ACIT, Circle-14(1), Kolkata, Kolkata V. M/s Microsec Technologies Limited, Kolkata

ITA 797/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6509 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIJUSH MUKHERJEE
• Assessee Lawyers: A K TULSIYAN; SHIKHA AGA RWAL ACA
• Keywords: Rule of consistency
• Section: 143(3); 143(1); 250; 131; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA C BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER) I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), KOLKATA..........APPELLANT VS. M/S. MICROSEC TECHNOLOGIES LIMITED...RESPONDENT (NEW NAME: INNOGROW TECHNOLOGIES LIMITED) INNOVATION TOWER PREMISES NO. 16-315 PLOT NO. DH 6/32 ACTION AREA -1D NEW TOWN, RAJARHAT KOLKATA 700 156 [PAN : AADCM 4151 G] APPEARANCES BY: SHRI A.K. TULSIYAN, FCA & MS. SHIKHA AGARWAL, ACA, APPEARED ON BEHALF OF THE ASSESSEE. SHRI PIJUSH MUKHERJEE, ADDL. CIT, SR. D/R APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : JULY 23 RD , 2019 DATE OF PRONOUNCING THE ORDER : JULY 31 ST , 2019 ORDER PER J. SUDHAKAR REDDY, AM :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 2, KOLKATA, (HEREINAFTER THE LD. CIT(A)), DT. 03/02/2017, PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND DATA PROCESSING. IT FILED ITS ORIGINAL RETURN OF INCOME ELECTRONICALLY ON 13/10/2010 DECLARING TOTAL INCOME OF RS.16,00,877/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT, AND LATER SELECTED FOR SCRUTINY THROUGH CASS. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT, DETERMINING THE TOTAL INCOME OF THE COMPANY AT RS.4,32,69,760/- INTERALIA, DISALLOWING THE CLAIM OF DEDUCTION MADE BY THE ASSESEE U/S 80-IC OF THE ACT, OF RS.4,16,68,879/-. THE GROUNDS ON WHICH THE DEDUCTION WAS DISALLOWED HAVE BEEN SUMMARIZED BY THE ASSESSING OFFICER AT PAGE 15 OF HIS ORDER WHICH IS EXTRACTED FOR READY REFERENCE:- 2 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED ON SUMMING UP THE ABOVE DISCUSSIONS, THE FOLLOWING POINTS ARE REITERATED: 1. THE ASSESSEE IS AN UNREGISTERED UNIT USING THE FACILITIES OF 'INCUBATION SERVICE' OF STPI, DEHRADUN WHICH IS NOT ELIGIBLE TO GET DEDUCTION U/S.80IC OF THE I.T. ACT, 1961. 2. THE ASSESSEE COMPANY STARTED USING THE INCUBATION FACILITY SERVICE FIRST DURING THE F.YR.2003-04. HENCE ALLOWABILITY OF DEDUCTION EVEN AT A LOWER RATE OF 30% OF THE PROFIT ([PROVISIONS OF SECTION 80IC(3) OF THE ACT] DOES NOT ARISE SINCE THE ASSESSEE COMPANY DOES NOT SATISFY THE ELIGIBILITY CONDITIONS FOR DEDUCTION AS DEFINED IN SUB-SECTION (1) OF SECTION 80IC OF THE ACT AS ELABORATELY DISCUSSED IN THE FOREGOING PARAGRAPHS OF THIS ORDER. IN VIEW OF THE DISCUSSIONS MADE IN THE ABOVE PARAGRAPHS THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE COMPANY U/S. 80IC OF THE I.T. ACT TO THE TUNE OF RS.4,16,68,879/- IS DISALLOWED. PENALTY PROCEEDINGS U/S.271(1) (C) OF THE I.T. ACT IS INITIATED FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. 2.1. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY HELD THAT THE ASSESSING OFFICER WAS WRONG IN DENYING DEDUCTION U/S 80IC OF THE ACT, TO THE ASSESSEE, FOR THE REASONS MENTIONED IN PAGES 13 TO 16 OF HIS ORDER. HE DELETED THE DISALLOWANCE AND ALLOWED THE APPEAL OF THE ASSESSEE. 3. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING EFFECTIVE GROUNDS:- 1) WHETHER ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF RS.4,16,68,879/- ON THE ENTIRE DEDUCTION CLAIMED BY THE ASSESSEE COMPANY U/S 80IC OF THE I.T. ACT, 1961. 2) WHETHER ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE ASSESSEE DID NOT FULFIL THE CONDITIONS TO CLAIM THE DEDUCTION U/S 80IC OF THE I.T. ACT, 1961. 4. THE LD. D/R, MR. PIJUSH MUKHERJEE, SUBMITTED THAT THE ASSESSEE HAD HIRED 3 (THREE) INCUBATION SEATS AT THE STPI, DEHRADUN, AS IS EVIDENT FROM THE COPY OF THE AGREEMENT PRODUCED BY IT. HE SUBMITTED THAT FROM THE SALARY DETAILS IT IS CLEAR, THAT ALMOST ALL THE EMPLOYEES WERE POSTED OUTSIDE DEHRADUN, UTTARANCHAL I.E., THE PLACE WHERE THE UNIT IS CLAIMED TO HAVE BEEN RUN FROM AND THAT MOST OF THE ADMINISTRATIVE EXPENSES WERE INCURRED FROM THE KOLKATA OFFICE. HE CONTENDED THAT PROVISIONS OF SECTION 80IC OF THE ACT, APPLIES TO ASSESSEES WHICH HAVE UNDERTAKINGS IN SPECIAL CATEGORY STATES AND IN THIS CASE, IT WAS UTTARANCHAL AND THE DETAILS SUGGEST THAT THE WORKPLACE WAS OTHER THAN IN THE STATE OF UTTARANCHAL. HE ARGUED THAT THE ASSESSEE IS NOT A REGISTERED UNIT WITH 3 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED STPI AND HAD JUST USED INCUBATIONS FACILITY AND HENCE, THE ASSESSEE DOES NOT SATISFY THE CONDITIONS LAID DOWN FOR GRANT OF DEDUCTION U/S 80IC OF THE ACT. HE VEHEMENTLY CONTENDED THAT PAYMENT OF SERVICE TAX IS NOT SUFFICIENT PROOF THAT THE ASSESSEE HAS RUN BUSINESS FROM THAT LOCATION. HE POINTED OUT THAT DURING THE COURSE OF SURVEY U/S 131 OF THE ACT, THE AUTHORITIES FOUND THAT THE UNIT WAS CLOSED. HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WAS IN ERROR IN DIRECTING GRANT OF DEDUCTION U/S 80-IC OF THE ACT. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, OPPOSED THESE CONTENTIONS AND SUBMITTED THAT THE SURVEY IN QUESTION U/S 131 OF THE ACT, AS IS EVIDENT FROM PARA 13 OF THE LD. CIT(A)S ORDER WAS CONDUCTED ON 12/03/2013 AND WHEREAS THE ASSESSEE COMPANY WAS ALLOTTED INCUBATIONS FACILITY AT THE SITE OF STPI, DEHRADUN, FOR DIFFERENT PERIODS I.E., 15 TH JULY, 2003 TO 31 ST JULY, 2005 AND FROM 1 ST OCTOBER, 2008 TO 28 TH FEBRUARY, 2013. THUS, ON 13 TH MARCH, 2013, THE ASSESSEE COULD NOT HAVE HAD ANY CONTROL OVER THE PREMISES. HE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE IS IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND DATA PROCESSING AND THAT IT HAD AGREEMENTS WITH STPI, DEHRADUN. HE SUBMITTED THAT SOME OF THE EMPLOYEES WERE POSTED AT THE CLIENTS PLACES OF WORK WHICH WAS IMPERATIVE FOR KNOWING THE EXACT REQUIREMENTS OF THE SAID CLIENTS, SO AS TO PROVIDE INFORMATION/SERVICES AND SUPPORT ON REAL TIME AND ON REQUIREMENT BASIS. HE TOOK THIS BENCH THROUGH THE FINDINGS OF THE LD. CIT(A) IN DETAIL AND RELIED ON THE SAME. HE SUBMITTED THAT THERE IS NO SPECIFIC REQUIREMENTS FOR REGISTRATION WITH STPI FOR, NON- EXPORT ORIENTED DOMESTIC UNIT. HE SPECIFICALLY POINTED OUT THAT THE ASSESSING OFFICER HAS ALLOWED THE CLAIM OF DEDUCTIONS OF THE ASSESSEE U/S 80IC OF THE ACT, FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13 ON THE SAME FACTS AND CIRCUMSTANCES. HE POINTED OUT THAT FOR THE ASSESSMENT YEAR 2012-13 ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT. HE RELIED ON A NUMBER OF CASE-LAW FOR THE PROPOSITION THAT PRINCIPLES OF CONSISTENCY IS APPLICABLE TO THE FACTS OF HIS CASE. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PERUSAL OF THE PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE LAW CITED, WE HOLD AS FOLLOWS:- 7. THE LD. CIT(A) HAS FROM PAGE 14 ONWARDS HELD AS FOLLOWS:- 4 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED I FIND THAT THE DURING THE YEAR THE APPELLANT HAD STARTED A NEW UNIT AT SAID SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) AT IT PARK, 2, SURVEY CHOWK, DEHRADUN-248001 IN THE STATE OF UTTARAKHAND. THE APPELLANT STARTED OPERATION FROM ITS SAID STPI DEHRADUN OFFICE TO PROVIDE INFORMATION TECHNOLOGIES AND INFORMATION TECHNOLOGIES ENABLED SERVICES. I FIND THAT THE MOST OF THE EMPLOYEES WERE POSTED AT THE CLIENTS' PLACE OF WORK FOR IMPERATIVE, INTER-ALIA TO DETERMINE SPECIFIC/EXACT REQUIREMENTS OF SAID CLIENTS AND TO PROVIDE INFORMATION, SERVICES AND SUPPORT AT REAL TIME AND ON REQUIREMENT BASIS. THE MONTH WISE STATEMENT, PAYMENT FOR SALARY, ALLOWANCES AND TRAVELLING ETC. OF EMPLOYEES OF APPELLANT EMPLOYED AT STPI AND DEPUTED TO SAID COMPANIES (SUMANGAL AND ALPINE) FOR GENERATING CLIENT SPECIFIC REPORTS BASED ON ANALYSIS OF MARKET DATA WERE FILED. THE INCUBATION FACILITIES HIRED BY APPELLANT FROM STPI WERE ON 'INCLUSIVE BASES. THESE FACT ARE EVIDENT, INTER-ALIA FROM SECOND AND THIRD RECITAL CLAUSE AND OPERATIVE CLAUSES L(B) AND 2 OF THE AGREEMENT WITH STPI. HENCE, NO ELECTRICITY COST WAS SEPARATELY PAYABLE/ PAID TO STPI FOR USE OF THEIR INCUBATION FACILITY. THE NATURE OF WORK OF INFORMATION TECHNOLOGIES AND INFORMATION TECHNOLOGIES ENABLED SERVICES (IT & ITES) INVOLVES DAY TO DAY INTERACTION WITH CLIENT/S TO UNDERSTAND THEIR REQUIREMENT, DETERMINE ITS EXACT NATURE AND PROVIDE IMMEDIATE/ REAL- TIME REQUISITE INPUTS/INFORMATION, UPGRADATION OR MODIFICATION TO GIVE BEST POSSIBLE RESULTS (ANALYSIS OF WORLDWIDE MARKETS, VARIOUS SECTORS, COMMODITIES, COMPANIES, SECURITIES AND FINANCIAL INSTRUMENTS). HENCE, CONCERNED EMPLOYEES HAD NECESSARILY TO BE POSTED AT CLIENT'S PLACE OF WORK SITUATED OUTSIDE UTTARANCHAL. THE SERVICES INCLUDED, TECHNICAL & ANALYTICAL ASSISTANCE TO ANALYZE WORLDWIDE DATA OF VARIOUS MARKETS, SECTORS, COMMODITIES, COMPANIES, SECURITIES AND FINANCIAL INSTRUMENTS INCLUDING DAY TO DAY INTERACTION WITH CLIENTS. BY PROVIDING THESE INFORMATION, SERVICES AND SUPPORT, OUR CLIENTS HAVE ALMOST REAL TIME AND NEED BASED INFORMATION AS PER THEIR SPECIFIC REQUIREMENT. THE SERVICES ALSO INCLUDED IMPROVING OVERALL OPERATIONAL, ANALYTICAL AND TECHNICAL COMPETENCIES OF THE CLIENT 'SUMANGAL' AND 'ALPINE' FOR BEST POSSIBLE- END RESULTS AND COMMERCIAL EXPLOITATION. APPELLANT ALSO UTILIZED THEIR SERVICES TO GIVE 'DEMO' OF ITS INFORMATION TECHNOLOGIES AND INFORMATION