Sawaria Pipes Pvt. Ltd., Hyderabad V. ACIT, Circle-3(1), Hyderabad

MA 196/HYD/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0245 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 12-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 80IB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER M.A NO. 196/H/2012 ARISING OUT OF ITA NO. 141/H/2012 ASSESSMENT YEAR 2008-2009 M/S. SAWARIA PIPES P. LTD. HYDERABAD PAN AAFCS3155C VS. ACIT, CIRCLE 3(1) HYDERABAD (APPLICANT) (RESPONDENT) FOR APPLICANT : SHRI S.RAMA RAO FOR RESPONDENT : MS. AMISHA S. GUPT DATE OF HEARING : 08.03.2013 DATE OF PRONOUNCEMENT : 10.05.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. 1. THE TRIBUNAL IN ITA NO.141/H/2012 DT.9.7.12 FOR THE AY 2008-09 HAD CONFIRMED THE DISALLOWANCE OF DEDUCTION U/S 80 IB CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS NOT A S MALL SCALE UNDERTAKING AS ON THE LAST DATE OF PREVIOUS YEAR RE LEVANT TO AY 2008-09. THE ASSESSEE HAS NOW MOVED A MISCELLANEOUS APPLICAT ION STATING AS UNDER: 2 2) THIS SECTION APPLIED TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS, NAMELY:- I. IT IS NOT FORMED BY SPLITTING UP, OR THE RECONSTRUC TION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE- ESTABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASS ESSEE OF THE BUSINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS R EFERRED TO IN SECTION 3B, IN THE CIRCUMSTANCES AND WITHIN THE PER IOD SPECIFIED IN THAT SECTION; II. IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; III. IT MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, N OT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVE NTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA: PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL, I N RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) SHALL APPLY AS IF TH E WORDS NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE E LEVENTH SCHEDULE HAD BEEN OMITTED. IT WAS FURTHER POINTED OUT IN THE MISCELLANEOUS APPLICATION THAT IN THE CASE OF THE ASSESSEE THE LEARNED CIT(A ) GAVE A FINDING THAT THE ASSESSEE IS MANUFACTURING HOT ROLLED STRIP S, ERWS PIPES AND TUBES WHICH IS NOT AN ARTICLE OR THING SPECIFIE D IN THE LIST IN THE ELEVENTH SCHEDULE. 3 KIND ATTENTION IS INVITED TO PARA 6 OF THIS ORDER A T PAGE 6. ONCE THE ASSESSEE IS NOT MANUFACTURING THE ARTICLE OR THING LISTED IN ELEVENTH SCHEDULE IT IS NOT REQUIRED TO BE A SMALL SCALE INDUSTRY AS COULD BE SEEN FROM THE PROVISO TO THE SEC.80 IB(2)( III) WHICH IS RE- PRODUCED ABOVE. IN SUCH CIRCUMSTANCES EVEN IF THE A SSESSEE IS NOT A SMALL SCALE INDUSTRY IT IS ENTITLED FOR DEDUCTION. DURING THE COURSE OF APPEAL PROCEEDINGS THE ASSESSEE SUBMITTED THIS AND DREW ATTENTION TO THE ORDER OF THE LEARNED CIT(A) FOR THE FINDING OF FACT. AS AGAINST THIS THE HONBLE ITAT WENT ON TO REAFFIRM WHAT IS S TATED BY THE CIT(A) AND THE AO THAT SINCE THE ASSESSEE IS NOT A SMALL SCALE INDUSTRY IT IS NOT ENTITLED FOR DEDUCTION THROUGH I T IS ENTITLED FOR THE SAME IN VIEW OF THE PROVISIONS OF SEC.80 IB (2)(III ). THIS IS A FACTUAL AND LEGAL ERROR. THE HONBLE ITAT, BY THEIR DECISI ON HAS DENIED THE ASSESSEE A DEDUCTION WHICH IT IS OTHERWISE ELIGIBLE . IT IS TO PRAY THE HONBLE ITAT TO RECTIFY THE MISTAKE AND PASS APPROP RIATE ORDERS. 2. IT IS THE CONTENTION OF THE ASSESSEE THAT THEY A RE ENTITLED TO UNDERTAKE U/S.80IB EVEN THOUGH THEY ARE NOT A SMALL SCALE UNDERTAKING BECAUSE EVEN MEDIUM AND LARGE SCALE INDUSTRIAL UNDE RTAKINGS ARE ENTITLED TO RELIEF U/S 80IB (3) AS LONG AS THEY ARE NOT MANUFACTURING ANY ARTICLES SPECIFIED UNDER ELEVENTH SCHEDULE.. 3. THE ASSESSEE HAS ESTABLISHED A SMALL SCALE INDUS TRIAL UNDERTAKING AND COMMENCED PRODUCTION FROM 10.2.2000. IF THE AS SESSEE IS NOT TO BE CONSIDERED AS SMALL SCALE INDUSTRIAL UNDERTAKING TH EN THE DEDUCTION U/S.80IB IN RESPECT OF MEDIUM AND LARGE SCALE UNDER TAKING WOULD BE AVAILABLE IF THEY COMPLY WITH THE REQUIREMENTS OF N OT ONLY SUB SECTION 80IB(2) BUT ALSO SUB SECTION 80IB(3) WHICH READS AS UNDER: (3) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDU STRIAL UNDERTAKING SHALL BE TWENTY-FIVE PERCENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY), OF THE PROFITS AN D GAINS 4 DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR A PERI OD OF TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATI VE SOCIETY) BEGINNING WITH THE INITIAL ASSESSMENT YEAR SUBJECT TO THE FULFILLMENT OF THE FOLLOWING CONDITIONS, NAMELY :- (I) IT BEGINS TO MANUFACTURE OR PRODUCE, ARTICLES OR THINGS OR TO OPERATE SUCH PLANT OR PLANTS AT ANY TIME DURI NG THE PERIOD BEGINNING FROM THE 1 ST DAY OF APRIL, 1991 AND ENDING ON THE 31 ST DAY OF MARCH, 1995 OR SUCH FURTHER PERIOD AT THE CENTRAL GOVERNMENT MAY, BY NOTIFICATION IN THE OFFI CIAL GAZETTE, SPECIFY WITH REFERENCE TO ANY PARTICULAR U NDERTAKING; (II) WHERE IT IS AN INDUSTRIAL UNDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING, IT BEGINS TO MANUFACT URE OR PRODUCE ARTICLES OR THINGS OR TO OPERATE ITS COLD S TORAGE PLANT [NOT SPECIFIED IN SUB-SECTION (4) OR SUB-SECTION (5 )] AT ANY TIME DURING THE PERIOD BEGINNING ON THE 1 ST DAY OF APRIL, 1995 AND ENDING ON THE [31 ST DAY OF MARCH, 2002]. 4. THEREFORE IF THE ASSESSEE, WHO IS NOT A SMALL SC ALE INDUSTRIAL UNDERTAKING, WERE TO CLAIM DEDUCTION U/S.80IB AND T HEN AS PER SUB SEC 80 IB(3)(I) THEY SHOULD HAVE COMMENCED ITS PRODUCTION AT ANY TIME DURING THE PERIOD STARTING FROM 1 ST APRIL 1991 AND ENDING WITH 31 ST MARCH 1995. IT IS ONLY IN THE CASE OF SMALL SCALE INDUSTRIAL UNDERTAKING THE PERIOD OF COMMENCEMENT O F PRODUCTION IS BETWEEN 1 ST DAY OF APRIL 1995 AND ENDING 31 ST MARCH 2002. IT IS BECAUSE OF THIS REQUIREMENT THAT THE ASSESSEE, WHO COMMENCED THEIR PRODUCTION IN FEBRUARY 2000, CLAIMED DEDUCTIO N U/S 80IB AS A SMALL SCALE UNDERTAKING. THEREFORE, WHEN THE ASS ESSEE HAS BEEN FOUND IS NOT TO BE A SMALL SCALE INDUSTRIAL UNDERTA KING THEY WILL BE ENTITLED TO U/S.80IB ONLY IF SATISFIES THE REQUIREM ENTS FOR 5 UNDERTAKINGS WHICH ARE NOT SMALL SCALE UNDERTAKINGS VIZ., IT HAD COMMENCED PRODUCTION BETWEEN THE PERIOD 1 ST APRIL 1991 AND ENDING WITH 31 ST MARCH 1995. AS THE ASSESSEE HAS COMMENCED PRODUCTION FROM FEBRUARY 2000 THEY WILL NOT BE ENTI TLED TO DEDUCTION U/S.80IB. 5. IN THE CIRCUMSTANCES THE MISCELLANEOUS APPLICATI ON FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.05.2013. SD/- SD/- (CHANDRA POOJARI) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 10 TH MAY, 2013. VBP/- COPY TO 1. M/S. SAWARIA PIPES P. LTD., C/O. R.JASRAJ & CO., AD VOCATE, 15-1-91/4/A, 2 ND FLOOR, PAPALAL PLAZA, FEELKHANA, HYDERABAD PAN AAFCS3155C 2. ACIT, CIRCLE 3(1), HYDERABAD 1. THE CIT (A)-IV, HYDERABAD 2. THE CIT-III, HYDERABAD 3. D.R. B BENCH, I.T.A.T. HYDERABAD