ASST CIT 31(1), MUMBAI V. DIAMOND TOOLS INDUSTRIES, MUMBAI

ITA 6936/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6995 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2006-2007
• Appeal Filed On: 28-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARIOM TULSIAN
• Assessee Lawyers: RAM TIWARI
• Keywords: Reopening of assessment; Tangible material; Wrong claim; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 142(1); 80IB; 148

Judgement Text

1 M/S DIAMOND TOOLS INDUSTRIES IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) ITA NO.6936/M/2016 - AY 2006-07 ITA NO.6937/M/2016 - AY 2007-08 ITA NO.6938/M/2016 - AY 2008-09 ITA NO.6940/M/2016 - AY 2010-11 ITA NO.6941/M/2016 - AY 2011-12 ACIT 31(1), MUMBAI VS M/S DIAMOND TOOL INDUSTRIES 108, UDYOG BHAVAN, SONAWALA ROAD, GOREGAON (W), MUMBAI-63 PAN : AAAFD4673L APPELLANT RESPONDENT APPELLANT BY SHRI HARI OM TULSIAN RESPONDENT BY SHRI RAM TIWARI DATE OF HEARING 24-05-2018 DATE OF PRONOUNCEMENT 13-06-2018 O R D E R PER G MANJUNATHA, AM : THESE FIVE APPEALS FILED BY THE REVENUE ARE DIRECT ED AGAINST TWO SEPARATE, BUT IDENTICAL ORDERS OF CIT(A)-42 DATED31 -08-2016 FOR THE ASSESSMENT YEARS 2006-07, 2007-08, 2008-09, 2010-11 & 2011-12. SINCE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, TH ESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER, FOR THE SAKE OF CONVENIENCE. 2. THE REVENUE HAS RAISED MORE OR LESS COMMON GROUN DS OF APPEAL FOR 2 M/S DIAMOND TOOLS INDUSTRIES AYS 2006-07 TO 2008-09 IN WHICH THE REVENUE HAS TAK EN TWO GROUNDS, I.E. (I) CHALLENGING THE ORDER OF THE LD.CIT(A) IN HOLDING THAT THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 147 WAS B AD IN LAW; AND (II) DELETION OF DEDUCTION CLAIMED U/S 80IB(4) OF THE IN COME-TAX ACT, 1961. FOR AY 2010-11, REVENUE HAS RAISED COMMON GROUNDS O F APPEAL IN WHICH IT HAS CHALLENGED THE ORDER OF CIT(A) IN DIRE CTING THE AO TO ALLOW DEDUCTION U/S 80IB(4) OF THE INCOME-TAX ACT, 1961. FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL TAKEN BY THE REVENUE FOR AYS 2006-07 ARE REPRODUCED BELOW:- AY 2006-07 1) 'WHETHER ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSMENT WAS BAD IN LAW IGNORING THE FACT THAT AS PER SECTION 147, THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT, AND THAT THE ISSUE H AD NOT BEEN CONSIDERED IN THE ORIGINAL ASSESSMENT. 2) WHETHER ON THE FACT AND CIRCUMSTANCES OF THE CA SE AND IN LAW, LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE DEDUCTION U/S 80-IB OF RS. 76.73.482/- OF UNIT-II IGNORING THE FACT THAT THE ASSESSEE FAILED TO PROVE THAT BOTH THE UNITS ARE INDEPENDENT ONE DURING THE COURSE OF REASSESSMENT P ROCEEDINGS. 3) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW. THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE DEDUCTIO N U/S 80-IB OF RS. 76,73,482/- OF UNIT-II IGNORING THE FACT THAT THE R EGISTRATION NUMBER AS PER 10CCB REPORT FILED WITH THE RETURN OF INCOME CLEARL Y STATES THAT THE SALES TAX NUMBER AND EXCISE NUMBER ARE SAME FOR BOTH THE UNIT S. 4) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING TO ALLOW THE DEDUCTIO N U/S 80IB OF RS. 76,73,482/- OF UNIT-II IGNORING THE FACT THAT UNIT- 11 IS NOTHING BUT EXTENSION OF THE EXISTING UNIT AND THE ASSESSEE HAD TRIED TO DIF FERENTIATE THE UNITS ONLY TO GET THE BENEFIT OF DEDUCTION U/S 80-IB.' 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF STONE 3 M/S DIAMOND TOOLS INDUSTRIES CUTTING TOOLS. THE ASSESSEE HAS FILED RETURN OF IN COME FOR AY 2006-07 ON 27-10-2006 DECLARING TOTAL INCOME OF RS.50,12,81 1. THE ASSESSMENT WAS ORIGINALLY COMPLETED U/S 143(3) ON 12-05-2008 D ETERMINING TOTAL INCOME OF RS.70,53,050. SUBSEQUENTLY, THE ASSESSME NT WAS REOPENED U/S 147 OF THE ACT, AND ACCORDINGLY A NOTICE U/S 14 8 DATED 26-03-2013 WAS ISSUED. THE AO HAS REOPENED THE ASSESSMENT FOR THE REASON THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMEN T ON ACCOUNT OF WRONG CLAIM OF DEDUCTION U/S 80IB(4) FOR UNIT NO.2 WHICH IS NOTHING BUT AN EXTENSION OF AN EXISTING UNIT NO.1. THE AO FURT HER OBSERVED THAT ACCORDING TO THE PROVISIONS OF SECTION 80IB(4), ONE OF THE CONDITIONS WHICH NEEDS TO BE FULFILLED FOR CLAIMING DEDUCTION IS THAT THE INDUSTRIAL UNDERTAKING HAS TO COME INTO EXISTENCE ON ITS OWN A S A NEW ENTITY WITHOUT FORMING OR SPLITTING OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. THE AO FURTHER OBSERVED THAT ON PERUSAL OF RECORD IT WAS SEEN THAT THE ASSESSEE HAS A COMMON CENTRAL EXCISE LICENCE AND SERVICE TAX LICENCE NUMBERS FOR BOTH THE UNITS AND WHICH ARE FUNCTIONING FROM THE SAME PREMISES WHERE THE UNIT NO.1 IS LOCAT ED. THEREFORE, HE OPINED THAT THE ASSESSEE HAS SET UP UNIT NO.2 BY SP LITTING UP OF AN ALREADY EXISTING BUSINESS; HENCE, THE CONDITIONS ST IPULATED U/S 80IB(4) WAS NOT FULFILLED SO AS TO CLAIM DEDUCTION FOR PROF IT DERIVED FROM THE UNDERTAKING AND ACCORDINGLY ISSUED NOTICE U/S 148 O F THE ACT. 4 M/S DIAMOND TOOLS INDUSTRIES SUBSEQUENTLY, THE CASE HAS BEEN SELECTED FOR SCRUTI NY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPO NSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED DETAILS, AS CALLED FOR. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO, AFTER CONSIDERING RELEVANT SUB MISSIONS OF THE ASSESSEE, DENIED DEDUCTION CLAIMED U/S 80IB(4) OF T HE ACT, ON THE GROUND THAT THE UNIT NO.2 ON WHICH DEDUCTION U/S 80 IB(4) WAS CLAIMED, WAS NOTHING BUT AN EXTENSION OF EXISTING UNIT AND A LSO WHICH IS FORMED BY SPLITTING UP ALREADY EXISTING BUSINESS. 