ASSISTANT COMMISSIONER OF INCOME TAX 33(1), MUMBAI vs. ALF ENGINEERING COMPANY, MUMBAI

Briefly stated facts necessary for adjudication of the controversy at hand are : assessee is into the business of manufacturing of automotive chasis, spare parts & fabricators and has shown income from business/profession and income from other sources during the year under assessment. Assessee claimed deduction under section 80IC of the Income Tax Act, 1961 (for short ‘ the Act’) to the tune of Rs.4,26,23,728/- & Rs.6,17,32,665/- for A.Y. 2012-13 & 2013-14 respectively. Assessing Officer (AO) following the order passed in A.Y. 2007-08, 2009-10, 2010-11 & 2011-12 wherein assessee’s claim for deduction under section 80IC of the Act has been rejected as the assessee did not comply with all the conditions laid down and thereby rejected the deduction

Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has reversed the order passed by the AO by allowing the deductions claimed by the assessee under section 80IC of the Act by partly allowing the appeal.

Feeling aggrieved the Revenue has come up before the Tribunal by way of filing present appeals.

Despite issuance and service of the notice to the assessee company none appeared on behalf of it, so the Bench proceeded to decide these appeals on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue.

We have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon.

At the very outset, the Ld. D.R. for the Revenue brought to the notice of the Bench that assessment order passed by the AO and appeal order passed by the Ld. CIT(A) in assessee’s own case for A.Y. 2007-08, 2009-10, 2010-11 & 2011-12 has already been set aside by the Tribunal in appeal bearing Nos.2452 & 6241/M/2012, and 5705/M/2014. This fact has also been brought on record by the assessee vide letter dated 17.05.2022, 22.06.2022, 28.07.2022 and 06.09.2022 available on the file.

We have perused the order passed by the co-ordinate Bench of the Tribunal in assessee’s own case for A.Y. 2007-08, 2009-10, 2010-11 & 2011-12 wherein issue in question has been set aside to the AO to decide afresh by returning following findings: “2.4. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the Ld. respective counsel, if kept in juxtaposition and analyzed, we note that the Assessing Officer has disallowed the claimed deduction u/s 80IC of the Act on the ground that the assessee has split up the already existing business by expanding manufacturing facilities in Zaheerabad to Haridwar (Utrakhand). It is the assessee's contention that it has set up a new plant to manufacture chasis for Mahindra and Mahindra in Haridwar, which is altogether a new plant. This fact has not been examined by the Ld. CIT(A). If the claim of the assessee is found to be; correct then assessee's claim is entitled to deduction u/s 80IC of the Act can be said to be justified, therefore, the Id. Assessing Officer is directed to examine the claim of the assessee and decided in accordance with law. However, since there are contradiction in the version of the CIT(A) as well as the assessee, therefore, the assessee is directed to furnish all the documents to substantiate its claim. The stand of the Revenue is that the assessee purchased second hand machinery from its sister concern which is more than 20% in contravention to sub-section 4(ii) of section 80IC of the Act and, therefore, the assessee is not eligible for deduction. Considering the totality of facts, we note that the Ld. Commissioner of Income Tax (Appeal) simply granted relief to the assessee ignoring the observation made in the assessment order and even herself/himself did not examine the factual matrix in proper perspective and merely granted relief which is based upon the claim of the assessee. It was the duty of the Ld. Commissioner of Income Tax (Appeal) either to contradict the observation made in the assessment order or to reach to a conclusion by examining the facts of its own. The observation made in the impugned orders is not based upon any evidence, and even no remand report was sought from the Id. Assessing Officer which is violation of rule 46A of the Rules. Even before under section, the Ld counsel for the assessee fairly explained that no question was asked by the Assessing Officer with respect to the bill (Page - 43). It is also noted that the Ld. Commissioner of Income Tax (Appeal) simply followed the earlier year without considering the facts of the other years and there was no comment whether there was substantial expansion made by the assessee. Before us, the Id. CIT(DR) invited our attention to Page-2 of the impugned order by claiming that there is wrong finding with respect to split in assessment year 2007-08, It was also contended that the first condition for claiming deduction u/s 80IC is that it should not form splitting of existing business. Therefore, we are of the view

Since the issue before the Bench in the present appeal is identical, fresh order needs to be passed by the AO by applying his own mind in terms of the order passed by the Tribunal in assessee’s own case for A.Y. 2007-08 to 2011-12. Consequently, both the appeals of the Revenue are set aside to the AO to decide afresh after providing opportunity of being heard to the parties. Consequently, both the appeals filed by the Revenue are allowed for statistical purposes.