JAI RAMA PLASTICS, MUMBAI v. ITO 15(3)(1), MUMBAI

ITA 7776/MUM/2010 | 2005-2006
Pronouncement Date: 25-02-2011 | Result: Partly Allowed

Appeal Details

RSA Number 777619914 RSA 2010
Bench Mumbai
Appeal Number ITA 7776/MUM/2010
Duration Of Justice 3 month(s) 14 day(s)
Appellant JAI RAMA PLASTICS, MUMBAI
Respondent ITO 15(3)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 25-02-2011
Assessment Year 2005-2006
Appeal Filed On 11-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH MUMBAI BEFORE SHRI R.K. PANDA ACCOUNTANT MEMBER I.T.A.NO.7776/MUM/2010 (A.Y. 2005-06) M/S. JAI RAMA PLASTICS B-402 VARDHMAN NAGAR DR.R.P. ROAD MULUND (W) PAN:AAEFJ2226R. VS. INCOME-TAX OFFICER-15(3)(1) MATRU MANDIR MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHRI PRADIP N. KAPASI. RESPONDENT BY SHRI S ATBIR SINGH. O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 16-08- 2010 OF THE CIT (APPEALS)-26 MUMBAI RELATING TO A SSESSMENT YEAR 2005-06. 2. IN GROUND NO.1 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE AO IN DENYING DEDUCTIO N U/S.80IB(4) FOR RS.2 57 670/-. 2.1 THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF 2 PARTNERS AND IS ENGAGED IN THE BUSI NESS OF MANUFACTURING OF PLASTIC BAGS AT ITS FACTORY AT DAMAN. THE ASSESSEE DECLARED ITS BUSINESS INCOME AT RS.2 57 670/- AND CLAIMED THE SAME AS DEDUCTION U/S.80IA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED BY THE ASSESSEE THAT THE DEDUCTION CLAIMED IS U/S.80IB AND NOT U/S.80IA WHICH IS A TYP OGRAPHICAL ERROR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO ASKED THE ASSESSEE TO FURNISH DETAILS WITH DOCUMENTARY EVIDENCE IN SUPPORT OF THE DEDUCTI ON CLAIMED. IN RESPONSE TO THE SAME THE ASSESSEE FILED AUDIT REPORT U/S.80IB PHOTOCOPY OF PROVISIONAL SSI ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 2 CERTIFICATE DATED 05-02-2004 SALES-TAX AND CST REG ISTRATION DATED 12-02-2004 AND OTHER DETAILS OF SALES LABOUR CHARGES RECEIVED AND EXPENSES. 3. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESS EE THE AO NOTED THAT THE ASSESSEE IS NOT ENTITLED TO GET ANY RELIEF U/S.80IB SINCE THE FIRM HAS NOT FULFILLED THE STIPULATED CONDITIONS PROVIDED FOR ITS ELIGIBIL ITY FOR CLAIM OF DEDUCTION U/S.80IB. ACCORDING TO THE AO AUDIT REPORT IN FORM NO.10CCB WAS NOT FURNISHED ALONG WITH THE RETURN OF INCOME BUT WAS FILED DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS. FURTHER THE INDUSTRIAL UNDERTAKING S HOULD HAVE COMMENCED ITS MANUFACTURING ACTIVITIES BEFORE 31-03-2004 WHEREAS THE ASSESSEE IN ITS APPLICATION FOR REGISTRATION FOR SSI UNIT WITH THE DIRECTOR INDUSTRIES DAMAN HAS MENTIONED THE COMMENCEMENT OF PRODUCTION AS 30-03-2 004. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO PROVE THAT IT HAS STAR TED ITS MANUFACTURING ACTIVITIES ON 30-03-2004. ACCORDING TO THE AO MERE MANUFACTURE OF A PROTOTYPE WITHOUT COMMENCEMENT OF PRODUCTION IN COMMERCIAL SE NSE WILL NOT AMOUNT TO COMMENCEMENT OR PRODUCTION FOR ALLOWING RELIEF. HE NOTED THAT IN RESPONSE TO THE APPLICATION BY THE ASSESSEE THE GENERAL MANAGER (D IC) DAMAN HAD ISSUED PROVISIONAL REGISTRATION CERTIFICATE DATED 05-02-20 04. ACCORDING TO THE AO THE PROVISIONAL CERTIFICATE IS GIVEN TO ANOTHER UNIT TO OBTAIN ALL FACILITIES/CLEARANCES ETC. REQUIRED TO ESTABLISH THE UNIT. IT DOES NOT PR OVE THAT THE ASSESSEE STARTED ITS MANUFACTURING ACTIVITIES BEFORE 31-03-2004. FURTHER THE ASSESSEE DID NOT FILE ANY CERTIFICATE FROM THE POLLUTION CONTROL COMMITTE E DAMAN TO SHOW THAT THE ASSESSEE HAS STARTED ITS MANUFACTURING ACTIVITIES BEFORE 31-03-2004. THE AO FURTHER NOTED FROM THE DETAILS FURNISHED BY THE ASS ESSEE THAT THE ASSESSEE FIRM IS DOING CONTRACT LABOUR JOB WORK FOR OTHERS. HE NOTED THAT OUT OF THE TOTAL SALES AND LABOUR CHARGES SHOWN AT RS.62.23 LAKHS LABOUR JOB WORK UNDERTAKEN FOR OTHERS IS OF RS.42.02 LAKHS. ACCORDING TO THE AO DEDUCTION I S AVAILABLE TO AN ASSESSEE ENGAGED IN THE BUSINESS OF MANUFACTURE OR PRODUCES ARTICLES OF SPECIFIC ITEMS. ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 3 HOWEVER IN THE INSTANT CASE THE ASSESSEE HAS UNDE RTAKEN JOB WORK FOR OTHERS WHICH IS NOTHING BUT CONTRACT WORKS DONE AND ARE N OT MANUFACTURING ACTIVITIES. DESPITE BEING ASKED BY THE AO TO FURNISH THE TYPE O F LABOUR JOB WORK DONE FOR OTHERS THE ASSESSEE DID NOT FURNISH THE SAME BUT O NLY FURNISHED LEDGER ACCOUNT OF LABOUR WORK DONE. IN VIEW OF THE ABOVE FACTS TH E AO WAS OF THE OPINION THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM 100% DEDUCTIO N FROM THE PROFITS OF THE BUSINESS U/S.80IB OF THE I.T. ACT. HE ACCORDINGLY D ISALLOWED AN AMOUNT OF RS.2 57 670/- CLAIMED BY THE ASSESSEE U/S.80IB. 4. BEFORE THE CIT(A) IT WAS SUBMITTED THAT THE ASS ESSEE HAS COMMENCED ITS BUSINESS ON 08-01-2004 I.E. THE DATE ON WHICH THE P REMISES WERE PURCHASED. IT WAS FURTHER SUBMITTED THAT SINCE THE ASSESSEE FULFI LLED ALL THE CONDITIONS PRESCRIBED U/S. 80IB(4) IT IS ENTITLED FOR THE DED UCTION. IT WAS SUBMITTED THAT THE MANUFACTURING ACTIVITIES OF THE ASSESSEE ARE IN AN INDUSTRIALLY BACKWARD STATE AND ENGAGED IN THE BUSINESS OF PLASTIC BAGS PLASTIC TU BING ROLLS AND PLASTIC SHEETS MANUFACTURED FROM PLASTIC GRANULES. IT WAS SUBMITTE D THAT MACHINERY WORTH RS.2 28 000/- WAS PURCHASED ON 06-01-2004 AND MANUF ACTURING WAS STARTED WITHIN FEW HOURS AND THE ASSESSEE HAD COMMENCED ITS PRODUCTION ACTIVITIES IN THE MONTH JANUARY ITSELF MORE PRECISELY ON 08-01-2004 . IT WAS SUBMITTED THAT THE WAGES REGISTER FOR THIS PERIOD IS NOT AVAILABLE DUE TO DESTRUCTION DURING FLOOD ON 03-08-2004. I WAS ARGUED THAT ELECTRICITY EXPENSES WERE INCURRED IN THE MONTH OF JANUARY AND FEBRUARY AND THE EXPENDITURE ITSELF PRO VES THE START OF THE BUSINESS. IT WAS SUBMITTED THAT RAW MATERIAL WAS PURCHASED FO R THE FIRST TIME ON 06-01- 2004 BEING PLASTIC GRANULES. THEREFORE IT CANNOT B E SAID THAT PRODUCTION WAS NOT STARTED BEFORE MARCH 2004. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE HAD MADE SALES OF RS.4 31 678/- AND EARNED LABOUR CHARGES OF RS.2 62 765/-. VARIOUS DECISIONS WERE ALSO CITED BEFORE THE CIT(A) TO SUBS TANTIATE THE CASE OF THE ASSESSEE. IT WAS SUBMITTED THAT IN THE PRECEDING YE AR AS WELL AS THE SUBSEQUENT ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 4 YEARS THE CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED. AS REGARDS FILING OF AUDIT REPORT IN FORM NO.10CCB DURING HE COURSE OF ASSESSM ENT PROCEEDINGS IT WAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE CAN BE ACC EPTED EVEN WHEN THE AUDIT REPORT IS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 5. HOWEVER THE CIT(A) WAS NOT CONVINCED WITH THE E XPLANATION GIVEN BY THE ASSESSEE AND UPHELD HE ACTION OF THE AO BY HOLDING AS UNDER : 3.2 I HAVE CONSIDERED THE RIVAL SUBMISSION OF TH A PPELLANT AND FINDING OF THE ASSESSING OFFICER CAREFULLY. WHILE VERIFYING THE FACTS OF THE CASE AND EVIDENCE ON RECORD IT IS FOUND THAT A PPELLANT HAS CLAIMED LABOUR CHARGES OF RS.1485/- RS.2515/- AND RS.500/- AS THE SALES BY VOUCHER NO. 123 ON A SINGLE DAY I.E. 08.01 .2004 WHICH MEANS IN REALITY THERE WAS NO MANUFACTURING ACTIVIT IES AND APPELLANT HAS CREATED SUCH EVIDENCES TO JUSTIFY THE COMMENCEM ENT OF MANUFACTURING ACTIVITIES MUCH EARLIER THAN APPROVED BY THE COMPETENT AUTHORITY DUE TO THAT APPELLANT HAS FAIL ED TO PRODUCE THE LABOUR ATTENDANCE REGISTER AND AFTER HAVING FOUND U NABLE TO PROVE WITH DIRECT EVIDENCE APPELLANT HAS COME UP WITH TH E PRETENCE THAT ORIGINAL LABOUR ATTENDANCE REGISTER FOR THE PERIOD OF JANUARY TO MARCH WERE NOT AVAILABLE AS THESE WERE DESTROYED DU RING THE FLOOR ON 03.82004. THIS STORY ITSELF GOES AGAINST THE CLA IM OF THE APPELLANT. IT IS WORTHWHILE TO MENTION THAT PLOT OF SAID FACTORY WAS PURCHASED ON 06.01.2004 IT MEANS BUSINESS WAS UNDER PROCESS OF ESTABLISHMENT THEREFORE IT IS UNBELIEVABLE THAT AF TER PURCHASE OF PROPERTY ON 06.01.2004 IMMEDIATELY AFTER ONE DAY JO B WORK WAS DONE ON 08.01.2004 OR ON THE SAME DAY. ON THE CONTR ARY THE CLAIM OF THE APPELLANT ITSELF PROVES THAT SUCH EVIDENCE H AS BEEN CREATED WITHOUT SUBSTANTIATING IT ONLY WITH A VIEW TO CLAIM THE DEDUCTION. MOREOVER ONE POINT IS ALSO WORTHWHILE TO MENTION T HAT SUCH BILL HAS BEEN RAISED AGAINST MEHTA PLASTICS APPEARS TO BE RE LATED