The ITO,Vapi Ward-4, Nani Daman V. Jitsan Enterprises, Nani Daman

ITA 892/AHD/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5853 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAURAV BATHAM
• Assessee Lawyers: S N L AGARWAL
• Keywords: Capital receipt; Set aside
• Section: 142(1); 80IB; 143(1); 143(2); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI T.K.SHARMA, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER DATE OF HEARING:30.06.10 DRAFTED ON:30.01.10 ITA NO.892/AHD/2010 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, VAPI WARD-4, DAMAN, DR. JEEVANJI HOTEL BUILDING, DEVKA ROAD, KATHIRIA, NANI DAMAN(U.T.) VS. M/S.JITSAN ENTERPRISES, PLOT NO.361/13, GANESH INDUSTRIAL ESTATE, KACHIGAM, NANI DAMAN. PAN/GIR NO. : AAEFJ7513R (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI GAURAV BATHAM D.R. RESPONDENT BY: SHRI S.N.L.AGARWAL A.R. O R D E R PER N.S.SAINI , ACCOUNTANT MEMBER :- THIS IS AN APPEAL FILED BY THE REVENUE AGAINST TH E ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-VALSAD, DATED 18.11.2009. 2. GROUND NO.1 OF APPEAL OF THE REVENUE READS AS UN DER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCT ION U/S.80IB OF THE ACT STATING THAT DISALLOWANCE OF CL AIM OF DEDUCTION U/S.80IB OF THE ACT ON THE SOLE GROUND TH AT THE ASSESSEE WAS NOT HAVING FACTORY LICENCE BEFORE IT STARTED MANUFACTURING ACTIVITIES IS WITHOUT ANY MER ITS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS CARRYING ON THE BUSINESS OF MANUFACTURING OF PLASTIC MOULDED PR ODUCTS. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME O F RS.79,509/- ON - 2 - 30-10-2006. THE SAME WAS PROCESSED ON 20.12.2006 U/ S 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO A S THE ACT]. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) AND 142(1) OF THE ACT ON 19.02.20 07 AND 28.04.2008. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE AO NOTICED THAT THE ASSESSEE CLAIMED DEDUCTION OF RS.3 6,47,945/- U/S 80IB OF THE ACT. AS PER D.I.C. REGISTRATION CERTIFI CATE, MANUFACTURING ACTIVITY IS STATED TO HAVE COMMENCED ON 30-03-2004 WHILE THE FACTORY LICENSE WAS ISSUED ONLY ON 23-04- 2004. THE AO FURTHER NOTICED THAT IN TERMS OF PROVISIONS OF SECT ION 6 OF THE FACTORIES ACT, FACTORY CANNOT BE STARTED WITHOUT FA CTORY LICENSE. TO A QUERY BY THE AO, SEEKING TO DISALLOW CLAIM FOR DE DUCTION U/S 80IB OF THE ACT, THE ASSESSEE REPLIED THAT THEY COMMENCE D ACTIVITY OF THE INDUSTRIAL UNDERTAKING IN THE LATTER PART OF MARCH, 2004 WITH THE AID OF POWER AND EMPLOYING MORE THAN 10 PERSONS. SINCE THE ASSESSEE FULFILLED THE CONDITIONS STIPULATED U/S 80IB OF THE ACT, THE ASSESSEE WAS ENTITLED TO THE SAID DEDUCTION. HOWEVER, THE AO DID NOT ACCEPT THESE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THA T THE ASSESSEE DID NOT FURNISH ANY THIRD PARTY EVIDENCE IN RESPECT OF COMMENCEMENT OF MANUFACTURING ACTIVITY ON 30-03-200 4. THE FACTORY LICENSE BEING THE THIRD PARTY EVIDENCE, PRO VED THAT PRODUCTION WAS STARTED ON 23-04-2004. THE LEARNED A SSESSING OFFICER HELD THAT SINCE AS PER SECTION 6 OF THE FAC TORIES ACT, THE ASSESSEE COULD NOT START WORK OF MANUFACTURING WITH OUT OBTAINING LICENSE, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S 80IB OF THE ACT. 4. ON APPEAL, THE ASSESSEE REITERATED THEIR SUBMISS IONS BEFORE THE AO. IN THE LIGHT OF THESE SUBMISSIONS, THE LEAR NED CIT(A) CONCLUDED AS UNDER: 5. GROUND 1. THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE ITAT, AHMEDABAD IN ITA NO.1006/AHD/2009 IN THE CASE OF M/S.SAMRATH HEALTH CARE - 3 - DTD. 05.06.2009. RESPECTFULLY FOLLOWING THE ORDER O F THE HON'BLE ITAT, I DIRECT THE AO TO GRANT BENEFIT U/S. 80-IB OF THE I.T.ACT. THE AO IS ALSO DIRECTED TO VERIFY THE INC OME NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB BEFORE G RANTING RELIEF U/S. 80-IB . THE ASSESSEE IS ENTITLED FOR DE DUCTION U/S.80IB ON THE INCOME WHICH HAS DIRECT NEXUS OF TH E INDUSTRIAL UNDERTAKING IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA V/S.CIT 317 ITR 218 (SC). THIS GROUND OF APPEAL IS ALLOWED. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE FILED COPY OF ORDER OF TRIBUNAL DATED 13.04.2010 PASSED I N THE ASSESSEES OWN CASE IN ITA NO.1652/AHD/2009 FOR ASS ESSMENT YEAR 2005-06 AND SUBMITTED THAT ON THE APPEAL FILED BY T HE ASSESSEE AGAINST DISALLOWING DEDUCTION UNDER SECTION 80-IB T O THE ASSESSEE ON IDENTICAL FACTS, THE TRIBUNAL SET ASIDE THE ORDE RS OF THE LOWER AUTHORITIES AND ALLOWED THE CLAIM OF DEDUCTION UNDE R SECTION 80IB TO THE ASSESSEE. THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL OF ASSESSMENT YEAR 2005-06, THE APPEAL OF THE ASSESSEE SHOULD BE ALLOWED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED W ITH THE ABOVE SUBMISSION OF THE LEARNED AUTHORISED REPRESEN TATIVE OF THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF PLASTIC MOULDED PRODUC TS AND IN THE RETURN FILED FOR THE YEAR UNDER CONSIDERATION CLAIM ED DEDUCTION OF RS.37,45,945/- UNDER SECTION 80IB OF THE ACT WHICH WAS NOT ALLOWED BY THE LEARNED ASSESSING OFFICER FOR THE RE ASON THAT THE ASSESSEE HAS CLAIMED TO HAVE COMMENCED MANUFACTURIN G ACTIVITY ON 30.03.2004 AS MENTIONED IN D.I.C. CERTIFICATE B UT IT IS SEEN THAT FACTORY LICENCE WAS ISSUED ON 23.04.2004 AND WITHOU T OBTAINING THE - 4 - FACTORY LICENCE, THE ASSESSEE COULD NOT HAVE STARTE D PRODUCTION AS PER SECTION 6 OF THE FACTORIES ACT. IN APPEAL, TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOLLOWING THE O RDER OF THE TRIBUNAL DATED 5.06.2009 IN THE CASE OF M/S.SAMRAT H HEALTH CARE LTD. IN ITA NO.1006/AHD/2009 ALLOWED THE CLAIM FOR DEDUCTION UNDER SECTION 80IB TO THE ASSESSEE. 8. BEING AGGRIEVED BY THE SAID ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 9. WE FIND THAT IN THE ASSESSMENT YEAR 2005-06 IN A SSESSEES OWN CASE, THE TRIBUNAL ALLOWED DEDUCTION UNDER SECT ION 80IB OF THE ACT ON IDENTICAL FACTS BY OBSERVING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. WE NOTICE THAT DEDUCTION U/S 80I B HAS BEEN DENIED IN THE YEAR UNDER CONSIDERATION FOR WANT OF FACTORY LICENSE IN THE PRECEDING ASSESSMENT YEAR. UNDISPUT EDLY, FACTORY LICENSE WAS ISSUED ON 23.4.2004 I.E. IN TH E YEAR CONSIDERATION. IN THESE CIRCUMSTANCES, ESPECIALLY W HEN LICENSE HAD BEEN ISSUED ON 23.4.2004 AND UNDISPUTED LY, THE ASSESSEE FULFILLED ALL THE CONDITIONS STIPULATED U/ S 80IB OF THE ACT, THERE IS NO REASON TO DISALLOW THE CLAIM FOR D EDUCTION U/S 80IB OF THE ACT. EVEN OTHERWISE, THE ASSESSEE WAS A LLOWED PROVISIONAL REGISTRATION AS A SMALL SCALE INDUSTRY ON 13.2.2004 .BESIDES, THE ASSESSEE OBTAINED NECESSARY NOC AND POWER CONNECTION . WE FIND THAT A CO-ORDINATE B ENCH VIDE THEIR ORDER DATED 05-06-2009 IN THE CASE OF M/S SAM RATH HEALTH CARE IN ITA NO.1006/AHD/2009 FOR THE AY 2005 -06, WHILE ADJUDICATING A SIMILAR ISSUE, CONCLUDED AS UN DER: 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNE D DR AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW THERE IS NO CAS E FOR INTERFERENCE IN THE ORDER OF THE LEARNED CIT(A). TH E LEARNED CIT(A) HAS RIGHTLY MENTIONED THAT TO OBTAIN FACTORY LICENSE IS NOT A CONDITION PRECEDENT FOR CL AIMING - 5 - DEDUCTION U/S 80 IB OF THE ACT. IF WE PRESUME THAT THIS CONDITION IS ALSO REQUIRED TO BE FULFILLED BY THE A SSESSEE, THEN IT WOULD AMOUNT TO LEGISLATION BY INSERTING AN OTHER CONDITION IN SECTION 80 IB FOR ALLOWING DEDUCTION U NDER THAT SECTION THOUGH PROVIDED IN THE STATUTE. THE AO DID NOT DOUBT ABOUT RAW MATERIAL CONSUMPTION, POWER CONSUMPTION, SALES AND EMPLOYMENT OF WORKERS. FURTHER, NO DOUBT WAS ALSO EXPRESSED BY THE AO THAT ASSESSEE DID NOT CARRY ANY MANUFACTURING ACTIVITY. NONETHELESS, THE ASSESSEE HAS APPLIED FOR FACTORY LICENSE PRIOR TO COMMENCEMENT OF PRODUCTION THOUGH IT WAS GRANTED SUBSEQUENTLY. THE ASSESSEE HAS BEEN GIVEN A PERMANENT REGISTRATION AS A SMALL SCALE INDUSTRIAL UNDERTAKING AND HAS REGISTERED WITH THE; SALES TAX AND EXCISE AUTHORITIES. FOR CLAIMING DEDU CTION U/S 80 IB OF THE ACT ONLY THE CONDITIONS LAID DOWN UNDER THAT SECTION ARE REQUIRED TO BE FULFILLED AND NO MO RE. THE REQUIREMENT UNDER OTHER STATUTES CANNOT BE BORROWED FOR ALLOWING/REFUSING DEDUCTION UNLESS IT IS SO PROVIDED IN THE IT ACT ITSELF. FOR EXAMPLE, THE LEGISLATURE THOUGHT IT FIT TO BRING THE CONDITION O F EMPLOYMENT OF 10 OR MORE WORKERS IF MANUFACTURING ACTIVITIES ARE CARRIED OUT WITH THE HELP OF POWER O R MORE THAN 20 WORKERS WITHOUT THE HELP OF POWER. SIMILARL Y, IF THE LEGISLATURE THOUGHT IT FIT TO OBTAIN FACTORY LI CENSE BEFORE ALLOWING DEDUCTION U/S 80 IB OF THE ACT THEN THEY WOULD HAVE SO PROVIDED. IN FACT, THERE ARE SEVERAL OTHER REQUIREMENTS IN DIFFERENT ACT APPLICABLE TO AN INDU STRY BUT ALL THESE REQUIREMENTS ARE NOT TO BE COMPLIED W ITH FOR CLAIMING DEDUCTION U/ S 80 IB OF THE ACT. WHAT IS ESSENTIAL IS THAT THE ASSESSEE SHOULD MANUFACTURE O R PRODUCE AN ARTICLE OR THING. IF THERE IS ANY VIOLAT ION OF ANY PROVISIONS OF OTHER STATUTES THEN THE ASSESSEE HAS TO EXPLAIN THE SAME TO THE AUTHORITIES EXECUTING TH OSE ACTS/ STATUTES. FURTHER FOR VIOLATION OF THE PROVIS IONS UNDER OTHER ACTS THE ASSESSEE MAY FACE PENAL PROVISIONS AS PROVIDED UNDER THOSE ACTS. BUT FOR TH AT COMMISSIONS/OMISSION UNDER OTHER ACTS THE DECISION UNDER THE IT ACT CANNOT BE AFFECTED UNLESS SO PROVI DED UNDER THE IT ACT. WE HOWEVER, NOTICE THAT THIS APPE AL IS FOR AY 2005-06..AND AS PER FACTS STATED IN THE ORDE R BY THE LEARNED CIT(A) THE ASSESSEE HAS OBTAINED FACTOR Y LICENSE ON 6-5-2004 WHICH IS FINANCIAL YEAR 2004-05 . THEREFORE, THERE SHOULD BE NO CASE FOR DISALLOWING THE CLAIM OF THE ASSESSEE U/S 80IB ON THE QUESTION OF N OT OBTAINING FACTORY LICENSE. AS A RESULT, WE CONFIRM THE - 6 - ORDER OF THE LEARNED CIT(A) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. 5.1 SIMILARLY, IN THE CASE OF M/S PRIYA PRINTEK IN ITA NO.2742/AHD/2009, FOLLOWING THE DECISION DATED 16.1 1.2009 OF THE ITAT IN THE CASE OF ADARSH PACKAGING VS. ITO IN ITA NOS.2253 AND 2254/AHD/2009 FOR AYS 2005-06 AND 2006 -07, THE TRIBUNAL CONCLUDED VIDE THEIR ORDER DATED 11.12 .2009 AS UNDER: 9. IN THE LIGHT OF THE AFORESAID ORDERS OF THE AHMEDABAD BENCHES OF THE TRIBUNAL THE FACT THAT IN THE PRESENT CASE THE ASSESSEE OBTAINED THE FACTORY LICE NSE ONLY ON 08-2-2007, BEFORE 31-3-2004 IS IRRELEVANT F OR THE PURPOSE OF SECTION 80IB. THE QUESTION HOWEVER REMAINS AS TO WHETHER THE ASSESSEE ACTUALLY STARTED PRODUCTION BEFORE 31-3-2004. IN THIS CONNECTION, TH E ASSESSMENT ORDER ITSELF MENTIONED THAT ON PERUSAL O F THE SSI REGISTRATION CERTIFICATE IT IS SEEN THAT TH E PRODUCTION STARTED ON 31-3-2004. IT THEREFORE APPEA RS TO US THAT THE SSI REGISTRATION CERTIFICATE WAS PRO DUCED BEFORE THE AO. THE CIT(A) HAS HOWEVER TAKEN THE VIE W THAT SINCE THE FACTORY LICENSE WAS ISSUED ONLY ON 08.02.07 AND IT IS AN OFFENCE PUNISHABLE UNDER THE FACTORIES ACT AND | THE RULES FRAMED THEREUNDER TO COMMENCE MANUFACTURING ACTIVITY BEFORE ISSUE OF THE SAID LICENSE, IT WOULD BE AGAINST PUBLIC POLICY TO ALLOW THE BENEFIT OF DEDUCTION UNDER ONE STATUTE IN RESPE CT OF ANY EXPENDITURE INCURRED BY THE ASSESSEE IN VIOLATI ON OF THE PROVISIONS OF ANOTHER STATUTE WHICH ALSO INVITE S PENALTY UNDER THAT STATUTE. THUS EVEN THE CIT(A) DO ES NOT APPEAR TO HAVE DOUBTED THE CLAIM OF THE ASSESSE E THAT THE MANUFACTURING ACTIVITY ACTUALLY COMMENCED BEFORE THE 31-3-2004. THE REASONING OF THE CIT(A) H AS NOT BEEN ACCEPTED AS CORRECT IN THE AFORESAID ORDER S PASSED BY THE AHMEDABAD BENCHES OF THE TRIBUNAL. THEREFORE RESPECTFULLY FOLLOWING THEM, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION UNDER SECTIO N 80IB AS CLAIMED AND ACCORDINGLY DIRECT THE AO TO AL LOW THE SAME. 5.2 UNDISPUTEDLY, THE AO DID NOT DOUBT EITHER CONSU MPTION OF RAW MATERIAL OR POWER WHILE SALES OF RS.1,16,39,418 /-HAVE BEEN MADE IN THE YEAR UNDER CONSIDERATION. AS ALREA DY - 7 - MENTIONED, THIS IS THE SECOND YEAR OF PRODUCTION AN D UNDISPUTEDLY, FACTORY LICENSE HAVING BEEN ISSUED ON 23-04- 2004, THERE IS NO BASIS FOR DISALLOWING THE CLAIM F OR DEDUCTION U/S 80IB OF THE ACT IN THE YEAR UNDER CONSIDERATION ON THE GROUND OF NOT OBTAINING THE FACTORY LICENSE IN THE PRECEDING ASSESSMENT YEAR. IN THE LIGHT OF THE VIEW TAKEN IN THE AFORESAID DECISIONS OF THE TRIBUNAL, THE AO WAS NOT JUSTIFIED IN DISALLOWING THE DEDUCTION U/S 80IB OF THE ACT FOR T HE YEAR UNDER CONSIDERATION ON THE GROUND THAT THE FACTORY LICENSE WAS NOT OBTAINED IN THE PRECEDING ASSESSMENT YEAR. THEREFORE, GROUND NO.1 IN THE APPEAL IS ALLOWED. 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD N OT SHOW ANY GOOD REASON TO NOT TO FOLLOW THE ABOVE QUOTED O RDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE PASSED IN THE ASSESSMENT YEAR 2005-06. THE LEARNED DEPARTMENTAL REPRESENTATIVE AL SO COULD NOT SHOW THAT THE ABOVE QUOTED ORDER OF THE TRIBUNAL WA S REVERSED IN APPEAL BY A HIGHER FORUM. IN THE ABOVE FACTS AND C IRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY GOOD REASON TO INTERFE RE WITH THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). IT IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 11. GROUND NO.2 OF THE APPEAL READS AS UNDER:- 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S.80IB OF THE I.T.ACT ON DISALLOWANCE O F RS.4,95,942/- MADE ON SCRAP SALES INCOME. 12. THE BRIEF FACTS OF THE CASE ARE THAT THE LEAR NED ASSESSING OFFICER DISALLOWED DEDUCTION UNDER SECTION 80IB OF THE ACT ON INCOME FROM SALE OF SCRAP OF RS.4,35,942/- ON THE G ROUND THAT THE SAME WAS INCOME FROM OTHER SOURCES IN VIEW OF DECIS ION OF HON'BLE SUPREME COURT IN THE CASE OF PANDIAN CHEMICALS LTD. 262 ITR 278 AND STERLING FOODS 237 ITR 579. - 8 - 13. IN APPEAL BEFORE THE LEARNED COMMISSIONER OF IN COME TAX(APPEALS), THE ASSESSEE CONTENDED THAT THE SCRAP WAS GENERATED DURING THE MANUFACTURING PROCESS AND THUS WAS INCOME DERIVED FROM INDUSTRIAL UNDERTAKING. 14. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE HELD THA T INCOME FROM SALE OF SCRAP WAS INCOME DERIVED FROM INDUSTRIAL UN DERTAKING IN VIEW OF DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF HARJIVANDAS JHUTHABHAI ZAVERI AND ANOTHER VS. CIT 2 58 ITR 785 (GUJ) AND ALLOWED DEDUCTION TO THE ASSESSEE UNDER S ECTION 80IB ON THE INCOME FROM SALE OF SCRAP. 15. BEING AGGRIEVED BY THE SAID ORDER OF THE LEARNE D COMMISSIONER OF INCOME TAX(APPEALS) THE REVENUE IS IN APPEAL BEFORE US. 16. THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT THE LEARNED ASSESSING OFFICER HAS OBSERVED THAT THE ASS ESSEE HAS NOT FILED DETAILS OF NATURE OF SCRAP GENERATED. HE SUB MITTED THAT IF THE SCRAP WAS GENERATED DURING THE MANUFACTURING PROCE SS, THEN THE SAME WOULD FORM PART OF ELIGIBLE PROFIT OF THE INDU STRIAL UNDERTAKING FOR THE PURPOSES OF DEDUCTION UNDER SECTION 80IB OF THE ACT BUT IF THE SCRAP WAS OF SPARE PARTS OF PLANT AND MACHINERY THEN THE SAME WILL BE CAPITAL RECEIPT AND WOULD NOT BE ELIGIBLE F OR DEDUCTION UNDER SECTION 80IB OF THE ACT. IN ABSENCE OF THE DETAIL THE LEARNED ASSESSING OFFICER COULD NOT VERIFY THE NATURE OF SC RAP AND THEREFORE, WAS FULLY JUSTIFIED IN DISALLOWING THE DEDUCTION CL AIMED BY THE ASSESSEE. - 9 - 17. THE LEARNED AUTHORISED REPRESENTATIVE OF THE AS SESSEE ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFO RE THE LEARNED ASSESSING OFFICER AND SUBMITTED THAT THE SCRAP WAS GENERATED DURING THE MANUFACTURING PROCESS AND THEREFORE, TH E LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WAS FULLY JUSTI FIED IN ALLOWING DEDUCTION UNDER SECTION 80IB TO THE ASSESSEE ON THE INCOME FROM SALE OF SCRAP. HOWEVER, HE HAD NO OBJECTION IF THE ISSUE WAS RESTORED BACK TO THE LEARNED ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING WHETHER THE SCRAP WAS OUT OF M ANUFACTURING PROCESS OR NOT AND THEN TO DECIDE THE ISSUE ACCORDI NGLY. 