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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
ASSESSEE BY : Shri Kapil Goel, Advocate REVENUE BY : Shri S.K. Jain, DR Date of Hearing : 05.01.2017 Date of Order : 11.01.2017
O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Since common questions of facts and law have been raised in both the aforesaid appeal and cross objection, the same are being discussion. 2. Appellant, Assistant Commissioner of Income-tax, Circle 1(1), New Delhi (hereinafter referred to as ‘the revenue’) by filing the present appeal, sought to set aside the impugned order dated 03.04.2013 passed by the Commissioner of Income-tax (Appeals)- IV, New Delhi qua the assessment year 2006-07 on the grounds inter alia that :-
“1 The learned CIT(A) has erred on facts and in law by annulling the order passed u/s 154 of the I.T. Act 1961 when the mistake corrected by virtue of the said order was apparent from record.
2 The learned CIT(A) has erred on facts and in law by not considering the fact that the increase in investment of Plant and Machinery during the year of the assessee was less than the statutory minimum requirement of 50% in accordance with sub clause 8(ix) of Section 80 I(C).
3 The learned CIT(A) has erred on facts and in law by not considering that the deduction claimed by the assessee u/s 80 I(e) was not allowable since there was no substantial expansion of plant and machinery of the undertaking or enterprises within the meaning of Section 80 I(C) Sub Clause(2) read with sub clause (4) and sub clause (8)(ix) of the I.T. Act 1961. Without prejudice to the above 4. The learned CIT(A) erred on facts and in law by not considering the basic position of law that assessee was not even entitled to the deduction ./2013 CO No.3/Del./2014 allowed by the AO u/s 80 I(C) of even 30 % as the assessee does not satisfy minimum statutory requirement of expansion during the year as per Section 80 I(e) Sub Clause(2) read with sub clause (4) and sub clause (8)(ix) of the I.T. Act 1961.
5. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the he ring of this appeal.”
The Objector, by filing the present cross objection, sought to set aside the impugned order dated 03.04.2013 passed by the Commissioner of Income-tax (Appeals)-IV, New Delhi qua the assessment year 2006-07 on the grounds inter alia that :- 1. Preliminary objection to revenue's argumentative/new/additional grounds That on the facts and in the circumstances of case and in law, the majority of the grounds taken now before ITA T by Assessing officer in appeal memo are neither borne out from impugned ( stero- type) rectification order nor from case records forming basis of the. impugned proceedings.
Refer: ITAT orders reported at : 12) ITD 204;,126 TTJ 984; 313 ITR (AT). 263; 297 ITR 49(AT) & Supreme Court in Mohinder singh Gill AIR 1978SC 851
Contentious issue/investigative and argumentative complex issue is out of purview of rectification proceedings That on the facts and in the circumstances of case and in law, from enormity of arguments involved in the matter, as glaring/apparent from revenue's appeals grounds, it is clear that there is "no mistake" which can be said to be "apparent" from records in instant case, as Refer Supreme Court in case of T.S. Balram vs. Volkart Bros. [1971] 82 ITR 50 3. That on the facts and in the circumstances of case and in law, from cursory look to revenue's appeal grounds it is clear that instant rectification proceedings being very limited in scope, are used for reframing the assessment giving additional reasons which is not permissible u/s 154 of the Act.
Refer Karnataka high court in case of eIT versus Mysore Breweries Limited ITA 72/2007 (Dated 9.04.2013) enclosed Basic records not consulted while passing impugned rectification order which vitiates entire action 4. That on the facts and in the circumstances of case and in law, it is perversely stated in impugned order that assessee has not submitted reply before assessing officer on proposed rectification, au contaire it is seriously repudiated as assessee filed adequate reply to proposed rectification and along with CA report filed in prescribed format available on records from beginning.”
Briefly stated the facts of this case are : originally assessment of the assessee for AY 2006-07 was completed under section 143(3) of the Income-tax Act, 1961 (for short ‘the Act’) on 18.08.2008 vide which the income of the assessee at Rs.15,87,850/- with book profit of Rs.3,59,50,375/- u/s 115JB of the Act was accepted. Subsequently, AO by entertaining the application u/s 154 of the Act noticed that the assessee had claimed deduction of only 30% u/s 80-IC as the assessee has already got the benefit of 100% benefit for five consecutive years till Assessment Year 2005-06. So, the AO vide order dated 29.03.2012 passed u/s 154 / 143(3) of the Act reduced the deduction u/s 80-IC to Rs.1,03,72,411/- @ 30% instead of Rs.3,45,74,704/-, which was @ 100%.
Assessee carried the matter before the ld. CIT (A) by way of filing appeal who has allowed the appeal by holding that the impugned addition is beyond the scope of section 154 of the Act.
Feeling aggrieved, the revenue has come up before the Tribunal by way of filing the present appeal. Assessee has also filed cross objection impugning the order passed by the AO. 6. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Short question arises before the Bench to be determined in this case is “
“as to whether the AO was empowered to reduce the deduction claimed by the assessee at Rs.3,45,74,704/- under section 80-IC of the Act to Rs.1,03,72,411/- @ ./2013 CO No.3/Del./2014 30% accepted u/s 143 of the Act by invoking the provisions contained u/s 154 of the Act.” 8. Undisputedly, the AO has passed order dated 29.03.2012 u/s 154 of the Act summarily without perusing and discussing the record to find out if the assessee is actually entitled for deduction u/s 80-IC of the Act @ 100% as claimed or 30% as held by the AO. It is settled principle of law that when there exists a debatable issue that two views are possible, it is not open to the authority u/s 154 of the Act to revise the opinion by invoking the provisions contained u/s 154 of the Act and only mistake apparent on record can be rectified.
In the instant case, this is not a mistake apparent on record rather the issue was debatable and required to be decided on merit.
So, we are of the considered view that the impugned issue decided by the AO u/s 154 of the Act is not rectification rather it amounts to reframing of the assessment without giving any reason.
However, the revenue is at liberty to reopen the assessment in accordance with law.
Even otherwise, the assessee has already been granted 100% deduction u/s 80-IC for AY 2010-11 vide order dated 15.07.2014 passed by CIT (A) which is not stated to have been challenged by the revenue. So, when the assessee has already been allowed 100% ./2013 CO No.3/Del./2014 deduction u/s 80-IC till 10th year of its operation, the disallowance u/s 80-IC for the intervening year AY 2006-07 does not fit into the scheme of rule of consistency which the revenue is required to follow. Order passed by CIT (A) dated 15.07.2014 for AY 2010- 11 is available at page 9 of the paper book.
In view of what has been discussed above, finding no illegality or perversity in the order passed by ld. CIT (A) the present appeal is dismissed and cross objection filed by the assessee are hereby allowed.
Order pronounced in open court on this 11th day of January, 2017.