Income Tax Appellate Tribunal - Ahmedabad
Asstt. Commissioner Of Income Tax,, ... vs M/S. Heerasons Chemical Pvt.Ltd.,, ... on 3 April, 2017
आयकर अपील य अ
धकरण, अहमदाबाद यायपीठ - अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD - BENCH 'D'
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND
SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.2952/Ahd/2015
AND
ITA No.663/Ahd/2016
नधा रण वष /Asstt. Year: 2009-2010
M/s.H.L. Equipments Vs. JCIT, Navsari Range
Survey No.60/1 Navsari.
Nr. Shukan Bungalows
Ground Floor, Plot No.1&2
City Light
Surat 395 007.
आयकर अपील सं./ ITA No.1250/Ahd/2013
नधा रण वष /Asstt. Year: 2009-2010
ACIT, Navsari Range Vs. M/s.H.L. Equipments
Navsari. Survey No.60/1
Nr. Shukan Bungalows
Ground Floor, Plot No.1&2
City Light
Surat 395 007.
आयकर अपील सं./ ITA No.1208/Ahd/2015
नधा रण वष /Asstt. Year: 2009-2010
M/s.HLE Engineers P.Ltd. Vs. JCIT, Navsari Range
Survey No.60/1 Navsari.
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
PAN : AABCH 4724 N
ITA No.2952/Ahd/2015 & 10 Others
H.L. Equipments and Others Vs. JCIT , Surat
2
आयकर अपील सं./ ITA No.1026/Ahd/2015
नधा रण वष /Asstt. Year: 2009-2010
JCIT, Navsari Range Vs. M/s.HLE Engineers P.Ltd.
Navsari. Survey No.60/1
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
PAN : AABCH 4724 N
आयकर अपील सं./ ITA No.665/Ahd/2016
AND
ITA NO.2981/Ahd/2016
नधा रण वष /Asstt. Year: 2009-2010
Heerasons Chemicals P.Ltd. Vs. ACIT, Navsari Range
Survey No.60/1 Navsari.
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
PAN : AAACH 5979 G
ITA NO.3075/Ahd/2014
नधा रण वष /Asstt. Year: 2009-2010
ACIT, Navsari Range Vs. Heerasons Chemicals P.Ltd.
Navsari. Survey No.60/1
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
PAN : AAACH 5979 G
ITA No.2952/Ahd/2015 & 10 Others
H.L. Equipments and Others Vs. JCIT , Surat
3
आयकर अपील सं./ ITA No.2953/Ahd/2015
AND
ITA NO.666/Ahd/2016
नधा रण वष /Asstt. Year: 2009-2010
Yashasvi Rasaayn P.Ltd. Vs. JCIT, Navsari Range
Survey No.60/1 Navsari.
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
PAN : AAACY 1854 F
ITA NO.2849/Ahd/2016
नधा रण वष /Asstt. Year: 2009-2010
JCIT, Navsari Range Vs. Yashasvi Rasaayn P.Ltd.
Navsari. Survey No.60/1
Ground Floor, Plot No.1&2
Nr.Shukan Bungalows
Opp: Maheshwari Bhavan
City Light
Surat 395 007.
अपीलाथ / (Appellant) तयथ
् / (Respondent)
Assessee by : Shri S.N. Soparkar with
Shri Parin Shah, AR
Revenue by : Shri Sanjay Agarwal, CIT-DR
सन
ु वाई क तार ख/Date of Hearing : 23/03/2017
घोषणा क तार ख /Date of Pronouncement: 03/04/2017
आदे श/O R D E R
PER RAJPAL YADAV, JUDICIAL MEMBER:
This bunch of appeals contains eleven appeals; out of which seven appeals are filed by four different assessees, viz. M/s.H.L. Equipments ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 4 and M/s.Yashasvi Rasayan Pvt. Ltd. are against orders of the ld.CIT(A) dated 3.8.2015 and 5.1.2016, while M/s.HLE Engineers P.Ltd. is against order of the ld.CIT(A) dated 3.3.2015. M/s.Heerasons Chemicals P.Ltd. is aggrieved with order of the ld.CIT(A) dated 5.1.2016 and 23.9.2014. Revenue is in appeals against orders of the ld.CIT(A) dated 22.2.2013, 3.3.2015 and 23.9.2014. Assessment year involved in these appeals is A.Y.2009-10. All these appeals are disposed of by this common order for the sake of convenience.
