TMI Blog2017 (11) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... d both of the requisite conditions contemplated u/s. 80IB(4), therefore the CIT(A) had rightly observed that the assessee stood duly entitled towards claim of deduction under the aforesaid statutory provision. We thus further find ourselves to be in agreement with the ld. A.R. that in light of the settled position of law, now when the assessee had been held as eligible and therein entitled towards claim of deduction under the aforesaid statutory provision for the preceding years, viz. A.Y. 2005-06 and A.Y. 2006-07, therefore unless the said relief granted in the said preceding years in which such claim was made and accepted is withdrawn or set aside, the A.O cannot be allowed, to hold a different view and disentitle the assessee from claim of the deduction under the same statutory provision during the year under consideration. We thus in light of our aforesaid observations finding no reason to take a different view, therefore uphold the order of the CIT(A) that the assessee stood duly entitled for claim of deduction u/s. 80IB(4). - Decided in favour of assessee. - I.T.A(s). No.1688 And 1689/Mum/2014 - - - Dated:- 22-6-2017 - SHRI R.C.SHARMA, AM AND SHRI RAVISH SOOD, JM For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein the A.O after disallowing the claim of the assessee towards deduction u/s. 80IB(4) of ₹ 31,28,017/-, therein assessed the total income of the assessee at ₹ 34,14,093/-, vide his order dated. 24.12.2009. The assessee carried the matter in appeal before the CIT(A), who vide his order dated 19.03.2010 allowed the claim of the assessee towards deduction u/s. 80IB(4). The order of the CIT(A) was assailed by the revenue before the Income Tax Appellate Tribunal, which therein vide its order dated 25.01.2012 passed in ITA No. 5029/Mum/2010 restored the matter to the file of A.O. for fresh adjudication. 3. The A.O during the course of the assessment proceedings in compliance to the directions of the Tribunal called upon the assessee to furnish necessary evidence and explanation to justify its claim of deduction u/s. 80IB(4). That during the course of the set aside assessment proceedings, the A.O called upon the assessee to furnish evidence of purchase of goods, delivery challans for goods, details of machinery purchased along with delivery challans, details of workers etc., in respect of its business of fabricating and assembling engineering products as a sole proprie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verse inferences as regards the same as under:- a. As far as purchase of machinery is concerned, the assessee had only purchased the machinery amounting to ₹ 6380/- from Roshni Electrical on 15-03-2004 and machinery amounting to ₹ 5,000/- from Vikas Electricals. On perusal of the bill issued by Roshni Electricals and Vikas Electricals, it is seen that on the bill telephone number were not mentioned. The sales tax number and CST' number mentioned on the bill is of Dadra and Nagar Haveli, but at the end of the bill it is mentioned that the registration certificate under Bombay Sale Tax, 1959 is in force on the date of sale. This is not possible since Dadra and Nagar. Haveli is Union Territory and Bombay Sale Tax, 1959 is not applicable there. This clearly shows that the bill produced by the assessee in the name of Roshni Electricals and Vikas Electricals are not' genuine, therefore, the purchase of machinery claimed to have been made from Roshni' Electricals and Vikas Electricals are not genuine. Therefore, the claim of the assessee that the goods we're manufactured by the use of machinery purchased from Roshni Electricals and Vikas Electricals duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. As regards consumption of electricity is concerned it is an unbel ievable fact that goods worth ₹ 97.51 lacs were manufactured during the F.Y. 2006-07 for which electricity amounting to ₹ 10,603/- for the period of 12 months was only consumed. On perusal of the electricity bill produced for the month Of March to May 2004, it is seen that electricity of 386 units were consumed for a period of three months which means the monthly consumpt ion is less than 150 uni ts which is much less than the electricity consumed in the household for domestic use. On perusal of the details of electricity sanctioned by the authorities it is seen that the wiring contractors had submitted the completion of the wiring and test report, wherein the date of connection is mentioned as 29/3/2004. The assessee had claimed to have the sold the manufactured goods. on 31/03/2004 of ₹ 51,000/- to its sister concern M/s Spectrum Scientific Pvt. Ltd., which is not possible as the electric connection was only installed on 29/3/2004 and the assessee had not submitted any evidence to have actually started the process of manufacturing in view of negligible consumption of electricity. Also on perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -03-2004. The said bill for machinery being purchased f rom M/s Roshni Electrical and Vikas Electricals dated 15-03-2004 is not proved to be genuine as discussed in Para 6.a above. Assessee has not proved to have employed workers during the period 2003-04 for manufacturing activity as the assessee has failed to give evidence regarding the identity and name and address of the workers. Therefore, manufacturing activity cannot be said to have taken place during the F.Y. 2003-04. Besides, as per the wiring contractor's completion and test report, the date of connection is mentioned as 29/03/0.04. Under the circumstances, it is not possible to manufacture the goods amounting to ₹ 51,000/- and sale the same on 31/3/2004 to M/s Spectrum Scientific Pvt. Ltd, which is the sister concern of the assessee. It is pertinent to mention here that the assessee has not submi t ted evidence regarding transportat ion of manufactured goods from his factory to its sister concern. g. The assessee relied on Sales Tax Exemption Certificate as per which the date of I commencement of production is shown as 31/03/2004. However, the same 1 cannot be