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TMI Blog2015 (2) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is a Small Scale Industry(SSI) unit started operation only in F.Y.2002-03." 3. Brief facts are that the assessee being an individual is the proprietor of M/s Invotech Engineers Manufacturing Pressed Steel Radiators & Special Purpose Machines. The assessee's case was picked up for scrutiny assessment under CASS for the relevant AY 2009- 10 and notice u/s. 143(3) was issued and served on the assessee. During the course of scrutiny proceedings, the assessee furnished books of accounts, Audit Report, other documents, evidences and also furnished other details and explanations as called for by the AO. The AO during the course of scrutiny proceedings, issued show-cause notice dated 18-11-2011 to explain how deduction u/s. 80IB(3) of the Act is allowable to the assessee. The relevant query to the issue under dispute as raised in the show-cause notice reads as under:- "During the course of scrutiny proceeding under section 143(3) of the Income Tax Act, 1961, it has been found on the basis of material available on record that:- '(1) Assessee has claimed deduction under section 80IB(3) of a sum of Rs. 18,16,678/- whereas assessee does not fulfilled the condition of sub para (ii) of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) allowed the claim of deduction u/s/80IB of the Act by observing in para- 3.2 as under:- "3.2 I have considered facts of the assessee. It has been seated by the appellant that the unit had come to existence in FY 1999-2000 at village Ramchandrapur. As the said location was having various problems, he shifted to premises at Piyali Town, Baruipur, Dist-24Pgs. At this premise, newly purchased machinery was installed and after obtaining trade license on 25.09.2000, the unit started manufacturing operation and the first bill was raised on 29.11.2000. In the first year i.e. FY 2000-01, the unit achieved turnover of Rs. 18 lacs. Thus, the unit had commenced production in FY 2000-01 and not after 31.03.2002 as observed by the assessing officer. The confusion has arisen, because the appellant had during FY 2002-03 shifted the factory in lock, stock and barrel to the present premises at 20B, Chnditala Main Road. For this, necessary permission was taken from Central Excise Authority. At the new premise the appellant continued to carry out same manufacturing operation which was being done in the earlier location. However, because of change of address, it had to apply for fresh trade licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king fulfills the above criterion, it is to be treated as small scale industrial undertaking for purpose of claiming deduction u/s. 80IB, irrespective of whether it is registered with the State Government or not. There is no dispute over the undertaking meeting the said criterion. Therefore, my opinion, the assessing officer was not correct in denying claim of deduction u/s. 80IB(3) to the appellant merely because the trade license for the new premise and provisional registration by Directorate of Cottage & Small Scale Industries of state Government was after 01.04.2002, when there was clear evidence before him that the appellant was engaged in manufacturing activity from FY 2000-01 onwards. Here is no dispute that the appellant satisfies all other eligibility conditions prescribed u/s. 80IB. Therefore, the assessing officer is directed to allow deduction u/s. 80IB(3) of I.T. Act, 1961, as computed in accordance with the provisions of law after going through the audit report and other relevant material.'" Aggrieved, now Revenue is in appeal before us. 5. We have heard the rival submissions and gone through the facts and circumstances of the case. We find that the AO has disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for 20B Chanditala Main Road. d) Copy of Trade Licence for 20B Chanditala Main Road Factory. In view of these facts and circumstances, we of the view that once the assessee has started manufacturing in FY 2000-01, as is evident from the records, the assessee is entitled to claim deduction u/s. 80IB of the Act and the claim will not fail for the simple reason the assessee has not fulfilled the restrictive conditions in the initial assessment year. This view is supported by the decision of the Hon'ble Supreme Court in the case of Bajaj Temp Ltd. (supra). 6. Further, the assessee has been allowed deduction u/s 80IB of the Act for and from AY 2004-05 to 2008-09 and now in AY 2009-10 the claim is declined. For the sake of consistency the claim of deduction u/s. 80IB of the Act cannot be disallowed. For this proposition, we are relying on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Delhi Press Patra Prakashan Ltd. (No.2) (2013) 355 ITR 14 (Del). Wherein it has been held as under: "The next controversy that needs to be addressed is whether it was open for the Assessing Officer to deny the benefit of section 80-I of the Act to the assessee having allowed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of any material change justifying the Revenue to take a different view of the matter-and, if there was not change, it was in support of the assessee-we do not think the question should have been reopened and contrary to what had been decided by the Commissioner of Income-tax in the earlier proceedings, a different and contradictory stand should have been taken. We are, therefore, of the view that these appeals should be allowed and the question should be answered in the affirmative, namely, that the Tribunal was justified in holding that the income derived by the Radhasoami Satsang was entitled to exemption under sections 11 and 12 of the Income-tax Act of 1961." The decision of the Supreme Court in the case Radhasoami Satsang [1992] 193 ITR 321 (SC) was on the facts where the question as to the entitlement for exemption under section 4(3)(i) of the Indian Income-tax Act, 1922, had not been granted for the assessment year 1939-40. The assessee had challenged the assessment order which was accepted by the Appellate Assistant Commissioner who upheld the assessee's claim for exemption. This view was consistently followed by the successive Assessing Officers till 1963-64. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case, the claim of the assessee under section 80-I of the Act was examined and allowed by the Assessing Officer for three years preceding the assessment year 1991-92. It is relevant to note that assessments in the earlier years, i.e., relating to the assessment years 1988-89, 1989-90 and 1990-91 has not been disturbed by the Assessing Officer and there has been no change that could justify the Assessing Officer adopting a different view in the assessment years 1991-92 and thereafter. As stated hereinbefore, in certain cases where the issues involved have attained finality on account of the subject matter of dispute having been finally adjudicated, the question of reopening and revisiting the same issue again in subsequent years would not arise. This is based on the principle that there should be finality in all legal proceedings. The Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC) had held as under (page 10) : "that the policy of law is that there must be a point of finality in all legal proceedings, that stale issues should not be reactivated beyond a particular stage and that lapse of time must induce repose in and set at res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act has to be determined in the year in which the new industrial undertaking is established. Although the deduction under section 80-I of the Act is available for the assessment years succeeding the initial assessment year, the conditions for availing of the benefit are inextricably linked with the previous year relevant to the assessment year in which the new undertaking was formed. In such circumstances, it would not be possible for an Assessing Officer to reject the claim of an assessee for deduction under section 80-I of the Act on the ground that the industrial undertaking in respect of which deduction is claimed did not fulfil the conditions as specified in section 80-I(2) of the Act, without undermining the basis on which the deduction was granted to the assessee in the initial assessment year. This, in our view, would not be permissible unless the past assessments are also disturbed. The Assessing Officers over a period of three years being assessment years 1988-89, 1989-1990 and 1990-1991 have consistently accepted the claim of the assessee for deduction under section 80-I of the Act and it would not be open for the Assessing Officer to deny the deduction under section 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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