Syngene International Limited, Bangalore V. CIT, Bangalore

ITA 906/BANG/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4772 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-07-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Assessment record; Prejudicial to interest
• Section: 10AA; 14A; 10B; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, B ENGALURU BEFORE S HRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I TA NO. 906 / BANG/2 0 1 6 (ASSESSMENT YEAR: 20 1 2 - 13 ) M/S.SYNGENE INTERNATIONAL LTD. PLOT NO.2 & 3, BOMMASAN DRA IV PHASE, JIGANI LINK ROAD, BENGALURU - 560099. PAN: AABCS9936M VS. APPELLANT PRINCIPAL COMMISSIONER OF INCOME - TAX - 6 BENGALURU. RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, CA. RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, CIT (DR) DATE OF HEARING : 05/03/2018 DATE OF PRONOUNCEMENT : 31 /05/2018 O R D E R PER I NTURI RAMA RAO, AM : THIS IS AN APPEAL FILED BY THE ASSESSEE - COMPANY DIRECTED AGAINST THE ORDER OF THE L D. PRINCIPAL COMMISSIONER OF INCOME - TAX , BENGALURU - 6 , BENGALURU, [PRINCIPAL CIT] DATED 2 9 /0 3 /201 6 PASSED U/S 263 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] FOR THE ASSESSMENT YEAR 201 2 - 13 . 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: BASED ON THE FACTS AND C IRCUMSTANCES OF THE CASE, SYNGENE INTERNATIONAL LIMITED (HEREINAFTER REFERRED TO AS 'THE APPELLANT'), RESPECTFULLY SUBMITS IN RESPECT OF THE ORDER PASSED BY THE LEARNED PRINCIPAL COMMISSIONER OF INCOME TAX 6 ( LD PR CIT ) UNDER SECTION 263 OF THE INCOME TA X ACT, 1961 (HE REINAFTER REFERRED TO AS 'THE ACT :'): 1. THE LD PR CIT HAS ERRED IN PASSING AN ORDER W HICH IS BAD IN LAW AND ON FACTS. ITA NO . 906 /BANG/20 16 PAGE 2 OF 6 2. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS, IN CONCLUDING THAT THE ORDER OF THE ASSESSING OFFICER ('AO') IS 'ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE' BY ALLEGING THAT NO PROPER ENQUIRY HAS BEEN MADE ON THE ISSUE OF RELIEF CLAIMED BY THE ASSESSEE UNDER SECTION 10AA OF THE ACT AND ACCORDINGLY HAS ERRED IN SENDING BACK THE ISSUE TO THE FILES OF THE AO FOR CONSIDERIN G IT AFRESH. SCOPE OF REVISION PROCEEDINGS 3. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS IN INITIATING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT. 4. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS IN INITIATING THE PROCEEDINGS UNDER SECTION 263 OF THE ACT WIT HOUT, CONSIDERING THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. DLF LIMITED (ITA NOS.236/2010 AND 384/2010 WHICH HAS ANALYSED THE JURISDICTION OF REVISION POWERS UNDER SECTION 263 OF THE ACT . 5. THE LD PR CIT HAS ERRED IN LAW IN DISR EGARDING THAT AS THE ISSUE UNDER CONSIDERATION IS A DEBATABLE MATTER, WHICH IMPLIES THAT THE MATTER INVOLVED HAS TWO POSSIBLE VIEWS, THERE COULD BE NO REVISION WITH RESPECT TO SUCH MATTER. RELIEF UNDER SECTION 10AA OF THE ACT. 6. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS, IN HOLDING THAT THE ASSESSMENT ORDER FOR THE SAID AY WAS MADE WITHOUT MAKING ANY ENQUIRY TO THE CLAIM. 7. THE LD PR CIT HAS ERRED IN LAW AND ON FACT IN DISREGARDING THE APPELLANT'S SUBMISSIONS, EXPLAINING THE ELIGIBILITY FOR CLAIMING, RELIE F UNDER SECTION 10AA OF THE ACT . 8. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS IN MERELY RELYING ON THE ASSESSMENT ORDERS WHICH FOR AY 2003 - 04 TO 2009 - 10 WHEREIN THE RELIEF UNDER SECTION 10B OF THE ACT HAS BEEN DENIED ON THE PREMISE THAT THE ACTIVITIES OF TH E APPELLANT DO NOT CONSTITUTE MANUFACTURE . 9. THE LD PR CIT HAS ERRED IN LAW IN NOT CONSIDERING THE DECISION OF THE BANGALORE TRIBUNAL FOR THE AY 2003 - 04, 2004 - 05 AND 2007 - 08 TO 2009 - 10 IN THE APPELLANT S OWN CASE, WHERE THE TRIBUNAL HAD GIVEN DUE TO RELI EF TO THE APPELLANT IN RELATION TO THE ABOVE MATTER AND CONCLUDED THAT THE ACTIVITIES CARRIED OUT BY THE APPELLANT RESULT IN MANUFACTURE OR PRODUCTION OF ARTICLE OR THING ITA NO . 906 /BANG/20 16 PAGE 3 OF 6 10. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS IN TAKING THE CONTRARY POSITIONS ON ONE HAND BY ACCEPTING THE CONTENTIONS OF HIS PREDECESSORS FOR NOT ALLOWING THE RELIEF UNDER SECTION 10B OF THE ACT AND ON THE OTHER HAND BY DISREGARDING THE POSITION TAKEN BY HIS PREDECESSORS BY ALLOWING THE RELIEF UNDER SECTION 10AA OF THE ACT TO THE APPELLA NT. OTHER GROUNDS 11. WITHOUT PREJUDICE TO THE ABOVE,, A REVISION ORDER CANNOT BE PASSED IN CASES WHERE THERE ARE TWO POSSIBLE VIEWS. 12. THE LD PR CIT HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE AO TO OBTAIN DETAILS AND TO THEREAFTER CONSIDER THE ISSUE AS P ER PROVISIONS OF THE ACT. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUNDS IS INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER . FURTHERS THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMIT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIM E BEFORE OR AT, THE TIME OF HEARING OF THE APPEAL. 3. BRIEFLY, FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURE OF FINE ORGANIC COMPOUNDS A ND R&D IN BIOTECHNOLOGY PROJECTS FOR NOVEL COMPOUNDS FOR NEW DRUGS. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 WAS FILED ON 30/11/2012. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED BY THE DEPUTY COMMISSIONER OF INCOME - TAX, CI RCLE 6(1)(2), BENGALURU [ AO ] AT TOTAL INCOME OF RS.14,15,66,065/ - . WHILE DOING SO, THE AO MADE ADDITION OF RS.3,08,428/ - INVOKING THE PROVISIONS OF SECTION 14A OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. SUBSEQUENTLY, T HE PRINCIPAL CIT EXAMINED THE ASSESSMENT RECORDS AND HAD COME TO CONCLUSION THAT THE AO, WITHOUT MAKING ENQUIRIES, HAD ALLOWED THE BENEFIT U/S 10AA OF THE ACT. ACCORDINGLY, SHOW CAUSE NOTICE U/S 263 WAS ISSUED TO THE ASSESSEE ON 09/03/2016. THE ASSESSEE HAD FILED OBJECTIONS VIDE LETTER DATED 23/03/2016. HOWEVER, THE LD. PRINCIPAL CIT HAD COME TO THE CONCLUSION THAT SINCE THE AO HAD NOT CAUSED NECESSARY INQUIRIES WHILE ALLOWING THE CLAIM U/S 10AA, ITA NO . 906 /BANG/20 16 PAGE 4 OF 6 THE ORDER OF ASSESSMENT PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. ACCORDINGLY, THE LD. PRINCIPAL CIT, EXERCISING POWER OF REVISION VESTED WITH HIM U/S 263, SET ASIDE THE ASSESSMENT WITH A DIRECTION TO THE AO TO REDO THE ASSESSMENT AFTER DULY VERIFYING THE CLAIM OF DEDUCTION U/S 10AA OF THE ACT AND AFTER AFFORDING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. BEING AGGRIEVED, THE ASSESSEE IS BEFORE US IN THE PRESENT APPEAL. 5. L EARNED AR OF THE ASSESSEE CONTENDED THAT THE ISSUE WHICH IS SOUGHT TO BE REVISED BY THE LD. PRINCI PAL CIT IS DEBATABLE ISSUE AND THE LD. PRINCIPAL CIT, WITHOUT COMING TO THE CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S 10AA, OUGHT TO HAVE EXERCISED JURISDICTION U/S 263. IN THIS REGARD, LEARNED AR OF THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. DUNLOP LTD. LEARNED AR OF THE ASSESSEE FURTHER CONTENDED THAT THE LD.PRINCIPAL CIT HAD IGNORED THE DECISION OF THE CO - ORDINATE BENCH IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEARS 2003 - 04, 2004 - 05, 2007 - 08 TO 2009 - 10 WHEREIN THE TRIBUNAL HAD GRANTED RELIEF TO THE ASSESSEE U/S 10AA. 6. ON THE OTHER HAND, LEARNED DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE ORDER OF THE LD. PRINCIPAL CIT. 7. WE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. IN THE PRESENT CASE, THE ONLY ISSUE IS WHETHER THE LD. PRINCIPAL CIT IS JUSTIFIED IN EXERCISING POWER OF REVISION VESTED WITH HIM U/S 263. THE ONLY GROUND ON WHICH THE LD. PRINCIPAL CIT HAS EXERCISED POWER OF REVISION IS THAT THE AO, W ITHOUT CAUSING INQUIRY, HAD ALLOWED THE BENEFIT OF SECTION 10AA OF THE ACT IGNORING THE ORDERS OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR ASSESSMENT YEARS 2010 - 11 AND 2011 - 12. THE ASSESSEE HAD NOT DISPUTED THESE FACTS. IT IS NOT THE CASE OF THE APPEL LANT THAT THE AO HAD EXAMINED THE CLAIMS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN THE PRESENT CASE, NEITHER ASSESSEE HAD FILED FULL DETAILS AS TO THE TRUE NATURE OF THE CLAIM NOR DID THE AO ENQUIRED INTO. I T IS A CASE OF NON - ENQUIRY BY THE AO ON T HE ABOVE ISSUES WHICH ARE SOUGHT TO BE REVISED BY THE CIT IN EXERCISING POWER U/S 263. THE HON BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIES CO. VS. CIT (2000) 243 ITR 83 HAS CLEARLY HELD ITA NO . 906 /BANG/20 16 PAGE 5 OF 6 THAT NON ENQUIRY INTO TRUE NATURE OF THE CLAIM MAKES THE ASSE SSMENT ORDER NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO INTERESTS OF REVENUE. EVEN EXPLANATION 2 TO SECTION 263 INSERTED BY THE FINANCE ACT, 2015 W.E.F. 01/06/2015 CLEARLY CLARIFIES THAT AN ORDER OF ASSESSMENT PASSED WITHOUT MAKING INQUIRIES OR VERIFICATIO N WHICH SHOULD HAVE BEEN MADE OR AN ORDER PASSED ALLOWING ANY RELIEF WITHOUT INQUIRY INTO THE CLAIM SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PROVISIONS OF EXPLANATION 2 TO SECTION 263 ARE EXTRACTE D BELOW: EXPLANATION 2. FOR THE PURPOSES OF THIS SECTION , IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEMED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, IF, IN THE OPINION OF THE PRINCIP AL COMMISSIONER OR COMMISSIONER, A. THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; B. THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; C. THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDE R, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119 ; OR D. THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WITH ANY DECISION WHICH IS PREJUDICIAL TO TH E ASSESSEE, RENDERED BY THE JURISDICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERSON. 8. AS REGARDS THE ASSESSEE S SUBMISSION THAT REASONS GIVEN IN SHOW CAUSE ARE DIFFERENT FROM THE REASONS GIVEN IN THE FINAL OR DER PASSED U/S 263, THE ISSUE IS SETTLED IN FAVOUR OF THE REVENUE BY THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. AMITABH BACHAN (384 ITR 200) WHEREIN THE HON BLE SUPREME COURT HELD THAT PROVISIONS OF SECTION 263 DO NOT REQUIRE ANY SPECIFIC SHOW CAUSE NOTICE DETAILING THE SPECIFIC GROUNDS ON WHICH REVISION OF ASSESSMENT ORDER IS SOUGHT. EVEN THE HON BLE SUPREME COURT IN THE VERY SAME CASE HAS UPHELD THE ASSUMPTION OF JURISDICTION U/S 263 IN A CASE WHERE CIRCUMSTANCES GIVE RISE TO NECESSITY OF INQUIRY I N THE INTERESTS OF REVENUE. LEARNED COUNSEL FOR THE ASSESSEE HAD FAILED TO DEMONSTRATE BEFORE US THAT DUE INQUIRY AS THE CIRCUMSTANCES OF THE CASE ITA NO . 906 /BANG/20 16 PAGE 6 OF 6 JUSTIFY, WAS DONE BY THE AO ON THE ITEMS WHICH ARE SOUGHT TO BE REVISED AND MERE RELYING ON PLETHORA OF DECI SIONS WITHOUT ESTABLISHING FOUNDATIONAL FACTS DOES NOT COME TO THE RESCUE OF THE ASSESSEE. NO RELIEF CAN BE GRANTED ON BALD ASSERTIONS WITHOUT BRINGING ON RECORD THE FOUNDATION FACTS IN SUPPORT OF SEVERAL LEGAL PROPOSITIONS. IN THE CIRCUMSTANCES, WE DO N OT SEE ANY MERITS IN THE APPEAL OF THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE - COMPANY IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2018 SD/ - SD/ - (SUNIL KUMAR YADAV) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 31/05/2018 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE