DCIT 9(3), MUMBAI v. SAMRUDH PHARMACEUTICALS P.LTD, MUMBAI

ITA 5212/MUM/2012 | 2004-2005
Pronouncement Date: 11-10-2013 | Result: Dismissed

Appeal Details

RSA Number 521219914 RSA 2012
Assessee PAN AABCS4538H
Bench Mumbai
Appeal Number ITA 5212/MUM/2012
Duration Of Justice 1 year(s) 1 month(s) 25 day(s)
Appellant DCIT 9(3), MUMBAI
Respondent SAMRUDH PHARMACEUTICALS P.LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 11-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 11-10-2013
Assessment Year 2004-2005
Appeal Filed On 17-08-2012
Judgment Text
` IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI . . ! ' #'' '$ % ! & BEFORE SHRI P.M. JAGTAP ACCOUNTANT MEMBER AND SHRI VIVEK VARMA JUDICIAL MEMBER . : 5212 / / 2012 A.Y. 2004-2005 ITA NO. : 5212/MUM/2012 (ASSESSMENT YEAR: 2004-2005) DY. COMMISSIONER OF INCOME TAX -9(3) 2 ND FLOOR ROOM NO. 229 AAYAKAR BHAVAN M. K. ROAD MUMBAI -400 020 VS M/S SAMRUDH PHARMACEUTICALS PVT LTD. A/101 PRATHANA BUILDING PLOT NO. 15 JAWAHAR NAGAR S.V. ROAD GOREGAON (W) MUMBAI .: PAN: AABCS 4538 H (APPELLANT) (RESPONDENT) APPELLANT- REVENUE BY : SHRI ABANIKANT NAYAK RESPONDENT- ASSESSEE BY : SHRI VIJAY MEHTA /DATE OF HEARING : 08-10-2013 !' / DATE OF PRONOUNCEMENT : 11-10-2013 * O R D E R #'' '$ : PER VIVEK VARMA JM: THE INSTANT APPEAL IS FILED BY THE DEPARTMENT AGAINST TH E ORDER OF CIT(A) 19 MUMBAI DATED 07.06.2012 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN HOLDING THAT REASSESSMEN T PROCEEDINGS U/S 147/148 OF THE INCOME TAX ACT 1961 AS BAD IN LAW I N VIEW OF THE EXPLANATION 1 TO SECTION 147 OF THE I.T. ACT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT(A) IS RIGHT IN DELETING THE DISALLOWANC E OF DEDUCTION U/S 80IB(3)(II) OF THE INCOME TAX ACT 1961 WITHOUT APP RECIATING THE FACT THAT THE ASSESSEE CONTRAVENED THE CONDITIONS REQUIRED FO R THE ELIGIBILITY FOR DEDUCTION U/S 80IB(3)(II) OF THE INCOME TAX ACT 19 61. M/S SAMRU DH PHARMACEUTICALS PVT LTD. ITA 5212/MUM/2012 2 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BET SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED . 2. THE FIRST ISSUE IS WITH REGARD TO HOLDING THE REASSESS MENT PROCEEDINGS TO BE BAD IN LAW. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN ON 29.10.2004 AND REGULAR ASSESSMENT U/S 143(3) WAS FRAMED O N 30.08.2006. THE INSTANT ASSESSMENT WAS REOPENED U/S 148 VIDE NOTICE U/S 148 DATED 28.03.2011. THE ASSESSEE AFTER FILING ITS RETU RN REQUESTED FOR THE SUPPLY OF REASONS WHICH WERE SUPPLIED TO THE ASSESSEE AND WHICH READ AS UNDER: IN THIS CASE RETURN OF INCOME WAS FILED ON 29.10.2 004 DECLARING TOTAL INCOME AT RS. 11980380/-. THE ASSESSMENT U/S.143(3) OF THE I. T. ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS COMPLETED ON 30.08.200 6 ASSESSING THE TOTAL INCOME AT RS. 12277291/-AFTER ALLOWING DEDUCTION U/ S.801B AT RS. 3339231/- AND 80G AT RS. 18500/-. THEREAFTER VIDE ORDER DATED 09.02.2007 PASSED U/S.154 OF THE ACT THE TOTAL INCOME WAS REVISED TO RS. 29 849/-. SUBSEQUENTLY IT IS NOTICED THAT THE ASSESSEE HAD CL AIMED THE SAID DEDUCTION ON THE BASIS THAT THE UNITS LOCATED IN BACKWARD AREA W HERE SMALL SCALE INDUSTRIAL UNITS. HOWEVER IT HAS NOW BEEN OBSERVED THAT THE AS SESSEE DOES NOT FALL WITHIN THE AMBIT OF SMALL SCALE INDUSTRIAL UNIT AS REQUIRE D U/S.801B(14 )(G) R.W.S.I1B OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1 951. THE REASONS FOR THE SAME ARE AS UNDER: SSI(SMALL SCALE INDUSTRIES) AS PER ITS DEFINITION I N SECTION 801B(14)(G) MEANS: SMALL SCALE INDUSTRIAL UNDERTAKING MEANS AN INDUSTR IAL UNDERTAKING WHICH AS ON THE LAST DAY OF THE PREVIOUS YEAR REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTAKING U/S.11B OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1951. UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT 1951 THE CENTRAL GOVERNMENT IS EMPOWERED TO SPECIFY THE REQU IREMENTS WHICH ARE TO BE COMPLIED WITH FOR OBTAINING THE STATUS OF SSI. AS PER GOI NOTIFICATION NO. SO 232(E) DTD.2.4.1991 AN SSI UNDERTAKING WAS THE UNIT IN WHICH THE INVESTMENT IN PLANT & MACHINERY W AS UPTO ONE CRORE RUPEES. SUBSEQUENTLY THE INVESTMENT CEILING WAS ENHANCED TO THREE CRORE RUPEES UNDER NOTIFICATION SO 857(E) DATED 10.12.97. IT WAS MADE OPTIONAL FOR THE UNITS REGISTERED EARLIER AD FELL WITHIN THE DEFINITION OF THE SSI AS PER THE REVISED INVESTMENT CEILING OFT. 3 CRORE FOR RE-REGISTRATION AS SSI WITHIN A PERIOD OF 180 DAYS. HOWEVER THE CEILING WAS AGAIN BROUGHT BACK TO ORIGINAL LEVEL OF RUPEES ONE CRORE VIDE NOTIFICATION NO SO 1288(E) DATED 24. 12.1999. THE GOL HAS ALSO CLARIFIED UNDER PRESS NOTE DATED 14.3 .2000 THAT TH E STATUS OF THOSE INDUSTRIAL UNDERTAKING WHICH HAD EITHER ESTABLISHED AFRESH OR ENHANCED THEIR INVESTMENT UPTO RS. 3 CRORE BEFORE THE NOTIFICATION DATED 24.1 2.1999 WILL CONTINUE TO ENJOY THE STATUS OF SSI. THE UNIT IN QUESTION OF M/S. SAMRUDH PHARMACEUTICAL S PVT LTD DOES NOT FALL IN ANY OF THE CATEGORIES AS THE UNIT WAS PROVISIONALLY REGISTERED AS SSI ON 16.1.1992 AND THE APPLICATION WAS NOT MADE AS PER T HE PROVISIONS OF NOTIFICATION DATED 10.12.1997. THE INVESTMENT IN PL ANT & MACHINERY L1A? /11 THE APPLICATION OF RE-REGISTRATION WAS ONLY RS. 53. 36 LAKHS. HENCE THE INVESTMENT WAS NOT INCREASED TO RS. 3 CRORE CEILING WITHIN THE SPECIFIED PERIOD LAID DOWN IN NOTIFICATION DATED 10.12.1997. SINCE T HE INVESTMENT CEILING WAS REDUCED TO RS.. 1 CRORE CEILING W.E.F. DECEMBER 19 99 THE MOMENT AND M/S SAMRU DH PHARMACEUTICALS PVT LTD. ITA 5212/MUM/2012 3 INVESTMENT EXCEEDS THE CEILING LIMIT THE UNIT LOSS ES THE STATUS OF SSI AND CONSEQUENTIAL BENEFITS U/S. 80IB(3)(II) OF THE I. T . ACT 1961. SINCE M/S. SAMRUDH PHARMACEUTICALS PVT LTD CONTRAVENED THESE C ONDITIONS THE UNIT WAS NOT ELIGIBLE FOR DEDUCTION U/S. 801B(3)(II) OF THE ACT. I HAVE THEREFORE REASONS TO BELIEVE THAT THE DEDUCT ION U/S. 8OIB(3)(II) INCOME OF RS. 24 81 806/- CHARGEABLE TO TAX HAS ESCAPED ASSES SMENT WITHIN MEANING OF SECTION 147 OF THE ACT. ACCORDINGLY REASSESSMENT PR OCEEDINGS U/S. 147 OF THE I. T. ACT 1961 ARE HEREBY INITIATED. 4. THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE THE AO PRAYING THAT INITIATION OF PROCEEDINGS U/S 148 WERE NOT IN ACCORDA NCE WITH LAW AND THAT THE ENTIRE MATERIAL/FACTS WHICH HAS BEEN THE BA SIS FOR FORMATION OF BELIEF AND REASONS HAD BEEN CONSIDERED IN THE REGULAR ASSESSMENT. 5. THESE SUBMISSIONS OF THE ASSESSEE WERE NEGATED AND THE AO PROCEEDED TO FRAME THE REASSESSMENT ORDER. 6. BEFORE THE CIT(A) THE ASSESSEE REITERATED THE FACTS AND SUBMITTED THAT THE AO INITIATED REASSESSMENT PROCEEDINGS WHEREIN THE BASIS WAS CLAIM OF DEDUCTION U/S 80IB AND WHICH IS CONTINUIN G FROM THE PRECEDING YEAR. IT WAS SUBMITTED THAT THE AO IN THE PRECEDING YEAR ALSO INITIATED THE REASSESSMENT PROCEEDINGS WHICH WERE HE LD TO BE INVALID BY THE CIT(A) AND SUBSEQUENTLY SUSTAINED BY THE C OORDINATE BENCH IN ITA NO. 6722/MUM/2011 FOR ASSESSMENT YEAR 200 3-04 WHEREIN IT WAS HELD AFTER CONSIDERING ALL THESE FACTUAL ASPECTS AND TH E MATERIALS PLACED BEFORE US WE HAVE NO HESITATION TO SAY THAT THE VERY BASIS FO R REOPENING THE ASSESSMENT IS BASED ON CHANGE OF OPINION BY THE AO AS WHATEVER HAS BEEN CONSIDERED IN THE REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN EXAM INED IN THE FIRST ASSESSMENT PROCEEDINGS AND NO NEW MATERIALS HAVE BE EN BROUGHT ON RECORD. THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA 320 ITR 561 (SC) SQUARELY APPLIES. WE ACCORDI NGLY HOLD THAT REOPENING WAS BAD IN LAW WHICH VITIATE THE REASSESSMENT PROCE EDINGS THEREFORE FINDINGS OF THE LD. CIT(A) ARE CONFIRMED. 7. THE CIT(A) IN THE IMPUGNED ORDER OBSERVED THE FIRST AND SECOND GROUND OF APPEAL RELATE TO IL LEGALITY AND INVALIDITY OF THE PROCEEDINGS INITIATED U/S 147 OF THE I.T. AC T 1961. 4.1 THE APPELLANT HAD FILED ITS RETURN OF INCOME A LONG WITH AUDIT REPORT ON 29.10.2004 DECLARING TOTAL INCOME OF RS.1 19 80 380/- AFTER CLAIMING DEDUCTION OF RS. 33 39 231/- U/S.801 B(3)(II) OF THE ACT. THE SAME WAS SUBJECTED TO SCRUTINY PROCEEDINGS U/S.143(3) AND AN ORDER PASSED ON 30.08.2006 WHEREBY THE AO BE ING M/S SAMRU DH PHARMACEUTICALS PVT LTD. ITA 5212/MUM/2012 4 SATISFIED ABOUT THE CLAIM OF DEDUCTION U/S.801B(3)( II). HOWEVER THE CASE WAS REOPENED VIDE NOTICE DATED 28.03.2011. 4.2 THE MAIN ARGUMENTS OF THE APPELLANT ARE SUMMAR IZED AS FOLLOWS: (I) THE REOPENING PROCEEDINGS PERTAIN TO A.Y.2004- 05 AND THEREFORE GOVERNED BY PROVISO TO SEC. 147 OF THE I.T. ACT 19 61 AS THE INITIAL ORDER WAS MADE U/S.143(3) OF THE ACT. (II) SINCE THE APPELLANT HAS FILED THE RETURN OF I NCOME ON TIME U/S.139 RESPONDED TO NOTICES ISSUED U/S.142(1) AND DISCLOSED ALL TRUE AND MATERIAL FACTS. THERE WAS NO CASE WHAT SOEVER OR ASSUMING JURISDICTION U/S.147/148 OF THE I.T. ACT 1961. (III) REOPENING WAS CHANGE OF OPINION AND THE AO H AS EXAMINED ALL THE EVIDENCE ON RECORD AND WHENEVER FELT NECESSARY HAD CALLED FOR FURTHER EVIDENCES TO SATISFY HIMSELF ABOUT THE GENUINENESS AND CORRECTNESS OF CLAIM MADE U/S.8QIB(3)(II) OF TH E I.T. ACT 1961. IN THIS CONNECTION ATTENTION WAS INVITED TO THE APPELLANTS LETTERS DATED 11.07.2005 & 09.11.2005 ALONG WITH SS I REGISTRATION CERTIFICATES AND OTHER RELATED