DCIT 10(3), MUMBAI V. NIRMAL INDUSTRIAL CONTROL P.LTD, MUMBAI

ITA 5911/MUM/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9385 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 04-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHIENDRA YADAV
• Keywords: Revised return; Reassessment proceedings
• Section: 143(3); 80IB; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B , MUMBAI , , , BEFORE SHRI SANJAY ARORA , A M AND SHRI AMIT SHUKLA , J M ITA NO. 5911 /MUM/20 13 : ASST.YEAR 200 6 - 200 7 THE DY.COMMISSIONER OF INCOME - TAX CIRCLE 10(3) MUMBAI. / VS. M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD. 1 ST FLOOR, SAMRIDDHI, OFF LBS MARG MULUND (WEST) MUMBAI 400 080. PAN : AABCN1777B. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI AKHIENDRA YADAV /RESPONDENT BY : --- NONE --- / DATE OF HEARING : 18 .02.2015 / DATE OF PRONOUNCEMENT : 25 .02.2015. / O R D E R PER AMIT SHUKLA (JM) : THIS APPEAL HAS BEEN PREFERRED BY THE DEPARTMENT AGAINST THE ORDER DATED 12.07.2013 , PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS) - 22 , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) READ WITH SECTION 263 , FOR THE ASSESSMENT YEAR 2006 - 2007. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCTION U/S 80IB WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE CLAIMED DEDUCTION U/S 80IA IN THE ORIGINAL RETURN OF INCOME. ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF M/S.GOETZE INDIA LTD. DECIDING ANY CHANGE IN ORIGINAL RETURN OF INCOME COULD BE MODIFIED BY FILING REVISED RETURN OF INCOME BEFORE THE ASSESSING OFFICER. 2. BRIEF FACTS OF THE CASE ARE THAT , THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF INDUSTRIAL VALVES FROM FACTORY LOCATED IN INDUSTRIALLY BACKWARD AREA. EARLIER, THE ASSESSEE WAS A PARTNERSHIP FIRM, WHICH WAS CONVERTED INTO PRIVATE LIMITED COMPANY IN THE YEAR 1999. THE FIRST YEAR OF OPERATION WAS IN THE ASSESSMENT YEAR 1997 - 98 AND THE CLAIM FOR DEDUCTION U/S 80 - IA WAS MADE FOR THE FIRST TIME IN THAT YEAR. THE SAID CLAIM OF DEDUCTION WAS DULY SCRUTINIZED BY THE ASSESSING OFFICER (AO) AND WAS ALLOWED. THEREAFTER , IN SUBSEQ UENT ASSESSMENT YEAR S , IN SCRUTINY PROCEEDINGS AND DETAILED INVESTIGATION, THE DEPARTMENT CONTINUED TO ALLOW ASSESSEE S CLAIM FOR DEDUCTION U/S 80 - IA. FOR THE RELEVANT ASSESSMENT YEAR, THE CLAIM FOR DEDUCTION WAS FOR THE NINTH YEAR AND IN THE RETURN OF INC OME IT HAS CLAIMED THE DEDUCTION U/S 80 - IA AT RS.1,49,93,658. IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) , DATED 22.12.2008, THE ASSESSEE S CLAIM FOR DEDUCTION WAS ALLOWED. SUBSEQUENTLY, THE LEARNED CIT UNDER REVISIONARY JURISDICTION U/S 263, NOTED THAT THE ASSESSEE HAS NOT FILED THE REQUISITE A UDIT REPORT IN FORM 10CCB TO SUPPORT ITS CLAIM OF DEDUCTION U/S 80 - IA. ACCORDINGLY, HE SET ASIDE THE ASSESSMENT ORDER TO EXAMINE THE ISSUE OF ADMISSIBILITY OF DEDUCTION U/S 80 - IA. IN PURSUANCE THEREOF, THE REASSESSMENT PROCEEDINGS WERE INITIATED BY THE AO. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE VIDE LETTER DATED 07.06.2011 FURNISHED THE A UDIT REPORT IN FORM NO.10CCB AND CLAIMED THE DEDUCTION U/S.80 - IB . THE AO ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 3 REJECTED THE ASSESSEE S CLAIM ON THE GROUND THAT THE ASSESSEE HAS NOT FILED THE REQUISITE FORM NO.10CCB ALONG WITH THE RETURN OF INCOME, NOR IT HAS FILED ANY REVISED RETURN, THEREFORE, SUCH A CLAIM CANNOT BE ENTERTAINED, AT THIS STAGE. IN SUPPORT OF HIS CONTENTION, HE STRONGLY RE LIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. V. CIT [284 ITR 323] . 3. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTED THAT , IN ALL THE EARLIER YEARS THE ASSESSEE S SIMILAR CLAIM HAS BEEN ALLOWED BY THE DEPARTMENT IN SCRUTINY PROCEEDINGS AND THIS BEING THE NINTH YEAR, THE SAID CLAIM CANNOT BE DISALLOWED , MAINLY ON THE GROUND THAT THE AUDIT REPORT HAS BEEN FILED AT THE STAGE OF ASSESSMENT PROCEEDINGS. OTHERWISE ALSO, ALL THE REQUISITE CONDITIONS FOR CLAIM OF DEDUCTIO NS STAND S FULFILLED IN THE ASSESSEE S CASE. RELIANCE WAS PLACED ON SEVERAL DECISIONS IN SUPPORT OF THE CONTENTION THAT THE REQUIREMENT OF FURNISHING THE AUDIT REPORT ALONG WITH THE RETURN OF INCOME IS DIRECTORY AND NOT MANDATORY. THE LEARNED CIT(A), AFTER REFERRING TO THE FOLLOWING DECISIONS AS RELIED UPON BY THE ASSESSEE, HELD THAT THE FILING OF FORM NO.10CCB IS ONLY A TECHNIC AL FORMALITY AND NOT MANDATORY: - ( I ) ITAT DELHI IN THE CASE OF NAN WOLLEN MILLS V. ACIT REPORTED IN 56 ITD 268. ( II ) ITAT KOLKATA IN THE CAS E OF DCIT V. TIDE WATER OIL CO. (I) LTD. IN ITA NO.20151/KOL/10 DATED 20.01.2012. ( III ) CIT V. ACE MULTITAXES SYSTEMS (P) LTD. REPORTED IN 317 ITR 207 (KARNATAKA) ( IV ) CIT - I, CHENNAI V. AKS ALLOYS (P) LTD. ( V ) CIT V. CONTIMETERS ELECTRICALS (P) LTD. (2009) 317 ITR 249 (D EL) ( VI ) CIT V. ARUNACHALAM AN (1994) 208 ITR 481 AND ( VII ) CIT V. JAYANT PATEL (2001) 248 ITR 199 (MADRAS). ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 4 3.1 HE FURTHER OBSERVED THAT THE ASSESSEE HAS FILED THE FORM NO.10CCB AT THE TIME OF REASSESSMENT PROCEEDINGS AND HENCE IT AMOUNTS TO PROPER COMPLIANCE AS PER THE PROVISIONS OF THE INCOME - TAX ACT. ACCORDINGLY, HE DIRECTED THE AO TO ALLOW THE CLAIM OF DEDUCTION U/S 80 - IB OF THE ACT. THE RELEVANT OBSERVATION AND THE FINDING OF THE CIT(A) ARE AS UNDER: - 3.8 I HAVE GONE THROUGH THE ABOVE DECISIONS OF THE HON BLE HIGH COURT AND TRIBUNAL AND WHAT EMERGES OUT THESE DECISIONS WAS THAT THERE IS NO MANDATORY REQUIREMENT UNDER LAW TO FURNISH FORM N O .10CCB ALONG WITH THE RETURN OF INCOME. THE SAME CAN BE FILED AT ANY TIME DURING THE COURSE OF ASSESSMENT PROCEEDING AND THIS AMOUNTS TO NECESSARY COMPLIANCE. IN THE PRESENT CASE, THE APPELLANT HAD FILED FORM NO.10CCB AT THE TIME OF REASSESSMENT PROCEEDING AND HENCE, IT AMOUNT S TO PROPER COMPLIANCE AS PER PROVISIONS OF INCOME - TAX ACT. THIS CLAIM HAD BEEN CONSISTENTLY ALLOWED BY THE AO IN VARIOUS YEARS AFTER SCRUTINY ASSESSMENTS. THIS WAS THE 9 TH YEAR OF THE CLAIM. WHEN THE CLAIM HAS BEEN ALLOWED IN THE INITIAL AND SUBSEQUENT YE ARS, IT IS NOT OPEN TO THE AO TO DISALLOW THE SAME AS IT WAS ONLY A TECHNICAL FORMALITY. HENCE, THE AO IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S 80IB OF THE I.T.ACT. 3.9 ONE OF THE REASONS FOR THE DISALLOWANCE BY THE AO WAS THAT THE APPELLANT HAD O RIGINALLY CLAIMED DEDUCTION U/S 80IA AND LATER, THE CLAIM WAS SHIFTED TO 80IB. IN THIS REGARD, THE APPELLANT HAD SUBMITTED THAT WHEN THE SEC.80IB WAS INTRODUCED IN THE YEAR 2000, ALL THE DEDUCTIONS COVERED ORIGINALLY IN SECTION 80IA WERE ALL TRANSFERRED TO SEC.80IB AND SEC.80IA WAS EXCLUSIVELY LEFT TO DEAL WITH AN INDUSTRIAL UNDERTAKING ENGAGED IN INFRASTRUCTURE DEVELOPMENT AND THIS IS THE REASON WHY THE ORIGINAL CLAIM U/S 80IA HAS BEEN LATER CHANGED TO SEC.80IB. I DO NOT FIND ANYTHING WRONG IN ALTERING THE CLAIM FROM SEC.80IA TO SEC.80IB IN VIEW OF CHANGE IN THE PROVISIONS OF THE ACT. HENCE, THE AO IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S.80IB OF THE I.T.ACT ON THE BASIS OF AUDIT REPORT IN FORM ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 5 10CCB FILED DURING THE COURSE OF REASSESSMENT PROCEEDINGS. THIS GROUND OF APPEAL IS ALLOWED. 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE, STRONGLY RELIED UPON THE ORDER OF THE AO AND SUBMITTED THAT WITHOUT THE REQUISITE AUDIT REPORT IN FORM NO.10CCB, THE ASSESSEE S CLAIM FOR DEDUCTION 80 - IB CANNOT BE ALLOWED. HERE IN THIS CASE, THE AUDIT REPORT HAS BEEN FURNISHED DURING THE COURSE OF REASSESSMENT PROCEEDINGS, AND THEREFORE, SUCH A CLAIM CANNOT BE ALLOWED, AS THE ASSESSEE CAN ONLY FILE THE AUDIT REPORT ALONG WITH THE RETURN OR IN THE REVISED RETURN U/S 139(5). HE REITERATED THE DECISION OF THE HON BLE APEX COURT IN THE CASE OF GOETZ INDIA LTD. (SUPRA). 5. ON BEHALF OF THE ASSESSEE, NONE APPEARED, DESPITE SERVICE OF NOTICE TO THE ASSESSEE. THEREFORE, WE ARE PROCEEDING TO DECIDE THE APPEAL ON MERITS AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 6. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE LEARN ED DR AND ALSO ON THE PERUSAL OF THE FINDINGS GIVEN IN THE IMPUGNED ORDERS, IT IS AN UNDISPUTED FACT THAT ALONG WITH THE RETURN OF INCOME, THE ASSESSEE HAS NOT FILED THE REQUISITE A UDIT REPORT IN FORM NO.10CCB IN SUPPORT OF ITS CLAIM FOR DEDUCTION U/S 80 - I B. THE REQUISITE AUDIT REPORT WAS ONLY FILED DURING THE COURSE OF REASSESSMENT PROCEEDINGS PASSED IN PURSUANCE OF ORDER PASSED U/S 263. FROM THE RECORDS, IT IS CLEAR THAT THE ASSESSEE HAS BEEN CARRYING OUT THE MANUFACTURING ACTIVITY FROM AN INDUSTRIALLY BA CKWARD AREA AND SINCE 1997 - 98, ITS CLAIM FOR DEDUCTION U/S 80 - IA HAS BEEN ALLOWED UNDER SCRUTINY PROCEEDINGS BY THE DEPARTMENT, RIGHT UP TILL ASSESSMENT YEAR 2005 - 2006. THIS WAS THE NINTH YEAR OF THE CLAIM MADE IN THE ASSESSMENT YEAR 2006 - ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 6 2007, WHEREIN SIM ILAR DEDUCTION WAS MADE IN THE RETURN OF INCOME. SINCE , ALL THE REQUISITE FORMALITIES FOR CLAIM OF DEDUCTION HAVE NOT BEEN DISPUTED, EXCEPT FOR THE FACT THAT AUDIT REPORT WAS NOT FILED ALONG WITH THE RETURN OF INCOME , THEREFORE, IT CANNOT BE HELD THAT ASSE SSEE IS NOT ELIGIBLE FOR CLAIM OF DEDUCTION . NOW IT HAS BEEN QUITE SETTLED BY CATENA OF CASE LAWS THAT, FILING OF AUDIT REPORT ALONG WITH THE RETURN OF INCOME IS MERELY A DIRECTORY AND NOT A MANDATORY CONDITION . IF THE AUDIT REPORT HAS BEEN FILED AT ANY TI ME DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IT IS AVAILABLE WITH THE AO, THEN THE REQUIREMENT OF THE STATUTE STANDS FULFILLED. THIS PROPOSITION HAS BEEN UPHELD BY THE HON BLE DELHI HIGH COURT AFTER RELYING UPON CATENA OF DECISIONS IN THE CASE OF CIT V. CONTIMETERS ELECTRICALS (P) LTD. (SUPRA) AND ALSO BY THE KARNATAKA HIGH COURT IN THE CASE OF CIT V. ACE MULTITAXES SYSTEMS (P) LTD. (SUPRA). THE FINDING AND CONCLUSION DRAWN BY THE CIT(A), BASED ON SUCH DECISIONS IS LEGALLY CORRECT , WE DO NOT FIND ANY REASON TO DEVIATE FROM SUCH A FINDING, AND ACC ORDINGLY, THE SAME IS CONFIRMED AND THE GROUND RAISED BY THE DEPARTMENT STANDS DISMISSED. 7 . IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY, 2015 . SD/ - SD/ - ( SANJAY ARORA ) ( AMIT SHUKLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 25 TH FEBRUARY, 2015 . DEVDAS* ITA NO. 5911 /MUM/20 13 M/S.NIRMAL INDUSTRIAL CONTROL PVT.LTD . 7 / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT , MUMBAI. 4. / CIT(A) - 22 , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE.