Sri Jitendra Kumar Agarwal, Prop., Ghaziabad V. ITO, Ghaziabad

ITA 6186/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6698 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 02-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 80IC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA NO.6186/DEL/2016 ASSESSMENT YEAR: 2012-13 SHRI JITENDRA KUMAR AGARWAL, PROP. M/S. ANROSE PHARMA, VIVEKANAND NAGAR, GHAZIABAD VS. INCOME TAX OFFICER, WARD-1(3), GHAZIABAD PAN :AFYPA8167P (APPELLANT) (RESPONDENT) ORDER PERO.P. KANT, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST OR DER DATED 28/03/2016 PASSED BY THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-GHAZIABAD [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEAR 2012-13 RAISING FOLLOWING GROUNDS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE FOLLOWIN G ACTIONS OF THE ASSESSING OFFICER: APPELLANT BY SHRI S. KRISHAN, ADV. RESPONDENT BY SHRI S.S. RANA, CIT(DR) DATE OF HEARING 17.10.2019 DATE OF PRONOUNCEMENT 30.10.2019 2 ITA NO.6186/DEL/2016 1. DETERMINING INCOME U/S 143(3) OF THE ACT AT RS.85,85,850/- AGAINST THE RETURNED INCOME IN A SUM OF RS.2,500/- 2. RESTRICTING DEDUCTION U/S 80IC OF THE ACT AT 25% AS AGAINST 100% CLAIMED BY THE ASSESSEE ON ACCOUNT OF PROFIT DERIVED FROM ELIGIBLE UNIT ON SUBSTANTIAL EXPANSION AS PROVIDED U/S 80IC(2) OF THE ACT. 2. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT ISSUE IN DISPUTE IS COVERED IN THE FAVOUR OF THE AS SESSEE BY THE ORDER OF THE TRIBUNAL IN ITA NO.5253/DEL/2017 IN IM MEDIATELY PRECEDING ASSESSMENT YEAR 2011-12 AND ACCORDINGLY, ISSUE OF DEDUCTION UNDER SECTION 80IC OF THE ACT ON SUBSTANT IAL EXPANSION MIGHT BE RESTORED TO THE FILE OF THE ASSESSING OFFI CER. THE LD. COUNSEL ALSO SUBMITTED THAT IN CASE OF THE SUBSTANT IAL EXPANSION, THE INITIAL ASSESSMENT YEAR WOULD BE SEPARATE OTHER THAN THE INITIAL ASSESSMENT YEAR OF MANUFACTURING OR COMMENC EMENT OF THE BUSINESS AS HELD BY THE HONBLE SUPREME COURT I N THE CASE OF PRINCIPAL CIT VS. AARHAM SOFTRONICS REPORTED IN 412 ITR 623 (SC). 3. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE, AN INDIV IDUAL, IS PROPRIETOR OF M/S. ANROSE PHARMA AND ENGAGED IN THE BUSINESS OF MANUFACTURING OF PHARMA PRODUCTS. IN THE RETURN OF INCOME FILED, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IC O F THE ACT IN RESPECT OF PROFIT AND GAINS FROM ITS UNITS LOCATED IN NOTIFIED AREA IN THE DISTRICT SOLAN OF HIMACHAL PRADESH. THE AS SESSEE CLAIMED 100% DEDUCTION AT THE TIME OF THE COMMENCEMENT FROM INITIAL 3 ITA NO.6186/DEL/2016 ASSESSMENT YEAR 2006-07. SUBSEQUENTLY, THE ASSESSEE CARRIED OUT SUBSTANTIAL EXPANSION IN ASSESSMENT YEAR 2011-12 AN D AGAIN CLAIMED DEDUCTION UNDER SECTION 80IC @ 100% ON THE GROUND THAT AS PER SECTION 80IC(2)(B)(II) OF THE ACT, ON CARRYI NG OUT SUBSTANTIAL EXPANSION, THE ASSESSEE IS ENTITLED FOR 100% DEDUCT ION UNDER SECTION 80IC OF THE ACT, AS AGAINST THE FINDING OF THE ASSESSING OFFICER THAT DEDUCTION AT THE RATE OF 25% IS ONLY A VAILABLE. 5. IN OUR OPINION, THIS DISPUTE HAS NOW BEEN SETTLED BY THE HONBLE SUPREME COURT IN THE CASE OF AARHAM SOFTRON ICS (SUPRA), WHEREIN IT IS HELD AS UNDER: 24. THE AFORESAID DISCUSSION LEADS US TO THE FOLLO WING CONCLUSIONS: (A) JUDGMENT DATED AUGUST 20, 2018 IN CLASSIC BINDI NG INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION 'INITIA L ASSESSMENT YEAR' CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFINITION CONTAINED IN SECTION 80-IB, WHICH DO ES NOT APPLY IN THESE CASES. THE DEFINITIONS OF 'INITIAL ASSESSMENT YEAR' IN THE TWO SECTIONS, VIZ., SECTIONS 80-IB AND 80-IC ARE MATERI ALLY DIFFERENT. THE DEFINITION OF 'INITIAL ASSESSMENT YEAR' UNDER SECTI ON 80-IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINIO N THAT THE AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN JANUARY 7, 2003 AND APRIL 1, 2012 IN THE ST ATE OF HIMACHAL PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF S UB-SECTION (2) OF SECTION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT TH E RATE OF 100 PER CENT, OF THE PROFITS AND GAINS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE 'INITIAL ASSESSMENT YEAR'. FOR THE NEXT FI VE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25 PER CENT, (OR 30 P ER CENT, WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS . (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDERTAKING OR ENTERPRISE, WITHIN THE AFORESAID PER IOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXP ANSION IS UNDERTAKEN WOULD BECOME 'INITIAL ASSESSMENT YEAR', AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BE ENTITLED TO 1 00 PER CENT, DEDUCTIONS OF THE PROFITS AND GAINS. 4 ITA NO.6186/DEL/2016 (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION IS CARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WOULD BE ENTITLED TO 100 PER CENT, DEDUCTI ON AGAIN FOR THE NEXT FIVE YEARS. ON THE OTHER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN THE EIGHTH YEAR BY AN ASSESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100 PER CENT, DEDUCTI ON FOR THE FIRST FIVE YEARS, DEDUCTION AT 25 PER CENT, OF THE PROFIT S AND GAINS FOR THE NEXT TWO YEARS AND AT 100 PER CENT, AGAIN FROM THE EIGHTH YEAR AS THIS YEAR BECOMES 'INITIAL ASSESSMENT YEAR' ONCE AG AIN. HOWEVER, THIS 100 PER CENT, DEDUCTION WOULD BE FOR THE REMAI NING THREE YEARS, I.E., EIGHTH, NINTH AND TENTH ASSESSMENT YEARS. 5. BUT, IN THE CASE OF THE ASSESSEE, THE FACTS OF SUBS TANTIAL EXPANSION REMAINED TO BE VERIFIED AND, THEREFORE, T HE TRIBUNAL (SUPRA) IN THE IMMEDIATELY PRECEDING ASSESSMENT YEA R, RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WIT H THE DIRECTION AS UNDER: 10. SINCE IN THE INSTANT CASE THERE ARE CERTAIN ER RORS IN THE AUDIT REPORT WHICH IS APPARENT AND SINCE THE ID. CIT(A) H AS GIVEN A FINDING THAT THE AUDITORS OF THE ASSESSEE NEITHER VERIFIED SUBSTANTIAL EXPANSION CLAIMED TO HAVE BEEN UNDERTAKEN BY THE AS SESSEE NOR STATED THAT INITIAL ASSESSMENT YEAR WOULD BE OTHER THAN THE ASSESSMENT YEAR 2006-07, THEREFORE, CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTICE, I DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFF ICER WITH A DIRECTION TO VERIFY THE DETAILS OF SUCH SUBSTANTIAL EXPANSION UNDERTAKEN BY THE ASSESSEE. THE ASSESSING OFFICER SHALL DECIDE THE IS SUE AFRESH AND IN ACCORDANCE WITH LAW KEEPING IN MIND THE DECISION OF THE HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF STOVEKRA FT INDIA (SUPRA).NEEDLESS TO SAY, THE ASSESSING OFFICER SHAL L GIVE DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND DECI DE THE ISSUE AS PER FACT AND LAW. I HOLD AND DIRECT ACCORDINGLY. TH E GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S . 6. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE DI RECTION OF THE TRIBUNAL, THE ISSUE IN DISPUTE IN THE YEAR UNDE R CONSIDERATION IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFIC ER FOR DECIDING IN THE LIGHT OF DIRECTION OF THE TRIBUNAL (SUPRA). IT IS NEEDLESS TO 5 ITA NO.6186/DEL/2016 MENTION THAT THE ASSESSEE SHALL BE AFFORDED ADEQUAT E OPPORTUNITY OF BEING HEARD. THE GROUND OF APPEAL OF THE ASSESSE E IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2019. SD/- SD/- (H.S. SIDHU) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30 TH OCTOBER, 2019. RK/-(D.T.D.) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI