TaxTMI 
TaxTMI 
2019 (12) TMI 965
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....vidences furnished by the assessee including the evidences of transporting plant and machinery from Delhi to Baddi during the course of appellate proceedings without giving any opportunity to the Assessing Officer of being heard in this issue. 4. On the facts and circumstances of case, Ld. CIT(A) has not appreciated the findings of the Assessing Officer that the assessee did not produce a single sample of finished goods or empty pack which could prove (i) the name of manufacturer (ii) weight & volume or production (iii) produce ingredients (iv) date of manufacture of product or batch No. and (v) chemical composition, which was pre-requisite for such manufacturing activities. 5. On the facts and circumstances of case, Ld. C1T(A) has erred in accepting the claim under section 80IC(2)(a)(ii) of assessee whereas the case is not covered under this section since the assessee during the assessment proceedings has claimed that its unit is lactated at 'Kasauli' whereas in Form 10CCB it is evident that the unit is located at Baddi, Distt. Solan. Thus there is discrepancy in the claim of the assessee. 6. The appellant craves leave to add, allow or amend any or all t....
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....of I T. Act 1961. It was further claimed that as per the provisions of section 80IC any undertaking or enterprise should either produce or manufacture articles which are not any article or thing specified in Thirteenth Schedule or produce of manufacture articles or things which are article or thing specified in Fourteen Schedule. The assessee stated that it has manufactured industrial perfumes and fragrances which do not fall under any article or things specified in Thirteen Schedule of the I.T. Act 1961. The assessee further claimed that it is eligible to claim deduction under section 80IC(2)(a) of the I T. Act. The assessee further submitted that while filing preparing Form 10CCB, the Chartered Accountant inadvertently mentioned "Yes" against Para 25(f) instead of "No" in Para 25(e) of Form 10CCB of the Income tax Act, 1961. Affidavit of the Auditor was also filed to show that it was an inadvertent mistake. The A.O, however, did not accept the contention of assessee and noted that Audit Report itself disentitle the assessee for making claim of deduction under section 80IC of the I.T. Act. The A.O. noted that Perfumes and Fragrances is not a business enlisted in Schedule-XIV. Ther....
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.... brand name or chemical name of items being sold. An Income Tax Inspector was deputed to examine the facts and spot who was furnished his report Dated 27.02.2013 in which it was submitted that the premises belong to M/s. Gopal Group of Industries who is in the business of Chewing Tobacco, Pan Chatni etc., and there is no manufacturing of Perfumes and Fragrances. The A.O. also noted that assessee was asked to produce an empty pack of finished goods for verification. In response to the query, assessee produced a pair of empty plastic jar fixed with plain label showing the name of "Gopal Perfumery Compound". The assessee failed to explain why it is producing the product of Gopal Industries instead of producing the product of M/s. Vasundhara Flavours i.e., assessee. The A.O. also noted that assessee failed to produce empty pack of manufacturing goods as is claimed in the audit report. The A.O. further noted that assessee has made sales to three firms i.e., (i) H.M. Sales Corporation, Delhi (ii) Aman Marketing and (iii) Radha Rani Impex, Delhi. The A.O. noted that these companies belong to one Shri Kusum Kumar Sethia who has filed income tax return in Gauhati, who has close association ....
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....in Schedule-XIV to be eligible for deduction U/s80IC(b)(ii) of the Income Tax Act. (ii) Not produced/manufactured item/article as claimed and also not produced any evidence/sample in physical form of salable manufactured goods. (iii) The assessee could not prove its distinguished entity at the registered office and business address i.e. 240, Okhla Industrial Estate Phase-III, New Delhi-110020 is also shared by its sister concern M/s Gopal Industries. The manufacturing unit at Khasra No. 117, Baddi Barotiwala Road, Village Burnwala Distt. Solan (HP) is also shared by M/s Gopal Industies, its sister concern. 2. No Product in name of "perfumes & fragrances" produced:- (i) The assessee not only failed in producing a sample of its product i.e. "Perfumery & Fragrances" with all necessary packing mode but also failed in producing the bills/vouchers of sales which can proves the description of item sold and to whom it is sold. (ii) The assessee also failed to produce the evidences of produced goods pack showing the prescribed details on it under Consumer Act and other Acts. 3. The unit at Baddi is not equipped with plant & machinery to ....
