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2016 (1) TMI 458 - ITAT LUCKNOW

2016 (1) TMI 458 - ITAT LUCKNOW - TMI - Reopening of assessment - assessee has wrongly claimed deduction u/s 80IC - Held that:- Assessee has furnished the consolidated tax audit report and financial statement and the notes claiming deduction under section 80IC of the Act. During the course of assessment proceeding and thereafter claim was allowed in other assessment years. Now, the Assessing Officer has taken a different stands for reopening the assessment without looking into the fact that in s .....

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and machinery of ₹ 37,52,759/- was made during relevant assessment year as compared to NIL opening balance as on 01.04.2008 being new undertaking/enterprises. Therefore, we are of the view that the assessee is entitled for deduction u/s 80IC of the Act as the addition to the plant and machinery is required to a particular undertakings and not the assessee as whole. - Decided in favour of assessee. - ITA Nos.842/LKW/2014 - Dated:- 19-11-2015 - SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SH .....

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ovisions of the Act, simply relying on the submission of assessee made before him. the CIT(A) failed to appreciate that the assessee did not disclose complete facts during the course of assessment proceeding by not furnishing separate Tax Audit Report in Form No.1OCCB for Sitarganj Unit as prescribed under Rule 18BBB of the Income Tax Act, 1962. 2. The Commissioner of Income Tax (A), Lucknow has erred in law and on facts of the case in deleting the addition made on account of disallowance of ded .....

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8377; 24,14,81,160/- and the assessment was completed u/s 143(3) of the Act, assessing the total income of ₹ 24,19,80,973/-. Having formed a belief on the basis of assessment framed for the AY 2010-11 that the assessee does not disclose the complete facts necessary for the AY 2009-10 and has wrongly claimed deduction u/s 80IC of the Act for AY 2009-10 in respect of Sitarganj Unit, the Assessing Officer issued notice u/s 148 of the Act and reopened the assessment. In compliance of notice u/ .....

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52,759/- made to plant & machinery alone in the relevant financial year, and substantial expansion is to be construed for Sitarganj undertaking only as the words present in sub section (2) of Section 80IC of the Act is undertaking or enterprise alone and not assessee or assessee as a whole. It was further contended that the assessment of the assessee was completed after numerous hearing had taken place and the AO had examined all possible issues including claim u/s 80IC of the Act. The Asses .....

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sessment, on the ground that the Assessing Officer has allowed deduction u/s 80IC in other assessment years and these facts were not taken into account by him while reopening the assessment. Therefore, reopening was done on the basis of change of opinion. On merit also, Ld. counsel for the assessee has contended that assessee has furnished tax audit report alongwith the return of income and there was no requirement of law to prepare a separate tax audit report for the unit on which deduction is .....

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as deleted the addition, in the light of consolidated tax audit report and separate financial statement in respect of Sitarganj Unit filed before him. The relevant observations of the CIT(A) is hereunder for the sake of reference: I have examined the reasons recorded u/s 147 of the Act for issue of notice u/s 148, finding given by the A.O. in assessment order and written submissions of appellant finding during appellate proceedings and assessment records of Assessment Years 2009-10 & 2010-11 .....

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proceedings. During the appellant proceedings the appellant was directed to furnish all evidences to prove the correctness and genuineness of the claim u/s 80IC of the Act of ₹ 1,50,09,117/- . In compliance to said query raised the appellant has again filed copy of tax audit report, consolidated and separate financial statement in respect of Sitarganj Unit, report in form No. 10CCB for claim of deduction u/s 80IC, bills & vouchers of Plant & Machinery installed in Sitarganj Unit, .....

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said proper and justified as per provisions of I.T. Act. The A.O. himself examined all the relevant records at the time of regular assessment proceeding in respect of claim of deduction u/s IC of the Act of ₹ 1,50,09,117/- . Therefore, I find much force in the argument of appellant that the initiation of proceedings u/s 147 of the Act and issue of notice_u/s 148 of the Act is bad in law and contrary to the provisions of IT Act. The AO has wrongly assumed the jurisdiction u/s 147/ 148 of t .....

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pra and contended that the assessee company, fulfilled all the conditions laid down u/s 80IC of the Act. Therefore, the A.O. should have allowed its legitimate claim made u/s 80IC of the Act of ₹ 1,50,09,117/- . I have examined the written submissions of appellant filed during appellate proceedings, finding given by A.O. in assessment order, assessment records of A.Y. 2009-10 & 2010-11 , scrutiny assessment order framed u/s 143(3) of the Act of A.Y./ 2009-10, 2010-11 and 2011-12 and ta .....

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e A.O. himself allowed the claim of deduction u/s 80IC after verification from relevant records i.e. copy of ITR of appellant, relevant tax audit reports & notes of accounts given in tax audit report etc. as mentioned above in A.Yrs. 2009-10,2010- 11 & 2011-12, therefore, there was no reason to withdraw the claim u/s 80IC which was allowed in original assessment proceedings of A.Y. 2009-10. The A.O. has mentioned in the reasons recorded u/s 147 of the Act that substantial expansion did n .....

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d from the Sitarganj Unit situated at Uttarakhand. I have examined the copy of P&L A/c and Balance sheet & its annexures and I found that the appellant has established the complete new unit at Sitarganj during the assessment year under consideration and manufacturing and sales took place in the assessment year under consideration. Since the entire investment in Sitarganj Unit in Plant & Machinery of ₹ 37,52,759/- was made during relevant assessment year as compared to NIL openi .....

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ssment year under consideration, therefore, the condition of substantial expansion as stated in the provisions of sub section (8) of 80IC of the Act is fulfilled. The A.O. has not properly appreciated the applicability of the relevant provisions of I.T. Act, 1961 u/s80IC, Looking, into the above facts on_merit also the disallowances made by the AO u/s 80IC of the Act of ₹ 1,50,09,117/- cannot be said proper & justified and same liable to be deleted. The A.O. is directed to delete the a .....

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f the orders are placed on pages 195 to 207 of the compilation of the assessee. Our attention was also invited to the assessment order for AY 2012-13 in which the Assessing Officer has recorded in his order that the claim of the assessee u/s 80IC of the Act was also examined by the AO in AY 2011-12 before allowing the same. It was further contended that though in AY 2011-12, the claim of the assessee was allowed but the assessment was not reopened by the AO u/s 148 of the Act. Ld. counsel for th .....

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dual financial statement may be filed. The assessee has furnished the requisite information before the Assessing Officer in order to establish that there was no opening balance of plant and machinery in Sitarganj undertaking and the entire amount reflecting as gross book value is on account of additions aggregating to ₹ 37,52,759/- made to plant & machinery alone in the relevant financial year. Ld. counsel for the assessee has also placed reliance upon the following judgments in suppor .....

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sing Corporation [2015] 58 taxmann.com 225 (Del) vii) CIT Vs. Tourism Finance Corporation of India Ltd. [2008] 173 taxmann 409 viii) CIT Vs. Chintoo Tomar [2015] 54 taxmann.com 289 ix) CIT Vs.Vaishali Avenue [2014] 48 taxamnn.com 289 x) CIT Vs. India Rare Earths Ltd. [2015] 61 taxmann.com 179 xi) GKN Sinter Metals Ltd. Vs. ACIT [2015] 55 taxmann.com 138 xii) Pine Chemicals Ltd. Vs. DCIT [2015] 57 taxmann.com 302 xiii) IBS Software Services Pvt. Ltd. Vs. Union of India [2015] 59 taxamann.com 96 x .....

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to the extent of 100% of profit. Accordingly, same has been claimed in the income tax return of the year. It was further contended that since all these information were available before the Assessing Officer, it cannot be said that he has not applied his mind before allowing the claim of the assessee u/s 80IC of the Act. On merit, Ld. counsel for the assessee has contended that the assessee has made the addition in plant and machinery amounting only to ₹ 37,52,759/- in Sitarganj Unit, the .....

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o there was no detailed discussion in this regard. 8. Though the assessment was reopened on 17.06.2013 for AY 2009-10, but no interference was made in the assessment order passed in AY 2010-11 on 22.12.2012 allowing the deduction u/s 80IC of the Act. It is also evident from record that other in AYs 2011-12 and 2012-13 deduction u/s 80IC was allowed and in the order for AY 2011- 12 the AO himself has observed that Assessing Officer has made an enquiry while allowing the claim of deduction u/s 80I .....

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eassessment proceedings, assessee has filed the consolidated tax audit report along with financial statement of the Sitarganj Unit on which deduction u/s 80IC was claimed. 9. We have also carefully examined various judicial pronouncements rendered on this issue and we find that in those judgments it has been repeatedly held that whenever the Assessing Officer has allowed the claim of the assessee having applied his mind the reopening of the assessment is not possible as it amount to the change o .....

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In that case, assessee has filed a note indicating the manner in which it had worked out its claim for deduction under 80-IA. The note indicated that the expenses were allocated between the three manufacturing units on basis of their turnover. Similarly in the instant case, the assessee has given a note in the auditor s report that Sitarganj Unit in Uttrakhand State has commenced commercial production w.e.f. 02.02.2009. The company is eligible for deduction u/s 80IC of the Act to the extent of 1 .....

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ential and basic documents which are to be necessarily examined before grant of exemption under section 10A are not gone into, then it is default of officer concerned and not assessee. 10.2 In the case of Pine Chemicals Ltd. Vs. DCIT reported in 57 taxmann.com 302 (Gujarat), the lordship of Gujarat High Court has held that the Tribunal was not right in holding that assessment was validly reopened under section 147, in spite of the fact that all primary facts were disclosed by the appellant in th .....

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