COMMISSIONER OF INCOME TAX-I, LUDHIANA vs. M/S CREMICA AGRO FOODS LTD., LUDHIANA

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ITA/64/2011HC Punjab & HaryanaPHHC01095778201102 May 2016Author: MR. JUSTICE RAMENDRA JAIN,MR. JUSTICE JITENDRA CHAUHAN3 pages
AI SummaryWithdrawn

What did the High Court hold?

The appeal was dismissed as not pressed. The appellant-revenue, through its counsel, submitted that in view of CBDT circulars No. 21/2015 dated 10.12.2015 and No. 279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, and considering that the tax effect involved was less than Rs. 20 lacs, they did not wish to press the appeal. The revenue sought liberty to file an application for revival of the appeal if something survived therein. The Court granted this liberty. It was clarified that the withdrawal of the appeal by the revenue would not be taken as an affirmation of the Tribunal's order on merits, and the legal issues raised were left open to be adjudicated in an appropriate case. Therefore, no specific finding was given on the substantial questions of law by the High Court.

What were the facts?

The appeal was filed by the Commissioner of Income Tax-I, Ludhiana (appellant-revenue) against an order dated 30.4.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B). The order pertained to assessment year 2005-06 and concerned the assessee, M/s Cremica Agro Foods Ltd. (respondent). The appeal was filed under Section 260A of the Income Tax Act, 1961. The core of the dispute revolved around the allowability of a deduction claimed by the assessee under Section 80IB of the Act. The revenue contended that the Assessing Officer (AO) had not conducted proper inquiries to verify the claim, particularly regarding the value of leased machinery in relation to total machinery installed.

What were the issues?

The Tribunal was asked to decide two substantial questions of law: 1. Whether the Tribunal was justified in holding that proper enquiries were made by the AO for verification of the claim of deduction under Section 80IB, when the CIT noted that the assessee had only filed a CA's certificate and not other supporting documents, and in the absence of verification of fixed assets and leased machinery details, it was not possible for the AO to determine if the original value of leased machinery was less than 20% of the total machinery installed, which is a condition for allowing the deduction under Section 80IB. Assessee's contention: Not recorded. Revenue's contention: The AO failed to conduct proper enquiries and verify crucial details regarding leased machinery, making the deduction claim questionable under Section 80IB. 2. Whether the Tribunal was justified in holding that the order for AY 2005-06 could not be considered erroneous and prejudicial to the revenue, by following the principle of consistency with AY 2003-04 and AY 2006-07, despite each year being an independent unit of assessment and the principle of res-judicata not being applicable. Assessee's contention: Not recorded. Revenue's contention: The Tribunal erred by applying the principle of consistency and ignoring that each assessment year is independent, and res-judicata does not apply.

Which sections of the Income-tax Act were involved?

Section 260A,Section 80IB

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: 02.05.2016 Commissioner of Income Tax-I, Ludhiana .......Appellant Versus M/s Cremica Agro Foods Ltd. ......Respondent CORAM: HON'BLE MR. JUSTICE RAJESH BINDAL HON'BLE MR. JUSTICE HARINDER SINGH SIDHU Present: Mr. Rajesh Katoch, Advocate for the appellant. Mr. Alok Mittal, Advocate and Mr. Abhishek Sanghi, Advocate for the respondent. RAJESH BINDAL,J. This appeal has been filed under Section 260 A of the Income Tax Act, 1961 (for short 'the Act'), against the order dated 30.4.2010 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (B), in ITA No. 879/CHD/2008, for the assessment year 2005- 06, raising the following substantial question of law: (1) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in holding that the proper enquiries were made by the AO for verification of claim of deduction u/s 80IB when the CIT has clearly brought out in order u/s 263 that the assessee had only filed CA's certificate and has not submitted any other supporting documents to support their claim and hence, in the absence of proper enquiry and in the REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -2- absence of verification of details of fixed assets and details of machinery taken on lease, it is not possible for the AO to decide if the original value of the machinery taken on lease is less than 20% of the total machinery installed in the unit for deciding allowability of claim u/s 80IB? (2) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in law in holding that since the issue the proper enquiries were made during the course of assessment for AY 2003-04 and AY 2006-07 and that there is nothing to infer anything adverse therefrom, following the principle of consistency, the order for the AY 2005-06 cannot be considered as erroneous and prejudicial to the interest of revenue ignoring the fact the each year is the independent unit of assessment and that principle of res-judicata is not applicable to the assessment proceedings? Learned counsel for the appellant-revenue submitted that in view of circular No.21/2015 dated 10.12.2015 read with circular No.279/Misc/M-142/2007-ITJ (Part) dated 8.3.2016, issued by Central Board of Direct Taxes, he does not wish to press the present appeal, as the tax effect involved is less than ` 20 lacs. However, he prays that liberty be granted to the revenue to file an application for revival of the appeal in case something survives therein. Dismissed as not pressed with liberty as prayed for. It is however, clarified that withdrawal of the appeal by the revenue shall not REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh -3- be taken as affirmation of order of the Tribunal on merits. The legal issue as claimed by the revenue is left open to be adjudicated in an appropriate case. (RAJESH BINDAL)

JUDGE (HARINDER SINGH SIDHU) 02.05.2016 JUDGE reema REEMA SAINI 2016.05.03 11:16 I attest to the accuracy and authenticity of this document High Court, Chandigarh

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