Income Tax Appellate Tribunal - Pune
Sonrise Tea Processing Co. Pvt. Ltd., ... vs Assessee on 16 October, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND
SHRI R.S. PADVEKR, JUDICIAL MEMBER
Sr.No. ITA No. A.Y. Appellant Respondent
1. 130/PN/08 1999-00 Dy. CIT Cir. 2, Sunrise Tea
Kolhapur Processing Pvt.
Ltd.
29 Shivaji Park,
Kolhapur
PAN AACCS
8805 J
2. CO 1999-00 Sunrise Tea Dy. CIT Cir. 2,
12/PN/09 Processing Pvt. Ltd. Kolhapur
in ITA No. 29 Shivaji Park,
130/PN/08 Kolhapur
PAN AACCS 8805 J
3. 131/PN/08 2000-01 Dy. CIT Cir. 2, Sunrise Tea
Kolhapur Processing Pvt.
Ltd.
29 Shivaji Park,
Kolhapur
PAN AACCS
8805 J
4. CO No. 2000-01 Sunrise Tea Dy. CIT Cir. 2,
13/PN/09 Processing Pvt. Ltd. Kolhapur
in ITA No. 29 Shivaji Park,
131/PN/08 Kolhapur
PAN AACCS 8805 J
5. 9/PN/08 2001-02 Sunrise Tea Dy. CIT Cir. 2,
Processing Pvt. Ltd. Kolhapur
29 Shivaji Park,
Kolhapur
PAN AACCS 8805 J
6. 10/PN/08 2002-03 -do- -do-
7. 11/PN/08 2004-05 -do- -do-
8. 222/PN/08 2005-06 -do- -do-
9. 1023/PN/09 2006-07 -do- -do-
10. 987/PN/10 2007-08 -do-
Assessee by : S/Shri S.N. Inamdar
And Shri C.H. Naniwadekar
Department by : Ms. Ann Kapthuama and
Shri Mukesh Verma
Date of hearing : 16-10-2012
Date of pronouncement: ____ 10-2012
ORDER
PER BENCH The captioned proceedings relate to the same assessee and involve certain common issues and therefore, they have been 2 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.
2. ITA No. 130/PN/2008 pertaining to assessment year 1999-00, arising out of order of the CIT(A), Kolhapur dated 16-10-2007, which in turn arises out of order dated 27-12-2006 passed by the Assessing Officer u/s 143(3) of the Income-tax Act, 1961 (in short "the Act"), was heard as a lead case, in deference to the submissions of the parties. In this appeal of the Revenue pertaining to the A.Y. 1999-00, solitary issue relates to assessee's claim for deduction u/s 80-IA of the Act amounting to Rs. 4,51,283/-. The Respondent-assessee is a Company incorporated under the provisions of Indian Companies Act, 1956 and is engaged in the activity of blending, processing and packaging of tea in its small scale industrial undertaking located at Kolhapur (Maharashtra). With respect to the profits of such industrial undertaking, assessee claimed deduction u/s 80-IA of the Act amounting to Rs. 4,51,283/-. In an assessment finalized u/s 143(3) of the Act, dated 27-12-2006, the claim has been denied on the ground that assessee does not fulfill the condition prescribed u/s 80IA(2)(iii) of the Act.
3. The CIT(A) however, allowed the claim of the assessee for A.Y. 1999-00. As per the CIT(A) for the purposes of sec. 80IA as it stood in the A.Y. 1999-00, assessee was an 'industrial undertaking' as per the meaning prescribed in section 80-IA(12)(b) read with the Explanation to sec. 33B of the Act, which inter alia, included an undertaking engaged in processing of goods apart from an undertaking engaged in manufacture of goods. As per the CIT(A), the assessee was engaged in an activity of processing, therefore, its industrial undertaking fell within the scope of section 80-IA of the Act 3 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. and accordingly, the profits thereon were eligible for deduction u/s 80IA of the Act as it stood for A.Y. 1999-00. Against such a decision of the CIT(A), the Revenue is in appeal before us.
