TMI Blog2014 (1) TMI 1750X X X X Extracts X X X X X X X X Extracts X X X X ..... which says that if the four years but not more than six years have been lapsed from the end of relevant assessment year unless the income chargeable to tax which has been escaped assessment amount or likely to an amount of ₹ 1 lac or more for that year. We find that this contention is satisfied and secondly if the four years but not more than 6 years if the property is located outside in India. In our opinion, this clause has been inserted w.e.f 01.07.2012. Therefore, it is not applicable of this question. Therefore, in our opinion, in this case under consideration for Assessment Year 04-05 the reopen assessment is barred by limitation, therefore, we have no hesitation to hold that the assessment for A.Y. 04-05 is barred by limitation. Similarly for A.Y. 05-06, the assessment was completed on 20.11.2007. The assessment was required to be reopened on or before 31st March 2010 and the assessment was reopened on 24 March, 2011. Therefore, the reopening of the assessment for 04-05 is bad in law as per the Decision of Hon’ble Supreme Court in the case of Kelvinator of India [2010 (1) TMI 11 - SUPREME COURT OF INDIA ]. Therefore, we hold that the notice issued u/s. 148 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order was required to be. quashed as nonest and void in the eye of law. 3. Without prejudice, the Commissioner (A) ought to have appreciated the assessment was reopened on a mere change of opinion and consequently the assessment order was not sustainable in the eye of law as there was no income that had escaped assessment. 4. Without prejudice, the Commissioner (A) ought to have followed the dictum of Hon ble Supreme Court reported in 231 ITR 200 in the case of Coca Cola Export Corporation etc., vs. ITO Anr. and ought to have held that the assessment was bad in law and consequently quashed the same. 4 In C.O. Nos. 29 30 same ground raised which read as under:- 1. The order of the Commissioner of Income-tax (A) in so far as it is prejudicial to the interest of Respondent, is bad in law. 2. Without prejudice, the Commissioner (A) ought to have appreciated the assessment was reopened on a mere change of opinion and consequently the assessment order was not sustainable in the eye of law, as there was no income that had escaped assessment. 3. Without prejudice, the Commissioner (A) ought to have followed the dictum of Hon ble Supreme Court reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that extended area and function the undertaking. At first site of the building, it is difficult to find out that there are two units operating in the building. Only during the enquiry which was conducted, the Director had explained that there are two units operating inside the said premises/building. The industrial undertaking should not have been formed by splitting up or reconstruction of a business already in existence for claiming deduction u/s 801B. Unless somebody points out that there are two units inside the building, it is impossible for anyone to find out that there are two undertakings functioning inside. Based on the inspection, it is believed that the Unit-II could not be regarded as a separate and independent industrial undertaking. In this regard the case of Periyar Chemicals, 226 ITR 0467 of Kerala High Court is quoted here. It is not correct to say that the new unit is housed in a different building. On the contrary the correct factual position is that the so-called new unit is also housed in the same building where the old plant is also erected. It is seen that the additional space necessary for installing the machineries of the new unit was made availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving any licence but we are registered as Apex packing Products (P) Ltd with the Department of Industries, Govt of Goa. Q.1O, Do you have any licence obtained for Unit-Il? Ans: No, no licence was obtained for Unit-II. The deduction u/s. 801B(4) is available only to an industrial undertaking which is recognized by the Ministry of Small Scale Industries. This ministry gives the recognition/certificate of license to start an industrial undertaking. In the absence of a license for an industrial undertaking, it is not right to call it an undertaking at all. If it is not an undertaking, there is no question of claiming deduction u/s. 80 IB as the deduction u/s. 80 IB is available only to an industrial undertaking. In the instant case of the assessee company, in the absence of the license from the Ministry of Small Scale Industries, Unit-II of the assessee company which is claiming deduction u/s. 8OlB is only an extension of the already existing Unit-I which had claimed deduction u/s. 801B earlier. As the Unit-Il is only an extension of the already existing Unit-I deduction claimed is not allowable. Unit-II does not have a distinct identity at all which is basic for any ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - I. On the other hand, the appellant contended that Unit- I and Unit- IT came into existence at different times, have manufacturing facility for two completely different products having different clientele. The machineries are totally different and one cannot he used to manufacture the product of other. They are capable of functioning independently and in fact, they are functioning independently. Having common management and few other common facilities, do not negate the independent identities of both units. Therefore, in view of the facts of this case, in my opinion, Unit-Il is an independent manufactv4xtg unit, constructed by investing a much higher amount compared to Unit- I, which is eligible for claim of deduction u/s. 801B (4). The AO is therefore directed to allow the deduction u/s. 801B(4) to the appellant on Unit-Il for A.Y. 2008-09, 2009-10, 2004-05, 2005-06, 2006-07 and2007- 08. This Ground of Appeal of the appellant is allowed accordingly. 