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Facts
The assessee, a Hindu Undivided Family manufacturing waste disposal bins, claimed deduction under section 80IC for its Unit III in Himachal Pradesh from Assessment Year (AY) 2010-11. While initially allowed under section 143(3) assessments, the Assessing Officer later disallowed the claim from AY 2014-15 due to doubts on manufacturing activities, leading to reopening and disallowance for prior assessment years (2010-11 to 2013-14).
Held
Following its previous decision for AY 2014-15, the Tribunal held that the assessee was entitled to the deduction under section 80IC for all assessment years. The reopening of assessment for AY 2010-11 under section 147 was also found invalid by the first appellate authority, being based on a mere change of opinion. The Assessing Officer was directed to delete the disallowances.
Key Issues
Whether the assessee is entitled to deduction under section 80IC of the Income-tax Act, 1961 for its manufacturing unit, and the validity of assessment reopening under section 147 based on a mere change of opinion.
Sections Cited
Section 80IC, Section 143(3), Section 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 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 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.
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 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 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 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 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 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