PR COMMISSIONER OF vs. M/S JEANS KNIT PVT LTD

1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.559/2015 C/W I.T.A.No.571/2016 & I.T.A. NO. 580/2016 ITA NO.559/2015 BETWEEN: 1. PR. COMMISSIONER OF

INCOME TAX, C.R.BUILDINGS

QUEENS ROAD

BANGALORE - 560 001. 2. DEPUTY COMMISSIONER OF

INCOME, CIRCLE - 11(5)

BANGALORE. ... APPELLANTS (BY Mr.E.I.SANMATHI AND Mr.JEEVAN J NEERALGI, ADVS.,) AND: M/S JEANS KNIT PVT. LTD., NO.21, E1, 2ND PHASE INDUSTRIAL AREA, PEENYA BANGALORE - 560 058. ... RESPONDENT (BY Mr.T.SURYANARAYANA RAO, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 17.04.2015 PASSED IN ITA

2 NO.1516/BANG/2012 FOR THE ASSESSMENT YEAR 2007-08, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. (II) SET ASIDE THE APPELLATE ORDER DATED 17.04.2015 PASSED BY THE ITAT, 'A' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.ITA NO.1516/BANG/2012 FOR ASSESSMENT YEAR 2007-08 AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. I.T.A.NO.571/2016 BETWEEN: 1. PR. COMMISSIONER OF

INCOME TAX -4

BMTC COMPLEX

KORAMANGALA

BANGALORE. 2. DEPUTY COMMISSIONER OF

INCOME TAX, CIRCLE - 11(5)

BANGALORE. ... APPELLANTS (BY MR.E.I.SANMATHI AND MR.JEEVAN G.NEERALGI, ADV.,) AND: M/S JEANS KNIT PVT. LTD., NO.21, E1, 2ND PHASE INDUSTRIAL AREA, PEENYA BANGALORE - 560 058. ... RESPONDENT (BY MR.T.SURYANARAYANA RAO, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 19.02.2016 PASSED IN ITA NO.746/BANG/2014 FOR THE ASSESSMENT YEAR 2010-11, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO:

3 (I) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT. (II) SET ASIDE THE APPELLATE ORDER DATED 19.02.2016 PASSED BY THE ITAT, 'A' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.ITA NO.746/BANG/2014 FOR ASSESSMENT YEAR 2010-11, AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST O OF JUSTICE. I.T.A.NO.580/2016 BETWEEN: 1. PR. COMMISSIONER OF

INCOME TAX- 4

BMTC COMPLEX

KORAMANGALA

BANGALORE 2. ASSISTANT COMMISSIONER

OF INCOME, CIRCLE - 11(5)

BANGALORE. ... APPELLANTS (BY Mr.E.I.SANMATHI AND MR.JEEVAN G. NEERALGI, ADV.,) AND: M/S JEANS KNIT PVT. LTD., NO.21, E1, 2ND PHASE INDUSTRIAL AREA, PEENYA BANGALORE - 560 058. ... RESPONDENT (BY Mr.T.SURYANARAYANA RAO, ADV.) - - - THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT, 1961 ARISING OUT OF ORDER DATED 27.11.2015 PASSED IN ITA NO.1244/BANG/2013 FOR THE ASSESSMENT YEAR 2008-09, PRAYING THAT THIS HON’BLE COURT MAY BE PLEASED TO: (I) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT.

4 (II) SET ASIDE THE APPELLATE ORDER DATED 27.11.2015 PASSED BY THE ITAT, 'C' BENCH, BENGALURU, IN APPEAL PROCEEDINGS NO.ITA NO.1244/BANG/2013 FOR ASSESSMENT YEAR 2008-09. AS SOUGHT FOR IN THIS APPEAL AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THESE ITAs COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED THE FOLLOWING: COMMON JUDGMENT These appeals under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act for short) have been preferred by the revenue. The subject matter of I.T.A.No.559/2015 pertains to Assessment Year 2007-08, whereas, the subject matter of I.T.A.No.571/2016 pertains to Assessment Year 2010- 11. In I.T.A.No.580/2016, relates to Assessment Year 2008-09. In all the aforesaid appeals, two substantial questions of law are common and the appeals pertain to the same assessee, therefore, they were heard together and are being decided by this common judgment. 2. I.T.A.No.559/2015 was admitted by a bench of this court on following substantial questions of law:

