ACIT, Pondicherry v. Abirami Soaps Works, Pondicherry

ITA 440/CHNY/2013 | 2009-2010
Pronouncement Date: 28-10-2013 | Result: Dismissed

Appeal Details

RSA Number 44021714 RSA 2013
Assessee PAN AABCN2036K
Bench Chennai
Appeal Number ITA 440/CHNY/2013
Duration Of Justice 7 month(s) 16 day(s)
Appellant ACIT, Pondicherry
Respondent Abirami Soaps Works, Pondicherry
Appeal Type Income Tax Appeal
Pronouncement Date 28-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 28-10-2013
Date Of Final Hearing 12-09-2013
Next Hearing Date 12-09-2013
Assessment Year 2009-2010
Appeal Filed On 13-03-2013
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH CHENNAI. BEFORE DR.O.K. NARAYANAN VICE-PRESIDENT & SHRI V. DURGA RAO JUDICIAL MEMBER ITA NO. 439/MDS/2013 ASSESSMENT YEAR: 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE I D.P. THOTTAM MUTHIALPET PUDUCHERRY 605 003. VS. M/S. POWER SOAP LIMITED R.S. NO. 94/1 SEMBIYAMPALAYAM KORKADU PO PONDICHERRY 605 009. [PAN : AABCN2036K] (APPELLANT) (RESPONDENT) ITA NO. 4 40 /MDS/2013 ASSESSMENT YEAR: 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE I D.P. THOTTAM MUTHIALPET PUDUCHERRY 605 003. VS. M/S. ABIRAMI SOAPS WORKS R.S. NO. 93/2 SEMBIYAMPALAYAM KORKADU PO PONDICHERRY 605 009. [PAN : AAIFA1436C] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S. DAS GUPTA JCIT RESPONDENT BY : SHRI G. BASKAR ADVOCATE DATE OF HEARING : 19.09.2013 DATE OF PRONOUNCEMENT : 28.10.2013 O R D E R PER V. DURGA RAO JUDICIAL MEMBER : THESE TWO APPEALS OF THE REVENUE; PERTAINING TO TWO DIFFERENT ASSESSEES ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) XII CHENNAI BOTH DATED 23.11. 2012 RELEVANT TO THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 2 ASSESSMENT 2009-10. BOTH THESE APPEALS HAVE COMMON FACTUAL MATRIX AND LEGAL PANORAMA AND THEREFORE ARE DEALT WITH BY THI S COMMON ORDER. WE SHALL TAKE UP I.T.A. NO. 439/MDS/2013 AS LEAD CAS E. 2. BOTH APPEALS OF THE REVENUE ARE TIME BARRED BY 08 DAYS IN FILING. THE DEPARTMENT HAS FILED CONDONATION IN THE FORM OF AFF IDAVIT REQUESTING TO CONDONE THE DELAY. BY REFERRING TO THE CONTENTS THE REIN THE LD. DR HAS REQUESTED TO CONDONE THE DELAY. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT OBJECT TO THE REQUEST OF THE LD. DR. ACCORDINGLY W E CONDONE THE DELAY OF 08 DAYS IN FILING THE APPEALS AND ADMIT BOTH APPEALS F OR HEARING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF MANUFACTURE OF DETERGENT CAKES DETERGE NT POWDER TOILET SOAP ETC. THE ASSESSEE IS LOCATED IN THE UNION TERRITORY OF PONDICHERRY AND HAS BEEN REGISTERED AS SMALL SCALE INDUSTRY [SSI] BY TH E DIRECTOR OF INDUSTRIES AND COMMERCE PONDICHERRY. FOR THE YEAR UNDER CONSI DERATION THE ASSESSEE HAS FILED ITS RETURN ON 30.09.2009 BY DECL ARING TOTAL INCOME OF ` .5 79 34 110/- AFTER CLAIMING DEDUCTION UNDER SECTI ON 80IB OF ` .2 38 42 811/-. THE ASSESSING OFFICER WHILE COMPLE TING THE ASSESSMENT UNDER SECTION 144 OF THE INCOME TAX ACT ASSESSED T HE INCOME OF THE ASSESSEE AT ` .10 56 23 190/- BY REJECTING THE CLAIM OF DEDUCTION OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 3 ` .2 38 42 811/- UNDER SECTION 80IB AND ALSO BY ESTIM ATING THE PROFIT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE IS MANUFACTURING OF TOILET SOAPS DETERGENT CAKES DETERGENT POWDER ETC. AND THE ITEMS ARE INCLUDED I N 11 TH SCHEDULE OF THE ACT. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT I N ORDER TO QUALIFY AS A SMALL SCALE INDUSTRY THE ASSESSEE SHOULD ENGAGE IN MANUFACTURING THE ITEMS LISTED IN SCHEDULE III OF INDUSTRIES [DEVELOP MENT AND REGULATION] ACT 1951 AS SPECIFIED IN LICENSING NOTIFICATION NO. S. O.477(E) DATED 25.07.1991. FURTHER HE HAS OBSERVED THAT IN ORDER TO QUALIFY AS A SMALL SCALE INDUSTRY THE INVESTMENT IN PLANT AND MACHINE RY SHOULD NOT EXCEED ` .1.00 CRORE WHEREAS IN THE INSTANT CASE THE TOTAL INVESTMENT IN PLANT AND MACHINERY AS ON 31.03.2009 WAS ` .6 24 41 135/- (WDV) I.E. EXCEEDING THE LIMIT OF ` .1.00 CRORE AND HENCE THE ASSESSEE CANNOT BE TREATE D AS A SMALL SCALE INDUSTRY. THEREFORE THE ASSESSING OFFICER HA S HELD THAT THE ASSESSEE IS NOT WITHIN THE DEFINITION OF SMALL SCALE INDUSTR Y AND NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. 4. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE LD. CIT(APPEALS). 5. IT WAS SUBMITTED BEFORE THE LD. CIT(APPEALS) T HAT THE ASSESSEES MANUFACTURING UNIT IS LOCATED IN THE STATE OF PONDI CHERRY WHICH IS AN I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 4 INDUSTRIALLY BACKWARD STATE AS NOTIFIED IN THE 8 TH SCHEDULE (AT SL.NO.16). IT ALSO EXPLAINED THAT ITS UNIT HAS BEEN REGISTERED AS A SMALL SCALE INDUSTRY BY THE DIRECTOR OF INDUSTRIES AND COMMERCE PONDICH ERRY. HENCE THE ASSESSEE CLAIMED THAT IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT ON BOTH COUNTS I.E. BEING LOCATED IN THE INDUST RIALLY BACKWARD STATE AS WELL AS BEING SMALL SCALE INDUSTRY. THE LD. CIT(APP EALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERIN G THE ENTIRE ISSUE OF THE CLAIM OF THE ASSESSEE IN DETAIL HAS OBSERVED A S UNDER: I HAVE CONSIDERED THE ASSESSEES SUBMISSIONS CARE FULLY. THE DEDUCTION UNDER SECTION 80IB IS AVAILABLE FOR THE ASSESSEES WHO BEGIN TO MANUFACTURE OR PRODUCE THINGS OR ARTICLE SPECIFIED IN THE SECTION AND SUBJECT TO THE CONDITIONS LAID DOWN THEREIN. THE PROVISIONS OF SEC. 80IB ARE: 80-IB. (1) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE INC LUDES ANY PROFITS AND GAINS DERIVED FROM ANY BUSINESS REFERRED TO IN SUB- SECTIONS (3) TO [(11) (11A) AND (11B)] (SUCH BUSINESS BEING HEREINAFTER REFERRED TO AS THE ELIGIBLE BUSINESS) THERE SHALL IN ACCORDANCE WITH AND SUBJECT TO THE PROVIS IONS OF THIS SECTION BE ALLOWED IN COMPUTING THE TOTAL INCOME OF THE ASSESSEE A DE DUCTION FROM SUCH PROFITS AND GAINS OF AN AMOUNT EQUAL TO SUCH PERCENTAGE AND FOR SUCH NUMBER OF ASSESSMENT YEARS AS SPECIFIED IN THIS SECTION. (2) THIS SECTION APPLIES TO ANY INDUSTRIAL UNDERTAK ING WHICH FULFILS ALL THE FOLLOWING CONDITIONS NAMELY : (I) IT IS NOT FORMED BY SPLITTING UP OR THE RECONS TRUCTION OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RESPECT OF A N INDUSTRIAL UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BUSINESS OF ANY SUCH INDUSTRIAL UNDERTAKING AS IS REFERRED TO IN SECTION 33B IN THE CIRCUMSTANCES AN D WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 5 (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR TH ING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDUL E OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS IN ANY PART OF INDIA : PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL IN RELATIO N TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) SHALL APPLY AS IF THE WORDS NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE HAD BEEN OMITTED. EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II) ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OTHER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE IF THE FOLLOWING CONDITIONS ARE FULFILLED NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT AT ANY TIME P REVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RES PECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PR OVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOME OF ANY PERSON FOR ANY PE RIOD PRIOR TO THE DATE OF THE INSTALLATION OF THE MACHINERY OR PLANT BY TH E ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN INDUSTRIAL U NDERTAKING ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY USED FOR ANY P URPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE OF THE MACHINERY OR PL ANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF TH E MACHINERY OR PLANT USED IN THE BUSINESS THEN FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION THE CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMP LIED WITH; (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MAN UFACTURES OR PRODUCES ARTICLES OR THINGS THE UNDERTAKING EMPLOYS TEN OR MORE WORK ERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER OR EMPLOY S TWENTY OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. (3) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING SHALL BE TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDE RTAKING FOR A PERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY) BEGINNING WITH THE INITIAL ASSESSMENT YEAR SUBJECT TO THE FULFILMENT OF THE FOLLOWING CONDITIO NS NAMELY : (I) IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES O R THINGS OR TO OPERATE SUCH PLANT OR PLANTS AT ANY TIME DURING THE PERIOD BEGINNING FROM THE 1ST DAY OF APRIL 1991 AND ENDING ON THE 31ST DAY OF MA RCH 1995 OR SUCH FURTHER PERIOD AS THE CENTRAL GOVERNMENT MAY BY NO TIFICATION IN THE OFFICIAL GAZETTE SPECIFY WITH REFERENCE TO ANY PAR TICULAR UNDERTAKING; (II) WHERE IT IS AN INDUSTRIAL UNDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING IT BEGINS TO MANUFACTURE OR PRODUCE AR TICLES OR THINGS OR TO I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 6 OPERATE ITS COLD STORAGE PLANT [NOT SPECIFIED IN SU B-SECTION (4) OR SUBSECTION (5)] AT ANY TIME DURING THE PERIOD BEGIN NING ON THE 1ST DAY OF APRIL 1995 AND ENDING ON THE 31ST DAY OF MARCH 20 02. (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WITH THE INITIAL AS SESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDE RTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY) SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPE RATE ITS COLD STORAGE PLANT OR PLANTS DURING THE PERIOD BEGINNING ON THE 1ST DAY O F APRIL 1993 AND ENDING ON THE 31ST DAY OF MARCH 2004 : PROVIDED .. FROM THE ABOVE PROVISIONS IT IS CLEAR THAT BEFORE CLAIMING THE DEDUCTIONS ONE HAS TO FULFILL THE REQUIREMENTS LAI D DOWN IN SUB-SECTION (2) OF SEC.80-IB OF THE ACT. ONCE THE SAID CONDITIONS LAID DOWN IN THE SUB-SECTION (2) ARE FULFILLED THE ASSESSEES ARE ELIGIBLE FOR DEDUCT ION UNDER VARIOUS SUB-SECTIONS (3) TO (11B) OF SEC.80-IB OF THE ACT BASED ON THE A CTIVITIES CARRIED OUT BY THEM. IN THE INSTANT CASE THE FOLLOWING ARE THE UNDISPUT ED FACTS: (A) THE ASSESSEE'S UNIT IS ENGAGED IN MANUFACTURING OF TOILET SOAPS DETERGENT CAKES AND DETERGENT POWDER ETC. (B) THE ASSESSEE'S MANUFACTURING UNIT IS LOCATED IN THE STATE OF PONDICHERRY. THE STATE OF PONDICHERRY IS AN 'INDUSTRIALLY BACKWA RD STATE' (AS INCLUDED IN 8 TH SCHEDULE AT SL.NO.16). (C) THE ASSESSEE HAS BEEN REGISTERED AS A 'SMALL SC ALE INDUSTRY' (SSI) WITH THE DIRECTOR OF INDUSTRIES AND COMMERCE PONDI CHERRY. (D) THE ASSESSEE'S 'MANUFACTURED ITEMS 'TOILET SOAP S DETERGENT CAKES AND DETERGENT POWDER' ARE INCLUDED IN THE 11 TH SCHEDULE OF THE IT ACT (AT SL.NO.4). BASED ON THE ABOVE FACTS AND THE REQUIREMENTS OF TH E SEC.80-IB OF THE ACT LET US EXAMINE WHETHER THE ASSESSEE IS ELI GIBLE FOR CLAIMING THE DEDUCTION U/S.80-IB. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 7 THE FIRST AND FOREMOST REQUIREMENT IS THE FULFILLME NT OF FOUR CONDITIONS STIPULATED IN SUB-SECTION (2) OF SEC.80-IB OF THE A CT. THESE CONDITIONS ARE (I) IT IS NOT FORMED BY SPLITTING UP OR THE RECON STRUCTION OF A BUSINESS ALREADY IN EXISTENCE : (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUS INESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR T HING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVE NTH SCHEDULE OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS IN ANY PART OF INDIA: (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MA NUFACTURES OR PRODUCES ARTICLES OR THINGS THE UNDERTAKING EMPLOY S TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUF ACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. THE FULFILLMENT OF THE CONDITIONS MENTIONED AT CLAU SES (I) (II) AND (IV) ABOVE ARE NOT UNDER DISPUTE. THE ONLY DISPUTE IS R EGARDING THE FULFILLMENT OF CONDITION IN CLAUSE (III) ABOVE WHEREIN THE ASSESS ING OFFICER HELD THAT THE ITEMS 'TOILET SOAPS DETERGENT CAKES AND DETERGENT POWDER ' MANUFACTURED BY THE ASSESSEE IS THE THING OR AN ARTICLE SPECIFIED IN SC HEDULE 11 (AT SL.NO.4) OF THE IT ACT AND HENCE NOT ELIGIBLE FOR DEDUCTION UNDER SECT ION 80- IB. THE ABOVE OBSERVATION OF THE ASSESSING OFFICER THAT THE MANUFACTURER OF THINGS OR ARTICLES SPECIFIED IN 11 TH SCHEDULE ARE NOT ELIGIBLE FOR DEDUCTION U/S.80-IB IS NOT CORRECT. AS PER THE CLAUSE (III) ABOVE ONLY THE ASSESSEES WHO MANUFACTURE THINGS/ARTICLES OTHER THAN THOSE SPECI FIED IN 11 TH SCHEDULE ARE ELIGIBLE FOR DEDUCTION U/S.80-IB. HOWEVER THIS CON DITION IS NOT ABSOLUTE AND TOTAL. THIS CONDITION IS EMBEDDED WITH CERTAIN EXCE PTIONS AS PROVIDED IN THE PROVISO. THERE IS A PROVISO TO THE CLAUSE (III) PRO VIDED FOR CERTAIN EXCEPTIONS AS UNDER: PROVISO TO CLAUSE (III) OF SUB-SECTION (2) OF SEC.80-IB: PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL I N RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUBSECTION (4) SHALL APPLY AS IF THE WORDS NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE HAD BEEN OMITTED. THUS THERE ARE TWO EXCEPTIONS TO THE CONDITIONS LA ID DOWN IN CLAUSE (III) ABOVE. ONE EXCEPTION IS THE SMALL SCALE INDUSTRIES (SSI) A ND THE OTHER EXCEPTION IS INDUSTRIAL UNDERTAKING REFERRED TO IN SUB-SECTION ( 4). THE INDUSTRIAL UNDERTAKING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 8 REFERRED TO IN SUB-SECTION (4) MEANS AN INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE. THUS IN THE CASE OF A 'SSI' OR 'INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE' THE ASSESSEES WILL EL IGIBLE FOR DEDUCTION U/S.80IB EVEN IF THEY ARE MANUFACTURING ITEMS SPECIFIED IN 11 TH SCHEDULE. THIS PARTICULARLY SO BECAUSE THE WORDS 'NOT BEING ANY ARTICLE OR THING S PECIFIED IN THE LIST IN THE ELEVEN SCHEDULE ARE TO BE OMITTED FROM THE CLAUSE (III) I F IT WAS A SSI OR INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD ST ATE AS PER THE PROVISO TO THE SAID CLAUSE. IN OTHER WORDS IF THE ASSESSEE IS A 'SMALL SCALE I NDUSTRY (SSI)' OR 'INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE' IT IS ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT IRRESP ECTIVE OF THE NATURE OF THE THINGS OR ARTICLE MANUFACTURED BY IT. FURTHER IF EITHER OF THESE TWO (AND NOT NECESSARIL Y BOTH) SITUATIONS ARE FULFILLED I.E. IF IT WAS SSI OR IF LOCATED IN AN I NDUSTRIALLY BACKWARD STATE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB EVEN O N THE ITEMS (MANUFACTURED) SPECIFIED IN 11 TH SCHEDULE. THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(4) OF THE ACT THE PROVISIONS OF WHICH ARE AS UNDER: SEC.80-IB: (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECI FIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE A SSESSMENT YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR AND THER EAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDE RTAKING. NOW LET US EXAMINE THE ASSESSEE'S CASE. THE ASSESS EE'S MANUFACTURING UNIT IS LOCATED IN THE STATE OF PONDICHERRY WHICH IS AN 'INDUSTRIALLY BACKWARD STATE' AS NOTIFIED IN 8 TH SCHEDULE (AT SL.NO.16). THERE IS NO DISPUTE REGARD ING THIS POSITION. THEREFORE THE ASSESSEE'S CASE IS CO VERED BY THE SECOND LIMB OF PROVISO TO CLAUSE (III) OF SUB-SECTION (2) OF SEC.8 0-IB OF THE ACT. HENCE THE WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE STANDS OMITTED FROM THE LANGUAGE OF CLAU SE (III) OF THE ACT. MANUFACTURING OF ANY ARTICLE OR THING (INCLUDING TH OSE SPECIFIED IN 11 TH SCHEDULE) IS SUFFICIENT FOR CLAIMING DEDUCTION U/S. 80-IB OF THE ACT IN SUCH A CASE. ON THIS ACCOUNT ALONE THE INSTANT ASSESSEE BEING LOCATED IN AN 'INDUSTRIALLY BACKWARD STATE' OF PONDICHERRY IS EL IGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 9 THE DEDUCTION U/S.80-IB IN THE CASE OF AN INDUSTRIA L UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE IS GOVERNED BY THE PROVISIONS OF SUB-SEC.(4). THE ONLY REQUIREMENT IN SUCH CASES IS THAT THE INDUSTRIAL UNDERTAKING SHOULD BE LOCATED IN AN INDU STRIALLY BACKWARD STATE. IT MAKE NO DIFFERENCE WHETHER SUCH UNDERTAKING IS A SM ALL SCALE INDUSTRY OR NOT. IN OTHER WORDS ONCE THE INDUSTRIAL UNDERTAKING IS LOC ATED IN AN INDUSTRIALLY BACKWARD STATE ALL UNITS (WHETHER SSI OR NON-SSI) ARE EQUALLY ELIGIBLE FOR DEDUCTION U/S. 80-IB OF THE ACT. ON THE OTHER HAND ALL THE SMALL SCALE INDUSTRIES ( SSI) CAN ALSO TAKE EXCEPTION TO CLAUSE (III) OF SUB-SEC.(2) OF SEC.80- IB I.E. FROM THE WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE IF THEY FULFILL ALL THE NORMS PRESCRIBED UNDER THE SSI GUID ELINES / INDUSTRIES (DEVELOPMENT AND REGULATION) ACT 1951. ONCE THE REQ UIREMENTS OF SSI ARE FULFILLED THE ASSESSEE FALLS UNDER THE FIRST LIMB OF EXCEPTIONS OF PROVISO TO CLAUSE (III). IN SUCH A CASE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION EVEN IF THEY MANUFACTURE ITEMS SPECIFIED IN 11 TH SCHEDULE. AND THEY ARE ELIGIBLE FOR DEDUCTION IRRESPECTIVE OF THE LOCATION OF THE UNDER TAKING I.E. WHETHER LOCATED IN AN INDUSTRIALLY BACKWARD STATE OR OTHER STATES. THUS THE ASSESSEES WHOSE INDUSTRIAL UNDERTAKINGS A RE RECOGNIZED AS 'SMALL SCALE