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TMI Blog2019 (12) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... f transporting plant and machinery from Delhi to Baddi during the course of appellate proceedings without giving any opportunity to the Assessing Officer of being heard in this issue. 4. On the facts and circumstances of case, Ld. CIT(A) has not appreciated the findings of the Assessing Officer that the assessee did not produce a single sample of finished goods or empty pack which could prove (i) the name of manufacturer (ii) weight & volume or production (iii) produce ingredients (iv) date of manufacture of product or batch No. and (v) chemical composition, which was pre-requisite for such manufacturing activities. 5. On the facts and circumstances of case, Ld. C1T(A) has erred in accepting the claim under section 80IC(2)(a)(ii) of assessee whereas the case is not covered under this section since the assessee during the assessment proceedings has claimed that its unit is lactated at 'Kasauli' whereas in Form 10CCB it is evident that the unit is located at Baddi, Distt. Solan. Thus there is discrepancy in the claim of the assessee. 6. The appellant craves leave to add, allow or amend any or all the ground of appeal before or during the course of hearing of the appeal." 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80IC any undertaking or enterprise should either produce or manufacture articles which are not any article or thing specified in Thirteenth Schedule or produce of manufacture articles or things which are article or thing specified in Fourteen Schedule. The assessee stated that it has manufactured industrial perfumes and fragrances which do not fall under any article or things specified in Thirteen Schedule of the I.T. Act 1961. The assessee further claimed that it is eligible to claim deduction under section 80IC(2)(a) of the I T. Act. The assessee further submitted that while filing preparing Form 10CCB, the Chartered Accountant inadvertently mentioned "Yes" against Para 25(f) instead of "No" in Para 25(e) of Form 10CCB of the Income tax Act, 1961. Affidavit of the Auditor was also filed to show that it was an inadvertent mistake. The A.O, however, did not accept the contention of assessee and noted that Audit Report itself disentitle the assessee for making claim of deduction under section 80IC of the I.T. Act. The A.O. noted that Perfumes and Fragrances is not a business enlisted in Schedule-XIV. Therefore, assessee's case is not even covered under section 80IC(2)(a)(ii) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to examine the facts and spot who was furnished his report Dated 27.02.2013 in which it was submitted that the premises belong to M/s. Gopal Group of Industries who is in the business of Chewing Tobacco, Pan Chatni etc., and there is no manufacturing of Perfumes and Fragrances. The A.O. also noted that assessee was asked to produce an empty pack of finished goods for verification. In response to the query, assessee produced a pair of empty plastic jar fixed with plain label showing the name of "Gopal Perfumery Compound". The assessee failed to explain why it is producing the product of Gopal Industries instead of producing the product of M/s. Vasundhara Flavours i.e., assessee. The A.O. also noted that assessee failed to produce empty pack of manufacturing goods as is claimed in the audit report. The A.O. further noted that assessee has made sales to three firms i.e., (i) H.M. Sales Corporation, Delhi (ii) Aman Marketing and (iii) Radha Rani Impex, Delhi. The A.O. noted that these companies belong to one Shri Kusum Kumar Sethia who has filed income tax return in Gauhati, who has close association with the assessee firm. The statement of Shri Kusum Kumar Sethia was recorded in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d/manufactured item/article as claimed and also not produced any evidence/sample in physical form of salable manufactured goods. (iii) The assessee could not prove its distinguished entity at the registered office and business address i.e. 240, Okhla Industrial Estate Phase-III, New Delhi-110020 is also shared by its sister concern M/s Gopal Industries. The manufacturing unit at Khasra No. 117, Baddi Barotiwala Road, Village Burnwala Distt. Solan (HP) is also shared by M/s Gopal Industies, its sister concern. 2. No Product in name of "perfumes & fragrances" produced:- (i) The assessee not only failed in producing a sample of its product i.e. "Perfumery & Fragrances" with all necessary packing mode but also failed in producing the bills/vouchers of sales which can proves the description of item sold and to whom it is sold. (ii) The assessee also failed to produce the evidences of produced goods pack showing the prescribed details on it under Consumer Act and other Acts. 3. The unit at Baddi is not equipped with plant & machinery to carry out production:- (i) As per the assesee's note submitted vide its letter dated 08/02/2013, there was basic requirements of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 09.11.2009 Lease Agreement as Annexure - 2. 13.11.2009 First purchase was made Copy of bill as Annexure - 5. 19.11.2009 Registration with Department of Excise and Taxation, Himachal Sales Tax, Himachal Pradesh. Central Sales Tax Registration Certificate and HP Value Added Tax Registration Certificate issued by the Department of Excise and Taxation, Himachal Pradesh as Annexure - 6. 20.11.2009 Purchase of 5/6 (five) Electronic Scales Copy of Bills as Annexure-7. 