Income Tax Appellate Tribunal - Ahmedabad
Kiri Dyes & Chemicals (P) Ltd.,, ... vs Department Of Income Tax
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IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
Before S/Shri Mukul Shrawat, JM and D.C.Agrawal, AM
ITA No.1149/Ahd/2007
Asst. Year :2003-04
Income-tax Officer, Wd Vs. Kiridyes & Chemicals
4(2), Ahmedabad. (P) Ltd., 53, Manek
Baug Society,
Ambavadi, Ahmedabad.
(Appellant) .. (Respondent)
Revenue by :- Shri Gaurav Batham, DR
Assessee by:- Shri S. N. Soparkar, AR
ORDER
Per D. C. Agrawal, Accountant Member.
This is an appeal filed by the Revenue against the order of ld. CIT(A) dated 15.12.2006 raising following grounds :-
(1) The ld. CIT(A) erred in law and on the facts of the case in directing the AO to allow the assessee's claim of deduction u/s 80IB for Rs.1,14,13,650/- in respect of first unit for which claim of the said deduction was made in the original return of income filed by the assessee ignoring the fact that the assessee has not made any claim u/s 80IB in respect of the first unit in the revised return of income filed by the assessee.
(2) The ld. CIT(A) has erred in allowing the assessee's aforesaid claim of deduction which was withdrawn by it in the revised return without appreciating the fact that once the original return is revised u/s 139(5) then the claim made in original return of income cannot be entertained by the AO., as also held in the cases of (i) Mangalore Chemicals & Fertilizers Ltd. (1991) 191 ITR 156, 164 (Karn) (ii) Arun Textiles "C" (1991) 192 ITR 700, 708 (Guj) and (iii) Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC). In fact, the assessee's alternate claim was not maintainable at all as no such claim was made in the revised return of income as held by the Hon. ITAT Bench 'C' Ahmedabad in the case of Infinium Communication Pvt. Ltd.
vs. ITO for AYrs. 2000-01 & 2001-02 in ITA Nos. 3489 & 3490/Ahd/2004 dated 3.11.2006.
(3) The ld. CIT(A) further erred in admitting the assessee's alternate claim in violation of Rule 46A of the I.T. Rules as no specific opportunity was granted to the AO to rebut the assessee's claim.
2. The facts of the case are that assessee company is engaged in manufacturing of dyes and chemicals. Return of income was filed on 29.11.2003 declaring total income of Rs.90,39,890/-. The assessee had claimed deduction u/s 80 HHC and 80IB. The return was processed u/s 143(1). The return was subsequently picked up for scrutiny. Thereafter during the course of scrutiny assessment proceedings assessee filed revised return on 31.3.2005 declaring total income of Rs.29,18,932/- wherein it made claim of deduction under section 10B of the Act for a sum of Rs.3,78,28,641/-. This deduction was claimed in place of deduction u/s 80 HHC and 80IB. While scrutinizing the claim the AO came to the conclusion that assessee company is not entitled to deduction 10B. It was noted by the AO that most of the income claimed exempt under section 10B was earned from export incentive like DEPB and duty draw back, excise duty refund and interest which could not be said to be income derived from manufacturing or processing. Further there were procedural defects like incorrect certificate. When deduction u/s 10B was refused by the AO the assessee sought to claim deduction u/s 80IB.in respect of Parkin Industry which is a separate unit of the assessee company. The claim was rejected on the ground that certificate of the auditor in form 10 CCB was not submitted along with return which 2 finally submitted on 29.3.2006 and it was also observed that assessee has purchased old plant and machinery and building for this unit. The AO noticed that investment in this unit was of Rs.1.19 crores whereas deduction under section 80IB (3)(ii) could be allowed to a small scale industry having investment in plant and machinery of less than Rs.1 crore.
3. Before ld. CIT(A) the claim of deduction u/s 80IB was made in respect of the first unit also which claim was made by the assessee in the original return filed on 29.11.2003 but was not made in the revised return filed on 31.3.2005. It was explained to the ld. CIT(A) that deduction u/s 80IB in respect of first unit was withdrawn in the revised return on the assumption that this unit is 100% EOU, therefore, entitled to deduction u/s 10B and, therefore, no claim u/s 80IB can be made in respect of the unit which is entitled to claim deduction u/s 10B. However, the deduction u/s 80IB was claimed in respect of second unit in the revised return also. The AO while disallowing the claim u/s 10B did not consider the claim of deduction u/s 80IB in respect of the first unit as made in the original return. During the course of appeal proceedings before ld. CIT(A) assessee raised alternative claim that in case his claim u/s 10B is rejected then he should be allowed deduction u/s 80IB. The ld. CIT(A) allowed the claim of assessee directing the AO to consider the claim of deduction u/s 80IB in respect of first unit. In this regard he observed as under :-
"8.2 I have considered the above claim. From the facts stated above it is clear that appellant has made a claim in the original return for the deduction u/s 80IB for the first unit. Since deduction u/s 10B has been disallowed by the AO, the AO should have examined the claim of deduction u/s 80IB. On consideration of the facts of the case, I direct the AO to consider this claim of deduction u/s 80IB in respect of first unit for which claim of deduction amounting to Rs.1,14,13,650/- was made in the original return and allow the claim as per provisions of law."3
4. Against this, ld. DR submitted that claim can be made only in the original return and if that claim is not made in the revised return then such claim could not be entertained. The department referred to following judgments:-
(i) Mangalore Chemicals & Fertilizers Ltd. (1991) 191 ITR 156, 164 (Karn)
(ii) Arun Textiles "C" (1991) 192 ITR 700, 708 (Guj)
(iii) Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC).
(iv) ITAT Bench 'C' Ahmedabad in the case of Infinium Communication Pvt. Ltd. vs. ITO for AYrs. 2000-01 & 2001-02 in ITA Nos. 3489 & 3490/Ahd/2004 dated 3.11.2006.
However, the ld. DR could not point out how there was a violation of Rule 46A as he could not point out which document or evidence ld. CIT(A) has admitted without giving opportunity to the AO.
5. Against this, ld. AR submitted that claim of deduction if otherwise admissible can be made at any stage, before the AO, before the CIT(A) or even before the Tribunal. Further ld. CIT(A) has only directed to verify the claim and as such he has not allowed the claim. Therefore, the department could not be aggrieved from such directions. Further section 139(5) does not debar from making a claim before appellate authorities. The decision of Hon. Apex Court in Goetze (India) Ltd. vs. CIT (supra) restricts the claim made before the AO but not before the appellate authorities.
6. We have considered the rival submissions and perused the material on record. In our considered view, there is no case for interference in the order of ld. CIT(A). The reasons are that if assessee is not entitled to claim deduction under section 10B then certainly he can make claim u/s 80IB if conditions laid down in that section are satisfied. Though AO is 4 not bound to allow such claim but when directed by appellate authority he has to consider the claim in the right earnest and if conditions laid down in the concerned section are fulfilled the claim has to be allowed. The judgment of Hon. Gujarat High Court in CIT vs. Arun Textiles 'C"
(supra) is only for the proposition that ITO is not bound to allow deduction if it is withdrawn in the revised return. This judgment was affirmed by Hon. Supreme Court in CIT vs. Mahendra Mills (2000) 243 ITR 56 (SC) by observing that if particulars required for allowance of depreciation are not furnished then depreciation cannot be granted. In CIT vs. Manglore Chemicals & Fertilizers (supra) it has been held that once revised return is filed then original return effaced for all purposes under Income-tax Act. In Goetze (India) Ltd. (supra) it is held that if claim is not made in a valid revised return then there is no power on the AO to entertain the claim. It was, however, made clear by Hon. Apex Court in that case that this decision restricts the AO to entertain a claim for deduction otherwise than by a revised return but did not impinch on the power of the appellate Tribunal under section 254 of the Act. Thus considering all the above judgments, we are of the considered view that if the case relating to claim are on the record of the AO, may be in the original return, then claim should be considered, examined and appropriate decision as per law should be arrived at. Thus respectfully following the decision of Hon. Apex Court in Goetze (India) Ltd. (supra), we direct the AO to consider the claim of deduction u/s 80IB and accordingly we confirm the order of ld. CIT(A).
7. Since there is no indication of additional evidence admitted by the ld. CIT(A), we do not find any merit in ground No.3 raised by the Revenue. This ground of Revenue is accordingly rejected.
58. In the result, appeal filed by the Revenue is dismissed.
Order was pronounced in open Court on 16/7/2010 Sd/- Sd/-
(Mukul Shrawat) (D.C.Agrawal)
Judicial Member Accountant Member
Ahmedabad,
Dated : 16/7/2010
Mahata/-
Copy of the Order forwarded to:-
1. The Assessee.
2. The Revenue.
3. The CIT(Appeals)-
4. The CIT concerns.
5. The DR, ITAT, Ahmedabad
6. Guard File.
BY ORDER,
Deputy/Asstt.Registrar
ITAT, Ahmedabad
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