The ACIT Circle-3(3), Hyderabad v. M/s. Vega Conveyors & Automation Ltd, Hyderabad

ITA 1199/HYD/2010 | 2007-2008
Pronouncement Date: 31-12-2010 | Result: Dismissed

Appeal Details

RSA Number 119922514 RSA 2010
Assessee PAN AABCV1639C
Bench Hyderabad
Appeal Number ITA 1199/HYD/2010
Duration Of Justice 3 month(s) 21 day(s)
Appellant The ACIT Circle-3(3), Hyderabad
Respondent M/s. Vega Conveyors & Automation Ltd, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 31-12-2010
Date Of Final Hearing 13-12-2010
Next Hearing Date 13-12-2010
Assessment Year 2007-2008
Appeal Filed On 09-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A HYDERABAD BEFORE SHRI G.C.GUPTA VICE PRESIDENT A ND SHRI AKBER BASHA ACCOUNTANT MEMBER ITA NO.1231/HYD/2010 : ASSESSMENT YEAR 2005-06 ITA NO.1199/HYD/2010 : ASSESSMENT YEAR 2007-08 DY. COMMISSIONER OF INCOME- TAX CIRCLE 3(3) HYDERABAD V/S M/S. VEGA CONVEYORS & AUTOMATION LTD. HYDERABAD ( PAN- AABCV 1639 C ) (APPLICANT) (RESPONDENT) APPELLANT BY : SHRI K.V.N.CHARYA RESPONDENT BY : SHRI G.N.HARI O R D E R PER AKBER BASHA ACCOUNTANT MEMBER THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE CIT(A)-IV HYDERABAD DATED 30. 7.2010 FOR THE ASSESSMENT YEAR 2005-06 AND DATED 15.7.2010 FOR THE ASSESSM ENT YEAR 2007-08. SINCE CERTAIN COMMON FEATURES ARE INVOL VED THESE TWO APPEALS ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.1231/HYD/2010 : ASSESSMENT YEAR 2005-06 2. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL RE AD AS FOLLOWS- ' (I) THE COMMISSIONER OF INCOME-TAX(APPEAL S) IV HYDERABAD HAS ERRED BOTH ON FA CTS AND IN LAW. (II) THE CIT(A) HAS ERRED IN HOLDING THAT THERE IS NO JUSTIFICATION IN DENIAL OF DEDUCTION U/S. 80-IB ONL Y ON THE GROUND THAT THE AUDIT REPORT IN FORM NO.10CCB H AS ITA.NO.1199 AND 1231 /HYD/2010 M/S. VEGA CONVEYORS & AUTOMATI ON LTD. HYD 2 NOT BEEN ENCLOSED WITH THE RETURN OF INCOME WHILE FURNISHING OF FORM NO.10CCB IS MANDATORY FOR CLAIMING DEDUCTION U/S. 80-IB. (III) THE DECISIONS IN THE CASES OF JAGDISH RAM KISHAN CHAND (304 ITR 450(HP); PANAMA CHEMICAL WORKS (245 ITR 684)(MP); GUPTA FABS (274 ITR 620(P&H); VALLI COTTON TRADERS PRIVATE LTD. (288 ITR 400(MAD) ; VISWANATH PRODUCTS (118 ITD 47(ITAT LUCKNOW) REFERRED TO BY THE CIT(A) SPEAK OF A SITUATION WHER E REPORT IN FORM NO.10CCB IS FURNISHED AT THE ASSESSMENT STAGE WHEREAS IN THE ASSESSEE'S CASE FORM NO.10CCB IS FURNISHED DURING THE COURSE OF RE- - ASSESSMENT PROCEEDINGS. (IV) THE HON'BLE APEX COURT IN THE CASE OF SUN ENGINEERI NG WORKS PRIVATE LIMITED (198 ITR 297) AND GOETZ (INDIA) LIMITED (284 ITR 323) HELD THAT PROCEEDINGS U/S. 147 ARE FOR THE BENEFIT OF REVENUE. THEREFORE NO DEDUCTION U/S. 80-IB SHALL BE ALLOWED BASED ON FORM NO.10CCB FILED AT THE STAGE OF RE-ASSESSMENT PROCEEDINGS. ' 3. LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING ON THE ORDER OF THE ASSESSING OFFICER REITERATED THE CONTE NTIONS URGED IN THE ABOVE GROUNDS OF APPEAL AND SUBMITTED THAT THE C IT(A) WAS NOT JUSTIFIED IN ALLOWING RELIEF TO THE ASSESSEE UNDER S.80I B OF THE ACT BASED ON THE AUDIT REPORT IN FORM NO.10CCB FILED DUR ING THE RE- ASSESSMENT PROCEEDINGS. 4. LEARNED COUNSEL FOR THE ASSESSEE REITERATING THE CONTENTIONS URGED BEFORE THE LOWER AUTHORITIES STRONGL Y RELIED ON THE ORDER OF THE CIT(A). HE ALSO PLACED RELIANCE ON THE DE CISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S. HEMSONS I NDUSTRIES (251 ITR 693). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND OTHER MATERIAL A VAILABLE ON RECORD INCLUDING THE CASE-LAW RELIED UPON BY THE PARTIES. IT IS AN UNDISPUTED ITA.NO.1199 AND 1231 /HYD/2010 M/S. VEGA CONVEYORS & AUTOMATI ON LTD. HYD 3 FACT THAT THE ASSESSEE IN THE PRESENT CASE HAS FILED THE A UDIT REPORT IN FORM 10CCB DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE ASSESSEE'S CLAIM FOR DEDU CTION UNDER S.80IB ON THE GROUND THAT THE AUDIT REPORT IN FORM 10CCB WAS NOT FILED ALONGWITH THE RETURN OF INCOME; OR WHETHER THE CIT(A) WAS CORRECT IN PROCEEDING ON THE BASIS OF FORM 10CCB FILED DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS AND DIRECTING THE ASSESSING OFFICER TO ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION U NDER S.80IB OF THE ACT. IT IS SETTLED POSITION OF LAW AS CONSISTENTLY HELD BY VARIOUS BENCHES OF THIS TRIBUNAL AND AS HELD IN VARIOUS DECISIONS REFERRED TO BY THE CIT(A) IN THE IMPUGNED ORDER THAT THOUGH FILIN G OF AUDIT REPORT IN FORM 10CCB IS MANDATORY AND PRE-REQUISITE FOR DEDUCTIO N UNDER S.80IB NON-FILING OF THE SAME ALONGWITH THE RETURN OF INCOME IS ONLY A CURABLE DEFECT AND ASSESSEE'S CLAIM FOR DEDUCTION HAS TO BE CONSIDERED ON ITS MERITS AS AND WHEN THE DEFECT IS CURED B Y FILING FORM 10CCB. WE ARE FORTIFIED IN THIS BEHALF BY THE DECISI ON OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF HAMSONS INDUSTRIES ( SUPRA) RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE. IT IS CONTENDED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE'S CLAIM FOR DEDUCTION UNDER S.80IB CAN BE ENTERTAINED AND EXA MINED ON MERITS WHEN THE AUDIT REPORT IS FILED BEFORE THE COM PLETION OF ASSESSMENT WHICH HAS NOT BEEN DONE IN THE PRESENT CASE SIN CE THE AUDIT REPORT WAS FILED ONLY DURING THE COURSE OF RE-ASSE SSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER WHICH CANNOT END UP GIVING ADDITIONAL DEDUCTIONS/BENEFITS TO THE ASSESSEE. W E DO NOT FIND MERIT EVEN IN THIS CONTENTION OF THE LEARNED DEPARTM ENTAL REPRESENTATIVE. IN THE CASE OF HEMSONS INDUSTRIES (SUPR A) BEFORE THE JURISDICTIONAL HIGH COURT FOR ONE OF THE YEARS U NDER APPEAL BEFORE ITA.NO.1199 AND 1231 /HYD/2010 M/S. VEGA CONVEYORS & AUTOMATI ON LTD. HYD 4 HON'BLE HIGH COURT VIZ. ASSESSMENT YEAR 1979-80 AUDIT R EPORT WAS FILED DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS AND I N RESPONSE TO THE SHOW-CAUSE NOTICE UNDER S.148 ISSUED BY THE ASSESSING OFFICER. IN THIS VIEW OF THE MATTER RESPECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT CITED ABOVE AMONG OTHERS WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE CIT( A). WE ACCORDINGLY UPHOLD THE SAME AND REJECT THE GROUNDS OF THE REVENUE IN THIS APPEAL. ITA NO.1199/HYD/2010 : ASSESSMENT YEAR 2007-08 6. EFFECTIVE GROUNDS OF THE REVENUE IN THIS APPEAL R EAD AS FOLLOWS- '1. THE ORDER OF THE CIT(A) IS ERRONEOUS BOTH ON TH E FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING O FFICER TO GRANT DEDUCTION OF RS.34 16 740 U/S. 80IB(3)(II). 