CONCERN AND RAMA PLASTICS WHICH ALSO APPEARS TO BE RELATED CONCERN. FURTHER IT IS WORTHWHILE TO MENTION THAT EVEN UPTO 05.02.20 04 APPELLANT WAS NOT REGISTERED WITH DIC THEREFORE BEFORE ANY VALID REGISTRATION SUCH PRODUCTION CANNOT BE STARTED. FURTHER MORE ONE EVI DENCE IS NOTED THAT THIS APPLICATION WAS MADE ON 03.02.2004 MENTIO NING THE POSSIBLE DATE OF COMMENCEMENT OF PRODUCTION ON 30.3 .2004 WHICH MEANS EVEN BEFORE 03.02.2004 BUSINESS WAS NOT START ED NOR WAS ANY PRODUCTION DONE THEREFORE THE SO-CALLED DOCUME NTARY EVIDENCE OF SALES AND JOB WORK WERE CREATED LATE ON ONLY WIT H A VIEW TO JUSTIFY THE CLAIM OF DEDUCTIONS. LD. AO HAS RIGHTLY POINTED OUT THAT BEFORE 30.3.2004 MANUFACTURING PROCESS WAS SNOT STARTED AN D MOREOVER DURING THE APPELLATE PROCEEDINGS ALSO APPELLANT HAS FAILED TO DEMONSTRATE WITH THE EVIDENCE AS TO WHAT TYPE OF MA NUFACTURING WOK WAS DONE AND FROM WHERE SUCH INCOME WAS GENERAT ED. IT APPEARS HAT BEFORE STARING OF ACTUAL MANUFACTURING APPELLANT HAD CREATED SALES BILLS AND LABOUR CHARGES BILLS WITH T WO INTENTIONS ONE IS FOR GETTING INFLATED THE EXPENDITURE OF RELATED CON CERNS BY ISSUING BILLS IN THEIR NAMES AND SECOND ONE IS THE CLAIM OF CORRESPONDING ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 5 PROFITS IN ITS OWN HAND AS ENTITLED FOR DEDUCTION. IT IS UNBELIEVABLE THAT ON THE DAY OF PURCHASE OF PROPERTY BEARING SR. NO. 380/1(1)(24) APPELLANT HAS STARTED THE PRODUCTION. FURTHER IT COMES INTO NOTICE THAT APPELLANT WAS REGISTERED WIT H ELECTRICITY DEPARTMENT ONLY ON 24.02.2004 WHERE IT CLAIMS THAT PRODUCTION WAS STATED IN THE MONTH OF JANUARY. NOT ONLY THAT IN A PPLICATION DATED 05.02.2004 MADE BY THE APPELLANT TO DIRECTOR DIC IT HAS BEEN MENTIONED THAT ESTIMATED DATE OF PRODUCTION SHALL B E ON 30.3.2004 WHEREAS IN RETURN OF INCOME APPELLANTS CLAIMS THA T IT HAS STARTED PRODUCTION IN THE MONTH OF JANUARY AND FEBRUARY. FU RTHER MORE ONE EVIDENCE IS WORTHWHILE TO REFER TO THAT ONLY ON 19. 3.2004 APPELLANT HAS GOT PERMISSION FROM THE POLLUTION CONTROL COMMI TTEE DAMAN AND DIU TO STAT ITS PRODUCTION PROVES THE FACT THAT ONLY AFTER THIS DATE APPELLANT AS ENTITLED TO COMMENCE THE PRODUCTI ON OR ANY COMMERCIAL ACTIVITIES IN THE SAID PREMISES. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESS EE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE STARTED ITS MANUFACTURING ACTIVITIES DURING THE FINANCIAL Y EAR 2003-04 RELEVANT TO THE ASSTT. YEAR 2004-05 AND THE CLAIM OF THE ASSESSEE F OR DEDUCTION U/S.80IB(4) HAS BEEN ACCEPTED U/S. 143(1) OF THE I.T. ACT. SIMILARL Y FOR THE ASSTT. YEARS 2006-07 TO 2008-09 THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S. 80IB(4) HAS BEEN ACCEPTED U/S.143(1) OF THE I.T. ACT. THEREFORE TH E DISPUTE IS