4. Before us, the learned DR appearing for the Revenue has primarily referred to the assessment order wherein it has been brought out that the activity undertaken by the assessee does not amount to 'manufacture' or 'production' of any article or thing within the meaning of sec. 80IA(2)(iii) of the Act. The learned DR submitted that the CIT(A) erred in ignoring the fact that the assessee not being engaged in the activity of 'manufacturing' or 'producing' any article or thing was not eligible in terms of sec. 80IA(2)(iii) of the Act, and he misdirected himself in allowing the claim of the assessee for deduction u/s 80-IA for A.Y. 1999-00 merely on the ground that it was an industrial undertaking as per sec. 80-IA(12)(b) read with Explanation to sec. 33B of the Act.
5. On the other hand, learned Representative for the respondent- assessee at the outset pointed out that sec. 80-IA(1), as it stood in the initial year i.e. A.Y. 1999-00, provided for deduction of profits and gains derived from any business of an industrial undertaking. The learned counsel for the assessee pointed out that in terms of sec. 80IA(12)(b) of the Act the meaning of expression "industrial undertaking" as given in Explanation given to sec. 33B has to be adopted. In terms of the said definition, an industrial undertaking involved in processing of goods is expressly included and in this manner, assessee's undertaking falls within the scope of sec. 80IA(1) of the Act. It was therefore, contended that when the expression "industrial undertaking" used in sub-section (1) of sec. 80-IA covers the assessee, no additional condition can be fastened 4 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. with regard to the assessee's claim of deduction u/s 80-IA based on sub-section (2) of sec. 80-IA of the Act. It has been submitted that by giving due importance to the adoption of definition of an 'industrial undertaking' as given in the Explanation to section 33B of the Act, which included a unit involved in processing of goods and reconciling the words used in sub-sections (1) and (2) of sec. 80-IA of the Act, an inescapable conclusion is that undertakings involved in processing of goods were also eligible for deduction u/s 80-IA as it stood for the A.Y. 1999-00.
6. Apart from the aforesaid, it has been submitted on behalf of the assessee that the case is fully supported by the decision of Special Bench of the Tribunal in the case of Madhu Jayanti International Ltd. Vs. Dy. CIT (2012) 137 ITD 377 (Kol) (SB), inasmuch as the activity carried on by the assessee of blending of various teas is admittedly an activity of processing. In support, it was also pointed out that Hon'ble Supreme Court in the case of CIT Vs. Tara Agencies (2007) 292 ITR 444 (SC) has also affirmed that blending of tea amounts to processing. At this point, the learned counsel has also referred to the following two judgments of Hon'ble Kerala High Court in the case of Girnar Industries Vs. CIT (2011) 338 ITR 227 (Ker) and Tata Tea Ltd. Vs. ACIT (2011) 338 ITR 285 (Ker) which have been followed by the Special Bench of the Tribunal in the case of Madhu Jayanti International Ltd. (supra) and as per the assessee, the ratio of the aforesaid judgments squarely applies to the case of the assessee.
