Income Tax Appellate Tribunal - Chandigarh
Shree Ram Print-N-Pack, Baddi vs Department Of Income Tax on 25 September, 2013
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IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES 'B' CHANDIGARH
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND SHRI T.R. SOOD, ACOCUNTANT MEMBER
ITA No. 1203/CHD/2012
Assessment Year:2009-10
The ITO Vs. Sh. Ram Print-N-Pack
Baddi Vill & PO Manpura
Solan
PAN No.ABFFS4545L
(Appellant) (Respondent)
Appellant By : Shri J.S. Nagar
Respondent By : Shri Vishal Mohan
Date of hearing : 25/09/2013
Date of Pronouncement : 18.10.2013
ORDER
PER T.R. SOOD, AM
The appeal by the revenue is directed against the order passed by the Ld. CIT(A), Shimla, H.P. on 09/08/2012
2. In this appeal the Revenue has raised the following grounds:-
1. On the facts and in the circumstances, the Ld. CIT(A) has erred in allowing the deduction of Rs.
55,70,119/- to the assessee which was disallowed by the Assessing Officer u/s 80IC of the Income Tax Act.
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2. It is prayed that the order of Ld. CIT(A) be set-aside and that of Assessing Officer restored.
3. After hearing both the parties, we find that during asses sment proceedings the Assessing Officer noticed that assessee has claimed deduction u/s 80IC amounting to Rs. 55,70,119/-. On perusal of the balance sheet, it was noticed that details of plants and machinery were as under:-
Opening balance of Plant & Machinery as on 01-04-2008 Rs. 42,82,528/-
Addition before 30-09-2008 Rs. 19,380/-
Addition after 30-09-2008 Rs. 4,85,478/-
Total Value Rs. 47,87,386/-
Less Deprecation Rs. 6,81,697/-
Balance Rs. 41,05,689/-
It was further noticed from the copies of the bills that machinery at the time of commencement of the business was purchased as second hand machinery from M/s Printers Park, Chennai as per the following details:-
Sl.No. Bill No. & Date Particulars Qty. Amount.
1 002 dated 07-12- One set of Used Second Hand One 36,40,00/-
2005 HEIDELBERG 72 v Four, Colour
Printing Machine with standard
accessories.
2 26 dated 05-04- Heidec Berg Sorm Single Color One 8,32,000/-
2006 USED Printing Machine with
Standard Accessories.
3 29 dated 03-02- One set of USED Second Hand One 3,64,000/-
2007 Seypa 36" Paper Cutting Machine
with Standard Accessories.
` Rs. 48,36,000/-
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Therefore, the assessee was asked to explain why deduction should be allowed because as per section 80IC (4) of the Act, the plant and machinery should not be previously used for any purpose. In response to this query, it was stated as under:-
"In respect of your query raised by your good self regarding installation of previously used machinery, it is submitted that the assessee firm has not installed any previously used machinery in India. The machineries were purchased from M/s Printers Park India which were imported from abroad and was used there only. Therefore, the assessee fulfills the conditions laid under section 80-IC, as it has not installed any previously used machinery in India."
4. The Assessing Officer after examining the above reply was not convinced because no documentary evidence were furnished to support the assessee's claim. Accordingly, deduction u/s 80IC was denied.
5. On appeal, Ld. CIT(A) allowed deduction by following her order for assessment year 2007-08.
6. In fact, it transpired during the course of hearing that deduction was allowed by the Ld. CIT(A) for assessment year 2007-08 but since the tax effect was less than the amount for which Revenue was not supposed to file appeal under the instructions , no appeal was filed by the Revenue.
7. Before us, Ld. DR strongly supported the order of As sessing Officer and submitted that assessee has failed to substantiate its claim 4 before the Assessing Officer. No documentary evidence was filed to prove that machinery was not used previously .
8. On the other hand, Ld. Counsel for the assessee submitted that machines were imported by M/s S Printers Park, Chennai and the necessary documents were filed before the Assessing Officer for assessment year 2007-08 as well as during this year. The machinery was imported by M/s M/s Printers Park, Chennai and was never used in India. He then referred to explanation below the section 80IA(3) of the Act and pointed out that machinery which was used outside India would not be considered as used in India. He also pointed out that section 80IC(4) specifically refers to this explanation and, therefore, it cannot be said that machinery was earlier used in India and accordingly assessee was rightly held to be eligible for deduction u/s 80IC of the Act.
9. We have heard the rival submissions carefully and find that deduction u/s 80IC was denied vide assessment order passed u/s 143(3) even in assessment year 2007-08 on the same footing, copy of which is placed at pages 43 to 46 of the paper book In that year even an affidavit of M/s Printers Park, Chennai was submitted before the Assessing Officer. The contents of the Affidavit have been extracted by Assessing Officer in assessment year 2007-08 as under:-
"We have imported the SEYPA 36" PAPER CUTTING MACHINE from M/s SOUTH EAST TRADING INC OF USA for re-sale and we have not used this machine for any kind of cutting or any other 5 production in India after the import. We sold the above machine to M/s SHRI RAM PRINT N PACK vide our invoice no. 29 dated 02-02- 2007"
10. Even the bills of lading were filed but s till the Assessing Officer did not accept the same. The Ld. CIT(A) adjudicated the issue through her appellate order, copy of which is placed at pages 47 to 50 of the paper book wherein vide paras 4 & 4.1 which are as under:-
"4. The rival submissions have been carefully considered with reference to the facts of the case. It is noted that he appellant had duly submitted the bills of purchase of the machinery under consideration alongwith the copies of the bill of lading from U.S. National Lines INC. It had also submitted the affidavit from the Printers Park, from whom the said machinery was purchased wherein it was certified that the machinery was imported from USA for re-sale and that the machinery was not used for any kind of cutting or any other production in India after the import. The appellant also furnished a certificate of Imported Exporter Code (IEC) in the name of the Printers Park. But the Ld. A.O was not satisfied with the documents furnished by the appellant. He went on to conclude that the affidavit given by the Printers Park was silent about he uses of the machine and therefore the appellant had not complied with Section 80IC(4) of the Act. It is not understood as to how the Ld. A.O. arrived at this conclusion even after the submission of the complete documentary evidence regarding the purchase of the machinery by the appellant, the impor t of the machinery by the Printers Park the bills of import the bills of lading and the affidavit of the Printers Park, Chennai. If the Ld. A.O. 6 had suspected any of the facts stated by the appellant or the Printers Park, he should have conducted independent enquiries and brought something tangible on record to controvert the claim of the appellant. However, the Ld. A.O. has done nothing in this regard. He has simply proceed on the basis of surmises and conjectures and assumed that the machinery was put to use in India after the import before the appellant bought the same from the Printers Park.
4.1 Further enquiries were got conducted through the assessing officer during the course of appellate proceedings. As per the report submitted by the assessing officer, the business of M/s. Printers Park is to import the used printing machines and to sell the same. They have got nothing to do with the printing in India after import M/s. Printers Park have also furnished a fresh affidavit dated 24.10.2011 to this effect to the Ld. A.O. As per the enquiries conducted from the O/o the Zonal Joint Director General of Foreign Trade, Chennai, the IEC number is mandatory only at the time of the clearance of the imported goods, but the process of import, i.e. placing the order, filing of bill of lading etc. can take place even without an IEC number. It is noted that the imported goods in question were cleared after the receipt of the IEC number by M/s. Printers Park. Thus there is nothing on record to establish that the machines purchased by the appellant from M/s. Printers Park. which, in turn imported the same from the USA, were put to use in India after the import and prior to the purchase by the appellant. Therefore, the denial of deduction u/s 80-IC by the Ld. A.O. is not found to be s ustainable. The Ld. A.O. is accordingly directed to allow the deduction u/s 80-IC of the Act to the appellant."7
11. The above clearly shows that sufficient evidence was there to prove that plant and machinery purchased from M/s Printers Park was not used previously in India. Similar enquiries were also conducted by Ld. CIT(A) which gave the same results. We further find that explanation to section 80IA (3) of the Act reads as under:-
"Explanation 1. For the purposes of clause (ii), any machinery of plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely :-
(a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India;
(b) such machinery or plant is imported into India from any country outside India: and
(c) no deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of machinery or plant by the assessee."
Further, the explanation to section 80IC(4) reads as under:-
"Explanation- The provisions of Explanations 1 and 2 to sub-section (3) of section 80-IA shall apply for the purposes of clause(ii) of this sub-section as they apply for the purposes of clause (ii) of that sub-
section."
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12. Thus, through this clarification in respect of usage of plant and machinery u/s 80IC (4) has been adopted in as given in Explanation to section 80IA(3). The explanation makes it clear that plant which was used outside India by a person other than the assessee shall not be regarded as plant and machinery previously used for any purpose. Since in the case before us, the plant and machinery was never used within India, as per the documents submitted by the assessee and enquiries made by Ld. CIT(A). Though the machinery was second hand but it was not used by the assessee outside India, therefore, it cannot be said that machinery was previously used for the purpose of computing deduction u/s 80IC(4) of the Act. We find no force in the submissions of the Ld. DR that documents were not filed before the Assessing Officer. The reading of the assessment order for assessment year 2006-07 clearly show that documents were filed before the Assessing Officer also. In these circumstances, we find nothing wrong with the order of Ld. CIT(A) and confirm the same.
13. In the result, Revenue's appeal is dismissed.
(Order Pronounced in the Open Court on this 18.10.2013) Sd/- Sd/-
(SUSHMA CHOWLA) (T.R.SOOD)
JUDICIAL MEMBER ACCOUNTANT MEMER
Dated : 18 t h Oct., 2013
Rkk
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Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
By order
Assistant Registrar,
ITAT, Chandigarh