Income Tax Appellate Tribunal - Nagpur
M. M. Patel And Sons (P.) Ltd. vs Income-Tax Officer on 20 August, 1996
Equivalent citations: [1982]1ITD82(NAG)
ORDER
Shri D. V. Junnarkar, Accountant Member
1. The assessee has in these appeals objected to the orders of the Commissioner (Appeals) upholding the orders of the ITO not allowing the relief to the assessee under section 80J and section 80HH of the Income-tax Act, 1961 for the assessment years 1976-77, 1977-78 and 1978-79.
2. The assessee is a private limited company which was incorporated on 3-9-1973, with its registered office at Bhandara. The main object of the assessee-company was to manufacture bidis. For this purpose the assessee had taken a licence for manufacturing of bidis under the Bidis & Cigar Workers (Conditions of Employment) Act, 1966. In the assessment for the year 1975-76, being the first assessment year, the assessee claimed exemption under section 80J and section 80HH on the ground that the assessee-company was newly established undertaking and had fulfilled all the conditions laid down by section 80J and section 80HH. While the ITO allowed the assessee's claim under section 80J he rejected the assessee's claim under section 80HH for the assessment year 1975-76.
On an appeal by the assessee before the AAC, the AAC held the issue in favour of the assessee holding that the assessee was entitled to the reliefs under section 80HH also.
The revenue did not appeal against the order of the AAC before the Tribunal and, therefore, the order of the AAC had become final.
3. For the years under consideration, the ITO rejected the assessee's claim under these sections on the ground that the assessee did not fulfil some of the conditions laid down under these sections.
4. Apart from the assessee's objection on merits that the assessee had fulfilled all the conditions laid down in section 80J and section 80HH contrary to the assertions in this respect by the ITO, one of the arguments taken before the Commissioner (Appeals) was that the AAC having held in the initial year, that is the assessment year 1975-76, that the assessee was eligible for relief under both these sections, for the succeeding years which are presently under consideration, it was not open to the ITO to reject the assessee's claim for relief under these sections. The Commissioner (Appeals), however, rejected the assessee's plea in this respect on the basis of the judicial pronouncements to the effect that the issue decided by the ITO previously could be reopened if fresh facts come to light, which on investigation would entitle the ITO to arrive at a conclusion or a finding contrary to one previously reached or if the earlier decision was given without taking into account the material evidence. The Commissioner (Appeals) held that in the absence of such circumstances, there could not be departure from the finding given after due enquiry by the predecessor-in-office. In the circumstances of the present case, he gave a positive finding that during the year 1975-76, while claim under sections 80J and 80HH was rejected though substantially the conditions for the allowance were the same, many of the facts pointed out by the ITO in the assessment order for the year 1976-77 though they had an important bearing on the decision (sic). He, therefore, held that the ITO during 1976-77 departed from the view taken by his predecessor in 1975-76 with adequate justification.
5. The assessee has, therefore, filed the present appeals before the Tribunal on the ground that the Commissioner (Appeals) erred in upholding the action of the ITO without pointing out a single material fact which was omitted to be taken into consideration by the previous ITO. Therefore, according to the assessee, the Commissioner (Appeals) would not have upheld the orders of the ITO and rejected the assessee's appeals for the years under consideration. Further in this connection the learned counsel for the assessee has relied on the Gujarat High Court decision in the case of Saurashtra Cement & Chemical Industries Ltd. v. CIT [1980] 123 ITR 669. In this case, the learned judges of the Gujarat High Court had laid down that there was no provision in section 80J similar to the one which was found in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. Without disturbing the relief granted in the initial year, the ITO could not examine the question again and decided to withhold or to withdraw the benefit already granted under section 80J.
6. On behalf of the revenue, it was submitted that the same High Court namely, the Gujarat High Court had taken a contrary view in the case of CIT v. Satellite Engineering Ltd. [1978] 113 ITR 208.
7. We have carefully considered the facts and circumstances of the case and also the submissions made by either party before us. It is an established fact that the assessee was found eligible for reliefs under section 80J by the ITO himself for the assessment year 1975-76. The AAC had found it eligible for reliefs under section 80HH for the same year. The findings of both these authorities have become final and conclusive so far as the assessment year 1975-76 is concerned. Now the question is whether the ITO can reject the assessee's claim for succeeding years in respect of the same business in respect of the same business in respect of the same assets under any circumstances. Under the provisions of section 80J (1) relief at the rate of 6 per cent per annum on the capital employed in the industrial undertaking may be computed under the provisions of the section. Further under section 80J (2), the relief has to be granted in computing the total income in respect of the assessment year relevant to the provisions year in which the industrial undertaking began to manufacture or produce articles and in each of the four assessment years immediately succeeding the initial assessment year. As we understand the law, the eligibility of the assessee for relief under section 80J for all the 5 years, namely, the "initial assessment year" as defined in section 80J (2) and in the four succeeding years has to be determined in the assessment proceedings for the initial assessment year. Nowhere in the enactment we find that the ITO is given any authority to revise his decision on the assessee's eligibility for relief under section 80J for any one of the 5 assessment years once the assessee is found to be eligible for relief and the finding about the assessee's eligibility for relief has become final and conclusive as in the instant case.
Likewise regarding relief under section 80HH, the relief is admissible to an assessee who satisfies the conditions laid down in that section for each of the 10 assessment years beginning with the assessment year relevant to the previous year in which the industrial undertaking begins to manufacture or produce articles. Even here we see no scope for the ITO to revise in the succeeding years his opinion about the eligibility of the assessee for relief under section 80HH. Further, if there is any doubt on the subject we find that the Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. (supra) has held in unambiguous terms that there was no provision in section 80J, similar to the one which was found in the case of development rebate, which could be withdrawn in subsequent years for breach of certain conditions. Without disturbing the relief granted in the initial year, the ITO could not examine the question again and decide to withdraw or to withhold the relief already granted under section 80J. As to the High Court decision of the same High Court in the case of CIT v. Satellite Engineering Ltd. (supra) relied in support of the revenue's case by the learned departmental representative, we may state that this case was cited also before the learned judges of the Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. (supra) and the learned Judges have distinguished the circumstances in which the decision in the case of Satellite Engineering Ltd. (supra) rendered and explained the dictum laid therein. Clearly the dictum laid down in the case of Satellite Engineering Ltd. (supra) has no application whatsoever to the facts of the present case. In our opinion, the law as explained by the learned Judges of the Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. (Supra) settles the issue once and for all.
8. Even as regards the assessee's claim under section 80HH, though the reliefs under the two sections, namely, sections 80H and 80HH are available to an assessee under different circumstances, the method of granting relief is identical. Under section 80J relief has to be granted for 4 succeeding years and under section 80HH relief has to be granted for 10 succeeding years; otherwise the basis is the same. The eligibility has to be determined in the initial assessment year. Therefore, in our opinion, the dictum laid down by the learned Judges of the Gujarat High Court in the case of Saurashtra Cement & Chemical Industries Ltd. (supra) would apply with equal force to the facts of the present case in its claim for relief under section 80HH also. In these circumstances, in our opinion, the ITO was ill-advised in not allowing the relief to the assessee under section 80J and section 80HH and the Commissioner (Appeals) had, in our opinion, erred in confirming the orders of the ITO.
9. In the circumstances, in our opinion, the orders of the Commissioner (Appeals) require to be reversed. They are reversed and the assessee's appeals are allowed.