TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 97
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....x Act, 1961; in short as 'the Act'; respectively. Heard Shri Sanjay Sarma, Senior Standing Counsel, Shri H.B. Mahanta, Principal CIT,Dibrugarh and Mrs. Rinnee Sherpa, ACIT present (incumbent Assessing Officer) representing the department and S/Shri Gaurav Jain and Deepesh Jain appearing for the assessee. 2. It transpires at the outset from a combined perusal of the Revenue and assessee's pleadings in their respective four cases each that the sole issue that arises for our apt adjudication is of the latter's eligibility to claim u/s 80IB deduction in former two and sec. 80IC deduction in the remaining six assessment year(s) involving corresponding deduction claims read amount(s) Rs.62,07,27,070/-, Rs.171,79,78,604/-, Rs.369,60,15,777, Rs.1174,87,15,092/-, Rs.1,149,57,71,017/-, Rs.1572,02,31,395/-, Rs.1626,49,31,357/- and 186,677,04,350/-; assessment year-wise respectively. 3. Learned representative(s) inform us very fairly that the Revenue's four appeal(s) in assessment year(s) 2003-04 to 2006-07 arise against the CIT(A)'s common order holding the taxpayer as eligible for sec. 80IB deduction in relation to its profit derives from the eligible undertaking i.e. new oil wells taken....
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....ate Books of Account should be maintained in respect of all these wells as each well is a distinct entity but no such separate Books of account have been maintained by the assessee in respect of these oil well's; C) According to the provisions of clause (ii) of sub-section (4) of Section 80IC an undertaking should not be formed by the transfer to a new business of machinery or plant previously used for any purpose. However the assessee has used common assets like Drilling Rig, Genuineness Set and other common movable assets. D) Separate Audit report in Form 10CCB has not been submitted for each well alongwith the return of income. the Authorized Representative (AR), Dr. Debi Pal, Sr. Advocate appearing on behalf of the Appellant submitted that under sections 80IB and 80IC where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in Sub-section (2) there shall be in accordance with and subject to the provisions of this section be allowed in computing the total income of the assessee a deduction from such profits and gains as specified in Sub-section (3). In order to claim such benefit the....
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....t constitutes a new industrial undertaking which is eligible for deduction under Section 15C of the Income Tax Act, 1922 (corresponding provision is 80J and 84). The Supreme Court pointed out at page 204 that a new industrial undertaking should be separate physically from than the old one, the capital of which and the profits thereon are ascertainable. The Supreme Court further pointed out, that a new undertaking must be an integrated unit by itself wherein articles are produced and at least a minimum of 10 persons, with the aid of power and a minimum 20 persons without the aid of power have been employed. Such a new industrially recongnizable unit of an assessee cannot be said to be reconstruction of his old business since there is no transfer of any assets of the old business to the new undertaking which takes place when there is reconstruction of the old business. The industrial unit and be treated as a new industrial undertaking if the undertaking is new in the sense that the new plant and machinery are erected for producing either the same commodities or some distinct commodities. The Supreme Court further pointed out that in order to claim the benefit of Section 15C of the 19....
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....rted in 255 ITR 253 at page 255, that for the purpose of claiming relief under Section 80HHH and Section 80I, the law does not require that separate accounts are to be maintained for claiming deduction under the aforesaid provisions. The provisions of section 80IC are similar in that the only requirement is that thee profit of the concern or the undertaking is to be separately ascertainable, and therefore the report of the Auditor giving such separate profit (ascertainable from, each oil well) is sufficient compliance with the section. The aforesaid decision of the Gauhati High Court is binding upon all authorities within the jurisdiction of the High Court. The same view has been subsequently followed by the Gauhati High Court in the case of Bongaigaon Refinery & Petrochemicals Ltd. Vs. CIT reported in 274 ITR 379. This view has been supported in catena of judicial decisions. 104 ITR 101 (Cal) at page 104 120 ITR 110 (Cal) at page 120 190 ITR 553 (All) at pages 555 (C) Regarding the assertions of the AO that the undertaking has been formed by transfer of assets, the AR submitted that the assessee has not transferred any plant or machinery which was formerly used by the as....
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....years 2003-04 and 2004-05 and benefit u/s. 80IC for the assessments years 2005-06 and 2006-07 are to be allowed." 5. Learned senior standing counsel seeks us to treat the Revenue's appeal ITA No.120/Gau/2008 for assessment year 2003-04 as the "lead" case raising the following substantive grounds:- "1. On the facts and circumstances of the case, the Ld. CIT(A) had erred on facts and law by allowing deduction u/s. 80IB through a non speaking order, without discharging and rebutting the AO's finding on facts and law and without referring to the limitations as provided u/s. 80IB(3)(i), 80IB(4) 3rd proviso of the I.T Act and 80IB(9)." 6. Our attention is next invited to Revenue's application filed way-back on 29.03.2017 seeking to raise its twin folded additional grounds that the CIT(A) has further erred in holding the assessee is eligible for u/s 80IB deduction despite its failure in filing the auditor's report in the prescribed Form 10CCB of the IT Rules and also for not having raised the said relief claim in the return of income. Hon'ble apex court's landmark judgment in National Thermal Power Corporation Ltd. vs. CIT (1998) 29 ITR 383 (SC) considered in the tribunal's Specia....
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.... alongwith the relevant profit and loss account as well as balance-sheet as if the undertaking is an distinct entity for the purpose of claiming u/s 80IB deduction. It also emphasises that the impugned statutory provision treats each undertaking as a separate one on standalone basis including capital employed, profits derived to be recorded in separate books of account. Hon'ble jurisdictional high court's decision CIT vs. Technotive Eastern Pvt. Ltd. (2002) 225 ITR 253 (Gau) is sought to be distinguished on the ground that the same involved sec. 80HH and 80I claim(s) against the one u/s 80IB raised before us. 10. The Revenue's next arguments are that the assessee's plant and machinery in its oil wells had been previously used for other purposes and therefore, the Assessing Officer had rightly denied the impugned sec. 80IB deduction. And also that the assessee had neither filed its Form 10CCB auditor's report alongwith return of income nor during scrutiny proceedings. 11. Mr. Mahanta, Principal Commissioner of Income-tax, Dibrugarh has also rendered his valuable assistance to the bench. He quoted sec. 80IB(9)(ii) of the Act that the assessee's deduction claim has to be consid....
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....Knitting Industries (P) Ltd. (2015) 376 ITR 456 (SC); Commissioner of Income-tax, Delhi vs. Contimeters Electricals (P) Ltd. (2009) 317 ITR 249 (Del); Commissioner of Income-tax vs. Axis Computers (India) (P) Ltd. (2009) 178 Taxman 143 (Del); Commissioner of Income-tax-I vs. AKS Alloys (P) Ltd. (2012) 18 taxmann.com 25 (Mad); Commissioner of Income-tax vs. Gujarat Oil & Allied Industries (1993) 201 ITR 325 (Guj) and Bajaj Tempo Ltd. vs. Commissioner of Income-tax (1992) 196 ITR 188 (SC); ARB Industries vs. JCIT Special Range-14 (2005) 93 TTJ 608 (Del) Notification No.S.O. 627(E) [No.11022(F.No.142/32/99-TPL)]Section 80-IB dated 04.08.1999 and Oil & Natural Gas Corporation Ltd. vs. Commissioner of Income-tax (2015) 376 ITR 306 (SC) is also quoted in support. 14. We have given our thoughtful consideration to forgoing arguments qua the instant "lead" issue of assessee's deduction claim u/s 80IB of the Act. We advert to the Assessing Officer's four folded reasoning (supra) that the assessee was supposed to furnish a separate audit report as prescribed under IT Rules in case of an eligible undertaking or enterprise claiming sec. 80IB deduction to be further accompanied by the relevant ....
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....ts. Its reliance on hon'ble Calcutta high court's judgment in assessee's case (supra) treating the oil wells as a composite plant for sec. 32(2A) investment allowance deduction does not apply so far as sec. 80IB deduction claim is concerned. We make it clear that the said relief was applicable for the purpose of giving stimulus to investment whereas the instant issue is that of eligible undertaking-wise deduction as already proved in foregoing discussion. 15. The Revenue's next argument is that the assessee had used its machines or plant for other purposes as per page-6 of the assessment order dated 30.11.2005 also does not carry merit. We notice first of all that the Assessing Officer had nowhere indicated as to what kind of plant and machinery had been used for other purposes. Be that as it may, hon'ble apex court's judgment in Bajaj Tempo Ltd. (supra) held long back that the legislative expression "form" alongwith a pre-fix negative covenant has to be interpreted in the following manner:- "'Form' according to the dictionary, has different meanings. In the context in which it has been used it was intended to connote that the body of the company or its shape did not com....
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.... We make it clear that Form 10CCB is a specific document prescribed for claiming the impugned deduction. The Revenue's above stated arguments that the assessee had not expressly made it clear in its computation about the impugned deduction claim raised u/s. 80IB(4) of the Act is declined. 19. Learned standing counsel submitted at this stage that our foregoing detailed discussion holding the assessee's eligible for claiming sec. 80IB deduction is applicable only in assessment years 2003-04 and 2004-05 involving appeal(s) ITA No.120 and 121/Gau/2008. We therefore reject Revenue's instant former two appeals. 20. The Revenue's case at this stage is that the Assessing Officer had rightly declined the assessee's deduction claim u/s. 80IC of the Act. Learned Principal CIT invited our attention to the fact that sec. 80IC of the Act envisaged the corresponding deduction relief in case of north eastern states under sub-section 2(b)(iii). And that the same applies to manufacture or production of any article or thing specified in 14th schedule as per the Finance Act, 2003 with effect from 01.04.2004. Item No.16 in 14th schedule admittedly includes "mineral based industry" in the positive lis....
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....de under such agreement to a non-resident/foreign company would be chargeable to tax under the provisions of Section 44BB and not Section 44D of the Act. We do not see how any other view can be taken if the works or services mentioned under a particular agreement is directly associated or inextricably connected with prospecting, extraction or production of mineral oil. Keeping in mind the above provision, we have looked into each of the contracts involved in the present group of cases and find that the brief description of the works covered under each of the said contracts as culled out by the appellants and placed before the Court is correct. The said details are set out below: S.No. Civil Appeal No. Work covered under the contract 1 4321 Work covered under the contract drilling of exploration wells and carrying out seismic surveys for exploratory drilling. 2 740 Drilling, furnishing personnel for manning, maintenance and operation of drilling rig and training of personnel. 3 731 Drilling, furnishing personnel for manning, maintenance and operation of drilling rig and training of personnel. 4 1722 Furnishing supervisory staff with expertise in operation ....
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.... Expert advice on the device to clean insides of a pipeline 34 2795 Feasibility study of rig to assess its remaining useful life and to carry out structural alterations 35 925 Engineering analysis of rig 36 1519 Imparting training on cased hold production long evaluation and analysis 37 1533 Training on well control 38 1518 Training on implementation of six sigma concepts 39 1516 Training on implementation of six sigma concepts 40 6023 Training on drilling project management 41 2796 Training in safety rating system and assistance in development and audit of safety management system. 42 1239 To develop technical specification for 3D seismic API modules of work and to prepare bid packages 43 1527 Supply supervision and installation of software which is used for analysis of flow rate of mineral oil to determine reservoir conditions. 44 1523 Supply, installation and familiarization of software for processing seismic data The above facts would indicate that the pith and substance of each of the contract/agreements is inextricably connected with prospecting, extraction or production of mineral oil. The dominant purpose of each of....
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....constitutional bench's decision in Commissioner of Customs vs. M/s Dilip Kumar Company & Others CA No.3327 of 2007 dated 30.07.2018 has also settled the law regarding an exemption provision that the same has to be interpreted strictly. The burden of proving its applicability is on the assessee to show that his case comes within the parameters of the exemption clause or notification; as the case may be. And in case of an ambiguity in exemption notification which is subject-matter of strict interpretation, the benefit thereof goes to the Revenue and not to the assessee. We keep in mind the foregoing legal proposition to revert back to the instant issue. The assessee has admittedly claimed sec.80IC(2)(b)(iii) deduction in its oil wells having started crude oil production between 20.12.1997 to 01.04.2007. 23. We further notice after a deeper scrutiny that the assessee's main produce "crude oil" is treated as interchangeable to mineral oil includinig Natural Gas and Petroleum as per sec. 3(c) of the Oil Fields (Regulation and Development) Act, 1948 (No.53 of 1948) or the Oil Fields (Regulation and Development) Amendment Act 1969 (No. 30 of 1969). Section 42 read with its Explanation, S....