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , THE LEARNED ASSESSING OFFICER DISALLOWED DEDUCTION UNDER SECTIO N 80IB ON INCOME FROM SALE OF SCRAP TO THE ASSESSEE AS THE AS SESSEE HAD NOT FILED DETAILS OF NATURE OF SCRAP. THE ASSESSEE CON TENDED BEFORE THE LOWER AUTHORITIES THAT THE SCRAP WAS GENERATED DURI NG THE MANUFACTURING PROCESS AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ACCEPTED THE SUBMISSION OF THE ASSESSE E AND ALLOWED THE CLAIM FOR DEDUCTION TO THE ASSESSEE. THE LEARNE D DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE LEARNED ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE CLAIM FOR DEDUCTION TO THE ASSESSEE AS THE ASSESSEE FAILED TO FILE THE DETAILS ABOUT THE N ATURE OF SCRAP. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE S UBMITTED THAT HE HAD NO OBJECTION IF THE ISSUE IS RESTORED BACK T O THE FILE OF THE LEARNED ASSESSING OFFICER FOR THE LIMITED PURPOSE O F VERIFYING WHETHER THE SCRAP IN QUESTION WAS GENERATED DURING THE MANUFACTURING PROCESS OR NOT AND THEN TO DECIDE THE ISSUE AS PER LAW ACCORDINGLY. WE THEREFORE, SET ASIDE THE ORDER S OF THE LOWER AUTHORITIES AND REMAND THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR READJUDICATION OF THE ISSUE A FTER PROPER - 10 - VERIFICATION IN THE LIGHT OF THE DISCUSSIONS MADE H EREINABOVE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE. THE ASSESSEE IS ALSO DIRECTED TO FILE THE DETAILS OF TH E SCRAP AS AND WHEN CALLED UPON TO DO SO BY THE LEARNED ASSESSING OFFIC ER. THUS, THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STAT ISTICAL PURPOSES. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. 20. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF H EARING IN THE PRESENT OF THE PARTIES ON 30 TH DAY OF JUNE, 2010. SD/- SD/- ( T.K. SHARMA ) (N.S. SAINI ) JUDICIAL MEMBER ACCOUNTAN T MEMBER AHMEDABAD; ON THIS 30 TH DAY OF JUNE, 2010 PARAS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VALSAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD DATE INITIALS 1. DRAFT DICTATED ON 30.06.2010 -------------- ----- 2. DRAFT PLACED BEFORE AUTHORITY 30.06.2010 ---- --------------- 3. DRAFT PROPOSED & PLACED 30.06.2010 --------- ---------- JM BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED 30.06.2010 ---------- --------- JM BY SECOND MEMBER 5. APPROVED DRAFT COMES TO P.S 30.06.2010 -------- ------------ 6. KEPT FOR PRONOUNCEMENT ON 30.06.2010 --------- ----------- 7. FILE SENT TO THE BENCH CLERK 30.06.2010 ------ -------------- 8. DATE ON WHICH FILE GOES TO THE ---------------- -------------------- 9. DATE OF DISPATCH OF ORDER ---------------- --- ------------------