24.11.2009 Purchase bill of Packaging material from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills Annexure - 8 26.11.2009 Some purchase bill of Raw materials from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills Annexure - 9 26.11.2009 1 (one) S.S. Tank with Fittings (Perfumery Tank) Capacity 1000 Ltr. Copy of bills as Annexure - 10 26.11.2009 2 (two) Nos. of Sintex Tank (For Perfumery Mixing) Capacity 2100 Ltr each Copy of bills as Annexure - 11 02.12.2009 Declaration filed with Excise Department to claim exemption under Notification No.50/2003 Dated 10.06.2003 Duly acknowledged copy of Letter submitted with E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rm 10CCB filed before the AO, on perusal of point no 25(f) of Form 10CCB, it revealed that the item manufactured fall in the item enlisted in Fourteenth Schedule. And, the commencement of business is 2nd November, 2009 i.e. before installation of necessary plant & machinery which has takes place 24th Nov., 2009 to 6th Jan, 2010. And, it is seen from registration accorded by Excise Department vide Reg. no - 02030100434 for business mentioned therein as "Manufacturing of Industrial Perfumes & Flavoured Pan Chatni (Pan Flavouring Material) while in Form 10CCB column No. 25(i)(c) it is mentioned as manufacturing of "Perfumes & Fragrances". And, the business premises of the assessee is not located in the area of notified by the CBDT vide Notification No.- S.O. 1296(E) dated 04.11.2003 and also not produced the article mentioned in Schedule - XIV requisite for eligibility of deduction u/s - 80IC(2)(a)(ii) of The Income Tax Act, 1961. The AR of the appellant contended that the appellant has fulfilled and satisfied all the three condition as laid down u/s.80IC of the Act, 1961 which are as under : 1. The appellant firm has manufactured industrial perfumes and fragrances, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irteenth Schedule of the Income Tax Act, 1961, however, in preparing Form 10CCB, the Chartered Accountant inadvertently mention "Yes" instead of "No" in Para 25(f) of Form 10CCB of the Income Tax Act, 1961. The AR also furnished an Affidavit of the Auditor dated 22.03.2013 confirming the said fact before the AO during the course of assessment proceedings. The AO further alleged that plea of figures in Audit Report being mistakenly incorrect is only an afterthought on the part of assessee, and ought to be rejected and the assessee cannot alter statutory statement / report as per his whims at later stage claiming these vitals discrepancies to be mere "clerical mistake". The AR contended in this respect that the AO himself mentioned in the assessment order that "Perfumes & Fragrances" is not a business enlisted in Schedule - XIV, then how these mistake can be after thought of the appellant. The AR further contended that AO himself satisfied that the article / thing produced by the appellant is not listed in Schedule Thirteenth of the Income Tax Act, 1961. The AR further contended that to claim deduction under the said section it is not compulsory to produce / manufacture arti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing unit. Stock register of finished goods maintained in Form - IV as per Excise Rules in support of Commencement of manufacturing of perfumery, Sales Tax assessment order passed by Assessing Authority. BBN, Baddi - I. Himachal Pradesh, Sales Tax returns and Stock transfer Challans of finished goods along with Declaration under Form - XXVI - A issued by Excise and Taxation Department. Himachal Pradesh and GRs of Transporters and Month wise detail of salary & wages paid to workers employees along with their name & addresses, electricity bill for consumption of electricity for the manufacturing plant. The same has been furnished before the undersigned and have been duly considered and placed on record. The AR further contended that the A.O. himself acknowledged in the assessment order that assessee produced pair of empty plastic Jar with a label showing the name Gopal Perfumery Compound, 505 and 435. The AR further contended that all purchase and sales made to and from manufacturing undertaking at Buranwala, Himachal Pradesh has to pass through the Himachal Pradesh sales Tax Barrier and at the time of passing the said Barrier, Sales Tax Declaration Form No. - XXVI - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m's name from M/s Vasundhara Flavours to M/s Gopal Consumer World is a question on liberty of business houses. It is pertinent to note that decision in respect of running of business lies solely with the owner, partners or director of that business and no one can interfere in the decision taken by the key person of that business because he is the only person who knows need of its business and how to accomplish the same. It is well settled law that the assessing officer should assess the income of the assessee as per the provisions of the Income tax Act, 196 and should not step into shoes of the assessee and tell how to do business and cited judicial precedent rendered by Hon'ble Supreme Court and High Court in support of its contention. The AR submitted various documents in support of its contention that the manufacturing unit is never been shared by M/s Gopal Industries during the course of assessment proceedings such as Lease Agreement dated 09.11.2009 between M/s Flakes N Flavourz for plot bearing khasra No. 117. Baddi - Barotiwala Road, Village Buranwala, Distt. Solan, Himachal Pradesh along with cop}' of patta or registry of land. Addendum to Partnership Deed dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the broad outline of process flow of manufacturing, hence does not contain detailed process along with detail of material such as quantity, composition and plant & machinery used at different stage of production, so on the basis of said note, allegation in respect of shortage of plant & machinery is bad in law while the appellant has submitted detail of plant & machinery installed at its manufacturing unit along with invoices / bills / Transfer challans of fixed assets purchased along with Form XXVI-A declaration under Excise and Taxation Department. Himachal Pradesh in respect of goods / material / capital goods which is an ample proof of transporting capital goods to Buranwala unit, Himachal Pradesh. The A.O. also alleged that that pivotal "plant & machinery" has been purchased in Delhi and no evidence of its transportation to manufacturing unit at Buranwala has been furnished by the appellant, hence, no vital plant & machinery installed at manufacturing unit during the year. The AR submitted that on perusal of the invoices and other evidences furnished before the A.O, it is quite evident that the appellant has purchased plant and machinery against Form "C", hence the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2009) made by the assessee firm which are reproduced as under : Date of Event / Activity Event / Activity Evidence 02.11.2009 Partnership Deed of "Vasundhara Flavours" executed to carry on the business in Himachal Pradesh Partnership Deed as Annexure-2. 09.11.2009 Factory premises in Buranwala (H.P) was taken on lease vide lease deed dated 09.11.2009. Lease agreement as Annexure - 2. 13.11.2009 First purchase was made. Copy of bill as Annexure - 5. 19.11.2009 Registration with Department of Excise and Taxation, Himachal Pradesh Sales Tax, Himachal Pradesh. Central Sales Tax Registration Certificate and HP Value Added Tax Registration Certificate issued by Department of Excise and Taxation, Himachal Pradesh as Annexure - 6. 20.11.2009 Purchase of 5/6 (five) Electronic Scales. Copy of bills as Annexure -7 24.11.2009 Purchase bill of Packaging material from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills as Annexure - 8 26.11.2009 Some purchase bill of Raw materials from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills as Annexure - 9 26.11.2009 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he mixture of various ingredients in the tank in order to get a homogenized mixture. The AR of the appellant in support of its contention has submitted various documents / evidences which were submitted before the AO during the course of assessment proceedings as well as before the undersigned which have been duly considered and placed on record. The A.O. has also alleged in the assessment order that at very beginning stage of production with this minimal plant & machinery it is impossible to produce such huge production and to make the sale of Rs. 14.73 crore in just three month of the very first year of production in response of which the AR of the appellant submitted that product manufactured by the appellant firm is a high value Industrial Perfumes. The product being an Industrial product, sold in bulk which has been corroborated from the details/documents submitted by the appellant during the course of assessment proceedings such as month-wise detail of quantity manufactured and dispatched, during the months December 2009 to March 2010. The relevant portion is reproduced as under : Month Quantity Manufactured (in kgs) Quantity Dispatched (in Kgs) Value of Dispatc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claration Form No. XXVI-A, as these are online forms which are generated at the time of goods passing the Sales Tax Barrier at Himachal Pradesh, and GR of the transporter before the AO for the purpose of Verification. The appellant has also produced books of account, original bank statements and vouchers along with supporting evidences for the verification of the learned assessing officer during the course of assessment proceedings. The appellant had also submitted copy of assessment order of Himachal VAT department, Himachal Pradesh assessing sales/stock transfers for the relevant financial year. However, the AO failed to appreciate the same and asked the appellant to justify huge sales made to few correlated parties and alleged that enquiries reveals that both H.M. sales Corporation and Aman Marketing are proprietorship concern owned by one Kusum Sethia who files his ITR in Guwahati on the basis of some alleged information / documents gathered by him conducting some private enquiry and issuing summon under section 131 / 133(6) of the Income Tax Act, 1961 during the course of assessment proceedings. The AR contended that appellant submitted during the course of assessment proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is revealed that at this premises there was never any type of manufacturing of Perfumery & Fragrance, Rather products under brand name 'Gopal Zarda" were being Produced and transported from this premises. The AR further contended that in the light of detail submission along with documentary evidences the AO erred in alleging in his assessment order that the appellant is re-routing his own unaccounted cash without examining and correlating the detail and explanations filed by the appellant before him during the course of assessment proceedings and without providing copies of the statement recorded, documents and information collected by issuing summon / notice issued under section 