M/s J.K. International, Kangra V. DCIT, Palampur

MA 49/CHANDI/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5491 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 3 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHRIJ S BHASIN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH SMC CHANDIGARH , ! BEFORE: SMT. DIVA SINGH, JM M.A. NO. 49/CHD/2018 IN ./ ITA NO. 815/CHD/2017 / ASSESSMENT YEAR : 2011-12 M/S J.K.INTERNATIONAL, PLOT NO. 18, INDUSTRIAL AREA, BAI ATARIAN, PO-KANORORI, TEHSIL-INDORA, KANGRA (HP). VS THE DCIT, CIRCLE, PALAMPUR. ./ PAN NO. : AAEFJ9527D / APPELLANT / RESPONDENT & ./ ITA NO. 815/CHD/2017 / ASSESSMENT YEAR : 2011-12 M/S J.K.INTERNATIONAL, PLOT NO. 18, INDUSTRIAL AREA, BAI ATARIAN, PO-KANORORI, TEHSIL-INDORA, KANGRA (HP). VS THE DCIT, CIRCLE, PALAMPUR. ./ PAN NO. : AAEFJ9527D / APPELLANT / RESPONDENT / ASSESSEE BY : SHRIJ.S.BHASIN, ADVOCATE / REVENUE BY : SMT. CHANDERKANTA, SR.DR ! ' # / DATE OF HEARING : 03.05.2019 $%&' # / DATE OF PRONOUNCEMENT : 28.05.2019 '#/ ORDER BY THE PRESENT MISCELLANEOUS APPLICATION U/S 254(2) OF THE INCOME TAX ACT,1961, THE ASSESSEE PRAYS FOR RECALL OF EX-P ARTE ORDER DATED 11.08.2017 IN ITA 815/CHD/2017 WHEREIN THE ASSESSEE 'S APPEAL WAS DISMISSED RELYING ON THE ORDER OF THE ITAT IN THE C ASE OF HYCRON ELECTRONICS V ITO IN ITA 798/CHD/2012 DATED 27.05.2015. 2. THE LD. AR RELYING UPON THE DECISION OF THE JURI SDICTIONAL HIGH COURT IN THE CASE OF M/S STOVE CRAFT INDIA VERSUS CIT-V A ND OTHERS IN ITA 20 TO MA- 49/CHD/2018 & ITA 815/CHD/2017 PAGE 2 OF 5 24/2015 SUBMITTED THAT THE PRESENT MISCELLANEOUS AP PLICATION HAS BEEN FILED PRAYING FOR A RECALL OF THE ORDER. IT WAS HI S SUBMISSION THAT NO DOUBT THE DECISION OF THE APEX COURT IN THE CASE OF CIT V S M/S CLASSIC BINDING INDUSTRIES & ORS. IN CIVIL APPEAL NO. 7208 AND OTHE RS OF 2018 DATED 20.08.2018 WAS AGAINST THE ASSESSEE, HOWEVER, THE L EGAL POSITION AS HAS NOW BEEN FINALLY SETTLED BY THE LATEST DECISION OF THE APEX COURT IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHE RS IN CIVIL APPEAL NO. 1784 OF 2019 DATED 20.02.2019 IS IN FAVOUR OF ASSES SEE'S STATED CLAIM. ACCORDINGLY, IT WAS HIS PRAYER THAT THE ORDER PASSE D CONTRARY TO THE POSITION OF LAW AS ADDRESSED BY THE APEX COURT MAY BE RECALL ED. 3. THE LD. SR.DR MS. CHANDER KANTA IN THE FACE OF T HE SETTLED LEGAL POSITION AGREED THAT THE ORDER IS RECTIFIABLE AND P OSED NO OBJECTION TO THE PRAYER OF RECALL. 4. IT WAS ALSO A COMMON PLEA OF THE PARTIES THAT S INCE ALL NECESSARY FACTS HAVE BEEN CONSIDERED BY THE TAX AUTHORITIES AS WELL AS THE ITAT , THE ARGUMENTS ADVANCED IN THE MISCELLANEOUS APPLICATION ON THE POSITION OF LAW WOULD ALSO BE FULLY APPLICABLE TO THE ISSUE AT HAND IN THE APPEAL. ACCORDINGLY, IT WAS A COMMON STAND OF THE PARTIES T HAT THE APPEAL MAY ALSO BE TAKEN UP TODAY ITSELF. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE APPEAL OF THE ASSESS EE WAS DISMISSED BY AN EX- PARTE ORDER HOLDING AS UNDER : 2. AT THE TIME OF HEARING, A COUNSEL STOOD UP STAT ING THAT HE IS PROXY COUNSEL, AS SUCH TIME WAS SOUGHT. THE LD. SR.DR OBJECTED TO TH E REQUEST FOR TIME STATING THAT IT IS A COVERED ISSUE BY THE ORDER DATED 08.10.2015 OF THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO, BADDI ITA NO . 326/CHD/2015. ACCORDINGLY, A PASS OVER WAS GIVEN TO ALLOW TIME TO THE CONCERNED PERSON TO FAMILIARIZE HIMSELF WITH THE FACTS. IN THE SECOND ROUND, WHEN THE APPEAL WAS CALLED, THE PERSON STATING TO BE PROXY COUNSEL WAS NOT PRESENT. IT WAS FURTHER NOTED THAT THERE IS NO POWER OF ATTORNEY ON RECORD. ACCORDINGLY, IT COULD NOT BE SAID THAT R EQUEST FOR TIME WAS MADE ON BEHALF OF THE ASSESSEE. IN THE CIRCUMSTANCES, CONSIDERING TH E MATERIAL AVAILABLE ON RECORD AND THE SUBMISSIONS OF THE LD. SR.DR, IT WAS PROPOSED T O PROCEED WITH THE PRESENT APPEAL EX- PARTE QUA THE ASSESSEE APPELLANT ON MERITS. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE AO V IDE HIS ORDER DATED 14.08.2015 U/S 263/143(3) OF THE ACT CONSIDERING THE CLAIM OF DEDU CTION OF 100% U/S 80IC RESTRICTED IT TO 25% ON THE GROUND THAT BEING THE 6 TH YEAR OF THE DEDUCTION FROM THE INITIAL ASSESSMENT MA- 49/CHD/2018 & ITA 815/CHD/2017 PAGE 3 OF 5 YEAR 2006-07 100% DEDUCTION COULD NOT BE ALLOWED. THE SAID CLAIM WAS UPHELD BY THE CIT(A) RELYING UPON THE AFORESAID ORDER OF THE ITA T IN THE CASE OF M/S HYCRON ELECTRONICS VS ITO, BADDI ITA NO. 326/CHD/2015. IN THE ABSENCE OF ANY DISTINCTION OF FACTS, CIRCUMSTANCES OR POSITION OF LAW HAVING BEEN BROUGHT TO THE NOTICE OF THE BENCH, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER. BEING SATISFIED BY THE REASONING AND THE FINDING, THE APPEAL OF THE ASSESSEE IS DISMISSE D. 5.1 CONSIDERING THE LEGAL POSITION AS SETTLED IN PC IT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS (SUPRA) ADMITTEDLY THE V IEW TAKEN ABOVE IS NOT IN CONSONANCE WITH THE LEGAL POSITION SETTLED BY TH E APEX COURT. IT IS SEEN THAT THE APPEAL WAS DECIDED EX-PARTE WHERE ADMITTED LY THE ASSESSEE COULD NOT PARTICIPATE. ACCORDINGLY, IN THE LIGHT OF THE S UBMISSIONS OF THE PARTIES BEFORE THE BENCH, EXERCISING THE POWERS AS VESTED I N ME BY PROVISO TO RULE 24 OF THE ITAT RULES 1963, THE ORDER DATED 11.08.20 17 IS RECALLED. SUPPORT IS DRAWN FROM THE DECISION OF THE HON'BLE DELHI HIG H COURT IN THE CASE OF CIT VS ANSAL HOUSING CONSTRUCTION LTD. 274 ITR 131 (DEL ). 6. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE ASSESSEE CONSIDERING THE LEGAL POSITION AS SET OUT IN AARHAM SOFTRONICS & OTHERS (SUPRA) AND THE FACT THAT THE ASSESSEE WAS NOT HEAR D, IS ALLOWED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT ITSELF. 7. ACCORDINGLY, IN TERMS OF THE ORAL PRAYER OF THE PARTIES ITA 815/CHD/2017 WAS TAKEN UP FOR HEARING. 8. BOTH THE PARTIES HAVE BEEN HEARD. THE COMMON STA ND AT THE COST OF RE-ITERATION REMAINS THAT THE LEGAL VIEW IS SETTLED IN FAVOUR OF THE ASSESSEE AND ON FACTS THERE IS NO DISPUTE. 9. A PERUSAL OF THE RECORD SHOWS THAT THE PRESENT A PPEAL HAS BEEN FILED BY THE ASSESSEE ASSAILING THE CORRECTNESS OF THE OR DER DATED 24.03.2017 OF CIT(A) PALAMPUR PERTAINING TO 2011-12 ASSESSMENT YE AR WHEREIN THE DEDUCTION CLAIMED AT 100% OF ELIGIBLE PROFITS U/S 8 0IC WAS RESTRICTED FOLLOWING THE DECISION OF THE ITAT IN THE CASE OF H YCRON ELECTRONICS V ITO IN ITA 798/CHD/2012 DATED 27.05.2015. THE ASSESSEE'S CLAIM OF HAVING CARRIED OUT SUBSTANTIAL EXPANSION DURING 2007-08 AS SESSMENT YEAR WAS CONSIDERED TO BE NOT RELEVANT AS IT WAS THE 6 TH YEAR OF MANUFACTURING ACTIVITY AND THE TAX HOLDING OF 100% DEDUCTION OF FIVE YEARS STOOD EXHAUSTED. THE MA- 49/CHD/2018 & ITA 815/CHD/2017 PAGE 4 OF 5 VIEW WAS AFFIRMED BY THE CIT(A) ALSO. HOWEVER, IT IS SEEN THAT THE APEX COURT HAS CONSIDERED THE LEGAL POSITION IN THE CASE OF PCIT SHIMLA VS M/S AARHAM SOFTRONICS & OTHERS (SUPRA) WHEREIN THE SAID CONTROVERSY HAS BEEN SETTLED. FOR READY REFERENCE, WE EXTRACT THE RELEV ANT PARAS FROM THE SAID DECISION AS UNDER : 22. IT WOULD BE PERTINENT TO POINT OUT THAT IN PAR A 20 OF THE JUDGMENT IN CLASSIC BINDING INDUSTRIES, THIS COURT OBSERVED THAT IF DED UCTION @ 100% FOR THE ENTIRE PERIOD OF 10 YEARS, IT WOULD BE DOING VIOLENCE TO T HE LANGUAGE OF SUB-SECTION (6) OF SECTION 80-IC. HOWEVER, THIS OBSERVATION CAME WITH OUT NOTICING THE DEFINITION OF INITIAL ASSESSMENT YEAR CONTAINED IN THE SAME VER Y PROVISION. 23. HAVING EXAMINED THE MATTER IN THE AFORESAID PERSPECTIVE, JUDGMENT IN THE CASE OF MAHABIR INDUSTRIES V. PRINCIPAL COMMISSIONE R OF INCOME TAX WOULD, IN FACT, HELP THE ASSESSEE. THE FINE DISTINCTION POINT ED OUT IN CLASSIC BINDING INDUSTRIES ELOPES THEREBY. TO RECAPITULATE, IN MAHA BIR INDUSTRIES, IT WAS HELD THAT IF AN ASSESSEE GET 100% 2 CIVIL APPEAL NOS. 4765-4766 OF 2018 DECIDED ON MA Y 18, 2018 24 EXEMPTION UNDER SECTION 80-IB OF THE ACT FOR FIVE Y EARS AND THEREAFTER CARRIES OUT THE SUBSTANTIAL EXPANSION BECAUSE OF WH ICH SAID ASSESSEE BECOMES ENTITLED TO EXEMPTION UNDER THE NEW PROVISION I.E. SECTION 80-IC OF THE ACT, THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION @ 100% EVEN AFTER FIVE YEARS. THIS RULING WAS PREDICATED ON THE GROUND THAT THERE CAN BE TWO INITIAL ASSESSMENT YEARS, ONE FOR THE PURPOSE OF SECTION 80-IB AND OTHER FOR THE PURPOSES OF SECTION 80-IC OF THE ACT. ONCE WE FIND THAT THERE CAN BE TWO INITIAL ASS ESSMENT YEARS, EVEN AS PER THE DEFINITION THEREOF IN SECTION 80-IC ITSELF, THE LEG AL POSITION COMES AT PAR WITH THE ONE WHICH WAS DISCUSSED IN MAHABIR INDUSTRIES. 