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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI RAJPAL YADAV & SHRI WASEEM AHMED
आयकर अपील�य अ�धकरण, राजकोट �यायपीठ, राजकोट । IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT �ी राजपाल यादव, �या�यक सद�य एवं �ी वसीम अहमद, लेखा सद�य के सम�। BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. Nos.578-581/Rjt/2008 (�नधा�रण वष� / Assessment Years : 2000-01 to 2003-04) & आयकर अपील सं./I.T.A. No.67/Rjt/2009 (�नधा�रण वष� / Assessment Year : 2004-05) बनाम/ Alpha Hi-Tech Fuel Limited, CIT(Appeals)-XVI, Station Road, Lakhtar, Dist. Ahmedabad. Vs. Surrendranagar, Gujarat-382775 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACA4258P (अपीलाथ� /Appellant) (��यथ� / Respondent) .. अपीलाथ� ओर से / Appellant by : Shri Kalpesh Doshi, A.R ��यथ� क� ओर से/Respondent by : Shri Anil Kumar Das, DR. सुनवाई क� तार�ख / Date of Hearing 16/09/2019 घोषणा क� तार�ख /Date of Pronouncement 18/09/2019 आदेश / O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of the Assessee against the appellate orders of the Commissioner of Income Tax(Appeals)-II, Rajkot [CIT(A) in short] arising in the assessment order passed under s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") relevant to Assessment Years (A.Ys) 2000-01 to 2004-05.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 2 -
First we take assessee’s appeal bearing ITA No. 578/RJT/2008. The assessee has raised the following grounds of appeal:
The grounds raised by the assessee in the appeal are descriptive and argumentative in nature, and it is not presented in consonance with Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963. However, in brief the main grievance of the assessee is that the ld. Revenue authorities have erred in denying the deduction under section 80JJA of the Income Tax Act, 1961. The assessee is also aggrieved with the action of the Revenue in initiating interest proceedings under section 234A, 234B and 244A and penalty proceedings under section 271(1)(c) of the Act.
The assessee has also raised the following additional grounds of appeal: 1. That the learned Assessing Officer has erred in re-opening the concluded assessment of A.Ys 2000-01, 2001-02 and 2003-04 u/s.147 of the I.T. Act, 1961. Note: 1. This ground is already taken up in Form 36 before Hon’ble ITAT, however the same was not up before CIT(A) 2. Since, this ground is affecting jurisdiction and arising out of assessment order, the same can be taken up at any time. 3. It has also been held by various courts that any ground which arises out of assessment and other orders can be taken up before ITAT for the first time.
First, we take up the additional ground of appeal. The issue raised by the assessee in additional ground of appeal is that the learned CIT (A) erred in quashing the assessment framed under section 147 of the Act.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 3 - 3. At the outset, the Ld. AR for the assessee before us submitted that the additional ground raised vide letter dated 07/09/2011 is legal in nature, and all the relevant details in respect of such ground are available on record. Accordingly, the Ld. AR prayed before us for the admission of the additional ground of appeal.
On the other hand, the Ld. DR did not raise any objection on the admission of the additional ground of appeal raised by the assessee.
We heard both the parties and perused the materials available on record. We note that the issue raised by the assessee in the additional ground of appeal is legal in nature which can be admitted at any stage during the proceedings. In this regard, we find support and guidance from the judgment of the Hon’ble Supreme Court in the case of NTPC Ltd Vs.CIT reported in 229 ITR 383 wherein it was held as under:
“Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assesseein accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the department have a right to file an appeal/cross objections before the Tribunal. There is no reason why the. Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 4 - not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. In the instant case, therefore, the Tribunal had jurisdiction to examine a question of law which arose from the facts as found by the lower authorities and having a bearing on the tax liability of the assessee”.
In view of the above, we admit the additional ground of appeal raised by the assessee and proceed to adjudicate the same.
The ld. AR at the outset has challenged the assessment framed under section 147 of the Act on the ground that it was initiated on the basis of the change of opinion after verification of same set of documents.
6.1 The learned AR also submitted that the reopening was made under section 147 of the Act after 4 years despite the fact that the assessee has disclosed truly and fully all the material facts in the return of income.
However, the learned DR for the Revenue before us relied on the order of the authorities below.
We have heard both the parties and perused the records, especially the impugned orders and the case laws cited therein. Before we proceed to enquire whether the reopening under section 147 of the Act was valid as per the provisions of law, it is pertinent to refer the reasons recorded for initiating the proceedings under section 147 of the Act. The reasons recorded reads as under:
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 5 - On verification of the case record its appears that: [1] As per the provision of Section 80JJA, deduction is admissible equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment years relevant to the previous year in which such business commences. The assessee has started the business from A.Y.1994-95. Therefore, the assessee is not entitled for this deduction for and from A.Y. 1999-2000. The assessee has wrongly claimed deduction u/s.80JJA at Rs.4,04,487/-. The deduction claimed is not admissible during the year. The Return of income is processed u/s.143(1)(a) of the Act. On the returned income. This has resulted in understatement of income by the assessee and underassessment of income by Rs.4,04,487/- Therefore, I have reason to believe that the income of the assessee is escaped the assessment. Notice u/s.148 is therefore, issued to tax the escaped income.
On perusal of the reasons recorded by the AO for reopening the assessment under section 147 of the Act, we note that there was no tangible material gathered by the AO from the outside source. As such, the reopening was initiated on verification of the assessment records. However, we further find that there was no assessment carried out under section 143(3) of the Act for the year under consideration. As such the return was processed under section 143(1) of the Act. Thus it is clear that the return of income filed by the assessee for the year under consideration was not examined by the Revenue. Therefore, the question of change of opinion does not arise in the given facts and circumstances.
9.1 Besides the above, we also note that the conditions attached in the 1st proviso to section 147 of the Act that there was failure on the part of the assessee to disclose truly and fully the material facts does not apply to it. It is because there was no scrutiny assessment under section 143(3) of the Act for the year under consideration.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 6 - In view of the above, we are not impressed with the arguments of the learned AR for the assessee and accordingly we do not find any reason to interfere in the finding of the learned CIT (A). Hence, the additional ground of appeal of the assessee is dismissed.
The issue raised in the 1st ground of appeal is that the learned CIT (A) erred in confirming the order of the AO by denying the disallowance under section 80JJA of the Act.
The facts in brief are that the assessee in the present case is a limited company and engaged in the business of collecting and processing or treating of biodegradable (agricultural) waste and making briquettes for fuel. The assessee in the year under consideration has claimed deduction under section 80JJA of the Act amounting to ₹3,94,891.00 only.
10.1 The assessee in support of its claim for the deduction under section 80-JJA of the Act submitted that it started its business/ commercial activities from the assessment year 1999-2000. The assessee also submitted that prior to the assessment year 1999-2000, there were lot of grievances by the customers about the quality of the machines designs and its manufacturing process. Therefore, there were lots of dismissals of the orders. As such after persisting efforts the commercial activity could begin from the assessment year 1999-2000.
10.2 The assessee also claimed that the benefit of deduction from the profit under section 80-JJA of the Act was reintroduced by the Finance
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 7 - Act (No. 2) 1998 w.e.f. 1-4-1999. Therefore, there was no question for claiming the deduction under section 80-JJA of the Act prior to the introduction of such provision under the statute.
10.3 However, the AO during the assessment proceedings observed that the company (assessee) was incorporated dated 29th January 1993 and the assessee has claimed deduction under section 80 IA of the Act for a period of 10 years beginning from the assessment year 1994-95 to 2003- 04. The AO also observed that the assessee has claimed depreciation for the assessment year 1994-95, 1995-96 and 1996-97. Accordingly, the AO held that the period of 5 years provided under section 80-JJA of the Act begins from the commencement of the business of the assessee i.e. AY 1994-95 in the case on hand. Accordingly, the AO denied the deduction to the assessee claimed by it under section 80-JJA of the Act for ₹ 4,04,490.00 and added to the total income of the assessee.
Aggrieved assessee preferred an appeal to the learned CIT (A).
The assessee before the learned CIT (A) submitted that the commercial activity begins when the product is established in the market. Therefore the production carried out during the research and development phase cannot be equated with the commercial production and commencement of the business. The assessee also claimed that the benefit of deduction from the profit under section 80-JJA of the Act was reintroduced by the Finance Act (No. 2) 1998,w.e.f. 1-4-1999. Therefore, there was no question for claiming the deduction under section 80-JJA of the Act prior to the introduction of such provision under the statute.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 8 - 12. However, the learned CIT (A) rejected the claim of the assessee by observing that it has made sales of its products effective from 1994-95 and claimed the deduction under section 80 IA of the Act. Accordingly the learned CIT (A) held that the commencement of the business of the assessee begun from the assessment year 1994-95 and the deduction is limited to the extent of 5 year from the year of commencement which ends in the assessment year 1998-99 in the instant case. Thus the learned CIT (A) confirmed the order of the AO.
Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us.
The learned AR before us filed two paper books running from pages 1 to 53 and 1 to 83 and reiterated the submissions as made before the authorities below.
On the other hand the learned DR vehemently supported the order of the authorities below by reiterating the findings contained therein.
We have heard the rival contentions of both the parties and perused the materials available on record. The limited issue before us relates whether the assessee begun the commercial production with effect from the assessment year 1994- 95 or from the assessment year 1999- 2000 as claimed by the assessee. In this regard, we note that the assessee has made sales, claimed depreciation effective from assessment year 1994-95 as well as it has claimed deduction under section 80 IA of the Act in the assessment year 1997 -98. A detailed chart about the activities
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 9 - carried out by the assessee right from its inception such as sales, depreciation, gross total income, net profit etc is available on 10 of the learned CIT (A) order. The impugned chart clearly reflects the fact that the assessee has commenced its commercial production long back. Therefore, we disagree with the contention of the assessee that it started its commercial production effective from the assessment year 1999- 2,000.
15.1 Now coming to the another contention of the assessee that there was no provision under the Act for claiming the deduction under section 80JJA of the Act till it was reintroduced by the Finance Act 1998 effective from 1 April 1999. Thus the question arises, though the assessee started commercial production effective from assessment year 1994-95, whether the assessee can be given the benefit of section 80 JJA of the Act from the relevant assessment year i.e. 1999-2000 on the ground that there was no such provision available in the earlier years prior to its introduction.
15.2 Indeed, there will be a disparity between the assessee commencing the production after the introduction of the provisions of section 80JJA of the Act viz a viz the person who commences the business much before the introduction of such provision under the statute.
15.3 Similarly, there was also no fault of the assessee for not claiming the deduction under section 80JJA of the Act. It is because there was no provision under the law during the time when the assessee commenced its commercial activity.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 10 -
15.4 Now, before proceeding further, we deem it necessary to mindfully observe the provisions of section 80JJA of the Act which reads as under: “80JJA. Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of bio-degradable waste for generating power (or producing bio fertilizers, bio presticides or other biological agents or for producing bio-gas or making pellets or briquettes for fuel or organic manure, there shall be allowed, in computing the total income of the assessee, (a deduction of an amount equal to the whole of such profits and gains for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which such business commences).”
15.5 On the perusal of the above provision, it is very clear that the purpose behind the provision of section 80JJA of the Act was to extend the benefit to the organisations from the commencement of business. It is beyond doubt that the assessee commenced its business much before the introduction of the provisions of section 80JJA of the Act in the statute. There was no mention under the provisions of section 80JJA of the Act for extending benefit to the assessee which have commenced their business much before the introduction of such provision. Thus, the provision itself vividly reflects the intent of lawmakers that the benefit of section 80JJA shall begin from the commencement of the business. We are also conscious to the fact that the learned AR for the assessee has placed various orders before the authorities below but on perusal of the same, we note that none of them is applicable to the case on hand. We also note that the assessee has also enjoyed the benefit of deduction under section 80 IA of the Act after the commencement of production for a period of 10 years. Accordingly, we do not find any infirmity in the
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 11 - order of the authorities below. Hence the ground of appeal of the assessee is dismissed.
In the result the appeal filed by the assessee is dismissed.
Coming to ITA Nos. 579/Rjt/2006 & 580-581/Rjt/2008 for AY 2001-02 to 2003-04 First, we take up the additional ground of appeal. The issue raised by the assessee in additional ground of appeal is that the learned CIT (A) erred in quashing the assessment framed under section 147 of the Act.
The issue raised in the additional ground of all the appeals is identical to the appeal of the assessee bearing No. 578/RJT/2008 which we have decided against the assessee. For the detailed discussions, please refer the relevant paragraph No. 4 of this order. Respectfully following the same, we do not find any reason to interfere in the finding of the authorities below. Hence the additional ground in all the appeals filed by the assessee is dismissed.
The issue raised in the 1st ground of appeal is that the learned CIT (A) erred in confirming the order of the AO by denying the disallowance under section 80JJA of the Act.
The issue raised in the ground of all the appeals is identical to the appeal of the assessee bearing No. 578/RJT/2008 which we have decided
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 12 - against the assessee. For the detailed discussions, please refer the relevant paragraph No. 13 of this order. Respectfully following the same, we do not find any reason to interfere in the finding of the authorities below. Hence the additional ground in all the appeals filed by the assessee is dismissed.
In the result all the appeals bearing numbers 578-581/Rjt/2008 for A.Y. (2000-01 to 2003-04) filed by the assessee are dismissed.
Coming to ITA numbers 67/RJT/2009 The assessee has raised the following grounds of appeal: 1. The learned Assessing Officer has erred in re-opening the concluded assessment of A.Y.2004-05 u/s.147 without any fresh information.
Without prejudice to ground no.1, learned CIT(A) has erred in upholding the order of the Assessing Officer in levying tax on book profit u/s.115JB and 3. Without prejudice to ground no.1 & 2, the learned CIT(A) has erred in upholding the order of the Assessing Officer in charging interest u/s.234 & B in respect of Tax payable u/s.115JB. The appellant craves leave to amend, modify, add or substitute the above grounds of appeal.
At the outset we note that, the learned AR for the assessee did not advance any argument at the time of hearing on ground No. 1 i.e. challenging the reopening under section 147 of the Act, therefore we dismiss the same as not pressed.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 13 - The issue raised by the assessee in ground No. 2 and 3 is that learned CIT (A) erred in charging tax under section 115 JB of the Act along with the interest under section 234A and 234B of the Act.
The AO during the assessment proceedings observed that there is nil income under the normal computation of income whereas there is a book profit amounting to ₹31,52,571 which was liable to tax under section 115 JB of the Act. But the assessee did not offer any tax under the provision of section 115 JB of the Act. Therefore, the AO worked the liability of tax under the provisions of section 115 JB of the Act along with the interest under section 234A/B of the Act.
Aggrieved assessee preferred an appeal to the learned CIT (A) who has confirmed the order of the AO.
Being aggrieved by the order of the learned CIT-A, the assessee is in appeal before us.
The learned AR before us did not point out any defect in the order of the learned CIT (A). As such he conceded that there is no infirmity in the order of the authorities below.
On the other hand the learned DR vehemently supported the order of the lower authorities.
ITA No.578-581/RJT/2008 A.Y.s 2000-01 to 2004-05 - 14 - 23. We have heard the rival contentions and perused the materials available on record. As there was no defect pointed out by the learned AR for the assessee in the order of the authorities below. Therefore, we do not find any infirmity in the order of the authorities below. Hence the ground of appeal of the assessee is dismissed.
In the result, this appeal of the assessee is dismissed.
In the combined results all the appeals filed by the assessee are dismissed. This Order pronounced in Open Court on 18/09/2019
-Sd- -Sd- (राजपाल यादव) (वसीम अहमद) �या�यक सद�य लेखा सद�य (RAJPAL YADAV) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Dated 18/09 /2019 manish