2. Shri S.N. Soparkar, Senior counsel, at very outset pointed out that facts and circumstances in all these appeals are common. He pointed out that for the facility of reference, facts from the first appeal bearing ITA No.2952/Ahd/2015 be taken. The ld.DR did not dispute this proposition. Therefore, with the assistance of the ld.representatives, we have gone through the record.
3. It has been pointed out before us that though the appellants i.e. assessees as well as Revenue have taken number of grounds in their appeals, but main grievance of the assessees revolves around two issues viz. (a) the ld.AO has erred in rejecting book results of the assessee and estimating profit with the help of section 145(3) of the Income Tax Act, 1961, (b) the ld.AO has erred in making addition on account unexplained purchases.
4. The ld.counsel for the assessee pointed out that in this case assessment order had travelled upto the Tribunal, and the Tribunal vide order dated 24.5.2015 in ITA No.1303/Ahd/2013 has set aside the issues to the file of the ld.CIT(A) for adjudication. But, the ld.CIT(A) did not adhere to directions given by the Tribunal and did not analysis the details. He has summarily by rejected all the contentions of the assessee without recording any specific finding.
ITA No.2952/Ahd/2015 & 10 OthersH.L. Equipments and Others Vs. JCIT , Surat 5
5. While impugning the orders of the Revenue authorities, the ld.counsel for the assessee submitted that survey under section 133A of the Act was conducted at the premises of the assessee on 29.9.2008. The assessee had filed its return of income on 29.9.2009 electronically declaring total income at Rs.75,69,646/-. The AO has passed assessment order on 29.12.2011 and determined taxable income of the assessee, M/s.H.L. Equipments in the Asstt.Year 2009-10 at Rs.6,36,45,140/-. The ld.AO has made two major additions; (a) he rejected books of accounts and estimated GP at Rs.3,26,12,166/-, (b) he worked out stock difference having value of Rs.5,40,04,722/-. He treated it as an investment for making unaccounted purchases. In his opinion, estimated GP computed in the case of the assessee must have been used for purchasing unaccounted material, and therefore, he calculated unaccounted purchases at Rs.2,13,92,556/- i.e. (Rs.5,40,04,722/- minus Rs.3,26,12,166/-) . The ld.counsel for the assessee took us through para-2 of the assessment order and pointed out that the AO has no time to verify the details submitted by the assessee. He himself admitted this aspect while making addition of unaccounted purchases in para-10.
6. Dissatisfied with this order, when the assessee filed an application for submission of additional evidence to the ld.CIT(A), the ld.CIT(A) did not admit additional evidence and confirmed the addition. The ld.CIT(A) has not considered a single evidence submitted by the assessee or explanation given by it. He pointed out that the order of the CIT(A) is running into 40 page. In the first 5 pages the ld.CIT(A) has reproduced directions of the ITAT, and in the next 12 pages, reproduced conclusions of the AO. Thereafter, he reproduced written submissions given by the assessee upto page no.38. His finding is running into one-and-half pages that is without making any reference to ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 6 any contentions or any details. He simply concurred with the AO. Accordingly, the ld.CIT(A) in spite of specific directions of the Tribunal appraising the ld.CIT(A) as to how sub-section (6) of section 250 of the Act contemplates for passing of the speaking order, the ld.CIT(A) did not consider any aspect. According to the ld.counsel, order of the ld.CIT(A) is not sustainable on this preliminary issue itself.
