High Court Of Delhi
Mrs. Bharti Sharma vs. Assistant Commissioner Of Income Tax
Section 80-IB, 254(1)
Asst. Year 2003-04
A.K. Sikri & Siddharth Mridul, JJ.
IT Appeal Nos. 138 & 365 of 2009
5th October, 2009
Counsel Appeared :
K.K. Manjani, for the Appellant : Sanjeev Sabharwal, for the Respondent
JUDGMENT
A.K. SIKRI, J. :
The appellant-assessee in her return filed for the asst. yr. 2003-04 had claimed deduction under s. 80-IB of the IT Act (hereinafter referred to as ‘the Act’). As per the assessee she had started business under the name M/s Varnali and M/s Pallavi Boutique in the year 1997-98. However, the deduction under s. 80-IB was claimed for the first time in the asst. yr. 2003-04. The explanation of the assessee for not claiming such a deduction in the earlier years was due to ignorance of law and in the asst. yr. 2003-04 during the course of assessment proceedings only such a claim was made on the advice of M/s Prakash K. Prakash, chartered accountant. The AO disallowed the claim on the ground that no such deduction was claimed in preceding years and even in succeeding years. The assessee preferred appeal thereagainst before the CIT(A). The CIT(A) after examining the record filed before him, was of the opinion that the assessee had satisfied the conditions stipulated for claiming such a deduction under s. 80-IB of the Act being 100 per cent export-oriented unit and therefore, allowed deduction under the said provision. The Revenue filed appeal thereagainst before the Income-tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’).
The Tribunal vide its impugned orders dt. 12th Feb., 2007 remitted the case back to the AO to determine as to whether the appellant was entitled to deduction under s. 80-IB for the asst. yr. 1997-98 or not, since as per the assessee otherwise in the year of incorporation itself, i.e., 199798 the production/export had also started. While doing so, the Tribunal took note of the fact that as per the provisions of s. 80-IB, it was for the assessee to satisfy that she was entitled to the claim deduction under the aforesaid provisions for the asst. yr. 1997-98, since it was the first year of the business. Challenging that decision, the assessee has filed the present appeal (i.e., IT Appeal No. 138 of 2009). We may also note at this stage that the assessee had preferred an application under s. 254(2) of the Act for correction in the impugned orders on the premise that such an order of remand to the AO cannot be allowed in as much as the AO was not only to sit over the judgment of the CIT(A) which has already allowed the claim of the assessee after having satisfied the conditions stipulated under s. 80-IB. This application has also been dismissed by the Tribunal vide its order dt. 16th Jan., 2009. Challenging that order IT Appeal No. 635 of 2009 has been filed by the assessee. In these circumstances, we have taken both the appeals together.
The submission of the learned counsel for the appellant remains the same, which was the basis of filing the application under s. 254(2) before the Tribunal, viz., the CIT(A) had after perusal of the records before him had allowed the deduction and AO could not sit in appeal over the aforesaid findings of the CIT(A). To buttress his submissions, the learned counsel for the appellant has read the order passed by the CIT(A) extensively in the Court. He had inter alia pointed out that the entire record relating to the start of business by the assessee and also the manufacturing activity carried out by the assessee was filed before the AO as well as CIT(A). The CIT(A) had even asked the assessee to send the case records, but the AO failed to comply with such direction. In these circumstances, the CIT(A) had gone into those very records and had arrived at a finding that the claim of deduction under s. 80-IB made by the assessee was found to be in order. On this premise, his submission is that it was not proper on the part of the Tribunal to remit the case back to the AO for determination of the same issue. He also submitted that when entire record was available with AO and if the AO failed to look into the same, the inference has to be drawn in favour of the assessee, particularly, in view of the aforesaid findings of the CIT(A). In support of his submission, learned counsel also relied upon the judgment of the Madras High Court in the case of Ramgosri Constructions (P) Ltd. vs. ITO (2009) 308 ITR 290 (Mad).
