ACIT, New Delhi V. Sh. Rajiv Bhatnagar, HUF, New Delhi

ITA 602/DEL/2010

• Counselvise Citation: 60220114 RSA 2010
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 03-05-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-02-2010

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `F : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO.602/DEL /2010 (ASSESSMENT YEAR : 2006-07) ACIT, CIRCLE 32(1), VS. RAJIV BHATANGAR, NEW DELHI. 1/12, JANGPURA, NEW DELHI (PAN/GIR NO.AAFHR3812K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. JAIN, C.A. REVENUE BY : SHRI V.K. SURYAVANSHY, SR.(DR) ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)- XXVI, NEW DELHI, DATED 23.11.2009, RELEVANT TO ASSE SSMENT YEAR 2006-07, WHEREIN FOLLOWING TWO GROUNDS HAVE BEEN RAISED: 1. LD.CIT(A) HAS ERRED IN DELETING AN ADDITION OF RLS.56,55,406/- MADE U/S 80IB WITHOUT CONSIDERING THE FACT THAT ASSESSEE COU LD NOT DISCHARGE ITS ONUS FOR CLAIMING DEDUCTIONS BY PRODUCING EVIDENCE DESPITE BEING GIVEN SUFFICIENT OPPORTUNITIES. 2. LD.CIT(A) HAS FURTHER ERRED IN ACCEPTING FRESH E VIDENCE UNDER RULE 46A AND NOT AFFORDING OPPORTUNITY TO ASSESSING OFFICER BEFORE DECIDING THE APPEAL, WITHOUT ADOPTING THE MANDATORY CONDITIONS A S ARE LAID DOWN UNDER RULE 46-A OF THE I.T. RULES, 1962. 2. AS REGARDS SECOND GROUND WITH REGARD TO ACCEPTIN G FRESH EVIDENCE IN VIOLATION OF RULE 46A OF THE I.T. RULES, 1962, LD.DR WAS ASKED T O SHOW EITHER FROM THE ORDER OF CIT(A) OR FROM MATERIAL ON RECORD AS TO WHICH FRESH EVIDENCE HAS BEEN ACCEPTED BY THE I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 2 FIRST APPELLATE AUTHORITY WITHOUT ADOPTING MANDATOR Y CONDITIONS AS LAID DOWN UNDER RULE 46A OF THE I.T. RULES, 1962. LD.DR COULD NOT BE ABLE TO POINT OUT EITHER FROM THE ORDER OF CIT(A) OR FROM THE MATERIAL ON RECORD THAT ANY F RESH EVIDENCE HAS BEEN ACCEPTED OR THERE IS ANY VIOLATION OF RULE 46A OF THE I.T. RULE S. THEREFORE, GROUND NO.2, AS RAISED BY THE DEPARTMENT, IN THIS REGARD IS UNTENABLE AND IS DISMISSED. 3. AS REGARDS FIRST GROUND, FACTS INDICATED THAT TH E ASSESSEE, HUF, IS PROPRIETOR OF TWO CONCERNS (I) M/S M.J. PACKAGING (II) M/S M.J. I NDUSTRIES. THE ASSESSEE HAD SET UP A UNIT UNDER M/S M.J. INDUSTRIES AT BADDI, HIMACHAL P RADESH AND HAD CLAIMED DEDUCTION U/S 80IB OF THE ACT IN RESPECT OF PROFITS FROM THAT UNI T. THE SAID M.J. INDUSTRIES ENTERED INTO AN AGREEMENT WITH THE M/S GILLETTE INDIA LTD. ON 30 TH JULY, 2003, IN RESPECT OF CERTAIN JOB WORK FOR THAT COMPANY. VIDE THIS AGREEMENT, THE AS SESSEE WAS REQUIRED TO UNDERTAKE A JOB WORK REQUIRING ASSEMBLY AND PACKAGING OF PERSON AL GROOMING AND UTILITY PRODUCTS MANUFACTURED BY THE SAID M/S GILLETTE INDIA LTD., A T 59, HPSIDC, BADDI, HP. THE