8.5 The facts of the instant case is identical to that of Diamond Tool Industries and therefore, following the decision in the above case, in my opinion, the sales tax retained by the appellant is part of the profit of the indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Act as per Decision of Hon ble Supreme Court and Hon ble Delhi High Court in the case of CIT vs. Foramer France reported in 264 ITR 566(SC): CIT vs. Kelvinator of India Ltd., (Del(. (F.B.) 256 ITR 1.The learned AR submitted that the Assessment Year 2002-03 being the initial year, the matter was deliberated upon in detail and even in the order u/s. 264 of the Act the Commissioner of Income Tax has agreed the existence of two undertaking eligible for 80IB exemption. 8. We have heard the rival contention of both the parties. Looking to facts and circumstances of the case, we find that the assessment was reopened by issuing the notice u/s. 148 which read as under. The assessee filed Return of Income on 30. 10. 2005 declaring total income of ₹ 2,18,733/ after claiming deduction u/s. 80IB of ₹ 2,10,85,825/-. The assessment was completed u/s. 143(3) on 20.11.2007 determining total income at ₹ 2,53,460/- after allowance of deduction u/s. 80IB of ₹ 1,72,62,730/-. In the assessee s case the assessment for A.Y. 08-09 was made u/s. 143(3) on 30.12.2010 disallowing assessee s claim u/s. 80IB for UNIT-II for the detailed reasons mentioned in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has required to the show cause notice which read as under:- October 31, 2011 Assistant Commissioner of Income Tax Circle 2(1), Panaji Aaykar Bhawa Patto, Panaji, Goa 403001 Sub: Notice u/s.148 of the Act for reopening the assessment u/s. 147 of the Act -Assessment Year: 2004-05-M/s. Apex Packing Products Pvt Ltd., Kundaim, Goa Please refer to the letter dt. 17.10.2011 along with the enclosed reasons recorded. At the outset we wish to submit that the reopening was bad in law in that it was barred by time. It may kindly be appreciated that the assessee has filed the return of income for the relevant assessment year disclosing all the primary materials and the assessment stood concluded on 8.12.2006. In the return filed originally the establishment of Unit-II has brought to the notice and all the articu1ars with regard to the plant and machinery purchased and the production made have already been disclosed. Thus, the assessee having filed the return of income and had also disclosed all the primary materials and particulars in the return and also in the course of assessment proceedings and further the assessment having been concluded u/s.143(3) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Bombay High Court had also held in the case of Asian Paints Ltd., vs. DCIT reported in 308 ITR 195(Bom) and Prashant S.Joshi Vs. ITO 324 ITR 154 (Born) that the reopening on mere change of opinion is bad in law. In fact for the assessment year 2002-03 being the initial year, the matter was deliberated upon in detail and even in the order u/s.264 of the Act the Commissioner of Income-tax has agreed the existence of two undertaking eligible for 80-lB exemption. In the circumstances, the reopening of assessment while referred to the findings for the assessment year 2008-09 is without basis especially when the very findings for the assessment year 2008-09 is under challenge before the CIT(A) who is yet to hear the matter. In the circumstances it is requested that the assessing authority may kindly drop the reassessment proceedings initiated u/s.147 of the Act. In the alternative it is prayed that we should await for the order of the CIT(A) before proceeding with the assessment. Thanking you, Yours faithfully, For Apex Packing Products Pvt. Ltd Yatin G. Kakodkar Director 9. From the reply of assessee and the documents on the record shows that Unit-II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment Year 2006-07 and 2007-08 which goes to the root of the case. The contention of the assessee is that the assessee was having second Unit and he was claiming deduction u/s. 80IB (4) on this Unit the assessee claimed deduction of the Unit-II in A.Y. 2002-03 and in Assessment Year 2002-03 the Assessing Officer has accepted that assessee was having two Units to separate Unit manufacturing of paper wrappers and film wrappers respectively. This fact has been admitted by the Commissioner of Income Tax which is the order u/s 264 of the Income Tax Act which is on page 40 of the paper book 1(1). From above it is in the notice of the Department that assessee was having separate unit No.2. The assessee was allotted separate plot Goa-Daman Diu Industrial Development Corporation on 15.3.1995. The original allotments letter was produced to show that Unit II was separate unit from Unit-I. The assessee was handed over this plot on 18.3.1995 and the Daman Diu Industrial Development Corporation has also given in writing that Plot No. 187 was allotted to the assessee. The assessee was manufacturing of plastic wrappers in the Industrial undertaking. The assessee has earlier disclosed this fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopened. 11. We have heard the rival contention of both the parties. Looking to the facts and circumstances of the case, we find that the assessee has filed the return of income for relevant Assessment Year on 27.09.2008 declaring total income. The Assessee is engaged in business of manufacturing of (i) wax coated wrappers for Parle Biscuits and (ii) laminated plastic wrappers under two separate industrial undertaking viz., Unit-1 and Unit-II. In Unit-I, it manufactured was coated wrappers whereas in Unit-II, it manufactured laminated plastic wrappers. Unit-II was established in 2002-03 was the first Assessment Year of the undertaking. The assessee claimed the benefit u/s. 80IB of the Act against the profits of Unit-II, since the Assessment Year 2002-03 and the same has been considered and allowed upto Assessment Year 2007-08. The details of the establishment of the industrial undertaking was called for and after satisfying with the claim of the Appellant and after satisfying with the compliance u/s. 80IB of the Act, the benefit was extended to the assessee. Similarly, in assessment year 2008-09 the assessee claimed deduction u/s. 80IB(4) of the Act to the tune of ₹ 1.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, it cannot be disallowed in subsequent years. The first year is in which the assessee has to prove the existence of independent industrial undertaking and if it is accepted, the profit derived therefrom has to be considered for deduction u/s. 80IB (4) of the Act. In the instant case, we find that the Assessing Officer has accepted Unit-II as industrial undertaking in assessment year 2002-03 and relief remains undisturbed. The AO cannot on the same set of facts deny deduction for the subsequent years. The Gujrat High Court in the case Saurashtra Cement Ltd. vs. CIT 123 ITR 669 has held that there is no provision of withdrawal of deduction once granted and such deduction cannot be denied in subsequent years unless the deduction allowed on the same ground in the earlier year is withdrawn. We find that Hon ble Bombay High Court in the case of Commissioner of Income Tax vs. Paul Brothers, 216 ITR 548 has held that once the deduction is allowed and it is not withdrawn for the earlier year, it cannot be withheld for subsequent years. Similarly the Bombay High Court which is Jurisdictional High Court in the case of Commissioner of Income Tax vs. Western Outdoor Interactive Limited has h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion in the eye of law. In the result, the C.O. for Assessment Year 2006-07 and 2007-08 are allowed. 12. In all ITA Nos. 145 to 150 for Assessment Year 2004-05 to 2009-10, the common issues raised by the Department which read as under:- 1. The learned CIT(A) has erred in allowing the assessee s appeal by allowing the claim of deduction claimed u/s. 80IB for unit II, which is just an expansion of existing unit 1 without considering the merit of the case. 2. The learned CIT(A), has erred in saying that unit-11 is an independent manufacturing unit eligible for deduction u/s. 80IB of the I.T. Act and allowed the deduction u/s. 80IB(4) on profit of said unit. 13. The brief facts in all these cases are that the assessee company claimed to be engaged in manufacturing of packing material from paper (Unit-1) and laminated packaging material (including wrappers) from plastics (Unit-II). The assessee claimed deduction u/s. 80 IB(4) in respect packaging material and the year under consideration was the 7th by her, year of operation. The AO has carried out the inspection of the assessee s premises conducted on 26.11.2010, it was found that (Unit-II) which is claimed to be separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t compared to Unit-I, which is eligible for claim of deduction u/s. 80IB(4). The AO is therefore directed to allow the deduction u/s. 80IB(4) to the appellant on Unit-II for A.Y. 2008-09, 2009-10, 2004-05, 2005-06, 2006-07 and 2007-08. This Ground of Appeal of the appellant is allowed accordingly. 15. We have gone through the order of the CIT(A) the CIT(A) has relied upon various judicial pronouncement. The main controversy is whether the assessee have separate Unit but maintaining the common record of excise duty, sales tax service tax, and having common registration and no separate permission from pollution department having a common electricity connection can be granted deduction u/s. 80IB(4). We find that in above circumstances the CIT(A) has relied upon the decision which is in favour of the assessee. During the course of hearing, learned DR could not produce any contrary decision against the finding of the CIT(A) therefore, we endorse the action of the CIT(A). We also got support from the decision of the Tribunal in the case of Fil Industrial Limited vs. Commissioner of Income Tax reported in 56 SOT 52 (Amritsar) wherein it is held as under: There is no requirement for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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