M/s. K. S. Industries,, v. The ACIT., Circle-2,,

ITA 133/AHD/2004 | 2000-2001
Pronouncement Date: 18-02-2010 | Result: Dismissed

Appeal Details

RSA Number 13320514 RSA 2004
Bench Ahmedabad
Appeal Number ITA 133/AHD/2004
Duration Of Justice 6 year(s) 29 day(s)
Appellant M/s. K. S. Industries,,
Respondent The ACIT., Circle-2,,
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 18-02-2010
Date Of Final Hearing 11-02-2010
Next Hearing Date 11-02-2010
Assessment Year 2000-2001
Appeal Filed On 20-01-2004
Judgment Text
1 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'A' (BEFORE S/SHRI N S SAINI AND MAHAVIR SINGH) ITA NO.133/AHD/2004 (ASSESSMENT YEAR:- 2000-01) A N D ITA NOS.1428 AND 1429/AHD/2005 (ASSESSMENT YEARS:- 1999-2000 AND 2002-03) M/S K S INDUSTRIES 104 CHANDRAKALA TOWER NEAR BHARTIYA VIDHYABHAVAN SCHOOL MAKARPURA ROAD BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-2 BARODA [APPELLANT] [RESPONDENT] ITA NO.1661/AHD/2005 (ASSESSMENT YEAR:-2001-02) M/S K S INDUSTRIES 104 CHANDRAKALA TOWER NEAR BHARTIYA VIDHYABHAVAN SCHOOL MAKARPURA ROAD BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-2 BARODA [APPELLANT] [RESPONDENT] ITA NO.2808 2809 AND 2810/AHD/2006 (ASSESSMENT YEARS:-1999-2000 2000-01 AND 2002-03) M/S K S INDUSTRIES 104 CHANDRAKALA TOWER NEAR BHARTIYA VIDHYABHAVAN SCHOOL MAKARPURA ROAD BARODA V/S THE ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE-2 BARODA [APPELLANT] [RESPONDENT] APPELLANT BY :- SHRI M J SHAH ADVOCATE RESPONDENT BY:- SHRI GOVIND SINGHAL SR. DR O R D E R 2 2 PER BENCH: THESE SEVEN APPEALS HAVE BEEN FILED BY THE ASSESS EE AGAINST SEVEN SEPARATE ORDERS OF THE LEARNED COMMIS SIONER OF INCOME- TAX (APPEALS)-VI / II BARODA [THE ACT]. SINCE CE RTAIN ISSUES AND FACTS INVOLVED IN THESE APPEALS ARE COMMON THEY WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER. 2 IN ITA NO.133/AHD/2004 FOR AY: 2000-01 ITA NO.1428/AHD/2005 FOR ASSESSMENT YEAR 1999-2000 AND ITA NO.1429/AHD/2005 FOR ASSESSMENT YEAR 2002-03 THE C OMMON GROUNDS OF APPEAL TAKEN BY THE ASSESSEE EXCEPT FOR CHANGE I N FIGURES ARE AS UNDER: 1 THAT THE LEARNED ASSESSING OFFICER ERRED IN LAW AND ON FACT IN DISALLOWING CLAIM OF DEDUCTION U/S 80IA OF RS.5 13 948/- AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-VI BA RODA IN CONFIRMING THE SAME EVEN THOUGH APPELLANT FIRM FU LFILLS THE CONDITIONS REQUIRED FOR CLAIM OF DEDUCTION U/S 80IA. 2 THAT THE LEARNED ASSESSING OFFICER AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN COMING TO THE CONCLUS ION THAT THE APPELLANT FIRM IS NOT MANUFACTURING OR PRODUCING AN Y ARTICLE OR THING AND NOT BEING INDUSTRIAL UNDERTAKING IS NOT QUALIFY ING FOR THE DEDUCTION. 3 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE PROCESSING OF METALS BY GIVING SURFACE TREATMENT NA MELY POWDER COATING AND PHOSPHATING ETC. ON THE SPRINGS SUPPLIED BY ONE M/S SAGAR SPRINGS P. LTD. HALOL. THIS WORK WAS BEING CARRIED OUT ON JOB WORK BASIS AS PER THE AGREEMENT MADE WITH M/S SAGAR SPRINGS (P) LTD. THE ASSESSEE WAS USING PLANT AND MACHINERY OWNED BY M/S SAGAR SPRING S INCLUDING FACTORY PREMISES ON LEASE BASIS ALONG WITH FACILITY OF ELECTRICAL CONNECTION AND ON THE PROFITS SO EARNED ON JOB WOR K DEDUCTION UNDER SECTION 80IA WAS CLAIMED. IN THE ASSESSMENT YEAR 19 98-99 CLAIM UNDER SECTION 80I WAS DISALLOWED BY THE LEARNED ASSESSING OFFICER ON THE GROUND THAT ENTIRE PLANT AND MACHINERY AND OTHER FI XED ASSETS ACTUALLY BELONG TO M/S SAGAR SPRINGS (P) LTD. AND THESE ASSE TS WERE NOW BEING USED BY THE ASSESSEE FOR ITS BUSINESS ACTIVITY. THE LEARNED ASSESSING 3 3 OFFICER WAS OF THE VIEW THAT THE BUSINESS OF THE AS SESSEE WAS AS A RESULT OF SPLITTING OR THE RECONSTRUCTION OF THE EXISTING BUSINESS OF SAGAR SPRINGS P. LTD. AS THE PARTNERS OF THE FIRM ARE CL OSELY RELATED TO THE DIRECTORS OF THE COMPANY. THEREFORE ASSESSEES CLA IM U/S 80IA WAS ALSO DISALLOWED FOR THE YEAR UNDER CONSIDERATION. I N THE ASSESSMENT YEAR 1998-99 THIS DISALLOWANCE WAS CONFIRMED BY TH E LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 4 FOR THE SAME REASONS AS STATED ABOVE DEDUCTION U /S 80IA FOR RS.5 80 000/- IN ASSESSMENT YEAR 1999-2000 AND RS.6 32 213/- IN ASSESSMENT YEAR 2002-03 WAS DISALLOWED BY THE LEARN ED ASSESSING OFFICER. 5 BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) THE ASSESSEE SUBMITTED THAT M/S SAGAR SPRINGS P. LTD. P ROVIDED SEPARATE SHEDS TO THE ASSESSEES FIRM POWDER COATING PLANT AND MACHINERY (NEWLY PURCHASED) ON LEASE BASIS. THE SHED WAS NEWL Y CONSTRUCTED WHICH HOUSES PLANT AND MACHINERY FOR CARRYING OUT T HE JOB WORK. THE ASSESSEE WAS HAVING LONG EXPERIENCE TO POWDER COATI NG AND HENCE IT WAS ENTRUSTED THE JOB BY THE COMPANY TO SUPPLY POWD ER COATED SPRINGS. IT WAS ALSO SUBMITTED ON BEHALF OF THE ASSESSEE THA T THE BUSINESS WAS FORMED BY THE TRANSFER OF NEW PLANT AND MACHINERY A ND THAT DEDUCTION UNDER SECTION 80IA WAS CORRECTLY CLAIMED. RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CA SE OF CIT VS. TAMIL NADU HEAT TREATMENT & FITTING SERVICES P. LTD. 238 ITR 540. THE ASSESSEE THEREFORE REQUESTED THAT DEDUCTION U/S 8 0IA BE ALLOWED. 6 AFTER CONSIDERING THE ABOVE SUBMISSIONS MADE BY T HE ASSESSEE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) HE LD AS UNDER: 2.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND THE FACTS OF THE CASE. AS AFORESAID THE APPELLANTS CLAIM WA S REJECTED BY AO FOR AY 1998-99 AND THE DISALLOWANCE WAS CONFIRMED BY TH E CIT(A)-II BARODA VIDE ORDER NO.CAB/II-61/2000-01 DATED 21-05- 2002. AS THE 4 4 FACTS OF THE CASE REMAIN SAME FOLLOWING THE DECISI ON OF THE THEN CIT(A)-II BARODA I HOLD THAT APPELLANT WILL NOT B E ENTITLED FOR CLAIM UNDER SECTION 80IA. THE ACTION OF THE AO IN DISALLO WING APPELLANTS CLAIM IS THEREFORE UPHELD AND THE DISALLOWANCE IS CONFIRMED. 