RONUK METAFIN P LTD, MUMBAI V. CIT 8, MUMBAI

ITA 7549/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4045 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 28-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 18-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SHRIVASTAV
• Keywords: Principle of natural justice; Difference of opinion; Change of opinion
• Section: 143(3); 80IB; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D, BENCH MUM BAI , , , BEFORE SHRI RAJENDRA, AM AND SHRI RAM LAL NEGI, JM ./ ITA NO.7549/MUM/2014 ( / ASSESSMENT YEAR: 2010-11) M/S. RONUK METAFIN PVT. LTD. 11-A, KISHORI COURT, ABDUL GAFFAR KHAN ROAD, WORLI SEA FACE, MUMBAI- 400025. VS. THE CIT-8, AAYAKAR BHAVAN, MUMBAI-400020. ./ ! ./ PAN/GIR NO. : AABCR9148Q ( ' / APPELLANT ) .. ( #$ ' / RESPONDENT ) %&' /ASSESSEE BY : SHRI. BHUPENDRA SHAH /REVENUE BY : SHRI. AJIT KUMAR SHRIVASTAV ( ) * '+ / DATE OF HEARING : 16/02/2016 ,-./ * '+ / DATE OF PRONOUNCEMENT 20/04/2016 !' / O R D E R PER RAM LAL NEGI, JM THE PRESENT APPEAL HAS BEEN PREFERRED BY THE A SSESSEE AGAINST ORDER DATED 05/12/2014 PASSED BY THE LD. CIT-8, MUMBAI PERTAINI NG TO THE ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE RELEVANT ASST. YEAR 2010-11, DECLARING THE TOTAL IN COME OF RS. 2,25,07,462/-. THE AO ACCEPTED THE SAME AND PASSED ASSESSMENT ORDE R U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). HOWEVER, THE CIT ISSUED NOTICE DATED 7/10/2014 TO THE ASSESSEE U/S 263 OF THE ACT. THE O PERATIVE PART OF THE SAID NOTICE READS AS UNDER: 2 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 2. A PERUSAL OF RECORDS SHOWS THAT IN THIS CASE, THE ASSESSMENT U/S 143(3) WAS COMPLETED ON 22/10/2012 A SSESSING TOTAL INCOME OF RS. 2,25,07,462/-. THE RECORD SHOWS THAT THE ASSESSEE FAILED TO FULFILL THE CONDITION LAID DOWN AS PER SEC. 80IB 5(I) OF THE IT ACT, 1961. THE ISSUE WAS NOT VERIFIE D BY THE AO, AS A RESULT OF WHICH EXCESS DEDUCTION U/S 80IB 5(I) OF R S. 45,18,998/- WAS ALLOWED TO THE ASSESSEE. IN VIEW OF THE ABOVE, IT IS CLEAR THAT EX CESS DEDUCTION OF RS. 45,18,998/- U/S. 80IB 5(I) HAS RESULTED IN ASSESSM ENT WHICH IS ERRONEOUS IN SO FAR AS WHICH IS PREJUDICIAL TO THE INTEREST OF REVENUE WITHIN THE MEANING OF SECTION 263 OF THE IN COME-TAX ACT, 1961. 3. ACCORDINGLY, YOU ARE REQUESTED TO SHOW CAUSE AS TO WHY YOUR ASSESSMENT ORDER DATED 22/10/2012 NOT BE ENHAN CED OR MODIFIED OR CANCELLED WITHIN THE MEANING OF SEC. 26 3 OF THE INCOME TAX ACT, 1961. 