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Income Tax Appellate Tribunal, MUMBAI BENCH “G”, MUMBAI
Before: SHRI C.N. PRASAD, HONBLE & SHRI N.K. PRADHAN, HONBLEShri S. Venkatraman
O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)–13, Mumbai dated 07.01.2016 for the Assessment Year 2011-12.
Revenue raised the following grounds in its appeal: - “1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee was held (A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., to be manufacturing on item which an delineated in the negative list contained in the Thirteenth Schedule of the Act and hence not eligible to claim deduction u/s 80IC of the Act.
2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in not appreciating the fact that the assessee has not submitted evidence to prove that the assets as laid down in section 80IC(4) of the IT. Act, 1961.
3. The appellant prays that the order of Ld. CIT (A) on the above ground be set aside and that of the assessing offer be restored.”
At the outset the Learned Counsel for the assessee submitted that identical issue came up before the Tribunal for the Assessment Years 2008-09 & 2009-10 in ITA.Nos. 3381 & 3382/MUM/2013 and the Tribunal by separate orders dated 30.11.2015 upheld the order of the Ld.CIT(A) in allowing the claim of the assessee u/s. 80IC of the Act. Copies of the orders are placed on record.
Ld. DR vehemently supported the orders of the authorities below.
5. We have heard the rival submissions, perused the orders of the authorities below. On a perusal of the order of the Tribunal in ITA.No.3381/MUM/2013 dated 30.11.2015, we find that the Revenue raised the following grounds: - “(i) The Learned CIT(A) has erred on facts and in law in deleting the disallowance of deduction u/s. 80IC amount to ₹.10,65,58,647/- made by the Assessing Officer without properly appreciating and legal matrix as clearly brought out by the Assessing Officer. (ii) The Learned CIT(A) has erred on facts and in law in holding that the assessee is eligible for deduction u/s. 80IC without appreciating the fact that the assessee has not filed Form 10CCB and other relevant details and also the separate accounts as required under the provisions of the income Tax Act for claiming the said deduction.
(A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., (iii) The Ld. CIT(A)’s order is contrary in law and on facts and deserves to be set aside. (iv) The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the AO restored. The appellant craves leave to amend or alter any ground or add a new ground that may be necessary.” 6. The Tribunal on going through the Assessment Order and Ld.CIT(A) order and on hearing both the counsels dismissed the appeal of the Revenue observing that there is no infirmity in the order passed by the Ld.CIT(A) in allowing the deduction u/s. 80IC of the Act observing as under: - “4. We have heard the Departmental Representative (DR) as well as Authorised Representative (AR) of both the parties and perused the material available on record.
While making assessment, the AO observed that no report in the form of section 10CCB was filed and the assessee-company was directed to furnish the Profit & Loss A/c, Balance-sheet of Baddi Unit with all an excess to justify the genuineness of claim of deduction u/s 80-IC. It is further mentioned in the order of- AO that product manufactured by the assessee company is not listed in part C of the XIVth schedule of the Act and the assessee was asked to explain whether the product of the assessee falls in this schedule and that sale tax/V AT, return of Baddi Factory was not filed, no bills of purchase of the plant & machinery from the erstwhile company of M/s G.M. Partitions Pvt. Ltd., Baddi and QA Technical Services (India) Pvt. Ltd., the AO further observed that the profits will have to be re-adjusted as per the total expenditure shown in the TDS certificate and that assessee has not furnished the basis for computing the profit relating to installation activity. The assessee has shown the installation receipt as the manufacturing receipt the expenses shown for installation receipt are 57.2% of the total sales and limited the deduction allowable to amount of Rs. 7,72,73,252/- and thus worked out the addition of Rs. 3,02,85,395/-.
The Id. CIT(A) while dealing with the addition observed that there is no dispute on fact that assessee's industrial unit is located in an eligible area as certified by State Industrial Authorities and accepted by Excise & Sales Tax Department and the unit is located in the area notified in the CBDT Notification dated 04.11.2003 and further observed that the report in form of 10CCB was filed during the assessment proceedings. The order of CIT(A) further opined that deduction u/s 80-IC, Industrial Undertaking are not manufactured or produced any article or things as specified in XIII schedule alternatively undertaking engaged in manufacturing or production of article specified in schedule XIV are also eligible for deduction and clearly observed that assessee was covered under 80-IC (2)(a)(ia) as it was producing the goods in the notified area. The order of Id. CIT(A) further contend the reference of assessment order of AY-2007-08 observing therein as under:
(A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., "(During the year, a company viz M/s. GM Partitions Pvt. Ltd. has amalgamated with the assessee company w.e.f 1/4/2006. The Hon'ble High Court, Mumbai has sanctioned the scheme of amalgamation vide their order dated 28th September, 2007. The amalgamated company has set up a partition manufacturing unit at Baddi which has been claimed to be eligible for deduction u/s. 80-IC. During the year, this unit has incurred loss of Rs.2,11,78,838/-, which has been carried forward by the assessee for set off against profit of Baddi unit in subsequent years.
Section 80-IC was inserted by Finance Act 2003 w.e.f. 01.04.2004 making special provision in respect of certain undertaking or enterprises in special category stage and section 80-IC is read as under: "80-IC. (1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (2), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains, as specified in sub-section (3). (2) This section applies to any undertaking or enterprise— (a) which has begun or begins to manufacture or produce any article or thing, not being any article or thing specified in the Thirteenth Schedule, or which manufactures or produces any article or thing, not being any article or thing specified in the Thirteenth Schedule and undertakes substantial expansion during the period beginning— (i) on the 23rd day of December, 2002 and ending before the 1st day of April, [2007], in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the Stale of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any Export Processing Zone or Integrated Infrastructure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any (A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., operation specified in that Schedule and undertakes substantial expansion during the period beginning— (i) on the 23rd day of December, 2002 and ending before the 1st day of April, [2007], in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any of the North-Eastern States. (3) The deduction referred to in sub-section (1) shall be— (i) in the case of any undertaking or enterprise referred to in sub-clauses (i) and (iii) of clause (a) or sub-clauses (i) and (iii) of clause (b), of sub-section (2), one hundred per cent of such profits and gains for ten assessment years commencing with the initial assessment year, (ii) in the case of any undertaking or enterprise referred to in sub-clause (ii) of clause (a) or sub-clause (ii) of clause (b), of sub- section (2), one hundred per 4 cent of such profits and gains for five assessment years commencing with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains. (4) This section applies to any undertaking or enterprise which fulfils all the following conditions, namely:— (i) it is not formed by splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.—The provisions of Explanations 1 and 2 to sub- section (3) of section 80-IA shall apply for the purposes of clause (ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. (5) Notwithstanding anything contained in any other provision of this Act, in computing the total income of the assessee, no deduction shall be allowed under any other section contained in Chapter VIA or in section 10A or section 10B, in relation to the profits and gains of the undertaking or enterprise. (6) Notwithstanding anything contained in this Act, no deduction shall be allowed to any undertaking or enterprise under this section, where the total period of deduction inclusive of the period of deduction under this section, or under the second proviso to sub-section (4) of section. 80-IB or under section 10C as the case may be, exceeds ten assessment years.
(A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., (7) The provisions contained in sub-section (5) and sub-sections (7) to (12) of section 80-IA shall, so far as may be, apply to the eligible undertaking or enterprise under this section. (8) For the purposes of this section,— (i) "Industrial Area" means such areas, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (ii) "Industrial Estate" means such estates, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (iii) "Industrial Growth Centre" means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (iv) "Industrial Park" means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (v) "Initial assessment year" means the assessment year relevant to the previous year in which the undertaking or the enterprise begins to manufacture or produce articles or things, or commences operation or completes substantial expansion; (vi) "Integrated Infrastructure Development Centre" means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (vii) "North-Eastern States" means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura; (viii) "Software Technology Park" means any park set up in accordance with the Software Technology Park Scheme notified by the Government of India in the" Ministry of Commerce and Industry; (ix) “Substantial expansion" means increase in the investment in the plant and machinery by at least fifty per cent of the book value of plant and machinery s (before taking depreciation in any year), as on the first day of the previous year in which the substantial expansion is undertaken; (x) "Theme Park" means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government.]"
The CIT(A) while dealing with the issue has called for remand report from AO, in the remand report, the AO accepted that there was no discrepancy in the income/receipt as per TDS Certificate and as shown in the account. Thus there was no case of transfer of eligible activity/unit to the eligible activity and thus by coming on conclusion that assessee fulfilled all the condition for claiming deduction u/s 80-IC of the Act, the AO was directed to allow such deduction after reducing the loss by assessee unit in AY 2007-08 and deleted the addition.
(A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., 9. The CIT(A) has categorically discussed all the fact relating with the admissibility of claim relating to section 80-IC of the Act and by seeking remand reports, wherein the AO has accepted that there was no discrepancy in the income. There is no dispute about the notified area wherein the unit of assessee situated, thus, there is no infirmity or illegality in the order passed by CIT(A), thus the ground raised in the present appeal by Revenue is rejected.
7. In the present appeal before us the Revenue has challenged the order of the Ld.CIT(A) in allowing the deduction u/s. 80IC of the Act. The Ld.CIT(A) followed the order of the Tribunal in ITA.No. 3381/Mum/2013 and allowed the claim of the assessee for deduction u/s. 80IC observing as under: - “5. Decision: - I have carefully gone through both the order of the AO as also the order of the Hon'ble Mumbai Tribunal (in ITA.No. 3381/Mum/2013, dated 30th November, 2015), a copy of which has been placed on record. The observations of the Hon'ble Tribunal at Para Nos. 8 and 9 are reproduced herewith. “8. The CIT(A) while dealing with the issue has called for remand report from AO, in the remand report, the AO accepted that there was no discrepancy in the income/receipt as per TDS Certificate and as shown in the account. Thus there was no case of transfer of eligible activity/unit to the eligible activity and thus by coming on conclusion that assessee fulfilled all the condition for claiming deduction u/s 80-IC of the Act, the AO was directed to allow such deduction after reducing the loss by assessee unit in AY 2007-08 and deleted the addition.
9. The CIT(A) has categorically discussed all the fact relating with the admissibility of claim relating to section 80-IC of the Act and by seeking remand reports, wherein the AO has accepted that there was no discrepancy in the income. There is no dispute about the notified area wherein the unit of assessee situated, thus, there is no infirmity or illegality in the order passed by CIT(A), thus the ground raised in the present appeal by Revenue is rejected.
It would become clear from a simple reading of the above extract that the Hon'ble Tribunal has granted the deduction u/s. 80IC as sought by the appellant for AY 2008-09. Respectfully following the aforesaid extracted decision of Hon'ble Mumbai Tribunal in the appellant’s own case, the sole ground of appeal in this case is allowed.”
8. Since the Ld.CIT(A) followed the order of the Tribunal in assessee’s own case for A.Y 2008-09 in allowing the claim of the assessee and since
(A.Y: 2011-12) M/s. GMP Technical Solutions Pvt. Ltd., the Revenue could not point out that the facts in current year are not similar/identical to the facts in earlier years, we do not find any valid reason to interfere with the decision of the Ld.CIT(A) in allowing the claim for deduction u/s. 80IC of the Act for A.Y 2011-12.
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on the 11th October, 2018