131 /133(6) of the Income Tax Act, l961. The AR of the appellant in support of its contention has submitted various documents / evidences vide its various replies such as Detail of party-wise sale & purchase, Confirmation from Debtors and Creditors along with Name, Address, PAN, Nature, and outstanding Balance against them, Consignment Sale Agreement of all Consignment Agents of M/s Vasundhara Flavours, Copy of Income tax Return along with Computation of income of Mr. Kusum Kumar Sethia, Sales Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, it is quite evident that the manufacturing unit is situated under the notified area and manufactured article / thing not being an article / thing not being an article/thing mentioned in the negative list of Thirteenth Schedule, hence the appellant has fulfilled the requisite conditions of section 80-IC of the Act eligible to claim deduction in the said section. Here it is relevant to mention that as regard to various allegations (point wise) mentioned in the assessment order and detailed submission along with evidences furnished before the undersigned, dealt in supra, the claim of the appellant cannot be rejected merely on the basis of inadvertent mistake committed by the tax auditor in Form 10CCB. On a careful perusal of the finding of the A.O. in assessment order and submission along with documents/evidences furnished by the AR in support of its contention as summarized above and also taking into ratio of the decision relied upon by the Appellant, in my considered view the disallowance of claim of deduction u/s 80-IC of the Act without appreciating the documentary evidences such as sales tax and excise records, declaration in Form XXVI - A generated online by the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) through documentary evidences. Learned Counsel for the Assessee submitted that Ld. CIT(A) decided the appeal on several points. However, the Department is challenging the Order of the Ld. CIT(A) only on few grounds. Therefore, appeal of Revenue is not maintainable and is liable to be dismissed. The assessee explained the date of commencement of business because partnership deed was executed on 02.11.2009. Learned Counsel for the Assessee submitted that Head of the Office is situated in Delhi, so, bills were prepared in the name of assessee at Delhi address. All the documentary evidences along with plant and machinery were sent to Baddi unit. The purchases were made against 'C' Form only. The assessee filed various replies before A.O. which were supported by documentary evidences which have not been denied by the authorities below. So no additional evidences were filed before Ld. CIT(A). The assessee manufactures goods as per Law, for which, assessee is entitled for deduction under section 80IC of the I.T. Act. Learned Counsel for the Assessee submitted that A.O. has denied the benefit of deduction under section 80IC on number of reasons i.e., (i) The unit not being situated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at Baddi unit, the claim of assessee has been denied under section 80IC in sum of Rs. 90,50,123/- only. Learned Counsel for the Assessee, therefore, submitted that since claim of assessee under section 80IC have been allowed in A.Y. 2013-2014 in respect of same items for Rs. 20.25 crores by the Ld. CIT(A), therefore, claim of assessee has been rightly allowed by the Ld. CIT(A). 6. We have considered the rival submissions and perused the material available on record. 7. Ground No.1 is general in nature and do not call for any adjudication. 8. On Ground No.2, the Department's case is that plant and machinery were purchased between 24.11.2009 to 06.11.2010 whereas the assessee claimed commencement of business on 02.11.2009 in Form 10CCB. The assessee has, however, explained that on 02.11.2009 partnership deed was executed and thereafter, further developments were made by purchasing the plant and machinery and manufacturing activities have been started, the details of which, were noted above. Therefore, there is no illegality in the explanation of assessee that it has started its business activity by executing the partnership deed. Further, this fact has been clarified by the Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, it was entitled for deduction under section 80IC of the I.T. Act, 1961. 11. On Ground No.5, Revenue challenged that unit of the assessee is not covered by the notified area. The assessee has filed copy of the relevant Notification to prove that its unit falls in notified area of Himachal Pradesh so as to entitle for deduction under section 80IC of the I.T. Act. The same submissions were already made before the Ld. CIT(A), which have not been disputed by the Ld. D.R. through any genuine material on record. 12. Considering the totality of the facts and circumstances in the light of finding of fact recorded by the Ld. CIT(A), it is clear that assessee produced all documentary evidences before the authorities below to show that it has began to manufacture items of Perfumes and Fragrances in the notified area. The same were supported by documentary evidences i.e., Excise Records and Sales Tax assessment etc., The assessee furnished GRs of transportation and bills etc., and C-Form to show that assessee entered into genuine business activity. Further it may be noted that though A.O. has raised so many objections at assessment stage and Ld. CIT(A) dealt with each and every item, but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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