4. IN CASE YOU WISH TO FILE A WRITTEN REP LY, IT MAY BE FILED ON OR BEFORE 20/10/2014. IN CASE YOU WISH TO BE HEARD PERSONALLY, THE DATE FIXED FOR THIS PURPOSE IS 21/10/2014 AT 11 .30 A.M 3. SINCE THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WH Y ORDER PASSED BY THE ASSESSING OFFICER SHOULD NOT BE SET ASIDE/CANCELLED /MODIFIED, THE COUNSEL FOR THE ASSESSEE SUBMITTED PAPER BOOK AND ALSO DISCUSSE D THE CASE. IN THE MEAN TIME DUE TO CHANGE OF JURISDICTION A FRESH SHOW-CAU SE NOTICE U/S 263 WAS ISSUED ON 20/11/2014. IN RESPONSE THEREOF THE ASSES SEE SUBMITTED WRITTEN SUBMISSIONS ALONG WITH PAPER BOOK. 4. THE CONTENTION OF THE ASSESSEE WAS THAT THE AO HAS PASSED THE ASSESSMENT ORDER AFTER EXAMINING THE MATERIAL PLACED BEFORE HI M. THE AO HAS RIGHTLY HELD THE ASSESSEE COMPANY ELIGIBLE FOR DEDUCTION U/S 80I B ON THE BASIS OF EVIDENCE PLACED BEFORE HIM. THE CLAIM OF THE ASSESSEE HAS AL SO BEEN CONSIDERED DURING THE PREVIOUS ASSESSMENT YEARS ON THE BASIS OF DETAI LS FURNISHED DURING THE RESPECTIVE ASSESSMENT PROCEEDINGS. SIMILAR DETAILS PERTAINING TO THE ASSESSMENT YEAR 2010-11, HAVE ALREADY BEEN FILED BE FORE THE AO. THE LD. CIT 3 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 AFTER HEARING THE ASSESSEE SET ASIDE THE ORDER PASS ED BY THE A.O WITH REGARD TO DEDUCTION ALLOWED U/S 80IB 5(I) OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E THE TRIBUNAL. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE CIT (A) UNDER SECTION 263 OF THE ACT ON THE FOLLOWING EFFECTIVE GROUNDS:- 1) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNE D CIT ERRED IN INVOKING SECTION 263 TO THE CASE OF THE APPELLANT O NLY BY WAY OF CHANGE OF OPINION, WITHOUT POINTING OUT ANY ERROR I N THE ORDER OF THE A.O AND ALSO BY DISREGARDING DETAILED SUBMISSIONS M ADE TO HIM FROM TIME TO TIME. 2) IN THE FACTS OF THE CASE AND IN LAW, THE SHOW CA USE NOTICE & ORDER U/S 263 ALLEGING ERRORS AND PREJUDICE, ITSELF IS ERRONEOUS ON MANY COUNTS AS FOLLOWS. A) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNED CIT HAS ERRED IN INVOKING THE PROVISION OF SEC. 263 MERELY BECAUSE HE WANTS TO TAKE A VIEW DIFFERENT FROM THE ONE TAKEN BY THE ASSESSING OFFICER AND THEREBY CHANGING THE OPINION OF THE ASSESSING OFFICER BY HIS/HER OPINION B) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNE D CIT HAS ERRED IN HOLDING THAT ASSESSING OFFICER FAILED TO VERIFY THE CLAIM OF THE APPELLANT U/S 80IB 5(I) IN RESPECT OF ERECTION CHARGES OF RS. 96,02,331/- AND SERVICE CHARGES OF R S. 54,60,000/- EVEN THOUGH ALL THE DETAILS WERE FURNIS HED TO THE ASSESSING OFFICER. C) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNED CIT HAS ERRED IN DISREGARDING THE FACT THAT SIMILAR DEDUCTI ON WAS ALREADY ALLOWED IN SEVERAL SCRUTINY ASSESSMENTS IN EARLIER YEARS AS WELL. D) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNED CIT HAS ERRED IN DISREGARDING THE FACT THAT THE DEDUCTION G RANTED IN INITIAL YEAR CANNOT BE WITHDRAWN IN SUBSEQUENT YEAR S ON THE SAME FACT. E) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNED CIT HAS ERRED IN DISREGARDING THE FACT THAT THE ORIGINAL NO TICE U/S 263 4 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 DID NOT CONTAIN ANY REFERENCE TO ERECTION CHARGES O F RS. 96,02,331/- AND SERVICE CHARGES OF RS. 54,60,000/- THEREBY RENDERING THE NOTICE AS INCOMPLETE AND THEREFORE BA D IN LAW. F) IN THE FACTS OF THE CASE AND IN LAW, THE LEARNED CIT HAS ERRED IN OVERLOOKING VARIOUS JUDGMENTS PRONOUNCED B Y THE DIFFERENT COURTS. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE LD. CIT(A) HAS ERRED IN INVOKING SECTION 263 OF THE ACT WITHO UT POINTING OUT ANY ERROR IN THE ORDER OF THE A.O. THE POWER OF THE REVISION UND ER SECTION 263 OF THE ACT IS IN THE NATURE OF SUPERVISORY JURISDICTION AND THE S AME CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED UNDER SECTION 263 EXIST . THE CONSIDERATION OF THE COMMISSIONER AS TO WHETHER AND ORDER IS ERRONEOUS I NSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE MUST BE BASED ON MA TERIAL ON THE RECORD OF THE PROCEEDINGS CALLED FOR BY HIM. THE LD. CIT(A) HAS W RONGLY HELD THAT THE A.O HAS FAILED TO VERIFY THE CLAIM OF THE APPELLANT U/S 80IB(5)(I) IN RESPECT OF ERECTION CHARGES OF RS. 96,02,331/- AND SERVICE CHA RGES OF RS. 54,60,000/-. THE AO HAS PASSED THE ASSESSMENT ORDER AFTER VERIFY ING ALL THE DETAILS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PRO CEEDINGS, THEREFORE IT CANNOT BE SAID THAT THE ASSESSEE HAS FAILED TO FULF ILL THE CONDITIONS PRESCRIBED BY LAW IN ORDER TO AVAIL BENEFIT UNDER SECTION 80IB 5(I) OF THE ACT. THE LD. COUNSEL ALSO INVITED OUR ATTENTION TO THE RELEVANT PAGES OF THE PAPER BOOK TO DEMONSTRATE THAT EACH AND EVERY DETAIL HAS BEEN SUB MITTED BEFORE THE AO. THE LD. CIT(A) HAS DISREGARDED THE FACTS THAT SIMILAR D EDUCTIONS HAVE ALREADY BEEN ALLOWED IN THE EARLIER YEARS. THE LD. COUNSEL RELYI NG ON THE LAW LAID DOWN IN GABERIAL INDIA LTD. 203 ITR 128 (BOM), SAKTHI CHARI TIES 244 ITR 266 (MAD), ENCUBE ETHICALS (P) LTD. VS ITO (2008) 22 SOT 374(M UMBAI) AND MRS. KHATIZA S.OOMERBHOY VS. ITO 100 ITD 173(MUMBAI), THE IMPUGNED ORDER IS CONTRARY TO THE SETTLED PRINCIPLES OF LAW AND IS LIABLE TO BE S ET ASIDE. 5 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 7. ON THE OTHER HAND THE LD. DR RELYING UPON THE JUDGMENTS/ORDERS PASSED BY THE HIGH COURTS AND ITATS IN MALABAR INDUSTRIAL COMPANY LTD. VS CIT(2000) 243 ITR 83; CIT VS. ACTIVE TRADERS(P) LTD .(1995) 214 ITR 583(CAL); DUGGAL AND CO. VS. CIT [1996] 220 ITR 456(DEL); CIT VS. TOYOTA MOTOR CORPN.[2008] 306 ITR 49(DEL); RAJALAKSHMI MILLS LTD . VS. ITO[2009]121 ITD 343(CHEN.)