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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya (AM)
This appeal by the assessee is directed against the order of learned CIT(A) dated 21.6.2011 and pertains to A.Y. 2005-06.
sole issue raised in ground No. 1 is learned CIT(A) erred in confirming the disallowance u/s. 80IB of the I.T. Act and thereby erred in confirming that there were not more than ten employees who were involved in the process of manufacturing at the factory at Silvasa.
At the outset, learned counsel submitted that the issue in this case relates to denial of deduction u/s. 80IB of the Act on the ground that there were ten employees who were involved in the process of manufacturing at the factory at Silvasa. Learned counsel submitted that identical issue in assessee’s own case has been decided in favour of the assessee in earlier and subsequent year. In this regard learned counsel referred to the decision of this ITAT in & 3517/Mum/2010 for A.Ys. 2003-04 & 2004-05, wherein identical issue has been decided in favour of the assessee by holding as under :-
We have considered the rival contentions. So far as the error in writing the correction section while making the claim in the return of income is concerned, the assessee during the assessment proceedings itself had made the submissions before the AO that there was an inadvertent error in making the claim under section 10A instead of under section 80IB. The assessee submitted to the AO that this claim be considered under section 80IB. He also filed a revised return in this respect. However, the AO rejected the claim of the assessee. It has been time and again held that the taxing authorities should tax the real income of the assessee and if a claim is allowable to an assessee under the relevant provisions they should themselves consider the same and give appropriate relief. They are not supposed to penalise the assessee for their inadvertent errors. A duty is also cast upon the AO not only to disallow the claim which as per the provisions of law is not tenable but also to allow the claim to which the assessee is entitled as per provisions of the law and which has been brought to the knowledge of the AO during the assessment proceedings. Even a duty has been also cast upon the first appellate authority i.e. CIT(A) whose powers are coterminous with that of the AO to consider the claim put forward by the assessee and decide the same as per provisions of law. The case laws relied upon by the assessee are squarely applicable on the facts and circumstances of the case of the assessee.
So far as the employment of 10 or more than 10 persons during the year is concerned, the assessee has explained that more than 10 persons had been employed in the manufacturing activity. As per the case laws cited by the assessee, it is not necessary that the assessee must employee 10 or more than 10 employees during the entire financial year. If the assessee employs 10 or more than 10 employees for substantial part of working period of factory carrying on manufacturing process then, in that event it shall be presumed that the assessee has complied with the provisions of section 80IB(2)(iv). The above stated case laws are squarely applicable to the case of the assessee.
In view of the above, we find merit in the appeal of the assessee and the same is hereby allowed. The AO is directed to allow the deduction to the assessee for the assessment years under appeal under section 80IB.
Learned counsel further submitted that in A.Y. 2006-07, 2007-08 & 2008-09, this Tribunal has similarly decided the issue in favour of the assessee. Since it is not the case of the Revenue that aforesaid decisions of the Tribunal in assessee’s own case have been set aside or that the facts are different. I do not find any reason to take a contrary view. Hence, orders of the authorities below are set aside and issue is decided in favour of the assessee.
In the result, appeal of the assessee is allowed.
Order has been pronounced in the Court on 10.6.2019.