ONLY FOR THE FINANCIAL YEAR 2004-05 RELEVANT TO ASSTT. YEAR 2005 -06. REFERRING TO THE COPY OF THE BALANCE-SHEET PLACED AT PAPER BOOK PAGE NOS. 31 TO 39 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PARTNERSHIP DEE D WAS EXECUTED ON 26-12- 2003. REFERRING TO ITS OBJECTS CLAUSES HE DREW TH E ATTENTION OF THE BENCH TO ITS NATURE OF ACTIVITIES. REFERRING TO COPY OF THE SALE DEED PLACED AT PAPER BOOK PAGES NO.40 TO 49 HE SUBMITTED THAT THE INDUSTRIAL GALA WAS PURCHASED ON 06- 01-2004. REFERRING TO PAGE 84 OF THE PAPER BOOK HE SUBMITTED THAT MACHINERIES WORTH RS.2 28 800/- WERE PURCHASED ON 06-01-2004. R EFERRING TO THE LEDGER ACCOUNT OF ELECTRICITY CHARGES PLACED AT PAPER BOOK PAGE NO. 85 AND THE CORRESPONDING BILLS PLACED AT PAPER BOOK PAGE NOS.8 6 TO 88 HE DREW THE ATTENTION OF THE BENCH TO PAYMENT OF ELECTRICITY CH ARGES PAID DURING THE PERIOD ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 6 31-01-2004 TO 31-03-2004. REFERRING TO THE LEDGER A CCOUNT OF PURCHASES PLACED AT PAPER BOOK PAGE NO.89 HE SUBMITTED THAT RAW MAT ERIALS AMOUNTING TO RS.14 79 384/- WERE PURCHASED DURING THE PERIOD 06- 01-2004 TO 31-03-2004. REFERRING TO THE LEDGER ACCOUNT OF SALES PLACED AT PAPER BOOK PAGE NO.90 HE SUBMITTED THAT THE FIRM HAS SOLD GOODS WORTH RS.4 3 1 678/- DURING THE PERIOD FROM 16-02-2004 TO 26-03-2004. REFERRING TO PAPER B OOK PAGES 92 TO 94 HE DREW THE ATTENTION OF THE BENCH TO THE LABOUR CHARG ES RECEIVED. REFERRING TO PAPER BOOK PAGE NO. 95 HE DREW THE ATTENTION OF T HE BENCH TO THE PROVISIONAL REGISTRATION ALLOTTED BY THE DIRECTOR OF INDUSTRIES ADMINISTRATION OF DEMAN & DIU ACCORDING TO WHICH THE DATE OF ISSUE IS 05-02-2004. REFERRING TO PAPER BOOK PAGE NOS. 96 TO 102 HE DREW THE ATTENTION OF THE BENCH TO THE CERTIFICATE ISSUED BY THE POLLUTION CONTROL COMMITTEE DAMAN & DIU AND DADRA & NAGAR HAVELI DATED 19- 03-2004. REFERRING TO PAPER BOOK PAGE NOS.103 AND 1 04 HE DREW THE ATTENTION OF THE BENCH TO THE SALES-TAX RETURN FILED BY THE A SSESSEE ACCORDING TO WHICH THE ASSESSEE HAS FILED ITS RETURN OF SALES AND OF TAX PAYABLE FOR THE QUARTER ENDING 31-03-2004. HE SUBMITTED THAT IN VIEW OF THE VARIOU S DETAILS FURNISHED BY THE ASSESSEE TO SUBSTANTIATE THAT IT HAS STARTED ITS MA NUFACTURING ACTIVITIES BEFORE 31-03-2004 AND CONSIDERING THE FACT THAT THE DEPART MENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE U/S.80IB(4) FOR THE PRECEDING YEAR AS WELL AS THE SUBSEQUENT YEARS THE CIT(A) WAS NOT JUSTIFIED IN REJECTING T HE CLAIM OF THE ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE DEPARTMENT HAS NOT RE-OPENED THE ASSESSMENT OF THE PRECEDING YEAR OR T HE SUBSEQUENT YEARS. HE SUBMITTED THAT ALTHOUGH THE AO HAS MENTIONED THAT A UDIT REPORT WAS NOT FILED ALONG WITH THE RETURN BUT WAS FILED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS HE SUBMITTED THAT THE CIT(A) WAS SILENT ON THIS ISS UE. HOWEVER IN VIEW OF THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CA SE OF CIT VS. SIVANAND ELECTRONICS REPORTED IN (209 ITR 63) (BOM.) AUDIT REPORT CAN BE FILED DURING THE ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 7 COURSE OF ASSESSMENT OR APPEAL PROCEEDINGS. HE SUBM ITTED THAT IN VIEW OF OVERWHELMING EVIDENCES IT HAS TO BE HELD THAT THE ASSESSEE HAS STARTED MANUFACTURING GOODS BEFORE 31-03-2004. 6.1 SO FAR AS THE OBJECTION OF THE REVENUE THAT TH E ASSESSEE HAD RECEIVED JOB WORK CHARGES FOR WHICH IT IS NOT ENTITLED TO DEDUCT ION U/S.80IB(4) THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO THE FOLLOWIN G DECISIONS SUBMITTED THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION U/S.80IB(4) ON ACCOUNT OF JOB WORK DONE : 1. CIT VS. IMPEL FORGE & ALLIES INDUSTRIES LTD. [1 83 TAXMAN 38 (P & H)]. 2. CIT VS. NORTHERN AROMATICS LTD. [196 CTR 479 (D EL.)]. 3. NU-LOOK P.LTD. VS. CIT [157 ITR 253 (DEL.)]. 4. CIT VS. J.B. KHARWAR & SONS [163 ITR 394 (GUJ. )]. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THE GROUND RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND STRONGLY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THERE IS NO POSITIVE EVIDENCE THAT THE ASSESSEE HAD STARTED ITS COMMERCIAL PRODUCTION BEFO RE 01-04-2004. THEREFORE THE AO WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE. 7.1 THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS RE JOINDER SUBMITTED THAT WHATEVER EVIDENCES WERE THERE WERE PRODUCED BEFORE THE AO. THE AO HAS NOWHERE POINTED OUT THAT THE ASSESSEE WAS UNABLE TO PRODUCE DOCUMENTARY EVIDENCE. HE HAS MERELY DISBELIEVED THE VARIOUS DOC UMENTARY EVIDENCES PRODUCED BEFORE HIM TO COME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT STARTED ITS MANUFACTURING ACTIVITIES BEFORE THE SPECIFIED D ATE. 8. I HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I HAVE ALSO CONSIDERED THE VARIOUS DECISI ONS CITED BEFORE ME. ALTHOUGH VARIOUS DOCUMENTARY EVIDENCES WERE FURNISHED BEFOR E THE AO AS WELL AS THE CIT(A) I FIND THE REVENUE AUTHORITIES HAVE REJECTE D THE CLAIM OF THE ASSESSEE ON ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 8 THE GROUND THAT THE ASSESSEE WAS UNABLE TO PROVE WI TH DOCUMENTARY EVIDENCE THAT IT HAS STARTED THE MANUFACTURING ACTIVITIES BE FORE 31-03-2004. HOWEVER THE FACT REMAINS THAT IN THE PRECEDING YEAR I.E. ASSTT. YEAR 2004-05 AND IN THE SUBSEQUENT YEARS I.E. ASSTT. YEARS 2006-07 TO 2008- 09 THE DEPARTMENT HAS ACCEPTED THE CLAIM OF DEDUCTION U/S.80IB(4) IN ASSE SSMENT COMPLETED U/S. 143(1). THE SUBMISSION OF THE LEARNED COUNSEL FOR T HE ASSESSEE THAT THE RETURNS WERE ACCEPTED U/S.143(1) FOR THE ASSTT. YEAR 2004- 05 AND ASSTT. YEARS 2006-07 TO 2008-09 AND THAT NO RE-ASSESSMENT PROCEEDINGS H AVE BEEN INITIATED COULD NOT BE CONTROVERTED BY THE LD. D.R. THEREFORE FOLLOWIN G THE RULE OF CONSISTENCY ALONE THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. FURTHE R IN VIEW OF THE OVERWHELMING EVIDENCES FILED BY THE ASSESSEE DURING THE COURSE O F ASSESSMENT PROCEEDINGS AS WELL AS APPEAL PROCEEDINGS SHOWING THE PURCHASE OF INDUSTRIAL GALA PURCHASE OF PLANT & MACHINERY PURCHASE OF RAW MATERIAL SALES & LABOUR CHARGES RECEIVED ELECTRICITY CONNECTION CERTIFICATE FROM THE POLLUT ION CONTROL BOARD AND CERTIFICATE FROM THE DIRECTOR OF INDUSTRIES WHICH ARE NOT PROV ED TO BE FALSE OR UNTRUE I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS STA RTED ITS MANUFACTURING ACTIVITIES BEFORE 31-03-2004. SO FAR AS THE ELIGIBI LITY OF THE ASSESSEE TO CLAIM DEDUCTION U/S.80IB(4) ON ACCOUNT OF JOB WORK CHARGE S RECEIVED IS CONCERNED IN VIEW OF THE DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE AT PARA 6.1 OF THIS ORDER I AM OF THE CONSIDERED OPINION THAT TH E ASSESSEE IS ENTITLED TO DEDUCTION U/S.80IB(4) ON ACCOUNT OF SUCH JOB WORK C HARGES RECEIVED FROM OTHERS. IN THIS VIEW OF THE MATTER I SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT HE AO TO ALLOW THE CLAIM OF DEDUCTION U/ S.80IB(4) FOR RS.2 57 670/- MADE BY THE ASSESSEE. 9. IN GROUND NO.2 THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.1 00 000/- MADE BY THE AO U/S.68 OF THE ACT. ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 9 9.1 THE FACTS OF THE CASE IN BRIEF ARE THAT THE A SSESSEE HAD SHOWN AN AMOUNT OF RS.1 00 000/- UNDER THE HEAD SUNDRY CREDITORS IN THE NAME OF M/S. AJMEET EXPORTS. IN THE ABSENCE OF ANY DETAILS AND CONFIRMA TION LETTERS THE AO TREATED THE SAME AS UNEXPLAINED CREDIT IN THE BOOKS OF THE ASSESSEE IN THE NAME OF M/S. AJMEET EXPORTS AND MADE ADDITION U/S.68 OF THE I.T. ACT. IN APPEAL IT WAS SUBMITTED THAT THE ASSESSEE HAD LET OUT A PART OF I TS FACTORY PREMISES WHICH WAS IDLE FOR RENT BY ENTERING INTO A LEASE AGREEMENT W ITH M/S. AJMEET EXPORTS VIDE AGREEMENT DATED 17-02-2004. ACCORDINGLY THE AMOUN T OF RS. 1 00 000/- WAS RECEIVED FROM THE LESSEE AS SECURITY DEPOSIT REFUND ABLE. SUBSEQUENT TO THE CANCELLATION OF THE LEASE AGREEMENT AN AMOUNT OF R S.60 000/- WAS FORFEITED BY THE ASSESSEE AND RS.40 000/- WAS REFUNDABLE AND AS SUCH RS.60 000/- WAS CREDITED IN THE P & L A/C. AS OTHER INCOME. IT WA S SUBMITTED THAT THERE WAS AN ERROR ON THE PART OF THE ASSESSEE WHILE ACCOUNTING THE ENTRY AS IT WAS WRITTEN AS SUNDRY CREDIT INSTEAD OF SECURITY DEPOSIT. IT W AS SUBMITTED THAT THIS AMOUNT OF RS.1 00 000/- WAS RECEIVED BY CHEQUE NO.251301 DATE D 12-02-2004 DRAWN ON HDFC BANK NEW DELHI AS PER THE TERMS OF THE LEASE AGREEMENT WHICH CAN BE VERIFIED FROM THE LEASE AGREEMENT ITSELF. IT WAS FU RTHER ARGUED THAT THE SAID AMOUNT OF RS.1 00 000/- WAS NEVER CLAIMED AS AN EXP ENDITURE IN THE P & L A/C. 9.2 HOWEVER THE CI(A) WAS NOT CONVINCED WITH THE A RGUMENTS ADVANCED BY THE ASSESSEE. THE VARIOUS DOCUMENTS FILED BEFORE HI M WERE REJECTED BY HIM SINCE THERE WAS NO APPLICATION OR PETITION FOR ADMISSION OF NEW EVIDENCE REQUIRED TO BE ADMITTED UNDER RULE 46A OF I.T. RULES. ACCORDING TO HIM IF A FACTORY WAS RENTED BY ENTERING INTO A LEASE AGREEMENT IT WAS NECESSAR Y TO SHOW THE LEASE RENT OF THE FACTORY PREMISES BUT THE SAME HAS NOT BEEN DONE AS NO RENTAL INCOME HAS BEEN SHOWN. SINCE THE ASSESSEE HAS NOT FURNISHED EV IDENCE TO EXPLAIN THE GENUINENESS OF SUCH ADVANCE DEPOSIT APPEARING IN T HE BALANCE-SHEET THE CIT(A) SUSTAINED THE ADDITION MADE BY THE AO U/S.68 OF THE I.T. ACT. ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 10 10. AT THE TIME OF HEARING BOTH THE PARTIES AGREED THAT THIS MATTER MAY BE RESTORED TO THE FILE OF CIT(A) FOR FRESH ADJUDICATI ON AFTER ADMITTING THE ADDITIONAL EVIDENCES FILED BEFORE HIM. I THEREFORE DEEM IT P ROPER TO RESTORE THIS ISSUE TO THE FILE OF CIT(A) WITH A DIRECTION TO ADMIT THE AD DITIONAL EVIDENCES FILED BEFORE HIM AND DECIDE THE ISSUE AS PER LAW AFTER GIVING DU E OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THI S GROUND BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN GROUND NO. 3 THE ASSESSEE HAS CHALLENGED TH E ORDER OF CIT(A) ON ACCOUNT OF SERIOUS VIOLATION OF NATURAL JUSTICE. HO WEVER THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS THIS GROUND SERIOUSLY. T HEREFORE THIS GROUND IS DISMISSED. 12. IN GROUND NO. 4 THE ASSESSEE HAS CHALLENGED TH E ORDER OF CIT(A) IN CONFIRMING THE LEVY OF INTEREST UNDER SECTIONS 234B AND 234C OF THE I.T. ACT BY THE AO. AFTER HEARING BOTH THE SIDES I AM OF THE C ONSIDERED OPINION THAT CHARGING OF INTEREST UNDER SECTIONS 234B AND 234C I S MANDATORY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY THIS GROUND I S DISMISSED. 13. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 25TH DAY OF FEBRUARY 2011. SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI: 25TH FEBRUARY 2011. NG: ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 11 COPY TO : 1.ASSESSEE. 2.DEPARTMENT. 3 CIT(A)-26 MUMBAI. 4 CIT-15 MUMBAI. 5.DR SMC BENCH MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA NO.7776/M/10- M/S. JAI RAMA PLASTICS 12 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 22-02-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 23-02-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER