2024 (8) TMI 870 - AT - Income Tax

Denial of deduction u/s 80IC - finished products manufactured at Unit No. III at Paonta Sahib, Himachal Pradesh from assessment year 2010-11 onwards - assessee s claim of deduction u/s 80IC was allowed in the initial assessment years - For the first time in assessment year 2014-15, AO expressed doubt/reservation with regard to assessee s claim of deduction as he was of the view that the machinery available with the assessee does not support the claim of deduction and observed that the electricity consumption cannot support claim of quantum of production. HELD THAT - While deciding the issue in order 2020 (6) TMI 136 - ITAT DELHI dated 02.06.2020, learned Tribunal factually verified the issue and ultimately concluded that the assessee is entitled to claim deduction u/s 80IC of the Act in respect of Unit III situated at Paonta Sahib. Since, the aforesaid decision of the Tribunal was not available before learned first appellate authority while deciding appeals for assessment years 2011-12, 2012-13, 2013-14, the disallowances were confirmed. While deciding the appeal for assessment year 2010-11, FAA not only held the reopening of assessment u/s 147 of the Act to be invalid as it was on a mere change of opinion, but he also decided the issue on merits following the decision of the Tribunal in assessment year 2014- 15. The facts discussed above clearly establish that all the assessment years under appeal, factually, stand on identical footing. Therefore, the contention of learned Departmental Representative that the assessment order for assessment year 2010-11 was not considered by the Tribunal while deciding the appeal for assessment year 2014-15, in our view, is irrelevant and immaterial. Considering the fact that in the reassessment order for assessment year 2010-11, the AO himself has made it clear that reopening of assessment is based on the decision taken by the AO in the assessment order passed for assessment year 2014-15. Thus, in our view, the issue is squarely covered by the decision of the Coordinate Bench in assessment year 2014-15. Assessee is entitled to claim deduction under section 80IC of the Act. Decided in favour of assessee.

Summary

Issues:
- Disallowance of assessee's claim of deduction under section 80IC of the Income-tax Act, 1961.

Detailed Analysis:
The judgment involves a series of appeals related to the disallowance of the assessee's claim of deduction under section 80IC of the Income-tax Act, 1961. The appeals pertain to assessment years 2010-11, 2011-12, 2012-13, and 2013-14. The primary issue revolved around the eligibility of the assessee, a Hindu Undivided Family (HUF) engaged in trading and manufacturing, to claim deduction under section 80IC for finished products manufactured at a specific unit. The Assessing Officer disallowed the deduction citing lack of machinery support, inadequate evidence of production, and insufficient documentation for goods movement. Consequently, assessments for previous years were reopened and deductions disallowed, leading to appeals before the Tribunal.

The counsel for the assessee argued that a previous Tribunal decision favoring the assessee in a similar matter for assessment year 2014-15 should apply to the current appeals. The Departmental Representative acknowledged the Tribunal's decision for 2014-15 but highlighted the initial disallowance of deduction in the assessment year 2010-11. The counsel countered by stating that the initial assessment for 2010-11 had allowed the deduction, and subsequent disallowances were based on the 2014-15 decision. The Tribunal considered these arguments and reviewed the facts, noting that the Assessing Officer's stance changed in 2014-15, leading to disallowances in earlier years based on the same reasoning.

The Tribunal emphasized that all assessment years under appeal shared identical circumstances. It deemed the Departmental Representative's argument regarding the 2010-11 assessment irrelevant, as the Assessing Officer's decision in 2014-15 prompted the reassessment for 2010-11. Relying on a prior Tribunal decision for 2014-15, the Tribunal concluded that the assessee was entitled to claim deduction under section 80IC for all disputed assessment years. Consequently, the Tribunal directed the Assessing Officer to delete the disallowances and allowed the assessee's appeals while dismissing the Revenue's appeal. The judgment was pronounced on 30th July 2024.