BHARATSONS HUF,NEW DELHI vs. ACIT, CIRCLE-46(1), NEW DELHI
Facts
The assessee, an HUF engaged in manufacturing, claimed deduction under section 80IC for its Unit III from AY 2010-11, which was initially allowed. The AO later doubted the claim in AY 2014-15, citing insufficient machinery, electricity consumption, and lack of toll tax receipts, leading to disallowance and reopening of earlier assessments (AY 2010-11 to 2013-14) under section 147. The CIT(A) confirmed disallowances for some years but allowed the claim and held the reopening invalid for AY 2010-11.
Held
The Tribunal observed that a Coordinate Bench had previously allowed the assessee's claim for deduction under section 80IC for AY 2014-15. Since the disallowances in the present appeals stemmed from the AO's stance in AY 2014-15, and the CIT(A) had also ruled the reopening for AY 2010-11 as invalid, the Tribunal considered the issue to be covered. Respectfully following the Coordinate Bench's decision, the Tribunal held the assessee is entitled to the deduction under section 80IC and directed the AO to delete all disallowances.
Key Issues
1. Whether the assessee is eligible for deduction under section 80IC of the Income-tax Act. 2. The validity of reopening assessments under section 147 based on a change of opinion.
Sections Cited
80IC, 143(3), 147
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI SAKTIJIT DEY, VICE- & SHRI S. RIFAUR RAHMAN
PER SAKTIJIT DEY, VICE-PRESIDENT
These are bunch of four appeals. Out of which, appeals
pertaining to assessment years 2011-12, 2012-13 & 2013-14 are
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
by the assessee. Whereas, the appeal for the assessment year
2010-11 is by the Revenue. These appeals arise out of separate
orders of learned Commissioner of Income Tax (Appeals). Since,
these appeals relate to the same assessee involving identical
issues, they have been clubbed together and disposed of in a
consolidated order for the sake of convenience.
The only substantive issue involved in these appeals relate
to disallowance of assessee’s claim of deduction under section
80IC of the Income-tax Act, 1961 (in short ‘the Act’).
Briefly the facts are, the assessee is a Hindu Undivided
Family (HUF). As stated by the Assessing Officer, the assessee is
engaged in the business of trading in all kinds of pipes. Besides,
the assessee is also engaged in manufacturing of waste disposal
bins for onward sales to various Government agencies and
municipal boards, on tender basis. The assessee started claiming
deduction under section 80IC of the Act in respect of finished
products manufactured at Unit No. III at Paonta Sahib, Himachal
Pradesh from assessment year 2010-11 onwards. The assessee’s
claim of deduction under section 80IC was allowed in the initial
assessment year 2010-11 in an assessment completed under
2 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
section 143(3) of the Act. Even, in subsequent assessment years
up to assessment years 2013-14, assessee’s claim of deduction
under section 80IC was allowed. For the first time in assessment
year 2014-15, the Assessing Officer expressed doubt/reservation
with regard to assessee’s claim of deduction under section 80IC of
the Act. He was of the view that the machinery available with the
assessee does not support the claim of deduction. He further
observed that the electricity consumption cannot support claim of
quantum of production. Further, evidences produced by the
assessee for movement of goods are insufficient to support its
claim of deduction in absence of toll tax receipts. Accordingly, he
disallowed assessee’s claim of deduction under section 80IC of the
Act. Based on the position taken in assessment year 2014-15, the
Assessing Officer reopened the assessments for the preceding
assessment years, wherein, assessee’s claim of deduction under
section 80IC were allowed. Ultimately, assessments were
completed under section 143(3) read with section 147 of the Act
disallowing assessee’s claim of deduction under section 80IC of
the Act. Being aggrieved with such disallowances, assessee
preferred appeals before learned first appellate authority.
3 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
However, learned first appellate authority confirmed the
disallowances in assessment years 2011-12, 2012-13 and 2014-
Whereas, he allowed the claim in assessment year 2010-11.
Before us, learned counsel appearing for the assessee
submitted that while deciding the issue in assessment year 2014-
15, though, learned first appellate authority has confirmed the
disallowances, however, while deciding assesseee’s appeal
contesting such disallowance, the Tribunal in ITA No.
507/Del/2019, dated 02.06.2020 has allowed assessee’s claim of
deduction under section 80IC of the Act. He submitted, since, the
disallowances in the impugned assessment years are based on
the decision taken by the Assessing Officer in assessment year
2014-15, the issue is squarely covered by the decision of the
Tribunal in assessment year 2014-15.
Learned Departmental Representative, though, agreed that
in assessment year 2014-15, the Tribunal has decided the issue
in favour of the assessee, however, at the same time, he
submitted that the initial year of claim of deduction under section
80IC of the Act is assessment year 2010-11. He submitted, in
assessment year 2010-11, the Assessing Officer has disallowed
4 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
assessee’s claim of deduction under section 80IC of the Act. He
submitted, this fact was not brought to the notice of the Tribunal
while deciding the issue in assessment year 2014-15.
In rejoinder, learned counsel for the assessee submitted that
in the original assessment completed under section 143(3) of the
Act for the assessment year 2010-11, the Assessing Officer had
allowed the claim of deduction under section 80IC of the Act after
thorough verification. He submitted, based on the decision taken
in assessment year 2014-15 by the Assessing Officer, the
assessment for assessment year 2010-11 was reopened and
deduction under section 80IC was disallowed. He submitted,
while deciding assessee’s appeal, learned first appellate authority
has not only held the reopening of assessment under section 147
of the Act to be invalid as it was on a mere change of opinion, but
he has also decided the issue on merits following the decision of
the Tribunal in assessment year 2014-15. Thus, he submitted,
the issue is squarely covered by the decision of the Tribunal.
We have considered rival submissions and perused the
materials on record. Undisputedly, the assessee has started
claiming deduction under section 80IC of the Act for Unit III from
5 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
assessment year 2010-11 onwards. It is a fact on record that
assessee’s claim of deduction under section 80IC of the Act was
allowed in assessment years 2010-11, 2011-12, 2012-13 and
2013-14. In fact, assessment for assessment year 2010-11, the
initial assessment year, was completed under section 143(3) of
the Act after thoroughly examining the claim of deduction under
section 80IC of the Act. While examining assessee’s claim of
deduction under section 80IC of the Act in assessment year 2014-
15, the Assessing Officer made a departure from the view taken in
earlier assessment years and held that assessee is not eligible to
claim deduction under section 80IC of the Act for the reasons
discussed elsewhere in the order.
Based on the view taken in the assessment proceedings in
assessment year 2014-15, assessments for the earlier assessment
years, viz., assessment years 2010-11, 2011-12, 2012-13 and
2013-14 were reopened under section 147 of the Act to disallow
assessee’s claim of deduction under section 80IC of the Act and
such deductions were ultimately disallowed while completing the
assessments under section 143(3) read with section 147 of the
Act. Pertinently, in the meanwhile, the dispute relating to
6 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
disallowance of claim of deduction under section 80IC of the Act
in assessment year 2014-15 came up for consideration before the
Tribunal in ITA No. 507/Del/2019. While deciding the issue in
order dated 02.06.2020, learned Tribunal factually verified the
issue and ultimately concluded that the assessee is entitled to
claim deduction under section 80IC of the Act in respect of Unit
III situted at Paonta Sahib. Since, the aforesaid decision of the
Tribunal was not available before learned first appellate authority
while deciding appeals for assessment years 2011-12, 2012-13,
2013-14, the disallowances were confirmed. However, while
deciding the appeal for assessment year 2010-11, learned first
appellate authority not only held the reopening of assessment
under section 147 of the Act to be invalid as it was on a mere
change of opinion, but he also decided the issue on merits
following the decision of the Tribunal in assessment year 2014-
15.
The facts discussed above clearly establish that all the
assessment years under appeal, factually, stand on identical
footing. Therefore, the contention of learned Departmental
Representative that the assessment order for assessment year
7 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
2010-11 was not considered by the Tribunal while deciding the
appeal for assessment year 2014-15, in our view, is irrelevant and
immaterial. Moreso, considering the fact that in the reassessment
order for assessment year 2010-11, the Assessing Officer himself
has made it clear that reopening of assessment is based on the
decision taken by the Assessing Officer in the assessment order
passed for assessment year 2014-15. Thus, in our view, the issue
is squarely covered by the decision of the Coordinate Bench in
assessment year 2014-15. Respectfully following the said decision
of the Coordinate Bench, as referred to above, we hold that the
assessee is entitled to claim deduction under section 80IC of the
Act. The Assessing Officer is directed to delete the disallowances
of deduction claimed under section 80IC of the Act in all the
assessment years under dispute.
Consequently, appeals of the assessee are allowed, whereas,
Revenue’s appeal is dismissed.
Order pronounced in the open court on 30th July, 2024
Sd/- Sd/- (S. RIFAUR RAHMAN) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT Dated: 30th July, 2024. RK/- Copy forwarded to: 1. Appellant 8 | P a g e
ITA Nos.8420, 8421 & 8422/Del/2019 & ITA No.3537/Del/2023
Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi
9 | P a g e
