TMI Blog2021 (2) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) than the Assessing Officer keeping in mind the relevant assessment year involved herein is 1998- 99 onwards. It is made clear that the assessee or its authorised representative shall appear before the CIT(A) on or before 31st July, 2021 along with all the relevant evidence for necessary factual verification; at its own risk and responsibility, to be followed by three effective opportunities of hearing failing which our instant remand directions shall be deemed to have been vacated. Appeals of assessee are treated as allowed for statistical purposes. - ITA No. 1304 to 1308/Hyd/16 - - - Dated:- 16-2-2021 - Shri S.S. Godara, Judicial Member And Shri Laxmi Prasad Sahu, Accountant Member For the Assessee : Shri Mohd. Afzal, AR For the Revenue : Shri Sunil Kumar Pandey, DR ORDER PER BENCH : These five assessee s appeals arise from CIT(A)-10, Hyderabad s order, dated 11-04-2016 for AYs.1998-99, 1999- 2000, 2000-01, 2001-02 2002-03 passed in appeal Nos.152, 155, 154, 151 153/CIT(A)-10/2015-16; involving proceedings u/s.143(3) r.w.s.254 of the Income Tax Act, 1961 [in short, the Act ]; respectively. 2. The assessee has raised the following id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LW.S 33B of the Act as per clause (v) of explanation to sub-section.2 of Sec.115JA of the Act. The assessee did not claim deduction u/s.80HHC while computing book profits in the revised return since deduction claimed u/s.80IA r.w.s 33B of the Act while computing book profit itself brought down the book profits to NIL. 1.2. The JCIT(Assts), Spl.Range-6, Hyderabad completed assessment on 28-02-2001 u/s.143(3) of the Act determining book profit at ₹ 5,77,42,084/- and taxable income at 30% thereof at ₹ 1,73,22,625/-. While doing so, the Assessing Officer (A.O) did not allow deduction claimed u/s.80IA r.w.s.33B of the Act. Having computed book profits at ₹ 5,77,42,084, the A.O did not allow deduction even u/s.80HHC of the Act. 1.3. On appeal, the C.I.T(A) by his order dated 11-03-2002 confirmed book profits assessed u/s.115JA. The assessee filed further appeal before the Hon'ble ITAT and the ITAT by its common order dated 21- 09-2007 in ITA Nos.528 737/H/02, 643 644/H/03 and 883/H/05 for the Asst.Years 1998-99 to 2002-03 remitted (a) the issue of deduction claimed u/s.80IA r.w.s. 33B of the Act while computing book profit and also (b) the additional g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Month wise production and dispatch h details as per RG 1 records for the year 1996-97 (Paper book page Nos 156 to 158) 10.Finished goods valuation and assessment of loss made by the New India Assurance Company limited due 10 cyclone (Paper book page Nos.159 to 161). 11.Letter dated 30.9.1997 issued by Asst. Commissioner, Central Excise for disposal of damaged finished goods due to cyclone (Paper book page Nos.162 to 163). DEDUCTION U/s.80IA R.W.S 33B OF I.T.ACT FOR THE ASSESSMENT YEARS 1998-99 TO 2002-03: 2.3. On 6th November 1996 the assessee's factory was hit by a massive cyclone which devastated the entire coastal area of Andhra Pradesh and Yanam. In Yanam, the buildings and plant and machinery in the assessee's factory were damaged extensively. The assessee invites kind attention to the surveyor's report dated 9-9- 1997 (pages 151 to 153 of paper book) wherein the extent of damage caused by the cyclone was stated as under: The devastating cyclone which struck Yanam on 6-11-1996 evening and continued till the early hours of 7-11-1996 caused extensive damaged buildings, plant and machinery of the insured's factory. The entire asbestos r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the PLCs supplied by Siemens was done by the supplier's service Engineer in our presence on 27.01.1997. The result of physical inspection and tests conducted with supplier's programmer showed total damage in 32 components. PLCs of OMRON supply were tested with the help of the kit by the Insured in our presence. Except batch feeding and press feeding control systems as well as palletizing robot control and Automatic sorting line control all other systems were put into service. The remainder are awaiting the arrival of manufacturer's technician for software correction and commissioning .. 2.6 As could be seen from the above report that the entire buildings, plant and machinery, electrical equipment, motors etc., in assessee's factory were damaged extensively and there was complete stoppage of production from the date of cyclone i.e., 6.11.1996 to 20.12.1996 when production was recommenced in Kiln II. Kiln I recommenced production on 22.12.1996. There is no production in Kilns III till the end of the year and recommenced production only on 15.04.1997 in the next financial year. Therefore the assessee submits that there is complete stoppage of prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Government of Pondicherry has granted 50% concession on power tariff vide G.O.Ms.No.9 dated 27.02.1997 for Yanam region for the Industrial units affected due to cyclone. Further deferment of payment of current consumption charges for a period of one year was also granted vide G.O.Ms.No.15 dated 31.3.1997. Pondicherry Government Sales Tax (PGST) reduced sales tax' by 50% vide G.O.Ms.No.2/97/F2 Dated 2.1.1997. CST was also reduced by 50% vide G.O.Ms.No. 3/97/F2 dated 2.1.1997. Financial Institutions rescheduled the loan installments by extending one more year for payment of installments and also funded the interest. 2.11. The assessee submits hereunder as to how deduction U/s.80IA r.w.s 33B of the Act is allowable to it. In this regard Kind attention is invited to sub-sections (2) of Section 80lA and 33B of the I.T.Act which read as under. 80IA(2) This section applies to any industrial undertaking which fulfills all the following conditions, namely:- (i) It is not formed by splitting up, or the reconstructions, of a business already existence; Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gazette, specify in this behalf, as an industrially backward district of Category A or an industrially backward district of Category B, and, it begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994, and ending on the 31st day of March, 2000. (d) In the case of an industrial undertaking being a small scale industrial undertaking} not specified in sub-clause (b) or in sub-clause (c), it begins to manufacture or produce articles or things or to operate its cold storage plant at any time during the period beginning on the 1st day of April, 1995 and ending on the 31st day of March, 2000. (v) In a case where the industrial undertaking manufactures or produces articles or things the undertaking employees ten or more workers in a manufacturing process carried all with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power. Explanation I. - For the purposes of clause (ii) of this sub-section, any machinery or plant which was used outside India by any Person . Explanation 2. - Where in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut six months and satisfies the condition laid down in clause (i) of sub-section (2) of section 80IA r.w.s.33B of I.T Act. 2.15. The assessee further submits that as could be seen from section 33B there should be extensive damage to any building, machinery or furniture. As could be seen from the whole phraseology of the section, the word 'or' is used and therefore the building may be damaged or plant and machinery could be damaged or furniture could be damaged. It is not necessary that the section requires that all these assets to be simultaneously damaged. The consequence should be the stoppage of business. In our case as a result of cyclone the buildings, plant and machinery, electrical equipment, etc., were extensively damaged and business came to a standstill. 2.16. The word extensive according to concise oxford dictionary means 'large in amount or scale'. The total amount of compensation paid by the insurance company during the years 1996-97 and 1997- 98 is ₹ 311 lakhs (page 149 of paper book). The assessee further submits that in the absence of statue specifying any minimum percentage of value of the machinery damaged in comparison with the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in manufacture of Ceramic Tiles with the aid of power this condition is also satisfied. 2.24. Therefore as explained above the assesse has satisfied the conditions laid down in Sec.80IA (2) r.w.s.33B of the Act. 2.26. The assessee therefore submits that it is entitled to deduction U/s. 80-IA/IB r.w.s.33B of the Act on the profits derived by it as it fulfilled all the conditions laid down in the said sections. 2.27. Assessment year: 1997-98: The assessee submits that though it is eligible to claim deduction u/s 80lA r.w.s 33B of I.T Act for the assessment year 1997-98 it has not claimed such deduction since there is no taxable income under either normal provisions or special provisions of Sec.115JA of the Act. 2.28. Assessment year 1998-99: The assessee filed return of income originally on 30.11.1998 declaring income under the normal provisions of the Act after set off of unabsorbed depreciation and book profit at ₹ 1.63,35,580/- U/s.115JA of the Act. Subsequently a revised return was filed on 01.02.1999 declaring NIL income under normal provisions of the Act. The assessee submits that though it is entitled for deduction U/s. 80IA r.w.s.33B of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble ITAT set aside the matter to the A.O to consider the additional evidence submitted by the assessee. 3.2. The assessee prays that Hon'ble Income Tax Appellate Tribunal to kindly consider all the above submissions and direct the Assessing Officer to allow the deduction claimed U/s. 80IA/IB r.w.s.33B of the Act for the assessment years 1998-99 to 2002-03 . 4. We now advert to the sole issue raised in assessee s grounds pertaining to disallowance of Section 80-IB deduction. The assessee s case all along appears to be that the alleged eligible unit(s) at Yanam had stopped production during the period from 7th November, 1996 to 21st December, 1996. The factual position is no different in the other years as well as pin-pointed from the departmental side. We find in this backdrop that the taxpayer has also sought to place on record a certificate coming from the office of the Superintendent of Customs and Central Excise, Yanam range dt.11-07-2014 regarding its above stated unit(s) having stopped production by way of additional evidence. 5. Mr.Moharana vehemently argued in favour of the lower authorities findings that this assessee has not co-operated all alon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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