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TMI Blog2014 (1) TMI 1750X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant assessment year, if the four years have lapsed from the end of relevant assessment year unless the case falls under clause-B which says that if the four years but not more than six years have been lapsed from the end of relevant assessment year unless the income chargeable to tax which has been escaped assessment amount or likely to an amount of 1 lac or more for that year. We find that this contention is satisfied and secondly if the four years but not more than 6 years if the property is located outside in India. In our opinion, this clause has been inserted w.e.f 01.07.2012. Therefore, it is not applicable of this question. Therefore, in our opinion, in this case under consideration for Assessment Year 04-05 the reopen assessment is barred by limitation, therefore, we have no hesitation to hold that the assessment for A.Y. 04-05 is barred by limitation. Similarly for A.Y. 05-06, the assessment was completed on 20.11.2007. The assessment was required to be reopened on or before 31st March 2010 and the assessment was reopened on 24 March, 2011. Therefore, the reopening of the assessment for 04-05 is bad in law as per the Decision of Hon’ble Supreme Court in the case of K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. 4. Without prejudice, the Commissioner (A) ought to have followed the dictum of Hon'ble Supreme Court reported in 231 ITR 200 in the case of Coca Cola Export Corporation etc., vs. ITO & Anr. and ought to have held that the assessment was bad in law and consequently quashed the same." 4 In C.O. Nos. 29 &30 same ground raised which read as under:- "1. The order of the Commissioner of Income-tax (A) in so far as it is prejudicial to the interest of Respondent, is bad in law. 2. Without prejudice, the Commissioner (A) ought to have appreciated the assessment was reopened on a mere change of opinion and consequently the assessment order was not sustainable in the eye of law, as there was no income that had escaped assessment. 3. Without prejudice, the Commissioner (A) ought to have followed the dictum of Hon'ble Supreme Court reported in 231 ITR 200 in the case of Coca Cola Export Corporation etc., vs. ITO & Anor. and ought to have held that the assessment was bad in law and consequently quashed the same." 5. The brief facts in all these cases are that the assessee company claimed to be engaged in manufacturing of packing material from paper (Unit-1) and laminated p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been formed by splitting up or reconstruction of a business already in existence for claiming deduction u/s 801B. Unless somebody points out that there are two units inside the building, it is impossible for anyone to find out that there are two undertakings functioning inside. Based on the inspection, it is believed that the Unit-II could not be regarded as a separate and independent industrial undertaking. In this regard the case of Periyar Chemicals, 226 ITR 0467 of Kerala High Court is quoted here. It is not correct to say that the new unit is housed in a different building. On the contrary the correct factual position is that the so-called new unit is also housed in the same building where the old plant is also erected. It is seen that the additional space necessary for installing the machineries of the new unit was made available by removing one longitudinal wall of the old building and enlarging the old building by extending the cross walls and constructing a new wall lengthwise. Of course fresh roofing had to be given to the enlarged area, but the roofing is contiguous with that of the roofing of the building of the old unit. Of these two rows are stated to belong to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This ministry gives the recognition/certificate of license to start an industrial undertaking. In the absence of a license for an industrial undertaking, it is not right to call it an undertaking at all. If it is not an undertaking, there is no question of claiming deduction u/s. 80 IB as the deduction u/s. 80 IB is available only to an industrial undertaking. In the instant case of the assessee company, in the absence of the license from the Ministry of Small Scale Industries, Unit-II of the assessee company which is claiming deduction u/s. 8OlB is only an extension of the already existing Unit-I which had claimed deduction u/s. 801B earlier. As the Unit-Il is only an extension of the already existing Unit-I deduction claimed is not allowable. Unit-II does not have a distinct identity at all which is basic for any industrial undertaking claiming the deduction u/s. 801B. Legal status of the unit is highly relevant to decide whether the unit is in the nature of an undertaking. Without prejudice to the above, any new industrial undertaking has to obtain registration from the Central Excise. Central Excise authorities monitor the manufacturing. They monitor the quantity that goes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factv4xtg unit, constructed by investing a much higher amount compared• to Unit- I, which is eligible for claim of deduction u/s. 801B (4). The AO is therefore directed to allow the deduction u/s. 801B(4) to the appellant on Unit-Il for A.Y. 2008-09, 2009-10, 2004-05, 2005-06, 2006-07 and2007- 08. This Ground of Appeal of the appellant is allowed accordingly. 