Income tax - Whether if assessee does not claim Sec 80IA benefits in initial years, same can be claimed in subsequent years when conditions stipulated are fulfilled - YES: HC
By TIOL News Service
AHMEDABAD, DEC 24, 2014: THE issue before the Bench is - Whether if assessee does not claim Sec 80IA benefits in initial years, same can be claimed in subsequent years when conditions stipulated are fulfilled. YES is the answer.
Facts of the case
The assessee concern is engaged in the business of forging and manufacturing of various types of auto parts. It had filed its return for the AY 2001-02, declaring total income of Rs.47,66,167/-. It had also claimed deduction u/s 80I in the relevant year whereas the business was started on 25.09.1991. It was also contended by the assessee that it became entitled to deduction after purchasing the new machinery. However, AO rejected the claim of the assessee. On appeal, CIT(A) allowed the appeal of the assessee. On further appeal, Tribunal had dismissed the appeals of the revenue and confirmed the order of the CIT(A).
Before HC, the Revenue's counsel had contended that the Tribunal had committed error in allowing the claim of the assessee. It was further submitted that the Tribunal as well as the CIT(A) had not properly considered the material on record. Therefore, it was urged that the present appeals deserved to be allowed. On the other hand, assessee's counsel had supported the impugned judgment and order of the Tribunal and submitted that the impugned order does not warrant any interference by HC in view of the concurrent findings of both the authorities, the CIT(A) as well as the Tribunal. Therefore, it was urged that the present appeals deserved to be dismissed.
Held that,
++ while dismissing the appeals of the revenue, the Tribunal had observed that the CIT(A) had calculated the value of old machinery and new machinery from AY 1991-92 to 1995-96. The CIT(A) has considered the decision of Kerala High Court in CIT V Seeyon Plywood (56 Taxation 296), wherein the Court has held that if the assessee does not satisfy the conditions in the initial year and if he satisfies the conditions in subsequent years, then the benefit must be given from the year in which it satisfies the conditions and as per section 80I the assessee is entitled for deduction only for 10 years and not more than that. The CIT(A) has also relied upon the decision of HC in the case of CIT Vs. Satellite Engineering Ltd. (113 ITR 208) and in CIT v. Suessin Textile Bearing Ltd. (135 ITR 443). It is not disputed by the Revenue that the condition that the value of old machinery should not exceed 20% of the total value of the machinery, was not fulfilled in the year A but the assessee has satisfied this condition during the years under consideration and therefore, the assessee is entitled for claiming deduction u/s. 80IA in the year it fulfills the condition in view of the judicial pronouncement referred to above. Moreover, the assessee purchasing new machinery of sister concerns and hiring of machinery from sister concern is also entitled for deduction u/s. 80IA as held in CIT Vs. Nars Minerals Export Pvt. Ltd. (231 ITR 863). Considering the facts and circumstances of the case in hand, more particularly the assessee having satisfied all the conditions in order to avail benefit of Section 80IA, the CIT(A) in our view is justified in allowing the claim of the assessee and as such, we find no reason to disturb the same. The appeals of the Revenue thus fail;
++ in view of the aforesaid, we are of the opinion that the Tribunal has given cogent and convincing reasons in arriving at the conclusion and we are in complete agreement with the view taken by the Tribunal. The Tribunal after considering the material on record has rightly held that the assessee has satisfied all the conditions in order to avail benefit of Section 80IA. Apart from that, advocate for the revenue is not in a position to show how the findings of the Tribunal are bad in law and on facts. In that view of the matter, we do not find any error in the order of the Tribunal. Hence, the present appeals are dismissed. Accordingly, the question of law posed in these appeals is answered in favour of the assessee and against the revenue.
(See 2014-TIOL-2345-HC-AHM-IT)