3. THE CIT(A) FAILED TO APPRECIATE THAT THE UNIT II IS A DISTINCT ENTITY AS PER THE PROVISIONS OF INCOM E TAX RULE 18 BBB AND THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE ASSESS EE'S CLAIM AFTER GATHERING ALL RELEVANT FACTS. ' 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE ASSESSING OFFICER SUBMITTED TH AT UNIT II OF THE ASSESSEE IS A DISTINCT ENTITY AND THE CIT(A) WAS NOT J USTIFIED IN ACCEPTING THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER S.8 0IB TREATING THE ENTIRE UNDERTAKING AS ONE ENTITY. NAR RATING THE FACTS OF THE CASE OF THE ASSESSEE AND TAKING US THROUGH THE RELEVA NT PARAS OF THE ASSESSMENT ORDER HE PLACED RELIANCE ON THE FOLLOWIN G DECISIONS- (1) TEXTILE MACHINERY CORPORATION V/S. CIT (107 ITR 195)- SC (2) MAHINDRA SINTERED PRODUCTS LTD. V/S. CIT (177 ITR 111) -BOM. ITA.NO.1199 AND 1231 /HYD/2010 M/S. VEGA CONVEYORS & AUTOMATI ON LTD. HYD 5 (3) MADRAS MACHINE TOOLS MANUFACTURERS P. LTD. C/S. CIT (98 ITR 119)-MAD. 8. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY RELIE D ON THE ORDER OF THE CIT(A) SUBMITTED THAT THE ASSESSEE IS EN GAGED IN MANUFACTURE OF CONVEYOR AND MATERIAL HANDLING EQUIP MENTS. IT IS THROUGH THE COORDINATED ACTIVITIES OF BOTH THE UNITS TH AT THE ASSESSEE MANUFACTURES THE CONVEYOR AND MATERIAL HANDLING EQUIP MENTS AND AS SUCH IT IS NOT CORRECT TO SAY THAT UNIT II IS AN INDEPEND ENT ENTITY DISTINCT FROM UNIT I. HE PLACED RELIANCE ON THE SPECIA L BENCH DECISION OF THE TRIBUNAL IN VSNL V/S. CIT (111 ITD 190). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES. ASSESSEE UNDISPUTEDLY I S ENGAGED IN THE MANUFACTURE OF CONVEYOR AND MATERIAL HANDLING E QUIPMENTS. IT IS EVIDENT FROM THE ORDERS OF THE LOWER AUTHORITIES THAT EVEN THOUGH THE UNIT II HAD A SEPARATE LAND BUILDING AND SOME PLANT AND MACHINERY IT CANNOT BE SAID TO HAVE THE BASIC CHARACTER OF INDEPENDE NCE OF FUNCTION AND ABILITY TO SURVIVE INDEPENDENT OF UNIT I. IN TH E CASE OF VSNL (SUPRA) SPECIAL BENCH OF THE TRIBUNAL HAS HELD THAT D ISTINGUISHING FEATURE OF AN UNDERTAKING ELIGIBLE FOR DEDUCTION IS I TS BASIC CHARACTER OF INDEPENDENCE OF FUNCTION AND ABILITY TO SURVIVE INDEPE NDENTLY OF THE OLD UNITS. WHETHER A PARTICULAR UNIT IS A DISTINCT EN TITY OR PART OF THE OTHER UNITS DEPENDS UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. SINCE IN THE CASE ON HAND UNIT II CANNOT SURVIVE ON I TS OWN AND INDEPENDENT OF UNIT I IT HAS TO BE HELD THAT IT FO RMS PART OF THE ASSESSEE'S UNDERTAKING AS A WHOLE AND NOT A DISTINCT ENTI TY. THE CASE- LAW RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESEN TATIVE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. IN THIS VIE W OF THE MATTER WE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE C IT(A). WE ITA.NO.1199 AND 1231 /HYD/2010 M/S. VEGA CONVEYORS & AUTOMATI ON LTD. HYD 6 ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A) AND REJECT THE GROUNDS OF THE REVENUE IN THIS APPEAL. 10. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 31ST DECEMBER 2010 SD/- SD/- (G.C.GUPTA) (AKBER BASHA) VICE PRESIDENT. ACCOUNTANT MEMBER. DT/- 31ST DECEMBER 2010 COPY FORWARDED TO: 1. M/S. VEGA CONVEYORS & AUTOMATION LTD. PLOT NO.201 /7 & 204/2 PHASE-II IDA CHERLAPALLY HYDERABAD 2. DY. COMMISSIONER OF INCOME-TAX CIRCLE 3(3) HYDERAB AD 3. CIT(A) IV HYDERABAD 4. COMMISSIONER OF INCOME-TAX-III HYDERABAD. 5. THE D.R. ITAT HYDERABAD. B.V.S.