2017 (8) TMI 1432 - HC - Income Tax

Court upholds ITAT's decision setting aside assessment order, grants deduction under Section 80-IB

The court upheld the ITAT's decision to set aside the fresh assessment order dated 27.07.2009 under Section 263/143(3). It found the CIT(A) correctly ... Revision u/s 263 - Held that:- Taking support of Section 263 (1)(b), the concept of record is the record which was available with the A.O. at the time of assessment. If the contention which has been raised by Mr. Jain is taken into consideration, no assessee will be assessee. If the subsequent events to the assessment order is taken into consideration then the scope of Section 263 will be enlarged. The record which was available with the A.O. is required to be taken into consideration and the tribunal while considering the matter has taken into consideration the seven documents, more particularly D.L.C. Certificate which could be procured easily and the other documents like export licence which has been granted w.e.f. 02.09.2002 and registration certificate granted by C.T.O. w.e.f. 26.08.2002. He has also produced the muster roll register. The tribunal has considered the complete facts in detail. It will not be appropriate to re-appreciate the facts, more particularly when the tribunal has observed that the discussion which has been done by the A.O. have not been specifically rebutted by the Department. - Decided in favour of assessee Issues Involved:1. Justification of ITAT's decision in upholding the CIT(A)'s setting aside of the fresh assessment order dated 27.07.2009 under Section 263/143(3).2. Validity of the assessment order dated 27.07.2009 in light of the pending appeal under Section 260A.3. Jurisdiction and validity of the revision order under Section 263 of the Income Tax Act, 1961.4. Grant of deduction under Section 80IB of the Income Tax Act based on evidence from a survey under Section 133A and statements recorded under Section 131.5. Appropriateness of the Tribunal's reliance on its order for A.Y. 2005-06 while setting aside the assessment order for A.Y. 2003-04.6. Compliance with the essential requirements under Section 80IB(2) concerning the restructuring or splitting of an existing business.Detailed Analysis:1. Justification of ITAT's Decision:The court examined whether the ITAT was justified in upholding the CIT(A)'s decision to set aside the fresh assessment order dated 27.07.2009. The Tribunal found that the CIT(A) correctly allowed the deduction claimed under Section 80-IB for the years under appeal. The Tribunal noted that the AO had passed a speaking order after making inquiries and examining the evidence, including the registration granted by the DLC, new machinery installation, and other relevant documents.2. Validity of the Assessment Order:The court considered the validity of the assessment order dated 27.07.2009, which was passed in compliance with the order dated 16.02.2009 under Section 263 by the Commissioner. The court found that the Tribunal had examined the issue on merit and noted that the AO had passed a speaking order after examining all the evidence. Therefore, the Tribunal's decision to quash the order under Section 263 was justified.3. Jurisdiction and Validity of the Revision Order:The court examined whether the revision order under Section 263 of the Income Tax Act could be declared without jurisdiction, wrong, and bad in law. The Tribunal found that the AO had examined the issue in detail and allowed the deduction under Section 80-IB. The Tribunal noted that the CIT had not justified treating the assessment order as erroneous and prejudicial to the revenue's interest. The court agreed with this finding, noting that the Tribunal had considered the complete facts and the detailed submissions of the assessee.4. Grant of Deduction under Section 80IB:The court considered whether the deduction of income under Section 80IB could be granted to the assessee based on evidence from a survey under Section 133A and statements recorded under Section 131. The Tribunal found that the assessee had successfully demonstrated that the business was not set up by splitting up an existing unit and had purchased new machinery. The Tribunal noted that the AO had examined the documents and evidence and allowed the deduction under Section 80-IB, which was justified.5. Appropriateness of Tribunal's Reliance:The court examined whether the Tribunal was right in relying on its order for A.Y. 2005-06 while setting aside the assessment order for A.Y. 2003-04. The Tribunal found that the facts were identical for A.Y. 2003-04 to 2005-06 and that the deduction under Section 80-IB had already been granted for A.Y. 2005-06. The court agreed with this finding, noting that the Tribunal had examined the details for A.Y. 2003-04 and 2004-05 and found that the AO had passed a speaking order after examining all the evidence.6. Compliance with Section 80IB(2) Requirements:The court considered whether the essential requirements under Section 80IB(2) were violated and whether the respondent assessee had renamed its business by restructuring or splitting an existing business. The Tribunal found that the assessee had set up a new unit with new machinery and had not merely restructured or split an existing business. The court agreed with this finding, noting that the Tribunal had examined the complete facts and found that the AO had passed a speaking order after examining all the evidence.Conclusion:The court concluded that the Tribunal had considered the complete facts in detail and had not committed any error in dismissing the appeal. The Tribunal's decision to quash the order under Section 263 and allow the deduction under Section 80-IB was justified. The court dismissed the appeals, answering the issues in favor of the assessee and against the department.