7. The ld.CIT-DR, on the other hand, was unable controvert this submission of the assessee. However, without rebutting to the above, he filed a small note and pointed out that the AO has given number of opportunities to the assessee, and thereafter made observations exhibiting non-availability of sufficient time for cross-verification of the details.
8. We have duly considered rival contentions and gone through the record. Before making upon inquiry of the facts of the present appeal, we would like to appraise ourselves with the judgment of the Hon'ble Punjab & Haryana High Court rendered in the case of Roadmaster Industries of India P.Ltd. Vs. Inspecting ACIT(Assessment), 303 ITR 138 (P&H). The Hon'ble Court has expounded requirement of passing a speaking order which has analysed all details and as to why such orders should be passed by quasi-judicial authorities. The Hon'ble Court has made reference to a large number of decisions of the Hon'ble Supreme Court as well as High Court wherein emphasis has been given as to why quasi-judicial authorities should give reason in support of their conclusions. In order to emphasis our point of view and which had made us handicap to adjudicate this appeal, we deem it appropriate to take note of this judgment which would enlighten the AO as to why he has to investigate the issue analytically and provide due opportunity of hearing to the assessee. The judgment reads as under:
ITA No.2952/Ahd/2015 & 10 OthersH.L. Equipments and Others Vs. JCIT , Surat 7 "4. On a perusal of impugned order, even the counsel for the Revenue could not dispute that the order passed by the CIT cannot be termed to be a speaking order which could stand in judicial scrutiny. As to whether in exercise of quasi-judicial powers, the authorities are required to pass orders by giving reasons in support thereof is well settled by a series of judgments by Hon'ble the Supreme Court of India.
5. In Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala and Ors. , while dealing with an order passed by the Central Government in exercise of its appellate powers under Section 111(3)of the Companies Act, 1956, in the matter of refusal of a company to register the transfer of shares, Hon'ble the Supreme Court observed:
If the Central Government acts as a Tribunal exercising quasi- judicial powers and the exercise of that power is subject to the jurisdiction of this Court under Article 136 of the Constitution, we fail to see how the power of this Court can be effectively exercised, if reasons are not given by the Central Government in support of its order.
6. Another Constitution Bench of Hon'ble the Supreme Court in Bhagat Raja v. Union of Indiaconsidered the question whether, while exercising revisional power under Section 30 of the Mines and Minerals (Regulation and Development) Act, 1957 r/w Rules 54 and 56 of the Mineral Concession Rules, 1960, the Central Government was required to give reasons in support of its decision and held:
The decisions of Tribunals in India are subject to the supervisory powers of the High Courts under Article 227 of the Constitution and of appellate powers of this Court under Article 136. It goes without saying that both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word "rejected", or "dismissed". In such a case, this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the appeal. This will certainly be a very unsatisfactory method of dealing with the appeal.
7. In Travancore Rayon Ltd. v. Union of India , Hon'ble the Supreme Court observed:ITA No.2952/Ahd/2015 & 10 Others
H.L. Equipments and Others Vs. JCIT , Surat 8 The Court insists upon disclosure of reasons in support of the order on two grounds : one, that the party aggrieved in a proceeding before the High Court or this Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous; the other, that the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power.
8. In Mahabir Prasad Santosh Kumar v. State of UP , Hon'ble the Supreme Court while quashing the cancellation of the petitioner's licence by the District Magistrate, observed:
Recording of reasons in support of a decision on a disputed claim by a quasi-judicial authority ensures that the decision is reached according to law and is not the result of caprice, whim or fancy or reached on grounds of policy or expediency. A party to the dispute is ordinarily entitled to know the grounds on which the authority has rejected his claim. If the order is subject to appeal, the necessity to record reasons is greater, for without recorded reasons the appellate authority has no material on which it may determine whether the facts were properly ascertained, the relevant law was correctly applied and the decision was just.
9. In Woolcombers of India Ltd. v. Woolcombers Workers Union , Hon'ble the Supreme Court quashed the award passed by the Industrial Tribunal on the ground that it was not supported by reasons and observed:
The giving of reasons in support of their conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious, unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimise the chances of unconscious infiltration of personal bias or unfairness in the conclusion. The authority will adduce reasons which will be regarded as fair and legitimate by a reasonable man and will discard irrelevant or extraneous considerations. Second, it is a well-known principle that justice should not only be done but should also appear to be done. Unreasoned conclusions may be just but they may not appear to be just to those who read them. Reasoned conclusions, on the other hand, will have also the appearance of justice. Third, it should be remembered that an appeal generally lies from the 'decision of judicial and quasi-judicial authorities to this Court by ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 9 special leave granted underArticle 136. A judgment which does not disclose the reasons will be of little assistance to the Court.
10. The same view was reiterated in Ajantha Industries and Ors.
v. CBDT and Ors. and Siemens Engineering & Manufacturing Co. of India Ltd. v. Union of India and Anr. .
11. In S.N. Mukherjee v. Union of India , a Constitution Bench reviewed various judicial precedents on the subject and observed:
The decisions of this Court referred to above indicate that with regard to the requirement to record reasons the approach of this Court is more in line with that of the American Courts. An important consideration which has weighed with the Court for holding that an administrative authority exercising quasi-judicial functions must record the reasons for its decision, is that such a decision is subject to the appellate jurisdiction of this Court under Article 136 of the Constitution as well as the supervisory jurisdiction of the High Courts under Article 227 of the Constitution and that the reasons, if recorded, would enable this Court and the High Court to effectively exercise the appellate or supervisory power. But this is not the sole consideration. The other considerations which have also weighed with the Court in taking this view are that the requirement of recording reasons would (i) guarantee consideration by the authority; (ii) introduce clarity in the decisions; and (iii) minimise chances of arbitrariness in decision-making. In this regard, a distinction has been drawn between ordinary Courts of law and Tribunals and authorities exercising judicial functions on the ground that a Judge is trained to look at things objectively uninfluenced by considerations of policy or expediency whereas an executive officer generally looks at things from the stand point of policy and expediency. Reasons, when recorded by an administrative authority in an order passed by it while exercising quasi-judicial functions, would no doubt facilitate the exercise of its jurisdiction by the appellate or supervisory authority. But the other considerations, referred to above, which have also weighed with this Court in holding that an administrative authority must record reasons for its decisions are of no less significance. These considerations show that the recording of reasons by an administrative authority serves a salutary purpose, namely, it excludes chances of arbitrariness and ensures a degree of fairness in the process of decisions-making. The said purpose would apply equally to all decisions and its application cannot be confined to decisions which are subject to appeal, revision or judicial review. In our opinion, therefore, the ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 10 requirement that reasons be recorded should govern the decisions of an administrative authority exercising quasi-judicial functions irrespective of the fact whether the decision is subject to appeal, revision or judicial review. It may, however, be added that it is not required that the reasons should be as elaborate as in the decision of a Court of law. The extent and nature of the reasons would depend on particular facts and circumstances. What is necessary is that the reasons are clear and explicit so as to indicate that the authority has given due consideration to the points in controversy. The need for recording of reasons is greater in a case where the order is passed at the original stage. The appellate or revisional authority, if it affirms such an order, need not give separate reasons if the appellate or revisional authority agrees with the reasons contained in the order under challenge.
12. In Testeels Ltd. v. N.M. Desai, Conciliation Officer and Anr. , a Full Bench of Gujarat High Court speaking through P.N. Bhagwati, J. (as his Lordship then was) made a lucid enunciation of law on the subject in the following words:
The necessity of giving reasons flows as a necessary corollary from the rule of law which constitutes one of the basic principles of the Indian constitutional set up. The administrative authorities having a duty to act judicially cannot therefore decide on considerations of policy or expediency. They must decide the matter solely on the facts of the particular case, solely on the material before them and apart from any extraneous considerations by applying pre-existing legal norms to factual situations. Now the necessity of giving reasons is an important safeguard to ensure observance of the duty to act judicially. It introduces clarity, checks the introduction of extraneous or irrelevant considerations and excludes or, at any rate, minimises arbitrariness in the decision-making process.
Another reason which compels making of such an order is based on the power of judicial review which is possessed by the High Court under Article 32 of the Constitution. These Courts have the power under the said provisions to quash by certiorari a quasi judicial order made by an administrative officer and this power of review can be effectively exercised only if the order is a speaking order. In the absence of any reasons in support of the order, the said Courts cannot examine the correctness of the order under review. The High Court and the Supreme Court would be powerless to interfere so as to keep the administrative officer within the limits of the law. The result would be that the power of ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 11 judicial review would be stultified and no redress being available to the citizen, there would be insidious encouragement to arbitrariness and caprice. If this requirement is insisted upon, then they will be subject to judicial scrutiny and correction.
13. Keeping in view the above settled principles of law and applying the same in the facts and circumstances of the present case, we are of the view that the order passed by the CIT does not satisfy the prerequisites of a speaking order, as the same does not contain reasons to support the order."
9. In the light of the above, let us examine the facts of the present case and why we have been persuaded to remit the issues involved in this appeal to the file of the AO for re-adjudication. A perusal of the assessment dated 29.12.2011 would indicate that case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued on 25.8.2010. Thereafter, proceedings remained dormant. The questionnaire under section 142(1) was issued on 9.11.2011 fixing the hearing on 22.11.2011. The assessee requested for adjournment of the case for 10 days. The case was listed for hearing on 29.11.2011. A perusal of written note by the ld.CIT-DR would indicate that after 29.11.2011 the ld.AO has fixed hearing weekly and he concluded the assessment within a period of one month. At this stage we deem it appropriate to take note of the observations made by the AO in para 10 of the assessment order.
"[10] In this case, a survey action u/s. 133A was conducted on 29/09/2008. During the survey , stock inventory as per books was submitted to survey party. As per this value of stock as on 29/09/2008 is Rs. 7,21,28,646/- (copy enclosed -Annexure-A, Page No. 1 to 87). The physical stock of inventory was also taken by the survey party as per which value of stock is Rs. 7,22,45,395/- (copy enclosed -Annexure - B, Page-1 to 36). Details regarding working of opening stock, closing stock and stock as on date of survey was called for vide this office letter dated 09/11/2011, 30/11/2011 and 16/12/2011. The same is furnished by the assessee on 26/12/2011 vide submission dated 19/12/2011. On perusal of working of stock statement, the value ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 12 of stock as on 29/09/2008 has been worked out at Rs. 12,61,33,368/- (copy enclosed - Annexure-C, Page No. 1 to 82), Accordingly, there Is difference of Rs. 5,40,04722/-. As the assessee submit the said details only on 26/12/2011, it is not possible to give opportunity to the assessee to reconcile the figure. In such circumstance, I am constrained and do not have any alternative but to add the difference of Rs. 5,40,04,722/- (Rs. 12,61,33,368 - Rs. 7,21,28,646/-) being unaccounted purchases. It is noted that addition of Rs. 3,26,12,166/- is made on account of estimation of gross profit as discussed in forgoing paras. It is presumed that suppression of profit is diverted to unaccounted purchase which are reflected in the stock statement submitted by the assessee during the assessment proceedings as discussed above. In these circumstances, difference between the unaccounted stock of Rs. 5,40,04,722/- and estimated gross profit of Rs. 3,26,12,166/-, which comes to Rs. 2,13,92,556/- is added to the total income on account of unaccounted purchases. A penalty proceeding u/s. 271(l)(c) is separately initiated for concealment of Income as well as furnishing inaccurate particulars of income. It is mentioned that both the additions are made without prejudice to each other."
10. The ld.AO himself admitted that for want of time it was not possible to cross-verify the details. If it was not possible for him to cross-verify the details, then why he had made addition and charged an entity with tax liability. He himself committed mistake by not starting assessment proceedings well in time and then punish the assessee.
11. Dissatisfied with this type of reasoning, the assessee carried the matter in appeal before the ld.CIT(A). It filed application for permission to submit additional evidence. In this application the assessee sought to file confirmation from job work parties in order to demonstrate position of stock. On the one hand, the AO has expressed his handicap of cross-verifying the details of stock, on the other hand, when the assessee submitted confirmation for buttressing its case, the ld.CIT(A) did not take this evidence on record. A perusal of clause (b) of sub-rule 1 of Rule 46 of the Income Tax Rules, 1962 would indicate that it envisage a right in an appellant to submit additional evidence in case ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 13 where he was prevented by sufficient reasons from producing the evidence which he was called upon to produce by the AO. Similarly, clause (c) further contemplates that if he was prevented by sufficient cause from producing an evidence before the AO, which is relevant to any ground of appeal, then such evidence should be permitted to the assessee. The ld.CIT(A) failed to consider this aspect. The assessee was prevented by the time gap given by the AO for submitting details. He started investigating in fag end of month of November, and time limit to pass assessment order was end of December. There was only one month's time. It may be quite difficult for the assessee to collect all the details asked for by the AO in short span of time. The ld.CIT(A) ought to have considered this aspect before declining the prayer. The ld.CIT(A) had failed to deal with this aspect specifically. It has been inferred from the order that this prayer was impliedly declined. The order of the ld.CIT(A) is running into 40 pages. The ld.CIT(A) has recorded submissions of the assessee as well as conclusions of the AO in first 36 pages. Thereafter, on page no.37, the ld.CIT(A) briefly noted the facts and on page no.39 recorded the following finding:
"
......
......
I have considered the rival submissions and has gone through the assessment order. From the defects pointed out by the assessing officer in the books of accounts of the appellant, I am inclined to agree with the action of the assessing officer in rejecting the books of accounts and the estimation of the gross profit. The reasons stated by the assessing officer have not been rebutted by the AR of the appellant with cogent evidence/explanation during the appellate proceedings. In the circumstances, the rejection of books of accounts and estimating the gross profit being the average of three years by the assessing officer is based on the facts of the case hence the addition made at Rs.3,26,12,166/- is upheld and the grounds of appeal of the appellant are dismissed."
ITA No.2952/Ahd/2015 & 10 OthersH.L. Equipments and Others Vs. JCIT , Surat 14
12. This finding cannot be termed as a speaking order by any standard. A perusal of the order of the ld.CIT(A) would indicate that not a single contention of the assessee has been dealt with. Both orders are contrary to the proposition expounded by the Hon'ble Punjab & Haryana High Court expecting of passing of a speaking order from a quasi judicial authority. We are conscious of the fact that we have earlier set aside the issue to the CIT(A) and it gave lot of hardship to the assessee, but in the absence of any cross-verification with regard to the confirmation given from the job workers offered by the AO or by the CIT(A) it is quite difficult for the Tribunal to record any finding of the fact. The AO has made major additions without verifying the details. This aspect would take us nowhere. In such situation, we deem it appropriate and in the interest of justice to set aside impugned orders of ld.CIT(A) (except in ITA No.1250/Ahd/2013) and that of AO's in all the appeal, because facts are identical and restore these issues to the file of the AO for re-adjudication. The ld.AO shall commence hearing well in time and provide sufficient opportunities to the assessee. While passing assessment order, AO shall keep in mind the judgment of the Hon'ble Punjab and Haryana High Court extracted (supra) and record reasons in support of his contentions. The facts and circumstances in th appeals of all the assessees are similar, therefore, in view of the above, all these appeals are allowed for statistical purpose except ITA No.1250/Ahd/2013.
