ACIT, Bangalore V. M/s Endeka Ceramics Pvt. Ltd., Bangalore

ITA 886/BANG/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68321 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 28-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P CHANDRASHEKAR DIT
• Assessee Lawyers: DR C P RAMASWAMI
• Section: 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.886/BANG/2009 ASSESSMENT YEAR : 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 11(3), BANGALORE. VS. M/S. ENDEKA CERAMICS PVT. LTD., (FORMERLY JOHNSON MATHEY CERAMICS INDIA LTD.), 23/57, 4 TH CROSS, EAST END C MAIN ROAD, 9 TH BLOCK, JAYANAGAR, BANGALORE 560 069. PAN: AAACJ 4924C APPELLANT RESPONDENT APPELLANT BY : SHRI P. CHANDRASHEKAR, ADDL.DIT RESPONDENT BY : DR. C.P. RAMASWAMI, ADVOCATE DATE OF HEARING : 27.08.2013 DATE OF PRONOUNCEMENT : 30.08.2013 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER D ATED 25.06.2009 OF CIT(APPEALS)-I, BANGALORE RELATING TO ASSESSMENT YE AR 2005-06. ITA NO.886/BANG/2009 PAGE 2 OF 9 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS FOLLOWS:- 1. THE ORDER OF THE LEARNED CIT(A)-I IS OPPOSED TO LAW TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (A) ERRED IN ALLOWING THE ASSES SEES APPEAL AND IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION CLAIMED, U/S. 80IA, BY THE ASSESSEE. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN COMING TO THE CONCLUSION THAT THE FACTS PERTAINING TO THE EARLIER ASSESSMENT YEAR 2004-05 ARE IDENTICAL TO THE FACTS FOR THE CURRENT ASSESSMENT YEAR 2005-06 AND ON THIS GROUND ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06 B Y RELYING ON THE DECISION OF THE INCOME TAX APPELLATE TRIBUNAL F OR THE ASSESSMENT YEAR 2004-05. 4. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THE FACT THAT THE DECISION OF THE INCOME -TAX APPELLATE TRIBUNAL, FOR THE ASSESSMENT YEAR 2004-05, IN THE A SSESSEES CASE, RELIED ON BY THE COMMISSIONER OF INCOME-TAX(APPEALS ), HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPEAL HAS B EEN FILED U/S. 260A OF THE I.T. ACT, 1961. 5. THE COMMISSIONER OF INCOME-TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT, FOR THE ASSESSMENT YEAR 2 005-06 IT IS NOT THE CASE WHERE THE ASSESSING OFFICER HAS ALLOWED TH E ASSESSEES CLAIM FOR DEDUCTION, U/S. 80IA, AND THEREAFTER THE COMMISSIONER OF INCOME-TAX, HAS INVOKED HIS POWERS, U/S. 263, TO WITHDRAW THE DEDUCTION WRONGLY ALLOWED BY THE ASSESSING OFFICER. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE DETAILED REASONS RECORDED BY THE AS SESSING OFFICER IN THE SCRUTINY ASSESSMENT ORDER PASSED U/S . 143(3), WHILE DISALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U NDER SECTION 80IA OF THE I.T. ACT, 1961. 7. THE COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE CONSIDERED THAT IT IS WELL SETTLED PRINCIPLE OF LAW THAT THE ASSESSMENT ORDER FOR EACH ASSESSMENT YEAR IS SEPARA TE AND DISTINCT AND THAT THE DECISION ON ANY ISSUE FOR ONE ASSESSME NT YEAR WILL NOT OPERATE AS RES JUDICATA FOR ANY SUBSEQUENT YEAR . ITA NO.886/BANG/2009 PAGE 3 OF 9 8. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING IT IS PRAYED THAT THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) BE CANCELLED AND THAT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. THE ASSESSEE ESTABLISHED A MANUFACTURING UNIT IN SOOLAGIRI BLOCK OF DHARMAPURI DISTRICT, TAMIL NADU, FOR MANUFACTURE OF ZIRCONIUM SILICATE, COLOURS AND FRITS FOR APPLICATION IN TILES AND SANI TARY WARE INDUSTRIES. THE UNIT COMMENCED ITS MANUFACTURE IN AUGUST, 1995 RELE VANT FOR THE FIRST ASSESSMENT YEAR 1996-97. 4. FOR THE A.Y. 2005-06, THE ASSESSEE FILED ITS RET URN OF INCOME ON 29. 10.2005 DECLARING A TOTAL INCOME OF RS.8,43,29,703/ -, WHICH INCLUDED A CLAIM FOR DEDUCTION U/S.80-IA FOR A SUM OF RS.2,83, 72,567/-. THE ASSESSEE HAD BEEN CLAIMING THE DEDUCTION U/S.80-IA FROM THE A.Y. 2001-02 ONWARDS - I.E., THE YEAR IN WHICH THE ASSESSEE HAD MADE PROFI TS FROM THE MANUFACTURE OF THE ABOVE SAID UNDERTAKING. PRIOR TO A.Y. 2001-0 2, IT WAS INCURRING LOSS AND CONSEQUENTLY COULD NOT CLAIM ANY DEDUCTION U/S. 80-IA, THOUGH COMMENCEMENT OF MANUFACTURE WAS FROM AUGUST, 1995. 5. UP TO THE ASSESSMENT YEAR 2004-05, MOST OF THE A SSESSMENTS WERE COMPLETED UNDER SCRUTINY AND THE CLAIM OF THE APPEL LANT MADE U/S.80-IA WAS EXAMINED AND ALLOWED, HOLDING THE ASSESSEE COMP ANY AS AN ELIGIBLE UNDERTAKING IN TERMS OF SECTION 80-IA(2)(IV)(C) AS IT ORIGINALLY STOOD AT THE TIME WHEN THE ASSESSEE COMPANY STARTED ITS MANUFACT URING ACTIVITY IN AUGUST, 1995. HOWEVER, DURING THE COURSE OF ASSESSM ENT PROCEEDING FOR ITA NO.886/BANG/2009 PAGE 4 OF 9 THE A.Y. 2005-06, THE ASSESSING OFFICER QUESTIONED THE CLAIM MADE U/S.80- IA AND ULTIMATELY HELD THAT THE ASSESSEE COMPANY WA S NOT ELIGIBLE TO MAKE ANY CLAIM IN TERMS OF SECTION 80-IA. 6. THE PROVISIONS OF SUB-CLAUSE (C) OF CLAUSE (IV) OF SUBSECTION (2) OF SECTION 801A, AS IT STOOD ON 1-4-1996 RELEVANT FOR THE ASSESSMENT YEAR 1996-97 READ AS UNDER :- (C) IN THE CASE OF AN INDUSTRIAL UNDERTAKING LOCATE D IN SUCH INDUSTRIALLY BACKWARD DISTRICT AS THE CENTRAL GOVER NMENT MAY, HAVING REGARD TO THE PRESCRIBED GUIDELINES, BY NOTI FICATION IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BEHALF, IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COL D STORAGE PLANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGINNING ON T HE 1ST DAY OF OCTOBER, 1994 AND ENDING ON THE 31ST DAY OF MARCH, 1999; 7. THE ASSESSEE SUBMITTED BEFORE THE AO THAT IT SET UP ITS UNIT AFTER 1 DAY OF OCTOBER, 1994, I.E. IN AUGUST 1995, AND TILL THAT TIME THE CENTRAL GOVERNMENT DID NOT NOTIFY IN THE OFFICIAL GAZETTE SUCH INDUSTRIALLY BACKWARD DISTRICTS, IT WAS REASONABLY PRESUMED THA T THE ASSESSEE COMPANY WOULD BE ELIGIBLE TO CLAIM TAX HOLIDAY IN T ERMS OF SECTION 80IA(2) (IV)(C). ACCORDINGLY, THE CLAIM WAS MADE FOR DEDUCT ION U/S 80IA AND ALLOWED FOR ASST. YEARS 2000-01 ONWARDS, IN REGULAR SCRUTIN Y ASSESSMENTS. HOWEVER, THE GAZETTE NOTIFICATION WAS ISSUED AS LAT E AS IN OCTOBER 1997 VIDE NO. S.O.714(E) DATED 7-10- 1997, WITH RETROSPE CTIVE EFFECT FROM 1-10- 1994. FURTHER, THE INCOME TAX AMENDMENT ACT, 1998 A MENDED SECTION 80IA(2) (IV)(C) RETROSPECTIVELY WITH EFFECT FROM 1- 4-1998 TO READ AS ITA NO.886/BANG/2009 PAGE 5 OF 9 (C) IN THE CASE OF AN INDUSTRIAL UNDERTAKING LOCATE D IN SUCH INDUSTRIALLY BACKWARD DISTRICT AS THE CENTRAL GOVER NMENT MAY, HAVING REGARD TO THE PRESCRIBED GUIDELINES, BY NOTI FICATION IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BEHALF, AS AN IND USTRIALLY BACKWARD DISTRICT OF CATEGORY A OR AN INDUSTRIALLY BACKWARD DISTRICT OF CATEGORY B AND IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD STORAGE P LANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1ST DAY OF OCTOBER, 1994 AND ENDING ON THE 31ST DAY OF MARCH, 2000; 8. THE ASSESSEE FURTHER SUBMITTED THAT IT IS A MATT ER OF RECORD THAT DHARMAPURI DISTRICT EXCLUDING HOSUR BLOCK DID FALL WITHIN THE NOTIFIED INDUSTRIALLY BACKWARD AREAS IN TERMS OF SCHEDULE VI II READ WITH THE PROVISIONS OF SECTION 8OHH, THE PREDECESSOR SECTION OF SECTION 801A AND AS SUCH, THE MANUFACTURING UNIT OF THE ASSESSEE COM PANY WAS SET UP IN THAT CHAULGIRI BLOCK FALLING WITHIN DHARMAPURI DIST RICT. IT IS NOT IN HOSUR BLOCK OF DHARMAPURI DISTRICT. CONSEQUENTLY IT HAS B EEN AN ELIGIBLE UNIT IN TERMS OF SECTION 80IA, TO BEGIN WITH. THOUGH IN T HE RETROSPECTIVE NOTIFICATION, DHARMAPURI DISTRICT OF TAMIL NADU WAS NOT INCLUDED AS AN INDUSTRIALLY BACKWARD AREA, SUCH NOTIFICATION COULD BE MADE APPLICABLE PROSPECTIVELY AND NOT RETROSPECTIVELY. 9. THE ASSESSING OFFICER DID NOT AGREE WITH THE SUB MISSIONS OF THE MADE ON BEHALF OF THE ASSESSEE. HE HELD AS FOLLOWS :- 15. SUMMING UP BRIEFLY, THE ASSESSEE COMPANYS MA IN BASIS FOR TAKING THE DEDUCTION IS ITS ASSUMPTION THAT THE GOVERNMENT HAD PROMISED TO EXTEND THE BENEFIT OF DEDUCTION TO THE AREA WHERE IT WAS SET UP, AS PREVAILING EARLIER IN THE SCHEDUL E VIII READ WITH PROVISION OF S.8OHH. THE RIGHTEOUS INDIGNATION WITH WHICH THE ITA NO.886/BANG/2009 PAGE 6 OF 9 ASSESSEE REFERS TO THE PROMISSORY ESTOPPEL AND THE SO CALLED DENIAL OF BENEFIT AT A LATER DATE, FALL FLAT ON ITS OWN AC CORD AS EXPLAINED BELOW: S.NO. ACTIVITY DATE / AMOUNT 1. THE SETTING UP OF MANUFACTURING UNIT AUGUST 1995 2. OMISSION OF SCHEDULE VIII FROM IT. ACT. 1-4-1984 3. INTRODUCTION OF S. 801A(2)(IV)(C) W.E.F 1-4-1995 4. ISSUE OF NOTIFICATION OF BACKWARD DISTRICTS OCTOBER 1997 5. CLAIM OF DEDUCTION BY ASSESSEE IN THE PERIOD AY 1995-96 TO AY 1999-2000 NIL 6. FIRST YEAR OF DEDUCTION OF CLAIM AY 2000-01 THE CLAIMS OF THE ASSESSEE STARTED ONLY IN AY 20 00-2001, MUCH AFTER THE ACTUAL DISTRICTS ENTITLED FOR THE DE DUCTION WERE WELL KNOWN AND CLEARLY ESTABLISHED. THE ISSUE OF PROMIS SORY ESTOPPEL WOULD COME INTO PLAY (EVEN THOUGH AS SAID EARLIER, IT IS NOT JUST LIBERAL INTERPRETATION BUT CORRECT INTERPRETATION O F LAW WHICH SHOULD PREVAIL), AND CASE MAY BE MADE IN ASSESSEES FAVOUR, IN CASE THE ASSESSEE HAD STARTED CLAIMING THE DEDUCTIO N IMMEDIATELY ON INTRODUCTION OF THE PROVISION AND AFTER A CERTAI N PERIOD OF FAIT ACCOMPLI, ON THE INTRODUCTION OF THE NOTIFICATION, WITHDRAWS SUCH HITHERTO ENJOYED DEDUCTION. HOWEVER, IN THE CASE OF ASSESSEE COMPANY, AS TABULATED SUPRA, THE FIRST CLAIM ITSELF CAME THREE YEARS AFTER THE NOTIFICATION ON BACKWARD DISTRICTS. THIS CLEARLY SHOWS THAT IT IS ONLY WHEN THE COMPANY STARTED MAKI NG PROFITS AND THERE WAS AN ATTEMPT TO REDUCE THE TAX LIABILIT Y, THEY HIT UPON THIS CLAUSE. AND EVEN THOUGH KNOWING FULLY WELL THA T THEY ARE NOT ENTITLED TO, MADE CLAIMS BY EXTENDING TO THEMSELVES ON THEIR OWN ACCORD DEDUCTIONS AND PROVISION WHICH WERE NEVER TH ERE RIGHT FROM THE BEGINNING. 16. CAN DEDUCTION BE ALLOWED ON THE GROUNDS THAT IT WAS ALLOWED IN THE EARLIER YEARS? ITA NO.886/BANG/2009 PAGE 7 OF 9 16.1 AS REGARDS THE ALLOWANCE OF DEDUCTION THIS YE AR SIMPLY BECAUSE IT WAS ALLOWED IN THE EARLIER 4 YEARS IS LI KE ARGUING THAT SINCE YOU HAVE NOT DONE ANYTHING FOR 4 MISTAKES, YO U CAN AS WELL ALLOW THE 5 TH MISTAKE. AS EACH YEARS PROCEEDINGS IN INCOME TAX IS DIFFERENT AND INDEPENDENT, AND EACH DEDUCTION HA S TO BE SEEN IN THE LIGHT OF ITS OWN CODE OF ELIGIBLE CONDITIONS EV ERY YEAR, THE CLAIM FOR DEDUCTION COMES UP FOR FRESH EXAMINATION, NO MATTER FOR HOW MANY YEARS IT WAS ALLOWED EARLIER. 10. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) HEL D THAT THE ASSESSEE WAS ENTITLED TO DEDUCTION CLAIMED. IN THI S REGARD, THE CIT(A) FOUND THAT IN THE A.Y. 2004-05, THE TRIBUNAL IN ITA NO.24/BANG/2009 DATED 09.04.2009 HELD THAT THE ASSESSEE WAS ENTITLED TO B ENEFIT U/S. 80IA OF THE ACT. FOLLOWING THE AFORESAID ORDER, THE CIT(A) ALLO WED THE CLAIM OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE CIT(A), TH E REVENUE HAS PREFERRED THE PRESENT APPEAL. 11. AT THE TIME OF HEARING, IT WAS BROUGHT TO OUR N OTICE THAT THE TRIBUNAL IN ITA NO.784/BANG/2002 FOR THE A.Y. 2003-04 HAD AL LOWED SIMILAR CLAIM OF THE ASSESSEE. THE RELEVANT OBSERVATIONS OF THE TRI BUNAL WERE BROUGHT TO OUR NOTICE, WHICH ARE REPRODUCED BELOW:- 04. AFTER HEARING THE LEARNED DR AND ALSO GOING THR OUGH THE COMMISSIONER OF INCOME-TAX (APPEALS)'S ORDER, WE FI ND THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ALLOWE D THE ASSESSEE'S CLAIM OF DEDUCTION U/S.80IA RELYING ON T HE ORDER PASSED BY THE ITAT IN ASSESSEE'S OWN CASE FOR THE A SSESSMENT YEAR 2004-05. THE TRIBUNAL IN THE SAID ORDER HAS FO LLOWED ANOTHER ORDER IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 20 05-06. THE REVENUE HAS ALSO TAKEN AS GROUND NO.4 THAT THE TRIB UNAL'S ORDER FOR ASSESSMENT YEAR 2004-05 HAS NOT BECOME FINAL SI NCE APPEAL U/S.260A HAS BEEN FILED BEFORE THE HON'BLE HIGH COU RT. HOWEVER, ITA NO.886/BANG/2009 PAGE 8 OF 9 NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE SAID DECISION OF THE TRIBUNAL HAS BEEN REVERSED/MODIFIED BY THE H ON'BLE KARNATAKA HIGH COURT. HENCE, AS ON DATE, THE DECISI ON HOLDING THE FIELD IS THAT OF THE TRIBUNAL FOR THE ASSESSMEN T YEAR 2004-05. WE DO NOT FIND ANY CHANGE IN FACTS AND CIRCUMSTANCE S IN THE PRESENT ASSESSMENT YEAR ALSO. IN SUCH FACTS AND CIR CUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE COMMI SSIONER OF INCOME-TAX (APPEALS) IN FOLLOWING THE DECISION OF T HIS TRIBUNAL IN ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2004-05, WHILE ALLOWING THE ASSESSEE'S APPEAL IN RESPECT OF 80IA D EDUCTION. HENCE, WE DISMISS THE REVENUE'S APPEAL. 12. THE LD. DR SUBMITTED THAT THE REVENUE IS IN APP EAL AGAINST THE ORDER OF THE TRIBUNAL FOR THE A.Y. 2005-06 BEFORE THE HON BLE HIGH COURT OF KARNATAKA AND THEREFORE THE ISSUE HAS NOT ATTAINED FINALITY. 13. WE HAVE CONSIDERED HIS SUBMISSIONS AND WE FIND THAT THIS TRIBUNAL WHILE DECIDING THE APPEAL OF THE ASSESSEE FOR THE A .Y. 2003-04 HAS ALREADY DEALT WITH THIS ASPECT. HENCE, WE DO NOT FIND ANY GROUND TO INTERFERE WITH THE ORDER OF THE CIT(A). CONSEQUENTLY, THE APPEAL BY THE REVENUE IS DISMISSED. 14. IN THE RESULT APPEAL BY THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF AUGUST, 2013. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVA N ) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE, DATED, THE 30 TH AUGUST, 2013. /D S/ ITA NO.886/BANG/2009 PAGE 9 OF 9 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.