TMI Blog2016 (5) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... s claim of deduction/s 80IB of the Act.- Decided against assessee - I.T.A. No. 2046/Mds. /2015 - - - Dated:- 10-2-2016 - Shri Chandra Poojari, Accountant Member And Shri G. Pavan Kumar, Judicial Member For the Appellant : Mr. Sarojkumar Parida, Advocate For the Respondent : Mr. R. Duraipandian, JCIT, D.R ORDER Per Chandra Poojari, Accountant Member This appeal is filed by the Assessee is directed against the order of the Learned Commissioner of Income Tax(A)-11, Chennai dated 26.02.2015 pertaining to the assessment year 2004-05. 2. There is a delay of 124 days for filing the appeal. The assessee filed a petition for condonation of delay stating that the order of CIT(A) was received by the assessee on 06.04.2015 and appeal should have been filed on or before 06.06.2015. However, it was actually filed on 07.10.2015, thereby there was a delay of 124 days. It was further submitted that the filing work was entrusted to Mr.N.Gopalan, who had left the services vide his resignation letter dated 29.04.2015 and thereafter in his absence, there was no competent person to care of the taxation matter. Being so, it has taken time to identify the counsel for filing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order. For this purpose, he relied on the judgment of Bombay High Court in the case of CIT Vs. Jet Airways (I) Ltd., reported in 331 ITR 236. On the other hand, ld.D.R relied on the order of Ld. CIT(A). 7. We have heard both the parties and perused the material on record. The assessment year involves in this case is 2004-05. The original assessment was completed in this case on 21.12.2006 and re-opening of assessment notice was issued to the assessee u/s.148 of the Act on 30.03.2011 with the reasons that in the case of the assessee M/s. TTK LIG limited, during the last Year 2004-05, the investments as on 31.03.2004 stands at `51,46,64,200/- being investments in mutual funds and subsidiaries and joint venture partner, the income from which is not includible in the total income. The assessee company M/s. TTK LIG Limited while computing income chargeable to tax has not disallowed the expenditure Incurred in relation to the above, the income from which does not form part of the total income as per Section 14A (1) of the Income-tax Act, 1961. Hence, the same needs to be disallowed. Reliance in this regard is also placed on the decision of the Hon ble ITAT in the case of Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 147 r.w.s 148 of the Act. There cannot be two opinions. The point of time when the reasons are recorded after forming opinion of escapement of income is only relevant. Hence, this plea of the ld.AR is not tenable in the eyes of law. It is true that u/s.147, the Assessing Officer can either assess or reassess but for taking action thereunder, he has to record reasons that income chargeable to tax has escaped assessment . It is also mandated by section 148(2) to record reasons in writing. The reassessment proceedings u/s 147 are further subject to sections 148,149,150,151,152 and 153. But in the present case, we are required to decide the limited issue regarding the validity of proceedings undertaken after four years of the assessment year in question. The Assessing Officer is required to see if the conditions laid in Explanation 2(c) because in this case the assessment was completed u/s 143(3) are satisfied or not. In case, (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low rate; or(iii) such income has been made the subjective of excess relief under this Act; or (iv) excessive loss or depreciation allowance or any other a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary for his assessment for that assessment year. There are two other conditions which are not relevant for deciding the legal issue under appeal. We have to see as to what failure of the assessee to disclose fully and truly all material facts signify. The expression failure to disclose material facts has been explained in the Taxman s Direct Taxes Manual Volume 3. It is true that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure can be even false or true. It may be a full disclosure or it may not be a full one. A part disclosure many a times may be misleading one. What is required under the law is a full and true disclosure of all material facts necessary for making assessment for that year. This law was laid down by the Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd etc vs ITO Others, 221 ITR 538. The words omission or failure to disclose fully and truly all material facts necessary for assessment for that year postulates a failure of the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the assessee has disclosed all the material fact necessary for the purpose of assessment. The assessee must have brought to the notice of the AO the decision of the Special Bench in the case of Cheminvest Ltd.v. ITO New Delhi (supra). The failure of the assessee to consider the application of this Special Bench decision is also failure on the part of the assessee to disclose all the material fact fully and truly for the purpose of assessment . As such reopening is valid. Further, the assessee has taken a plea that in view of the judgement of Bombay High court in the case CIT Vs. Jet Airways (I) Ltd., cited supra, the AO cannot travel beyond the reasons recorded. In our opinion, this argument holds no water. In that case Hon ble Bombay High Court held that AO may assess or reassess the income in respect of any issue which comes to his notice. Subsequently, in the course of the proceedings, though the reasons for such issue were not included in the notice, however even if issuing of notice u/s.148, the AO accepted the contention of the assessee and holds that the income which he has initially confirmed the reasons to believe, had escaped assessment, as a matter of fact not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss referred to in sub- sections (3) to (11) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :- (i) It is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a result of the re- establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose; (iii) It manufactures or produces any article or thing, not being any article or thing specified in the list in the Elev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of caps for packaging or other fittings of cork, rubber, polyethylene or any other material. It is the case of the assessee that its product manufactured, i.e. rubber contraceptives or condoms, are not covered by Articles 27 28 whereas the Revenue s stand is that the same is hit by the said schedule. Now, the moot question before us as to whether a condom is covered by the Eleventh Schedule entries Nos.27 28 or not? After perusing the statutory provisions, we are of the opinion that entry No.27 pertains to crown corks or other fittings of cork, rubber, polyethylene or any other material. In other words, the same covers the case of rubber fittings whereas entry-28 covers cases of pilfer proof caps for packaging or other fittings of rubber. The two entries above cited i.e. item Nos. 27 28 envisage different contextual references i.e. Crown Corks and other fittings of cork and rubber and pilfer proof caps. If we analyze the usage of a condom, we are constrained to hold that it is a sheath of rubber fitting, made to fit over sexual organ for prevention of sexual transmitted diseases and unwanted pregnancies. Since the statute restricts the scope of the deduction provision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute between the parties regarding the fact that tyre is a rubber fitting. The material used for type is definitely rubber as per Item No.27 of Eleventh Schedule which prescribes the list of articles or things not eligible for deduction under section 80IA, disentitles the assessee from this claim. The decisions relied on by the ld. A.R are entirely on different facts and they are not at all relevant. Therefore, this appeal of the assessee for assessment year 2002-03 stands dismissed. Taking cue from the same, and in view of our above analysis of the facts of the case, we hold that the assessee s produce manufactured is an item covered by Item Nos.27 28 of Eleventh Schedule of the Act being a rubber fitting. Accordingly, we hold that the CIT(A) has rightly upheld the rejection of assessee s claim of deduction/s 80IB of the Act. So, the issue is decided in favour of the Revenue and against the Assessee. Respectfully following the above ratio laid down by this Tribunal, we are inclined to hold that the assessee is not entitled for deduction u/s.80-IB of the Act in respect of its unit at Pallavaram unit which is manufacturing rubber contraceptives. 13. In the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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