ACIT 1(3), MUMBAI v. QUEST INTERNATIONAL INDIA LTD, MUMBAI

ITA 267/MUM/2009 | 2005-2006
Pronouncement Date: 11-03-2010 | Result: Partly Allowed

Appeal Details

RSA Number 26719914 RSA 2009
Assessee PAN AAACL1013D
Bench Mumbai
Appeal Number ITA 267/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 29 day(s)
Appellant ACIT 1(3), MUMBAI
Respondent QUEST INTERNATIONAL INDIA LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 11-03-2010
Date Of Final Hearing 14-01-2010
Next Hearing Date 14-01-2010
Assessment Year 2005-2006
Appeal Filed On 12-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH MUMBAI BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS. 266 & 267/MUM/2009 (ASSESSMENT YEARS: 2004-05 & 2005-06) ACIT - 1(3) M/S. QUEST INTERNATIONAL INDIA LTD. ROOM NO. 540/564 5TH FLOOR 402 AKRUTI CENTER POIN T AAYAAR BHAVAN M.K. ROAD VS. MIDC CENTRAL ROAD NR. MAROL MUMBAI 40020 TELEPHONE EXCHANGE ANDHERI (E) MUMBAI 400093 PAN - AAACL 1013 D APPELLANT RESPONDENT APPELLANT BY: SHRI T.T. JACOB RESPONDENT BY: SHRI PARAG VYAS/MS. SHEETAL BANDEKAR O R D E R PER B. RAMAKOTAIAH A.M. THESE APPEALS ARE BY THE REVENUE AGAINST THE ORDERS OF THE CIT(A) XXI MUMBAI VIDE COMMON ORDER DATED 01.10.2008. THE REVE NUE IS AGGRIEVED THAT THE CIT(A) HAS NOT DISPOSED OFF GROUND NOS. 1 & 2 IN BOTH THE APPEALS AND FURTHER GROUND IN A.Y. 2005-06 IS WITH REFEREN CE TO ALLOWANCE OF 80IB BY THE CIT(A). FOR THE SAKE OF CLARITY THE GROUNDS IN A.Y. 2005-06 ARE EXTRACTED WHEREIN GROUND NOS. 1(A) AND A(B) ARE SIM ILAR TO THE GROUNDS IN A.Y. 2004-05: - 1(A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) FAILED TO DISPOSE OF THE GROUNDS NO. 1 AND 2 AND ALLOWED RELIEF FOR GIVING TAX CREDIT U/S. 115JAA OR THE ACT FOR TH E TAX PAID ON DEEMED INCOME IGNORING THE FAT THAT NO SUCH GROUND OF APPE AL WAS FILED BY THE ASSESSEE. 1(B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) SHOULD HAVE REJECTED GROUNDS NO. 1 AND 2 FI LED BY THE ASSESSEE FOLLOWING THE DECISION OF ITAT IN A.Y. 2002-03 VIDE ORDER ITA NO. 5959/MUM/05. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S. 80IB OF THE I.T. ACT IN RESPECT OF ALL THE UNITS OF INDUSTRIAL UNDERTAKING WITHOUT APPRECIATING THE FACT THAT THE INDUSTRIAL U NDERTAKINGS HAVE ITA NO. 266&267/MUM/2009 M/S. QUEST INTERNATIONAL INDIA LTD. 2 BEEN SET UP BY THE ASSESSEE BY PURCHASE OF PLANT AN D MACHINERY ALREADY USED BY ANOTHER PERSON. 2. WITH REFERENCE TO GROUND NO. 1 IT WAS THE SUBMISSIO N OF THE LEARNED D.R. THAT THE CIT(A) HAS NOT DISPOSED OFF THE GROUN D EVEN THOUGH THEY ARE EXTRACTED IN THE APPELLATE ORDER. THE LEARNED COUNS EL FAIRLY ADMITTED THAT THE GROUNDS BEFORE THE CIT(A) IN BOTH THE YEARS HAVE NO T BEEN CONSIDERED AND HE HAS NO OBJECTION IF THE ISSUES IN GROUND NO. 1 RAIS ED (AS GROUND NO. 1 & 2 BEFORE THE CIT(A) BY THE ASSESSEEE) ARE TO BE SET A SIDE TO THE FILE OF THE CIT(A). FURTHER IT IS ALSO SUBMITTED THAT THE FINDI NGS OF THE CIT(A) IN PARA 3.3 FOLLOWING THE JUDGEMENT OF THE HON'BLE ITAT ARE NOT RELEVANT FOR THE IMPUGNED YEARS AND ACCORDINGLY THE MATTER CAN BE R ESTORED TO THE FILE OF THE CIT(A) FOR DECIDING AFRESH. 3. AFTER PERUSING THE ORDERS OF THE CIT(A) AND RELEVAN T GROUNDS OF APPEAL WE ARE OF THE VIEW THAT EVEN THOUGH SPECIFIC GROUND S ARE RAISED BEFORE THE CIT(A) HE HAS NOT CONSIDERED AND DISPOSED OFF THE SAME AND ACCORDINGLY THE ISSUES RAISED IN GROUND NO. 1 IN BOTH THE REVENUE A PPEALS ARE SET ASIDE TO THE FILE OF THE CIT(A) TO CONSIDER IT AFRESH AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE. GROUNDS ARE CONSIDERED ALLOWED FOR ST ATISTICAL PURPOSES. 4. GROUND NO. 2 IN A.Y. 2005-06 IS WITH REFERENCE TO T HE ALLOWANCE OF 80IB BY THE CIT(A). THE BRIEF FACTS LEADING TO THE PRESENT ISSUE ARE THAT THE ASSESSEE HAS ACQUIRED UNITS FROM M/S. HINDUSTAN LEA VER LTD. AS A GOING CONCERN BASIS VIDE AGREEMENT DATED 29.06.2001 AND C LAIMED 80IB DEDUCTION TO AN EXTENT OF RS.5 10 55 755/- ON SUCH UNITS DURI NG THE YEAR UNDER CONSIDERATION. THE A.O. ASKED WHY DEDUCTION UNDER S ECTION 80IB CANNOT BE ALLOWED AS SUCH UNITS HAVE BEEN FORMED BY TRANSFER RING ASSETS AND LIABILITIES OF THE ALREADY EXISTING COMPANY. IT WAS THE SUBMISSION OF THE ASSESSEE THAT THESE UNITS WHICH ARE ELIGIBLE FOR 80 IB CLAIM HAVE BEEN TRANSFERRED ON GOING CONCERN BASIS AND SUCH TRANSFE R CANNOT BE CONSIDERED AS SPLIT UP OR RECONSTRUCTION. FURTHER IT WAS SUBMI TTED THAT THE CLAIM WAS BEING ALLOWED FROM A.Y. 2001-02. THE A.O. DID NOT A CCEPT ASSESSEES DETAILED EXPLANATION AND HELD THAT THE COMPANY HAS BEEN FORM ED AFTER PURCHASING PLANT AND MACHINERY ALONGWITH PREMISES AND OTHER AS SETS WHICH WERE ALREADY BEEN USED BY THE EARLIER COMPANY HINDUSTAN LEAVER LTD. IN VIOLATION ITA NO. 266&267/MUM/2009 M/S. QUEST INTERNATIONAL INDIA LTD. 3 OF PROVISIONS OF SECTION 80IB. ACCORDINGLY HE DISAL LOWED DEDUCTION UNDER SECTION 80IB. AFTER CONSIDERING THE SUBMISSION OF T HE ASSESSEE THE CIT(A) ALLOWED ASSESSEES CLAIM BY CONSIDERING THE ISSUE A S UNDER: - 5.2.1 DURING THE COURSE OF DISCUSSION THE LEARNED COUNSEL FURTHER CLAIMED THAT IF AT ALL THE CLAIM OF DEDUCTION U/S. 80IB WAS TO BE RECONSIDERED THE SAME SHOULD HAVE BEEN DONE IN THE PERIOD RELEVANT TO A.Y. 2002-03 WHEN THE NEW COMPANY CAME INTO EXISTEN CE. THE LEARNED COUNSEL CLAIMED THAT THE ASSESSING OFFICER HAD ALLO WED SUCH CLAIM U/S. 80IB FOR A.Y. 2002-03 BOTH IN THE ORIGINAL ASSESSME NT AND IN THE RE- ASSESSMENT PROCEEDINGS U/S. 147. THAT IS TO SAY THA T THE CLAIM U/S. 80IB HAS BEEN CONSIDERED BY THE ASSESSING OFFICER I N THE YEAR OF FORMATION OF THE COMPANY AND THE CLAIM HAS BEEN ALL OWED. THE LEARNED A.R. FURTHER RELIED ON THE FOLLOWING JUDGEMENTS: - 1. CIT VS. TYRESOLES CONCESSIONARIES PVT. LTD. 213 ITR 770 (BOM) 2. ITO VS. HINDUSTAN PETROLEUM LTD. (ITAT BOMBAY BENCH 16 ITD 574) IN THE CASE OF CIT VS. TYRESOLES CONCESSIONARIES PV T. LTD. IT WAS HELD THAT IN THE CASE OF AMALGAMATION OF COMPANIES IF T HE AMALGAMATING COMPANY IS ENTITLED TO CERTAIN RELIEF SUCH SPECIAL DEDUCTION CAN BE CLAIMED BY THE AMALGAMATED COMPANY ALSO IN RESPECT OF SHIPS FOR THE BALANCE OF THE PERIOD FOR 5 YEARS. BASED ON THIS LO GIC THE LEARNED A.R. CLAIMED THAT IN THE CASE OF DEMERGER ALSO UNITWISE CLAIM HAS TO BE ENTERTAINED. IN THIS REGARD HE ALSO REFERRED TO BO ARDS CIRCULAR NO. 15/5/63-IT(AL) DT. 13.12.1963. 5.3 I HAVE CAREFULLY CONSIDERED THE ISSUE. THERE IS FORCE IN THE ARGUMENT OF THE LEARNED A.R. THAT CLAIM OF DEDUCTIO N U/S. 80IB HAS TO BE EXAMINED IN THE VERY FIRST YEAR OF THE DEMERGER. IT IS A FACT THAT THE CLAIM WAS NEVER DOUBTED IN THE FIRST YEAR I.E. A.Y. 2002- 03. EVEN IN THE RE- ASSESSMENT PROCEEDINGS FOR THIS YEAR INCOME WAS EN HANCED AND DEDUCTION U/S. 80IB WAS ALLOWED TO THE EXTENT OF PR OFIT AVAILABLE. THIS EVEN CLEARLY SETS THE PRECEDENCE OF FUTURE ALLOWANC E U/S. 80IB UNLESS SOME NEW FACTS EMERGE. WITHOUT PREJUDICE TO THIS I T IS A SETTLED LAW THAT THE CLAIMS IN RESPECT OF INDUSTRIAL UNDERTAKINGS HA VE TO BE CONSIDERED UNIT-WISE. IF THE ASSESSING OFFICER WAS CONCERNED A BOUT THE REVALUATION OF THE ASSETS HE HAS NOT BEEN ABLE RAISE OBJECTION THROUGH THE ASSESSMENT ORDER. EVEN IF THE DEDUCTION HAS TO BE L IMITED AND HAS TO BE WORKED OUT ON THE BASIS OF ORIGINAL VALUES SAME OU GHT TO HAVE BEEN STARTED FROM A.Y. 2002-03. THIS WILL BE AN ENTIRELY DIFFERENT SUBJECT MATTER AND DOES EMANATE FROM THE APPELLANTS GROUND OF APPEAL. 5.3.1 CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE CASE IT IS HELD THAT THE APPELLANT WAS CORRECT IN PRINCIPLE IN MAKING A CLAIM U/S. 80IB UNIT-WISE. ACCORDINGLY THE ASSESSING OFFICER IS DIRECTED TO ALLOW DEDUCTION U/S. 80IB OF THE I.T. ACT IN RESPEC T OF ALL THE UNITS OF INDUSTRIAL UNDERTAKING WHICH IS ELIGIBLE FOR TH E PURPOSE AND CORRECTLY CALCULATE THE SAME. GROUND NOS. 4 & 5 OF THE APPEAL FOR AY 2005-06 ARE THUS ALLOWED. ITA NO. 266&267/MUM/2009 M/S. QUEST INTERNATIONAL INDIA LTD. 4 5. THE LEARNED D.R. REITERATED THE ARGUMENTS OF THE AO WHEREAS THE LEARNED COUNSEL SUBMITTED THAT THESE UNITS ORIGINAL LY ESTABLISHED IN A.Y. 1996-97 AND A.Y. 1998-99 AND TRANSFERRED AS SUCH TO THE ASSESSEE COMPANY AND THE CIT(A) IS CORRECT IN ALLOWING THE CLAIM ON THE BALANCE OF THE ELIGIBLE YEARS. THE LEARNED COUNSEL ALSO REFERRED TO THE PAP ER BOOK WHEREIN THE DETAILS OF 80IB CLAIMS WERE MENTIONED INCLUDING THE CLARIFICATIONS GIVEN TO THE A.O. AND THE CIT(A). 6. AFTER CONSIDERING THE SUBMISSIONS AND EXAMINING THE RECORD WE ARE OF THE VIEW THAT THE ASSESSEE HAS CORRECTLY CLAIMED 80 IB DEDUCTION FOR THE BALANCE OF THE YEARS ON THE ELIGIBLE UNITS AND THE CIT(A) WAS CORRECT IN ALLOWING THE CLAIM. IT IS ALSO SEEN THAT IN A.Y. 2 004-05 WHICH WAS ALSO IN APPEAL BEFORE US THE ASSESSEE WAS ALLOWED DEDUCTIO N AND NO GROUNDS WERE RAISED REGARDING THE SAME. IN VIEW OF THIS WE DO N OT SEE ANY REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A). TO THAT EX TENT GROUND NO. 2 IN A.Y. 2005-06 STANDS REJECTED. 7. IN THE RESULT APPEAL FOR A.Y. 2004-05 WAS TREATED ALLOWED FOR STATISTICAL PURPOSES AND APPEAL FOR A.Y. 2005-06 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MARCH 2010. SD/- SD/- (R.K. GUPTA) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 11 TH MARCH 2010 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XXI MUMBAI 4. THE CIT I MUMBAI CITY 5. THE DR D BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.