TECHNOLOGIES ENABLED SERVICES (IT & ITES) TO POTENTIAL NEW CLIENTS AS WELL. I FIND THAT THE BALANCE SHEET FROM YEAR 31.03.2003 TO 31.03.2010 CLEARLY SHOWS THAT THE THOUGH NON-EXPORT ORIENTED UNITS CAN ALSO AVAIL OF THEIR FACILITIES. REGISTRATION WITH STPI IS COMPULSORY FOR EXPORT ORIENTED UNITS ONLY AND NOT FOR OTHERS. THE AR SUBMITTED FAQ COMPUTER PRINTOUT OBTAINED FROM STPI SITE (MARKED PAGE A-45 TO A-50 OF THE PAPER BOOK) AND REPRODUCED BELOW FOR CONVENIENCE. Q. IS THE REGISTRATION UNDER STP SCHEME MANDATORY? O NO. ALTHOUGH REGISTRATION UNDER STP SCHEME IS OPTIONAL, THE SAME IS RECOMMENDED FOR AVAILING VARIOUS BENEFITS OFFERED BY THE SCHEME. SINCE REGISTRATION WAS NOT REQUIRED FOR A NON-EXPORT ORIENTED DOMESTIC UNIT, QUESTION OF COMPULSORY SUBMISSION OF REPORTS TO STPI DOES NOT ARISE. THERE IS 5 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED NO DOCUMENT WHICH SUGGEST THAT THE REPORT WAS ASKED FROM THE APPELLATE AND IT WAS NOT SUBMITTED AND BASED UPON THAT ANY ACTION WAS TAKEN ON THE APPELLATE BY THE STPI IN THIS REGARDS. I FIND THAT IT IS NOT A CASE OF RESTRUCTURE OF EXISTING BUSINESS OF THE APPELLANT. RESTRUCTURING BUSINESS, NECESSARILY INVOLVES TRANSFER OF ASSETS OF AN EXISTING BUSINESS/UNIT TO A NEW ONE ACCOUNTS AND ALLIED REPORTS CLEARLY SHOW NOTHING LIKE THIS HAS HAPPENED IN THIS CASE. EVEN THE STATEMENT OF MR. GANESH NAYAK CLEARLY INDICATES THAT A NEW UNIT STARTED BY THE APPELLANT FOR A SPECIFIC PURPOSE, I.E. TO PROVIDE INFORMATION TECHNOLOGIES AND INFORMATION TECHNOLOGIES ENABLED SERVICES (IT & ITES) BY HIRING INCUBATION FACILITIES AT STPI, DEHRADUN. IT IS NOT CASE WHERE THE APPELLATE INSTALLED A PLANT AND MACHINERY, BUT IT A CASE WHERE ALL THE FACILITIES WERE PROVIDED BY THE STPI. I FIND THAT THE AGREEMENT BETWEEN MICROSEC TECHNOLOGIES LIMITED AND STPI DEHRADUN CLEARLY SAYS THAT THE STPI IS PROVIDING THE USE OF SPACE ALONG WITH THE COMMON USER FACILITIES I.E. FURNISHED AREA (INCLUDING PAINTING, FLOORING, BLINDS, CEILING, INTERNAL ELECTRICAL FITTINGS LIGHTINGS, ALUMINIUM WORK ETC.), AIR CONDITIONING, MODULAR FURNITURE, CHAIRS, LAN CABLING EPABX WIRING, DC POWER BACK UP, HOUSEKEEPING AND OTHER SERVICES TO INCUBATION UNIT AT 2 SURVEY CHOWK, DEHRADUN. THEREFORE, APPELLANT WAS NOT REQUIRED TO INCUR ANY EXPENDITURE FOR INFRASTRUCTURE RELATED MATTERS. THEREFORE, ALL THE COST RELATING TO INFRASTRUCTURE WAS INCLUDED IN THE SERVICE CHARGES PAID TO STPI. EVEN THE WORK STATION AT STPI FACILITY, DEHRADUN WAS PROVIDED BY STPI ITSELF. THE SAME IS MENTIONED IN THE MONTHLY INVOICE ISSUED BY THE AUTHORITY OF THE APPELLANT. THE APPELLANT HAS ALSO MADE FRESH APPLICATION TO THE SOFTWARE TECHNOLOGY PARK OF INDIA FOR THE INCUBATION FACILITY ON 22.09.2008 ALONG WITH THE FEES REQUIRED FOR THE SAID FACILITY. I FIND THAT ALL THESE DOCUMENTS ARE PART OF PAPER BOOK FILED DURING THE APPELLATE PROCEEDING. 