13. Now we take up ITA No1250/Ahd/2013.
14. This is the appeal of the Department against the order of the ld.CIT(A) in the first round i.e. dated 22.2.2013 passed in Asstt.Year 2010. Sole grievance of the Revenue is that the ld.CIT(A) has erred in ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 15 allowing deduction of Rs.20,70,770/- under section 80IB of the Income Tax Act. The ld.counsel for the assessee contended that the appeal of the Revenue is not maintainable on account of low tax effect. He made reference to the CBDT Circular bearing no.21/2015. On the other hand, the ld.CIT-DR contended that this appeal should not be decided on account of low tax effect because on account of certain additions, quantification of deduction may fluctuate. He further contended that department has filed a detailed statement of facts, and he relied upon these statement of facts. On the other hand, the ld.counsel for the assessee contended that, otherwise also on merit the issue is covered in favour of the assessee by the decision of the Hon'ble Gujarat High Court in assessee's own case. He placed on record copy of the Hon'ble Gujarat High Court order dated 26.8.2014 passed in Tax Appeal No.891 and 892 of 2014. The AO has disallowed the claim of the assessee on the ground that the assessee itself has not carried out any manufacturing work. The manufacturing work was done by the sister concern. These reasons have been summarized in para-13 of the statement of facts, and they read as under:
"13. As discussed above, it is held that;
i) The activities of the assessee is against the spirit of chapter VI-A, as interpreted by the Hon'ble Supreme Court in the case of Textile Machinery Corp. Ltd. V/s. CIT (1977) 107 ITR 195 (SC) and that of the Hon'ble Delhi High Court in the case of CIT V/s.
Hindustan General Inds. Ltd.
j) The actual manufacturing work done by H.L.E. Engineers Pvt. Ltd., a sister concern of the assessee firm and not by assessee firm.
ITA No.2952/Ahd/2015 & 10 OthersH.L. Equipments and Others Vs. JCIT , Surat 16
k) The assessee is obtaining vessels and other equipments in ready to fit conditions and just riveting, nut bolting and welding them where ever required.
l) The activity performed by the assessee does not change the identity or characteristics of the original commodity, since; only simple assembling is done by the assessee.
m) The activity of the assessee is not manufacturing in view of the tests formulated by the Hon'ble Supreme Court of India, in the cases of Pio Food Packers (1980) 46 STC 63, N.C. Budharaja & Co. (1993) 204 ITR 412 and J.G. Glass Ind. Ltd. (1998) AIR 1998 SC 839.
n) Assessee's case can be compared with that of CIT Vs. Babcock and Wilcox (1999) 158 CTR 352 (Cat.)
o) The assessee has presented wrong facts of its case with respect to the activity done by it and with respect to the skill required to carry out that process, in order to mislead the assessing officer so that it can enjoy the undue benefits of section 80IB of the Act.
p) The assessee is not eligible for any benefits of deduction u/s.80IB, as has been held in very similar cases by the Hon'ble Supreme Court in the cases cited supra, since, the activity of assembling performed by the assessee, is not manufacturing.
As stated above, and after discussion the issue at length, the AO has disallowed assessee's claim u/s. 80IB of the Act."
15. The ld.CIT(A) has granted deduction on the ground that in Asstt.Year 2008-09, the ld.CIT(A) has allowed deduction to the assessee vide order dated 17.3.2011. We find that the deduction in the Asstt.Years 2008-09 and 2006-07 were upheld to the level of the Hon'ble High Court. Thus, respectfully following the order of the Hon'ble High Court, we do not see any reasons to interfere in the order ITA No.2952/Ahd/2015 & 10 Others H.L. Equipments and Others Vs. JCIT , Surat 17 of the ld.CIT(A). This ground of appeal is rejected and the appeal of the Revenue is dismissed.
16. In the result, all appeals are allowed for statistical purpose except ITA No.1250/Ahd/2013 which is dismissed. Order pronounced in the Court on 3rd April, 2017.
Sd/- Sd/- (N.K. BILLAIYA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 03/04/2017