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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
सुनवाई क� तार�ख / Date of Hearing :01.02.2016 घोषणा क� तार�ख /Date of Pronouncement :05.02.2016 आदेश / O R D E R
PER C.N. PRASAD, JM:
This appeal is filed by the Revenue against the order of the Ld. CIT(A)-1, Mumbai dated 14.03.2014 pertaining to assessment year 1996-97.
The only issue in the appeal of the Revenue is that the Ld. CIT(A) erred in directing the AO to allow deduction u/s. 80IA of the Act as claimed by the assessee in respect of Daman Unit.
The Ld. Counsel for the assessee at the outset submits that an identical issue in assessee’s own case come up before Hon’ble Tribunal, Mumbai Bench for assessment year 1994-95 in ITA No. 6397/M/2002. The Ld. Counsel submits that by order dated 31.12.2008, the Co-ordinate Bench allowed the claim of the assessee u/s. 80IA in respect of the unit at Daman. He prays that the appeal of the Revenue may be dismissed following the order of the Tribunal in assessee’s own case for the earlier assessment year.
The Ld. Departmental Representative placed reliance on the assessment order in denying the deduction u/s. 80IA of the Act.
We have perused the orders of the lower authorities and also perused the order of the Co-ordinate Bench in assessee’s own case for the assessment year 1994-95, wherein it was held that the assessee is entitled for deduction u/s. 80IA of the Act. While holding so, the Co-ordinate Bench held as under:
Regarding ground No. 1 the A.O. held that the assessee company had established a unit by reorganization of existing business by amalgamation of Ecomax Agro System and Biosense Crop Protection which was sanctioned on 27.01.1994 by Hon'ble Bombay High Court, hence, assessee is not entitled for deduction in view of provisions of section 80IA(2)(i)(ii). He also held that no product was manufactured by the new unit. Deduction under section 80I is not allowable in case of assessee who manufactures or produces article after 31.03.1991. Since the assessee began manufacturing from 01.05.1993 deduction was not available.
3. On appeal the learned CIT(A) deleted the disallowance stating that the A.O. has confused between section 80I and 80IA. The date of commencement of production was apparently taken from section 80I instead of 80IA. Deduction under section 80I is not available to manufacturer of producer who begins manufacture after 31.03.1991 but deduction under section 80IA was eligible to manufacturer who begins manufacture or produces between 01.04.1993 to 31.03.2000. He further held that the A.O. was also confused about assessee company and the industrial undertaking of company at Daman. That three other units amalgamated with assessee company by itself will not disentitle the assessee company from claiming deduction under section 80IA. What is important is that unit set up by the assessee company at Daman should be eligible for deduction under section 80IA(7) and (9). Under section 80IA (7) the business of industrial undertaking has to be treated separate from other unit of business of the company and section 80IA(9) empowers A.O. to compute profit of the unit if he finds that the deduction has been claimed at a higher figure through inter unit transactions. Therefore amalgamation of three other companies with assessee company in 1994 does not by itself effect the deduction under section 80IA available to Daman unit of assessee company. Further the assessment done under section 143(3) for assessment year 1995-96 and 1996-97 also show that A.O. has accepted the eligibility claim of the assessee's unit at Daman.
4. The learned D.R. placed strong reliance on the findings of the Assessing Officer. He submitted that the company namely Biosense Crop Protection incorporated on 27.03.1992, Ecomax Agro System incorporated on 16.12.1991 and Good value Agro Products Ltd. have merged with assessee company with appointed date 01.08.1993. As per amalgamation scheme approved by Hon'ble Bombay High Court all asset and liabilities of all three units companies stand transferred to assessee w.e.f. 01.08.1993. He further submitted that as per the findings of the A.O. vide para 5 of his order, Boisense company was having a pheromone Trap Factory unit a Daman and Ecomax was having CDA Sprayer unit at Daman. The machinery, plants and other fixed assets were taken over by the assessee company at its Daman unit. Thus the Daman unit of assessee was formed with the transfer of machinery or plant previously used for any purpose (section 80IA(2) (II)). Thus the assessee company including Daman unit was formed by splitting up and reconstruction of business already in existence. Thus condition laid down in section 80IA(9)(2)(i) and (ii) are not satisfied, therefore, the A.O. has rightly held that assessee is not entitled to deduction under section 80IA. He further submitted that as per the finding of the A.O. in last para of his order, the Daman unit of Biosense and Ecomax were earmarked for production of Pheromone Trap and CDA Sprayers and A.O. held further that it noticed that assessee has not produce any new product after establishing a new industrial undertaking. Thus the income of Daman unit shown and claimed as deduction under section 80IA which was earned by these units after amalgamation. The learned CIT(A) without calling remand report from the A.O. has accepted the claim of assessee at the back of A.O. The new version submitted by the assessee without referring for the verification hence there is violation of natural justice and amounts to admission of additional evidence. He relied on the decision of Hon'ble Gauhati High Court in CIT vs. Ranjit Kumar Choudhury (2007) 288 ITR 179 (Gau.) which held that where there was no reason for failure to adduce evidence before A.O. – document not admissible as evidence before learned CIT(A) under rule 46A – learned CIT(A) got power not to admit evidence. He further submitted that the claim of the assessee that in subsequent assessment year the A.O. allowed claim of assessee, it is submitted that in subsequent year it may be the income from Daman unit of assessee set up originally and not formed by reconstruction/splitting. Moreover the principle of res judicata does not apply to income tax proceedings. Every assessment year is an independent assessment and hence even where a particular issue was never examined by the Assessing Officer in earlier years, the A.O. is not debarred from adjudicating said issue in relevant assessment year. (DCIT vs. Ram Gopal & Sons 155 Taxman 223 ITAT Mumbai 'G' Bench.). Further Doctrine of Estoppel does not apply in case of successive assessments, that an assessment is complete in itself and the taxing authorities are not bound by any contention it took up on one assessment, when the question arises with regard to different assessment ( Kantilal Chimanlal Shah 26 ITR 303 (Bom)).
5. Without prejudice the learned D.R. also submitted that the assessee had other incomes by way of technical transfer fee, dividend, interest income totalling to Rs.15,85,118/- which should not be considered as unit income to allow deduction under section 80IA.
The learned counsel submitted the facts with the support of paper book and affidavits that the unit at Daman was separate and distinct and the claim was made correctly.
We have considered the issue. The learned CIT(A) has given the following findings: - "4.4 I have carefully considered the above. It appears that the Assessing Officer is confused between section 80I and 80IA of the Act. At some places he is referring to section 80I and some other places he is referring to section 80IA. The date of commencement of production has been taken apparently from sec. 80I, instead of sec. 80IA. Secondly, the Assessing Officer is also confused about the Appellant company and the industrial unit of the Appellant company at Daman. The three other units amalgamated with the Appellant company, by itself will not disentitle the Appellant Co. from claiming the deduction u/s. 80IA of the Act. What is important is that the unit set up by the Appellant company at Daman should be eligible for the deduction u/s. 80IA of the Act. The sub-sections 80 IA(7) and (9) themselves make this position clear. 4.6 U/s. 80 IA(7), the business of the industrial unit has to be treated as one, separate from the other units of business of the Appellant for computing the eligible profit and the allowable deduction. Sec. 80 IA(9) empowers the Assessing Officer to compute the profit of the unit if he finds that the deduction has been claimed at a higher figure through inter-unit transactions. Therefore, the amalgamation of three other companies with the Appellant company in 1994 does not by itself affect the deduction u/s. 80IA available to the Daman unit of the Appellant Company. The regular assessments done u/s. 143(3) of the Act for A.Ys. 1995-96 and 1996-97 also show that the Assessing Officer have in those assessments accepted the eligibility of the Appellant's unit at Daman for the deduction, for the post-amalgamation periods. In the facts and circumstances of the case, the disallowance of deduction u/s. 80 IA of the Act done by the Assessing Officer is not sustainable for non-application of mind to the facts of the case and misapplication of law as discussed above. Accordingly, it is deleted. This ground of appeal is allowed." As seen from the facts on the record, we are of the opinion that the A.O. has indeed misled himself in considering the merger of other units in different perspective. So we are in agreement with the findings that the unit is entitled for deduction u/s. 80IA. However, as far as the quantum of deduction is concerned, eventhough the A.O. raised question about the other income included in the P & L Account, these were not examined as he disallowed the claim entirely. In the interest of justice, we restore
the issue of considering the nature of other income and whether they can be part of unit income while considering the deduction under section 80IA. To this limited extent the matter is restored to A.O. to consider these other incomes afresh. Ground partly allowed.
Respectfully following the decision of the Tribunal, we uphold the order of the Ld. CIT(A) and allowing the claim of deduction u/s. 80IA of the Act to the assessee. 6. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 5th February, 2016.