7. We have carefully considered the rival submissions. The assessee set up a small scale industrial undertaking at Kolhapur for blending, processing and packing of tea. The activity of the 5 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. assessee comprised of purchase of tea of different qualities, blending the same by mixing one type with another to give desired quality of tea under various brands. The assessee claimed that blending brings out a change in quality, taste and aroma of tea and ultimately a new product emerges in the form of, "blended tea", which amounts to 'manufacturing' or 'processing'. This position was not accepted by the Assessing Officer but as per the CIT(A) the activity carried out by the assessee amounts to 'processing' and impliedly accepted the stand of the Assessing Officer that the activity does not amount to 'manufacture' or 'production'. On this aspect, in our considered opinion, the plea of the Revenue that the activity undertaken by the assessee does not amount to manufacturing or production, is justified, having regard to the judgment of Hon'ble Supreme Court in the case of Tara Agencies (supra). The process undertaken by the assessee in its industrial undertaking is similar to that what was considered by the Hon'ble Supreme Court in the case of Tara Agencies (supra) wherein it has been held that such activity does not fall within the ambit of 'production' or 'manufacture'. The respondent-assessee has referred to the decision of the Special Bench of the Tribunal in the case of Madhu Jayanti International Ltd (supra) wherein it has been held that the business of blending and packaging of tea and export thereof amounts to 'manufacturer' or 'production' of the tea. The reliance placed by the assessee on the decision of the Special Bench of the Tribunal in the case of Madhu Jayanti International Ld (supra) is quite mis-placed, inasmuch as, the point before the Special Bench was whether for the purpose of sec. 10A/10B of the Act, the assessee engaged in business of blending, processing of tea and export thereof can be said to be manufacturer or producer of tea. To emphasize again, we may state that the issue before the 6 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. Special Bench was to examine whether business of blending and processing of tea amounted to be manufacturing or producing of tea for the purposes of sec. 10A/10B of the Act. The Special Bench held that for the purposes of sec. 10A/10B of the Act, expression "manufacture" included processing, blending and packaging of tea while under the common parlance such type of activity did not amount to 'manufacture' or 'production'. In coming to such a conclusion it followed the judgments of Hon'ble Kerala High Court in the case of Girnar Industries (supra) and Tata Tea Ltd (supra). The penultimate para of the decision of the Special Bench which reads as under, "We, in view of the above, hold that when the products for which the assessee's unit is recognised as a 100% EOU are tea bags, tea in packets and tea in bulk packs and the assessee is exclusively engaged in blending and packing of tea for export may not be manufacturer or producer of any other article or thing in common parlance. However, for the purpose of section 10A, 10AA and 10B, we have to consider the definition of the word "manufacture" as defined in sec. 2(r) of SEZ Act, Exim Policy, Food Adulteration Rules, 1955, Tea (Marketing) Control Order 2003, etc. We also find that the definition of 'manufacture' as per sec. 2(r) of the SEZ Act, 2005 is incorporated in sec. 10AA of the Income-tax Act with effect from 10-2-2006. Hon'ble Kerala High Court in the case of Girnar Industries (supra) had held such amendment in sec. 10AA to be of clarificatory in nature. The definition of 'manufacture' under the SEZ Act, Exim Policy, Food adulteration Rules and Tea (Marketing) Control Act is much wider than what is the meaning of the term "manufacture' under the common parlance, and it includes processing, blending, packaging etc. In view of the above and respectfully following the decision of Hon'ble Kerala High Court in the cases of Girnar Industries (supra) and Tata Tea Ltd (supra), we hold that the assessee is entitled for exemption u/s 10B of the Act on account of blending of tea. Similarly, in our view, the industrial units engaged in the very same activity i.e. blending, packing and export of tea in the free trade zone shall also be entitled to enjoy tax exemption under sec. 10A of the Act." brings out the clarity. Quite clearly, the pronouncement in the case of Madhu Jayanti International Ltd (supra) based on the judgment of Kerala High Court in the case of Girnar Industries (supra) and Tata 7 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. Tea Ltd (supra), is applicable only in the context of sections 10A, 10AA and 10B of the Act for the reasons stated therein. In fact, the Special Bench itself noted that the same does not change the meaning of the terms 'manufacture or 'production' in the context of impugned processing of blending of tea, in the common parlance. In the present case, the issue is not in the context of sections 10A, 10AA or 10B of the Act, which was the case before the Special bench. The decision of the Special bench of the Tribunal in the case of Madhu Jayanti International Ltd. (supra) does not help the case of the assessee.
8. Now, we may refer to the stand of the CIT(A) which, is to the effect that the activity undertaken by the assessee's industrial undertaking amounts to 'processing' and therefore, the assessee is eligible for deduction u/s 80-IA of the Act. No doubt, the stand of the assessee to the effect that the impugned activity i.e. blending of tea amounts to 'processing' is quite justified, inasmuch as the same is also in line with the pronouncement of the Hon'ble Supreme Court in the case of Tara Agencies (supra) wherein similar activity has been held to be amounting to 'processing' and not 'production' or 'manufacture'. So however, the moot question is as to whether the same would entitle the assessee for deduction u/s 80-IA of the Act as it stood for A.Y. 1999-00, which is the first year of assessee's claim, as it is the year in which the industrial undertaking of the assessee has been set up. In this context, we may refer to sec. 80IA as it stood for A.Y. 1999-00, which reads as under:
"80-IA. Deduction in respect of profits and gains from industrial undertakings, etc. in certain cases - (1) Where the gross total income of an assessee includes any profits and gains derived from any business of an industrial undertaking or a hotel or operation of a ship or developing, maintaining and operating any infrastructure facility or scientific and industrial research and development or providing telecommunication services 8 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. whether basic or cellular including radio paging, domestic satellite service or network of trunking and electronic data interchange services or construction and development of housing projects or operating an industrial park of commercial production or refining of mineral oil in the North Eastern Region or in any part of India on or after the 1 st day of April 1997 (such business being hereinafter referred to as the eligible business), to which this section applies, there shall in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage specified in sub-section (5) and for such number of assessment years as is specified in sub-section (6)."
9. Sub-section (1) of sec. 80-IA is the main provision which prescribes for deduction of profits and gains derived by the assessee from any business of an industrial undertaking as defined in sec. 80- IA(12)(b) of the Act. Section 80-IA(12)(b) prescribes that for the purposes of section 80-IA, the expression "industrial undertaking"
shall have the meaning assigned to it in the Explanation to sec. 33B of the Act. The said Explanation reads as under:
Explanation - In this section, "industrial undertaking"
means any undertaking which is mainly engaged in the business of generation or distribution of electricity or any other form of power or in the construction of ships or in the manufacture or processing of goods or in mining."
10. Now, the case set up by the assessee is that it being an undertaking involved in 'processing' of goods it is an industrial undertaking as understood for the purpose of sub-section (1) of sec. 80-IA read with clause (b) of sub-section (12) of sec. 8-IA of the Act. Therefore, according to the assessee, the profit and gains of such industrial undertaking fall within the purview of sub-section (1) of sec. 80-IA and it is eligible for the prescribed deduction.
11. At this stage, we may refer to sub-section (2) of sec. 80-IA which contains clauses (i) to (v), inter-alia containing conditions which are required to be fulfilled by an industrial undertaking so as 9 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. to seek deduction u/s 80-IA of the Act. Sub-section (2) of sec. 80-IA clearly prescribes that the section shall apply to any industrial undertaking which fulfills all the conditions prescribed therein viz. the conditions contained in clauses(i) to (v) thereof. One such condition contained in clause (iii) of sub-section (2) of sec. 80IA mandates that the industrial undertaking should 'manufacture' or 'produce' any article or thing. Therefore, in terms of clause (iii) of sub-section (2) of section 80-IA an industrial undertaking ought to manufacture or produce any article or thing in order to qualify for deduction u/s 80-IA of the Act. Ostensibly, as noticed earlier, the activity of blending of tea undertaken by the assessee-industrial undertaking does not amount to manufacture or production and therefore, assessee's industrial undertaking violates the condition prescribed in clause (iii) of sub-section (2) of sec. 80-IA of the Act. On this aspect, the plea raised by the assessee is that as it qualifies to be an 'industrial undertaking' referred to in sub-section (1) of sec. 80-IA read with clause (b) of sub-section (12) of sec. 80-IA, it should be held entitled for deduction u/s 80-IA of the Act. According to the assessee, the function of sub-section (2) of sec. 80-IA is not to whittle down the effect of sub-section (1) but is merely to define the period of exemption depending on the commencement of production and to ensure that the undertaking is new and not formed by splitting up or re-construction of the existing business and that it does not produce articles specified in Eleventh schedule. It is sought to be made out that the words "manufactures or produces" used in clause
(iii) of sub-section (2) of sec. 80-IA is only in the above context. It is further sought to be made out that if the intention of the legislature was to restrict deduction only to such industrial undertaking which manufactures or produces article or thing, the same would have been provided in sub-section (1) of sec. 80-IA itself. 10
ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc.
12. We have carefully pondered over the plea set up by the assessee. In our considered opinion, sub-section (2) of section 80IA lays down the conditions which are to be fulfilled by an industrial undertaking so as to claim the benefit of deduction envisaged in sec. 80-IA. Clauses (i) to (v) thereof contain conditions, viz. that it is not formed by splitting up or re-construction; that it is not formed by the transfer of plant and machinery previously used; that it manufactures or produces any article or thing not being an article specified in Eleventh Schedule unless it is a small scale industrial undertaking, etc. The point to be noted that such conditions are necessarily to be complied with by an 'industrial undertaking' so as to take the benefit of section 80-IA of the Act. In the present case, assessee's claim is violative of clause (iii) of sec. 80-IA(2) of the Act. The plea of the assessee is that it qualifies to be an 'industrial undertaking' as referred to in sec. 80-IA(1) of the Act and therefore, sub-section (2) of sec. 80-IA of the Act cannot impose a further condition so as to defeat its claim for exemption. In our considered opinion, sub-section (1) of sec. 80-IA of the Act itself contains expression "......to which this section applies........". The aforesaid expression qualifies the presence of the expression ".........and business of an industrial undertaking........." contained in sub-section (1) of sec. 80-IA of the Act. Therefore, in order to claim exemption u/s 80-IA of the Act it is not enough that the unit should fall in the expression "industrial undertaking" for the purposes of sub-section (1) of sec. 80-IA of the Act alone, rather sec. 80-IA(1) itself prescribes that the exemption is available to an industrial undertaking, 'to which this section applies' which reflects the import of the fulfillment of condition prescribed in sub-section (2) of section 80-IA of the Act. In this background, the conditions 11 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. prescribed in sub-section (2) of sec. 80-IA of the Act has to be read harmoniously and therefore, in the present case, clause (iii) of sub- section (2) of sec. 80-IA cannot be ignored while examining the assessee's claim of deduction u/s 80-IA of the Act. On a clear interpretation of sec. 80-IA of the Act, as it stood for the A.Y. 1999- 00, the assessee's activity amounts to processing only and it does not amount to either manufacture or production and since the term 'processing' has not been included in sec. 80-IA on account of clause (iii) of sub-section (2) of sec. 80-IA of the Act, the assessee is not entitled for deduction u/s 80-IA of the Act. The CIT(A), in our view, clearly fell in error while allowing assessee's claim for deduction u/s 80-IA of the Act for A.Y. 1999-00.
13. Accordingly, we reverse the order of the CIT(A) and restore that of the Assessing Officer, denying the deduction u/s 80-IB of the Act to the assessee. Accordingly, the appeal of the Revenue in ITA No. 130/PN/2008 for A.Y. 1999-00 is allowed.
14. Coming to the appeal of the Revenue in ITA NO. 131/PN/2008 for A.Y. 2000-01, facts are identical to those for A.Y. 1999-00. Following the parity of reasoning given in preceding paragraphs while dealing with the appeal for A.Y. 1999-00, we reverse the order of the CIT(A) and restore that of the Assessing Officer, denying the deduction u/s 80-IB of the Act to the assessee.
15. Now, we may take C.O. No. 12/PN/2009 preferred by the assessee in relation to the order of the CIT(A) dated 16-10-2007 pertaining to A.Y. 1999-00. In its C.O the only plea raised by the assessee is with regard to the validity of reopening of assessment by the Assessing Officer by invoking sec. 147/148 of the Act. 12
ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc.
16. On this aspect, assessee had contended before the CIT(A) that the Assessing Officer was not justified in reopening the assessment by invoking sec. 147/148 of the Act on the ground that the assessment for A.Y. 2003-04 was completed by the Assessing Officer after fully satisfying himself about the assessee's eligibility for deduction u/s 80-IA/80-IB of the Act and based on same facts and circumstances and without any different material coming to his possession, the Assessing Officer was not justified in invoking sec. 147/148 of the Act for the year under consideration. The plea of the assessee was that under these circumstances, reopening of assessment amounted to "change of opinion" which was impermissible. The CIT(A) noticed that the return of income for the year under consideration was processed u/s 143(1) and also noticed that in so far as the assessment year 2003-04 was considered, the assessment made u/s 143(3) of the Act was taken up for revision by the Commissioner of Income-tax-II Kolhapur (in short Commissioner") by invoking sec. 263 of the Act and in this background, there was justifiable information with the Assessing Officer to reopen the assessment for the impugned assessment year. The relevant discussion by the CIT(A) in this regard is contained in para 18 of the impugned order which reads as under:
"I have considered the submissions. According to the existing provisions, all the returns have to be processed u/s 143(1) and if any tax or interest is due, an intimation is sent specifying the tax demand or if any refund is due it is granted to the assessee. It is further provided that the acknowledgement of the return shall be deemed to be an intimation u/s 143(1) if neither any sum is payable nor refundable. Only in cases where the OAO has reasons to believe that there is a wrong claim made in the return, he may resort to assessment of the income u/s 143(3). In the case, the time limit for issue of notice u/s 143(2) has already expired, the AO can resort to a notice u/s 148 to assess or reassess the income It is important to note that sec. 148 mentions the word "assess' as well as 'reassess' or 're-computation' of income . In the present case the return as accepted u/s 13 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. 143(1) in good faith. While accepting the returns u/s 143(1) the law does not allow the AO to make any change or adjustment to the claims made by the assessee. It therefore, cannot be said that processing of a return u/s 143(1) shows an implicit acceptance of the claims made in the return. The contention of the appellant that there was 'change of opinion' in issuing notice u/s 148 is misplaced. The other contention is that since similar deduction had been allowed in the later year i.e. 2003-04 in an assessment made u/s 143(3), the AO was obliged to follow his own decision taken for an earlier year. There is no such obligation since each year has to be viewed separately. It is also found that the assessment made u/s 143(3) for A.Y. 2003-04 was taken up for revision u/s 263 by the ld. CIT-II Kolhapur. This could constitute information for the AO to re-examine the claim made by the appellant in the earlier years."
17. Not being satisfied with the order of the CIT(A) the learned counsel for the assessee submitted before us that there were no fresh facts and details which came to the notice of the Assessing Officer so as to justify the invoking of sec. 147 of the Act in the instant year. It was pointed out that prior to issuance of notice u/s 148 of the Act for the impugned assessment year, the claim of the assessee for deduction u/s 80-IA/80-IB of the Act was subject matter of consideration in A.Y. 2003-04 and under these circumstances, invoking of sec. 147 of the Act in the instant year amounted to 'change of opinion'. As per the learned counsel there was no justifiable material or irrational plea so as to require the Assessing Officer to invoke sec. 147 of the Act. In this context, reliance was placed on the judgment of Hon'ble Bombay High Court in the case of Indivest PTE Ltd. Vs. Additional Director of Income-tax and others (2012) 250 CTR (Bom) 15.
18. On the other hand, learned DR appearing for the Revenue has relied upon the orders of the lower authorities.
19. We have considered the rival submissions carefully. In the context of the assumption of jurisdiction by issuance of notice u/s 14 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. 148 of the Act, the sum and substance of the arguments raised before us is that there was no fresh material or a rational belief that certain income had escaped assessment on account of allowance of deduction u/s 80-IA of the Act. At the time of hearing, reliance has been placed on the judgment of Hon'ble Bombay High Court in the case of Indivest PTE Ltd. (supra), to point out that in the absence of tangible material or a rational belief, assessment could not be reopened u/s 147/148 of the Act. It was put across to the learned counsel in the course of hearing that the aforesaid proposition could be examined only on perusal of the reasons recorded by the Assessing Officer pursuant to sec. 147 of the Act, a copy of which was not on record. However, the point sought to be made was that prior to issuance of notice u/s 148 of the Act dated 30-3-2006 for the instant assessment year, the assessment for A.Y. 2003-04 was completed by the Assessing Officer wherein the claim of the assessee for deduction u/s 80-IB was upheld. There was no material with the Assessing Officer to entertain a belief for the instant assessment year that any income had escaped assessment on account of wrong allowance of deduction u/s 80-IA of the Act. In this context, we find that the CIT(A) records that the assessment made u/s 143(3) for the A.Y. 2003-04 was taken up for revision u/s 263 by the CIT-II, Kolhapur, and therefore, it would constitute information for Assessing Officer to re-visit the claim made by the assessee u/s 80-IA for earlier years. It is for this reason that the CIT(A) has negated the proposition challenging the assumption of jurisdiction u/s 147. In our considered opinion, the objection taken by the assessee has not been dealt with by the CIT(A) in its proper perspective. Ostensibly, the revisionary proceedings for A.Y. 2003- 04 u/s 263 has been initiated by the CIT-II Kolhapur on 15-11-2006 whereas the notice u/s 148 of the Act in the instant assessment year 15 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. was issued on 30-3-2006. Therefore, the CIT(A) misdirected himself in observing that the revisionary proceedings u/s 263 of the Act by the Commissioner for the A.Y. 2003-04 would constitute 'information' for the Assessing Officer in the instant assessment year.
20. If the test of whether there existed any tangible material with the Assessing Officer on the date of recording of reasons u/s 147 of the Act, is to be examined, it would be in the fitness of things that due reference be made to the reasons so recorded and other contemporaneous record available with the Assessing Officer. Clearly such an approach is conspicuous by absence in the order of the CIT(A). Therefore, in the interest of justice, we deem it fit and proper to set aside the order of CIT(A) Kolhapur on this aspect and restore the matter back to his file to re-visit the objection of the assessee against assumption of jurisdiction by the Assessing Officer by issuance of notice u/s 148 dated 30-3-2006. Needless to say, the CIT(A) shall allow an opportunity of being heard to the assessee and then adjudicate on this aspect afresh in accordance with law.
21. In the result, the Cross Objection of the assessee is allowed for statistical purposes.
22. Similar issue has been raised by the assessee in its Cross Objection No. 13/PN/2009 pertaining to A.Y. 2000-01. Following the reasons given while dealing with CO No. 12/PN/2009, the same is allowed for statistical purposes.
23. In the captioned appeals for the A.Y. 2001-02, 2002-03, 2004- 05, 2005-06, 2006-07 and 2007-08 filed by the assessee, the issue 16 ITA No 130, 131, 9 to 11, 222, 1023 & 987/PN/09 Sunrise Tea Pr.Pvt.Ltd.
A.Y. 1999-00, 2000-01, etc. relates to assessee's claim of deduction u/s 80-IB of the Act in relation to the profits from business of industrial undertaking engaged in the activity of blending, processing and packaging of tea in its small scale industrial undertaking. The conditions in terms of which, assessee has been found to be ineligible for deduction u/s 80-IA of the Act for A.Y. 1999-00 in preceding paragraphs also holds good in the context of claim made u/s 80-IB of the Act for the captioned assessment years. Following the parity of reasoning in ITA No. 130/PN/2008 for A.Y. 1999-00 we hold that the assessee is not entitled for deduction u/s 80-IB of the Act, for the years under consideration.
.
24. In the result, the appeals of the Revenue are allowed while the appeals of the assessee are dismissed and the cross objections filed by the assessee are partly allowed for statistical purposes.
Decision pronounced in the open court on 31 st October 2012.
Sd/- sd/-
(R.S. PADVEKAR) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated 31 st October 2012
Ankam
Copy to:-
1. Assessee
2. Department
3. The CIT (A) Kolhapur
4. The CIT- Kolhapur
5. The Departmental Representative, "A" Bench, I.T.A.T., Pune.
By Order Sr. P.S, ITAT Pune Bench, Pune. .