5 (i) Whether in the facts and circumstances of the case, the tribunal is right in dismissing the appeal preferred by the revenue by holding that the assessee is entitled for deduction under Section 10-B of the Income Tax Act, even when the assessing authority on the basis of the facts and materials on record has categorically rightly held that the assessee has not fulfilled the conditions for seeking deduction under said provisions? (ii) Whether in the facts and circumstances of the case, the order of the tribunal can be said as perverse since it has merely affirmed the findings of the first appellate authority that the assessee is eligible for deduction under Section 10-B without recording finding of its own and omitting to consider and adjudicate the grounds of the revenue in proper perspective? 3. In I.T.A.No.571/2016 and I.T.A.No.580/2016 in addition, to the aforesaid two substantial questions of law, following additional substantial questions of law arise for consideration respectively:

6 I.T.A.No.571/2016: (i) Whether on the facts and circumstances of the case, the Tribunal is right in directing the assessing authority to consider claim of deduction of Rs.123,33,06,953/- as against the claim of Rs.113,85,96,681/- made in the original return of income even without considering the principle laid down by Apex Court in case of M/s.Goetze (India) Ltd (reported in 284 ITR page 323)? I.T.A.No.580/2016: (i) Whether on the facts and in the circumstances of the case, the tribunal is right in holding that the security premium account derived under the head 'reserves and surplus' of balance sheet is not part of accumulated profit for the purpose of Section 2(22)(3) of the IT Act by relying on the decision in the case of Radheshyam Jain in ITA No.728/CHD/2011 dated 28.09.2012 even when the facts of the said case ar5e not applicable to instant case and the ingredients of section 2(22)(e) are fully satisfied in the case of the assessee?

7 4. The factual background, in which the aforesaid questions of law arise for our consideration need mention, which are stated infra. The assessee is engaged in the manufacture and export of readymade garments and also engaged in doing job works. The assessee is a 100% export oriented unit. For the facility of reference, facts from I.T.A.No.559/2015 are being referred to. The assessee filed the return of income for the Assessment Year 2007-08 declaring ‘NIL’ income after claiming deduction of Rs.51,04,29,715/- under Section 10B of the Act. The Assessing Officer completed the assessment under Section 143(3) of the Act vide order dated 31.12.2010. Thereafter, there was a survey in the premises of the assessee on 05.11.2009 and simultaneously survey was also carried out in the premises of M/s Fiber and Fabrics International Private Limited (FFIPL), which is a sister concern of the assessee. While completing the scrutiny assessment under Section 143(3) of the Act based on the survey

8 and other enquiries, the Assessing Officer disallowed the assessee's claim for deduction under Section 10B of the Act. 5. The Assessing Officer inter alia held that assessee is entitled to deduction under Section 10B of the Act only after verification and the contention of the assessee that old machinery from FFIPL was transferred to it only in April 2007 does not deserve acceptance as the assessee had taken over the premises of FFIPL along with old plant and machinery available and the assessee installed new machinery over a period of time and started its first unit in November 2004 and second unit in March 2005. It was further held that there is no material to indicate that assessee as well as FFIPL are separate entities. It was also held that it took over vacant units of FFIPL in May, June and September 2005 and remaining units in April 2007. From the statements of owners of the premises, it was inferred that second unit was handed over to the assessee in July 2005 as

9 construction was completed in the last week of June 2005 and the assessee started the business of stitching i.e., the job work in the year 2004-05 and then took over the warehouse and certain units of FFIPL and thereafter, took new premises as a fishing unit and processing unit and stitching unit of FFIPL within a short span of time. It was further held that the assessee rented new premises mainly to show itself eligible for deduction under Section 10B of the Act but it had reconstructed the business of FFIPL by taking over units of FFIPL and only thereafter, started the manufacturing activity. The assessee did not have an inbuilt infrastructure and resources for export of garments and was completely dependant on FFIPL. It was also held that there was a transfer of business of FFIPL to the assessee by shifting the employees as well as customers of FFIPL. Thus, it was held that the case of assessee was in fact, reconstruction of business of FFIPL and assessee was not eligible for deduction under Section 10B of the

10 Act. 6. The assessee thereupon filed an appeal before the Commissioner of Income Tax (Appeals) who by an order dated 24.08.2012 allowed the appeal preferred by the assessee. The Commissioner of Income Tax (Appeals) after meticulous appreciation of evidence on record by a detailed order partly allowed the appeal preferred by the assessee. Being aggrieved, the assessee as well as the revenue filed appeals before the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal' for short). The tribunal by an order dated 17.04.2015 dismissed the appeal preferred by the assessee as well as by the revenue. In the aforesaid factual background, the revenue has approached this court. 7. Learned counsel for the revenue submitted that one of the Director's viz., Anupam Kothari holds 99.99% shares in both the companies. It is also

11 submitted that since, FFIPL's deduction came to an end under Section 80HHC Act, the assessee in order to get deduction, floated its new company viz., the assessee by using all plant and machinery, manpower and gradually transferred all its transactions to the assessee. The assessee thereafter, claimed deduction under Section 10B of the Act. While inviting our attention to Section 10B of the Act, it was submitted that from the material available on record, it is evident that the assessee is not eligible to claim deduction under the aforesaid provision as it has not fulfilled the condition prescribed under Section 10B(2)(ii) of the Act as it is formed by reconstruction of business of FFIPL and had also made use of plant and machinery, which was not in existence. It is contended that it is nothing but a colorable devise adopted by the assessee to avoid tax liability and the assessing authority has rightly lifted the veil. It is also pointed out that from the statement of one Mr.Nagesh, Senior Manager of the assessee, it is evident that the

12 machines belonging to FFIPL were transferred to the assessee and the aforesaid fact has also been admitted by one Mr.Anupam Kothari. It is also pointed out that mere approval of the Development Commissioner given for export oriented unit does not entitle the assessee to claim deduction under Section 10B of the Act. It is also argued that for Assessment Year 2005-06, the assessee had mentioned in Form 3CD that it is involved in job work activity and therefore, is not eligible for deduction under Section 10B of the Act. It is also pointed out that the list of suppliers and customers of both the companies are the same and premises was leased out along with machineries to the assessee. It is also submitted that the finding recorded by the tribunal is perverse as from the material on record, it is evident that the assessee had adopted colorable devise to avoid tax liability, however, the aforesaid aspect has totally been ignored by the tribunal. It is also pointed out that the tribunal erred in ignoring the admission made by

13 one Mr.Nagesh and Mr.Anupam Kothari and the finding recorded by it that there was no transfer for the periods 2004-05, 2005-06 and 2006-07 and the plant and machinery were purchased in the year 2007-08, which does not exceed the prescribed limit of 20%, is factually incorrect as the assessee started using entire plant and machinery of FFIPL from 2004-05 itself. The tribunal also erred in not giving any finding about the colorable devise adopted by the assessee. The tribunal also erred in not appreciating that business of FFIPL was taken over by the assessee. 8. It is further submitted that the tribunal grossly erred in directing the assessing authority to reconsider the revised claim made by the assessee during assessment proceedings with regard to enhanced claim made under Section 10B of the Act for a sum of Rs.123,33,06,953/- without appreciating the fact that the assessee had neither made the aforesaid claim in the return of income nor had filed the revised return of

14 income and therefore, the assessee cannot make a fresh claim without filing a revised return. It is also urged that the tribunal grossly erred in holding that balance in reserve and surplus is only on account of security premium amount after reducing the loss incurred by the assessee for the earlier year as well as the year under consideration and therefore, it cannot be considered as accumulated profit as per Explanation 1 and 2 to Section 2(22)(e) of the Act and the tribunal ought to have appreciated that there is no material to prove that loans /advance was granted to the assessee on behalf of or for individual benefit of shareholder. It is further submitted that share premium amount can also be considered for the purpose of accumulated profits, since, there is no specific exclusion of the same in Explanation 1 to the said Section except in respect of capital gains and share premium amount is not a capital gain earned. It is urged that since, the tribunal has failed to determine the core issue with regard to colorable devise adopted by the

15 assessee, to evade tax, therefore, the matter be remitted to the tribunal for decision afresh in accordance with law. In support of aforesaid submissions, the reliance is placed on decision of Supreme Court in 'TEXTILE MACHINERY CORPORATION LTD. VS. COMMISSIONER OF INCOME TAX, 107 ITR 195 (SC), BACHITAR SINGH VS. COMMISSIONER OF INCOME TAX AND ANR.', 328 ITR 400, 'DEPUTY COMMISSIONER OF INCOME TAX, CIRLCE 11(1) VS. ACE MULTI AXES SYSTEMS LTD', 400 ITR 141, 'THERMAL CORPORATION VS. CIT', 229 ITR 383 and 'GOETZE (INDIA) LTD VS. COMMISSIONER OF INCOME TAX', (2006) 284 ITR 323. 9. On the other hand, learned counsel for the assessee submitted that assessee has complied with the conditions mentioned in Section 10B of the Act and the Commissioner of Income Tax (Appeals) as well as the tribunal have rightly held that the assessee is entitled to claim deduction under Section 10B of the Act. It is

16 further submitted that the aforesaid findings are concurrent findings of fact and are based on meticulous appreciation of evidence on record. Learned counsel for the assessee has taken us through the order passed by the Commissioner of Income Tax (Appeals) and it has been pointed out from the order passed by the tribunal that no material has been brought on record by the revenue even before the tribunal to show that the finding recorded by the Commissioner of Income Tax (Appeals) are either perverse or factually incorrect. It is pointed out that Clause (vii) of Circular dated 17.01.2013 clearly states that setting up of a fresh unit in itself would not make the unit eligible for tax benefits as long as unit is set up after obtaining necessary approval from competent authorities and has not been formed by splitting or reconstruction of an existing business and fulfills all other conditions prescribed in the relevant provisions of law. It is urged that matter stands concluded by concurrent findings of

17 fact and no substantial question of law arises. It is also submitted that the compliance with the condition mentioned in Section 10B of the Act has to be seen in the first year, in which deduction under Section 10B of the Act is claimed. With reference to additional substantial question of law in I.T.A.No.571/2016, our attention has been invited to paragraph 12 of the order passed by the tribunal and it has been submitted that a claim for deduction can be made before a higher authority, which has been done in the instant case. With reference to additional substantial question of law involved in I.T.A.No.580/2016, it is submitted that the aforesaid issue also stands concluded by concurrent findings of fact as the Commissioner of Income Tax (Appeals) as well as the tribunal have held that no accumulated profit has accrued to the assessee. In support of aforesaid submissions, reliance has been placed on decisions of Supreme Court in 'SAMI LABS LTD. VS. ASSISTANT COMMISSIONER OF INCOME-

18 TAX', (2012) 20 TAXMANN.COM 785 (KARNATAKA), 'BAJAJ TEMPO LTD. VS. COMMISSIONER OF INCOME-TAX', (1992) 62 TAXMAN 480 (SC), 'COMMISSIONER OF INCOME- TAX VS. METROPOLITAN SPRINGS (P.) LTD.', (1991) 58 TAXMAN 72 (BOM), NATIONAL THERMAL POWER CO. LTD. VS. COMMISSIONER OF INCOME-TAX', (1998) 229 ITR 383 (SC), CIRCULAR NO.1/2013 DATED 17.11.2013 and 'THE COMMISSIONER OF INCOME TAX (CENTRAL), LUDHIANA VS. RADHE SHAM JAIN', I.T.A.NO.225/2013. 10. We have considered the submissions made by learned counsel for the parties and have perused the record. Before proceeding further, it is axiomatic to take note of relevant extract of Section 10B of the Act, which reads as under: 10B. (2) This section applies to any undertaking which fulfils all the following

19 conditions, namely :— (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any 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 ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation.—The provisions of Explanation 1 and Explanation 2 to sub- section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub- section as they apply for the purposes of clause (ii) of that sub-section.

20 11. Undoubtedly the conditions mentioned in Section 10B(2) of the Act have to be complied with by an assessee in order to claim deduction under Section 10B of the Act. Now we may advert to the facts of the case to ascertain whether the assessee in the instant case, has complied with the requirements as laid down in Section 10B(2) of the Act. The Commissioner of Income Tax (Appeals) by a detailed order dated 24.08.2012 and on meticulous appreciation of evidence on record has recorded the following findings: (i) Admittedly, the assessee was incorporated in the month of September 2004 as an export oriented unit after necessary approvals and became operational only during Financial Year 2005-06, relevant to Assessment Year 2006-07 and therefore, claimed deduction under Section 10B of the Act for the Assessment Year 2006-07.

21 (ii) The assessee claimed deduction for the first time in the Assessment Year 2006-07 and survey was conducted on 05.11.2009. Therefore, there was considerable time gap between the commencement of export oriented unit and the survey. It was further held that there is no addition to plant and machinery by the assessee from FFIPL during the Assessment Year 2005-06, 2006-07 and 2007-08. The assessee acquired certain plant and machinery only during the Assessment Year 2008-09, following the due procedure and value of such addition is below 20% of the total value of plant and machinery. (iii) There was no transfer of old plant and machinery from FFIPL either during the Assessment Year under consideration or in Previous assessment Years where the claim

22 for deduction under Section 10B of the Act was made for first time. The Commissioner of Income Tax (Appeals) found that the aforesaid fact also finds corroboration from contemporaneous records filed with the custom authorities. (iv) The assessee acquired two premises from FFIPL on lease and the payments were made to the FFIPL, which is evident from the statement of accounts. The assessee also obtained bonding from the customs authorities in this regard and verification made by the Assessing Officer himself reveals that aforesaid premises were taken on lease on 28.06.2005 and 15.09.2005. There is no bar on taking the premises on rent for the purpose of claiming deduction under Section 10B of the Act.

23 (v) During Assessment Year 2006-07, 4568 employees were recruited by the assessee, out of which 1103 employees were working with FFIPL. The aforesaid fact has not been disputed by the revenue. Therefore, it cannot be said that the assessee was using the employees of FFIPL for its business. (vi) The assessee had new customers viz., GAP, GPS, Strategic, guess etc apart from some of the customers of FFIPL and there is no bar that the assessee should not have customers and suppliers from sister concern as long as it has separate business relations. The assessee has been supplying to the customers out of their own manufacture and has got raw materials from the suppliers from its own resources.

24 (vii) Under the Act, there is no need to maintain a unit wise accounts in order to claim deduction under Section 10B of the Act. The assessee acquired business premises, invested in the plant and machinery and employed the manpower by following rules and procedures and made substantial investment in the new plant and machinery. The investment in the plant and machinery for the Assessment Years 2005-06 to 2007-08 is to the tune of Rs.12,10,17,890/-, Rs.36,41,30,102/- and Rs.18,04,50,402/- respectively. (viii) The assessee acquired some plant and machinery from FFIPL worth Rs.9.86 Crores during the Assessment Year 2008-09 and the same does not exceed 20% of the total value of plant and machinery.

25 (ix) Mr.Nagesh and Mr.V.Sreedhar had filed affidavits retracting their statements and therefore, the reliance placed on the statements during the course of survey is not justified. There is no bar under the Act to take land or building on lease for purpose of manufacture. The only restriction under Section 10B of the Act read with Section 80I of the Act is with regard to transfer of any machinery or plant, which was previously used for any other purpose. In the instant case, there is no transfer / lease of plant and machinery used by FFIPL during the financial year 2005-06 as per submissions made by the assessee. (x) There is no reconstruction of the assessee but there was purchase of certain items of plant and machinery and lease of

26 certain building premises from FFIPL during Assessment Year 2008-09. This fact has also been found by the Assessing Officer in the order. A new unit can always start availing the tax benefits on which there is no bar under the statute. The assessee is a separate and a distinct undertaking satisfying the conditions enumerated under Section 10B of the Act and therefore, the observation of the Assessing Officer that it was a colorable devise is not correct. 12. Thus, on the basis of the aforesaid findings, the Commissioner of Income Tax (Appeals) concluded that the Assessing Officer's finding that the assessee is formed by splitting or reconstructing of business is not based on facts. The tribunal by an order dated 17.04.2015, in paragraph 6 has held as follows:

27 'Having heard the rival contentions and having considered the material on record, we find that the CIT(A) has considered the issue at length and has come to the conclusion that there was no transfer of old plant and machinery during the financial year 2004-05, 2005-06 and 2006-07 and further that the plant and machinery purchased by the assessee from FFIPL in the financial year 2007-08 also did not exceed 20% of the total plant and machinery of the assessee during the said financial year. He further observed that since there was no purchase of old plant and machinery from FFIPL in the earlier Assessment Year been as per contemporaneous records of the EOU/Customs authorities. The relevant date of the plant and machinery purchased by the assessee over the years is reproduced at para 1.2.3, page 30 of the order of the CIT(A). Thus, CIT(A) held that the manufacturing activity carried on by the assessee in the Assessment Years earlier to Assessment Year 2008-09 was by use of new plant and machinery. As regards the transfer of

28 business premises, employees and the customers of FFIPL to the assessee, the CIT(A) observed that there was no prohibition in the use of the business premises of FFIPL by the assessee and also of the employees and customers of FFIPL and further that the transfer of employees and customers of the assessee was only a small percentage of the total employees and customers of the assessee respectively. Thus holding, the CIT(A) set aside the finding of the AO and allowed the deduction under Section 10B of the Act. We find that the CIT(A) has given elaborate reasons for coming to the conclusion that the learned Departmental Representative has not been able to rebut any of the findings of the CIT(A) with any evidence to the contrary. Since, the findings of the CIT(A) are based upon the evidence produced by the assessee which has not been rebutted by the revenue, we do not see any reason to interfere with the order of the CIT(A). Thus, the revenue's appeal is dismissed.

29 13. The question whether or not assessee has complied with the conditions mentioned in Section 10B(2) of the Act in order to enable him to claim deduction under Section 10B of the Act is essentially a question of fact. From close scrutiny of the orders passed by the Commissioner of Income Tax (Appeals) as well as the tribunal, it is evident that the aforesaid findings are based on meticulous appreciation of evidence on record. The tribunal has affirmed the findings of fact recorded by the tribunal on the basis of meticulous appreciation of evidence on record, which by no stretch of imagination can be said to be perverse. It is pertinent to note that even before the tribunal, the revenue was not able to rebut any of the findings recorded by Commissioner of Income Tax (Appeals) by adducing any evidence to the contrary. The concurrent findings of fact do not suffer from any perversity warranting interference of this court in exercise of powers under Section 260A of the Act. [SEE: SYEDA

30 RAHIMUNNISA VS. MALAN BI BY L.RS. AND ORS. (2016)10 SCC 315

and PRINCIPAL COMMISSIONER OF INCOME TAX, BANGALORE & ORS. VS. SOFTBRANDS INDIA P. LTD., (2018) 406 ITR 513] 14. So far as the submission made on behalf of the revenue that the assessee has failed to comply with the condition viz., that it was not formed by transfer of a new business or machinery or plant previously used for any purpose, suffice it to say that Supreme Court in Bajaj Tempo Limited supra while interpreting Section 15C of Income Tax Act, 1922, which corresponds to Section 80J of the Act, dealt with the expression 'not formed' and has held that the aforesaid expression means that the undertaking should not be in continuation of old unit but emergence of a new unit. There are concurrent findings of fact that the assessee is a new export oriented unit, therefore, the aforesaid

31 submission does not deserve acceptance. Similarly, the contention that the submission made by the revenue that its contention that assessee had adopted colorable devise for tax evasion has not been dealt with also needs to be stated, to be rejected as in para 3.29 of the order passed by the Commissioner of Income Tax (Appeals), the Commissioner of Income Tax (Appeals) on the basis of material available on record has negated the aforesaid contention raised on behalf of the revenue and the order passed by the Commissioner of Income Tax (Appeals) has been upheld by the tribunal. Thus, the first two substantial questions of law are answered against the revenue and in favour of the assessee. 15. This takes us to the additional substantial question of law in I.T.A.No.571/2016. From perusal of para 12 of the order dated 19.02.2016 passed by the Income Tax Appellate Tribunal, it is evident that admittedly, assessee had filed the revised claim under Section 10B of the Act during the course of the

32 assessment proceedings and the revision resulted in enhancement of the claim from Rs.113,85,96,681/- to Rs.123,33,06,953/-. Therefore, the tribunal held that the Commissioner of Income Tax (Appeals) rightly directed the Assessing Officer to verify the claim of the assessee in this regard. The tribunal has taken into account the decision of the Supreme Court in Goetz India Ltd., supra and has held that the aforesaid decision does not restrict the powers of the higher authorities to consider the revised claim and the tribunal and has rightly placed reliance on decision of the Supreme Court in 'NATIONAL THERMAL POWER CORPORATION VS. CIT', 229 ITR 383. Thus, on the facts of the case and in view of the finding recorded by the tribunal in para 12 of the order, the additional substantial question of law framed does not arise for consideration. The same is answered accordingly.

33 16. Now we may advert to the additional substantial question of law framed in I.T.A.No.580/2016. From perusal of para 4.4 of the order dated 13.05.2013 passed by the Commissioner of Income Tax (Appeals), it is evident that the Commissioner of Income Tax (Appeals) has recorded a finding that there are no accumulated profits available in the books of accounts of FFIPL. The aforesaid finding has been affirmed by the tribunal vide order dated 27.11.2015 in para 7 of its order and it has been held that admittedly, the reserve and surplus amount does not show any accumulated profit but the amount shown is loss as well as premium on securities. Thus, the aforesaid issue is also recorded by concurrent findings of fact, which cannot be termed as perverse. In view of preceding analysis, the additional substantial questions of law involved in I.T.A.No.571 & 580/2016 are answered against the revenue and in favour of the assessee. In the result, we do not find any

34 merit in these appeals and the same are hereby dismissed. Sd/- JUDGE Sd/- JUDGE ss