DOCUMEN TS WHICH ESTABLISH THAT ALL THE DETAILS REQUIRED FOR DECISIO N OF THE ISSUE WERE DULY FILED. COPY OF THE LETTERS AND SSI REGIST RATION CERTIFICATES WERE ALSO FILED ALONG WITH PAPER BOOK (IV) THE APPELLANT RELIED ON PLETHORA OF DECISIONS INCLUDING THAT CIT VS. KELVINATOR OF INDIA LTD. {320 ITR 561 564-565( SC)} WHICH HAS CLEARLY HELD THAT REOPENING IS NOT POSSIBLE ON MERE CHANGE OF OPINION IF ALL MATERIAL FACTS ARE DISCLOSED BY T HE TAX PAYER. (V) THE APPELLANT ALSO CONTENDED THAT REOPENING WA S BASED ON AUDIT OBJECTION AND SO IS INVALID IN VIEW OF THE DE CISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF ILFS INVES TMENTS MANAGERS LTD. VS. ITO (187 ITR 32 36). (VI) THE APPELLANT IN HIS SUPPORT HAS FILED THE OR DER OF CIT(A) FOR A.Y.2003-04 ON THE SAME ISSUE. (VII) THE APPELLANT SUBMITS THAT SINCE HE HAS GOT RELIEF ON BOTH ISSUES BY CIT(A) FOR A.Y.2003-04 HE SHOULD BE GIVEN RELIE F IN THE APPEAL UNDER CONSIDERATION. 4.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE THE SUBMISSIONS OF THE APPELLANT ASSESSMENT ORDER AND THE ORDER OF CI T(A) FOR A.Y.2003-0. THE CIT(A) HAS DISCUSSED ELABORATELY ON BOTH THE IS SUES WHILE PASSING THE APPELLATE ORDER FOR A.Y.2003-04. I FIND NO INCO NGRUITY IN THE SAID ORDER OF CIT(A). THE FACTS REMAINING THE SAME RESP ECTFULLY FOLLOWING ORDER OF THE CIT(A) 20 I ALLOW BOTH THE GROUNDS OF THE APPELLANT. 8. THE CIT(A) THEREFORE ALLOWED THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE REASSESSMENT PROCEEDINGS WERE BAD IN LAW. 9. THE DEPARTMENT IS NOW IN APPEAL BEFORE THE ITAT. 10. BEFORE US THE DR PLACED RELIANCE ON THE ORDER OF THE AO. 11. THE AR PLACED RELIANCE ON THE ORDER OF THE CIT(A) PRAY ING THAT THE ORDER OF THE CIT(A) WAS CORRECT. M/S SAMRU DH PHARMACEUTICALS PVT LTD. ITA 5212/MUM/2012 5 12. AFTER HEARING THE FACTS AND PERUSAL OF THE VARIOUS O RDERS WE ARE OF THE VIEW THAT THE INSTANT REASSESSMENT PROCEEDINGS A RE ALSO EMANATING FROM THE CHANGE OF OPINION ON THE SAME AND CON TINUING PROJECT UNDERTAKEN BY THE ASSESSEE AND WHICH IS COMING FROM THE PRECEDING YEAR WHEREIN THE APPELLATE FORA HAD HELD THE RE ASSESSMENT PROCEEDINGS TO BE BAD IN LAW. 13. IN THESE CIRCUMSTANCES WE DO NOT FIND ANY REASON TO DEVIATE FROM THE ORDER OF THE CIT(A) HOLDING THE REASSESSMENT PRO CEEDINGS TO BE BAD IN LAW. THIS FINDING OF THE CIT(A) WE SUSTAIN AND AS A CONSEQUENCE GROUND NO. 1 IS ALLOWED. 14. SINCE WE HAVE HELD THE REASSESSMENT PROCEEDING TO B E BAD IN LAW GROUND NO. 2 BECOME INFRUCTUOUS. 15. IN THE RESULT THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH OCTOBER 2013. SD/- SD/- ( . . ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATE: 13 TH OCTOBER 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) & & ' ( ) - 19 MUMBAI / THE CIT (A)-19 MUMBAI. 4) & & ' 9 MUMBAI / THE CIT -9 MUMBAI 5) )*+ & -. / THE D.R. E BENCH MUMBAI. 6) +/ 0 COPY TO GUARD FILE. M/S SAMRU DH PHARMACEUTICALS PVT LTD. ITA 5212/MUM/2012 6 &12 / BY ORDER / / TRUE COPY / / [ 3 / 4 5 & -. DY. / ASSTT. REGISTRAR I.T.A.T. MUMBAI *784 . . * CHAVAN SR. PS