Case Law Details
ITAT GUWAHATI BENCH
Assistant Commissioner of Income-tax
versus
Assam Dyeing Plants (P.)Ltd.
IT Appeal No. 46 (GAU.) OF 2011
Assessment Year – 2004-05
Date of Pronouncement – 03.02.2012
ORDER
K.K. Gupta, Accountant Member
This appeal by the Revenue is on the issue of learned CIT(A) having allowed the claim of deduction u/s.80-IC as otherwise disallowed by the Assessing Officer on the facts and circumstances of the assessee’s case.
2. The brief facts as have been brought on record are that the assessee is a private limited company carrying on business of dyeing of synthetic yarn and acrylic fibre. The assessee had commenced its manufacturing activity in the previous year relevant to the assessment year 1998-1999. Thus, the previous year relevant to the assessment year under dispute is the seventh year of its operation and the assessee has been enjoying the benefit of deduction u/s. 80-IB of the Income-tax Act, 1961 till the preceding assessment year. However, in terms of the third proviso inserted to u/s. 80-IB(4) of the Act, the assessee thereafter became entitled to deduction as it fell within the scope of section 80-IC of the Income-tax Act, 1961. During the course of assessment proceedings for the assessment year under consideration, the Assessing Officer, after verification allowed the deduction u/s. 80-IC of the Act to the extent of Rs. 54,25,571 as against Rs. 55,22,029 claimed by the assessee. In the meanwhile, the ld. Commissioner of Income-tax, Guwahati-I, Guwahati assumed jurisdiction u/s. 263 of the Income-tax Act, 1961 and passed the order revising the assessment order on the alleged ground that there is an apparent contradiction between the tax audit reports submitted in Form 3CD end Form 10CCB which would lead to denial of the deduction u/s. 80-IC of the Act. Thereafter in course of the proceedings before the Assessing Officer, the deduction claimed u/s. 80-IC of the Income-tax Act, 1961 was denied on the entire income from manufacturing activity holding a view that no substantial expansion was carried out by the assessee in the relevant previous year relating to the assessment year under consideration apart from the issue of contradiction pointed out by the learned Commissioner of Income-tax and denied the benefit of deduction u/s. 80-IC of the Act on the central excise refund on the observation that it has no nexus with manufacturing activity and as such is to be treated as income from other source in the assessment order passed u/s. 263/143(3) of the Income-tax Act, 1961. The assessee appealed before the Commissioner of Income-tax (Appeals), who, however, allowed the claim of deduction u/s. 80-IC of the Income-tax Act, 1961 on the income from manufacturing activity holding that the Assessing Officer has misconstrued the provisions of Section 80-IC of the Act in relation to substantial expansion’ and also addressed the other grievance by holding that the deduction u/s. 80-IC of the Act cannot be disallowed by the Assessing Officer simply on the ground that observation in Form No. 3CD and Form 10CCB by the auditor are contradictory to each other because the assessee had duly complied with the conditions required to claim the benefit of deduction u/s. 80-IC of the Act. The learned CIT(A) also allowed the benefit of deduction u/s. 80-IC of the Income-tax Act, 1961 on the excise duty refund construing the same as being derived from the eligible business of industrial undertaking and having direct nexus with manufacturing activity. The Revenue is in appeal here before the Tribunal against the said order of the learned CIT(A).
3. The learned DR initiating his arguments submitted that the learned CIT(A) has taken cognizance of the fact that the Assessing Officer had expanded the direction u/s.263 of the learned CIT by holding a view regarding the claim of deduction u/s.80-IC has to be in a particular manner. The view therefore as given by the Chartered Accountant in form 3CD as submitted by the assessee along with the return for claim of deduction u/s.80-IC had to be considered together when it categorically indicated that the Central Excise Duty refund has direct nexus with the manufacturing activities and the assessee is not entitled to deduction u/s.80-IB on the Central Excise Duty Refund received by it and also adjudicated by the Hon’ble Guwahatt High Court in the case of CIT v. Meghalaya Steels Ltd . [2011] 332 ITR 91 which is pending for review. However, he left to the discretion of the Bench for consideration in the light of the submissions of the learned Counsel for the assessee as may, be brought on record.
4. The learned Counsel for the assessee submitted that the learned CIT(A) has given a categorical finding with respect to the mistake committed by the auditors regarding observation of the detail in Form 3CD that the deduction under Chapter VIA was shown as “NIL”, whereas in the return it had been claimed u/s.80-IC amounting to Rs. 56,22,029 and was correspondingly supported by audit report in form 10CCB as required u/s.80-IC(vii) r.w.s. 80-IA(vii). Having fulfilled these conditions, this technical mistake in reporting NIL claim of deduction was rightly considered by the learned CIT(A) for not denying the deduction u/s. 80-IC as it was not part of the direction of the learned CIT u/s.263.
5. We have heard the rival contentions. and perused the material on record as no controverting material has been brought on record by the revenue as to why the deduction u/s.80-IC be denied to the assessee merely because the auditor in a report u/s.44AB in Col. “deduction under Chapter VIIA has observed “NIL”. This being a technical non-disclosure appropriately was supported by the auditor by claiming deduction u/s.80-IC which he had certified therefore cannot be subjected to denial to the assessee being purely of technical nature. We may as a passing reference also mention that the case law cited regarding refund of excise duty was held in favour of the assessee by the jurisdictional High Court for deduction u/s.80-IC.
6. In the result, the appeal of the Revenue is dismissed.
