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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 ..... herefore, the assessing officer was correctly 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. - Decided in favour of assessee. - I.T.A No. 1326/Kol/2012 - - - Dated:- 6-2-2015 - Shri Mahavir Singh, JM And Shri Shamim Yahya, AM JJ. For the Appellant : Shri Kanaiya Lal Kanak, JCIT Respondent: Shri V. N. Purohit Shri HarshVardhan Bhardwaj , CA ORDER Per Shri Mahavir Singh, JM : This appeal by revenue is arising out of order of CIT(A)-XXXIII, Kolkata in Appeal No. 97/CIT(A)-XXXIII/ACIT Cir-53,Kol/11-12 dated 09.07.2012. Assessment was framed by ACIT, Circle-53, Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 2009-10 vide his order dated 31.10.2011. 2. The only issue in this appeal of revenue is against the order of CIT(A) in allowing deduction u/s 80IB of the Act. For this revenue has raised the following ground of appeal: That on facts and in the circumstances of the case the CIT(A) erred in accepting that the old unit engaged in production since F.Y. 2000-01 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w-cause notice that it has commenced manufacturing during the FY 2000- 01. According to assessee, it was entitled to claim deduction for the AY 2001-02, which is the initial AY within the meaning of Sec. 80IB of the Act but for the non-fulfillment of the restrictions as regards to number of employees, the assessee did not make claim originally. But when this claim was made during assessment proceedings, the AO declined on account of restriction of number of employees. Accordingly, in the present assessment year also, the AO disallowed the claim of the deduction by observing that, The main condition in the instant case (i) whether industrial undertaking is a small scale industrial undertaking and (ii) begins to manufacture articles between 01-04-1995 and 31-03-2002. The industrial undertaking under consideration has become a small scale industrial undertaking only on 05-09-2002. Therefore, prima facie, he is qualified to get deduction only in year 2002-03 and not in the year 2001-02. Assessee has not been formed within 31-03-2002. Therefore, assessee is not qualified within the extended dated i.e. 31-03-2002 and not eligible to get the benefit of section 890IB(3) of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fist invoice for manufactured goods being dated 29.112000. This is quite evident from the fact that the appellant it has been showing manufacturing turnover and also paying Excise Duty since FY 2000-01. If the assessing officer s view was correct, there could have been no sale of manufactured goods prior to FY 2002-03. The only significant event which happened in FY 2002-03 is that the entire manufacturing operation was shifted to new premises which also involved some procedure like obtaining new trade license. However, that, in no way, means that manufacturing activity started after 31.03.2002. It is also not a case, where the old undertaking was closed and a new undertaking was started. Rather, the same plant and machinery and other establishment was shifted to the new premises. Such shifting of operation can also not be equated with formation of undertaking by way of splitting up or reconstruction of existing business. Regarding registration with Directorate of Cottage Small Scale Industry, section 80IB(3) nowhere requires that in order to claim deduction u/s 80IB, the unit should be registered with Directorate of Cottage Small Scale Industries of state government. IT has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to assessee, the trade license was obtained on 25-09-2000 and machineries were installed. The assessee was also applied registration under Central Excise Act and started manufacturing operation. The first bill was raised for sale of the product on 29-11-2000 for the item pressed steel radiator . The assessee started commercial operation in FY 2000-01 and achieved a turnover of around of ₹ 18 lakhs and filed the following documents before AO in support of its contentions vide letter dated 19-08-2011:- a) Copy of trade licence issued for factory premises at Piyali Town, Baruipur. b) Copy of application for central excise registration with all annexure. c) Copy of formal Central Excise Registration Certificate. d) Copy of application to Central Excise for permission to issue invoice. e) Copy of First Invoice. f) Copy of some of Invoices in respect of Plant Machinery purchased in 1999-00 and 2000-01. Even these facts have not been denied by ld. Senior DR. Subsequently, when the factory unit was shifted at the premises 20B, Chanditala Main Road, the following documents were submitted in support of the same:- a) Copy of application to Central Excise Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucceeding years. It is well settled law that the principles of res judicata do not apply to income-tax proceedings and assessment for each year is an independent proceeding. It is now equally well established that issues that have been settled and accepted over a period of time should not be revisited in subsequent assessment years in the absence of any material change which would justify the change in view. The Supreme Court in the case of Radhasoami Satsang [1992] 193 ITR 321 (SC) has held that unless there is a material change in justifying the Revenue to take a different view the earlier view which has been settled and accepted of a several years should not be disturbed. The relevant extract from the said judgment is quoted below (page 329) : We are aware of the fact that strictly speaking res judicata does not apply to income-tax proceedings. Again, each assessment year being a unit, what is decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer would reveal that for the first time, claim under section 80J of the Act was made by the assessee in the assessment year 1973-74. The assessee was denied that claim by the Assessing Officer. For this reason, the Assessing Officer denied the claim in this assessment year as well, taking note of the fact that the matter pertaining to 1973-74 was pending before the Income-tax Appellate Tribunal. It is a matter of record that the appeal filed by the assessee for the assessment year 1973-74 was allowed by the Income-tax Appellate Tribunal. The effect thereof was that the assessee was granted the requisite deduction under section 80J of the Act for the assessment year 1973-74. The Department has sought reference under section 256(1) of the Act which reference application was also rejected by the Tribunal. Likewise, for the assessment years 1974-75 and 1975-76, the claims of the assessee were allowed. The assessee, once given the deduction under section 80J of the Act is entitled to such a deduction for a period of five years. If the assessee has been allowed the benefit of section 80J in the last three preceding years, there is no reason to deny the same for the instant asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cean-going vessels or other powered craft. Such deduction is also available for the seven assessment years immediately succeeding the initial assessment year. Surely in cases where an assessee is held to be eligible for deduction in the initial assessment year, the same cannot be denied in the subsequent assessment years on the ground of ineligibility since the set of facts which enable an assessee to claim to be eligible for deduction under section 80-I of the Act occur in the previous year relevant to the initial assessment year and have to be examined in the initial assessment year. In such cases, where the facts on the basis of which the deductions are claimed are subject matter of an earlier assessment year and do not arise in the current assessment year, it would not be possible for an Assessing Officer to take a different view in the current assessment year without altering or reopening the assessment proceedings in which the eligibility to claim the deduction has been established. In cases where deduction is granted under section 80-I of the Act, the applicability of the section is determined in the year in which the new industrial undertaking is established. The qualificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y granted to the assesseecompany for the assessment year 1968-69, in the assessment year under reference, that is, 1969-70, without disturbing the relief granted for the initial year. It should be stated that there is no provision in the scheme of section 80J similar to the one which we find in the case of development rebate which could be withdrawn in subsequent years for breach of certain conditions. No doubt, the relief of tax holiday under section 80J can be withheld or discontinued provided the relief granted in the initial year of assessment is disturbed or changed on valid grounds. But without disturbing the relief granted in the initial year, the Income-tax Officer cannot examine the question again and decide to withhold or withdraw the relief which has been already once granted. The Division Bench of the Bombay High Court in the case of Paul Brothers [1995] 216 ITR 548 (Bom) has also adopted the view expressed by the Gujarat High Court in the case of Saurashtra Cement and Chemical Industries Ltd. [1980] 123 ITR 669 (Guj). 7. In the given facts and circumstances of the case and proposition of law in respect to consistency, as discussed above, we confirm the order of CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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