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....ours" executed to carry on the business in Himachal. Partnership Deed as Annexure - 2. 09.11.2009 Factory premises in Buranwala (H.P.) was taken on lease vide lease deed dated 09.11.2009 Lease Agreement as Annexure - 2. 13.11.2009 First purchase was made Copy of bill as Annexure - 5. 19.11.2009 Registration with Department of Excise and Taxation, Himachal Sales Tax, Himachal Pradesh. Central Sales Tax Registration Certificate and HP Value Added Tax Registration Certificate issued by the Department of Excise and Taxation, Himachal Pradesh as Annexure - 6. 20.11.2009 Purchase of 5/6 (five) Electronic Scales Copy of Bills as Annexure-7. 24.11.2009 Purchase bill of Packaging material from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills Annexure - 8 26.11.2009 Some purchase bill of Raw materials from outside suppliers directly delivered at Buranwala, Baddi, Himachal Pradesh. Copy of bills Annexure - 9 26.11.2009 1 (one) S.S. Tank with Fittings (Perfumery Tank) Capacity 1000 Ltr. Copy of bills as Annexure - 10 26.11.2009 2 (two) Nos. of Sintex Tank (For Perfumery Mixing) Capa....
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....of the Income tax Act, 1961 and submission of the AR along with documents/evidences on the same : The AO alleged in the assessment order that inconsistent information furnished in Form 10CCB. The appellant has claimed deduction u/s 80- IC(2)(a)(ii) & 80-IC(3)(ii) while, as per Form 10CCB filed before the AO, on perusal of point no 25(f) of Form 10CCB, it revealed that the item manufactured fall in the item enlisted in Fourteenth Schedule. And, the commencement of business is 2nd November, 2009 i.e. before installation of necessary plant & machinery which has takes place 24th Nov., 2009 to 6th Jan, 2010. And, it is seen from registration accorded by Excise Department vide Reg. no - 02030100434 for business mentioned therein as "Manufacturing of Industrial Perfumes & Flavoured Pan Chatni (Pan Flavouring Material) while in Form 10CCB column No. 25(i)(c) it is mentioned as manufacturing of "Perfumes & Fragrances". And, the business premises of the assessee is not located in the area of notified by the CBDT vide Notification No.- S.O. 1296(E) dated 04.11.2003 and also not produced the article mentioned in Schedule - XIV requisite for eligibility of de....
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....ed 26.12.2009 of Himachal Pradesh Fire Service physically verified the unit of the appellant at Buranwala. The same has been furnished before the undersigned and have been duly considered and placed on record. The AR contended that appellant has manufactured Industrial Perfumes & fragrance, not being an activity or article or thing specified in Thirteenth Schedule of the Income Tax Act, 1961, however, in preparing Form 10CCB, the Chartered Accountant inadvertently mention "Yes" instead of "No" in Para 25(f) of Form 10CCB of the Income Tax Act, 1961. The AR also furnished an Affidavit of the Auditor dated 22.03.2013 confirming the said fact before the AO during the course of assessment proceedings. The AO further alleged that plea of figures in Audit Report being mistakenly incorrect is only an afterthought on the part of assessee, and ought to be rejected and the assessee cannot alter statutory statement / report as per his whims at later stage claiming these vitals discrepancies to be mere "clerical mistake". The AR contended in this respect that the AO himself mentioned in the assessment order that "Perfumes & Fragrances" is not a business enlisted in S....
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....2003 dated 10.06.2003 along with detail of Plant & Machinery installed therein, Capacity of the Plant of the appellant, detail and type of Raw Material used. Detail of Packing Material etc. and duly acknowledged copy of letter submitted with Excise department, Return filed with Commissionerate of Central Excise, Chandigarh in respect of finished goods actually manufactured and moved out from the manufacturing unit. Stock register of finished goods maintained in Form - IV as per Excise Rules in support of Commencement of manufacturing of perfumery, Sales Tax assessment order passed by Assessing Authority. BBN, Baddi - I. Himachal Pradesh, Sales Tax returns and Stock transfer Challans of finished goods along with Declaration under Form - XXVI - A issued by Excise and Taxation Department. Himachal Pradesh and GRs of Transporters and Month wise detail of salary & wages paid to workers employees along with their name & addresses, electricity bill for consumption of electricity for the manufacturing plant. The same has been furnished before the undersigned and have been duly considered and placed on record. The AR further contended that the A.O. himself acknowledged in the asses....
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....m dated 26th September, 2012 to its Partnership Deed dated 2nd November, 2009 changed the name of the firm from "Vasundhara Flavours" to "Gopal Consumer World". Apart from the change of name, everything else remains the same. The change in the name of the firm is also reflected in its PAN number, which remained same with the changed name. The AR further contended that doubt raised by the AO in his order on change of appellant firm's name from M/s Vasundhara Flavours to M/s Gopal Consumer World is a question on liberty of business houses. It is pertinent to note that decision in respect of running of business lies solely with the owner, partners or director of that business and no one can interfere in the decision taken by the key person of that business because he is the only person who knows need of its business and how to accomplish the same. It is well settled law that the assessing officer should assess the income of the assessee as per the provisions of the Income tax Act, 196 and should not step into shoes of the assessee and tell how to do business and cited judicial precedent rendered by Hon'ble Supreme Court and High Court in support of its contention. ....
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.... alleged in his order that unit at Baddi is not equipped with plant & machinery to carry out production as per the assessee's note submitted vide its letter dated 08/02/2013, there was basic requirements of sufficient items of plant & machinery and without the same production of saleable goods/items could have not taken place. The AR contended in this respect that note on manufacturing process submitted by the appellant before the AO is not exhaustive and just gives the broad outline of process flow of manufacturing, hence does not contain detailed process along with detail of material such as quantity, composition and plant & machinery used at different stage of production, so on the basis of said note, allegation in respect of shortage of plant & machinery is bad in law while the appellant has submitted detail of plant & machinery installed at its manufacturing unit along with invoices / bills / Transfer challans of fixed assets purchased along with Form XXVI-A declaration under Excise and Taxation Department. Himachal Pradesh in respect of goods / material / capital goods which is an ample proof of transporting capital goods to Buranwala unit, Himachal Pradesh. ....
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....A which is issued at the time of entry of the goods in the state of Himachal Pradesh, without which Form "C" cannot be issued and it is ample proof of transporting capital goods to the manufacturing unit at Buranwala, Himachal Pradesh. The AR also contended that the appellant in support of its contention that it has installed sufficient plant and machinery has submitted, the detail of event and activity taken place before the first clearance (i.e., on 10/12/2009) of finished goods from the manufacturing unit. The AR also furnished the details of events occurred before the first clearance (i.e., on 10.12.2009) made by the assessee firm which are reproduced as under : Date of Event / Activity Event / Activity Evidence 02.11.2009 Partnership Deed of "Vasundhara Flavours" executed to carry on the business in Himachal Pradesh Partnership Deed as Annexure-2. 09.11.2009 Factory premises in Buranwala (H.P) was taken on lease vide lease deed dated 09.11.2009. Lease agreement as Annexure - 2. 13.11.2009 First purchase was made. Copy of bill as Annexure - 5. 19.11.2009 Registration with Department of Excise and Taxation, Himachal Pra....
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....nded that as regard to no Monoblock Pump is purchased before starting manufacturing process, the appellant has two Monoblock Pumps instead of one and also having one Barrel pump. The AO also pointed out that the appellant does not have Gas Burner, the appellant has purchased Gas Burner before the commencement of production which is not capitalized. The AR also contended in respect of allegation made by the AO that mixing tanks fitted with nozzle to be connected to Monoblock Pump, since there in only one Monoblock pump, at one time only one set of chemicals in one tank could be processed while the appellant firm is having two Monoblock Pumpsets which were used to circulate the mixture of various ingredients in the tank in order to get a homogenized mixture. The AR of the appellant in support of its contention has submitted various documents / evidences which were submitted before the AO during the course of assessment proceedings as well as before the undersigned which have been duly considered and placed on record. The A.O. has also alleged in the assessment order that at very beginning stage of production with this minimal plant & machinery it is impossi....
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....'s case The A.O. further alleged in the assessment order that the sales claimed by the appellant are not genuine and bogus as the assessee did not produce/manufacture "Perfumery & Fragrance" and also failed to produce evidence of goods, so produced and also failed to produce documentary evidence i.e. bills / vouchers and name of the parties to whom sale of goods has been so produced has been made. The AR contended that the appellant has submitted various details / documents such as party-wise sales, party-wise purchase, details of sundry creditors and sundry debtors along with their address before the AO during the course of assessment proceedings. The appellant also produced sales bills / voucher etc. along with Sales Tax declaration Form No. XXVI-A, as these are online forms which are generated at the time of goods passing the Sales Tax Barrier at Himachal Pradesh, and GR of the transporter before the AO for the purpose of Verification. The appellant has also produced books of account, original bank statements and vouchers along with supporting evidences for the verification of the learned assessing officer during the course of assessment proceedings. The appell....
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....of Rs. 1,00,00,000/-. The appellant further submitted that appellant has made sales to M/s Aman Marketing of Rs. 71,62,000/- during the financial year under consideration and the amount as shown is not the commission, but the sale proceeds received by the appellant. The AR further contended that the AO has relied on some report of an Inspector who has visited the alleged manufacturing unit of the appellant at Buranwala, Himachal Pradesh and various information / material gathered by him during the course of assessment proceedings and alleged in his order on the basis of said report that the said premises belongs to Gopal Group of Industries who is in the business of chewing Tobacco, Pan Chatni etc. and after making local enquiries from the neighborhood it is revealed that at this premises there was never any type of manufacturing of Perfumery & Fragrance, Rather products under brand name 'Gopal Zarda" were being Produced and transported from this premises. The AR further contended that in the light of detail submission along with documentary evidences the AO erred in alleging in his assessment order that the appellant is re-routing his own unaccounted cash without....
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....s judicial precedents. The AO has not built up the case. 7. In my considered view, the appellant has furnished and also produced relevant documentary evidence to justify its claim of deduction under section 80-IC of the Income tax Act, 1961 before the AO but the same is rejected merely on the basis of an inadvertent mistake committed by the Tax Auditor in Form 10CCB without considering ^he legal position that deduction / benefit allowable to the appellant should not be denied as beneficial legislation should have liberal construction with a view to implementing the intent. On perusal of the documentary evidences. Notification issued by the CBDT (Notification No S.O. 1269(E) dated 04.11.2003 as amended by Notification dated 27.08.2008) and Thirteenth Schedule of the Income tax Act, 1961, it is quite evident that the manufacturing unit is situated under the notified area and manufactured article / thing not being an article / thing not being an article/thing mentioned in the negative list of Thirteenth Schedule, hence the appellant has fulfilled the requisite conditions of section 80-IC of the Act eligible to claim deduction in the said section. Here it is relevant ....
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....eported that assessee did not manufacture the Perfumes and Fragrances at the premises. The destination of purchases of the plant and machinery is at Delhi only. There is no gas burner and sales are made to the Associated Enterprises only, which creates doubt. There are cash deposits in the account of the purchaser. The Ld. D.R. referred to the conclusion of the A.O. as reproduced above to show that A.O. has rightly made the addition in the matter. The Ld. D.R, therefore, submitted that matter may be remanded to the Ld. CIT(A) for passing the order afresh, by giving opportunity of being heard to the A.O. 5. On the other hand, Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that all observations of the A.O. have been met by the assessee before the Ld. CIT(A) through documentary evidences. Learned Counsel for the Assessee submitted that Ld. CIT(A) decided the appeal on several points. However, the Department is challenging the Order of the Ld. CIT(A) only on few grounds. Therefore, appeal of Revenue is not maintainable and is liable to be dismissed. The assessee explained the date of commencement of business because partne....
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....Counsel for the Assessee also placed on record the assessment order in the case of assessee (Now M/s. Gopal Consumer World) under section 143(3) Dated 31.03.2016, in which, the A.O. has discussed the issue of deduction under section 80IC and noted that the Ld. CIT(A) has allowed the claim of assessee for A.Y. 2010-2011, in which, appeal of the Department is pending before the Tribunal and similarly in A.Y. 2012- 2013, claim of assessee has been denied by A.O, in which, assessee is in appeal. The A.O. examined the issue of deduction under section 80IC on the same facts in detail and after calling report from the Income Tax Officer, Baddi, which is reproduced in this Order, the claim of assessee for deduction under section 80IC for Perfumery Compound, Pan and Chatni have not been disallowed. Further for items mentioned at Sl.Nos. 4 to 7 which were not manufactured at Baddi unit, the claim of assessee has been denied under section 80IC in sum of Rs. 90,50,123/- only. Learned Counsel for the Assessee, therefore, submitted that since claim of assessee under section 80IC have been allowed in A.Y. 2013-2014 in respect of same items for Rs. 20.25 crores by the Ld. CIT(A), therefore, claim ....
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....g all the above items in notified area. The assessee also claimed that it has submitted the goods, produce of his Industrial Perfumes and Fragrances, which is for the purpose of industrial use only before A.O. and the A.O. did not doubt the same. The assessee further referred to Consumer Production Act in the reply to show that there is no violation on the part of the assessee. The Assessee's Counsel has referred to every portion of the reply filed before the Ld. CIT(A) to show that all the items i.e., plant and machinery purchased at Delhi were transported to Baddi which were supported by documentary evidences. Since assessee has Registered Office at Delhi and bills are issued at Delhi address for plant and machinery, there is no illegality in the same. The assessee has filed detailed explanation to show that it has began manufacturing activity in notified area. Therefore, it was entitled for deduction under section 80IC of the I.T. Act, 1961. 11. On Ground No.5, Revenue challenged that unit of the assessee is not covered by the notified area. The assessee has filed copy of the relevant Notification to prove that its unit falls in notified area of Himachal Pradesh so as to enti....