DCIT 8(2), V. LEXI PENS (INDIA) PVT. LTD,

MA 49/MUM/2011

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6981 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 18-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: M SUBRAMANIAN
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI R.K.PANDA, ACCOUNTANT MEMBER M.A.NO. 49/MUM/2011 ARISING OUT OF ITA. NO. 4883/MUM/2008 - ASSESSMENT YEAR 2005-2006 DCIT, RANGE 8 (2) MUMBAI 400020 VS. LEXI PENS (INDIA) PVT. LTD. MUMBAI 53 PAN AAACL7243D (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI V.V.SHASTRI (DR) FOR RESPONDENT : SHRI M.SUBRAMANIAN (AR) DATE OF HEARING : 02-09-2011 DATE OF PRONOUNCEMENT : 14-09-2011 ORDER PER D. MANMOHAN, V.P. 1. BRIEF FACTS, NECESSARY FOR THE DISPOSAL OF THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE, ARE STATED AS UND ER. 2. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING PEN PARTS. DURING THE PREVIOUS YEAR R ELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, IT CLAIMED DED UCTION UNDER SECTION 80IB OF THE ACT. THE CASE OF THE ASSESSING OFFICER WAS THAT THE OLD PLANT AND MACHINERY TRANSFERRED FROM MUMBAI TO DAMAN WORKED OUT TO MORE THAN 20% OF THE TOTAL PLANT AND MACHINE RY OF THE UNDERTAKING AND HENCE ASSESSEE IS NOT ENTITLED TO D EDUCTION UNDER SECTION 80IB OF THE ACT. ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT IN RESPECT OF ASSESSMENT YEAR 2004-200 5 IDENTICAL ISSUE WAS DECIDED BY THE CIT(A) IN FAVOUR OF THE ASSESSEE . THIS NECESSITATED THE ASSESSING OFFICER TO GIVE DETAILED REASONS TO H OLD THAT, DESPITE THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2004-20 05, CIRCUMSTANCES PROVE THAT THE ASSESSEE HAD FORMED THE NEW INDUSTRI AL UNDERTAKING AT 2 DAMAN BY TRANSFER OF MORE THAN 20% OF THE PLANT AND MACHINERY PREVIOUSLY USED AT ITS FACTORY AT MUMBAI ; HE ARRIV ED AT A CONCLUSION THAT THE ASSESSEE WAS NOT IN POSSESSION OF ANY EVID ENCE TO SUBSTANTIATE THE TIMING OF SHIFTING OF MACHINERY. M OREOVER, SIZE AND NATURE OF THE MACHINERY DO NOT REQUIRE BREAKING OF BALCONY WALL FOR THE PURPOSE OF THEIR SHIFTING. IN OTHERWORDS, ASSES SEE IS TRYING TO CREATE AN EVIDENCE IN THE FORM OF A LETTER WRITTEN TO SOCIETY WITH REGARD TO BREAKING-UP OF WALL JUST TO CREATE AN IMPRESSIO N THAT THE BREAKING OF WALL WAS NECESSITATED DUE TO SIZE OF MACHINERY. 3. ON AN APPEAL FILED BY THE ASSESSEE, LEARNED CIT (A) MERELY RELIED UPON THE ORDER PASSED BY THE CIT(A) IN ASSES SEES OWN CASE FOR THE ASSESSMENT YEAR 2004-2005 TO COME TO THE CONCLU SION THAT THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80I B OF THE ACT. HE VIRTUALLY REPRODUCED THE ORDER OF THE CIT(A) IN RES PECT OF THE ASSESSMENT YEAR 2004-2005 TO HIGHLIGHT THAT DESPITE THE ORDER OF THE CIT(A) IN ASSESSEES OWN CASE FOR THE EARLIER YEAR, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN TAKING A DIFFERENT VIEW. LEARN ED CIT(A) HELD THAT THE ASSESSING OFFICER COMMITTED AN ERROR IN DISALLO WING THE DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT. 4. IT MAY BE NOTICED THAT IN RESPECT OF THE ASSESS MENT YEAR 2004-2005 ORDER PASSED BY THE CIT(A) WAS NOT ACCEPT ED BY THE REVENUE AND AN APPEAL WAS FILED BEFORE THE APPELLAT E TRIBUNAL AND A CROSS-OBJECTION WAS ALSO FILED BY THE ASSESSEE WHIC H WERE NUMBERED AS ITA. NO. 7716/MUM/2007 AND C.O.77/MUM/2008 AND P OSTED BEFORE ITAT H BENCH, MUMBAI. THESE CASES WERE REP RESENTED BY MR. M.SUBRAMANIAM ON BEHALF OF THE ASSESSEE AND SHRI B. K. SINGH FOR THE REVENUE. VIDE ORDER DATED 26 TH AUGUST, 2009 THE TRIBUNAL PASSED A DETAILED ORDER ON THE SAID ISSUE WHEREIN IT OBSERVE D THAT THE LEARNED CIT(A) PASSED A CRYPTIC ORDER AND THEREFORE, THE MA TTER REQUIRES FRESH ADJUDICATION BY THE CIT(A) AND ACCORDINGLY SET ASID E THE MATTER WITH A DIRECTION TO GIVE A FINDING AS TO WHETHER THERE WAS ANY VIOLATION OF CONDITIONS PRESCRIBED UNDER SECTION 80IB(2) OF THE ACT. 3 5. AS THE THINGS STOOD THUS, REVENUE FILED AN APPE AL AGAINST THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 200 5-2006 WHICH WAS NUMBERED AS ITA.NO.4833/MUM/2008 WHEREIN THE SAME C OUNSEL APPEARED FOR THE ASSESSEE (I.E., MR. M.SUBRAMANIAM) WHEREAS A DIFFERENT D.R. APPEARED FOR THE REVENUE, PRESUMABLY BECAUSE OF THE FACT THAT THE MATTER WAS PLACED BEFORE ITAT A BEN CH, MUMBAI. DESPITE THE FACT THAT THE DECISION OF THE CIT (A) F OR THE ASSESSMENT YEAR 2005-2006 WAS MAINLY BASED UPON THE ORDER PASS ED BY HIS PREDECESSOR IN ASSESSEES OWN CASE FOR THE ASSESSME NT YEAR 2004- 2005, WHICH WAS HELD TO BE A CRYPTIC ORDER BY THE ITAT, H BENCH, MUMBAI COUNSEL APPEARING FOR THE ASSESSEE DID NOT BRING IT TO THE NOTICE OF THE BENCH ABOUT THE OUTCOME OF THE ORDER PASSED IN THE IMMEDIATELY PRECEDING YEAR. UNDER THE CIRCUMSTANCES , THIS BENCH HAS DISPOSED OF THE APPEAL FILED BY THE REVENUE INDEPEN DENTLY WHEREIN IT WAS HELD THAT THE RATIO OF PLANT AND MACHINERY TRAN SFERRED WAS NOT SPECIFICALLY CHALLENGED BY THE REVENUE BEFORE US AN D HENCE, THE CLAIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WAS ACCE PTED BY THE BENCH. 6. SUBSEQUENTLY, THE REVENUE NOTICED THAT ON THE S AME ISSUE THE ITAT, IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-2005, HAD SET ASIDE THE MATTER FOR FRESH ADJUD ICATION AND HENCE AN ERROR CREPT IN THE IMPUGNED ORDER ON ACCOUNT OF OVERLOOKING THE ORDER PASSED BY THE BENCH IN ITA.NO.7716/MUM/2007. IT WAS ALSO CONTENDED THAT THE FIRST GROUND RAISED BY THE REVEN UE I.E., THE LEARNED CIT(A) ERRED IN DELETING DISALLOWANCE OF CL AIM OF DEDUCTION UNDER SECTION 80IB OF THE ACT WITHOUT APPRECIATING THE FACTS OF THE CASE ; ENTIRELY TAKES CARE OF THE ISSUE OF DISALLO WANCE INCLUDING DISALLOWANCE ON THE GROUND OF PROPORTION OF THE PLA NT AND MACHINERY TRANSFERRED. UNDER THE CIRCUMSTANCES, THE M.A. WAS FILED AGAINST THE ORDER DATED 29-10-2009 SEEKING RECALL OF THE SAID O RDER ON THE GROUND THAT THE DECISION RENDERED BY THE TRIBUNAL I N ITA.4883/M/08 IS PER INCURIAM INASMUCH AS IT DID NOT NOTICE AN EA RLIER DECISION OF THE 4 DIVISION BENCH IN ASSESSEES OWN CASE FOR THE ASSES SMENT YEAR 2004- 2005. 