rel ied upon for claiming exemption u/s. 801B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement which were required to be satisfied for enabling an assessee to raise its claim towards deduction u/s. 80IB(4), the CIT(A) after deliberating on definition of the term Manufacture , in the backdrop of the judgment of the Hon ble High Court of Kerala in the case of Tata Tea Ltd. Vs. ACIT (ITA NO. 87 of 2009, dated 25.01.2010) and the definition of the said term as had been contemplated in Chapter IX of the Export Import policy, 2002-2007, therein after vetting into the nature of business and the processes involved in the case of the assessee, therein observed that the assessee was into manufacturing of S.S. Fabricated parts from S.S. Sheets with the use of power. It was observed by the CIT(A) that the entire manufacturing process carried out by the assessee involved various processes which were carried on the S.S. Sheets, before the same were converted into S.S. fabricated parts, as under:- i. Making and cutting SS Sheet ii. Bending of sheet through Hand press iii. Welding, grinding and drilling operation iv. Fitting of separate sheet metal parts to form double walled cabinet/fabricated panel. v. Insulating the cabinet. 7. The CIT(A) thus deliberating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein the latter had observed that though it was a holiday, still most of the workers, numbering about 12, were available at the premises. The CIT(A) thus concluded that the assessee could safely be held to have employed more than 10 workers at his unit, and thus duly satisfied the second limb contemplated u/s. 80IB(4). 9. The CIT(A) thus deliberating on the contentions of the assessee before him, in the backdrop of the material available on record, therein concluded that the assessee was engaged in the business of manufacturing of S.S. Casserole containers by subjecting the S.S. sheets to various processes of marking and cutting SS shets, bending of sheets through hand press, welding, grinding and drilling, fitting of separate sheet metal parts to form double walled cabinet/fabricated panel and insulating the cabinet, thus could safely be held to be in the business of manufacturing of a new product. That in respect of the adverse inferences drawn by the A.O as regards the poor correlation between the percentage of power and the manufacturing activity of the assessee, it was observed by the CIT(A) that as the process of manufacturing of the assessee was not a power intensive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the basis of the aforesaid documents. It was further averred by the ld. D.R. that in the period relatable to A.Y. 2004-05, no claim towards deduction u/s. 80IB(4) was raised by the assessee. Per contra, it was submitted by the Authorized Representative (for short A.R.) for the assessee that the CIT(A) during the course of the appellate proceedings had called for a remand report from the A.O. That it was submitted by the ld. A.R. that as during the period relevant to A.Y. 2004-05 the assessee had offered a loss , it was only for the said reason that no claim of deduction u/s. 80IB(4) was raised in the said year. The ld. A.R drawing our attention to the copy of the assessment order passed under Sec. 143(3) in the case of the assessee for A.Y. 2005-06 (Page 50-54 of APB), therein submitted that its claim towards deduction u/s. 80IB(4) of ₹ 18,58,737/- was allowed by the A.O only after thorough vetting in the course of the assessment framed u/s. 143(3). The ld. A.R. further submitted that the entitlement of the assessee towards claim of deduction u/s. 80IB(4) had thereafter had been tested in appeals filed by the assessee and revenue, in the case of the assessee for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following judicial pronouncement:- 1. CIT Vs. Paul Brothers (1995)216 ITR 548 (Bom) 2. CIT Vs. Western Out floor Interactive P. Ltd. (2012)349 ITR 309 (Bom) 3. Radhasoami Satsang Vs. CIT (1992)193 ITR 321(SC) 4. DCIT Vs. Jindal Photofilms Ltd. (2008) 113 ITD 0624 (TM). The ld. A.R further submitted, that as had been appreciated at length by the CIT(A), it stood established beyond any scope of doubt that the assessee was involved in manufacturing of S.S. Casserole Containers from the S.S. sheets, therefore in the backdrop of due compliance by the assessee of the requisite conditions contemplated u/s. 80IB(4), therein averred that no adverse inferences as regards the latters entitlement towards the claim of a deduction under the said statutory provision was liable to be drawn. It was thus submitted by the ld. A.R that the CIT(A) after duly appreciating the facts of the case in light of the settled position of law, had rightly allowed the appeal of the assessee and held that the latter was duly entitled towards claim of deduction u/s. 80IB(4). 11. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 12. We now take up the appeal of the revenue, marked as ITA No. 1689/Mum/2014. The assessee assailing the order of the CIT(A), dated 18.12.2013 for A.Y. 2008-09 had raised the following grounds of appeal before us:- 1. On the facts and in the circumstances of the case, and in law, the ld. CIT(A) erred in allowing claim of deduction u/s. 80IB(4) of ₹ 38,39,300/- without appreciating that the assessee could not substantiate the fact that manufacturing was commenced on or before 31.03.2004 being one of the criteria for the deduction u/s. 80IB(4).of the I.T. Act. 2. On the facts of the circumstances of the case, and in law the ld. CIT(A) erred in not appreciating the fact that the assessee failed to produced documentary evidences to substantiate its claim regarding the number of workers employed. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in admi t t ing the addi t ional evidence in violat ion of Rule 46A wi thout al lowing an opportunity to examine the evidences in remand proceeding. 4. On the facts and circumstances of the case, the Ld. CIT(A) is not justif ied in deleting the addi t ion on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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