Loading judgment…
Facts
The Revenue filed an appeal against the CIT(A)'s order for AY 2008-09. The assessee declared NIL income, but the AO made additions regarding Duty Draw Back and deduction u/s 80IC. The assessee settled the Duty Draw Back addition under the Vivad se Vishwas Scheme.
Held
The Tribunal noted that the Duty Draw Back issue was settled under the Vivad se Vishwas Scheme. For the remaining addition related to Section 80IC, the Tribunal relied on its own previous decision for AY 2009-10, where it was held that the assessee was undertaking manufacturing at the Haridwar unit and was eligible for deduction.
Key Issues
Whether the disallowance of Duty Draw Back and deduction u/s 80IC were justified, especially in light of the Vivad se Vishwas settlement and previous tribunal orders.
Sections Cited
143(1), 143(2), 143(3), 147, 148, 80IC, 9(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI
Before: SHRI YOGESH KUMAR U.S. & SHRI MANISH AGARWAL
The Deputy Commissioner Vs M/s Sharda Exports of Income Tax, Plot No. 11, SIDUCUL, Central Circle, Integrated Industrial Estate, Dehraudn Ranipur,Haridwar,Uttarakhand PAN: AAYFS1694N Appellant Respondent IAssessee by Sh. Rajkumar, CA & Sh. J. P. Sharma, CA Revenue by Sh. S. K. Chatterjee, CIT, DR Date of Hearing 12/09/2025 Date of Pronouncement 26/09/2025 ORDER
PER YOGESH KUMAR, U.S. JM:
The present appeal is filed by the Revenue against the order of the Ld. Commissioner of Income Tax (Appeals), Kanpur-4 [‘Ld. CIT(A)’ for short] dated 27/04/2022 for Assessment Years 2008-09.
Brief facts of the case are that, the Assessee furnished return of income for Assessment Year 2008-09 declaring NIL income. The return filed by the Assessee was processed u/s 143(1) of the Income Tax Act, 1961 ('Act' for short). Subsequently, a notice u/s 143(2) of the Act was issued and assessment was completed u/s 143(3) of the Act on 24/12/2010by computing the total income of the Assessee at Rs.
13,98,31,925/-by making addition of Rs. 13,98,31,925/- on account of Duty Draw Back occurred during the year. Subsequently, a notice u/s 148 of the Act was issued to the Assessee on 08/06/2012for the year under consideration. An assessment order came to be passed on 29/09/2021 under Section 147/143(3) of the Act by making disallowance of Rs. 13,98,31,925/- on the ground that Duty Draw Back occurred during the year cannot be allowed as deduction u/s 80IC of the Act, further disallowed Rs. 51,27,57,399/- under Section 80IC of the Act on the ground that the Assessee failed to substantiate that the manufacturing was actually being done at Haridwar unit of the Assessee.
It is pertinent to note that, the Assessee approached Hon'ble High Court on the issue of disallowance made on the Duty Draw Back and during the pendency of the proceedings before the High Court, Assessee applied for Vivad se Vishwas Scheme, 2020 and paid the requisite tax as per the said scheme in so far as the said addition of Rs. 13,98,31,925/-.
Further, aggrieved by the assessment order dated 29/09/2021, Assessee preferred an Appeal before the Ld. CIT(A). The Ld. CIT(A)
vide order dated 27/04/2022, observed that in so far as disallowance of Rs. 13,98,31,925/- made on the account of duty draw back has been settled in VSV-2020 Scheme and the Assessee paid requisite tax liability.In so far as remaining disallowance of Rs. 37,29,15,474/- in respect of export profits, by relying on the order of the Tribunal dated 14/06/2023 for Assessment Year 2009-10 in Assessee’s own case in deleting the disallowance vide order dated 27/04/2022. Aggrieved by the order of the Ld. CIT(A) dated 27/04/2022, the Revenue preferred the present Appeal.
The Ld. Department's Representative submitted that the Ld.
CIT(A) erred in deleting the disallowance of Rs. 51,27,47,399/- made on account of deduction claimed u/s 80IC of the Act by the Assessee, thus by relying on the assessment order, sought for allowing the Appeal of the Revenue.
Per contra, t he Ld. Assessee's Representative submitted that out of total disallowance of Rs. 51,27,47,399/-, the disallowance made on account of duty drawback of Rs. 13,98,31,921/-has been already settled by the Assessee in VSVS-2020 and the Assessee has paid tax liability as per the said Scheme. Further in so far as remaining addition of Rs. 37,29,15,474/-which being other than Duty Draw Back, submitted that the A.O. while making the addition relied on the findings of assessment order for Assessment Year 2009-10 and denied the benefit, however, Tribunal in for Assessment Year 2009-10, vide order dated 14/06/2023held that the Assessee was manufacturing at Haridwar Unit and accordingly 80IC of the Act was allowed to the Assessee. Therefore, submitted that even in year under the consideration, there is no change of facts and circumstances, thus the Ld. CIT has rightly deleted the addition which requires no interference at the hands of the Tribunal.
We have heard both the parties and perused the material available on record. In so far as disallowance made by the A.O. on account of duty drawback of Rs. 13,98,31,921/-, the same has already been settled by the Assessee in VSVS-2020 and the Assessee has paid tax liability as per the said Scheme. Therefore, the Revenue cannot have grievance on the same.
In so far as remaining addition of Rs. 37,29,15,474/-, the Ld.
CIT(A) allowed 100% deduction on export profit. It is found that in the year under consideration, the A.O. while making the disallowance, relied on the findings and the conclusion of the A.O. made in assessment order pertaining to Assessment Year 2009-10, wherein it was held that, there was no manufacturing at Haridwar accordingly disallowance was made. However, the said issue for Assessment Year 2009-10 has been dealt and decided by the Co-ordinate Bench of the wherein vide order dated 14/06/2013, it is held that assessee carried out the manufacturing activity at Haridwar Unit and the Assessee is entitled for deduction under sec. 80IC of the Act in following manners:-
“24. Apart from the above, we have considered the report. The assessee has explained each page and each objections raised by the Assessing Officer. The survey has not been carried out on the premises of the assessee because it has already discontinued the business. In paragraph 4.2 of the learned First Appellate Authority has observed that as far as the material available inreport at Sr. Nos. '1 to 4, 6 to 9, 11 to 13, 15 to 71, 73 to 83, 93, 94 & 97 are concerned, the assessee has given a common reply that these documents are not related to the assessee firm because, it has closed the business. In the paper book, assessee has placed on record its reply on all the issues. In the report of the Assessing Officer, Sr. No. 1 talks about register pertaining to dying unit. It is annexure 63. The conclusion derived by the Assessing Officer is that this register has been found at the Gogal Road, Meerut Unit of the assessee, therefore, it may be concluded that dying operation is being performed at Meerut rather then Haridwar as claimed by the assessee. The reply of the assessee is available on page 206 of the paper book. It submitted that on page Nos. 1 and 2, dates mentioned are January 2012. Therefore, it is a register for dying unit. It does not relate to the business of the assessee which discontinued w.e.f. Ist of April 2009. Learned CIT(Appeals) has simply ignored this reply on the ground that it is a stock reply. When a business was discontinued in 2009 and the department is trying to co-relate the entries of 2012 with 2009, it is totally misapplication of mind. In the survey, the department ought to have collected the material for the period relevant to this assessment year. It should not have drawn the inference from the latest material found at the premises of new concern and then assumed that it must belong to the assessee in 2009. During the course of hearing, wehave confronted the Learned DR to pin point the material which pertains to the period of the accounting year involved in the present assessment year and then point out how that material suggests that assessee has not carried out any manufacturing activity. He drew our attention towards Sr. No. 96, or No. 86, Sr. No. 10 and Sr. No. 14 of the report. We have duly considered these material but they do not suggest that assessee has not carried out any manufacturing activity.
Apart from these aspects, learned counsel for the assessee took us through the assessment order passed by Dy. Commissioner, Central Excise under sec. 9(2) available
on page 452 of the paper book. He also took us through the sales-tax assessment order passed by Dy. Commissioner Sales-tax, Haridwar. Copy of this order is available on pages 453 to 458. These are scrutiny assessments. For assessment year 2008-09, these authorities have accepted the business turnover of the assessee. Learned Revenue Authorities have totally ignored these material on the record. It is true that whenever a conclusion has to be reached on an appreciation of a number of facts established by evidence, whether that was sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. The efforts of the Learned CIT(Appeals) is to reach the conclusionon the basis of circumstantial evidence but to our mind the inferences drawn by the Learned Revenue Authorities are not supported by the material or the circumstances. They are just on assumption and suspicion. Therefore, in our opinion, the assessee has carried out the manufacturing activity. It has been granted deduction under sec. 80IC of the Act from the last four assessment years. The department is unable to lay its hands on any concrete material which can force us to take a different view then the stand of the Assessing Officer in earlier four assessment years. Assessee is entitled for deduction under sec. 80IC of the Act.”
Further in Assessment Year 2010-11 to 2015-16, it has been held that the entity w.e.f. 01/04/2009 was a new entity, therefore 80IC of the Act was allowed w.e.f Assessment Year 2010-11 onwards as a new entity @100% for first five years and thereafter @ 25% for subsequent years. The relevant portion of the order of the Tribunal in reproduced as under:-
“17. The old Firm was dissolved vide deed of dissolution dated and effective from 01.04.2009, as per the copy of dissolution deed The assessee firm came into existence on 01.01.2009 which is evident from the copy of deed of partnership dtd. 01.01.2009 as per records which the A.O. wrongly noted in the assessment order as 01.04.2009. The said partnership deed has also been got registered with the "Registrar of Firms" vide certificate in "Form-A" dated 12.04.10. In this registration certificate, the date of joining has been specified as "01.01.2009". It shows that during the period 01.01.09 till 31.03.09, the old as well as the appellant firm, simultaneously existed. This construction of the dates persuaded him to reach to a diabolic conclusion that the old firm got closed and immediately new firm got started.
It is a fact on record that 1st export dispatch has taken on 05.05.2009. The old machinery has not been used as indicated by the invoices of the new machinery which was purchased from the third party. The evidences proves that it is a case where new plant & machinery has been acquired which was not previously used. Hence, the conditions for the eligibility of claim u/s 80IC in the case of a new industrial undertaking stands satisfied. Hence, we decline to the interfere with the reasoned order of the Ld. CIT(A).”
In view of the above facts and circumstances and by following Assessee’s own case for Assessment Year 2009-10, 2010-11 to 2015- 16, we find no reason to interfere with the findings and conclusion of the Ld. CIT(A). Accordingly, we find no merits in the grounds of Appeal of the Revenue, thus, the Grounds of Appeal of the Revenue are dismissed.
In the result, Appeal of the Revenue is dismissed.
Order pronounced in the open court on 26th September, 2025
Sd/- Sd/- (MANISH AGARWAL) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 26 .09.2025 R.N, Sr.P.S*