3. AGGRIEVED BY THE ASSESSMENT ORDER ASSESSEE PREFE RRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), ASSESSEE HAS CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT ON THE GROUND T HAT THE AO HAS REOPENED THE ASSESSMENT ON MERE CHANGE OF OPINION WITHOUT ANY NEW MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME. THE ASSESSEE ALSO CHALLENGED THE DISALLOWANCE OF DEDUCTION CLAIMED U/ S 80IB(4) OF THE ACTG. THE ASSESSEE HAS FILED ELABORATE WRITTEN SUB MISSIONS ON BOTH ISSUES WHICH HAVE BEEN REPRODUCED BY THE LD CIT(A) AT PARA 4 ON PAGES 5 TO 16 OF HIS ORDER. THE SUM AND SUBSTANCE OF THE ARGUMENTS OF THE ASSESSEE BEFORE THE LD. CIT(A) INSOFAR AS MERITS OF THE ISSUE WAS CONCERNED, THAT IT HAS FULFILLED ALL THE CONDITIONS SPECIFIED U/S 80IB(4) WITH NECESSARY EVIDENCES, THEREFORE, THE AO WAS ERRED IN DISALLOWING 5 M/S DIAMOND TOOLS INDUSTRIES DEDUCTION CLAIMED ON THE GROUND THAT UNIT NO.2 IS N OTHING BUT AN EXTENSION OF ALREADY EXISTING UNIT ONLY FOR THE REA SON THAT BOTH UNITS CARRY COMMON SALES-TAX AND SERVICE TAX REGISTRATION NUMBE RS WITHOUT APPRECIATING THE FACT THAT SALES-TAX AND SERVICE TA X NUMBERS ARE ISSUED TO AN ASSESSEE BUT NOT TO INDIVIDUAL UNITS. ` 4. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO RELYING UPON VARIOUS JUDICIAL PRE CEDENTS ALLOWED APPEAL FILED BY THE ASSESSEE, WHEREIN HE HAS QUASHE D RE-ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S.147 ON THE GROUND THAT THE AO HAS REOPENED THE ASSESSMENT ON MERE CHANGE OF OPINI ON WITHOUT THERE BEING ANY TANGIBLE MATERIAL WHICH SUGGESTED ESCAPEM ENT OF INCOME WHICH IS EVIDENT FROM THE FACT THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE AO HAD MADE SPECIFIC ENQUIRIES CON CERNING THE ALLOWABILITY OF DEDUCTION CLAIMED U/S 80IB(4) OF TH E ACT. THE ASSESSMENT ORDER WAS PASSED AFTER CONSIDERING THE REPLIES / EV IDENCES FILED BY THE ASSESSEE. THE REOPENING OF THE CASE AFTER THE END OF 4 YEARS FROM THE ASSESSMENT ORDER CAN BE DONE ONLY IF THE ASSESSEE F AILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR AS SESSMENT. IN THE PRESENT CASE, THE AO HAS NOT POINTED OUT ANY FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL F ACTS. THEREFORE, THE ACTION OF THE AO IN REOPENING ASSESSMENT IS A MERE CHANGE OF OPINION 6 M/S DIAMOND TOOLS INDUSTRIES WHICH IS NOT PERMISSIBLE UNDER LAW. ACCORDINGLY, T HE LD.CIT(A) QUASHED NOTICE ISSUED U/S 148 OF THE ACT. CONSEQUENTLY RE- ASSESSMENT ORDER HAS BEEN ANNULLED. 5. AS REGARDS DEDUCTION CLAIMED U/S 80IB(4) OF THE ACT, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/ S 80IB(4) OF THE ACT FOR AY 2003-04 ONWARDS. THE CLAIM WAS DULY SUPPORT ED BY THE REQUISITE DOCUMENTS AND THE AUDIT REPORT AS PER RULE 18BBB OF INCOME-TAX RULES, 1962. WHEN THE AO HAS ACCEPTED THE CLAIM OF THE AS SESSEE IN EARLIER YEAR, THERE IS NO REASON FOR THE AO TO DENY SUCH CL AIM IN SUBSEQUENT YEARS WITHOUT ANY MATERIAL CHANGES IN FACTS. THE A O HAS DENIED THE BENEFIT ONLY ON THE GROUND THAT THE ASSESSEE HAS CO MMON REGISTRATION NUMBERS FOR SALES-TAX AND EXCISE DUTY AND ALSO BOTH UNITS ARE FUNCTIONING FROM SAME PREMISE. BUT FACT REMAINS TH AT SALES-TAX NUMBER AND EXCISE REGISTRATION NUMBER ARE ISSUED TO THE EN TITIES, BUT NOT TO EACH UNIT LOCATED IN DIFFERENT PLACES OR AT SAME PLACE. THE ASSESSEE HAS FILED NECESSARY DETAILS TO PROVE THAT EACH UNIT IS INDEPE NDENT OF ONE ANOTHER AND WHICH ARE SEPARATELY FUNCTIONING FROM AY 2003-0 4 ONWARDS. THE ASSESSEE HAS MAINTAINED SEPARATE SET OF BOOKS OF A CCOUNT WHICH HAS BEEN AUDITED UNDER THE PROVISIONS OF SECTION 80IB(4 ) OF THE ACT. UNDER THESE CIRCUMSTANCES, IT APPEARED THAT THE ACTION OF THE AO WAS MORE IN THE NATURE OF SUSPICION BUT SUSPICION CANNOT TAKE T HE PLACE OF FACTS. 7 M/S DIAMOND TOOLS INDUSTRIES THEREFORE, ALLOWED THE CLAIM OF DEDUCTION U/S 80IB( 4) OF THE ACT. RELEVANT PORTION OF THE ORDER OF CIT(A) IS EXTRACTE D BELOW:- 5.1 : GROUND OF APPEAL NO. 1 IN THIS GROUND OF APPEAL THE ASSESSEE HAS ASSAILED THE ASSUMPTION OF JURISDICTION U/S 147 OF THE ACT BY THE AO. THE FACT S OF THE CASE ARE ELABORATED IN DETAIL IN THE EARLIER PART OF THE ORDER AND THE COMPREHENSIVE SUBMISSIONS OF THE ASSESSEE ARE ALSO ELABORATED ABOVE. AFTER CONSI DERING THE SAME! IT IS SEEN THAT THE CLAIM OF THE ASSESSEE IS CORRECT. IN THE O RIGINAL ASSESSMENT PROCEEDINGS THE THEN AO HAD MADE SPECIFIC INQUIRIES CONCERNING THE ALLOWABILITY OF THE DEDUCTION AS PER SECTION 80IB OF THE ACT. THE ASSES SMENT ORDER WAS PASSED AFTER CONSIDERING THE REPLIES/EVIDENCES OF THE ASSE SSEE. THE RE-OPENING OF THE CASE AFTER ASSESSMENT AFTER THE END OF 4 YEARS FROM THE ASSESSMENT YEAR COULD HAVE BEEN DONE ONLY IF THE ASSESSEE HAD NOT MADE A FULL AND TRUE DISCLOSURE. IN THE PRESENT CASE THE AO HAS NOT POINTED OUT WHAT DI SCLOSURE WAS NOT MADE. THE STATEMENT OF THE AO REGARDING BOTH THE UNITS HAVING THE SAME ADDRESS OR EXCISE/SALES TAX NUMBERS ETC ARE NOT RELEVANT. THEY 1 MAY THE START OF AN ENQUIRY BUT BY THEMSELVES THEY MEAN NOTHING. THE CONDITIONS PRESCRIBED UNDER SECTION 80IB(2) DO NOT REQUIRE A DIFFERENT PLOT OF LAND OR EXCISE REGISTRATION. IN THE ORIGINAL ASSESSMENT THE ASSESSEE HAS PROVIDED SUFFI CIENT PROOF THAT