWING DEDUCTIONS U/S 80IB ON EXCISE DUTY REFUND EVEN WHEN THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTIO N U/S 80IB (4) OF THE I.T. ACT, 1961 ON PROFIT ATTRIBUTABLE TO CENTRAL EXCISE DUTY AS IT IS NOT DERIVED FROM INDUSTRIAL UNDERTAKING. 4. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD , DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF APPEAL. 3. THE ASSESSEE IS OPERATING TWO UNITS AT JAMMU IN THE NAME AND STYLE OF M/S GSP STRUCTURES AND M/S GSP POWER PROJECTS. IT H AS CLAIMED DEDUCTIONS OF RS.25,89,048/- U/S 80IB IN RESPECT OF PROFITS OF TH ESE TWO CONCERNS. M/S GSP POWER PROJECTS HAS BEEN FUNCTIONING W.E.F. 27.06.20 05 WHEREAS M/S GSP STRUCTURES HAS COMMENCED ITS FUNCTIONING W.E.F. 04. 04.2007. THE ALLOWABILITY OF DEDUCTIONS U/S 80IB OF I.T. ACT IN CASE OF M/S G SP POWER PROJECTS HAS BEEN EXAMINED IN DETAIL BY THE RESPECTIVE AOS DURING AS SESSMENT PROCEEDINGS U/S 143(2) OF I.T. ACT FOR A.Y. 2006-07, 2007-08, 2008- 09 AND 2009-10. ON DETAILED EXAMINATION OF FACTS, IT WAS THE OPINION OF THE EAR LIER AOS THAT THE ASSESSEE WAS NOT MANUFACTURING THE D.G. SETS AT JAMMU. IT HA D BEEN ONLY ASSEMBLING VARIOUS COMPONENTS AT JAMMU IN ITS UNIT IN THE NAME OF M/S GSP POWER PROJECTS. IT HAD BEEN INFERRED BY THE AO IN THE ASS ESSMENT PROCEEDINGS THAT THE ACTIVITIES OF ASSEMBLING BY THE ASSESSEE DOES NOT AMOUNT TO MANUFACTURING 3 ITA NO. 5902/DEL/2014 UNDER THE PROVISIONS OF SECTION 80IB AND HENCE, THE DEDUCTION U/S 80IB WAS DISALLOWED. THE FACTS OF THE CASE FOR F.Y. 2010-11 WAS EXAMINED BY THE AO. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS ASS EMBLING VARIOUS COMPONENTS TO MAKE D.G. SETS IN RESPECT OF ACTIVITIES OF M/S G SP POWER PROJECTS AND FURTHER HOLD THAT THE FACTS OF THIS YEAR ARE IDENTI CAL TO THAT OF ASSESSMENT YEAR 2006-07, 2007-08, 2008-09, 2009-10 AND 2010-11. THE RETURNED INCOME OF RS.2,97,23,110/- WAS ASSESSED AT RS.3,57,71,480/- I N THE ASSESSMENT ORDER U/S 143(3) OF THE INCOME TAX ACT. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE FILED THE APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE AS SESSEE. 5. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY ASSESSED INCOME AT RS.3,57,71,480/-. THE LD. DR RELIED UPON THE ORD ER OF THE ASSESSING OFFICER. 6. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) A ND ALSO THE ORDER OF THE ITAT IN EARLIER ASSESSMENT YEARS. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORDS. THE FACTS OF PRESENT ASSESSMENT YEAR ARE IDENTICAL TO THAT OF AS SESSMENT YEAR 2006-07, 2007-08, 2008-09, 2009-10 AND 2012-13 IN ITA NOS. 2 955/DEL/2012, 1191/DEL/2010, 767/DEL/2012, 5683/DEL/2012 AS WELL AS 6153/DEL/2015 RESPECTIVELY ON ALL THE ISSUES WHEREIN VIDE ORDER D ATED 1/8/2017 THE ITAT HELD AS UNDER: 15. THE CIT(A) ON THE ISSUE OF DISALLOWANCE OF CL AIM OF DEDUCTION U/S 80 IB HAS HELD THAT THE PROCESS FLOW CHART OF MANUFACT URING OF DG SETS FILED BY THE ASSESSEE EXHAUSTIVELY DESCRIBES THE MANUFACTURI NG PROCESS WHICH INVOLVES THREE STAGES I.E. MANUFACTURING OF CANOPY OF DG SETS, MANUFACTURING OF DG SET AND MANUFACTURING OF AMF PANEL WHICH ALSO INCLUDES DRILLING, CUTTING ACOUSTIC FOAM PASTING, FIXING OF ELECTRICAL ITEMS, DRILLING OF MOUNTING PLATE FIXING OF SWITCH GEAR, LOAD TESTING, SOUND TE STING ETC. THE CIT(A) FURTHER HELD THAT THE PROCESS OF MANUFACTURING DG SETS DOES NOT INVOLVE MERE ASCENDING OF PARTS BUT IS ACTUALLY A MANUFACTURING PROCESS RESULTING IN THE 4 ITA NO. 5902/DEL/2014 MANUFACTURE OF NEW PRODUCT FROM THE RAW MATERIALS B Y GIVING THEM NEW PROPERTIES. THE CIT(A) HAS EXHAUSTIVELY GIVEN ITS FINDING BASED ON THE EVIDENCES PLACED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A). THE CIT(A) HAS ALSO GONE THROUGH THE DETAILS OF PLA NT AND MACHINERY AND ALSO THE COPIES OF BILLS RELATING TO THE PURCHASE OF THE SAME FILED BY THE ASSESSEE. THE CIT(A) HAS ALSO GIVEN CLEAR FINDING THAT THE AS SESSING OFFICER HAS PICKED OUT AND HIGHLIGHTED ONLY THOSE MACHINES WHICH ARE U SED FOR LIFTING AND SHIFTING WORK AND ASCENDING ON THE DG SET AND IGNOR ED THE OTHER MACHINES USED BY THE ASSESSEE FOR VARIOUS PURPOSES DEPLOYED BY THE ASSESSEE IN ITS MANUFACTURING PROCESS. AFTER CAREFUL CONSIDERATION , THE CIT(A) HELD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S 80 IB OF THE ACT. THERE IS NO NEED TO INTERFERE WITH THE DETAILED FINDING ON RECORD GI VEN BY THE CIT(A). THEREFORE, THIS ISSUE IS DECIDED CORRECTLY BY THE CIT(A) IN AL L THE ASSESSMENT YEARS AND THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). .. 17. AS RELATED TO ISSUE RELATING TO EXCISE DUTY RE FUND, THE CIT(A) HAS RIGHTLY RELIED UPON THE HON'BLE SUPREME COURT DECIS ION IN CASE OF LIBERTY INDIA 317 ITR 218 WHEREIN IT IS HELD THAT THE PAYMENT F C ENTRAL EXCISE DUTY HAD A DIRECT NEXUS WITH THE MANUFACTURING ACTIVITY AND SI MILARLY OF THE REFUND OF CENTRAL EXCISE DUTY ALSO HAD A DIRECT NEXUS WITH TH E MANUFACTURING ACTIVITY. THE ISSUE OF PAYMENT OF CENTRAL EXCISE DUTY WOULD N OT ARISE IN THE ABSENCE OF ANY INDUSTRIAL ACTIVITY. THERE IS INEXTRICABLE LIN K BETWEEN THE MANUFACTURING ACTIVITY, PAYMENT OF CENTRAL EXCISE DUTY AND ITS RE FUND. THEREFORE, THE CIT(A) HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO ALLO W DEDUCTION U/ S 80IB ON THE EXCUSE DUTY REFUND RECEIVED BY THE ASSESSEE. THERE IS NO NEED TO INTERFERE WITH THE SAME FINDING. THIS ISSUE RAISED IN ASSESS MENT YEAR 2008-09 BY THE REVENUE IS DISMISSED. 5 ITA NO. 5902/DEL/2014 THUS, THERE IS NO NEED TO INTERFERE WITH THE ORDERS OF THE CIT(A) AS THE ISSUES INVOLVED IN THE PRESENT APPEAL ARE ALREADY D ECIDED BY THE ITAT IN ASSESSEES OWN CASE IN FAVOUR OF THE ASSESSEE AND R EVENUES APPEALS WERE DISMISSED. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21ST FEBRUA RY, 2018 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 21/02/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 5902/DEL/2014 DATE 1. DRAFT DICTATED ON 11/01/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 11/01/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 21.02.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 2 .02.2018 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. 7 ITA NO. 5902/DEL/2014