Commissioner of Income Tax vs Bhavani Forge P. Ltd.

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K.S. Jhaveri, J.—Since all these appeals arise from the common order of the Income Tax Appellate Tribunal, they are being disposed of by this common judgment.

By way of these appeals, the appellant-revenue has challenged the common order dated 28.02.2006 passed by the Income Tax Appeal Tribunal [for short "the Tribunal"] in ITA Nos. 278/RJT/05, 574/RJT/03 & 279/RJT/05, whereby the appeals filed by the revenue were dismissed by the Tribunal.

In all these appeals the facts as well as the question of law are same, therefore, we are discussing only the facts of Tax Appeal No. 1321 of 2006 for our convenience.

The facts in brief are that respondent-assessee is engaged in the business of forging and manufacturing of various types of auto parts. The assess had filed its return for the Assessment Year 2001-02 on 29.10.2001 and declared total income of Rs. 47,66,167/-. The respondent-assessee had claimed deduction under Section 80I of the Income Tax Act, 1961 in the relevant year whereas the business was started on 25.09.1991. It was the contention of the assessee that it became entitled to deduction after purchasing the new machinery. However, the Assessing Officer rejected the claim of the assessee.

4.1. Against the order of the Assessing Officer, the assessee filed an appeals before the Commissioner of Income Tax. The CIT(A) allowed the appeal of the assessee. Being aggrieved and dissatisfied with the order of the CIT(A), the revenue has filed appeals before the Income Tax Appellate Tribunal. The Tribunal after hearing the parties dismissed the appeals of the revenue and confirmed the order of the CIT(A). Hence, these appeals are filed at the instance of the revenue.

In all these appeals, the Court had formulated the following substantial question of law:-

"Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was right in law and on facts in holding that the deduction under Section 80IA of the Income Tax Act, 1961 if not claimed in the initial year, can be claimed in the subsequent years when the conditions therein are fulfilled?"

Learned counsel for the appellant-revenue has submitted that the Tribunal has committed error in allowing the claim of the assessee. He further submitted that the Tribunal as well as the CIT(A) have not properly considered the material on record. Therefore, he urged that the present appeals deserve to be allowed.

On the other hand, learned advocate for the respondent-assessee has supported the impugned judgment and order of the Tribunal and submitted that the impugned order does not warrant any interference by this Court in view of the concurrent findings of both the authorities namely the CIT(A) as well as the Tribunal. Therefore, he urged that the present appeals deserve to be dismissed.

We have heard learned advocates appearing for both the parties and perused the material on record. While dismissing the appeals of the revenue, the Tribunal in paragraph No. 5 has observed as under:-

"5. We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that the CIT(A) has calculated the value of old machinery and new machinery from Assessment Year 1991-92 to 1995-96 as under:-

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 Hon''ble High Court in the case of Commissioner of Income Tax, Gujarat-I Vs. Satellite Engineering Ltd., and in Commissioner of Income Tax, Gujarat-IV Vs. Suessin Textile Bearing Ltd., . 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.Ys. 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 of the Income Tax Act. Apart from that, learned advocate for the appellant-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.