TMI Blog2022 (10) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has addressed the issues raised by the Assessing Officer while denying the claim of deduction u/s 10B. Considering all we deem it proper to restore the issue to the file of the learned CIT (A) with a direction to adjudicate the issue of validity of re-assessment proceedings as well as the claim of deduction u/s 10B of the I.T. Act by passing a speaking order giving pointwise reasonings on both the issues. The grounds raised by the Revenue as well as the grounds raised by the ass in the cross objection are accordingly allowed for statistical purposes. - ITA Nos.121 & 146/Hyd/2019, C.O Nos.7 & 27/Hyd/2019 - - - Dated:- 11-10-2022 - Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member For the Assessee : Shri S. Ravi, Sr. Advocate/A.V. Raghuram, Advocate For the Revenue : Shri P. Chandrasekhar, DR ORDER PER R.K. PANDA, A.M The above two appeals filed by the Revenue and the two cross objections filed by the assessee are directed against the separate orders dated 23.1.2018 11.1.2019 of the learned CIT (A)-1, Hyderabad relating to A.Ys 2010-11 2011-12 respectively. Since identical issues are involved in the above appeals, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradesh. The assessee-company was manufacturing two products i.e. triclopyr and throxypyr from the above plant under DTA unit. Later on, the assessee filed an application before Development Commissioner, Visakhapatnan Special Economic Zone and obtained approval vide letter No. Per:327/EOU/VSEZ/2005, dated 09/12/2005 for conversion of existing DTA nit into 100% EQU unit for manufacturing triclopyr and fluroxypyr products. Further, as per the Director's Report of Annual Report 2006-07, it is clearly mentioned that the existing weedicides unit man1jacturing triclopyr and fluroxypyr for export is registered as a 100% EOU with effect from February, 2007. As per CBDT's Circular No. 1/2005, dated 06/01/2005, the assessee is eligible to claim deduction u/s 10B even in respect of an undertaking set up in Domestic Tariff Area (DTA) and subsequently converted into a EOU. However, as per the above circular the deduction is available only from the year in which it has got approval as 100% EOU and shall be available only for the remaining period of ten consecutive assessment years beginning with the assessment year relevant to the pervious year in which the undertaking begins to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y converted into 100% Export Oriented Unit (EOU) vide license No.PER:327/EOU/SEZ/2005, dated 9.12.2005 granted by Visakhapatnam Special Economic Zone (VSES) Visakhapatnam. Accordingly, the assessee has claimed deduction u/s 10B of the Act. 5. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He referred to the provisions of section 10B of the I.T. Act, obtained a letter from VSEZ clarifying whether the assessee has constructed new unit and to which unit, the license was granted and came to the conclusion that there is only one-unit i.e., DTA Unit which was established in 1994 and as per the clarification given by the SEZ Vizag, only one unit was constructed by the assessee. He further noted that the Vizag SEZ has clarified that the approval granted by it vide letter dated 9.12.2005 was in response to DTA Unit established in the year 1994. Rejecting the various explanation given by the assessee and observing that the assessee does not fulfil the conditions prescribed under the provisions of sub section 2(ii) of section 10B of the I.T. Act, the Assessing Officer rejected the claim of deduction u/s 10B of the I.T. Act. 6. Before the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emains as per original assessment order u/s 143(3) dated 28.03.2013 . 8. Aggrieved with such order of the learned CIT (A), the Revenue is in appeal before the Tribunal by raising the following grounds: 1. The learned CIT(A) erred in deleting the disallowance u/s. 10B of Rs. 12,91,80.370/- 2. The Learned CIT(A) erred in accepting the claim of assessee that it had established a new unit at existing factory premises without verifying approval, if any, granted by AP State Government for starting a new unit. 3. The Learned CIT(A) erred in accepting the claim of assessee that it has established a new unit at existing factory premises without verifying nature/purpose of capital expenditure incurred towards buildings machinery and without ascertaining it was in fact for new unit . 4. The Learned CITA) erred in disregarding the letter dt. 29.05.2017 issued by the Assistant Development Commissioner, VSEZ, Visakhapatnam which categorically stated that permission issued on 09.12.2005 was tor conversion of the existing DTA unit into EOU (and not for establishing new unit). 5. Any other ground that may be urged at the time of hearing of appeal. 9. The assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven and the Assessing Officer after considering various submission allowed the claim of deduction u/s 10B of the I.T. Act. He submitted that the Assessing Officer without any tangible material available on record, has reopened the assessment beyond a period of 4 years from the end of the relevant A.Y without pointing out any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. He further submitted that in the A.Y 2008-09 and 2009-10 the claim of deduction u/s 10B has already been allowed to the assessee and therefore, without disturbing the claim of deduction in the preceding year, claim of deduction for the impugned A.Y could not have been denied by the Assessing Officer. He submitted that since the learned CIT (A) while deciding the appeal in favour of the assessee on merit has passed a speaking order and has held that the assessee is eligible to claim deduction u/s 10B of the I.T. Act, therefore, the grounds raised by the Revenue should be dismissed. 11. The learned DR, on the other hand, referring to the order of the learned CIT (A) submitted that the learned CIT (A) has not at all passed a speaking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim of deduction under section 10B of the I.T. Act, the reasons of which have already been reproduced in the preceding paragraph. It is the submission of the learned Counsel for the assessee that since the orders for the A.Y 2008-09 and 2009-10 have attained finality where such claim of deduction u/s 10B has been granted, therefore, without disturbing the order for the preceding years, the Assessing Officer could not have disallowed the claim of deduction u/s 10B of the I.T. Act. It is also his submission that when in the original assessment proceedings, the assessee had already filed the requisite documents and the Assessing Officer after considering the details passed the order u/s 143(3), therefore, such reopening of the assessment after a period of 4 years from the end of the relevant A.Y is not valid in view of the proviso to section 147 of the I.T. Act. It is the submission of the learned DR that each A.Y is a separate A.Y and merely because some wrong has been done in the preceding year, such wrong cannot be perpetuated in the subsequent years. It is also his submission that when the assessee has claimed deduction u/s 10B of the I.T. Act by furnishing false and inaccura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f capital expenditure incurred towards building, machinery and without ascertaining it was in fact for new unit. iv. The CIT(A) erred in disregarding the letter dated 29-05-2017 issued by Assist Commissioner, SEZ, VSP which categorically stated that permission issued on 09 2005 was for the conversion of the existing DTA unit into EOU (and not for establishing the new unit). v. Any other ground that may be urged at the time of hearing. C.O. 126/Hyd/2019 A.Y 2011-12 15. The ground raised by the assessee in the C.O reads as under: 1) The Commissioner of Income Tax (Appeals) erred in not considering the issue of reopening. The CIT(A) ought to have appreciated that the reassessment is bad in law as the AO had reopened the assessment undersection 148 of the Act on a mere change of opinion or audit objection and dehors of any tangible material, in respect of an assessment which was concluded by determining the income of the under section 143(3) of the Act. 2) The Commissioner (Appeals) failed to appreciate that the assessment was reopened in respect of an assessment concluded under section 143(3) of the Act in respect which four (4) years has elapsed from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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