8. THE LD. D/R COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE LD. CIT(A). THE LD. CIT(A) IN THE ABOVE EXTRACTED ORDER GAVE REASONS AND BASIS FOR COMING TO A CONCLUSIONS AS TO WHY THE ASSESSING OFFICER WAS WRONG IN HIS FINDINGS. EACH AND EVERY POINT HAS BEEN DEALT WITH. EACH POINT RAISED BY THE ASSESSING OFFICER WERE REPLIED TO BY THE ASSESSEE AND AFTER CONSIDERING THESE REPLIES THE LD. CIT(A) HAS GRANTED RELIEF BY EXAMINING THE FACTS. WE FIND NO INFIRMITY IN THE SAME. AS WE ARE UPHOLDING THE ORDER OF THE LD. CIT(A), WE DO NOT GIVE SEPARATE REASONS. WHEN THE REASONS OF THE LD. CIT(A) ARE APPROVED BY THE ITAT, NO SEPARATE REASONS NEED BE GIVEN AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF K.Y. PILLIAH & SONS [1967] 63 ITR 411 (SC) , WHEREIN IT WAS HELD AS FOLLOWS:- THE TRIBUNAL IS THE FINAL FACT-FINDING AUTHORITY AND NORMALLY IT SHOULD RECORD ITS CONCLUSION ON EVERY DISPUTED QUESTION RAISED BEFORE IT, SETTING OUT ITS REASONS IN SUPPORT OF ITS CONCLUSION. BUT, IN FAILING TO RECORD REASONS, 6 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED WHEN THE TRIBUNAL FULLY AGREED WITH THE VIEW EXPRESSED BY THE AAC AND HAS NO OTHER GROUND TO RECORD IN SUPPORT OF ITS CONCLUSION, IT DOES NOT ACT ILLEGALLY OR IRREGULARLY, MERELY BECAUSE IT DOES NOT REPEAT THE GROUND OF THE AAC ON WHICH THE DECISION WAS GIVEN AGAINST THE ASSESSEES OR THE DEPARTMENT. THE CRITICISM MADE BY THE HIGH COURT THAT THE TRIBUNAL HAD 'FAILED TO PERFORM ITS DUTY IN MERELY AFFIRMING THE CONCLUSION OF THE AAC', WAS APPARENTLY UNMERITED. CONSEQUENTLY, INSTANT APPEAL WAS TO BE ALLOWED. 8.1. WE ALSO FIND THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IC OF THE ACT, FOR THE ASSESSMENT YEAR 2011-12 AND 2012-13. FOR THE ASSESSMENT YEAR 2011-12, THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT AND THE CLAIM WAS NOT DISTURBED FOR THE ASSESSMENT YEAR 2012-13 IN SCRUTINY PROCEEDINGS U/S 143(3) WHEREIN THE ASSESSING OFFICER ALLOWED THIS CLAIM. THE FACTS ARE SIMILAR. THUS, ON PRINCIPLES OF CONSISTENCY, THIS CLAIM OF THE ASSESSEE CANNOT BE DISTURBED. FOR THIS PROPOSITION, WE REFER TO THE FOLLOWING CASE-LAW:- 8.2. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MACBROUT ENGINEERING PVT. LTD. [2014] 52 TAXMANN.COM 219 (BOMBAY), HELD AS FOLLOWS:- SECTION 80-IB OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS - PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS (MANUFACTURE) - ASSESSMENT YEARS 2006-07 TO 2009-10 - ASSESSEE-COMPANY WAS ENGAGED IN MANUFACTURING ACTIVITY AND CLAIMED DEDUCTION UNDER SECTION 80-IB - FOR EARLIER YEARS, IT WAS CONFIRMED THAT ACTIVITY UNDERTAKEN BY ASSESSEE QUALIFIED TO BE A MANUFACTURING ACTIVITY AND DEDUCTION WAS ALLOWED - WHETHER TRIBUNAL, APPLYING PRINCIPLE OF CONSISTENCY IN CURRENT YEAR, WAS JUSTIFIED IN ALLOWING DEDUCTION UNDER SECTION 80-IB - HELD, YES 8.3. THE HONBLE SUPREME COURT IN THE CASE OF RADHASOAMI SATSANG VS. CIT [1992] 193 ITR 321 (SC), REFERRING TO THE CASE OF HOYSTEAD V. COMMISSIONER OF TAXATION [1926] AC 155 (PC), HELD AS FOLLOWS:- PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATIONS BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF THE LAW OF THE CASE, OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHER OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERTAIN CIRCUMSTANCES. IF THIS WERE PERMITTED LITIGATION WOULD HAVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT IS A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED, AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINCIPLE - NAMELY, THAT OF SETTING TO REST RIGHTS OF LITIGANTS, APPLIES TO THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUMED BY THE PLAINTIFF AND TRAVERSABLE BY THE DEFENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT IS BOUND BY THE JUDGMENT, ALTHOUGH IT MAY BE TRUE ENOUGH THAT 7 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED SUBSEQUENT LIGHT OR INGENUITY MIGHT SUGGEST SOME TRAVERSE WHICH HAD NOT BEEN TAKEN. THESE OBSERVATIONS WERE MADE IN A CASE WHERE TAXATION WAS IN ISSUE. 12. THIS COURT IN PARASHURAM POTTERY WORKS CO. LTD. V. ITO [1977] 106 ITR 1 STATED: '. . . AT THE SAME TIME, WE HAVE TO BEAR IN MIND THAT THE POLICY OF LAW IS THAT THERE MUST BE A POINT OF FINALITY IN ALL LEGAL PROCEEDINGS, THAT STALE ISSUES 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 IT MUST IN OTHER SPHERES OF HUMAN ACTIVITY....' (P. 10) ASSESSMENTS ARE CERTAINLY QUASI-JUDICIAL AND THESE OBSERVATIONS EQUALLY APPLY. 13. WE ARE AWARE OF THE FACT THAT STRICTLY SPEAKING RES JUDICATA DOES NOT APPLY TO INCOME-TAX PROCEEDINGS. AGAIN, EACH ASSESSMENT YEAR BEING A UNIT, WHAT IS DECIDED IN ONE YEAR MAY NOT APPLY IN THE FOLLOWING YEAR BUT WHERE A FUNDAMENTAL ASPECT PERMEATING THROUGH THE DIFFERENT ASSESSMENT YEARS HAS BEEN FOUND AS A FACT ONE WAY OR THE OTHER AND PARTIES HAVE ALLOWED THAT POSITION TO BE SUSTAINED BY NOT CHALLENGING THE ORDER, IT WOULD NOT BE AT ALL APPROPRIATE TO ALLOW THE POSITION TO BE CHANGED IN A SUBSEQUENT YEAR. 14. ON THESE REASONINGS IN THE ABSENCE OF ANY MATERIAL CHANGE JUSTIFYING THE REVENUE TO TAKE A DIFFERENT VIEW OF THE MATTERAND IF THERE WAS NO CHANGE IT WAS IN SUPPORT OF THE ASSESSEEWE DO NOT THINK THE QUESTION SHOULD HAVE BEEN REOPENED AND CONTRARY TO WHAT HAD BEEN DECIDED BY THE COMMISSIONER IN THE EARLIER PROCEEDINGS, A DIFFERENT AND CONTRADICTORY STAND SHOULD HAVE BEEN TAKEN. WE ARE, THEREFORE, OF THE VIEW THAT THESE APPEALS SHOULD BE ALLOWED AND THE QUESTION SHOULD BE ANSWERED IN THE AFFIRMATIVE, NAMELY, THAT THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE INCOME DERIVED BY THE RADHASOAMI SATSANG WAS ENTITLED TO EXEMPTION UNDER SECTIONS 11 AND 12.' 9. APPLYING THE PROPOSITIONS OF LAW LAID DOWN IN THESE CASE-LAW TO THE FACTS OF THE CASE ON HAND, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THIS APPEAL OF THE REVENUE. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 31 ST DAY OF JULY, 2019. SD/- SD/- [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31.07.2019 {SC SPS} 8 I.T.A. NO. 797/KOL/2017 ASSESSMENT YEAR: 2010-11 M/S. MICROSEC TECHNOLOGIES LIMITED COPY OF THE ORDER FORWARDED TO: 1. M/S. MICROSEC TECHNOLOGIES LIMITED (NEW NAME: INNOGROW TECHNOLOGIES LIMITED) INNOVATION TOWER PREMISES NO. 16-315 PLOT NO. DH 6/32 ACTION AREA -1D NEW TOWN, RAJARHAT KOLKATA 700 156 2. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), KOLKATA 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, KOLKATA BENCHES