TMI Blog2012 (8) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... rs by the Department, as there is no change of facts and circumstances. - IT APPEAL NO. 494 (MUM.) OF 2006 - - - Dated:- 13-4-2012 - P.M. JAGTAP, AMIT SHUKLA, JJ. For the Appellant: Arvind Sonde For the Respondent: Dinesh Kumar ORDER Amit Shukla, Judicial Member This appeal has been filed by the assessee against order dated 19.08.2005 passed by CIT-XII, Mumbai for the quantum of assessment for the Assessment Year 2000-01. 2. The appeal is barred by limitation by 91 days. Along with the appeal, the appellant has filed a petition for condonation of delay accompanied by an affidavit of partner Shri Chirag Pramod Shah. The reasons for condonation of delay has given by the appellant on the following grounds :- 1. The Order of the CIT(A) dated 19th August, 2005 was served at our office was received by Shri Girish B. Doshi. He did not note down the date of communication of the order. 2. As Shri Girish B Doshi, proceeded on unscheduled leave for certain personal reason, he did not communicate the receipt of the order to any of the partners/responsible persons of our firm. 3. Only on 17th January, 2006, when he returned from leav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 16.01.2004 after recording the reasons (the copy of which has been placed in the paper book from pages 43 to 44A). After the notice was served upon the assessee, it vide letter dated 15.10.2004 intimated to the Assessing Officer that the return filed originally should be treated as return in response to notice u/s.148. Thus in terms of letter dated 15.10.2004, the assessee filed its 'return' in response to the notice u/s.148 based on original return, wherein the claim for deduction u/s.80IB was made. Subsequently on 09.03.2005, such a return was revised, whereby the entire claim made u/s.80IB was withdrawn by the assessee. The so called 'revised return' was accompanied by a letter dated 07.03.2005 giving the reasons for withdrawing the claim (the copy of which has been placed in the paper book at pages 75 to 76). 5. The assessee is a partnership firm which was formed as per the Partnership Deed dated 15.12.1998. It is engaged in the business of manufacturing of pre-fabricated steel buildings from the factory situated at Silvasa. The Assessing Officer noted that in the balance sheet as on 31.03.1999, relevant to the Assessment Year 1999-2000, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in the A.Y. 1999-2000, he further proceeded to examine, whether the business had started from the new industrial undertaking. It has been observed by the Assessing Officer that the assessee had started its business from a lease premises 102/11, Madhubon Dam Road, Rakholi, Silvasa taken from M/s. Steel Fab Engineering Corporation (Silvasa) (a different unit), which was carrying on a similar business and it had closed its business as on 31.03.1999. The machinery which was used by M/s. Steel Fab Engineering Corporation (Silvasa) was sold to the sister concern M/s. Steel Fab Engineering Corporation (Kashmira, Mumbai) (again a different unit) for a sum of ₹ 4,63,890/-. The Assessing Officer after enquiry has even doubted the said purchase and shifting of machinery from Silvasa to Kashmira. From the entire information gathered as above, he came to the conclusion that the assessee had not started the manufacturing activities from the beginning of the year but only when the new machinery alleged to have been purchased by them upto March 2000. The crux of the finding of the Assessing Officer as summarized by him in paras 9 and 10 of the assessment order is that the assessee may hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent machineries and equipments for carrying out of manufacturing activities and there was no common customer also. Thus, on these facts, it was contended that it is neither a case of splitting nor reconstruction of business already in existence. ( ii ) As regard to the second condition that the new industrial undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose. The assessee contended that; ( a ) it had filed bills, transport receipts and other evidences to show that the new plant machineries have been purchased; ( b ) prior to assessment year 2000-20001, i.e. for the assessment year 1999-2000 it was carrying out manufacturing activities from the machines purchased from M/s Jyoti Traders and in support of which all the relevant documents and confirmation was filed which include, invoice copies received from Sales Tax Department, guarantee certificate issued by M/s Jyoti Traders, delivery challan for machinery purchase and account confirmation from M/s Jyoti Traders. (The other set of evidences have been discussed in para 3 of page 6 of the appellate order.) ( c ) further it was neve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to this notice but wrote a letter dated 15.10.2004 filed on 28.10.2004 stating that original return filed on 31.10.2000 should be treated as return in response to notice u/s 148. After the detailed inquiries and investigation made by the Assessing Officer, he came to the conclusion that appellant's claim u/s 80-IB is not allowable. The appellant suo-motu filed a return on 09.03.2005 withdrawing its claim u/s 80-IB of the IT Act. In appellate proceedings before me, it is argued that the return filed by the appellant is not a valid return and the Assessing Officer should not have taken cognizance of the revised return filed on 09.03.2005. This argument of the appellant cannot be accepted now. The appellant is aided and advised by competent CAs and tax consultants. The revised return filed on 09.03.2005 must have been filed after consulting the appellant's CA. However, after perusing the Appellant's submissions, I notice that the Appellant seems to fulfil all the conditions stipulated in section 80IB of the I.T. Act, 1961 but since the Appellant itself suo moto has withdrawn his claim u/s 80 IB by filing revised return on 9.3.2005, I decline to interfere in the matter. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on such return, reliance was placed on the following decisions :- ( i ) CIT v. Bharat General Reinsurance Co. Ltd. [1971] 81 ITR 303 (Delhi.); ( ii ) P.T. Sheo Nath Prasad Sharma v. CIT [1967] 66 ITR 647 (Allahabad); ( iii ) Shankar R. Mhatre v. Asstt. CIT [2009] 117 ITD 241 (Mum.); and ( iv ) Nirmala L. Mehta v. A. Balasubramaniam , CIT [2004] 269 ITR 1/139 Taxman 394 (Bom.). 