8.5 The facts of the instant case is identical to that of Diamond Tool Industries and therefore, following the decision in the above case, in my opinion, the sales tax retained by the appellant is part of the profit of the industrial undertaking and eligible for deduction u/s. 80IB of the Act. Enhancement application of the AO is rejected accordingly." 7. C.O. No. 27 and 28 relates to Assessment Years 2004-05 and 2005-06 which goes to the root of the case. During the course of hearing the learned AR submitted that the notice u/s 148 for reopening the assessment u/s. 147 of the Act for assessment year 2004-05 is bad in law on the ground that it was barred by limitation. The assessee has filed the return of income for relevant assessment year disclosing all the primary materials and the assessment to conclude on 8.12.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment was reopened by issuing the notice u/s. 148 which read as under. "The assessee filed Return of Income on 30. 10. 2005 declaring total income of ₹ 2,18,733/ after claiming deduction u/s. 80IB of ₹ 2,10,85,825/-. The assessment was completed u/s. 143(3) on 20.11.2007 determining total income at ₹ 2,53,460/- after allowance of deduction u/s. 80IB of ₹ 1,72,62,730/-. In the assessee's case the assessment for A.Y. 08-09 was made u/s. 143(3) on 30.12.2010 disallowing assessee's claim u/s. 80IB for UNIT-II for the detailed reasons mentioned in the assessment order, based on the following grounds. Assessee company is having two units, vis. Unit-I and Unit-II. Both the Units are existing in the same building. The Unit-II does not exist separately. It is only an extension of the already existing unit. After conducting the enquiry, it is concluded that the Unit-II does not exist separately and it is only an extension of the already existing Unit. The Unit-II cannot exit independently and cannot operate as a standalone undertaking. Thus it was held that Unit-II is not eligible for deduction u/s. 80IB. The assessee company, is not having the license from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the relevant assessment year disclosing all the primary materials and the assessment stood concluded on 8.12.2006. In the return filed originally the establishment of Unit-II has brought to the notice and all the articu1ars with regard to the plant and machinery purchased and the production made have already been disclosed. Thus, the assessee having filed the return of income and had also disclosed all the primary materials and particulars in the return and also in the course of assessment proceedings and further the assessment having been concluded u/s.143(3) of the Act, by applying the proviso to Sec. 147 of the Act the assessment cannot be reopened beyond 4 years from the end of the assessment year. For the relevant assessment year the last date of the assessment year was 31.3.2005 and accordingly the assessment if at all required to be reopened it should have been e on or before 31.3.2009. In the circumstances the entire proceedings are barred by limitation and the notice being invalid, no reassessment can be done and the impugned notice may kindly be withdrawn. Without prejudice, from the reasons recorded it is found that on mere surmise the assessing authority has come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the very findings for the assessment year 2008-09 is under challenge before the CIT(A) who is yet to hear the matter. In the circumstances it is requested that the assessing authority may kindly drop the reassessment proceedings initiated u/s.147 of the Act. In the alternative it is prayed that we should await for the order of the CIT(A) before proceeding with the assessment. Thanking you, Yours faithfully, For Apex Packing Products Pvt. Ltd Yatin G. Kakodkar Director 9. From the reply of assessee and the documents on the record shows that Unit-II was in exists as per the order of Commissioner of Income Tax which is on page 40 of the Paper Book No.1. In Assessment Year 2002-03 wherein firstly claim of adjustment of loss of Unit-II was claimed against the profit of Unit-I. We find that Assessment Year 2002-03 is not reopened. Secondly, we find that for Assessment Year 2004-05, the assessment was completed on 08.12.2006 and it is required to be reopened before 31st March 2009, but the assessment was reopened on October 31st, 2011 by issuing the notice on 24.3.2011. Therefore, the assessment is reopened after four years. If the assessment is reopened after four years the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department that assessee was having separate unit No.2. The assessee was allotted separate plot Goa-Daman & Diu Industrial Development Corporation on 15.3.1995. The original allotments letter was produced to show that Unit -II was separate unit from Unit-I. The assessee was handed over this plot on 18.3.1995 and the Daman Diu Industrial Development Corporation has also given in writing that Plot No. 187 was allotted to the assessee. The assessee was manufacturing of plastic wrappers in the Industrial undertaking. The assessee has earlier disclosed this fact to the department and department has accepted the fact that Unit-II was in existing right from beginning. The Assessing Officer has reopened the assessment on the ground that Unit-II