Preetiben Chittusing Chauhan, SILVASSA v. The ACIT.,Cent.Circle-2,, Surat

ITSSA 112/AHD/2009 | 2006-2007
Pronouncement Date: 18-11-2011 | Result: Dismissed

Appeal Details

RSA Number 11220516 RSA 2009
Assessee PAN ABNPC6043R
Bench Ahmedabad
Appeal Number ITSSA 112/AHD/2009
Duration Of Justice 2 year(s) 1 month(s) 5 day(s)
Appellant Preetiben Chittusing Chauhan, SILVASSA
Respondent The ACIT.,Cent.Circle-2,, Surat
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 18-11-2011
Date Of Final Hearing 15-11-2011
Next Hearing Date 15-11-2011
Assessment Year 2006-2007
Appeal Filed On 13-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD BEFORE SHRI MUKUL KUMAR SHRAWAT JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.(SS) NO. 112/ AHD/2009 (ASSESSMENT YEAR 2006-07) PREETIBEN CHITTUSINH CHAUHAN AVDHESH MANSION PWD ROAD SILVASSA 396230 U.T. OF DADRA & NAGAR HAVELI VS. ACIT CC-2 SURAT PAN/GIR NO. : ABNPC6043R (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI K N BHATT AR RESPONDENT BY: SHRI S K GUPTA CIT DR DATE OF HEARING: 15.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) II AHMEDABAD DATED 07.08.2009 FOR THE ASSES SMENT YEAR 2006- 07. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: THE ORDER OF ASSESSMENT IS CONTRARY TO THE FACTS AND PREJUDICIAL TO THE APPELLANT. 02. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW THE DISALLOWANCES MADE BY THE LEARNED ASSESSIN G OFFICER AND CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ARE CONTRARY TO LAW AND BASED ON ERRONEOUS UNDERSTA NDING OF THE FACTS. I.T.(SS)NO.112 /AHD/2009 2 03. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND INTERPRETATION OF LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION JR THE LEARNED ASSESSING OFFICER IN NOT GRANTING DEDUCTION U/S. 80 IB TO THE APPELLANT ON THE BASIS THAT THE APPELLANT HAS NOT S ET UP ANY NEW BUSINESS OR INDUSTRIAL UNDERTAKING BUT HAS TAKEN OV ER AN EXISTING CONCERN AND HENCE NOT ELIGIBLE FOR DEDUCTION U/S. 8 0!B AS PER PROVISIONS U/S. 80IB(4) OF THE ACT. THE ACTION OF T HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS OF THE CASE AND THE PROVISIONS OF SECTION 80IB ON A PL AIN READING AND LITERAL INTERPRETATION OF THE LAW AND HENCE DESERVE S TO BE DELETED. 04. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND INTERPRETATION OF LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN NOT GRANTING DEDUCTION U/S. 80 IB BY INCORRECTLY INTERPRETING THE PROVISIONS OF SECTION 80IB(2) AND 80IB(4) OF THE ACT. THE ACTION OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND C IRCUMSTANCES OF THE CASE AND LAW AND DESERVES TO BE DELETED. 05. ON APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND INTERPRETATION OF LAW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN NOT ALLOWING DEDUCTION U/S. 80 IB OF THE I. T. ACT 1961 FROM THE PROFITS AND GAINS OF THE INDUSTR IAL UNDERTAKING OF THE APPELLANT. THE ACTION OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE FACTS AND C IRCUMSTANCES OF THE CASE AND LAW AND DESERVES TO BE DELETED. 3. IT WAS SUBMITTED BY THE LD. A.R. THAT GROUND NOS . 1 & 2 ARE GENERAL AND ONLY ONE ISSUE IS INVOLVED IN THE REMAI NING GROUND NOS. 4 5 & 6 I.E. REGARDING DISALLOWANCE OF ASSESSEES CLAIM FOR DEDUCTION U/S 80- IB. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMEN T STAGE ARE NOTED BY LD. CIT(A) IN PARA 2 OF HIS ORDER WHICH IS REPRODUCED B ELOW: 2. THE ONLY GROUND OF APPEAL IS AGAINST NOT ALLOWI NG DEDUCTION U/S.80IB OF THE I.T. ACT. THE ASSESSEE CLAIMED RS.6 26 939/- AS DEDUCTION U/S.80IB(4) OF THE ACT. THE ASSESSING OFF ICER FOUND THAT I.T.(SS)NO.112 /AHD/2009 3 THE CONCERN WAS IN OPERATION FROM 22.10.2001 (RELEV ANT TO CLAIM THE DEDUCTION IN A.Y.2006-07 AFTER PURCHASING THE U NIT FROM M/S. CHETAN ENTERPRISES.' THE ASSESSING OFFICER DISALLOW ED THE CLAIM OF DEDUCTION U/S.80IB ON THE GROUND THAT SECTION 80IB( 2) SUB-CLAUSE (I) PUTS A BAR ON FORMATION OF ELIGIBLE CONCERN BY SPLITTING UP OR THE RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTEN CE WHILE SUB CLAUSE (II) PROHIBITS THE FORMATION OF ELIGIBLE CON CERN BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PR EVIOUSLY USED FOR ANY PURPOSE. IN THE INSTANT CASE BOTH THE COND ITIONS HAVE BEEN FLOUTED AND THUS THE INCOME FROM CHETAN ENTERPRISE S AS SHOWN BY THE ASSESSEE IS NOT ELIGIBLE FOR THE DEDUCTION U/S .80IB. FURTHER THE ADMITTED FACT IS THAT THE ASSESSEE HAS TAKEN OVER T HE ALREADY USED PLANT AND MACHINERY OF THE FIRM M/S.CHETAN ENTERPRI SES AND BUILT UP HER OWN INDUSTRIAL UNDERTAKING. 4. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSE E IS IN FURTHER APPEAL BEFORE US. 5. IT IS SUBMITTED BY THE LD. A.R. THAT THE UNIT IS THE SAME. IT WAS ALSO SUBMITTED THAT EARLIER MR. CHETAN MODI WAS THE PROP RIETOR AND HE WAS GETTING DEDUCTION U/S 80-IB OF THE INCOME TAX ACT 1961 AND SUBSEQUENTLY IT WAS CONVERTED INTO A PARTNERSHIP F IRM BY ADDING THE ASSESSEE AS A PARTNER AND THEREAFTER MR. CHETAN MO DI RETIRED AND THE ASSESSEE BECAME THE SOLE PROPRIETOR OF THIS UNIT AN D HENCE THE UNIT IS THE SAME AND ONLY THE OWNER HAS CHANGED AND THEREFORE THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80-IB OF THE ACT WITH RE SPECT TO THIS UNIT. REGARDING THE TERM RECONSTRUCTION IN CLAUSE (I) O F SUB-SECTION (2) OF SECTION 80-IB IT WAS SUBMITTED THAT RECONSTRUCTIO N MEANS CHANGE IN ASSETS OF THE UNIT. RELIANCE WAS PLACED ON THE TRI BUNAL DECISION RENDERED IN THE CASE OF ITO VS ADVANCE VALVES GLOBAL AS REPO RTED IN 08 ITR (TRIB) 684 (DEL.). IT WAS SUBMITTED THAT IN THAT CASE ALS O THE TRIBUNAL DECIDED I.T.(SS)NO.112 /AHD/2009 4 THE ISSUE IN FAVOUR OF THE ASSESSEE UNDER SIMILAR F ACTS AND HENCE THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THIS TRIBUN AL DECISION. 6. AS AGAINST THIS LD. D.R. OF THE REVENUE SUPPORT ED THE ORDERS OF AUTHORITIES BELOW. OUR ATTENTION WAS DRAWN TO PARA 2 OF THE ASSESSMENT ORDER WHERE IT IS NOTED BY THE A.O. THAT AS PER TH E RETURN OF INCOME FILED BY THE ASSESSEE IT IS EMERGING THAT THE CONCERN HA S BEEN SHOWING THIS UNIT AS OPERATIONAL ONLY FROM ASSESSMENT YEAR 2006-07 RE LEVANT TO FINANCIAL YEAR 2005-06 AND AS PER FORM 10CCB IT IS SEEN THAT THE DATE FROM WHICH THE CONCERN HAS BEEN IN OPERATION IS 22/10/2001 REL EVANT TO ASSESSMENT YEAR 2002-03 AND HENCE IT IS CLEAR THAT THE CONCER N HAS BEEN TAKEN OVER BY THE ASSESSEE FROM CERTAIN OTHER PERSON DURING FI NANCIAL YEAR 2005-06 AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR DED UCTION U/S 80-IB. HE HAS ALSO DRAWN OUR ATTENTION TO PARA 4 OF THE ORDER OF LD. CIT(A) WHERE IT IS NOTED BY HIM THAT THE PROPRIETORSHIP FIRM WAS CONVE RTED INTO PARTNERSHIP FIRM BY ADDITION OF THE ASSESSEE AS PARTNER THROUGH PARTNERSHIP DEED AND THIS PARTNERSHIP DEED WAS REGISTERED ON 13.07.2005 ALTHOUGH THE PARTNERSHIP WAS SUPPOSED TO BE MADE ON 31.03.2005. THIS PARTNERSHIP FIRM WAS TO COMMENCE BUSINESS W.E.F. 01.04.2005. B UT A SEPARATE DEED OF DISSOLUTION OF THE PARTNERSHIP FIRM WAS MADE ON 01. 04.2005 ITSELF (ALTHOUGH REGISTERED ON 05.08.2005) AND THE FIRM WA S DISSOLVED ON 01.04.2005 AND HENCE THE PARTNERSHIP FIRM NEVER CA ME INTO EXISTENCE AND THEREFORE IT IS A DIRECT PURCHASE OF THE ASSE TS BY THE ASSESSEE FROM SHRI CHETAN MODI AND THEREFORE THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80-IB BECAUSE IT IS A CASE OF RECONSTRUCTION OR TRANSFER OF THE OLD ASSETS TO THE NEW CONCERN. REGARDING THE TRIBUNAL DECISION CITED BY THE LD. A.R. IT WAS SUBMITTED THAT HIS TRIBUNAL DECISI ON IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFERENT. IT WAS SUBMITTED THAT IN I.T.(SS)NO.112 /AHD/2009 5 THAT CASE THE PROPRIETORSHIP BUSINESS WAS CONVERTE D INTO PARTNERSHIP AND THE DEDUCTION U/S 80-IB WAS CLAIMED BY THE EARLIER PROPRIETORSHIP CONCERN ALSO ON ITS CONVERSION INTO PARTNERSHIP. IN THE PR ESENT CASE THE FIRM HAS NEVER COME INTO EXISTENCE AND NO EVIDENCE HAS BEEN BROUGHT ON RECORD THAT THE EARLIER OWNER SHRI CHETAN MODI HAS CLAIMED AND BEEN ALLOWED DEDUCTION U/S 80IB IN RESPECT OF THIS UNIT. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT AS PER CLAUSE (I) OF SUB-SECTION (2) OF SECTIO N 80-IB SECTION 80-IB DOES NOT APPLY TO ANY INDUSTRIAL UNDERTAKING IF IT WAS FORMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXIST ENCE. THERE IS NO DISPUTE ON THIS ASPECT THAT THIS BUSINESS OF SHRI C HETAN ENTERPRISES WAS ALREADY IN EXISTENCE SINCE 22.10.2001 AND THE ASSES SEE HAS BECOME OWNER OF THE SAME ONLY ON 01.04.2005. FROM PARA 4 OF THE ORDER OF LD. CIT(A) IT IS SEEN THAT ALTHOUGH THE ASSESSEE HAS TRIED TO GIVE A COLOUR OF CONVERSION OF PROPRIETORSHIP CONCERN INTO PARTNERSH IP FIRM AND THEN AGAIN CONVERSION OF PARTNERSHIP FIRM INTO PROPRIETORSHIP CONCERN BUT IT IS APPARENT THAT THE REAL FACT IS SOMETHING ELSE THAT THE ASSESSEE HAS PURCHASED THIS UNIT FORM SHRI CHETAN MODI BECAUSE T HE FIRM HAS NEVER COME INTO EXISTENCE BECAUSE THE PARTNERSHIP DEED WA S EXECUTED ON 31.03.2005 AND THE BUSINESS OF THE FIRM WAS TO COMM ENCE FROM 01.04.2005 BUT THE FIRM WAS DISSOLVED ON THE SAME D ATE I.E. ON 01.04.2005 AND ALL THESE FACTS CLEARLY SHOW THAT TH E FIRM NEVER CAME INTO EXISTENCE AND IT WAS A PURCHASE OF THE UNIT BY THE ASSESSEE FROM SHRI CHETAN MODI. NOW IN THE LIGHT OF THESE FACTS WE EXAMINE THE APPLICABILITY OF THE TRIBUNAL DECISION RENDERED IN THE CASE OF ITO VS ADVANCE VALVES GLOBAL (SUPRA). IN THAT CASE THE U NIT IN QUESTION WAS I.T.(SS)NO.112 /AHD/2009 6 FORMED ON 28.12.1999 AND IT WAS DEMONSTRATED BY THE LD. A.R. BEFORE THE CIT(A) THAT THE SAID UNIT WAS NOT FORMED BY SPLITTI NG UP OR RECONSTRUCTION OF THE BUSINESS ALREADY IN EXISTENCE OR BY TRANSFER TO THE NEW UNIT OF THE PLANT PREVIOUSLY USED IN BUSINESS. HE CLEARLY DEMO NSTRATED THAT THE ASSESSMENT OF THE SAME PROPRIETORSHIP CONCERN WAS C OMPLETED BY THE A.O. UNDER SECTION 143(3) AND IT WAS FOUND BY THE A .O. THAT THE UNIT SATISFIES ALL THE CONDITIONS FOR THE SEVERAL YEARS I.E. ASSESSMENT YEAR 2001- 02 2003-04 AND 2004-05 AND THE A.O. ALLOWED DEDUCT ION TO THAT UNIT U/S 80-IB. SUBSEQUENTLY THE SAME PROPRIETORSHIP CONCE RN WAS CONVERTED INTO PARTNERSHIP ON 01.11.2003 AND BEFORE THE TRIBUNAL THE CLAIM WAS OF THE PARTNERSHIP FIRM SO CONVERTED AND UNDER THESE FACTS IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THERE WAS NEITHER ANY SP LITTING UP NOR RECONSTRUCTION OF THE BUSINESS ALREADY IN EXISTENCE AND IT WAS ALSO NOT A CASE OF RECONSTRUCTION OF THE INDUSTRIAL CONCERN WH ICH CONTINUED TO MANUFACTURE THE SAME ITEMS EVEN AFTER CONVERSION IN TO A FIRM. IN THE PRESENT CASE THE FACTS ARE DIFFERENT. THERE IS NO CONVERSION OF PROPRIETORSHIP CONCERN INTO PARTNERSHIP CONCERN BUT THERE IS A TRANSFER OF UNIT FROM ONE PROPRIETOR TO THE OTHER PROPRIETOR AL THOUGH THE ASSESSEE HAS TRIED TO GIVE COLOUR TO SUCH TRANSFER BY FORMING A PARTNERSHIP DEED AS PER WHICH THE FIRM WAS TO COMMENCE BUSINESS FORM 01.04. 2005 BUT ON THE SAME DATE THE FIRM WAS DISSOLVED ALSO AND HENCE I T IS APPARENT THAT THE FIRM NEVER CAME INTO EXISTENCE AND THEREFORE THIS TRIBUNAL DECISION IS NOT APPLICABLE IN THE PRESENT CASE BECAUSE THE FACT S ARE DIFFERENT. IN OUR CONSIDERED OPINION IN THE PRESENT CASE THERE IS R ECONSTRUCTION OF UNIT AS PER WHICH THE UNIT WAS TRANSFERRED FROM ONE OWNER TO THE PRESENT OWNER AND THEREFORE AS PER CLAUSE (I) OF SUB-SECTION (2 ) OF SECTION 80-IB OF THE I.T.(SS)NO.112 /AHD/2009 7 ACT THE PROVISIONS OF SECTION 80-IB ARE NOT APPLI CABLE IN THE PRESENT CASE. WE THEREFORE DECLINE TO INTERFERE IN THE O RDER OF LD. CIT(A). 8. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE M ENTIONED HEREINABOVE. SD./- SD./- (MUKUL KUMAR SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 15/11/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16/11/2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 17/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 18/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.18/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..