COMMISSIONER OF INCOME TAX-II vs. WAVES FOODS PVT LTD

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TAXAP/666/2011HC GujaratGJHC24025372201104 July 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the Tax Appeal. It held that no substantial question of law arose for consideration. The Court noted that it had already dismissed Tax Appeal No. 665 of 2011, which related to Assessment Year 2003-04, by its order dated July 4, 2012. Since the impugned order of the ITAT was common, and the facts and grounds were similar for AY 2004-05, the present appeal was also liable to be dismissed on the same reasoning. The reasoning provided in the judgment for AY 2003-04 was held to be applicable to the present appeal. Therefore, the appeal was dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax-II) has filed this Tax Appeal against the common order dated November 12, 2010, passed by the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'A'. The appeal concerns ITA No. 2413 of 2007 for Assessment Year (AY) 2004-05. The assessee, Waves Foods Pvt Ltd, claimed a deduction of Rs. 12,04,73,904 under Section 80IB of the Income Tax Act, 1961, which was restricted to Rs. 11,82,75,912. The dispute arose over the purchase of new machinery for its factory units. The Assessing Officer disallowed the deduction, stating that the value of old machinery exceeded 20%. The CIT(A) allowed the deduction, relying on a prior year's order. The ITAT dismissed the Revenue's appeal for AY 2004-05, following its decision for AY 2003-04.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in deleting the disallowance of the claim of deduction under Section 80IB of the Act for AY 2004-05? The Revenue contends that the disallowance was justified because the value of old machinery exceeded 20%, which disqualified the assessee from claiming the deduction under Section 80IB. The assessee argued that the machinery installed was new and therefore qualified for the deduction. The ITAT, in its impugned order, dismissed the Revenue's appeal by following its reasoning for the preceding assessment year (2003-04), where it had also allowed the deduction. The High Court noted that it had already dismissed a similar appeal for AY 2003-04.

Which sections of the Income-tax Act were involved?

Section 80IB

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
TAXAP/666/2011 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 666 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the  judgment? 2 To be referred to the Reporter or not? 3 Whether their Lordships wish  to see the  fair copy of the  judgment? 4 Whether this case involves a substantial question of law as to  the interpretation of the constitution of India, 1950 or any  order made thereunder? 5 Whether it is to be circulated to the civil judge? ========================================================= COMMISSIONER OF INCOME TAX-II Versus WAVES FOODS PVT LTD ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 04/07/2012

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) This Tax Appeal is directed against the common order dated 12th November   2010   passed   by   the   Income   Tax   Appellate   Tribunal, Ahmedabad, Bench 'A' insofar as it concerned ITA No. 2413 of 2007 for the Assessment Year 2004­05. TAXAP/666/2011 2/3 JUDGMENT

2.

0 The appellant has raised the following question proposing it as substantial question of law. “Whether the Appellate Tribunal is right in law and on facts   in   deleting   the   disallowance   of   claim   of deduction u/s.80IB of the Act?'

3.

0 The assessee claimed deduction for Rs. 12,04,73,904/­ for the Assessment Year 2004­05 under Section 80IB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). The amount was, however, restricted to total income of Rs.11,82,75,912/­. The issue involved was in respect of the said deduction on the basis of purchase of machinery. It was the case of the assessee that the machineries which were installed at its   factory   units   were   new   and,   therefore,   they   were   qualified   for deduction under Section 80IB of the Act.

3.

1 The   Assessing   Officer   did   not   allow   the   deduction   as   per   his Assessment Order dated 22nd December 2006 taking a view that value of old machineries was more than 20% which disentitled the assessee from claiming the deduction in question. The CIT (A) by his order dated 19th March 2007 held in favour of the assessee on the basis of this order for preceding year 2003­04. It was noted by the Appellate (Commissioner) that   the   Assessing   Officer   had   not   accepted   the   contention   of   the assessee on the ground that the decision of CIT (A) was not accepted by the Revenue and an appeal was pending before the Income Tax Appellate Tribunal. The Appellate Commissioner allowed the appeal.

4.

0 The Revenue approached the Income Tax Tribunal which decided the two appeals for the assessment orders 2003­04 and 2004­05 by common impugned order as mentioned above. As far as Appeal No.2413 of 2007 related to Assessment Year 2004­05 was concerned, the Tribunal dismissed the same by observing in para 11 of the impugned common

TAXAP/666/2011 3/3 JUDGMENT order as under: “The learned CIT(A) following his appellate order for assessment year 2003­04 directed the AO to grant deduction u/s.80IB of the IT Act to the assessee. This issue is same as is considered   in   preceding   assessment   year 2003­04. By following the same reasons for decision in that year above, we dismiss this appeal of the revenue was well.”

5.

0 We have dismissed the Tax Appeal No. 665 of 2011 by our order dated 4th July 2012, which related to Assessment Year 2003­04. Since the impugned order is common and the facts and the grounds are also similar, the present appeal which is in respect of subsequent Assessment Year 2004­05 is also liable to be dismissed on the same reasoning given by us in our judgment in Tax Appeal No.665 of 2011 mentioned above.

6.

0 The reasoning supplied in the abovementioned order dated 04th July 2012 in Tax Appeal No. 665 of 2011 holds good for the purpose of present appeal too. In that view and for the reasons recorded in Tax Appeal No.665 of 2011, the present appeal is liable to be dismissed. No substantial question of law arises for consideration by this Court.

7.

0 Accordingly, the present Tax Appeal is dismissed. [V. M. SAHAI, J.] [N. V. ANJARIA, J.] Amit

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