2013 (10) TMI 218 - HC - Income Tax

High Court upholds lower authorities' decisions on Section 80IB deduction, dismisses appeals for lack of substantial questions.

Assistant Commissioner of Income-tax, Circle 2(1), Panaji Versus Geno Pharmaceuticals Ltd.

The High Court upheld the lower authorities' decisions regarding the eligibility for deduction under Section 80IB for AY 2007-08 and 2008-09, dismissing ... Reassessment u/s 147 - failure to issue Notice u/s 143(2) - Deduction u/s 80IB of the Income Tax Act - Held that:- No notice under Section 143(2) had been issued while making assessment under Section 143(3) read with Section 147 - The ITAT, after relying on the judgment of the Apex Court in R. Dalmia v. CIT [1999 (2) TMI 4 - SUPREME Court], came to the conclusion that issuance of notice under Section 143(2) was mandatory. The ITAT has taken into consideration the relevant provisions and has also taken into consideration the judgment of the Apex Court and relying on the said judgments, the ITAT has held that notice under Section 143(2) is mandatory and in the absence of such service, the Assessing Officer cannot proceed to make an inquiry on the return filed in compliance with the notice issued under Section 148 – Decided against the Revenue. Issues:- Challenge to ITAT's judgment on deduction under Section 80IB for AY 2007-08 and 2008-09.- Mandatory issuance of notice after reopening the case.- Non-issuance of notice under Section 143(2) during assessment under Section 143(3) read with Section 147.- Disallowance of claim under Section 80IB for AY 2007-08 and 2008-09.- Concurrent findings by CIT (Appeals) and ITAT on eligibility for deduction under Section 80IB.Analysis:1. Challenge to ITAT's judgment on deduction under Section 80IB for AY 2007-08 and 2008-09:- The respondent, a pharmaceutical company, claimed deduction under Section 80IB for setting up a new tablet manufacturing unit. The Revenue disallowed the claim for AY 2007-08 and 2008-09, considering it an expansion of the existing unit. The Commissioner of Income Tax (Appeals) allowed the appeal, which was confirmed by ITAT. The Assistant Commissioner challenged these orders through Tax Appeals No.75/2012 and 76/2012. The High Court upheld the concurrent findings of fact by the lower authorities, dismissing the appeals.2. Mandatory issuance of notice after reopening the case:- In Tax Appeals No.77/2012 and 78/2012, the ITAT held that notice issuance after reopening the case was mandatory. The Revenue contended that this order contradicted the provisions of Sections 292BB introduced by the Finance Act 2008. However, the High Court noted that this aspect was not raised before the ITAT, and as no substantial question of law was raised, the appeals were dismissed.3. Non-issuance of notice under Section 143(2) during assessment under Section 143(3) read with Section 147:- The High Court referred to the case law stating that the Tribunal has discretion to allow new grounds to be raised, especially if it affects the correct assessment of tax liability. Relying on the judgment in R. Dalmia v. CIT, the ITAT held that notice under Section 143(2) was mandatory. As no substantial question of law was raised in these appeals, the High Court found no grounds for interference.4. Disallowance of claim under Section 80IB for AY 2007-08 and 2008-09:- The Revenue disallowed the claim under Section 80IB for AY 2007-08 and 2008-09, alleging an expansion rather than the establishment of a new unit. The CIT (Appeals) and ITAT both found in favor of the respondent based on the material on record. As no substantial question of law was raised, the High Court upheld the concurrent findings, leading to the dismissal of the appeals.5. Concurrent findings by CIT (Appeals) and ITAT on eligibility for deduction under Section 80IB:- Both the CIT (Appeals) and ITAT arrived at concurrent findings that the respondent was entitled to claim the deduction under Section 80IB based on the evidence presented. The High Court, finding no substantial question of law raised in these appeals, dismissed them as well.In conclusion, the High Court dismissed all four appeals, emphasizing the absence of substantial questions of law and upholding the concurrent findings of fact by the lower authorities regarding the eligibility for deduction under Section 80IB and procedural matters related to notice issuance.