THE NEW UNIT IS DISTINCT AND SEPARATE FROM THE OLD UNIT. TH E ASSESSEE HAD PROVIDED DETAILS OF THE NEW BUILDING AND THE NEW MACHINERIES ACQUIRED TO MAKE THE NEW UNIT. IT IS ALSO SEEN THAT THE AO DID NOT CONSIDER THE OBJECTIONS RAISED BY THE ASSESSEE TO THE NOTICE U/S 148. THE AO WAS TO G IVE REASONABLE REPLY TO THE OBJECTION WHICH WAS NOT DONE. 5.2 , AFTER CONSIDERING THE CASE LAWS RELIED UPON BY THE ASSESSEE AND THE FACTS OF THE CASE AND ALSO THE ORDER OF THE CIT(A) 34 IN THE CASE OF THE ASSESSEE FOR A.Y. 2005-06 IT IS HELD THAT THE NOTICE ISSUED U/S 148 OF THE ACT WAS BAD IN LAW AND THEREFORE IT S QUASHED. THE GROUND OF APPEAL NO . 1 IS ALLOWED. XXXXXXXXXXXXXXXXXXXX 5.9 IN A.Y. 2006-07 HAS ALSO OBSERVED THAT THE REGI STRATION NUMBER OF SSI AUTHORITIES IS SAME BOTH THE UNITS AND SALES TAX NU MBER AND EXCISE NUMBER OF BOTH THE UNITS IS SAME. THE ASSESSEE HAS CHALLENGE D THIS ARGUMENT CLAIMING THAT NO SUCH CONDITION HAVE BEEN STATED IN SECTION 80IB FOR CLAIMING DEDUCTION UNDER THIS SECTION. THE ASSESSEE HAS EXPLAINED THA T THESE NUMBERS ARE ALLOTTED TO THE ASSESSEE AND NOT TO THE UNIT JUST LIKE PAN N O IN CASE OF INCOME TAX. THE ASSESSEE ALSO CLAIMED THAT THOUGH ITS EXCISE AN D SERVICE TAX REGISTRATION IS THE SAME BUT SEPARATE RECORDS FOR BOTH THE UNITS WERE BEING MAINTAINED AND FILED WITH THE AUTHORITIES AND EVEN THE MODVAT CRED IT FOR BOTH THE UNITS WERE BEING AVAILED SEPARATELY. THE ASSESSEE ARGUED THAT THIS FACT IS AVAILABLE IN AUDITED PROFIT AND LOSS ACCOUNT FOR UNIT I AND UNIT II RESPECTIVELY. IT IS ALSO CLAIMED THAT SEPARATE MANUFACTURING AND PRODUCTION STOCK REGISTERS ARE BEING MAINTAINED BY IT AND EVEN THE CONSUMPTION OF RAW MA TERIAL RECORDS FOR BOTH THE 8 M/S DIAMOND TOOLS INDUSTRIES UNITS ARE RECORDED SEPARATELY. IT IS SEEN THAT THE ARGUMENTS OF THE ASSESSEE HAVE CONSIDERABLE FORCE AND ARE ACCEPTED. 5.10 UNDER THE ABOVE CIRCUMSTANCES AND IN VIEW OF THE CASE LAW S DISCUSSED ABOVE IT IS HELD THAT THE AO HAS NOT MADE A CASE FO R DISALLOWANCE OF THE DEDUCTION U/S 80IB(4) OF THE ACT. THE ACTION OF I T HE AO WAS MORE IN THE NATURE OF SUSPICION BUT SUSPICION CANNOT TAKE THE P LACE OF FACTS. IT IS HELD THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THE BONA FI DES OF ITS CLAIM AND THE ASSESSEE IS ALLOWED THE DEDUCTION U/S 80IB(4) OF TH E ACT FROM THE PROFITS OF UNIT-II. THE GROUND OF APPEAL NO. 2 OF THE ASSESSEE IS ALLOWED. 6. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM REVENUES APPEAL FOR AY 2006-07 IS DEDUCTION CLAIMED U/S 80IB (4) OF THE ACT IN RESPECT OF PROFIT DERIVED FROM UNIT II. THE LD.DR SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN DIRECTING THE AO TO ALLOW DE DUCTION U/S 80IB(4) TOWARDS PROFIT DERIVED FROM UNIT II, IGNORING THE F ACT THAT THE ASSESSEE FAILED TO PROVE THAT BOTH THE UNITS ARE INDEPENDENT AND UNIT II HAS FULFILLED ALL CONDITIONS SPECIFIED U/S 80IB(4) OF THE INCOME- TAX ACT, 1961. THE LD.CIT(A) FAILED TO APPRECIATE THE FACT THAT BOTH U NITS ARE HAVING COMMON REGISTRATION NUMBER OF SALES-TAX AND EXCISE WHICH IS CLEAR AS PER FORM 10CCB FILED ALONGWITH RETURN OF INCOME. T HE AO HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT UNIT II WHICH IS CLAIMING EXEMPTION U/S 80IB(4) IS NOTHING BUT EXTENSION OF UNIT I AND ALSO FORMED BY SPLITTING UP OF ALREADY EXISTING BUSINESS. THEREFORE, THE CIT(A ) WAS COMPLETELY ERRED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 80 IB(4) OF THE ACT. 7. ON THE OTHER HAND, THE LD.AR FOR THE ASSESSEE SU BMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF 9 M/S DIAMOND TOOLS INDUSTRIES ITAT, MUMBAI BENCH D IN ASSESSEES OWN CASE FOR A Y 2005-06 IN ITA NO.3903/MUM/2014 DATED 08-03-2017, WHEREIN THE ITAT , UNDER SIMILAR SET OF FACTS HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80IB(4) IN RESPECT OF PROFIT DERIVED FROM UNIT II. THE CIT(A), AFTER RIG HTLY CONSIDERING RELEVANT FACTS HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80IB(4 ) AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE AO HAS DISALLOWED DEDUCTION CLAIMED U/S 80IB(4), ON THE GROUND THAT BOTH THE UNITS FUNCTIONING FROM THE SAM E PREMISE, THEY HAVE SAME REGISTRATION NUMBER ASSIGNED BY SSI AUTHORITIE S, SALES-TAX AUTHORITIES AND CENTRAL EXCISE AUTHORITIES. ACCOR DING TO THE AO , UNIT II IS NOTHING BUT AN EXTENSION OF UNIT I AND ALSO FORM ED BY SPLITTING UP OF AN ALREADY EXISTING BUSINESS. THEREFORE, HE OPINED TH AT THE ASSESSEE HAS NOT FULFILLED CONDITIONS SPECIFIED U/S 80IB(4) OF T HE INCOME-TAX ACT, 1961 SO AS TO CLAIM DEDUCTION FOR PROFIT DERIVED FROM UN IT II. THE AO PROCEEDED MAINLY ON THE PREMISES THAT BOTH UNITS AR E FUNCTIONING FROM SAME PREMISE AND ALSO BOTH UNITS ARE HAVING COMMON REGISTRATION NUMBER OF ALL THE AUTHORITIES. WE FIND THAT THE AB OVE ISSUE HAS ALREADY BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF ITAT, M UMBAI BENCH D IN ASSESSEES OWN CASE FOR AY 2005-06 AND AFTER APPRIS ING RELEVANT FACTS HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS MA INTAINED SEPARATE 10 M/S DIAMOND TOOLS INDUSTRIES BOOKS OF ACCOUNT FOR BOTH THE UNITS AND UNIT II HAS BEEN SET UP BY MAKING INVESTMENT IN NEW PLANT & MACHINERY. THE CO -ORDINATE BENCH FURTHER OBSERVED THAT THE REVENUE FAILED TO BRING O N RECORD ANY EVIDENCES TO DEMONSTRATE THAT UNIT II HAS BEEN SET UP BY SPLITTING UP OF AN EXISTING BUSINESS OR BY USING OLD MACHINERY BY A N EXISTING BUSINESS. MOREOVER, ASSESSEES CLAIM OF DEDUCTION U/S 80IB(4) IN RESPECT OF UNIT II WAS EXAMINED IN DETAIL IN THE INITIAL YEAR OF CLAIM I.E. AY 2003-04. THE AO, AFTER MAKING NECESSARY ENQUIRY AND VERIFYING TH E DOCUMENTARY EVIDENCE SUBMITTED BY THE ASSESSEE, AND ALSO BEING SATISFIED THAT UNIT II HAS FULFILLED ALL THE CONDITIONS HAS ALLOWED ASSESS EES CLAIM OF DEDUCTION IN RESPECT OF UNIT II. THAT BEING THE CASE, IN THE ABSENCE OF ANY MATERIAL DIFFERENCE IN FACTS IN THE IMPUGNED ASSESSMENT YEAR , THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB(4) ON THE SAME SET OF F ACTS CANNOT BE DENIED. THE RELEVANT PORTION OF THE ORDER OF THE I TAT IS EXTRACTED BELOW:- 9. INSOFAR AS MERITS OF THE ISSUE IS CONCERNED , IT IS EVIDENT FROM THE ORDER THAT THE ASSESSING OFFICER HAS DENIED ASS ESSEE'S CLAIM OF DEDUCTION PRIMARILY FOR THE REASON THAT BOTH THE UN ITS FUNCTION FROM THE SAME PREMISE, THEY HAVE THE SAME REGISTRATION N UMBER SSI AUTHORITIES, SALES TAX AUTHORITIES AND CENTRAL EXCI SE ITIES. HOWEVER, ON A PERUSAL OF THE ORDER PASSED BY THE LEARNED COM MISSIONER (APPEALS), WE HAVE NOTICED THAT THE ASSESSEE HAS MA INTAINED SEPARATE BOOKS OF ACCOUNT FOR BOTH THE UNITS, UNIT- II HAS BEEN SET- UP BY MAKING INVESTMENT IN NEW PLANT AND MACHINERY AND SUPPORTING DETAILS AND VOUCHERS WERE ALSO PRODUCED. IT HAS EMPLOYED SEPARATE SET OF EMPLOYEES FOR BOTH THE UNI TS AND MOST IMPORTANTLY THERE IS NO MATERIAL BROUGHT ON RECORD BY THE DEPARTMENT TO DEMONSTRATE THAT UNIT-II HAS BEEN SET -UP BY SPLITTING 11 M/S DIAMOND TOOLS INDUSTRIES UP OF OR RECONSTRUCTION OF AN EXISTING BUSINESS OR BY USING OLD MACHINERY OF AN EXISTING BUSINESS. MOREOVER, AS ALR EADY STATED, ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 80IB IN RESPECT OF UNIT- II WAS EXAMINED IN DETAIL IN THE INITIAL YEAR OF CL AIM I.E., ASSESSMENT YEAR 2003-04. THE ASSESSING OFFICER AFTER MAKING NE CESSARY ENQUIRY AND VERIFYING THE DOCUMENTARY EVIDENCE SUBM ITTED BY THE ASSESSEE THE ASSESSING OFFICER BEING SATISFIED THAT UNIT-II HAS FULFILLED ALL THE CONDITIONS HAS ALLOWED ASSESSEE'S CLAIM OF DEDUCTION IN RESPECT OF UNIT-II. THAT BEING THE CASE, IN THE ABSENCE OF ANY MATERIAL DIFFERENCE IN FACT IN THE IMPUGNED ASSESSM ENT YEAR, ASSESSEE'S CLAIM OF DEDUCTION UNDER SECTION 80IB ON THE SAME SET OF FACTS AND CIRCUMSTANCES CANNOT BE JN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN WESTERN OUTDOOR INTERACTIVE PVT. LTD. (SUPRA). THEREFORE, ON MERIT S ALSO, THE ASSESSEE IS BOUND TO SUCCEED. THUS, GROUNDS NO.2, 3 AND 4 ARE ALSO DISMISSED. 9. IN THIS VIEW OF THE MATTER AND BEING CONSISTENT WITH THE VIEW TAKEN BY THE CO-ORDINATE BENCH, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(4) IN R ESPECT OF PROFIT DERIVED FROM UNIT II. THE CIT(A), AFTER CONSIDERING RELEVA NT FACTS, HAS RIGHTLY DELETED ADDITION MADE TOWARDS DISALLOWANCE OF DEDUC TION CLAIMED U/S 80IB(4) OF THE ACT. WE DO NOT FIND ANY ERROR IN TH E ORDER OF THE CIT(A). HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF CI T(A) AND REJECT GROUND RAISED BY THE REVENUE. 10. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE ACT. THE AO RE OPENED THE ASSESSMENT ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT IN VIEW OF WRONG CLAIM MADE U/S 80IB (4) OF THE ACT. THE LD.CIT(A) QUASHED THE RE-ASSESSMENT ORDER PASSED BY 12 M/S DIAMOND TOOLS INDUSTRIES THE AO ON THE GROUND THAT THE AO HAS REOPENED THE A SSESSMENT ON MERE CHANGE OF OPINION WITHOUT THERE BEING ANY NEW MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME AND ALSO THE ASSESSME NT HAS BEEN REOPENED AFTER A PERIOD OF 4 YEARS WITHOUT ANY ALLE GATION ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR ASSESSMENT. THE REVENUE HAS FAILED TO BRING ON REC ORD ANY EVIDENCE TO CONTROVERT THE FINDING OF FACTS RECORDED BY THE LD. CIT(A) TO QUASH RE- ASSESSMENT ORDER. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT THE CIT(A) WAS RIGHT IN QUASHING RE-ASSESSMENT ORDER FO R THE REASON STATED IN HIS ORDER AT PARA 5.1 AND 5.2. THERE IS NO ERRO R OR INFIRMITY IN THE ORDER OF THE CIT(A). HENCE WE ARE INCLINED TO UPHOLD THE FINDING OF CIT(A) AND REJECT GROUND RAISED BY THE REVENUE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE FOR A.Y. 2006-07 IS DISMISSED. AYS 2007-08 & 2008-09 12. THE ISSUES INVOLVED IN ITA NOS 6937 & 6938/MUM /2016 ARE IDENTICAL TO THE ISSUES DISCUSSED IN ITA NO.6936/M UM/2016, BUT FOR FIGURES. THE REASONS GIVEN BY US IN ITA NO.6936/MU M/2016 SHALL MUTATITS MUTANDIS APPLY TO THESE APPEALS ALSO. THE REFORE, FOR THE DETAILED REASONS GIVEN BY US IN ITA NO6936/MUM/2016 , WE DISMISS THE APPEALS FILED BY THE REVENUE FOR AYS 2007-08 AND 20 08-09. 13 M/S DIAMOND TOOLS INDUSTRIES AYS 2010-11 & 2011-12 13. IN THESE TWO APPEALS, EXCEPT THE ISSUE OF REOPE NING OF ASSESSMENT U/S 147, THE ISSUE ON MERIT IS SIMILAR TO ITA NO.69 36/MUM/2016. THE REASONS GIVEN BY US IN PRECEDING PARAS IN APPEAL NO .6936/MUM/2016 SHALL MUTATIS MUTANDIS APPLY TO THESE APPEALS ALSO. . THEREFORE, FOR THE DETAILED REASONS GIVEN BY US IN ITA NO6936/MUM/2016 , WE DISMISS THE APPEALS FILED BY THE REVENUE FOR AYS 2010-11 AND 20 11-12. 14. AS A RESULT, ALL THE FIVE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 13 TH JUNE, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI