ACIT 9(1), MUMBAI V. DESSAN AGROTECH LTD, MUMBAI

ITA 7754/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101305 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 21-07-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 17-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S C TIWARI
• Assessee Lawyers: S K MISHRA
• Keywords: Reopening of assessment; Audit objection; Difference of opinion; Competent authority; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 80IB; 147; 148; 11

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 1363 / MUM/20 1 2 AND ITA NO.7754/MUM/2011 ( / ASSESSMENT YEA R S : 20 0 4 - 05 AND 200 5 - 06 ) THE ASSTT. COMMISSIONER OF INCOME TAX, RANGE 9(1), ROOM NO.223, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 / VS. M/S DE ESAN AGROTECH LIMITED, 4A, VIKAS CENTRE, 104, S V ROAD, SANTACRUZ(W), MUMBAI - 400054 ( / APPELL ANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAACD1662N / APPELLANT BY SHRI S K MISHRA / R EVENUE BY SHRI S C TIWARI / DATE OF HEARING : 14 .9 . 201 5 / DATE OF PRONOUNCEMENT: 09 . 10. 201 5 / O R D E R P ER B R BASKARAN, AM : BOTH THE APPEALS FILED BY THE R E VENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY LD CIT(A) - 19 , MUMBAI FOR ASSESSMENT YEARS 200 4 - 05 AND 2005 - 06 . SINCE THE ISSUES URGED IN B OTH THE APPEALS A RE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. IN BOTH THE YEARS, THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN HOLDING THAT THE REOPENING OF ASSESSMENT IS BAD IN LAW. ITA NO. 1363/ MUM/2011 AND 7754/M/2011 2 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF OIL AND OIL CAKES THROUGH SOLVENT EXTRACTION PROCESS. THE ASSESSMENTS OF BOTH THE YEARS UNDER CONSIDERATION WAS COMPLETED ORIGINALLY U/S 143(3) OF THE ACT BY ALLOWING DEDUCTION U/S 80IB OF THE ACT CLAIMED BY THE ASSESSEE . THE ASSESSING OFFICER SUBSEQUENTLY NOTICED THAT THE ASSESSEE HAD COMMENCED MANUFACTURING ACTIVITIES ON 14.6.1995 ONLY, WHEREAS THE PROVISIONS OF SEC. 80IB(3)(I) MANDATE THAT THE ASSESSEE SHOULD HAVE COMMENCED MANUFACTURING PRIOR TO 31.3.1995 . HOWEVER THE ABOVE SAID TIME LIMIT COMMENCING PRODUCTION WAS AVAILABLE UPTO 31.3.2002 FOR A SMALL SCALE UNDERTAKING U/S 80IB(3)(II) OF THE ACT. HOWEVER, THE ASSESSING OFFICER ALSO NOTICED THAT THE INVESTMENT MADE BY THE ASSESSEE IN THE PLANT AND MACHINERY HAS EXCEEDED RS.1.00 CRORES AND HENCE THE AO TOOK THE VIEW THAT THE ASSESSEE CANNOT BE CONSIDERED TO BE A SMALL SC ALE UNDERTAKING , THUS BECOMING INELIGIBLE TO CLAIM DEDUCTION U/S 80IB(3)(II) OF THE ACT ALSO . ACC ORDINGLY, T HE AO ENTERTAINED THE BELIEF THAT THE INCOME OF THE ASSESSEE HAS ESCAPED THE ASSESSMENT BY REASON OF DEDUCTION U/S 80IB WRONGLY ALLOWED TO THE AS SESSEE. ACCORDINGLY HE REOPENED THE ASSESSMENT OF BOTH THE YEARS UNDER CONSIDERATION IN ORDER TO DISALLOW THE DEDUCTION ALLOWED U/S 80IB OF THE ACT. THE ASSESSEE CONTENDED BEFORE THE AO THAT IT IS CLASSIFIED AS SMALL SCALE UNDERTAKING AS PER INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1951 AND ALSO FURNISHED A COPY OF REGISTRATION CERTIFICATE. ACCORDINGLY IT CONTENDED THAT IT IS ELIGIBLE FOR DEDUCTION U/S 80IB(3)(II) OF THE ACT. THE SAID CONTENTION DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER. ACCORD INGLY THE AO COMPLETED THE ASSESSMENT OF BOTH THE YEARS BY DISALLOWING THE CLAIM FOR DEDUCTION U/S 80IB OF THE ACT. 4. BEFORE LD CIT(A), THE ASSESSEE CHALLENGED THE VALIDITY OF REOPENING OF ASSESSMENT BY CONTENDING THAT THE ASSESSEE HAD BEEN ALLOWED DE DUCTION ITA NO. 1363/ MUM/2011 AND 7754/M/2011 3 U/S 80IB OF THE ACT IN THE EARLIER YEARS AND HENCE THE AO HAS REOPENED THE ASSESSMENT OF THE TWO YEARS UNDER CONSIDERATIO N ONLY ON CHANGE OF OPINION . IT WAS FURTHER CONTENDED THAT THE ASSESSEE CONTINUES TO BE CLASSIFIED AS SMALL SCALE UNDERTAKING UNDER THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1951 , WHICH IS THE REQUIREMENT PRESCRIBED IN SEC. 80IB(14)(G) OF THE ACT. THE LD CIT(A) NOTICED THAT ALL THE DETAILS RELATING TO THE DEDUCTION CLAIMED U/S 80IB WAS AVAILABLE BEFORE THE AO IN THE ORIGIN AL ASSESSMENT PROCEEDINGS ALSO IN BOTH THE YEARS. THE AO HAD NOT BROUGHT ANY FRESH MATERIAL ON RECORD. ACCORDINGLY HE WAS CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE THAT THE REOPENING WAS DONE ON MERE CHANGE OF OPINION. ACCORDINGLY THE LD CIT(A) HEL D THAT THE REOPENING WAS BAD IN LAW IN BOTH THE YEARS. 5. IT IS PERTINENT TO NOTE THAT THE ASSESSMENT FOR AY 2004 - 05 WAS REOP E NED ON 24.03.2009 AND THE ASSESSMENT FOR AY 2005 - 06 WAS REOPENED ON 01 - 10 - 2009, I.E., AT A LATER DATE. IN THE REASONS RECORD ED FOR REOPENING OF AY 2005 - 06, THE AO HAS REFERRED TO THE AUDIT OBJECTION GIVEN BY REVENUE AUDIT PARTY IN RESPECT OF THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION BOTH U/S 80IB(3)(I) AND 80IB(3)(II) OF THE ACT. HENCE, IT WAS CONTENDED BEFORE LD CIT( A) THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT ON THE BASIS OF AUDIT OBJECTION ONLY AND HENCE ON THAT GROUND ALSO, THE REOPENENING WAS BAD IN LAW. THE LD CIT(A) HAS ACCEPTED THE SAID CONTENTIONS OF THE ASSESSEE IN AY 2005 - 06. 6. IN ASSES SMENT YEAR 2004 - 05, THE LD CIT(A) ALSO EXAMINED THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT, I.E., ON MERITS ALSO, AND HELD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IB OF THE ACT. IT IS PERTINENT TO NOTE THAT THE R EVENUE HAS NOT ITA NO. 1363/ MUM/2011 AND 7754/M/2011 4 CHALLENGED THE SAID DECISION OF THE LD CIT(A), MEANING THEREBY, THE APPEAL FILED BY THE REVENUE FOR AY 2004 - 05 IS ONLY ACADEMIC IN NATURE. 7. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE LD CIT(A) HAS DISCUSSED ABO UT THE VALIDITY OF REOPENING OF ASSESSMENT IN A DETAILED MANNER IN HIS ORDER. HENCE, FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY IN AY 2004 - 05: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE B Y THE APPELLANT. THE A.O. HAS RECORDED HIS REASONS FOR REOPENING AND THE SAD REASONS ARE AS UNDER: 'ON VERIFICATION FORM 10CCB REVEALED THAT THE DATE OF COMMENCEMEN T OF OPERATION BY THE UNDERTAKING IS MENTIONED A S 14.6.1995. SINCE UNI T COMMENCED ITS OPER ATION AFTER 31.3.95, IT WAS NOT ENTITLED TO CLAIM THE DEDUCTION U/S 801B (3)( I ). FURTHER, AS PER S R . NO. 18(B) OF FORM 10CCAB, THE INVESTMENT IN THE PLANT AND MACHINERY IS MORE THAN RS. 1 C RORE AND THEREFORE THE COMPANY IS NOT A SMALL SCALE INDUSTRIAL UNDER TAKING. HENCE, THE COMPANY DOES NOT QUALIFY FOR DEDUCTION U/S 80I B (3)(II). THEREFORE, THE ASSESSEE WAS NEITHER ENTITLED FOR DEDUCTION U/S 80 IB (3)(I) NOR U/S 80 IB (3)(II). THE DEDUCTION ALLOWED U/S 801 B (3) WAS THEREFORE IRREGULAR. THE INCORRECT ALLOWANCE OF DEDUCTION U/S 80 I B(3) OF RS. 72,04,694 / - FOR A.Y. 2004 - 05 HAS RESULTED INTO ESCAPEMENT OF INCOME FROM ASSESSMENT WITHIN THE MEANING OF PROVISIONS OF SECTION 147 OF THE IT ACT, 19 61. ' 5.1 FROM THE REASONS AS RECORDED IT IS CLEAR THAT THE VERY BASIS FORMI NG THE FOUNDATION FOR INITIATING REASSESSMENT PROCEEDINGS IS THE AUDIT REPORT IN FORM 10CC B ALREADY ON RECORD. THE ASSESSMENT HAD ORIGINALLY BEEN COMPLETED UNDER S. 143(3) I.E , AFTER SCRUTINY. THE APPELLANT HAD BEEN ALLOWED DEDUCTION UNDER S. 80 I B OF THE ACT AND WHICH WAS THE SUBJECT MATTER OF APPEAL, ALBEIT ON A DIFFERENT MATTER. HOWEVER, THIS DENOTES APPLICATION OF MIND OF THE A.O. ON THE ELIGIBILITY OR OTHERWISE OF THE APPELLANT FOR THE CLAIM OF DEDUCTION UNDER S. 80IB. THUS A LL THE PRIMARY FACTS WERE D ISCLOSED IN THE RETURN OF INCOME AS FILED. THOUGH IT IS SEEN THAT THE NOTICE HAS BEEN ISSUED BEFORE THE EXPIRY OF FOUR YEARS FROM THE RELEVANT ASSESSMENT YEAR, THE ISSUE RAISED IN THIS GROUND IS WHETHER THE A . O. COULD BE CREDITED ITA NO. 1363/ MUM/2011 AND 7754/M/2011 5 WITH HAVING 'REASON TO BEL IEVE' THAT INCOME HAD ESCAPED ASSESSMENT. I T HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. ( 320 ITR 561 CITED ABOVE) THAT 'REASON TO BELIEVE' CANNOT BE EQUATED WITH CHANGE OF OPINION. ADMITTEDLY, IN THE INSTANT CA SE, BETWEEN THE DATE OF ORDER OF ASSESSMENT SOUGHT TO BE REOPENED AND THE DATE OF FORMING AN OPINION THAT INCOME HAS ESCAPED ASSESSMENT, NOTHING NEW HAS HAPPENED. THERE HAS BEEN A FRESH APPLICATION OF MIND BY THE A.O. ON THE EXISTING SAME SET OF FACTS, THU S, IT AMOUNTS TO ONLY A CHANGE OF OPINION. IN THE CASE OF THE KELVINATOR OF INDIA LTD IT HAS BEEN HELD THAT THE A.O. DOES NOT HAVE THE POWER TO REVIEW THE DETAILS ALREADY ON RECORD REGARDING THE CLAIM OF DEDUCTION UNDER S. 80 IB . ALL RELEVANT INFORMATION W AS DISCLOSED IN THE RETURN FILED, ACCOMPANIED WITH THE AUDIT REPORT. UNDER THE CIRCUMSTANCES, REASSESSMENT PROCEEDINGS HAVE BEEN INITIATED BASED ON A CHANGE OF OPINION ON THE SAME SET OF FACTS THAT WERE ALREADY AVAILABLE ON RECORD AND CONSIDERED BY THE A.O . HENCE IT IS HELD THAT THE RATIO OF THE JUDGMENT OF THE H O N'BLE SUPREME COURT IN CIT VS. KELVINATOR OF INDIA LTD APPLIES AND HENCE IT IS HELD THAT PROCEEDINGS LEADING TO ISSUE OF NOTICE UNDER S . 148 HAVE NOT BEEN VALIDLY INITIATED 8. ON MERITS, I.E., ON THE ISSUE OF ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT, THE LD CIT(A) HELD AS UNDER: - 7. I HAVE CONSIDERED THE FACTS OF THE CASE, THE FINDINGS OF THE A.O. I HA VE CAREFULLY PERUSED THE RECORDS. THE APPELLANT HAD CLAIMED DEDUCT ION UNDER S . 80 IB AS PER RETURN OF INCOME FILED ORIGINALLY. THE CLAIM UNDER S. 80 IB WAS SUPPORTED BY AUDIT REPORT, IN FORM NO. 10CCB FILED ALONG WITH RETURN OF INCOME. THE CLAIM WAS MADE IN THE STATUS OF A SMALL SCALE INDUSTRIAL UNDERTAKING. THEREFORE, THE CLAIM OF THE APPELLANT HAS TO BE EXAMINED IN TERMS OF SECTION 80IB (3)(II) OF THE INCOME TAX ACT. IT IS PROVIDED THAT WHERE AN INDUSTRIAL UNDERTAKING IS A SMALL SCALE INDUSTRIAL UNDERTAKING, IT MUST BEGIN TO MANUFACTURE OR PRODUCE ARTICLES OR THING OR TO O PERATE COLD STORAGE PLANT [ NOT BEING THE COLD STORAGE PLANT SPECIFIED IN SUB - SECTION 4 OR SUB - SECTION 5 ] AT ANY TIME DURING THE PERIOD BEGINNING ON 1.4.1995 AND ENDING ON 31.3.2002. ADMITTEDLY, THE UNDERTAKING, CO MMENCED OPERATIONS ON 14 JUNE 1995, AS IS EVIDENCED BY THE AUDIT REPORT IN FORM 10CCB. THUS, THE APPELLANT COMPANY STARTED COMMERCIAL PRODUCTION WITHIN THE ELIGIBILITY PERIOD AS PRESCRIBED IN SUB - SECTION (II) OF CLAUSE (3) OF SECTION 80IB . AS MENTIONED EARLIER THE CLAIM OF THE APPELLANT HAS BEEN MADE CONSIDERING ITSELF AS A SMALL SCALE ITA NO. 1363/ MUM/2011 AND 7754/M/2011 6 INDUSTRIAL UNDERTAKING. THEREFORE. THE CLAIM OF THE APPELLANT IS TO BE EXAMINED IN THE LIGHT OF THE CONDITIONS PRECEDENT F OR DEDUCTION UND ER SUB - SECTION ( II ) OF CLAUSE 3 OF SECTION 80IB STANDS FULFILLED. THE TERM ' SMALL SCALE INDUSTRIAL UNDERTAKING' IS DEFINED IN CLAUSE (G OF SUB - SECTION 14 OF S. 80IB ) AS UNDER: (G) 'SMALL - SCALE INDUSTRIAL UNDERTAKING MEANS AN INDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PREVIOUS YEAR, REGARDED AS A SMALL - SCALE IND USTRIAL UNDERTAKING UNDER SECTION 11B OF THE INDUSTRIES ( DEVELOP MENT AND REGULATION) ACT, 1951 (65 OF 1951)' SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 READ AS UNDER : 11B(1) THE CENTRAL GOVERNMENT MAY, WITH A VIEW TO ASCERTAI NING WHICH ANCILLARY AND SMALL SCALE INDUSTRIAL UNDERTAKING NEED SUPPORTIVE MEASURES, EXEMPTIONS OR OTHER FAVOURABLE TREATMENT UNDER THIS ACT TO ENABLE THEM TO MAINTAIN THEIR VIABILITY AND STRENGTH SO AS TO BE EFFECTIVE IN (A) PROMOTING IN A HARMONIOUS MANNER THE INDUSTRIAL ECONOMY OF THE COUNTRY AND EASING THE PROBLEM OF UNEMPLOYMENT, AND (B) SECURING THAT THE OWNERSHIP AND CONTROL OF THE MATERIAL RE SOURCES OF THE COMMUNITY ARE SO DISTRIBUTED AS BEST TO SUBSERVE THE COMMON GOOD, SPECIFY, HAVING REGARD TO THE FACTORS MENTIONED IN SUB - SECTION (2), BY NOTIFIED ORDER, THE REQUIREMENTS WHICH SHALL BE COMPLIED WITH BY AN INDUSTRIAL UNDERTAKING TO ENABLE I T TO BE REGARDED, FOR THE PURPOSES OF THIS ACT, AS AN ANCILLARY, OR A SMALL SCALE, INDUSTRIAL UNDERTAKING AND DIFFERENT REQUIREMENTS MAY BE SO SPECIFIED FOR DIFFERENT OR WITH RESPECT TO INDUSTRIAL UNDERTAKINGS ENGAGED IN THE MANUFACTURE OR PRODUCTION OF DI FFERENT ARTICLES: PROVIDED THAT NO INDUSTRIAL UNDERTAKING SHALL BE REGARDED AS AN ANCILLARY INDUSTRIAL UNDERTAKING UNLESS IT IS, OR IS PROPOSED TO BE, ENGAGED IN ITA NO. 1363/ MUM/2011 AND 7754/M/2011 7 (I) THE MANUFACTURE OF PARTS, COMPONEN TS, SUB - ASSEMBLIES, TOOLINGS OR INTERMEDIATES; OR (II) RE NDERING OF SERVICES, OR SUPPLYING OR RENDERING, NOT MORE THAN FIFTY PER CENT OF ITS PRODUCTION OR ITS TOTAL SERVICES, AS THE CASE MAY BE, TO OTHE R UNITS FOR PRODUCTION OF OTHER ARTICLES. ( 2) THE FACTORS REFERRED TO IN SUB - SECTION (1) ARE THE FOLLOWING, NAMELY: (A) THE INVESTMENT BY THE INDU STRIAL UNDERTAKING IN (I) PLANT AND MACHINERY, OR (II) LAND , BUILDINGS, PLANT AND MACHINERY; (B) THE NATURE OF OWNERSHIP OF THE INDUSTRIAL UNDERTAKING; (C) THE SMALLNESS OF THE NUMBER OF WORKERS EMPLOYED IN THE INDUSTRIAL UNDERTAKING; (D) THE NA TURE, COST AND QUALITY OF THE PRODUCT OF THE INDUSTRIAL UNDERTAKING; (E) FOREIGN EXCHANGE, IF ANY, REQUIRED FOR THE IMPORT OF ANY PLANT OR MACHINERY BY THE INDUSTRIAL UNDERTAKING; AND (F) SUCH OTHER RELEVANT FACTORS AS MAY BE PRESCRIBED. 7.2 FROM A READING OF S.11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION ) ACT IT IS EVIDENT THAT AN UNDERTAKING HAS TO COMPLY WITH T H E REQUIREMENTS UNDER THE SAID ENACTMENT SO AS TO BE REGARDED AS AN ANCILLARY OR AS A SMALL SCALE INDUSTRIAL UNDERTAKING . SUB - SECTION 2 OF SECTION 11B REFER TO TH E FACTORS WITH WHICH THERE HAS TO B E COMPLIANCE AND ONE OF THE FACTORS MENTIONED IS THE INVESTMENT BY THE UNDERTAKING IN P LANT AND MACHINERY. IT IS F URTHER SEEN THAT THE COMPLIANCE TO THE SAID FACTOR OR FACTORS SHALL BE AS PER NOTIFIED ORDER. THUS, THE STATUS OF AN UNDERTAKING THAT IS WHETHER SMALL SCALE OR ANCILLARY, SHALL BE DECIDED BY THE COMPETENT AUTHORITY UNDER THE SAI D ENACTMENT I.E. THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT WITH REFERENCE TO THE NOTIFICATIONS ISSUED BY THE ITA NO. 1363/ MUM/2011 AND 7754/M/2011 8 CENTRAL GOVERNMENT FROM TIME TO TIME. IT IS A FACT THAT THE COMPANY HAS BEEN REGISTERED AS SMALL SCALE INDUSTRIA L UNDERTAKING WITH THE DISTRICT INDUSTRY CENTER, DHULE WHICH IS A PRESCRIBED AUTHORITY UNDER S. 11 B OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT. 7.3 DURING THE COURSE OF HEARING OF APPEAL THE APPELLANT HAS FURNISHED COP Y OF APPLICATIO N FURNISHED BEFORE THE DISTRICT INDUSTRY CEN TRE DATED 9.2.200 7 WHEREIN IT IS INDICATED THAT IT IS AN SMALL SC ALE INDUSTRIAL UNDERTAKING (PAGES 46 TO 55 OF THE PAPER BOOK FILED). THE LAST PAGE OF THE SAID APPLICATION I S ACKNOWLEDGEMENT SIGNED BY THE GENERAL MANAGER. DISTRICT INDUSTRY C ENTRE, DHULE, W HEREIN THE UNDERTAKING IS ACKNOWLEDGED AS SMALL S CALE . IN T HE SA ID F ORM, IT IS STATED THAT THE DATE OF COMMENCEMENT OF PRODUCTION IS 14.06.1995. FURTHER, AS PER RECORDS IT IS EVIDENT THAT THE CLAIM FOR DEDUCTION U /S 801A/80IB IS BEING MADE FROM THE A.Y. 19 97 - 98 AND HAS BEEN G IVEN ACCORDINGLY. THE RECORDS INDICATE THE FIRST YEAR OF THE CLAIM IS 1997 - 98 , WHERE A CLAIM WAS MADE UNDER S. 80IA AND WAS ALLOWED. THUS, FROM THE FAC TS AS ARE AVAILABLE ON THE RECORDS OF THE A.O. AND ALSO BASED ON T HE MATERIALS PROD U CED DURING THE COURSE OF HEARING OF THE APPEAL IT IS SEEN THAT THE APPELLANT COMPANY HAS BEEN REGISTERED AS A SMALL SCALE INDUSTRIAL UNDERTAKING AND CONTINUE TO BE SO . THE RECORDS INDICATE THAT THE REGISTRATION GRANTED TO AN APPELLANT COMPANY, AS A SMAL L SCALE INDUSTRIAL UNDERTAKING HAS NOT BEEN CANCELLED OR WITHDRAWN. HENCE, IT HAS TO BE HELD THAT ONCE A REGISTRATION HAS BEEN GRANTED TO AN UNDERTAKING AS AN SMALL SCALE INDUSTRIAL UNDERTAKING, WHICH IS AT THE TIME OF FORMATION OF THE BUSINESS OF THE CO MPANY, IT WOULD CONTINUED TO BE SO, NOTWITHSTANDING THE SUBSEQUENT NOTIFICATIONS ISSUED. AS STATED EARLIER THE CLAIM FOR DEDUCTION AS SMALL SCALE INDUSTRIAL UNDERTAKING STOOD ADMITTED IN THE YEAR 1997 - 98, SUBSEQUENTLY, IN THE SUBSEQUENT YEARS THE CLAIMS HAVE BEEN ALLOWED. THE POSITION IN LAW IS THAT ONCE THE CLAIM OF AN UNIT FOR BEING CONSIDERED AS AN SMALL SCALE INDUSTRIAL UNDERTAKING STAND ADMITTED AND THE DEDUCTION ALLOWED, IN SUBSEQUENT YEARS THE CLAIM CANNOT BE VARIED TO T HE DETRIMENT OF THE UNDERTAK ING. IN THIS REGARD, REFERENCE IS MADE TO THE DECISION OF THE H ONBLE ITAT CHANDIGARH 'A' BENCH IN MICRO INSTRUMENT CO.VS. IT A 2008 12 DTR 501. IT HAS BEEN HELD BY THE HON'BLE TRIBUNAL THAT ONCE THE RELIEF UNDER S. 80IB HAS BEEN ALLOWED TO THE ASSESSEE IN THE INITIAL YEAR THEN IT IS NOT OPEN TO EXAMINE T HE VERACITY OF THE RELIEF IN THE SUBSEQUENT YEARS ESPECIALLY WHEN THE RELIEF ALLOWED IN THE INITIAL YEAR HAS NOT BEEN DISTURBED. AS PER THE DECISION OF THE HONBLE TRIBUNAL, WHEN IN INITIAL YEAR THE DEDU CTION HAS BEEN ALLOWED THE IMPLICATION IS THAT THE UNDERTAKING FULFILS THE ITA NO. 1363/ MUM/2011 AND 7754/M/2011 9 CONDITIONS AS PRESCRIBED FOR BEING ELIGIBLE FOR THE SAID RELIEF. IN THIS REGARD, RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE 'H' BENCH OF THE DELHI ITAT IN TATA COMMUNIC ATION INTERNET SERVICES LTD. VS. IT A 2010 39 SOT 106 DELHI. IN THE SAID DECISION THE SAID LEGAL POSITION HAS AGAIN BEEN REITERATED THAT SUBSEQUENT TO THE GRANTING OF THE CLAIM, IT IS NOT POSSIBLE TO PICK UP A SUBSEQUENT ASSESSMENT YEAR AND TO HOLD THAT THE RE HAS BEEN VIOLATION OF THE PROVISIONS. IN THE SAID CASE, THE HO N BLE TRIBUNAL WAS DEALING WITH SIMILAR CLAIM UNDER S. 80IA AND HAS OBSERVED THAT THE BAR AS PROVIDED IN S. 80IA(3) HAS TO BE CONSIDERED ONLY FOR THE FIRST YEAR OF THE CLAIM OF DEDUCTION. TH E HON'BLE TRIBUNAL HAS OBSERVED THAT THE BAR AS PROVIDED IN SUB - SECTION 3 IS IN RELATION TO THE FORMATION OF THE UNDERTAKING AND ONCE THE FORMATION IS COMPLETE , THE DEVELOPMENT OF THE UNDERTAKING CANNOT PUT CANNOT BE PUT UNDER THE RESTRAINTS AS STIPULAT ED IN SUB - SECTION 3. IT HAS BEEN HELD BY THE HONBLE TRIBUNAL IN THE SAID CASE THAT THE ELIGIBILITY FOR THE CLAIM OF DEDUCTION U/S 80IA BY APPLYING THE RESTRAINS OF SECTION 80IA (3) CANNOT BE CONSIDERED FOR EVERY YEAR OF THE CLAIM OF DEDUCTION U/S 80 IA BUT CAN BE CONSIDERED ONLY IN THE YEAR OF FORMATION OF THE BUSINESS.' THUS, THE RATIO OF THE SAID DECISIONS IS THAT THE RESTRAINTS AS FOUND IN THE STATUTE CAN ONLY BE APPLIED WITH REFERENCE TO THE FIRST YEAR OF THE CLAIM AND NOT IN THE SUBSEQUENT YEAR. IN THE CASE OF THE APPELLANT THE CLAIM HAD BEEN ALLOWED IN THE EARLIER YEAR AND THEREFORE BASED ON THE RATIO OF THE DECISION AS CITED ABOVE IT IS HELD THAT THE RELIEF ALLOWED UNDER S. 80 IB COULD NOT BE WITHDRAWN IN A SUBSEQUENT YEAR WITH REFERENCE TO THE R ESTRAINTS AS MENTIONED IN S. 80IB(3)WHICH HAVE TO BE APPLIED IN THE INITIAL YEAR. 9. THUS, WE NOTICE THAT THE LD CIT(A) HAS GIVEN CLEAR FINDING THAT THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION U/S 80IB AS PER THE PROVISIONS OF SEC. 80IB(3)(II) OF T HE ACT. THE LD CIT(A) HAS FURTHER HELD THAT THE QUESTION AS TO WHETHER THE ASSESSEE IS A SMALL SCALE UNDERTAKING OR NOT HAS TO BE EXAMINED AS PER THE PROVISIONS OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. ANOTHER IMPORTANT POINT NOTED BY THE LD CIT(A) IS THAT THE ASSESSEE HAD BEEN ALLOWED DEDUCTION U/S 80IB OF THE ACT IN THE YEARS EARLIER TO THE TWO YEARS UNDER CONSIDERATION, MEANING THEREBY THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT HAD ALREADY BEEN EXAMINED IN TH E EARLIER YEARS. HENCE, BY PLACING RELIANCE ON ITA NO. 1363/ MUM/2011 AND 7754/M/2011 10 SOME OF THE JUDICIAL DECISIONS, THE LD CIT(A) HELD THAT THE ASSESSING OFFICER, A FTER HAVING ACCEPTED THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT IN THE EARLIER YEARS AND AFTER HAVI NG ALLOWED THE DEDUCTION IN THE INITIAL YEAR AS WELL AS IN SOME OF THE SUBSEQUENT YEARS, IS NOT CORRECT IN EXAMIN ING THE ELIGIBILITY OF THE ASSESSEE AGAIN IN OTHER SUBSEQUENT YEARS. ACCORDINGLY HE HELD THAT THE ACTION OF THE AO HAS TO BE CONSIDERED AS TA KEN ON MERE CHANGE OF OPINION ONLY. 10. ON A COMBINED READING OF T HE DISCUSSIONS MADE BY THE LD CIT(A) ON LEGAL ISSUE AND ALSO ON MERITS , WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN HOLDING THAT THE ASSESSING OFFICER HAS PROCEEDED TO EXAM INE THE ELIGIBILITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S 80IB OF THE ACT FOR THE TWO YEARS UNDER CONSIDERATION MERELY ON CHANGE OF OPINION . FURTHER, THE VARIOUS JUDICIAL DECISION RELIED UPON BY LD CIT(A) WOULD SHOW THAT, AFTER HAVING ACCEPTED THAT THE AS SESSEE IS A SMALL SCALE INDUSTRY FOR A GOOD NUMBER OF EARLIER YEARS, IT IS NOT OPEN FOR THE AO TO CHANGE HIS VIEW , THAT TOO ONLY FOR TWO YEARS UNDER CONSIDERATION. ACCORDINGLY, WE UPHOLD THE ORDERS PASSED BY LD CIT(A) FOR BOTH THE YEARS UNDER CONSIDERATI ON. 11. BOTH THE PARTIES ARGUED ON THE ISSUE RELATING TO REOPENING OF THE ASSESSMENTS WAS MADE ON THE BASIS OF AUDIT OBJECTIONS. WE DO NOT FIND IT NECESSARY TO DISCUSS ABOUT THE SAME IN VIEW OF OUR DECISION STATED ABOVE. ITA NO. 1363/ MUM/2011 AND 7754/M/2011 11 12 . IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 9TH OCT , 2015. 9TH OCT , 2015 S D SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 9TH OCT , 2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY OR DER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI