The ITO,Vapi Ward-3,, Vapi v. Balaji Polymers, SILVASSA

ITA 464/AHD/2011 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Dismissed

Appeal Details

RSA Number 46420514 RSA 2011
Bench Ahmedabad
Appeal Number ITA 464/AHD/2011
Duration Of Justice 5 month(s) 4 day(s)
Appellant The ITO,Vapi Ward-3,, Vapi
Respondent Balaji Polymers, SILVASSA
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 22-07-2011
Date Of Final Hearing 15-07-2011
Next Hearing Date 15-07-2011
Assessment Year 2007-2008
Appeal Filed On 17-02-2011
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD BEFORE S/SHRI D. K. TYAGI JM AND A. MOHAN ALANKAMO NY AM INCOME-TAX OFFICER VAPI WARD-1 VAPI. VS. M/S BALAJI POLYMERS S.NO.132/1/4 B/H PRINCE PLASTIC ATHAL SILVASSA. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI JASBIR S. CHOUHAN SR.DR RESPONDENT BY:- SHRI TUSHAR HEMANI AR O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGERIVED BY THE ORDER OF LD.CIT(A) VALSAD IN APPEAL NO. CIT(A)VLS/383/09-10 DATED 26/11/2010 RAISING THE FOLLOWING GROUNDS :- (1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S 80IB OF THE ACT STATING THAT DISALLOWANCE OF CLAIM OF DEDUCTION U/S 80IB OF THE ACT ON THE SOLE GROUND THAT THE ASSESSEE WAS NOT HA VING FACTORY LICENSE BEFORE IT STARTED MANUFACTURING ACTIVITIES IS WITHOUT ANY MERITS. IT IS THEREFORE PRAYED THAT THE ORDER OF TH E LD. CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. (2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE POINT THAT THE ASSESSEE HAS FAILED TO PROVE THAT IT HAS COMMENCED THE MANUF ACTURING ITA NO.464/AHD/2011 ASST. YEAR 2007-08 ITA NO.464/AHD/2011 ASST. YEAR 2007-08 2 ACTIVITY ON OR BEFORE 31/3/2004 AS STIPULATED IN S ECTION 80IB OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM RUNNING INDUSTRIAL UNDERTAKING IN THE BACKWARD AREA OF SILVASSA AND MANUFACTURE POLYMER SHEETS PROFILES AND OTHER SIMI LAR PRODUCTS AND IT IS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT @ 100% F OR INITIAL 5 YEARS FROM THE DATE OF COMMENCEMENT OF ITS MANUFACTURING ACTIV ITIES IF IT FULFILLS THE CONDITIONS LAID DOWN IN SECTION 80IB OF THE ACT. TH E RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 01.10.200 7 DECLARING TOTAL INCOME OF NIL WHEREIN AN AMOUNT OF RS.36 12 699/- W AS CLAIMED AS DEDUCTION U/S 80IB OF THE ACT. THE ASSESSMENT WAS M ADE U/S 143(3) ON 17.12.2009 DETERMINING THE TOTAL INCOME AT RS.36 12 699/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLAIM OF DEDUCTIO N U/S 80IB WAS DISALLOWED. 3. IN APPEAL THE LD. CIT(A) DELETED THE DISALLOWANC E OF THE DEDUCTION CLAIMED U/S 80IB AMOUNTING TO RS.36 12 699/- ON THE GROUND THAT OBTAINING THE FACTORY LICENSE IS NOT A CONDITION PR ECEDENT FOR CLAIM OF DEDUCTION U/S 80IB WHILE REACHING THIS CONCLUSION THE LD. CIT(A) HAS RELIED UPON THE DECISION OF THE TRIBUNAL AHMEDABAD IN THE CASE OF M/S SAMARTH HEALTH CARE VIDE ORDER NO. ITA NO.1006/AHD/ 2009 FOR AY 2005-06. AGGRIEVED BY THIS ORDER THE REVENUE IS IN APPEAL BEFORE US. ITA NO.464/AHD/2011 ASST. YEAR 2007-08 3 4. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFFI CER AND CONTENDED THAT THE ACTUAL COMMENCEMENT OF COMMERCIAL PRODUCTI ON/MANUFACTURING HAD NOT TAKEN PLACE ON OR BEFORE 31.03.2004 WHICH W AS THE CUT OFF DATE. THE AO HAD RIGHTLY DISALLOWED THE CLAIM OF THE ASSE SSEE SINCE THE ASSESSEE HAD NOT OBTAINED THE REQUISITE FACTORY LIC ENSE. IT WAS FURTHER SUBMITTED THAT MANUFACTURING ACTIVITY OF THE ASSESS EE WITHOUT A VALID LICENSE IS AN ILLEGAL AND UNLAWFUL ACTIVITY. 5. ON THE OTHER HAND THE LD. AR FOR THE ASSESSEE S UBMITTED THAT THIS ISSUE IS NOW SQUARELY COVERED BY THE DECISION OF TH IS TRIBUNAL IN THE CASE OF ITO VS. M/S JOLLY POLYMERS IN ITA NO.2763/AHD/2 010 AY 2007-08 PRONOUNCED ON 18.03.11 WHEREIN AN IDENTICAL ISSUE HAS BEEN DECIDED ON SIMILAR FACTS AND CIRCUMSTANCES OF THE CASE. HE HAS SUBMITTED A COPY OF THE SAID ORDER. 6. WE HAVE HEARD THE HEARD THE RIVAL PARTIES AND PE RUSED THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ISSUE RAISED BY THE REVENUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE TRIBUNAL IN THE CASE OF ITO VS. M/S JOLLY POLYMERS IN ITA NO.2763/A HD/2010 AY 2007- 08 PRONOUNCED ON 18.03.11 WHEREIN THE TRIBUNAL HAS OBSERVED AS UNDER:- ITA NO.464/AHD/2011 ASST. YEAR 2007-08 4 5. AFTER HEARING BOTH THE PARTIES WE FIND THAT ISS UE IS NOW COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE BY THE O RDER OF ITAT IN THE CASE OF SAMRATH HEALTH CARE (SUPRA) WHEREIN THE TRIBUNAL HAS HELD AS UNDER:- 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED DR AND CAREFULLY PERUSED THE ORDERS OF THE LOWER AUTHORITI ES. IN OUR CONSIDERED VIEW THERE IS NO CASE FOR INTERFERENCE IN THE ORDER OF THE LEARNED CIT(A). THE LEARNED CIT(A) HAS RIGHTLY MENTIONED THAT TO OB TAIN FACTORY LINCENSE IS NO A CONDITION PRECEDENT FOR CLAIMING D EDUCTION U/S.80 IB OF THE ACT. IF WE PRESUME HAT THIS CONDITION IS ALSO R EQUIRED TO BE FULFILLED BY THE ASSESSEE THEN IT WOULD AMOUNT TO LEGISLATIO N BY INSERTING ANOTHER CONDITION IN SECTION 80 IB FOR ALLOWING DED UCTION UNDER THAT SECTION THOUGH NOT PROVIDED IN THE STATUTE. THE AO DID NOT DOUBT ABOUT RAW MATERIAL CONSUMPTION POWER CONSUMPTION SALES AND EMPLOYMENT OF WORKERS. FURTHER NO DOUBT WAS ALSO EXPRESSED BY THE AO THAT ASSESSEE DID NOT CARRY ANY MANUFACTURING ACTIVITY. NONETHELESS THE ASSESSEE HAS APPLIED FOR FACTORY LICENSE PRIOR TO C OMMENCEMENT OF PRODUCTION THOUGH IT WAS GRANTED SUBSEQUENTLY. THE ASSESSEE HAS BEEN GIVEN A PERMANENT REGISTRATION AS A SMALL SCAL E INDUSTRIAL UNDERTAKING AND HAS REGISTERED WITH THE SALES TAX A ND EXCISE AUTHORITIES. FOR CLAIMING DEDUCTION U/S.80 IB OF TH E ACT ONLY THE CONDITIONS LAID DOWN UNDER THAT SECTION ARE REQUIRE D TO BE FULFILLED AND NO MORE. THE REQUIREMENT UNDER OTHER STATUTES CANNO T BE BORROWED FOR ALLOWING / REFUSING DEDUCTION UNLESS IT IS SO PROVI DED IN THE IT ACT ITSELF. FOR EXAMPLE THE LEGISLATURE THOUGHT IT FIT TO BRIN G THE CONDITION OF EMPLOYMENT OF 10 OR MORE WORKERS IF MANUFACTURING ACTIVITIES ARE CARRIED OUT WITH THE HELP OF POWER OR MORE THAN 20 WORKERS WITHOUT THE HELP OF POWER. SIMILARLY IF THE LEGISLATURE THOUGH T IT FIT TO OBTAIN FACTORY LICENSE BEFORE ALLOWING DEDUCTION U/S.80 IB OF THE ACT THEN THEY WOULD HAVE SO PROVIDED. IN FACT THERE ARE SEVERAL OTHER REQUIREMENTS IN DIFFERENT ACT APPLICABLE TO AN INDUSTRY BUT ALL THE SE REQUIREMENTS ARE NOT TO BE COMPLIED WIDTH FOR CLAIMING DEDUCTION U/S.80 IB OF THE ACT. WHAT IS ESSENTIAL IS THAT THE ASSESSEE SHOULD MANUFACTUR E OR PRODUCE AN ARTICLE OR THING. IF THERE IS ANY VIOLATION OF ANY PROVISIONS OF OTHER STATUTES THEN THE ASSESSEE HAS TO EXPLAIN THE SAME TO THE AUTHORITIES EXECUTING THOSE ACTS / STATUTES. FURTHER FOR VIOLAT ION OF HE PROVISIONS UNDER OTHER ACTS THE ASSESSEE MAY FACE PENAL PROVIS IONS AS PROVIDED UNDER THOSE ACTS. BUT FOR THAT COMMISSIONS / OMISSI ON UNDER OTHER ACTS THE DECISION UNDER THE IT ACT CANNOT BE AFFECTED UN LESS SO PROVIDED UNDER THE IT ACT. WE HOWEVER NOTICE THAT THIS APPE AL IS FOR AY 2005-06 AND AS PER FACTS STATED IN THE ORDER BY THE LEARNED CIT(A) THE ASSESSEE HAS OBTAINED FACTORY LICENSE ON 6-5-2004 WHICH IS F INANCIAL YEAR 2004- 05. THEREFORE THERE SHOULD BE NO CASE FOR DISALLOW ING THE CLAIM OF THE ASSESSEE U/S.80 IB ON THE QUESTION OF NOT OBTAINING FACTORY LICENSE. AS A RESULT WE CONFIRM THE ORDER OF THE LEARNED CIT(A ) AND DISMISS THE GROUNDS OF APPEAL OF THE REVENUE. WE FURTHER FIND THAT IN ASSESSEES OWN CASE FOR ASS ESSMENT YEARS 2005-06 AND 2006-07 ON IDENTICAL FACTS THE ITAT HAS GIVEN R ELIEF TO THE ASSESSEE. ITA NO.464/AHD/2011 ASST. YEAR 2007-08 5 RESPECTFULLY FOLLOWING THE SAME WE ALLOW THE CLAIM OF ASSESSEE. THIS GROUND OF REVENUES APPEAL IS DISMISSED. 7. FROM THE FACTS OF THE CASE BEFORE US IT IS APPAR ENT THAT THE ASSESSEE HAS COMMENCED ITS ACTIVITIES WITHIN THE AY 2004-05 THOUGH NOT SIGNIFICANTLY. FURTHER IT IS ALSO NOT DISPUTED BY T HE REVENUE THAT THE ASSESSEE HAS NOT OBTAINED ITS FACTORY LICENSE SUBSE QUENTLY TO HOLD IT AS AN ILLEGAL ACTIVITY. BENEFICIAL PROVISIONS OF THE ACT ARE MEANT TO CREATE A POSITIVE IMPACT IN THE ECONOMY AND SOCIETY. THEREFO RE A BENEFICIAL INTERPRETATION HAS TO BE ADOPTED. RESPECTFULLY FOLL OWING THE DECISION OF THE TRIBUNAL QUOTED (SUPRA) WE UPHOLD THE ORDER OF LD. CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 22/7/11. SD/- SD/- (D.K.TYAGI) (A. MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD DATED : 22/7/11. MAHATA/- ITA NO.464/AHD/2011 ASST. YEAR 2007-08 6 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 18/7/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 18/7/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..