is not a new Industrial Undertaking and accordingly not eligible for deduction u/s 80IB(4) of the Act. The Assessing Officer has reopened this assessment only on the basis of that the assessee was not having separate licence for operating Unit-2 therefore, it was not independent undertaking. We has gone through the order of the Commissioner on page 40 of Paper Book No. 1 wherein the department has accepted that Unit- II in existence in A.Y. 2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertaking. The assessee claimed the benefit u/s. 80IB of the Act against the profits of Unit-II, since the Assessment Year 2002-03 and the same has been considered and allowed upto Assessment Year 2007-08. The details of the establishment of the industrial undertaking was called for and after satisfying with the claim of the Appellant and after satisfying with the compliance u/s. 80IB of the Act, the benefit was extended to the assessee. Similarly, in assessment year 2008-09 the assessee claimed deduction u/s. 80IB(4) of the Act to the tune of ₹ 1.13,68,166/- from the profits of Unit-II being its 7th year of operation. In the 7th year the Assessing Officer has verified the claim and he has came to the conclusion that Unit-II was not separate industrial undertaking and it was only an extension of Unit-I. The Unit-II is separate industrial undertaking and which was manufacturing a different products all together. In Assessment Year 2002-03, the Assessing Officer has examined the claim in detail and in Assessment Year 2002-2003 the existence of the independent industrial undertaking was accepted and profit derived therefrom had been considered for deduction under 80IB of the act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction once granted and such deduction cannot be denied in subsequent years unless the deduction allowed on the same ground in the earlier year is withdrawn. We find that Hon'ble Bombay High Court in the case of Commissioner of Income Tax vs. Paul Brothers, 216 ITR 548 has held that once the deduction is allowed and it is not withdrawn for the earlier year, it cannot be withheld for subsequent years. Similarly the Bombay High Court which is Jurisdictional High Court in the case of Commissioner of Income Tax vs. Western Outdoor Interactive Limited has held as under: "In both the matter of Commissioner of Income Tax v. Paul Brothers reported in 216 ITR 548 and M/s. Direct Information Private Ltd. v. ITO dated 29/9/2011 in Writ Petition No.1479/2011, this Court has held that where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act, then unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside, the Income Tax officer cannot withdraw the relief for subsequent years. More particularly so, when the revenue has not even suggested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 80IB(4) on profit of said unit. 13. The brief facts in all these cases are that the assessee company claimed to be engaged in manufacturing of packing material from paper (Unit-1) and laminated packaging material (including wrappers) from plastics (Unit-II). The assessee claimed deduction u/s. 80 IB(4) in respect packaging material and the year under consideration was the 7th by her, year of operation. The AO has carried out the inspection of the assessee's premises conducted on 26.11.2010, it was found that (Unit-II) which is claimed to be separate Industrial Unit by the assessee for which the deduction being claimed u/s. 80IB(4), was operating in the same building, where Unit-1 is operational. On going through the verification, it was found that Unit-II does not have any separate building of its own for functioning. The building of Unit-I was extended by the assessee to accommodate machines of Unit-II. The Assessing Officer did not allow the deduction u/s 80IB (4). The assessee was given show cause notice and after considering the various statements the Assessing Officer was of a view that Unit -II is not independent Unit but it is Unit-I only and disallowed the claim of 80IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uce any contrary decision against the finding of the CIT(A) therefore, we endorse the action of the CIT(A). We also got support from the decision of the Tribunal in the case of Fil Industrial Limited vs. Commissioner of Income Tax reported in 56 SOT 52 (Amritsar) wherein it is held as under: There is no requirement for the assessee to obtain separate registration for each of the three industrial undertakings, having established new industrial undertaking by way of fresh investment of building and plant & machinery and therefore, it cannot be held that undertakings are not eligible to claim deduction u/s 801B of the Act. Deduction u/s 801B-Refund of excise duty-Allowability---AO observed that assessee was not eligible for refund of excise duty being income 'not derived from industrial undertaking' but income attributable to receipt of excise duty refund from industrial undertaking-Held, Excise Duty Refund was to be treated as 'capital receipt' and not liable to be taxed-Assessee's appeal allowed Held: Issue stands covered by the decision of the Hon'ble Jurisdictional High Court of Jammu & Kashmir, in the case of Shree Balaji Allows v. CIT and Another (2011) 333 ITR 335 (J&K) wher ..... X X X X Extracts X X X X X X X X Extracts X X X X
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