7 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSE SSEE AT THE TIME OF HEARING SUBMITTED THAT HE IS NOT PRESSING T HE ABOVE GROUNDS OF APPEAL RAISED IN ALL THE YEARS UNDER CONSIDERATION. THEREFORE THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 8 IN ITA NO.1661/AHD/2005 FOR ASSESSMENT YEAR 2001- 02 ITA NO.2808/AHD/2006 FOR ASSESSMENT YEAR 1999-2000 ITA NO. 2809/AHD/2006 FOR ASSESSMENT YEAR 2000-01 AND ITA NO.2810/AHD/2006 FOR ASSESSMENT YEAR 2002-03 THE C OMMON GROUND OF APPEAL TAKEN BY THE ASSESSEE EXCEPT FOR CHANGE I N FIGURES READS AS UNDER:- THAT THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX ERRED IN LAW AND ON FACT IN LEVYING PENALTY OF RS.2 03 000/- U/S 271(1) (C) OF THE INCOME TAX ACT WHICH WAS RAISED ON ACCOUNT OF DISALLOWING CLAIM OF DEDUCTION U/S 80IA AND THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-VI VADODARA IN CONFIRMING THE SAME WITHOUT APPRECIATING THE FACTS OF THE CASE AND ONLY FOLLOWING THE ORDER OF PRECEDENT AUTHORITY. 9 THE BRIEF FACTS ARE THAT RETURN OF INCOME WAS FIL ED ON 16-12-99 DECLARING A TOTAL INCOME OF RS.17 40 000/- AFTER CL AIMING DEDUCTION OF RS.5 80 000/- U/S 80IA. ASSESSMENT WAS COMPLETED U/ S 143(3) AT A TOTAL INCOME OF RS.23 54 285/- ON 30-11-2004. THE CLAIM O F DEDUCTION OF RS.5 80 000/- WAS DISALLOWED AND PENALTY PROCEEDING S U/S 271(1)(C) WERE INITIATED. THE DISALLOWANCE MADE BY THE LEARNE D ASSESSING OFFICER WAS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) BARODA FOLLOWING THE DECISION OF HIS PREDECESSOR FO R ASSESSMENT YEAR 1998-99. THE FINDING GIVEN BY THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS) FOR ASSESSMENT YEAR 1998-99 ARE AS UNDER: - 5 5 WHEN THERE IS NO SHED NO PLANT & MACHINERY THE U NDERTAKING CANNOT BE INDUSTRIAL UNDERTAKING WITHIN THE MEANING OF SECTIO N 80IA. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE APPELLANT ALSO GOES AGAINST THE APPELLANT. THE HON'BLE ITAT DELHI IN THE CASE OF MAHENDRAKUMAR AGRAWAL VS ITO (1987) 27 TTJ (DELHI) 529 HAS HELD THAT THE OVERAL L CONTEXT OF SECTION 80IA THEREFORE IS CLEARLY SUGGESTIVE OF THE FACT THAT T HE PERSON WHO WANTS TO CLAIM RELIEF U/S 80IA SHOULD BE HAVING AN INDUSTRIAL UND ERTAKING WHICH HAS ITS OWN FACTORY WHERE THERE ARE MACHINE INSTALLED EITHER O WNED BY THE ASSESSEE HIMSELF OR TAKEN ON HIRE BY HIM AND MANUFACTURING PROCESS SHOULD BE UNDERTAKEN IN THE PREMISES OF THE ASSESSEES OWN INDUSTRIAL UNDER TAKING AND IN THE PROCESS OF SUCH MANUFACTURING THERE SHOULD BE EMPLOYMENT OF 10 OR MORE PERSONS IF THE FACTORY IS RUN WITH THE AID OF POWER. IF A PERSON D OES NOT OWN FACTORY IT IS OBVIOUS HE WOULD NOT BE IN A POSITION TO CLAIM RELI EF U/S 80I OF THE ACT. THE APPELLANT FAILED TO PRODUCE EITHER BEFORE THE AO OR BEFORE ME ANY MATERIAL EVIDENCE TO SUBSTANTIATE ITS CLAIM OF BEING AN INDU STRIAL UNDERTAKING IN THE FORM OF NEW SALES TAX CERTIFICATE NEW EXCISE CERTIFICAT E REGISTRATION WITH SMALL SCALE INDUSTRIES OR LABOUR DEPARTMENT ETC. 10 DURING THE PENALTY PROCEEDINGS THE LEARNED ASSES SING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO ESTABLISH THAT THERE WAS A REASONABLE BELIEF FOR THE CLAIM OF DEDUCTION U/S 80IA AND THE PENALTY OF RS.2 03 000/- WAS IMPOSED BY THE LEARNED ASSESSING OFFICER U/S 271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. SIM ILARLY THE LEARNED ASSESSING OFFICER LEVIED PENALTY OF RS.2 00 000/- I N THE ASSESSMENT YEAR 2000-01 RS.3 00 000/- IN THE ASSESSMENT YEAR 2001-02 AND RS.2 28 235/- IN THE ASSESSMENT YEAR 2002-03 U/S 27 1(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. 11 BEFORE THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) THE ASSESSEE CONTENDED THAT THERE WAS A DIFFERENCE OF O PINION IN THE INTERPRETATION OF LAW. IT WAS ALSO CONTENDED THAT T HE WORD CONCEALMENT MEANS INTENTIONAL SUPPRESSION OF TRUT H OR FACT. IT WAS ALSO CONTENDED THAT THE ASSESSEE CANNOT BE PENALIZE D FOR THE WRONG APPRECIATION OF FACTS BY THE AUTHORITY AND THAT IT HAS TO BE INDEPENDENTLY FOUND IN THE PENALTY PROCEEDINGS THAT THE DISPUTED AMOUNT REPRESENTS HIS INCOME. RELIANCE WAS PLACED ON A NUMBER OF CASE LAWS BY THE ASSESSEE. 6 6 12 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE H ELD AS UNDER:- 2.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL AND FACTS OF THE CASE. IT IS SEEN THAT THE FINDINGS GIV EN BY THE AO IN THE ASSESSMENT ORDER AS WELL AS LD. CIT(A) FOR AY 1 998-99 IN QUANTUM APPEAL HAVE NOT BEEN REBUTTED AND THEREFORE THE DEDUCTION U/S 80IA IS NOT CLEARLY AVAILABLE TO THE APPELLANT. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH HIS BONA F IDE BELIEF. UNDER THESE FACTS AND CIRCUMSTANCES I DO NOT INTEN D TO INTERFERE WITH THE ACTION OF THE AO IN IMPOSING THE PENALTY O F RS.2 03 000/- U/S 271(1)(C). THE CASE LAWS RELIED U PON BY THE LD COUNSEL ARE ALL DISTINGUISHABLE ON FACTS. PENALTY I MPOSED BY THE AO IS THEREFORE CONFIRMED. 13 THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONE R OF INCOME-TAX (APPEALS) AND SUBMITTED THAT THE ASSESSEE IS NOT EX IGIBLE TO PENALTY U/S 271(1)(C) OF THE ACT AND THEREFORE THE SAME SHOULD BE DELETED IN ALL THE YEARS UNDER CONSIDERATION. 14 THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED O N THE ORDERS OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS). 15 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE THE LEARNED ASSESSING OFFICER LEVIED PENALTY U /S 271(1)(C) OF THE ACT OF RS.2 03 000/- IN THE ASSESSMENT YEAR 1999-20 00 RS.2 00 000/- IN THE ASSESSMENT YEAR 2000-01 RS.3 00 000/- IN TH E ASSESSMENT YEAR 2001-02 AND RS.2 28 235/- IN THE ASSESSMENT YEAR 2 002-03. ALL THE AFORESAID PENALTIES WERE LEVIED DUE TO DISALLOWANCE BY THE LEARNED ASSESSING OFFICER OF THE DEDUCTION CLAIMED U/S 80IA OF THE ACT BY THE ASSESSEE. THE UNDISPUTED FACTS OF THE CASE ARE THAT AS PER THE ASSESSEE IT STARTED A NEW INDUSTRIAL UNIT FOR PROCESSING OF MET AL BY GIVING SURFACE TREATMENT MAINLY COATING AND PHOSPHATING ETC. DURIN G THE PREVIOUS YEAR 7 7 RELATING TO THE ASSESSMENT YEAR 1998-99 THE ASSESSE E WAS PRIOR TO THE STARTING OF THIS INDUSTRIAL UNIT WAS ALSO ENGAGED I N THE MANUFACTURING OF ALL TYPES OF AUTOMOBILES SPRINGS FOR USE IN SCOOTER S AND CARS BUT HARDENING AND POWDER COATING OF THE SAME WAS CARRIE D OUT BY SOME OTHER INDUSTRIAL UNDERTAKINGS. THE ASSESSEE FOR THI S NEW INDUSTRIAL UNDERTAKING GOT A SHED TOGETHER WITH PLANT AND MACH INERY ON LEASE FROM M/S. SAGAR SPRINGS PVT. LTD. AND THEREIN STARTED TH E SAID ACTIVITY AND CLAIMED DEDUCTION U/S 80IA IN RESPECT OF INCOME DER IVED FROM THIS INDUSTRIAL UNDERTAKING. THE LEARNED ASSESSING OFFIC ER DISALLOWED THE CLAIM OF DEDUCTION U/S 80IA TO THE ASSESSEE ON THE GROUND THAT THE NEW INDUSTRIAL UNDERTAKING WAS SET UP BY SPLITTING OF T HE EXISTING INDUSTRIAL UNDERTAKING AS BECAUSE THE ASSESSEE WAS NOT THE OWN ER OF THE PLANT AND MACHINERY. THE LEARNED ASSESSING OFFICER FURTHER OB SERVED THAT THE ACTIVITY OF THE ASSESSEE IN THIS NEW INDUSTRIAL UND ERTAKING INVOLVED ONLY HARDENING OF SPRING AND POWDER COATING OF THE SAME AND THESE ACTIVITIES DO NOT CONSTITUTE MANUFACTURING. THUS THE LEARNED A SSESSING OFFICER MADE THE DISALLOWANCE OF THE DEDUCTION CLAIMED BY T HE ASSESSEE AND LEVIED PENALTY U/S 271(1)(C) OF THE ACT FOR CONCEAL MENT OF INCOME BY THE ASSESSEE. ON APPEAL THE LEARNED COMMISSIONER O F INCOME-TAX (APPEALS) CONFIRMED THE LEVY OF THE PENALTY FOR ALL THE FOUR YEARS UNDER CONSIDERATION BY OBSERVING AS UNDER:- 2.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL AND FACTS OF THE CASE. IT IS SEEN THAT THE FINDINGS GIV EN BY THE AO IN THE ASSESSMENT ORDER AS WELL AS LD. CIT(A) FOR AY 1 998-99 IN QUANTUM APPEAL HAVE NOT BEEN REBUTTED AND THEREFORE THE DEDUCTION U/S 80IA IS NOT CLEARLY AVAILABLE TO THE APPELLANT. THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH HIS BONA F IDE BELIEF. UNDER THESE FACTS AND CIRCUMSTANCES I DO NOT INTEN D TO INTERFERE WITH THE ACTION OF THE AO IN IMPOSING THE PENALTY O F RS.2 03 000/- U/S 271(1)(C). THE CASE LAWS RELIED U PON BY THE LD COUNSEL ARE ALL DISTINGUISHABLE ON FACTS. PENALTY I MPOSED BY THE AO IS THEREFORE CONFIRMED. WE FIND THAT THE ASSESSEE HAS CLAIMED THAT THE DEDU CTION U/S 80IA WAS MADE ON THE BASIS OF THE BONA FIDE BELIEF OF THE AS SESSEE THAT HE WAS 8 8 ENTITLED FOR SUCH DEDUCTION. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE EXPLAINED THAT IN VIEW OF THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TAMILNADU HEAT TREATMENT AND FITTING SERVICES PVT. LTD. (1999) 238 ITR 540 ( MAD) WHEREIN THE SIMILAR ACTIVITIES CARRIED ON BY THE ASSESSEE WAS H ELD AS MANUFACTURING ACTIVITY. FURTHER FOR STARTING THIS MANUFACTURING UNIT A NEW SHED WAS CONSTRUCTED BY M/S SAGAR SPRINGS PVT. LTD. AND NEW PLANT AND MACHINERY WAS PURCHASED BY M/S SAGAR SPRINGS PVT. L TD. AND AS NEW PLANT AND MACHINERY TAKEN ON LEASE WAS UTILIZED IN THE MANUFACTURING PROCESS THE ASSESSEE BONAFIDELY BELIEVED THAT IT WA S ELIGIBLE FOR DEDUCTION U/S 80IA OF THE ACT. WE FIND THAT IN THE CASE OF CIT VS. TAMILNADU HEAT TREATMENT AND FITTING SERVICES PVT. LTD. (1999) 238 ITR 540 (MAD) IT WAS HELD BY THE HON'BLE MADRAS HIG H COURT AS UNDER: ACTIVITY CARRIED ON BY ASSESSEE WHEREBY IT IS RECE IVING FROM ITS CLIENT UNTREATED CRANKSHAFTS FORGINGS CASTINGS E TC. AND SUBJECTING THEM TO HEAT TREATMENT IN ORDER TO TOUG HEN THEM TO THE REQUISITE STANDARDS SO THAT THEY COULD BE SOLD IN THE MARKET IS A MANUFACTURING ACTIVITY ENTITLING IT TO CLAIM THE D EDUCTIONS UNDER SS. 80HH AND 80-I. WE FIND THAT THE ASSESSEES ACTIVITY IN THE PRESENT CASE ALSO INVOLVED TOUGHENING OF THE SPRING AND THEREFORE IN OUR CONSI DERED VIEW THE BELIEF OF THE ASSESSEE THAT IT WAS ENGAGED IN MANUF ACTURING CANNOT BE HELD AS MALAFIDE BELIEF. FURTHER AS NEW PLANT AND MACHINERY WAS UTILIZED IN THE ABOVE BUSINESS THE BELIEF OF THE A SSESSEE THAT THE UNIT WAS A NEW UNIT ESTABLISHED BY IT AND DID NOT INVOLV E BRINGING INTO EXISTENCE OF A BUSINESS BY SPLITTING UP WITHIN THE MEANING OF SECTION 80IA OF THE ACT ALSO CANNOT BE HELD TO BE A MALAFID E BELIEF. THUS IN OUR CONSIDERED VIEW THE LEARNED COMMISSIONER OF INCOME -TAX (APPEALS) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE COUL D NOT HAVE BONAFIDELY BELIEVED THAT ITS ACTIVITY DID NOT FALL WITHIN THE PURVIEW OF SECTION 80IA OF THE ACT. THEREFORE IN OUR CONSIDERED VIEW PENA LTY U/S 271(1)(C) IS NOT EXIGIBLE IN THE INSTANT CASE FOR THE ASSESSMENT YEAR 1999-2000. 9 9 BOTH THE PARTIES BEFORE US ADMITTED THAT THE FACTS INVOLVED AND THE ISSUE INVOLVED IN ALL THE FOUR YEARS ARE IDENTICAL. WE T HEREFORE DELETE THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT OF OF RS.2 03 000/- IN THE ASSESSMENT YEAR 1999-2000 RS.2 00 000/- IN THE ASS ESSMENT YEAR 2000-01 RS.3 00 000/- IN THE ASSESSMENT YEAR 2001- 02 AND RS.2 28 235/- IN THE ASSESSMENT YEAR 2002-03. THUS ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED. 16 IN THE RESULT THE APPEALS OF THE ASSESSEE IN IT A NOS.133/AHD/2004 ITA NO.1428 AND 1429/AHD/2005 ARE DISMISSED AND THE APPEALS OF THE ASSESSEE IN ITA NOS.1661/AHD/200 5 ITA NOS.2808 2809 AND 2810/AHD/2006 ARE ALLOWED. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 18-02-2010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (N S SAINI) ACCOUNTANT MEMBER DATE : 18-02-2010 COPY OF THE ORDER FORWARDED TO : 1. M/S K S INDUSTRIES 104 CHANDRAKALA TOWER NEAR BHARTIYA VIDHYABHAVAN SCHOOL MAKARPURA ROAD BARODA 2. THE ACIT CIRCLE-2 BARODA 3. CIT CONCERNED 4. CIT(A)-VI BARODA 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT AHMEDABAD