(SB) AND CIT VS. ABAD CONSTRUCTION 44 TAX MANN.COM 319 (KAR) SUBMITTED THAT AS PER THE RATIO LAID DOWN IN THE AF ORESAID CASES, THE COMMISSIONER HAS JURISDICTION TO INVOKE THE POWER U NDER SECTION 263 OF THE ACT IN CASE OF INCORRECT ASSUMPTION OF FACTS; INCOR RECT APPLICATION OF LAW; FAILURE TO FOLLOW THE PRINCIPLES OF NATURAL JUSTICE NON APPLICATION OF MIND AND NON EXAMINATION OF RELEVANT ISSUES. IN THE PRESENT CASE THE AO HAS NEITHER APPLIED HIS MIND, NOR DID VERIFY THE CLAIM OF THE A PPELLANT U/S 80IB 5(I) IN RESPECT OF ERECTION CHARGES AND SERVICE CHARGES. TH E CASES RELIED UPON BY THE ASSESSEE ARE NOT APPLICABLE TO THE PRESENT CASE AS THE FACTS OF THE PRESENT CASE ARE DISTINGUISHABLE. SINCE, THE PRINCIPLE OF ESTOPP EL IS NOT APPLICABLE TO THE PROCEEDINGS UNDER INCOME TAX ACT, THE ASSESSEE HAS NO RIGHT TO TAKE THE PLEA THAT THE DEPARTMENT HAS ALLOWED THE SAME DEDUCTION IN THE PAST. HENCE, IN THE PRESENT CASE, THE LD. COMMISSIONER HAS RIGHTLY INVO KED THE JURISDICTION UNDER SECTION 263 OF THE ACT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE MATERIAL PLACE BEFORE US INCLUDING THE CASES RELIED UPON BY THE PA RTIES, IN THE LIGHT OF THEIR RESPECTIVE SUBMISSIONS. WE HAVE NOTICED THAT THE AS SESSEE HAS BEEN GRANTED DEDUCTION UNDER SECTION 80IB (5)(I) OF THE ACT IN T HE PRECEDING YEARS. THE ISSUE I.E., WHETHER THE DEDUCTION IN QUESTION IS ALLOWABL E OR NOT, WAS REQUIRED TO BE DECIDED BY THE AO IN THE FIRST YEAR ITSELF AND SINC E THE ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE THEN AO, A T THIS STAGE THERE IS NO JUSTIFICATION IN TAKING A DIFFERENT VIEW THAT THE A SSESSEE IS NOT ENTITLED FOR THE SAME. SO, THERE IS NO DISPUTE OVER THE FACT THAT RE TURNS FOR THE PRECEDING EIGHT 6 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 YEARS HAVE BEEN ASSESSED UNDER SECTION 143(3) OF TH E ACT AND THE ASSESSEE HAS BEEN ALLOWED THE DEDUCTION. WE HAVE NOTICED THAT TH E ASSESSEE HAS FURNISHED EACH AND EVERY DETAIL, AS ASKED BY THE AO INCLUDING THE DETAILS REGARDING ERECTION CHARGES AND THE SERVICE CHARGES IN QUESTIO N DURING THE ASSESSMENT PROCEEDINGS. THIS FACT FURTHER ESTABLISHES THAT THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS WITH REGARD TO THE DEDUCTION IN QUES TION ON THE BASIS OF THE CONTENTION OF THE ASSESSEE AND EVIDENCE PRODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. THE HONBLE SUPREME COURT HAS HELD IN COMMISSIONER OF INCOME TAX V. GREENWORLD CORPORATION [2009] 181 TAXMAN 111 (SC) THAT AN ORDER OF ASSESSMENT PASSED BY THE INCOME TAX OFFICER CANNOT BE INTERFERED WITH ONLY BECAUSE ANOTHER VIEW IS POSSIBLE. THEREFORE, ONCE I T IS ESTABLISHED THAT THE AO HAS TAKEN ONE OF THE POSSIBLE VIEWS AFTER DUE APPLI CATION OF MIND, THE COMMISSIONER HAS NO JURISDICTION UNDER SECTION 263 OF THE ACT TO DIRECT THE AO TO INITIATE FURTHER ENQUIRY IN THE ORDER WHICH H AS ALREADY BEEN CONCLUDED. AS HAS BEEN OBSERVED BY THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GABRIEL INDIA LTD . (SUPRA), SUCH ACTION WILL BE AGAINST THE POLICY O F THE LAW THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROC EEDINGS, THAT STALE ISSUE SHOULD NOT BE REACTIVATED BEYOND A PARTICULAR STAGE AND THAT LAPSE OF TIME MUST INDUCE REPOSE IN AND SET AT REST JUDICIAL AND QUASI-JUDICIAL CONTROVERSIES AS IS MUST IN OTHER SPHERES OF HUMAN ACTIVITY. FURT HER ENQUIRY AND /OR FRESH DETERMINATION CAN BE DIRECTED BY THE COMMISSIONER O NLY AFTER COMING TO THE CONCLUSION THAT THAT THE EARLIER FINDINGS OF THE AS SESSING OFFICER WAS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IN OUR CONSIDERED OPINION, THE FACTS OF THE PRESENT CASE AND EVIDENCE ON RECORD DO NOT SUGGEST THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO TH E INTERESTS OF THE REVENUE SO AS TO INVOKE THE JURISDICTION UNDER SECTION 263 OF THE ACT. 9. THE LD. CIT(A) HAS BASED HIS FINDINGS ON THE RAT IO LAID DOWN BY THE HONBLE SUPREME COURT IN LIBERTY INDIA VS. CIT KARNAL (2009) 317 ITR 218 (SC ) WHEREIN 7 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 IT WAS HELD THAT SUBSIDY BY WAY OF CUSTOMS DUTY DRA W BACK COULD NOT BE TREATED AS A PROFIT DERIVED FROM THE INDUSTRIAL UND ERTAKING. SIMILARLY , IN INDIAN ADDITIVES VS. DCIT(2012) 25 TAXMAN.COM 412 (SC) THE ISSUE BEFORE THE HONBLE COURT WAS THAT WHETHER AN ASSESSEE WHO WAS ENGAGED IN MANUFAC TURE AND SELLING OF ADDITIVES ON COMMISSION BASIS, WAS ENTIT LED TO DEDUCTION UNDER SECTION 80IB IN RESPECT OF SERVICE INCOME AND COMMI SSION? HENCE, THE FACTS OF THE PRESENT CASE ARE DIFFERENT FROM THE FACTS OF TH E CASES RELIED UPON BY THE LD. COMMISSIONER. 10. IN VIEW OF THE FACTS OF THE CASE, SUBMISSIONS O F THE PARTIES AND EVIDENCE PLACED ON RECORD TO SUBSTANTIATE THEIR RESPECTIVE C ONTENTIONS AND THE PRINCIPLES OF LAW LAID DOWN BY THE HONBLE SUPREME COURT AND THE JURISDICTIONAL HIGH COURT, DISCUSSED IN THE FOREGOI NG PARAS, WE ARE OF THE CONSIDERED VIEW THAT THE LD. COMMISSIONER HAS WRONG LY INVOKED THE REVISIONAL JURISDICTION UNDER SECTION 263 OF THE ACT. THE ASSE SSMENT ORDER PASSED BY THE AO DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. WE, TH EREFORE, SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. COMMISSIONER AND A LLOW ALL THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL, 2016 ( RAJENDRA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0) MUMBAI; 1 DATED:20/04/2016 8 ITA NO 7549/MUM/2014 ASSESSMENT YEAR: 2010-11 !'#$%&'&$ / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT. 3. ( 3' ( ) / THE CIT(A)- 4. ( 3' / CIT 5. 67 #'8% , + 8%/ , ( 0) / DR, ITAT, MUMBAI 6. 9) / GUARD FILE. !' / BY ORDER, $6' #' //TRUE COPY// ()*+ (DY./ASSTT. REGISTRAR) , ( 0) / ITAT, MUMBAI PRAMILA