7. WE HAVE HEARD THE LEARNED DR AS WELL AS LEARNED COUNSEL, APPEARING ON BEHALF OF THE ASSESSEE, IN THIS REGARD . LEARNED COUNSEL FILED WRITTEN SUBMISSIONS DATED 10 TH AUGUST, 2011 WHEREIN IT WAS STATED THAT THE CIT(A), WHILE DISPOSING OF THE APPE AL FOR THE ASSESSMENT YEAR 2005-2006, HAD INDEPENDENTLY EXAMIN ED THE FACTS AND CIRCUMSTANCES AND ALSO BROUGHT OUT THE ASSESSIN G OFFICERS ERROR IN CALCULATING PERCENTAGE OF PLANT AND MACHINERY TR ANSFERRED DURING THE FINANCIAL YEAR 2004-2005 RELEVANT TO THE ASSESS MENT YEAR 2005- 2006. IT WAS FURTHER SUBMITTED THAT DURING THE COUR SE OF HEARING OF HEARING, BEFORE THE ITAT, LEARNED DR ARGUED ONLY TH E ISSUE OF AUDIT REPORT AND DID NOT RAISE THE ISSUE OF PERCENTAGE OF MACHINERY TRANSFERRED FROM MUMBAI TO DAMAN. CONSEQUENTLY, THE ASSESSEES REPRESENTATIVE ALSO MADE SUBMISSIONS ONLY ON THE IS SUE OF AUDIT REPORT AND NOT ON THE ISSUE OF PERCENTAGE OF MACHIN ERY TRANSFERRED FROM MUMBAI TO DAMAN. IN OTHERWORDS, THE CONTENTION OF THE LEARNED COUNSEL IS THAT THERE WAS NO OCCASION FOR THE ASSES SEES REPRESENTATIVE TO BRING TO THE NOTICE OF THE BENCH WITH REGARD TO THE ORDER PASSED BY THE ITAT FOR THE ASSESSMENT YEAR 2004-2005. HE FURT HER SUBMITTED THAT IN THE IMPUGNED ORDER THE BENCH HAVING CONSIDE RED THE FACTS OF THE CASE INDEPENDENTLY IT CANNOT BE SAID THAT THERE IS ANY MISTAKE APPARENT FROM RECORD. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. AS COULD BE NOTICED FROM THE ORDER PASS ED BY THE CIT(A) IN RESPECT OF THE ASSESSMENT YEAR 2005-2006, EARLIER O RDER OF THE CIT(A) WAS TAKEN AS THE MAIN BASIS WHILE COMING TO THE CON CLUSION THAT THE RATIO OF THE ASSETS TRANSFERRED FROM MUMBAI TO DAMA N WAS ONLY 14.44%. THOUGH A GENERAL GROUND WAS TAKEN BY THE RE VENUE NO MATERIAL WHATSOEVER WAS FURNISHED TO SUBMIT THAT TH E RATIO OF ASSETS TRANSFERRED FROM MUMBAI, AS FOUND BY THE CIT(A), WA S NOT ACCEPTED BY THE ADMINISTRATIVE CIT WHILE AUTHORIZING THE APPEAL TO BE FILED FOR THE 5 ASSESSMENT YEAR 2005-2006. IN FACT, LEARNED DR HAS NOT ADVANCED ANY ARGUMENTS WITH REGARD TO THE SAID ASPECT AND TH E SAME WAS RECORDED BY US IN PARA 9 OF OUR ORDER BY OBSERVING AS UNDER : 9. IT MAY BE NOTICED THAT THE RATIO OF THE PLANT A ND MACHINERY TRANSFERRED WAS NOT SPECIFICALLY CHALLENGED BY THE REVENUE BEFORE US AND NO ARGUMENTS WERE ADVANCED IN THAT REGARD. 9. NO DOUBT IT IS THE DUTY OF THE COUNSEL TO PROJE CT THE FACTS IN PROPER PERSPECTIVE AND BRING IT TO THE NOTICE OF THE BENCH WHEN AN ORDER WAS PASSED BY THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-2005. UNFORTUNATELY, COUNSELS BELIEVE IN THEIR ROLE OF ASSISTING THE ASSESSEES AND NOT ASSISTING T HE BENCH IN COMING TO A PROPER CONCLUSION AS IS EVIDENT FROM THE WRITT EN SUBMISSIONS FILED BY THE COUNSEL WHEREIN IT IS STATED THAT HE HAD NO OCCASION TO REFER TO THE ORDER OF THE ITAT FOR THE ASSESSMENT YEAR 2004- 2005 AT THE TIME OF ARGUING THE APPEAL FOR THE ASSESSMENT YEAR 2005- 2006. THOUGH WE MAY EMPATHIZE WITH THE DEPLORABLE STANDARDS FOLLOWE D BY THE COUNSELS, WHICH IS BELIEVED TO BE THE PROPER METHOD IN THE COURSE OF DISCHARGING THEIR MORAL DUTIES AS COUNSELS APPEARIN G FOR ASSESSEES, WE CANNOT LOOSE SIGHT OF THE FACT THAT THE REPRESEN TATIVE APPEARING FOR THE REVENUE HAS ALSO AN EQUAL ROLE TO PLAY. IT IS T HE DUTY OF THE ASSESSING OFFICER TO RAISE A SPECIFIC GROUND OR ATL EAST TO MENTION THE SAME IN THE LETTER ADDRESSED TO THE COMMISSIONER FO R OBTAINING AUTHORIZATION. IN THE EVENT OF NOTICING THAT PROPER GROUND IS NOT RAISED, ATLEAST A SENIOR OFFICER, OF THE RANK OF CO MMISSIONER, WHILE DISCHARGING HIS DUTIES UNDER SECTION 253 (2) OF THE ACT, SHOULD HAVE DIRECTED THE ASSESSING OFFICER PROPERLY AND AN EQUA L RESPONSIBILITY IS CAST UPON THE SENIOR D.R. TO REPRESENT THE MATTER O N BEHALF OF THE DEPARTMENT BY MAKING AN ENDEAVOUR TO BRING FORTH TH E REQUIRED MATERIAL, AND IF NECESSARY, BY BRINGING IT TO THE N OTICE OF THE ASSESSING OFFICER AND CIT CONCERNED THE LACUNA IN THE GROUNDS . IT COULD THUS BE SEEN THAT IT IS A CASE WHERE BOTH THE PARTIES HAVE NOT BROUGHT TO OUR 6 NOTICE WITH REGARD TO THE DECISION RENDERED BY THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2004-2005 AND ON T HE TOP OF IT THE LEARNED DR HAS NOT SPECIFICALLY CHALLENGED THE ORDE R OF THE CIT(A) WITH REGARD TO THE ASSUMED RATIO OF PLANT AND MACHINERY TRANSFERRED FROM MUMBAI TO DAMAN FACTORY. SINCE THE DECISION OF THE BENCH IS BASED UPON THE FACTS AND MATERIAL PLACED BEFORE US - AND ALSO IN THE LIGHT OF GROUNDS WHICH WERE RAISED BY THE REVENUE - IN THE A BSENCE OF POINTING OUT WITH CORROBORATIVE EVIDENCE THAT THE R EVENUE INTENDED TO CHALLENGE THE DECISION OF THE CIT(A) WITH REGARD TO THE RATIO OF PLANT AND MACHINERY TRANSFERRED, IT CANNOT BE SAID THAT T HE ORDER PASSED BY THE ITAT SUFFERS FROM ANY MISTAKE APPARENT FROM REC ORD. 10. IN THE CASE OF CIT VS. RAMESH ELECTRIC & TRADI NG CO. 203 ITR 497 (BOM.) THE HONBLE BOMBAY HIGH COURT OBSERV ED THAT A DECISION RENDERED BY THE TRIBUNAL ON ACCOUNT OF FAI LURE OF THE PARTIES IN BRINGING THE CORRECT FACTS CANNOT BE SAID TO GIV E RAISE TO A MISTAKE COMMITTED BY THE TRIBUNAL AND TRIBUNAL HAD NO JURIS DICTION UNDER SECTION 254 (2) TO REVIEW THE MATTER. HAVING REGARD TO THE CIRCUMSTANCES, WE REJECT THE MISCELLANEOUS APPLICAT ION FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 14-09-2011. SD/- SD/- (R.K.PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE 14 TH SEPTEMBER, 2011 VBP/- 7 COPY TO 1. M/S. INDUSTRIAL EXPORTS, FLAT NO. 22, 2 ND FLOOR, SAYED VILLA, 12 RENOLD ROAD, AGRIPADA, MUMBAI-400 008. PAN AA AFI6935Q. 2. ACIT 15 (2), MUMBAI 3. CIT(A)-28, 15 & 16, 3 RD FLOOR, MITTAL COURT, B WING, NARIMAN POINT, MUMBAI 400 021. 4. CIT-15, MUMBAI 5. DR I BENCH 6. GUARD FILE (TRUE COPY) BY ORDER ASST. REGISTRAR, ITAT, MUMBAI BENCHES MUMBAI.