ACIT 8(3)(OSD), MUMBAI V. LEXI PENS INDIA, MUMBAI

ITA 873/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56021 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: M SUBRAMANIAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DU RGA RAO, J.M. ITA NO. 873/MUM/2010 ASSESSMENT YEAR: 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX-8(3)(OSD), APPELLANT R.NO. 204, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 20. VS. M/S LEXI PENS INDIA PVT. LTD., RESPONDENT B-33, 6 TH FLOOR, LEXI CENTRE OFF LINK ROAD, ANDHERI (W), MUMBAI 400 053. APPELLANT BY : MR. PAVAN VED RESPONDENT BY : MR. M. SUBRAMANIAN DATE OF HEARING : 03/11/2011 DATE OF PRONOUNCEMENT: 18/11/2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-18, MUMBAI, PASSED ON 01/12/2009 FOR THE ASS ESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS AP PEAL IS AGAINST THE ACTION OF THE CIT(A) IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80 IB. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING BALL POINT PENS AND R EFILLS. THE AO DISALLOWED DEDUCTION U/S 80IB ON THE GROUND THAT SI MILAR DISALLOWANCE WAS MADE IN THE EARLIER ASSESSMENT YEA RS 2004-05 & 2005-06. THE DISALLOWANCE WAS MADE IN THE EARLIER Y EARS ON THE ITA NO. 873/M/2010 M/S LEXI PENS INDIA LTD. 2 GROUND THAT THE ASSESSEE TRANSFERRED OLD MACHINERY FROM BOMBAY UNIT TO NEW UNIT AT DAMAN ON WHICH 80IB DEDUCTION IS CLA IMED AND THE VALUE OF SUCH PLANT AND MACHINERY TRANSFERRED EXCEE D 20% OF THE TOTAL VALUE OF PLANT AND MACHINERY INSTALLED AT DAMAN. ON APPEAL, THE CIT(A) HELD THAT THE MACHINERY TRANSFERRED FROM MUM BAI IS BELOW THE THRESHOLD LIMIT OF 20% PRESCRIBED U/S 80IB, THE DED UCTION U/S 80IB IS ALLOWABLE TO THE ASSESSEE. AGGRIEVED, THE REVENUE I S IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED REPRESENTATIVES OF BOTH T HE PARTIES CONCEDED THAT THE ISSUE UNDER CONSIDERATION IS COVE RED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BEN CH IN ASSESSEES OWN CASE FOR AY 2005-06 IN ITA NO. 4883/MUM/2008 VI DE ORDER DATED 29 TH OCTOBER, 2008. WE REPRODUCE THE FACTS AND FINDINGS OF THE COORDINATE BENCH IN AY 2005-06 AS UNDER:- 5. AS REGARDS THE CLAIM OF THE ASSESSING OFFICER T HAT THE VALUE OF PLANT AND MACHINERY TRANSFERRED WAS MORE THAN 20%, THE ASSESSEE CONTENDED BEFORE THE LEARNED CIT (A) THAT THE VALUE OF PLANT AND MACHINERY TRANSFERRED FROM MUMBAI TO DAMAN, DURING THE FINANCIAL YEAR 2004-2005, WORKS OUT TO 14.44% (MUCH LESS THAN THE SPECIFIED LIMIT OF 20%) OF THE TOTAL VALUE OF THE MACHINERY O R PLANT USED IN THE BUSINESS AT DAMAN. IT WAS ALSO CONTENDED THAT WRONG FIGURES WERE TAKEN INTO CONSIDERATION BY THE ASSESSING OFFICER W HICH RESULTED IN MISLEADING FIGURE OF THE PERCENTAGE OF PLANT AND MA CHINERY TRANSFERRED. IT WAS ALSO CONTENDED THAT IN THE IMME DIATELY PRECEDING EAR IDENTICAL ISSUE WAS CONSIDERED BY THE LEARNED C IT (A) WHEREIN :RREOUS FINDINGS OF THE ASSESSING OFFICER WERE TAK EN NOTE OF AND RECTIFIED. 6. HAVING REGARD TO THE FACTUAL MATRIX, THE LEARNED CIT (A) O1FVED THAT THE PLANT AND MACHINERY TRANSFERRED WORKS-OUT TO LE SS THE SPECIFIED LIMIT AND THUS THE ASSESSEE IS ENTITLED TO CLAIM DE DUCTION UNDER SECTION 801B OF THE ACT. HE FURTHER OBSERVED THAT SO LONG A S AN AUDIT REPORT IS FURNISHED BEFORE COMPLETION OF THE ASSESSMENT PROCE EDINGS IT WOULD BE SUFFICIENT COMPLIANCE TO ENABLE THE ASSESSEE TO CLA IM DEDUCTION UNDER SECTION 801B OF THE ACT. 7. AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), R EVENUE IS IN APPEAL BEFORE US. LEARNED DEPARTMENTAL REPRESENTATIVE RELI ED UPON THE ORDER ITA NO. 873/M/2010 M/S LEXI PENS INDIA LTD. 3 PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE INTENTION OF THE LEGISLATURE IS DEFEATED IF AN ASSESSEE IS PERMITTED TO FURNISH THE AUDIT REPORT BEYOND THE DATE PRESCRIBED FOR FILING THE RE TURN OF INCOME. IT WAS SUBMITTED THAT THE CORRECTNESS OF THE CLAIM CAN BE CROSS-VERIFIED ONLY WITH THE AID OF THE AUDIT REPORT AND IF AN ASS ESSEE FILES SUCH REPORT AT THE FAG END OF THE ASSESSMENT PROCEEDINGS , THE PURPOSE OF CROSS-VERIFICATION CANNOT BE ACHIEVED AND THUS RULE 18BBB AND PROCEDURE PRESCRIBED THEREIN HAS TO BE MANDATORILY FOLLOWED AND, IN THE ABSENCE OF FURNISHING AUDIT REPORT, BEFORE THE SPECIFIED DATE, ASSESSEE SHOULD NOT BE PERMITTED TO CLAIM DEDUCTION UNDER SECTION 801B OF THE ACT. 8. ON THE OTHER HAND LEARNED COUNSEL RELIED UPON TH E FOLLOWING DECISIONS IN SUPPORT OF HIS CONTENTION THAT FILING OF AUDIT REPORT ALONG WITH RETURN OF INCOME IS MERELY DIRECTORY AND SO L ONG AS ASSESSEE COMPLIES WITH THE MANDATORY REQUIREMENT OF FILING/F URNISHING AUDIT REPORT BEFORE COMPLETION OF THE ASSESSMENT PROC4L G S AND OFFERS SATISFACTORY EXPLANATION FOR FAILURE TO SUBMIT REPO RT IN TIME, SUCH REPORT CAN BE TAKEN INTO CONSIDERATION. 1. CIT VS. SHIVANAND ELECTRONICS (1994) 209 ITR 63 (BORN.) 2. CIT VS. CONTIMETERS ELECTRICALS P. LTD. 317 ITR 249 (DEL.) 9. IT MAY BE NOTICED THAT THE RATIO OF THE PLANT AN D MACHINERY TRANSFERRED WAS NOT SPECIFICALLY CHALLENGED BY THE REVENUE BEFORE US AND NO ARGUMENTS WERE ADVANCED IN THAT REGARD. 10 HAVING REGARD TO THE RIVAL SUBMISSIONS WE ARE OF THE VIEW THAT THE ORDER PASSED BY THE LEARNED CIT(A) DOES NOT CAL L FOR INTERFERENCE, PARTICULARLY IN THE LIGHT OF DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHIVANAND ELECTRONICS, 209 ITR 63 (BOM) WHEREIN THE HONBLE COURT OBSERVED THAT SO LONG AS THERE IS REASONABLE EXPLANATION FOR FURNISH ING A BELATED AUDIT REPORT, AN ASSESSEE CAN BE PERMITTED TO FILE THE REPORT BEFORE COMPLETION OF THE ASSESSMENT PROCEEDINGS. AD MITTEDLY, IN THE INSTANT CASE, THE ASSESSEE HAS TENDERED AN EXPL ANATION WHICH IS NOT FOUND TO BE INCORRECT. CONSIDERING THE CIRCUMSTANCES, WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 5. SINCE THE ISSUE UNDER CONSIDERATION IS IDENTICAL TO THAT OF AY 2005-06, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH IN THAT YEAR, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) IN ALLOWING THE ASSESSEES CLAIM OF DEDUCTION U/S 80IB AND THE ORDER OF CIT(A) IS ITA NO. 873/M/2010 M/S LEXI PENS INDIA LTD. 4 HEREBY UPHELD. ACCORDINGLY, THE GROUND RAISED BY TH E REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF NOVEMBER, 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 18 TH NOVEMBER, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.