Smt. Rasilaben Natverlal Chauhan, V. The Income tax Officer, Ward-III, Vapi

ITA 960/AHD/2006

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9717 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-08-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 19-04-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: S N L AGARWALLA
• Keywords: Set aside
• Section: 80IB; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.960/AHD/2006 ASSESSMENT YEAR:2002-03 DATE OF HEARING:30.8.10 DRAFTED:1.9.10 SMT. RASILABEN NATVERSINH CHAUHAN, PROP. SHEETAL BAR & RESTAURANT AND PROP.M/S. MARUTI STONE WORKS, NOROLI, SILVASSA, PAN NO.ABZPC8545Q V/S . INCOME TAX OFFICER, WARD-3, VAPI (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N.L. AGARWALLA, AR RESPONDENT BY:- SHRI VIMALENDU VERMA, DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VALSAD IN APPEAL NO. CIT(A) /VLS/68/2005-06 DATED 15-02-2006. THE ASSESSMENT WAS FRAMED BY ITO, WARD- 3, VAPI U/S143(3) R.W.S.147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 31-03-2005 FOR ASSESSMENT YEAR 2002-03. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN NOT ALLOWING DEDUCTION U/S.80IB OF THE AC T. FOR THIS, ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS 1-4 :- I TA NO.960/AHD/2006 A.Y.2002-03 SMT. RASILABEN N CHAUHAN V ITO WD-3, VAPI PAGE 2 (1) THE LEARNED I.T.O. HAS ERRED IN COMPUTING TOTA L INCOME AT RS.22,84,753/- BY DISALLOWING CLAIM OF DEDUCTION OF INCOME OF RS.21,24,005/- U/S. 80IB. (2) THE LEARNED I.T.O. HAS FAILED TO APPRECIATE THA T ALL THE CONDITIONS LAID DOWNU/S.80IB FOR DEDUCTION OF INCOME HAS BEEN FULLY SATISFIED. (3) THE LEARNED I.T.O. HAS MADE VARIOUS FALSE OBSER VATIONS FOR DISALLOWING THE INCOME WHICH IS DEDUCTABLE U/S.80IB . (4) YOUR APPELLANT HAS SATISFIED ON VARIOUS EVIDENC ES PRODUCED THAT THE INCOME CLAIMED IS DEDUCTABLE U/S.80IB. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS RUNNING BUS INESS OF RE-SALE OF LIQUOR ALSO RUNNING RESTAURANT AND STARTED A QUARRY BUSINE SS OF DIGGING THE STONES AND CRUSHING THE STONE AND MANUFACTURE AND PRODUCE STONE CHIPS AS IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2001-02. THE ASSESSING OFFICER DENIED THE DEDUCTION U/S. 80IB OF THE ACT AMOUNTING TO RS.15,69,026/- TO THE ASSESSEE AND CIT(A) AFTER CONSIDERING THE FACTS OF THE CASE DISMISSED THE APPEAL OF THE ASSESSEE. THE ASSESSEE IS RUNNING BAR AND RESTAURANT IN THE NAME AND STYLE SHEETAL BAR & RESTAURANT, AT NAROL I, WHEREAS, THE QUARRY IS RUN IN THE NAME M/S MARUTI STONE WORKS FROM SR. N O.6/1, ATHALA,SILVASSA. THE ASSESSEE HAS CLAIMED DEDUCTION OF RS.21,24,005/ - U/S.80IB FOR THE YEAR UNDER CONSIDERATION FROM THE PROFITS EARNED OUT OF STONE QUARRY. THE ACTIVITY OF THE ASSESSEE IN RESPECT OF STONE QUARRY INCLUDES QU ARRYING OF STONES AND CRUSHING IT TO OBTAIN METAL, KAPCHI ETC. THE CLAIM U/S.80IB IS MADE BY THE ASSESSEE ON THE GROUND THAT M/S.MARUTI STONE WORKS IS AN UNDERTAKING LOCATED IN THE UNION TERRITORY OF DADAR & NAGAR HAV ELI, WHICH IS AN INDUSTRIALLY BACKWARD AREA, SPECIFIED IN THE VIITH SCHEDULE OF T HE ACT AND ASSESSEE HAS DISCLOSED TO HAVE COMMENCED THIS ACTIVITY OF STONE QUARRY FROM THE ACCOUNTING PERIOD 2000-01 RELEVANT TO THE ASSESSMENT YEAR 2001 -02 AND THE YEAR UNDER CONSIDERATION IS THE SECOND YEAR OF ACTIVITY OF THI S QUARRY. THE AO HAS DENIED THE CLAIM OF DEDUCTION U/S.80IB TO THE ASSESSEE ON THE FOLLOWING GROUNDS:- I TA NO.960/AHD/2006 A.Y.2002-03 SMT. RASILABEN N CHAUHAN V ITO WD-3, VAPI PAGE 3 I) M/S. MARUTI STONE WORKS IS FORMED BY SPLITTING U P AND RECONSTRUCTION OF M/S. JAY BAJRANG STONE QUARRY IN CONTRAVENTION T O PROVISO OF SECTION 80IB(2)(I) II) M/S. MARUTI STONE WORKS IS FORMED BY THE TRANSF ER OF PLANT & MACHINERY PREVIOUSLY USED BY M/S. JAY BAJRANG STONE QUARRY IN CONTRAVENTION TO PROVISO OF SECTION 80IB(2)(II). III) M/S. MARUTI STONE WORKS DOES NOT MANUFACTURE O R PRODUCE ARTICLES OR THINGS AS PROVIDED IN SECTION 80IB. THE CIT(A) CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S.80IB(4) OF THE ACT AND HELD VIDE PARAA-9.5 AND 10 AS UNDER:- 9.5 IN THE CASE OF APPELLANT, THE RAW MATERIAL IS STONE, WHICH IT QUARRIES FROM THE EARTH AND THEREAFTER IT HAS BEEN CRUSHED I NTO METAL AND KAPCHI. THE CHARACTERISTICS OF THE RAW MATERIAL, I.E. STONE AND CHARACTERISTICS OF THE FINAL PRODUCT, WHICH IS ALSO STONE IS SAME AND THE CHARACTERISTICS OF THE MATERIAL DOES NOT UNDERGO ANY CHANGE. THE STONE IN THE QUARRIED FORM CANNOT BE CONVENIENTLY USED FOR THE PURPOSE OF MAKING MIXTURES FOR CONCRETE OR ROAD TARRING. THEREFORE, FOR SAKE O F CONVENIENCE, THE SAID QUARRIED STONES ARE REQUIRED TO BE CRUSHED INTO VAR IOUS SIZES SO THAT IT CAN BE CONVENIENTLY USED. THUS AS HELD BY THE HONOR ABLE SUPREME COURT IN THE CASE OF S. R. TISSUES PVT. LTD. AND LU CKY MINMAT PRIVATE LIMITED, THE ACTIVITY OF THE APPELLANT CAN NOT TREA TED AS MANUFACTURING. 10. IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE APPE LLANT HAS NOT FULFILLED THE CONDITIONS MENTIONED IN THE ACT FOR GETTING THE DED UCTION U/S. 80IB OF THE INCOME TAX ACT. THE ACTION OF THE ASSESSING OFF ICER IN DISALLOWING THE DEDUCTION U/S. 80IB IS CONFIRMED AND IN THE RES ULT, THE APPEAL IS DISMISSED. AGGRIEVED, ASSESSEE CAME IN SECOND APPEAL BEFORE US . 4. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE, SHRI S.N.L. AGARWALLA STATED THAT EXACTLY ON IDENTICAL FACTS IN IMMEDIATE PRECED ING YEAR, I.E. 2001-02, THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.1/AHD/2005 DATED 16-03-2009, WHEREIN THE TRIBUNAL HAS SET ASIDE THE ISSUE FOLLOW ING EARLIER YEAR IN PARA-4-6 AS UNDER:- I TA NO.960/AHD/2006 A.Y.2002-03 SMT. RASILABEN N CHAUHAN V ITO WD-3, VAPI PAGE 4 4. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORE SAID FINDINGS OF THE LEARNED CIT(A). AT THE OUTSET, THE LEARNED AR OF TH E ASSESSEE INVITED OUT ATTENTION TO A DECISION DATED 5-10-2007 OF THE ITAT D BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-04 AND 2004-05 IN ITA NO.3202 AND 3203/AHD/2007 AND SUBMITTED THAT THE MATTER MAY9 BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FO R RE-EXAMINATION AS DIRECTED BY THE ITAT IN THE ASSESSMENT YEAR 2003-04 AND 2004-05. THE LEARNED DR DID NOT OPPOSE THESE SUBMISSIONS OF THE LEARNED AR ON BEHALF OF THE ASSESSEE. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO DECISION OF THE ITAT RELIED UPON BY TH E LEARNED AR ON BEHALF OF THE ASSESSEE. IN THE SAID DECISION DATED 5-10-2007, THE TRIBUNAL HELD AS UNDER:- 6. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE O N RECORD WE FIND THAT THE IN BOTH THE ASSESSMENT YEARS 2003-04 AND 2 004-05 THE ASSESSEE HAS FILED PAPER BOOK CONTAIANING79 AND 64 PAGES RESPECTIVELY. IN THE CERTIFICATE APPENDED TO THE PA PER BOOK IN BOTH THE YEARS UNDER APPEAL IT IS STATED THAT EXCEPT DOC UMENTS AT SL. NO.5.3, 5.4 AND 5.3 WHICH WERE HELD BEFORE THE LEAR NED CIT(A) ONLY OTHER DOCUMENTS WERE HELD BEFORE THE AO AND TH E LEARNED CIT(A). AT SL.NO.3 OF THE PAPER BOOK IS THE WRITTEN SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) ON 23-2-2007 AND 27. 2.2007. AT SL.NO.5.3 ARE COPIES OF VOUCHERS OF BUILDING EXPENS ES AND AT SL.5.4 IS THE CERTIFICATE OF ARCHITECT SHRI KALPESH M PATEL. THE LEARNED DR HAS NOT POINTED OUT BEFORE THE BENCH THA T THE OTHER DOCUMENTS CLAIMED BY THE ASSESSEE SHOULD HAVE BEEN FILED BEFORE THE AO WAS NOT IN FACT FILED BEFORE HIM. IN THE ABOVE CIRCUMSTANCES OF THE CASE, IN OUR CONSIDERED OPINIO N THE AO SHOULD HAVE PASSED THE ASSESSMENT ORDER TAKING INTO CONSIDERATION THE DOCUMENTS FILED BEFORE HIM. WE FI ND THAT THE AO HAS PASSED THE ORDER U/S.144 OF THE ACT WITHOUT CON SIDERING THE DOCUMENTS AND SUBMISSIONS FILED BEFORE HIM. HENCE, IN OUR CONSIDERED OPINION IT WILL BE JUST AND FAIR TO REST ORE THE ISSUES IN THE APPEAL BACK TO THE FILE OF THE AO TO RE-ADJUDIC ATE THE SAME AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE AND CONSIDERING THE DOCUMENTS AND SUBMISSIONS OF THE AS SESSEE. WE DO SO. 6. IN THE LIGHT OF THE AFORESAID FINDINGS OF THE IT AT AND UNDISPUTED SUBMISSIONS ON BEHALF OF THE ASSESSEE, WE VACATE TH E FINDINGS OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH SIMILAR DIRECTIONS AND ADJUDICATE THE MATTER AFTER AFFORDING SUFFICIEN T OPPORTUNITY OF HEARING BY ASSESSEE AND CONSIDERING THE VARIOUS DOCUMENTS A ND SUBMISSIONS. I TA NO.960/AHD/2006 A.Y.2002-03 SMT. RASILABEN N CHAUHAN V ITO WD-3, VAPI PAGE 5 SINCE THE FACTS ARE EXACTLY IDENTICAL THAT IN EARLI ER YEAR, AS WELL AS IN FUTURE YEARS AND THE TRIBUNAL HAS SET ASIDE THIS ISSUE. HE NCE, TAKING A CONSISTENT VIEW, WE SET ASIDE THE ISSUE TO THE FILE OF ASSESSI NG OFFICER TO DECIDE IN TERMS OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN C ASE IN EARLIER YEAR. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED FOR STATISTIC AL PURPOSES. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 17/09/2010 SD/- SD/- (N.S.SAINI) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 17/09/2010 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-VLS 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD