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2018 (6) TMI 1536 - AT - Income TaxCondonation of delay filing appeal - Deduction u/s. 80IB denied on job work income earned in mixing of rubber compounds - delay in filling appeal - delay of 2819 days - sufficient cause - reason for delay - period of limitation - Held that - If the application of the assessee for condoning the delay is rejected it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution the Government cannot retain even a single pie of the individual citizen as tax when it is not authorised by an authority of law. Therefore if we refuse to condone the delay that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore in our opinion by preferring the substantial justice the delay of 2819 days has to be condoned. Whether 2819 days was excessive or inordinate? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause the period of delay may not be relevant factor. In fact the Madras High Court in the case of CIT v. K.S.P. Shanmugavel Nadai and Ors. 1984 (4) TMI 24 - MADRAS HIGH COURT considered the delay of condonation and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years 2819 days cannot be considered to be inordinate or excessive. In this case the issue on merit regarding granting of deduction u/s. 80IB was covered in favour of the assessee by the Judgment of the jurisdictional High Court. Therefore for the purpose of advancing substantial justice which is of prime importance in the administration of justice the expression sufficient cause should receive a liberal construction. Thus we condone the delay of 2819 days in filing the appeal and admit the appeal for adjudication. With regard to the deduction u/s.80IB on the job work income earned in mixing of rubber compounds which came up before this Tribunal in assessee s own case 2014 (1) TMI 1037 - ITAT COCHIN there is nothing in the section to indicate that article or thing produced or manufactured should be final product in itself. So much so the activity of the assessee in their new industrial unit which is mixing rubber with chemicals process oil etc. making compound rubber is covered by section 80IB of the Act - Decided in favour of assessee.
Issues Involved:
1. Deduction under Section 80IB of the Income Tax Act. 2. Delay in filing the appeal before the Tribunal. Detailed Analysis: 1. Deduction under Section 80IB of the Income Tax Act: The primary issue revolves around the assessee's claim for a deduction under Section 80IB amounting to Rs. 67,52,946/-. The assessee included mixing charges in the income eligible for this deduction. The Assessing Officer (AO) contested this inclusion, arguing that the deduction under Section 80IB is available only to profits derived from manufacturing activities. Mixing, according to the AO, is merely one of several processes involved in manufacturing tread rubber and does not constitute a complete manufacturing process. Consequently, the AO concluded that the assessee was not entitled to the deduction for job work mixing charges. Upon appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's decision. The assessee then appealed to the Tribunal, which had to address the merits of whether the income from job work mixing of rubber compounds qualifies as "manufacturing or production" under Section 80IB. The Tribunal referred to the jurisdictional High Court's decision in the assessee's own case, which had previously determined that the production of compound rubber, even on a job work basis, qualifies as manufacturing or production. The High Court had emphasized that the term "production" includes bringing into existence new goods through processes that may not amount to full-fledged manufacturing. Thus, the Tribunal concluded that the assessee's activity of mixing rubber with chemicals to produce compound rubber falls under the purview of Section 80IB, entitling the assessee to the claimed deduction. 2. Delay in Filing the Appeal Before the Tribunal: The appeal was filed with a delay of 2819 days. The assessee submitted a condonation petition, accompanied by an affidavit, explaining that the delay was due to an inadvertent omission by their Chartered Accountant (CA), who mistakenly believed that the appeal had been filed. The Tribunal had to decide whether this explanation constituted "sufficient cause" for condoning the delay. The Tribunal considered several precedents, including the Supreme Court's judgment in N. Balakrishnan vs. M. Krishnamurthy, which held that substantial justice should be preferred over technicalities when there is no deliberate delay. The Tribunal also referenced various decisions from other cases where delays caused by CA's mistakes were condoned, emphasizing that such mistakes, if bona fide, should not deprive a party of justice. The Revenue argued against condonation, citing the inordinate length of the delay and the assessee's negligence. However, the Tribunal noted that the primary consideration should be the advancement of substantial justice. The Tribunal found the assessee's explanation credible and not indicative of any malafide intent or negligence. It emphasized that the judiciary's role is to remove injustice rather than uphold technicalities that would perpetuate it. The Tribunal, therefore, condoned the delay, allowing the appeal to be heard on its merits. It reiterated that the substantial justice principle should prevail, especially when the issue on merit was already decided in favor of the assessee by the jurisdictional High Court. Conclusion: The Tribunal allowed the appeal filed by the assessee, granting the deduction under Section 80IB for the job work income from mixing rubber compounds. The delay of 2819 days in filing the appeal was condoned, emphasizing the importance of substantial justice over technical considerations.
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