THE PR. COMMISSIONER OF INCOME TAX -3 vs. ELTEK SGS PVT. LTD.

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ITA/33/2019HC DelhiDLHC01000835201818 January 2019Author: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE PRATEEK JALAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises from the order of the Tribunal. The Court referenced the Supreme Court decision in Kedarnath Jute Mfg. Co. Ltd. vs. Commissioner of Income Tax, Central Calcutta (1971) 82 ITR 363, stating that the Assessing Officer's duty is to apply the law to the given facts, irrespective of the positions of the Revenue or the assessee. The Court found that the lower appellate authorities had considered the facts and applied the law. Therefore, the appeal filed by the Revenue lacked merit. The operative direction was to dismiss the appeal.

What were the facts?

The assessee, Eltek SGS Pvt. Ltd., is a private company engaged in the manufacture and trade of electronic and electrical equipment. For Assessment Year 2005-2006, the assessee initially claimed and was allowed the benefit under Section 80IB of the Income Tax Act, 1961, during the processing of its return under Section 143(1). Subsequently, the Assessing Officer (AO) re-opened the case. The AO noted that the industrial undertaking commenced production on 15.03.1997, which was after the sunset date of 31.03.1995. Additionally, the AO believed the assessee was not a small-scale undertaking based on its audit report and the Ministry of Industry's DIPP order dated 10.12.1997. The Commissioner of Income Tax (Appeals) [CIT(A)] reversed the AO's decision, accepting the assessee's argument that turnover stipulations in terms of fixed asset investments were met as per Note 1 of the DIPP circular. The Income Tax Appellate Tribunal (ITAT) affirmed the CIT(A)'s order. The Revenue appealed this decision.

What were the issues?

1. Whether the Tribunal erred in holding that the respondent/assessee was entitled to the benefit under Section 80IB for Assessment Year 2005-2006, considering the commencement of production after the sunset date of 31.03.1995 and the assessee's status as a small-scale undertaking. Assessee's Contentions: The assessee argued that it complied with the turnover stipulations in terms of fixed asset investments as per Note 1 of the DIPP circular dated 10.12.1997, which was accepted by the CIT(A) and affirmed by the ITAT. Revenue's Contentions: The Revenue contended that the AO, CIT(A), and ITAT erred in ignoring the Auditor's report, which was material evidence. The Revenue highlighted that the industrial undertaking commenced production after the sunset date of 31.03.1995 and that the assessee was not a small-scale undertaking.

Which sections of the Income-tax Act were involved?

Section 80IB,Section 260A,Section 143(1)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
$~16 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 33/2019 THE PR. COMMISSIONER OF INCOME TAX -3 ..... Appellant Through: Mr.Ruchir Bhatia & Mr.Puneet Rai, Advocates versus ELTEK SGS PVT. LTD. ..... Respondent Through: Mr.Piyush Kaushik, Advocate CORAM: HON’BLE MR. JUSTICE S. RAVINDRA BHAT HON’BLE MR. JUSTICE PRATEEK JALAN

O R D E R %

18.01.

2019

CM APPL. 2109/2019

For the reasons stated in the application, delay of 325 days in refilling

the appeal is condoned.

The application is disposed of.

1.

The Revenue’s grievance in this appeal under Section 260A of the Income Tax Act, 1961, is that the lower Appellate Authorities fell into error in holding that the respondent/assessee was entitled – for the given Assessment Year [2005-2006], to the benefit under Section 80IB.

2.

The assessee company is a private company, engaged in manufacture and trade of electronic and electrical equipments and goods. It filed its return of income on 31.10.2005, which was processed under Section 143(1) of the Income Tax Act and its claim under Section 80IB was allowed.

Subsequently, its case was re-opened; the AO noted that the assessee – an industrial undertaking, commenced production on 15.03.1997. This was after the sunset date i.e. 31.03.1995. The AO also felt, in addition, that apart from this disqualifying factor, the assessee was not a small scale undertaking, within the meaning of that expression, in terms of the Ministry of Industry’s DIPP order dated 10.12.1997, having regard to the Audit Report. The CIT(A), on the appeal by the assessee, accepted its plea and held that the turnover stipulations in terms of the investments in the fixed assets by Note 1 of the DIPP circular had been complied with. The ITAT affirmed the decision of the CIT(A).

3.

The Revenue highlights the report of the Auditor and submits that since this was the material on record, which the AO gave importance to, CIT(A) as well as ITAT were in error in choosing to ignore it. This Court is of the opinion that no substantial question of law arises, as it is far too well settled that the duty of the Assessing Officer is to apply the law in the given facts regardless of the position of the Revenue or the assessee in the course of the proceedings [refer to Kedarnath Jute Mfg. Co. Ltd. vs. Commissioner of Income Tax, Central Calcutta (1971) 82 ITR 363 (SC)].

4.

As a result, the appeal lacks merit. The same is accordingly dismissed.

S. RAVINDRA BHAT, J

PRATEEK JALAN, J JANUARY 18, 2019/„hkaur‟

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