16. On the strength of these decisions, he argued that surrendering of claim through a letter or withdrawing the claim by way of an invalid revised return, there cannot be estoppel for assessee for making the claim before the appellate authorities, which if otherwise is allowable on facts and circumstances of the case. 17. Per Contra, learned Senior D.R. submitted that firstly, all the case laws as have been referred to by the ld. counsel are not applicable and secondly, when the assessee itself has suo motu revised the return for withdrawing the claim, it cannot be now, at this stage, be allowed to take the plea for the claim under Section 80IB. The surrender or withdrawal of claim by the assessee was not a voluntary action but was done only when the AO has car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim u/s 80IB by filing revised return on 9.3.2005, I decline to interfere in the matter. ( c ) In pursuance of Sr.A.R. letter dated 26.11.2008, the Department vide letter dated ACIT 12(3)/ITAT/2008-09 dated 13.01.2009 filed the Cross objection before CIT (DR), ITAT on 14.01.2009. ( d ) As soon as the AO received the direction of the Sr. A.R. to the cross objection the same has been filed with the reasonable time after obtaining the approval from the CIT-12, Mumbai on 14.01.2009, before the Hon'ble ITAT. Prayer : It is submitted that the cross objection has been filed before the Hon'ble ITAT against the following observation of the CIT(A) in the order dated 19.08.2005. the Appellant seems to fulfill all the conditions stipulated in section 80IB of the I.T. Act, 1961 but since the Appellant itself suo moto has withdrawn his claim u/s 80IB by filing revised return on 9.3.2005, I decline to interfere in the matter. While making the above observation, no specific reasons were given by the Ld. CIT(A). However, in this case, there was survey u/s.133A and A.O. has conducted thorough enquiries and came out to the conclusion that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso perused the facts and material placed on record. 23. First of all, we will advert to the issue as to whether under Rule 27, the Department can challenge the finding of the CIT(A), stating that the assessee seems to fulfil all the conditions stipulated in Section 80IB , even though in final conclusion, he had decided the issue against the assessee. Rule 27 provides that the respondent, though he may not have appealed, may support the order appealed against on any of the grounds decided against him. This rule enables the respondent to challenge any of the finding decided against him, even though he has neither come in any appeal nor has filed any Cross Objection, as in the final conclusion, the issue has been decided in his favour. We are unable to agree with the contention of the learned Senior Counsel that this rule is only meant for the assessee and not for the department. The rule per se does not distinguish between the department and the assessee as it gives the right to the respondent, which can be department also and it is permissible for the department as a respondent to defend the order of CIT(A) on any other ground which has been decided against it. Rules 11 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged the finding of the Assessing Officer that the conditions required for claiming deduction under Section 80IB stands fully satisfied and all such evidences and enquiry as done by the AO will not render the claim of the assessee infructuous. A detail rebuttal was given by the assessee before the CIT(A) and the claim for 80IB was strongly pleaded for. 27. It is quite a settled proposition that any claim for deduction under Income Tax Act are dependent upon the conditions laid down under the provisions of the Act and there are requisite formalities which are required to be done as per the law. Once these conditions are fulfilled, the assessee is entitled for statutory deduction or claim to which he is entitled to. Mere consent or acquiescence by the assessee cannot take away the otherwise a legitimate claim to which he is entitled to. It is an admitted position of law that an admission or acquiescence cannot be a foundation for assessment where the income is returned under erroneous impression or misconception of law. It is otherwise open to the assessee to demonstrate and satisfy the authorities concerned that his particular income was not taxable or claim for deduction is oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r himself has admitted that old machinery was found in the survey operation at the factory premises during the financial year 1999-2000 i.e. AY 2000-2001 and has also observed that it may have used it for the production purpose. From this, it can be safely inferred that the assessee was engaged in manufacturing of building material situated at Silvasa even in the assessment year 1999-2000. 29. In the impugned assessment year, the Assessing Officer has denied the claim on the ground that most of the new plants and machineries were purchased during the relevant year only and that to be from 4th February, 2000 to 27th March, 2000 and, hence, these machineries were not ready for use as on 1-4-2000. Therefore, the claim under Section 80IB for manufacturing the products from an industrial undertaking during this year, is not fulfilled. Once it has been accepted that the assessee was engaged in the manufacturing of building material in the assessment year 1999-2000 and there is no contrary evidence to show that it has ceased to carry on such activities in the relevant year, we are unable to concur with the finding of the AO simply on the ground that the new machines were purchased in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. 31. Now, coming to the second condition that the new industrial undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose , also stands satisfied, which is evident from the fact that the Assessing Officer himself has admitted that the new plant and machinery has been purchased and it is not his case that the assessee was previously using its new plant and machinery. The last condition that it manufactures Article not included in Eleventh Schedule and has employed more than 10 workers is not in dispute. Thus, all the conditions laid down under Section 80IB stands fully satisfied in the case of the assessee and claim for deduction under Section 80IB cannot be denied in this year based on the findings given by the Assessing Officer or by the virtue of surrender of claim before the Assessing Officer. It is a duty casts upon the Assessing Officer or to the appellate court to see that if a deduction or a claim for exemption is statutory allowable, then the same has to be allowed, if the assessee fulfils the prescribed conditions required under the statute. 32. In view of our findings, we, accordingly reverse the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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