2019 (12) TMI 965 - AT - Income Tax

Deduction u/s 80IC - manufacture items of Perfumes and Fragrances in the notified area - Assessee submitted that even in the case of lessor at the same premises in question, the Department has granted deduction u/s 80IC vide Order under section 143(3) - Assessee also filed copy of Notification Dated 27.08.2008 to show that factory unit of the assessee falls within the notified area - HELD THAT - assessee produced all documentary evidences before the authorities below to show that it has began to manufacture items of Perfumes and Fragrances in the notified area. The same were supported by documentary evidences i.e., Excise Records and Sales Tax assessment etc., The assessee furnished GRs of transportation and bills etc., and C-Form to show that assessee entered into genuine business activity. Though A.O. has raised so many objections at assessment stage and Ld. CIT(A) dealt with each and every item, but, Department has filed revised ground only on few items. Thus, the genuineness of the activities of manufacturing conducted by the assessee at Baddi have not been challenged by the Revenue in the revised grounds of appeal. These facts clearly show that assessee has entered into genuine business activities. Even if sales are made to three parties only, there is nothing wrong against the assessee. It may also be noted here that in respect of some items of manufacture, A.O. has allowed the claim of assessee in scrutiny assessment under section 143(3) for A.Y. 2013-2014 vide Order Dated 31.03.2016 after calling a report from Income Tax Officer, Baddi. Therefore, rule of consistency apply to the facts of the case and Department cannot take a different stand against the assessee in different assessment years. It may also be noted here that it has not been clarified, whether report of the Inspector or statement of Shri Kusum Kumar Sethia was supplied to the assessee for rebuttal ? Therefore, such report and statement cannot be read in evidence against the assessee. It may also be noted here that it is a Departmental Appeal and no documentary evidences have been produced before us to contradict or rebut the finding of fact recorded by the CIT(A) in favour of the assessee. Therefore, in the absence of any evidence against the assessee on record, it is difficult to take a contrary view as have been taken by the CIT(A). In view of the above discussion, we do not find any infirmity in the finding of fact recorded by the Ld. CIT(A) to allow the claim of assessee for deduction under section 80IC - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the Ld. CIT(A)'s order.
2. Commencement of business and purchase of plant and machinery.
3. Acceptance of additional evidence by Ld. CIT(A).
4. Production of finished goods and packaging evidence.
5. Eligibility under section 80IC(2)(a)(ii) of the Income Tax Act.
6. General grounds for appeal.

Detailed Analysis:

1. Validity of the Ld. CIT(A)'s Order:
The Revenue challenged the Ld. CIT(A)'s order, alleging it was "bad in law and not in consonance with the facts of the case." The Tribunal found that the Ld. CIT(A) had thoroughly considered the documentary evidence and submissions made by the assessee, which substantiated the claim for deduction under section 80IC. The Ld. CIT(A) concluded that the assessee's unit was located in a notified area and that the manufactured goods did not fall under the negative list of the Thirteenth Schedule, thus fulfilling the conditions for the deduction.

2. Commencement of Business and Purchase of Plant and Machinery:
The Revenue argued that the plant and machinery relevant for production were purchased between 24.11.2009 to 06.01.2010, whereas the assessee claimed the commencement of business on 02.11.2009. The Tribunal noted that the partnership deed was executed on 02.11.2009, and subsequent developments, including the purchase of plant and machinery, were made, which justified the commencement of business activities. The Chartered Accountant had clarified this before the A.O.

3. Acceptance of Additional Evidence by Ld. CIT(A):
The Revenue contended that the Ld. CIT(A) accepted additional evidence without giving the A.O. an opportunity to respond. The Tribunal found that the assessee had submitted various replies and documentary evidence before the A.O., which were not denied by the authorities. Therefore, no additional evidence was filed before the Ld. CIT(A), and the claim of the Revenue was unfounded.

4. Production of Finished Goods and Packaging Evidence:
The Revenue claimed that the assessee did not produce a single sample of finished goods or empty packs. The Tribunal observed that the assessee had produced both empty and filled packs of finished goods during the assessment proceedings. The A.O. did not raise any suspicion or doubt on the genuineness of the samples. The Tribunal found that the assessee had adequately demonstrated the manufacturing activities through documentary evidence, including excise records and sales tax assessments.

5. Eligibility under Section 80IC(2)(a)(ii) of the Income Tax Act:
The Revenue argued that the assessee's unit was not located in a notified area and did not produce eligible goods. The Tribunal noted that the assessee provided a copy of the relevant notification proving that its unit fell within the notified area of Himachal Pradesh. The Tribunal also found that the assessee's manufacturing activities were genuine and supported by documentary evidence. The Tribunal emphasized the principle of consistency, noting that the Department had allowed similar claims in subsequent years.

6. General Grounds for Appeal:
The Tribunal dismissed the general grounds for appeal, finding no merit in the Revenue's arguments. The Tribunal concluded that the Ld. CIT(A) had correctly allowed the assessee's claim for deduction under section 80IC, and there was no infirmity in the order.

Conclusion:
The Tribunal upheld the order of the Ld. CIT(A), confirming the assessee's entitlement to the deduction under section 80IC of the Income Tax Act. The appeal of the Revenue was dismissed.