TaxTMI 
TaxTMI 
2022 (5) TMI 1683
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....Act. 2. Whether on the facts and in the circumstances of the case and in law, the Ld CIT(A) has erred in allowing the deduction u/s.80IB(4) of the I.T. Act without appreciating the facts that the preparation of Ujala Supreme by diluting the raw material i.e. Acid Violet Dye49 with a different chemical composition or integral structure as envisaged u/s.2(29)(BA) of the I.T. Act and thereby not eligible for deduction U/s. 80IB(5)(i) of the I. T. Act. 3. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance u/s.14A, without appreciating the fact that the A.O has properly recorded his satisfaction for invoking the provisions of Rule 8D and therefore since Rule 8D is invoked, the disallowance has to be worked out as per the formula prescribed therein and there is no scope for any deviation there from. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance u/s.14A observing that since there is no exempt income, no disallowance can be made u/s.14A without appreciating that as held in the decision of Special Bench of ITAT, Delhi in....
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....he ITAT, Mumbai. The assessee has also furnished the copy of the above cited order of the ITAT. On the other hand, the ld. D.R stated that ITAT has not decided issue on merit. 7. Heard both the side and perused the material on record. Without reiterating the facts as elaborated above during the course of assessment the A.O has not allowed the claim of deduction u/s 80IC in respect of Uttaranchal Unit of the assessee and deduction u/s 80IB in respect of Himachal Unit of the assessee on the reasoning that the process of making of Ujala Supreme did not result into any new product. During the course of appellate proceedings before us the ld. Counsel submitted that coordinate bench of the ITAT in the case of assessee itself for A.Y. 2011-12 has adjudicated identical issue on similar facts vide ITA No. 7281/Mum/2016 in favour of the assessee. With the assistance of the ld. representative we have gone through the above referred decision of the ITAT. The relevant part of the decision is reproduced as under: "7. Before us the learned A.R. for the respondent assessee made a preliminary point in defence of the ultimate conclusion of the CIT(A), which is based on the judgement o....
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....en consecutive years starting from the initial assessment year when the relevant undertaking of the assessee commences manufacture or production. Therefore, factually speaking, the instant assessment year is not the initial year of the claim, either for section 80IB or for section 80IC of the Act. At the time of hearing, the learned A.R. furnished a copy of the assessment year passed under section 143(3) of the Act for A.Y. 2002-03 dated 24.12.2004, which is the first year of claim of deduction under section 80IB of the Act with regard to Wayanad Unit, whose date of commencement of production/manufacture is 23.05.2001. Similarly, the date of commencement of manufacture/production of Himachal Unit is 25.08.2002, and the initial assessment year being 2003- 04 for which also, a copy of the assessment order passed under section 143(3) of the Act dated 30.01.2006 has been furnished, wherein the relevant claim under section 80IB has been allowed. In so far as the claim under section 80IC for Uttranchal Unit is concerned, the date of commencement of manufacture/production is 06.05.2008, and therefore the initial assessment year of claim is Assessment Year 2009-10. For Assessment Year 2009....
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....t in the case of Simple Food Products (P) Ltd. (supra) squarely covers the controversy. In the said case, the issue related to claim of deduction under Section 80IB of the Act in relation to Assessment Years 1999-2000 to 2005-06. In Assessment Year 1999-2000, the Assessing Officer disallowed the claim of deduction under Section 80IB of the Act for the first time even when in the initial Assessment Year of 1996-97 the deduction under Section 80IB of the Act stood allowed. The point raised by the assessee was that the claim of deduction in respect of Assessment Year 1999-2000 onwards could not be rejected as the deduction granted in Assessment Year 1996-97, i.e. the first year, had not been withdrawn. In this background, the following discussion in the judgment of the Hon'ble Bombay High Court is relevant:- "(j) According to us, the entire issue is no longer res-integra. The impugned order of the Tribunal has, after recording that the appellant - Assessee relies upon the decision of this Court in Paul Brothers (supra) has not dealt with the same. It gives no finding as to why and in what manner it would not apply to the present facts. Further, we find that distinction wh....
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....n sub-clause (3) under Section 80IA/IB of the Act which gives deduction for 10 consecutive years to the profit and gains of an Industrial undertaking from initial year of assessment when the deduction was allowed, subject to the condition laid down therein. It is not the Revenue's contention that the condition in clause (3) of Section 80IB of the Act has not been fulfilled. Therefore, once deduction is granted in the initial Assessment Year, the same would continue for the period of 10 consecutive year unless the relief for initial year is also withdrawn at the time of withholding the relief under Section 80IA/IB of the Act." 13. The aforesaid discussion by the Hon'ble High Court clearly brings out that once deduction is granted in the initial assessment year, the same would continue for the period of ten consecutive years unless the relief for initial assessment year is also withdrawn. We are conscious of the fact that in coming to such decision, the Hon'ble High Court did notice the absence of the Revenue to establish that for the subsequent assessment years in dispute, the facts were different from the facts on which the claim for deduction in the initial ye....
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....awn'. Therefore, in our view, the Assessing Officer could not have rejected the claim for deduction under Sections 80IB as well as 80IC of the Act in the subject assessment order because the relief allowed in the initial assessment year was not withdrawn at the time of such rejection in the instant year. 17. In the above background, we, therefore, find merit in the preliminary point made out by the respondent-assessee and the appeal of Revenue on this point deserves to be dismissed. Thus, in the final analysis, we uphold the ultimate conclusion of the CIT(A) to allow the benefit under Sections 80IB and 80IC of the Act to the assessee, albeit on a different ground." After taking into consideration the facts and finding in the order of the ITAT in the case of the assessee itself as supra we find that facts and circumstances in this order are also similar to the A.Y. 2011-12 except variation in the amount of quantum of addition. There is nothing before us on hand to differ from the issue raised in the case of the assessee cited (supra) to take a different view on this issue. Therefore, since the issue on hand being squarely covered following the principle of consistency, w....