Gujarat High Court
Commissioner Of Income Tax Ii vs Sagar Springs Pvt. Ltd....Opponent(S) on 9 January, 2014
Author: Akil Kureshi
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/10/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 10 of 2014
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COMMISSIONER OF INCOME TAX II....Appellant(s)
Versus
SAGAR SPRINGS PVT. LTD....Opponent(s)
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Appearance:
MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL
KURESHI
and
HONOURABLE MS JUSTICE SONIA
GOKANI
Date : 09/01/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The Revenue is in appeal against the judgment of the Incometax Appellate Tribunal (hereinafter referred to as 'the Tribunal') dated May 10, 2013, raising the following questions for our consideration :
"(1) Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified in deleting the addition made on account of disallowance of Page 1 of 8 O/TAXAP/10/2014 ORDER deduction claimed u/s.80IB(4) of the Act, without appreciating that the assessee was not eligible for deduction u/s.80IB(4) as it had failed to fulfill the conditions specified in the said section ?
(2) Whether on the facts and circumstances of the case and in law the Hon'ble ITAT was justified in deleting the addition made on account of disallowance of deduction claimed u/s.80IB(4) of the Act, without appreciating that since the total value of the Plant and Machinery exceeded the prescribed limit of Rs.1 crore, the assessee was not eligible for deduction u/s 80IB(4) of the Act inspite of clarifications made by Ministry of Commerce and Industry with respect to relevant notifications on 24.12.1999 and on 14.03.2000 ?"
2. The issue pertains to deduction under section 80IB(4) of the Incometax Act, 1961 (hereinafter referred to as 'the Act'). We are concerned with the assessment year 200607. The Assessing Officer declined to grant such benefits on the ground that the assessee's investment in the plant and machinery exceeded Rs.1 crore, which was the maximum limit for being recognised as Page 2 of 8 O/TAXAP/10/2014 ORDER Small Scale Industrial unit. The matter was carried in appeal. The Appellate Authority dismissed the appeal. Being aggrieved by the same, the assessee approached the Tribunal. The Tribunal by the impugned judgment reversed the view of the Revenue Authorities making the following observations :
"9. We have heard the rival submission and perused the material on record. It is an undisputed fact that the assessee had claimed deduction under 80 IB for the first time in assessment year 199899 and the assessee's claim was allowed by Appellate Authorities. With respect to the limit of value of plant and machinery, CIT(A) in this order has noted that the limit for investment in plant and machinery for the purpose of S.S.I. Unit of Rs.3 crore (vide notification dated 10.12.1997) was reduced to Rs.1 crore (vide notification dated 29.12.1999). Later on 14.03.2000 a clarification was issued to the following effect.
(i) The units that have obtained permanent registration on the order dated 10.12.1997 would continue to remain as SSI units in Page 3 of 8 O/TAXAP/10/2014 ORDER spite of the order dated 24.12.1999 reducing the investment limit to Rs.1 crore.
(ii) The units which had switched over to the SSI status based on the order dated 10.12.1997 would continue to remain as SSI in spite of the order dated 24.12.1999 and
(iii) The units which have got provisional registration with the state authorities for their SSI status would continue to remain as SSI units in spite of the order dated 24.12.1999, provided the provisional registration had taken place within the period of limitation of 180 days specified in the order dated 10.12.1997.
10. It is also an undisputed fact that the assessee was granted S.S.I. certificate on 17.10.1994 and which was valid up to 30.10.1994. There is nothing on record to prove that the aforesaid SSI certificate has been withdrawn by the competent authorities. In the case of KHS Machinery Private Limited (supra) the Coordinate Bench has held that there is no precondition of registration of unit as SSI unit for availing the benefit of deduction under 80 IB of the Act. The assessee has also placed on record the certificate from District Industry Centre wherein it has been certified that the plant Page 4 of 8 O/TAXAP/10/2014 ORDER and machinery was not more than 3 crores. The aforesaid facts have not been controverted by the Revenue by bringing any contrary material on record.
11. In the case of Saurashtra Cement and Chemical Industries Limited (supra) the Hon.High Court has held that deduction cannot be denied in succeeding year without disturbing the relevant relief granted in the initial year. The ITO cannot examine the question again and decide to withhold or withdrawal the relief which has been already once granted.
12. Considering the totality of the facts and relying on the aforesaid decisions of the Hon.H.C. and respectfully following the decision of the coordinate bench of Tribunal, we are of the view that the assessee is entitled to deduction under 80 IB of the Act."
3. The learned counsel Mr.K.M. Parikh appearing for the Revenue vehemently contended that the Tribunal committed serious error in not considering the fact that the assessee's investment in plant and machinery was more than Rs.1 crore and, therefore, the assessee could not Page 5 of 8 O/TAXAP/10/2014 ORDER get the benefit of deduction under section 80IB(4) of the Act, which was meant only for Small Scale Industrial units.
4. Having perused the orders on record, it clearly emerges that the assessee was granted certificate of Small Scale Industry registration by the State authorities way back in the year 1994. The assessee's claim for deduction under section 80IB(4) of the Act was disputed in the earlier year also, as is borne out from the decisions of the Assessing Officer, who observed that following detailed discussion in the year 1998 for the assessment year 200506, the claim under section 80IB(4) of the Act is allowed. The learned counsel for the Revenue candidly pointed out that such issue had reached High Court once. This Court had ruled in favour of the assessee vide common order dated April 25, 2011 rendered in Tax Appeal Nos.2044 to 2051 of 2009. This Court had dismissed the Revenue's appeals. That being the position, benefit of section 80IB(4) cannot be denied.
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O/TAXAP/10/2014 ORDER
5. Be that as it may, the Tribunal in the present case, has noted that though the limit of the Small Scale Industries was reduced from Rs.3 crore to Rs.1 crore, by a subsequent clarification it was provided that the Small Scale Industrial units which have obtained permanent registration before December 10, 1997 would continue to remain Small Scale Industries in respect of limit of Rs.3 crore and the units which had switched over to the Small Scale Industries status based on the order dated December 10, 1997 would continue to remain as Small Scale Industries despite such reduction in limit. Admittedly, the Tribunal noted that the assessee had produced the certificate of District Industry Centre certifying that the investment in the plant and machinery did not cross the limit of Rs.3 crore.
6. Under the circumstances, no interference is called for. No question of law arises. The Tax Appeal is dismissed.
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O/TAXAP/10/2014 ORDER
(AKIL KURESHI, J.)
(MS SONIA GOKANI, J.)
Aakar
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