INDUSTRIES' OR 'LOCATED IN AN INDUSTRI ALLY BACKWARD STATE' ARE ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT EVEN I F THEY MANUFACTURE 'ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDUL E'. FURTHER AS STATED EARLIER THE EXCEPTIONS SPECIFIE D IN THE PROVISO TO CLAUSE (ILL) I.E. BEING 'SMALL SCALE INDUSTRIES' OR 'LOCATED IN AN INDUSTRIALLY BACKWARD STATE' ARE INDEPENDENT OF EACH ORDER. THE ASSESSEES NEED NOT FULFILL BOTH OF THESE TWO CONDITIONS. IF ANYONE OF THESE TW O REQUIREMENTS IS FULFILLED THE ASSESSEE IS ELIGIBLE FOR DEDUCTION IRRESPECTIVE OF THE FULFILLMENT OF THE OTHER CONDITION. THUS IN THE INSTANT CASE THE ASSESSEE IS LOCATED IN THE STATE OF PONDICHERRY WHICH IS IN AN INDUSTRIALLY BACKWARD ST ATE. THERE IS NO DISPUTE REGARDING THIS. HENCE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER THE SUB- SECTION (4) OF SEC.80-IB OF THE ACT ON ALL THE ART ICLE/THINGS (INCLUDING THOSE MENTIONED IN 11 TH SCHEDULE) MANUFACTURED BY IT. IT ALSO MAKE NO DIFF ERENCE WHETHER THE UNDERTAKING IS A SSI OR NOT. ONCE THE INDUSTRIAL UNDERTAKING IS LOCATED IN AN I NDUSTRIALLY BACKWARD STATE IT IS ELIGIBLE FOR DEDUCTION U/S.80IB(4) OF THE ACT. IN SUCH A SITUATION THERE IS NO NEED TO FULFILL THE REQUIREMENTS OF SSI NAT URE. IF THE ASSESSEE WANTS TO CLAIM DEDUCTION U/S.80IB OF THE ACT BEING IN THE N ATURE OF SSI (I.E. IF WANTS TO CLAIM EXCEPTION AS PER THE FIRST LIMB OF PROVISO TO CLAUSE (III)) THEN ONLY THE ASSESSEE HAS TO PROVE THAT IT IS RECOGNIZED AS A SS I AND ALL THE RELEVANT CONDITIONS ARE FULFILLED. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 10 IN THE INSTANT CASE THE ASSESSEE'S INDUSTRIAL UNDE RTAKING IS 'LOCATED IN AN INDUSTRIALLY BACKWARD STATE' OF PONDICHERRY. ON THI S ACCOUNT ALONE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT. HENCE THERE IS NO NEED TO FULFILL THE REQUIREMENTS OF SSI. CONSEQUENTLY TH E AMOUNT OF CAPITAL DEPLOYED ETC ARE NO LONGER RELEVANT AS THE ASSESSEE CAN CLA IM DEDUCTION U/S.80-IB OF THE ACT BY VIRTUE OF ITS LOCATION IN INDUSTRIALLY BACKW ARD STATES. THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(4) OF THE ACT. THEREFORE EXAMINATION OF ASSESSEE'S RECOGNITION AS SSI AND THE FULFILLMENT OF THE NECESSARY CONDITIONS THEREIN IS OF ONLY ACADEMIC SIGNIFICANCE AS THE FULFILLMENT OR NON-FULFILLMENT OF THIS REQUI REMENT WILL NOT HAVE ANY ADVERSE IMPACT ON THE ELIGIBILITY OF DEDUCTION UNDE R SUB-SECTION (4) OF SEC.80- IB OF THE ACT. IN VIEW OF THE ABOVE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB OF THE ACT MORE SPECIFICALLY UNDER SUB-SECTION (4) OF SEC.80-IB OF THE INCOME TAX ACT. THEREFORE THE ASSESSING OFFICER IS DIRECTED TO GRANT NECESSARY RELIEF TO THE ASSESSEE U/S.80-IB OF THE ACT. THE ASSESSEE SUCCEED S IN ITS APPEALS IN THIS REGARD. 6. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEES MANUFACTURING UNIT IS LOCATED IN AN INDUSTRIALLY BACKWARD STATE I.E. PONDICHERRY. THEREFORE THE ASSESSEE IS ELIGIBLE FO R DEDUCTION UNDER SECTION 80IB AND RELIED ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF DCIT V. M/S. VINBROS & CO. IN I.T.A. NO. 1581/MDS/2012 FOR THE A SSESSMENT YEAR 2009-10 VIDE ORDER DATED 29.01.2013. 8. ON THE OTHER HAND THE LD. DR HAS FAIRLY ACCEPT ED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE. SUBSEQUENTLY WHEN THE B ENCH SOUGHT FOR CLARIFICATION FROM THE ASSESSEE AS TO HOW THE ASSESSEE IS A SMAL L SCALE INDUSTRY IN VIEW OF THE INVESTMENT OF MORE THAN ` . 1.00 CRORE THE LD. COUNSEL FOR THE ASSESSEE HAS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 11 SUBMITTED THAT EVEN THE ASSESSEE IS NOT A SMALL SCA LE INDUSTRY THE ASSESSEE IS ELIGIBLE FOR DEDUCTION BEING SITUATED IN AN INDUSTR IALLY BACKWARD AREA I.E. PONDICHERRY. FURTHER THE LD. DR HAS SUBMITTED THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 144 OF THE ACT. 9. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS ON RECORD AND ALSO GONE THROUGH ORDERS OF AUTHORITIES BELOW. THE ASSESSEE I S ENGAGED IN MANUFACTURING OF TOILET SOAPS DETERGENT CAKES DETERGENT POWDER ETC. THE ASSESSEES MANUFACTURING UNIT IS LOCATED IN THE STATE OF PONDI CHERRY. THE STATE OF PONDICHERRY IS AN INDUSTRIALLY BACKWARD STATE [AS I NCLUDED IN 8 TH SCHEDULE AT SL.NO. 16]. THE ASSESSEES MANUFACTURED ITEMS TOIL ET SOAPS DETERGENT CAKES DETERGENT POWDER ETC. ARE INCLUDED IN THE 11 TH SCHEDULE O THE INCOME TAX ACT [AT SL.NO. 4]. THE ABOVE FACTS ARE NOT DISPUTED BY THE DEPARTMENT. THE ONLY OBJECTION OF THE ASSESSING OFFICER IS THAT THE ASSE SSEE IS MANUFACTURING THE ITEMS MENTIONED IN THE 11 TH SCHEDULE AND ALSO THE ASSESSEE IS NOT A SMALL SCAL E INDUSTRIAL UNDERTAKING AND THEREFORE THE ASSESS IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. FOR THE SAKE OF CLAR ITY WE WOULD LIKE TO EXTRACT RELEVANT PROVISIONS OF SECTION: 80-IB. (1) XXXXXXXXX (2) XXXXXXXXX (I) XXXXXXX (II) XXXXXX (III) IT MANUFACTURES OR PRODUCES ANY ARTICLE OR TH ING NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHE DULE OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS IN ANY PART OF I NDIA : I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 12 PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL IN RELATIO N TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUSTRIAL UNDERTAKING REFERRED TO IN SUB- SECTION (4) SHALL APPLY AS IF THE WORDS NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE HAD BEEN OMITTED. (IV) XXXXXXXX (3) XXXXXXXX (4) THE AMOUNT OF DEDUCTION IN THE CASE OF AN INDUS TRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEARS BEGINNING WITH THE INITIAL AS SESSMENT YEAR AND THEREAFTER TWENTY-FIVE PER CENT (OR THIRTY PER CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GAINS DERIVED FROM SUCH INDUSTRIAL UNDE RTAKING : PROVIDED THAT THE TOTAL PERIOD OF DEDUCTION DOES NOT EXCEED TEN CONSECUTIVE ASSESSMENT YEARS (OR TWELVE CONSECUTIVE ASSESSMENT YEARS WHERE THE ASSESSEE IS A CO-OPERATIVE SOCIETY) SUBJECT TO FULFILMENT OF THE CONDITION THAT IT BEGINS TO MANUFACTURE OR PRODUCE ARTICLES OR THINGS OR TO OPE RATE ITS COLD STORAGE PLANT OR PLANTS DURING THE PERIOD BEGINNING ON THE 1ST DAY O F APRIL 1993 AND ENDING ON THE 31 ST DAY OF MARCH 2004 : 10. AS PER PROVISO TO SUB-SECTION (2)(III) OF SECT ION 80IB THERE ARE TWO EXCEPTION PROVIDED BY THE ABOVE CLAUSE I.E. ONE EXC EPTION IS THAT A SMALL SCALE INDUSTRY AND THE OTHER EXCEPTION IS AN INDUS TRIAL UNDERTAKING REFERRED TO IN SUB-SECTION (4) I.E. AN INDUSTRIAL UNDERTAKIN G SITUATED IN AN INDUSTRIALLY BACKWARD STATE SPECIFIED IN THE EIGHTH SCHEDULE. TH US IN THE CASE OF A 'SSI' OR 'INDUSTRIAL UNDERTAKING SITUATED IN AN IND USTRIALLY BACKWARD STATE' THE ASSESSEES WILL ELIGIBLE FOR DEDUCTION UNDER SEC TION 80IB EVEN IF THEY ARE MANUFACTURING ITEMS SPECIFIED IN 11TH SCHEDULE. THI S PARTICULARLY SO BECAUSE THE WORDS 'NOT BEING ANY ARTICLE OR THING S PECIFIED IN THE LIST IN THE ELEVEN SCHEDULE ARE TO BE OMITTED FROM THE CLAUSE (III) IF IT WAS A SSI OR INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE AS PER THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 13 PROVISO TO THE SAID CLAUSE. IN OTHER WORDS IF THE ASSESSEE IS A 'SMALL SCALE INDUSTRY (SSI)' OR 'INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE' IT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB OF THE ACT IRRESPECTIVE OF THE NATURE OF THE THINGS OR ARTICLE MANUFACTURED BY IT. FURTHER IF EITHER OF THESE TWO (NOT NECESSARILY BOTH) SITUA TIONS ARE FULFILLED I.E. IF IT WAS SSI OR IF LOCATED IN AN INDUSTRIALLY BACKWARD S TATE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION80-IB EVEN ON T HE ITEMS (MANUFACTURED) SPECIFIED IN 11TH SCHEDULE. 11. IN THE PRESENT CASE THE ASSESSEES MANUFACTUR ING UNIT IS LOCATED IN THE STATE OF PONDICHERRY WHICH IS AN INDUSTRIALLY BACKWARD STATE AS NOTIFIED IN 8 TH SCHEDULE (AT SL.NO. 16). THESE FACTS ARE NOT DISPU TED BY THE DEPARTMENT. THEREFORE THE ASSESSEE IS COVERED BY S ECOND LIMB OF PROVISO TO CLAUSE (III) OF SUB-SECTION (2) OF SECTION 80IB OF THE ACT. 12. IN SO FAR AS THE DECISION OF THE COORDINATE BE NCH IN THE CASE OF DCIT V. VINBROS & CO. (SUPRA) IS CONCERNED THE TRIBUNAL HAS OBSERVED THAT THE FINDINGS OF THE CIT(A) THAT THE PLACE OF ASSESSEES BUSINESS IS IN AN INDUSTRIALLY BACKWARD STATE I.E. PONDICHERRY HAVE NOWHERE BEEN DISPUTED. MEANING THEREBY EVEN IF WE HOLD THAT THE ASSESSEE IS A SMALL SCALE INDUSTRY STILL IT IS ENTITLED FOR CLAIM OF DEDUCTI ON IN VIEW OF SECTION 80IB(4) OF I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 14 THE ACT SINCE IT IS OPERATING FROM AN INDUSTRIALL Y BACKWARD STATE. HENCE WE OBSERVE THAT THE ASSESSEE SATISFIES WITH SECTION 80IB(4) OF THE ACT AND ARGUMENTS OF THE REVENUE THAT IT IS NOT A SMALL SCA LE INDUSTRY OR IT MANUFACTURE AN ITEM CONTAINED IN SCHEDULE XI OF THE ACT DO NOT HOLD ANY GROUND. THEREFORE WE HOLD THAT ONCE THE ASSESSEE SATISFIES THE CONDITION IN SECTION 80IB(4) OF THE ACT THE ARGUMENTS OF THE REVENUE ONLY CARRY ACADEMIC SIGNIFICANCE .. 13. THE LD. CIT(APPEALS) AFTER CONSIDERING THE FA CTS AND CIRCUMSTANCES AND PROVISIONS OF THE ACT ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(4) OF THE ACT. AFTER CAREFUL CONSIDERATION OF ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(APPEALS) ON THIS ISSUE AND ACCORDINGLY THE GROUNDS OF APPEAL OF THE REVENUE IS DISMISSED. I.T.A. NO. 440/MDS/2013 [A.Y. 2009-10] 14. BOTH PARTIES HAVE SUBMITTED THAT IN THIS CASE THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IS WHETHER THE ASSESSE E IS ELIGIBLE FOR DEDUCTION CLAIMED UNDER SECTION 80IB OF THE ACT. WE FIND THAT THE FACTS AND ISSUE INVOLVED IN THIS CASE ARE SIMILAR TO THAT OF IN REVENUES APPEAL IN I.T.A. NO. 439/MDS/2013 DECIDED HEREINABOVE . IN VIEW OF OUR ABOVE DECISION IN THE I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NOS SS S. .. .439 & 440 439 & 440 439 & 440 439 & 440/M/ /M/ /M/ /M/13 1313 13 15 CASE OF ACIT V. POWER SOAP LTD. IN I.T.A. NO. 439/M DS/2013 THE APPEAL OF THE REVENUE STANDS DISMISSED. 15. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON MONDAY THE 28 TH OF OCTOBER 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI DATED THE 28.10.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.