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2020 (5) TMI 255 - AT - Income TaxDeduction u/s 80IB(3) - Whether Appellant as engaged in business of manufacturing of mills machinery parts and chemicals has satisfied all the conditions relating to allowably of deduction? - assessee has claimed deduction being 25% of the profit u/s 80IB - HELD THAT - Undisputed fact that the assessee has been claiming deduction under section 80IB of the Act for the last several years and the same was accepted by the Revenue in the assessment framed under section 143(3). Activity of the assessee has already been accepted by the Revenue as eligible for the deduction under section 80IB of the Act. Since there is no change in the facts and circumstances for the year under consideration viz a viz the earlier assessment years, we are of the view that the principles of consistency need to be applied. See M/S. SONATA SOFTWARE LTD VERSUS ADDL. COMMISSIONER OF INCOME TAX 2015 (3) TMI 353 - ITAT MUMBAI In the similar facts and circumstances the jurisdictional High Court in the case of Saurashtra Cement Chemical Industries Ltd. 1979 (1) TMI 249 - GUJARAT HIGH COURT has held that The tax holiday under section 80J cannot be discontinued in the subsequent year without disturbing the relief granted in the earlier year. We hold that the claim of the assessee for the deduction u/s 80IB cannot be denied for the year under consideration as the claim has been accepted by the revenue in the earlier assessment years which was not withdrawn. - Decided in favour of assessee.
Issues:
1. Disallowance of deduction claimed under section 80-IB (3) of the Act. Analysis: The appellant, engaged in the business of manufacturing mills machinery parts and chemicals, appealed against the order disallowing a deduction under section 80-IB (3) of the Act. The Assessing Officer (AO) disallowed the deduction as the appellant did not fulfill the conditions required for claiming the deduction. The AO observed discrepancies in the commencement of production dates provided by the appellant. The Commissioner of Income Tax (Appeals) upheld the AO's decision, emphasizing the need for the appellant to meet specific conditions outlined in the Act. The appellant's claim was supported by a certificate from a Chartered Accountant but lacked substantial evidence to prove the commencement of production before the specified period. The appellant contended that the Revenue had accepted similar deductions in previous assessment years, invoking the principle of consistency. The Tribunal noted the appellant's consistent claims in prior years and cited relevant judicial decisions supporting the continuity of deductions unless withdrawn from the initial assessment year. Relying on precedents, the Tribunal directed the AO to allow the deduction claimed by the appellant. The Tribunal emphasized the importance of adhering to the principle of consistency in tax assessments, especially when deductions have been consistently allowed in previous years. The appellant's eligibility for the deduction under section 80-IB (3) of the Act was upheld based on the principle that once a deduction is accepted and not withdrawn from the initial assessment year, it should continue in subsequent years. The Tribunal referred to specific judicial decisions supporting this principle and directed the AO to delete the addition made, allowing the appellant's appeal. This detailed analysis of the judgment highlights the issues involved, the arguments presented by the appellant, the decisions of the lower authorities, and the Tribunal's ruling based on legal principles and precedents. The Tribunal's decision to allow the appellant's claim for deduction under section 80-IB (3) of the Act showcases the application of legal principles and consistency in tax assessments.
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