TMI Blog2018 (12) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... not bonafide. Even otherwise also, if one goes by the principle laid down in the case of Goetz India Ltd.[2006 (3) TMI 75 - SUPREME COURT] if the claim has not been made before the AO by way of revised return then same can be made before the appellate authorities. Thus claim of deduction u/s 80IC to the assessee cannot be denied simply because such a claim was not made in the return field u/s 139 (1) albeit was made in the revised return u/s 139(5) filed within the stipulated time provided in the said section - decided in favour of assessee. - ITA No. 1100/Del/2017, ITA Nos. 3838; 3839/Del/2015 - - - Dated:- 6-8-2018 - Shri Amit Shukla, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Assessee : Shri Vinod Bindal, CA, Ms. Sweety Kothari, CA For the Department : Ms. Shefali Swaroop, CIT(DR), Shri S.R. Senapati, Sr. DR ORDER PER AMIT SHUKLA, J.M. The appeals of the revenue for the assessment year 2009-10 and 2010-11 have been filed against impugned order of even date 13.3.2015, passed by Ld. CIT (Appeals)-18, New Delhi for the quantum of assessment passed u/s 143(3); whereas the assessee has filed his appeal against impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, sales tax registration, excise registration, DIC intimation of increase in fixed assets, etc. However, the AO noted that it is very difficult to make out which plant and machinery was added for substantial expansion. He further required the assessee to furnish bills alongwith other expenses incurred like freight, etc., to ascertain the opening value of plant and machinery for the assessment year under consideration and claim of substantial expansion. From the details furnished, AO noted that addition during the assessment year 2009-10 was only 1,24,14,061/- and the remaining amount of ₹ 11,59,62,670/- pertains to the previous year including assessment year 2006-07. Further amount of ₹ 12,83,76,731/- was taken out from capital-work-in-progress. Again he issued show cause notice, in response the assessee vide letter dated 16.12.2011 claimed that the WDV of the Plant Machinery as at 1.4.2008 was ₹ 14,78,36,000/- and not ₹ 24,77,55,000/-. The assessee submitted that the bills amounting to ₹ 1,24,14,061/- pertains to the A.Y. 2008-09 and remaining bills of ₹ 11,59,62,670/- pertain to earlier years. The substantial expansion of the unit was compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee justified remaining addition out of capital work in progress but failed to file detail account of capital work in progress of the two other projects undertaken at Gujarat and Rajasthan......... Fourthly, assessee failed to furnish Form 10CCB which is mandatory and no document has been placed on record in support of such claim which again support that unit is also eligible for central excise exemption; Fifthly, Tax auditor has certified that company has not claimed any deduction under Chapter VI A; Sixthly, the certificates filed by DIC envisage only states that unit is eligible for deduction subject to compliance of conditions but no order has been passed certifying that assessee has undertaken substantial expansion and the expansion of capacity as noted by DIC is over the original capacity as on 7.1.2003; and Lastly, evidence filed in support of substantial expansion of plant and machinery does not satisfy the condition of 50% expansion over the value of plant and machinery without depreciation for which he has given the above. Thus with these reasons he denied the claim of deduction u/s 80IC. 6. Before the Ld. CIT (A), the assessee gave the details and ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under:- S.No. Condition Compliance 1. It has begun or begins to manufacture or produce any article or thing. Or It manufactures or produces any article or things and undertakes substantial expansion The assessee has undertaken substantial expansion during the year since it has increased the investment in plant machinery by ₹ 12,83,76,731/- which is 51.82%. i.e. more than 50% of the book value of plant and machinery of ₹ 24,77,55,000/- as on 01/04/08 as has been explained in detail hereinabove. 2. Item manufactured or produced should not be an article or thing specified in Thirteenth Schedule The items manufactured and operations carried out by the assessee are covered under the following broad categories: (i) Processing, Preservation and Packaging of Mushrooms, (ii) Food Processing and Packaging (iii) Milk and Milk based products None of the above items or operations is covered under the Thirteenth Schedule (Part-B) as applicable for the State of Himachal Pradesh as can be verified from the copy of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for admission of additional evidence was also filed to rebut the various allegations of the AO which has been discussed in detail in the impugned order. The said additional evidences were forwarded to the AO on which AOs remand report was called upon and the same has been incorporated in the appellate order from pages 10 to 13. The AO was also directed to conduct inquiry by the Ld. CIT (A) in terms of directions given vide letter dated 30.6.2014. In response to which AO has filed his report dated 5.11.2014, wherein he has made inquiry from Central Excise Department and also sought for Inspector s report. All these details too are appearing in the impugned order. 9. After considering the entire gamut of material evidences on the remand report of the AO the Ld. CIT (A) has threadbare discussed the issue and allowed the claim of deduction u/s 80IC. The sums and substances of his finding are that:- Firstly, the amount of ₹ 24.77 crores was the actual cost of plant and machinery which was reflected in Schedule V of the balance sheet as on 31st March, 2008 as per the Companies Act and AO s observation in this regard is factually incorrect. The plant and machinery wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verified by the AO in the remand proceedings. Regarding non-mention of deduction under chapter VI-A in the tax audit report, Ld. CIT(A) observed that tax audit was conducted by a CA on 21.8.2009 and the same CA has signed the Form No. 10CCB dated 22.6.2009. Therefore, assessee should not be made to suffer from inadvertent error on the part of the CA; and Lastly, he also held that all conditions stipulated for eligibility of deduction u/s 80IC stands fulfilled. 10. Before us, Ld. DR strongly relied upon the order of the AO and submitted that whatever observations which have been made by the Ld. CIT(A) has not been verified by him and has solely relied upon the assessee s submissions as well as evidences filed. All the allegations made by the AO have not been properly rebutted on certain evidences or inquiry report discussed by AO and CIT (A) should have applied his own mind. He submitted that matter can be restored back to the file to the Ld. CIT (A) so that he can apply his mind and verify the evidences himself. 11. On the other hand, Ld. Counsel for the assessee after explaining the entire facts submitted that all these evidences which were filed before the AO were als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. F.Y. 2008-09 Steam Generating Boiler, Tanks, etc. (Indian machinery installed in parts up to July, 2008) 19,48,518 Total : 4,78,71,741 S. No. Machine Heads Cost (Rs.) 1. FY 2007-08 FrigoscandiaGyrostackSpiral Freezer, Multivac tray packing machine, Custom made incline conveyor belt, Custom made 89 long portable stainless steel incline conveyor, Foot conveyor, Stem patty enroder/coater, Stein L.S. 34 breading machine, Stein fryer and boiler, Bridge patty former, Hobart stainless steel double door freezer, Shelf stainless steel table with attafchments, Thermoking MDW 30 reefer unit, SS Washer SS incline Transfer conveyor, etc. (Custom cleared up to February, 2008 Imported from Rain Dance America, USA) 6,84,67,101 2. FY 2008-09 Electrical Motors and Installation of above machines 4,86,899 Total 6,89,54,000 S. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the AO from DIC it has come on record that the proposal for expansion was approved by the DIC Committee on 9.1.2008 and commercial production had commenced on 27.9.2008; and therefore, the claim of deduction was made on 2009-10. The assessee had also intimated to the Excise Department about the completion of the substantial expansion and running of trial production vide letter dated 23.6.2008, copy of which has been placed at page 223 of the paper book to show that trial production had commenced w.e.f. 14.6.2008 and commercial production started from 29.9.2008. The copy of intimation has been placed on page 224 of the paper book. 14. Further, the assessee has made a claim for deduction u/s 80-IC (2)(a) which does not have any condition that the product must be specified in the Fourteenth Schedule, because this condition is applicable only when the deduction is claimed u/s 80IC(2)(b). The condition applicable for claiming deduction u/s 80IC (2)(a) is that the article should not fall in the thirteenth schedule. In so far as condition of filing of audit report is concerned, whether same stood complied with or not, is not in dispute, because, admittedly it was before the AO d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, our finding given above will apply mutatis mutandis for this year also and therefore, we affirm the order of the Ld. CTI(A) in allowing the claim of deduction. Accordingly, the revenue s appeal for the A.Y. 2010-11 is also dismissed. 17. Coming to the assessee s appeal for the asstt. Year 2012-13, the assessee has raised following grounds: 1. The Ld. CIT(Appeals) erred in law and on facts in confirming the disallowance of ₹ 17,17,610/- claimed u/s 80IC a. By misinterpreting the provisions of section 80AC on legal issue as well as on facts; and b. By incorrectly applying the stipulation contained u/s 80A(5) on deduction claimed u/s 80IC. 18. Here in this year, the AO has denied the claim of deduction u/s 80IC amounting to ₹ 17,17,610/- following the earlier year of Asstt. Year 2009-10. However, one additional fact noted by the AO is that assessee has not claimed deduction u/s 80IC in the original return of income filed on 29.7.2012, but has been claimed in the revised return filed on 23.3.2013 which is not in accordance with section 80AC. Thus, on this count he disallowed the claim of deduction u/s 80IC amounting to ₹ 17,17,610/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80A(5). 21. On the other hand, Ld. DR submitted that it is mandatory that claim for deduction has to be made in the return of income filed u/s 139(1) in terms of section 80 AC, otherwise the assessee will not be eligible for deduction nu/s 80IC. He thus strongly relied upon the order of the Ld. CIT (A). 22. We have heard the rival submissions and also perused the relevant finding given in the impugned order. It is undisputed fact that the assessee is otherwise eligible for claim of deduction u/s 80IC in respect of his Himachal Pradesh Unit which is being consistently allowed to the assessee for the assessment year 2009-10 as held by us in the aforesaid appeals. The assessee has filed its return of income u/s 139(1) on 27.9.2012 showing an income of ₹ 17,17,610/-. Later on assessee filed revised return u/s 139(5) on 23.3.2013, declaring income at nil and had stated that the claim of deduction u/80IC was by mistake omitted to be claimed in the original return of income. Therefore, such a claim is now being made in the revised return. Thereafter a notice u/s 143(2) was issued on 6.8.2013 to scrutinise the revised return of income. Even the AO has taken due cogniz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 10B shall be allowed to an assessee who does not furnish a return of his income on or before the due date specifled in sub-section (1) of section 139. Similarly, with a view to enforce the compliance for furnishing the return of income by the due date by the assessees who are entitled for deductions under section 80-IA or section 80 IAB or section 80-IB or section 80-IC from their income, a new section 80AC has been inserted so as to provide that no deduction under section 80-IA or section 80-IAB or section 80-IB or section 80-IC shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified in subsection (1) of section 139. 10.2 This amendment takes effect retrospectively from 1-4-2006 and applies in relation to the assessment year 2006-07 and subsequent years. Ergo, the intention of the legislature is that the assessee should furnish a return of his income on or before due date specified u/s 139 (1). Nowhere it has been clarified or stated that if assessee has fails to claim the deduction in return u/s 13(1) and later on makes a claim in the revised return u/s 139(5), then also it has to be denied. The said provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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