Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the revenue and the same is directed against the order of ld. CIT(A), Bangalore-6, Bangalore dated 03.08.2016 for Assessment Year 2010- 11.
The grounds raised
by the revenue are as under. “1. The order of the CIT (Appeals) is opposed to law and the facts and circumstances of the case.
2. On the facts and in circumstances of the case, whether the CIT(A) was right in holding that the assessee is eligible for deduction u/s 10B without appreciating the fact that the tenure of claim of deduction expired in A.Y. 2006-07.
3. On the facts and in circumstances of the case, whether the CIT(A) was right in holding that the assessee is eligible for deduction u/s 10B without appreciating the factthat the jurisdictional ITAT has disallowed the claim of deduction for A.Y. 2008-09, vide its order in dt. 11.05.2016.
4. For these and such other grounds that may be urged at the time of Page 2 of 5 hearing, it is humbly prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer be restored. 5. The appellant craves leave to add, alter, amend or delete any of the grounds that may be urged at the time of hearing of the appeal.”
The revenue has also raised three additional grounds which are as under. “1. Whether the assessee company has established unit-II complying to the provisions of section 10B (2) in the light of fact that the fixed assets schedule prove the contrary. 2. Whether the assembly activities carried out and has claimed by the assessee company which is approved by the Dy. Commissioner, Special Economic Zone (SEZ), constitutes manufacture and production as contemplated u/s1OB of Income Tax Act? 3. Whether the claim of the assessee u/s 10B is admissible on the finish product being radiation detectors on which beneficed u/s 10B has already been utilized 10 consequence years.”
At the very outset, the ld. DR of revenue supported the assessment order. He also submitted that Form No. 56G for Unit I forAssessment Year 2008-09 is available on pages 43 to 56 of paper book and in para no. 5 of ANNEXURE– A to this form, it is noted that the assessee is engaged in manufacture of instruments and apparatus for measuring and detecting Ionizing Radiators and the date of initial registration is 11.08.1998 and the date of commencement of manufacture or production is 01.10.1996. Thereafter he submitted that similar form no. 56G for Unit II for Assessment Year 2008-09 is available on pages 57 to 64 of paper book and as per ANNEXURE-A to this form available on page no. 58 of paper book, it can be seen that the nature of assessee’s business undertakings is manufacture of instruments and apparatus for measuring and detecting Ionizing Radiators and the date of initial registration is 23.12.2003 and the date of commencement of manufacture or production is 10.06.2004. Thereafter he submitted that for the present year i.e. Assessment Year 2010-11 form No. 56G for Unit II is available on pages 71 to 76 of paper book and as per ANNEXURE -A for this year available on page no. 72 of paper book, the nature of business is same and date of initial registration is 23.12.2003 and the date of commencement of manufacture or production is 10.06.2004. Thereafter he submitted that similar issue is already decided by the tribunal in assessee’s own case as per the Tribunal order for Assessment Year 2008-09 in ITA No.
Page 3 of 5 708/Bang/2013 dated 11.05.2016 of which he submitted a copy along with written submissions and pointed out that as per page no. 14 of this Tribunal order, it was held that the period of 10 consecutive years should be reckoned from the Assessment Year 1997-98 i.e. from the year of commencement of production or manufacture of an article or thing up to the Assessment Year 2006-07 and since in that case, the Assessment Year involved was Assessment Year 2008-09, the assessee was not eligible for deduction in Assessment Year 2008-09. He submitted that under this factual position, the order of CIT (A) should be reversed and that of AO should be restored.
As against this, ld. AR of assessee supported the order of CIT (A). He also submitted that the judgement of Hon'ble Karnataka High Court in assessee’s own case for Assessment Year 2009-10 is available on pages 165 to 170 of paper book in of 2016 dated 27.02.2018 and it was pointed out that in this year, this decision of Hon'ble Karnataka High Court is on both aspects as to whether the period of 10 years have expired or not and whether the assessee is manufacturing or producing anything or not. It was pointed out that the revenue has withdrawn the principal contention regarding availability of tenure of deduction of 10 years and this aspect was given up because the revenue had filed an application in M.P. No. 128/Bang/2016 seeking for rectification of impugned order on the same issue which has been rejected vide order dated 23.01.2017 noting that the Assessing Officer had found that the Assessment Year 2009-2010 was the 5th Assessment Year, for which, the deduction under Section 10B of the Act was being claimed, which is a finding of fact, which has attained finality. He submitted that if Assessment Year 2009-10 is 5th Assessment Year then Assessment Year 2010-11 is 6th Assessment Year and on this aspect, the revenue has no case. The second aspect is as to whether the assessee is engaged in the process of manufacturing and the production also. It was held by the Hon'ble Karnataka High Court that this issue was decided by the Tribunal in Assessment Years 2003-04 and 2004-05 respectively in favour of the assessee and this has been upheld by Hon'ble Karnataka High Court in ITA No. 351/2009 c/w ITA No.352/2009 by an order dated 19.01.2015 and since the process of manufacture and production
Page 4 of 5 remains same, this decision apply in the present year i.e. Assessment Year 2009-10 which was before Hon'ble Karnataka High Court. He submitted that this is not case of the revenue that there is any difference in product and therefore, on this issue also, the revenue has no case.
We have considered the rival submissions. We find that as per the judgement of Hon'ble Karnataka High Court in assessee’s own case for Assessment Year 2009-10, this was noted that Assessment Year 2009-10 was 5th Assessment Year for claiming deduction u/s. 10B. As per Form No. 56G for the present year available on pages 71 to 76 of paper book, it is seen that this is the 6th year and therefore, it is apparent that this is the same unit for which in Assessment Year 2009-10, the issue was decided by Hon'ble Karnataka High Court in favour of the assessee. On the second aspect, as to whether the assessee is engaged in manufacture and production or not also, the issue was decided by Hon'ble Karnataka High Court in favour of the assessee in Assessment Years 2003-04, 2004-05 and 2009-10 also. However we find that in para no. 4 of the assessment order for the present year, the AO has noted that the assessee has stated to have been manufacturing and exporting instruments and apparatus for measuring and detecting Ionizing Radiators and as per ANNEXURE-A to Form No. 56G for the present year available on page no. 72 of paper book also, it is stated that the nature of business of the undertaking is manufacture of instruments and apparatus for measuring and detecting Ionizing Radiators but as per the certificate dated 17.04.2009 issued by Cochin Special Economic Zone (CSEZ) to assessee, it is stated that the items of manufacture is Arrays & Arrays Assembly. Hence it has to be examined and found out as to whether the assessee is having EOU status registration from CSEZ in respect of those products for which the assessee is claiming deduction u/s. 10B of IT Act because the registration available on page no. 81 of paper book is for Arrays & Arrays Assembly but as per page no. 3 of the assessment order, the assessee is claiming deduction in the present year for manufacturing and exporting instruments and apparatus for measuring and detecting ionizing radiators. Hence, for this limited factual verification, the matter has to go back to the file of AO and therefore, we set aside the order of Page 5 of 5 CIT (A) and restore the matter back to the file of AO for fresh decision in the light of above discussion after providing adequate opportunity of being heard to assessee.
In the result, the appeal filed by the revenue is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.