The aforesaid submission of the learned counsel for the appellant appears to be attractive in the first instance. However, when we look into the nature of the findings arrived at by the CIT(A), we find that there is no merit in these submissions. From the order of the CIT(A), it cannot be discerned that any specific finding was arrived at by the CIT(A) to the effect that the assessee satisfied the conditions stipulated in s. 80-IB even in respect of asst. yr. 1997-98. We can also note that the observation is made by the CIT(A), on the basis of record produced before him, that the claim under s. 80-IB is found to be in order. There is no discussion of any documents produced before the CIT(A) on the basis of which he gave another specific finding to the effect that the manufacturing activity had started in the year 1997-98. It could not be disputed by the learned counsel for the appellant that even when no claim was made for the asst. yr. 1997-98 in order to become leviable (sic-eligible) for such a claim for the asst. yr. 2003-04, it is necessary for the assessee to establish that the assessee was entitled to such a claim for the asst. yr. 1997-98. What comes out from the aforesaid fact is that there should have been some finding by the authorities below that the conditions contained in s. 80-IB were satisfied even in respect of 1997-98 especially when the Tribunal found that no such findings are arrived at either by the AO or by the CIT(A).
We are of the opinion that the approach of the Tribunal in remitting the case back to the AO for determination of the question is without blemish and perfectly justified. We may observe at this stage that the application filed by the assessee under s. 254 of the Act, while dismissing that application, the Tribunal rightly observed as under : “4. During the course of hearing of original appeal before us, it was argued by the learned senior Departmental Representative that the deduction under s. 80-IB of the Act could not be allowed without filing the revised return of income. He placed reliance on the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (2006) 204 CTR (SC) 182 : (2006) 284 ITR 323 (SC), Tribunal, Delhi Bench ‘A’ on the basis of the above facts noted that the industrial undertaking started business in the previous year relevant to asst. yr. 1997-98 and no claim was made perhaps due to the fact that it was 100 per cent export oriented organization. It was also noted that from the records it was not clear whether in asst. yrs. 1997-98 to 2002-03 the assessee claimed deduction under s. 10A or s. 80HHC of the Act. All of a sudden in asst. yr. 2003-04 the claim was made under s. 80-IB of the Act by filing the revised computation of income, without filing the revised return of income. The Bench further observed that the decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd. (supra) did not restrict the power of the Tribunal in admitting the claim. Since the claim for deduction under s. 80-IB of the Act was not examined in asst. yr. 199798 it was thought proper to set aside the issue to the file of the AO to examine the claim for asst. yr. 1997-98 and in a case the assessee was found to be eligible for deduction under s. 80-IB, the deduction for asst. yr. 2003-04 should be allowed. From the above facts, it is clear that the Bench has taken considered view for setting aside the matter for reconsideration by the AO. The assessee will be eligible for deduction under s. 80-IB of the Act or not in asst. yr. 1997-98 will depend on verification of the facts. Simply because the learned CIT(A) has allowed the claim of the assessee, will not constitute a mistake apparent from record to be rectified under s. 254(2) of the Act. The learned CIT(A) has nowhere examined the conditions for asst. yr. 1997-98. Whatever has been argued by the assessee before him has been repeated in the order. Therefore, in our considered view, there is no mistake apparent from record to be rectified under s. 254(2) of the Act. There being no mistake apparent from record, we do not find any necessity to rectify the order passed by the Bench. Moreover, by setting aside the order, the assessee will not be put to any loss. If the conditions are not satisfied the AO will decide the matter. If the conditions are not satisfied and the AO decides the matter against the assessee and it will be open to the assessee to appeal against the order. Accordingly, we dismiss the miscellaneous application filed by the assessee.”
In view of the aforesaid observation, judgment relied upon by the learned counsel for the appellant has no application to the facts of the present case.
We thus find no merit in either of the appeal and there is no substantial question of law which arises for consideration. These appeals are accordingly dismissed.
[Citation : 329 ITR 534]
