Income Tax Appellate Tribunal - Mumbai
Girish A. Soni, Mumbai vs Department Of Income Tax on 17 December, 2007
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH 'G', MUMBAI
Before Shri T.R. Sood, AM and Shri V.Durga Rao, JM
I.T.A.No. 6433/Mum/2008
Assessment Year : 2005-06
The Income-Tax Officer-25(2)(4), Shri Girish A. Soni,
Mumbai 501/A, Mohan Terrace, Mumbai
Vs. 400092 or C-803, Yamunadri Mahavir
Nagar, Mumbai 400 057.
PAN: AMYPS 0274 J
(Appellant) (Respondent)
Appellant by : Shri Mohd Usman
Respondent by : Shri Anil Thakrar
ORDER
PER T.R. SOOD, AM:
In this appeal the revenue has raised the following grounds:
"1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in granting deduction under section 80IB(5) to the assessee.
2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in granting deduction under section 80IB(5) to the assessee when the assessee failed to establish manufacturing activities at Silvassa factory which was found closed by the Postal Authorities."
2. After hearing both the parties, we find that during assessment proceedings the Assessing Officer noticed that assessee had claimed deduction u/s.80-IB of the Act. However, the Assessing Officer observed that though the assessee had claimed that its factory was situated at Silvasa, which was a notified backward district, but no electricity bills were produced. It as further noticed that no assets were appearing in the statement of assets in respect of this factory. Assessing Officer also noticed that even notice could not be served at the address of the factory and postal authorities had sent the notice back with the remarks "closed". In this background the AO was of the view that the factory at Silvasa was closed. He has also noticed that even the materials purchased by the assessee 2 ITA No.6433/M/08 M/s. Girish A. Soni have been directly sent to Bhayander (East) which falls in Gujarat which further shows that Silvasa factory was not working and therefore, deduction u/s.80IB was denied.
3. Before the CIT(A) it was mainly submitted that the factory in Silvasa was taken on rent and the rent of Rs.88,000/- was debited to Profit & Loss Account. Some details regarding fixed assets etc. were also filed. It was explained that raw- materials was being sent to Bhayander was only for some job work consisting of buffing and polishing and later on such material was sent to Silvassa factory.
4. The learned CIT(A) allowed the deduction vide para 3.6 of his order which reads as under:
"Perusal of return filed by the appellant, details given at the time of assessment proceedings and through letter dated 17.12.2007 and clarification submitted before the undersigned prove that appellant had manufactured stainless steel utensils of Silvassa. The factory shed was not owned by him, hence he took it on rent and lease rentals of Rs.88,000/- for the factory are debited to profit and loss account. Only job work of buffing and polishing is got done from Bhanander. Rest of the manufacturing work of utensils is done at Silvassa. Appellant paid sales tax at Silvassa. Finished goods are exported out from Dronagiri and Navaseva Sea Port JNPT which are the nearest ports from Silvassa. Bills of export sales and purchases show that all the purchases and sales are done from Silvassa. Only some bills of purchase of material show direct delivery of raw material at Bhayander. Other bills show direct delivery of material at Silvassa Electricity bills show payment of electricity charges by M/s. Prit Enterprises to electricity department, Dadra & Nagar Haveli, Silvassa. Telephone Bills are also called by the undersigned which shows payment for landline telephone No. 2630558 to Bharat Sanchar Nigam limited, Valsad for the telephone installed at factory premises of appellant at Silvassa. Lease agreement for the factory premises was entered on 05.10.1999 between M/s. Krishna Developers (lessor) and M/s. Prit Enterprises, Proprietor, Girish Soni (lessee) for Gala No. 102 admeasuring 961.25 sq.ft. area in Krishna Industrial Estate at Dadra & Nagar Haveli. Lease rent was fixed at Rs. 4,000/- per month on 05.10.1999 and was to be increased 10% after every one year. Appellant paid security deposit of Rs. 25,000/- in1999 for the premises. Appellant obtained Pollution control Certificate from the pollution Control committee, Daman & Diu and Dadra & Nagar Haveli on 06.11.2002 for M/s. Prit Enterprises for manufacturing stainless steel utensils. Appellant purchased 3 buffing motors on 12.04.2001, further 3 buffing machines on 20.04.2001. 1 knife grinding machine on 24.04.2001, 1 more knife grinding machine on 04.05.2001, pipe puffing machine on 09.05.2001, 10 hand press on 17.05.2001, further 12 hand press on 19.05.2001, further 18 had press on 26.05.2001 and all these plant and machineries are delivered and installed at the factory premises of appellant at Silvassa. The appellant has been doing manufacturing activity from the above premises since he took the factory premises on lease. Moreover, appellant ha been allowed deduction u/s.80IB(5) in all the earlier years. This is the 4th year of claim. All the above details show that the appellant 3 ITA No.6433/M/08 M/s. Girish A. Soni set up its industry in 1999-2000 starting manufacturing of steel utensils, got some job work like polishing, buffing and cutting done from 3 job workers at Bhayandar, dispatched goods for export from Nava Seva Sea Port JNPT, has electric connection and paid electricity bills at Silvassa, has land line telephone of factory premises at Silvassa and is granted Pollution Control Certificate from pollution Control Committee by Dadra & Nagar Haveli Office. In view of above, I am satisfied that appellant was engaged in manufacturing of goods at backward area hence is entitled for deduction u/s.80IB(5) of the Income-tax Act, 1961. AO is directed to allow deduction as discussed above."
5. Both the parties were heard in detail. We have considered the rival submissions carefully and find that some details like details of fixed assets or electricity bills were not filed before the AO and CIT(A) had allowed the relief on the basis of some materials which he never got verified from Assessing Officer. Therefore, it was proposed that the matter may travel back to the AO for which the learned counsel for the assessee have no objection. Therefore, in the interest of justice, we set aside the order of the learned CIT(A) and remit the matter back to the file of the A.O. for re-consideration of the issue after considering the fresh material which may be filed before him and/or which was filed before the CIT(A).
6. In the result, the revenue's appeal is allowed for statistical purposes. Order pronounced in the open court on this 28th day of May, 2010.
Sd. Sd.
(V. Durga Rao) (T. R. Sood)
Judicial Member Accountant Member
Mumbai dated the 28th May, 2010.
kn
Copy to:
1. The Assessee
2. The Revenue
3. The CIT, Mumbai City -25, Mumbai
4. The CIT(A)-XXV, Mumbai
5. The DR 'G' Bench, Mumbai By order
/True copy/
Asst. Registrar, ITAT, Mumbai