24. THE AFORESAID DISCUSSION LEADS US TO THE FOL LOWING CONCLUSIONS: (A) JUDGMENT DATED 20TH AUGUST, 2018 IN CLASSIC BIN DING INDUSTRIES CASE OMITTED TO TAKE NOTE OF THE DEFINITION INITIAL ASSESSMENT YEAR CONTAINED IN SECTION 80-IC ITSELF AND INSTEAD BASED ITS CONCLUSION ON THE DEFI NITION CONTAINED IN SECTION 80- IB, WHICH DOES NOT APPLY IN THESE CASES. THE DEFINI TIONS OF INITIAL ASSESSMENT YEAR IN THE TWO SECTIONS, VIZ. SECTIONS 80-IB AND 80-IC ARE MATERIALLY DIFFERENT. THE DEFINITION OF INITIAL ASSESSMENT YEAR UNDER S ECTION 80-IC HAS MADE ALL THE DIFFERENCE. THEREFORE, WE ARE OF THE OPINION THAT T HE AFORESAID JUDGMENT DOES NOT LAY DOWN THE CORRECT LAW. (B) AN UNDERTAKING OR AN ENTERPRISE WHICH HAD SET U P A NEW UNIT BETWEEN 7TH JANUARY, 2003 AND 1ST APRIL, 2012 IN STATE OF HIMAC HAL 25 PRADESH OF THE NATURE MENTIONED IN CLAUSE (II) OF SUB-SECTION (2) OF SECT ION 80-IC, WOULD BE ENTITLED TO DEDUCTION AT THE RATE OF 100% OF THE PROFITS AND GA INS FOR FIVE ASSESSMENT YEARS COMMENCING WITH THE INITIAL ASSESSMENT YEAR. FOR THE NEXT FIVE YEARS, THE ADMISSIBLE DEDUCTION WOULD BE 25% (OR 30% WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS. (C) HOWEVER, IN CASE SUBSTANTIAL EXPANSION IS CARRI ED OUT AS DEFINED IN CLAUSE (IX) OF SUB-SECTION (8) OF SECTION 80-IC BY SUCH AN UNDE RTAKING OR ENTERPRISE, WITHIN THE AFORESAID PERIOD OF 10 YEARS, THE SAID PREVIOUS YEAR IN WHICH THE SUBSTANTIAL EXPANSION IS UNDERTAKEN WOULD BECOME INITIAL ASSES SMENT YEAR, AND FROM THAT ASSESSMENT YEAR THE ASSESSEE SHALL BEEN ENTITLED TO 100% DEDUCTIONS OF THE PROFITS AND GAINS. MA- 49/CHD/2018 & ITA 815/CHD/2017 PAGE 5 OF 5 (D) SUCH DEDUCTION, HOWEVER, WOULD BE FOR A TOTAL P ERIOD OF 10 YEARS, AS PROVIDED IN SUB-SECTION (6). FOR EXAMPLE, IF THE EXPANSION I S CARRIED OUT IMMEDIATELY, ON THE COMPLETION OF FIRST FIVE YEARS, THE ASSESSEE WO ULD BE ENTITLED TO 100% DEDUCTION AGAIN FOR THE NEXT FIVE YEARS. ON THE OTH ER HAND, IF SUBSTANTIAL EXPANSION IS UNDERTAKEN, SAY, IN 8TH YEAR BY AN ASS ESSEE SUCH AN ASSESSEE WOULD BE ENTITLED TO 100% DEDUCTION FOR THE FIRST FIVE YE ARS, DEDUCTION @ 25% OF THE PROFITS AND GAINS FOR THE NEXT TWO YEARS AND @ 100% AGAIN FROM 8TH YEAR AS THIS YEAR BECOMES INITIAL ASSESSMENT YEAR ONCE AGAIN. 26 HOWEVER, THIS 100% DEDUCTION WOULD BE FOR REMAINING THREE YEARS, I.E., 8TH, 9TH AND 10TH ASSESSMENT YEARS. 25. IN VIEW OF THE AFORESAID, WE AFFIRM THE JUDGMEN T OF THE HIGH COURT ON THIS ISSUE AND DISMISS ALL THESE APPEALS OF THE REVENUE. LIKEWISE, APPEALS FILED BY THE ASSESSEES ARE HEREBY ALLOWED. 10. ACCORDINGLY, IN VIEW OF THE LEGAL POSITION AS F INALLY SETTLED, THE APPEAL OF THE ASSESSEE IS ALLOWED. SAID ORDER WAS PRONOUNC ED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 11. IN THE RESULT, M.A./49/CHD/2018 FILED BY THE RE VENUE IS ALLOWED. 12. IN THE RESULT, THE ITA 815/CHD/2017 FILED BY TH E ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MAY,2019. SD/- ( ) (DIVA SINGH) ! / JUDICIAL MEMBER & ' %( )* +* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ! , / CIT 4. ! , ( )/ THE CIT(A) 5. *-. / , # / , 012.3 / DR, ITAT, CHANDIGARH 6. .2 4' / GUARD FILE %( ! / BY ORDER, 5 / ASSISTANT REGISTRAR