AGREEMENT ALSO PROVIDED THAT THE SAID M/S GILLETTE INDIA LTD. SHALL BE HANDING OVER CERTAIN TOOLS, EQUIPMENT AND MACHINERY OWNED BY I T TO THE ASSESSEE TO FACILITATE THE ASSEMBLING AND PACKAGING BY THE ASSESSEE UNDER THE SAID AGREEMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICE R OBSERVED THAT EVEN THOUGH THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB OF THE I.T. ACT, IT HAD UTILIZED OLD MACHINERY PROVIDED BY THE SAID M/S GILLETTE INDIA LTD, AND AP PLIED THE PROVISIONS OF EXPLANATION 2 BELOW SUB-SECTION (2)(II) OF THE SECTION 80IB, WHIC H PROVIDED THAT IN ORDER TO BE ELIGIBLE TO CLAIM DEDUCTION U/S 80IB, THE TOTAL VALUE OF THE MACHINERY OR PLANT, PREVIOUSLY USED FOR ANY PURPOSE, TRANSFERRED TO ANY ELIGIBLE NEW BUSINE SS SHOULD NOT EXCEED 20% OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE BUSINES S. THE ASSESSING OFFICER COLLECTED THE I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 3 INFORMATION REGARDING THE MACHINERY AND PLANT PROVI DED BY M/S GILLETTE INDIA LTD. AND OBSERVED THAT VALUE OF THE MACHINERY WHICH WAS OLD AND EARLIER USED BY M/S GILLETTE INDIA LTD. EXCEEDED 20% OF THE VALUE OF PLANT AND M ACHINERY OF THE ELIGIBLE BUSINESS AND HENCE APPLYING EXPLANATION 2 BELOW SUB-SECTION (2)( II) OF SECTION 80IB, THE ASSESSING OFFICER DISALLOWED THE DEDUCTION U/S 80IB OF THE I. T. ACT, 1961. 4. ASSESSEE TOOK UP THE MATTER IN APPEAL AND PLEADE D THAT ASSESSING OFFICER IS WRONG IN SAYING THAT THE ASSESSEE DID NOT COMPLY WITH THE REQUIREMENTS OF GIVING DETAILS OF MACHINES GIVEN BY M/S GILLETTE INDIA LTD. FOR WHICH SHOW CAUSE NOTICE WAS ISSUED ON 16.12.2008 IN PARA.1 OF HIS ORDER AS THE ASSESSEE H AD SUBMITTED THE DETAILS OF THE MACHINERY PURCHASED AND INSTALLED BY THE UNIT IN TH E FORMAT STIPULATED AND DESIRED BY THE ASSESSING OFFICER VIDE HIS LETTER DATED 17.12.2008 ALONG WITH A LETTER FROM M/S GILLETTE INDIA LTD. THAT THE SAID MACHINES WERE SUPPLIED BY THEM. FURTHER, THE ASSESSING OFFICER CALLED FOR DETAILS OF THE MACHINES INCLUDING THEIR MAKE, YEAR OF MANUFACTURE, ORIGINAL COST, BILL NO. ETC. WHICH THE ASSESSEE DID NOT POS SESS, SINCE M/S GILLETTE INDIA LTD. HAD ONLY GIVEN A LIST OF MACHINES TO THE ASSESSEE WITHO UT ANY DETAILS. THE ASSESSEE AT THAT TIME HAD REQUESTED FOR TIME TO OBTAIN THESE DETAILS FROM M/S GILLETTE INDIA LTD. THE ASSESSING OFFICER HAD DIRECTLY WRITTEN TO M/S GILLE TTE INDIA LTD. AS CONFIRMED BY HIM IN PARA.7 OF HIS ORDER. THE ASSESSING OFFICER HAS ASS UMED THAT MACHINERY HAVING ORIGINAL COST OF RS.7,35,198/- IS OLD MACHINERY BASED ON THE YEAR OF MANUFACTURE EVEN IN THE LIST SUPPLIED BY M/S GILLETTE INDIA LTD., DIRECTLY TO TH E ASSESSING OFFICER, IT HAS NOT BEEN MARKED AS OLD MACHINERY. 5. THUS, THE ASSESSING OFFICER IS WRONG AND UNJUSTI FIED IN VALUING SO-CALLED USED MACHINERY AT ORIGINAL COST AND IGNORING ITS WRITTEN DOWN VALUE WHICH COMES TO I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 4 RS.4,26,651/- AT THE TIME IT WAS GIVEN TO M.J. INDU STRIES. IN CASE, THE WRITTEN DOWN VALUE OF THESE MACHINES IS TAKEN INTO ACCOUNT THAN THE VA LUE OF OLD MACHINES TO TOTAL INVESTMENT WOULD COME TO 14.69% WHICH IS WELL BELOW THE 20% BA R FIXED BY EXPLANATION 2 TO SECTION 80IB(II). 6. THE ASSESSING OFFICER IS, THEREFORE, WRONG AND U NJUSTIFIED IN IGNORING THE NARRATION OF THE WORD TRANSFER GIVEN IN SECTION 2 (47) WHILE DEEMING THE MACHINES OWNED BY M/S GILLETTE INDIA LTD. AND GIVEN BY THEM TO THE ASSESSEE FOR USE. 7. FURTHER, ARGUMENTS WERE ALSO ADVANCED TO PLEAD T HAT PLANT AND MACHINERY AGREEMENT WAS SIGNED BETWEEN THE ASSESSEE AND THE G ILLETTE INDIA LTD. AND WHILE SUBMITTING DETAILS OF THE ASSETS GIVEN BY GILLETTE (INDIA) LTD. AND THE ORIGINAL BILL IN RESPECT OF MACHINERY PURCHASED BY THE ASSESSEE, ALR EADY FILED BEFORE THE ASSESSING OFFICER, THE ASSESSEE RAISED THE ARGUMENTS ON THE F OLLOWING TWO GROUNDS: (I) THE PLANT AND MACHINERY WAS LENT BY M/S GILLETT E INDIA LTD. ONLY FOR THE LIMITED PURPOSE OF THEIR JOB WORK AND THERE WAS NO TRANSFER OF ANY PLANT AND MACHINERY FROM M/S GILLETTE INDIA LTD. TO THE A PPELLANT. (II) WHILE WORKING OUT THE TOTAL VALUE OF THE PLANT AND MACHINERY EARLIER USED FOR ANY OTHER PURPOSE, THE WRITTEN DOWN VALUE ALONE NEEDS TO BE TAKEN RATHER THAN THE ORIGINAL PURCHASE PRICE OF THE SAID OLD MACHINERY. 8. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO HOLD THAT THE PREVIOUSLY USED ASSETS WERE TRANSFERR ED TO NEW BUSINESS AND VALUE OF MACHINERY DOES NOT EXCEED 20% OF THE TOTAL VALUE OF THE MACHINERY AND PLANT USED IN BUSINESS. SO, CONDITION AS STIPULATED IN EXPLANATI ON 2 SUB-SECTION (II) OF SECTION 80IB HAS BEEN COMPLIED WITH. THEREFORE, ASSESSEE WAS HELD T O BE ENTITLED TO DEDUCTION CLAIMED U/S 80IB OF THE ACT, WHILE ALLOWING APPEAL ON THIS POIN T, CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE DEDUCTION AS CLAIMED. I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 5 9. AGGRIEVED BY THIS ORDER OF CIT(A), DEPARTMENT HA S COME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF ASSESSING OFFICER, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. LD.DR FURTHER SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM WHEN ASSESSEE HAD FAILED TO ESTABLISH ITS CASE FOR DEDUCTION U/S 80IB OF THE ACT. IT WAS THU S PLEADED FOR RESTORING THE ORDER OF THE ASSESSING OFFICER. 10. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FILED EACH AND EVERY DOCUMENT BEFORE THE ASSESSING OFFICER TO ESTABLISH ITS CASE FOR DEDUCTION U/S 80IB OF THE ACT, AS CLAIMED. COPY OF THE AGREEMENT AND OTHER R ELEVANT DOCUMENT WERE DULY FURNISHED BEFORE THE ASSESSING OFFICER, WHO DID NOT ALLOW THE CLAIM OF THE ASSESSEE WITH RESPECT TO DEDUCTION U/S 80IB OF THE ACT ON THE GROUND THAT OL D MACHINERY UTILIZED BY THE ASSESSEE EXCEEDED 20%, AS PRESCRIBED AND, BUT LD.CIT(A), IN APPEAL WHILE CONSIDERING THE RELEVANT MATERIAL, HAS CORRECTLY ACCEPTED THE CONTE NTION OF THE ASSESSEE THAT IT WAS BELOW 20% WHICH IS A BAR FIXED BY THE EXPLANATION 2 TO SE CTION 80IB(2)(II) OF THE ACT AND NEITHER LD.DR HAS PLACED ANY FRESH CONTRARY MATERIA L ON RECORD, NOR HAS HE BEEN ABLE TO ESTABLISH THAT TOTAL VALUE OF OLD MACHINERY EXCEEDS 20% OF THE TOTAL VALUE OF THE MACHINERY AND PLANT USED IN THE BUSINESS. THEREFO RE, IT WAS STRONGLY PLEADED THAT ASSESSEES CASE GETS ESTABLISHED FROM THE DOCUMENTS ALREADY ON RECORD BEFORE THE ASSESSING OFFICER, WHOSE COPY HAS BEEN FURNISHED BE FORE THE CIT(A) AND ALSO PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE BEFORE THIS BE NCH. THUS, THE IMPUGNED ORDER IS PROPER AND JUSTIFIED WHICH SHOULD BE UPHELD. IT WA S URGED FOR UPHOLDING THE ORDER OF CIT(A). I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 6 11. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT WAS REJECTED BY THE ASSESSING OFFICER MAINLY ON THE GROUND THAT TOTAL VALUE OF THE OLD MACHINERY AN D PLANT TRANSFERRED EXCEEDS 20% OF THE TOTAL VALUE OF THE MACHINERY AND PLANT USED IN THE BUSINESS OF THE ASSESSEE. THEREFORE, IN TERMS OF STIPULATION AS CONTAINED IN EXPLANATION 2 OF SECTION 80IB(2)(II) OF THE ACT, ASSESSEE WAS HELD TO BE NOT ENTITLED TO DEDUCTION W HEREAS FROM THE MATERIAL ON RECORD, CIT(A) FOUND SUCH FINDING OF ASSESSING OFFICER TO B E ERRONEOUS INASMUCH AS THE VALUE OF MACHINERY AND PLANT TRANSFERRED TO THE ASSESSEE DOE S NOT EXCEED 20% OF THE TOTAL VALUE OF THE MACHINERY AND PLANT USED IN THE BUSINESS OF TH E ASSESSEE AND MOREOVER, THE DEPARTMENT HAS NOT BEEN ABLE TO DISLODGE SUCH CLAIM OF THE ASSESSEE EITHER BY PLACING ANY CONTRARY MATERIAL ON RECORD OR COULD BE ABLE TO SHO W IT FROM THE MATERIAL AVAILABLE. SINCE, CONDITIONS AS CONTAINED IN RELEVANT PROVISIO NS HAS BEEN FULFILLED, THEREFORE, CIT(A) HAS TAKEN A CORRECT VIEW OF THE MATTER TO DECIDE TH E ISSUE IN FAVOUR OF THE ASSESSEE WHOSE ACTION BEING LEGALLY VALID IS UPHELD AND APPEAL OF THE REVENUE IS DISMISSED. 11. AS A RESULT, APPEAL OF THE REVENUE GETS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 17.12.2012. SD/- SD/- (A.N. PAHUJA) (U.B.S. BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : DEC. 17, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXVI, NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR, ITAT I.T.A. NO.602/DEL./2010 (A.Y. : 2006-07) 7