Mrs. Bharti Sharma vs Asstt. Commissioner of Income Tax

A.K. Sikri, J.—The appellant-assessee in her return filed for the assessment year 2003-04 had claimed deduction u/s 80-IB of the Income Tax Act (hereinafter referred to as the Act). As per the assessee she had started business under the name M/s Varnali and M/s Pallavi Boutique in the year 1997-98. However, the deduction u/s 80-IB was claimed for the first time in the assessment year 2003-04. The explanation of the assessee for not claiming such a deduction in the earlier years was due to ignorance of law and in the assessment year 2003-04 during the course of assessment proceedings only such a claim was made on the advice of M/s Prakash K. Prakash, chartered accountant. The assessing officer disallowed the claim on the ground that no such deduction was claimed in preceding years and even in succeeding years. The assessee preferred appeal thereagainst before the Commissioner (Appeals). The Commissioner (Appeals) after examining the record filed before him, was of the opinion that the assessee had satisfied the conditions stipulated for claiming such a deduction u/s 80-IB of the Act being 100 per cent export-oriented unit and therefore, allowed deduction under the said provision. The revenue filed appeal thereagainst before the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal).

The Tribunal vide its impugned orders dated 12-2-2007 remitted the case back to the assessing officer to determine as to whether the appellant was entitled to deduction u/s 80-IB for the assessment year 1997-98 or not, since as per the assessee otherwise in the year of incorporation itself, i.e., 1997-98 the production/export had also started. While doing so, the Tribunal took note of the fact that as per the provisions of Section 80-IB, it was for the assessee to satisfy that she was entitled to the claim deduction under the aforesaid provisions for the assessment year 1997-98, since it was the first year of the business. Challenging that decision, the assessee has filed the present appeal (i.e., IT Appeal No. 138 of 2009). We may also note at this stage that the assessee had preferred an application u/s 254(2) of the Act for correction in the impugned orders on the premise that such an order of remand to the assessing officer cannot be allowed in as much as the assessing officer was not only to sit over the judgment of the Commissioner (Appeals) which has already allowed the claim of the assessee after having satisfied the conditions stipulated u/s 80-IB. This application has also been dismissed by the Tribunal vide its order dated 16-1-2009. Challenging that order IT Appeal No. 635 of 2009 has been filed by the assessee. In these circumstances, we have taken both the appeals together.

The submission of the learned Counsel for the appellant remains the same, which was the basis of filing the application u/s 254(2) before the Tribunal, viz., the Commissioner (Appeals) had after perusal of the records before him had allowed the deduction and assessing officer could not sit in appeal over the aforesaid findings of the Commissioner (Appeals). To buttress his submissions, the learned Counsel for the appellant has read the order passed by the Commissioner (Appeals) extensively in the Court. He had inter alia pointed out that the entire record relating to the start of business by the assessee and also the manufacturing activity carried out by the assessee was filed before the assessing officer as well as Commissioner (Appeals). The Commissioner (Appeals) had even asked the assessee to send the case records, but the assessing officer failed to comply with such direction. In these circumstances, the Commissioner (Appeals) had gone into those very records and had arrived at a finding that the claim of deduction u/s 80-IB made by the assessee was found to be in order. On this premise, his submission is that it was not proper on the part of the Tribunal to remit the case back to the assessing officer for determination of the same issue. He also submitted that when entire record was available with assessing officer and if the assessing officer failed to look into the same, the inference has to be drawn in favour of the assessee, particularly, in view of the aforesaid findings of the Commissioner (Appeals). In support of his submission, learned Counsel also relied upon the judgment of the Madras High Court in the case of Ramgosri Constructions P. Ltd. Vs. Income Tax Officer, .

The aforesaid submission of the learned Counsel for the appellant appears to be attractive in the first instance. However, when we look into the nature of the findings arrived at by the Commissioner (Appeals), we find that there is no merit in these submissions. From the order of the Commissioner (Appeals), it cannot be discerned that any specific finding was arrived at by the Commissioner (Appeals) to the effect that the assessee satisfied the conditions stipulated in Section 80-IB even in respect of assessment year 1997-98. We can also note that the observation is made by the Commissioner (Appeals), on the basis of record produced before him, that the claim u/s 80-IB is found to be in order. There is no discussion of any documents produced before the Commissioner (Appeals) on the basis of which he gave another specific finding to the effect that the manufacturing activity had started in the year 1997-98. It could not be disputed by the learned Counsel for the appellant that even when no claim was made for the assessment year 1997-98 in order to become leviable (sic-eligible) for such a claim for the assessment year 2003-04, it is necessary for the assessee to establish that the assessee was entitled to such a claim for the assessment year 1997-98. What comes out from the aforesaid fact is that there should have been some finding by the authorities below that the conditions contained in Section 80-IB were satisfied even in respect of 1997-98 especially when the Tribunal found that no such findings are arrived at either by the assessing officer or by the Commissioner (Appeals).

We are of the opinion that the approach of the Tribunal in remitting the case back to the assessing officer for determination of the question is without blemish and perfectly justified. We may observe at this stage that the application filed by the assessee u/s 254 of the Act, while dismissing that application, the Tribunal rightly observed as under:

During the course of hearing of original appeal before us, it was argued by the learned senior departmental Representative that the deduction u/s 80-IB of the Act could not be allowed without filing the revised return of income. Fie placed reliance on the decision of Hon''ble Supreme Court in the case of Goetze (India) Ltd. Vs. Commissioner of Income Tax, Tribunal, Delhi Bench A on the basis of the above facts noted that the industrial undertaking started business in the previous year relevant to assessment year 1997-98 and no claim was made perhaps due to the fact that it was 100 per cent export oriented organization. It was also noted that from the records it was not clear whether in assessment years 1997-98 to 2002-03 the assessee claimed deduction u/s 10A or Section 80HHC of the Act. All of a sudden in assessment year 2003-04 the claim was made u/s 80-IB of the Act by filing the revised computation of income, without filing the revised return of income. The Bench further observed that the decision of Hon''ble Supreme Court in the case of Goetze (India) Ltd. (supra) did not restrict the power of the Tribunal in admitting the claim. Since the claim for deduction u/s 80-IB of the Act was not examined in assessment year 1997-98 it was thought proper to set aside the issue to the file of the assessing officer to examine the claim for assessment year 1997-98 and in a case the assessee was found to be eligible for deduction u/s 80-IB, the deduction for asst. yr. 2003-04 should be allowed. From the above facts, it is clear that the Bench has taken considered view for setting aside the matter for reconsideration by fee assessing officer. The assessee will be eligible for deduction u/s 80-IB of the Act or not in assessment year 1997-98 will depend on verification of the facts. Simply because the learned Commissioner (Appeals) has allowed the claim of the assessee, will not constitute a mistake apparent from record to be rectified u/s 254(2) of the Act. The learned Commissioner (Appeals) has nowhere examined the conditions for assessment year 1997-98. Whatever has been argued by the assessee before him has been repeated in the order. Therefore, in our considered view, there is no mistake apparent from record to be rectified u/s 254(2) of the Act. There being no mistake apparent from record, we do not find any necessity to rectify the order passed by the Bench. Moreover, by setting aside the order, the assessee will not be put to any loss. If the conditions are not satisfied the assessing officer will decide the matter. If the conditions are not satisfied and the assessing officer decides the matter against the assessee and it will be open to the assessee to appeal against the order. Accordingly, we dismiss the miscellaneous application filed by the assessee.

In view of the aforesaid observation, judgment relied upon by the learned Counsel for the appellant has no application to the facts of the present case.

We thus find no merit in either of the appeal and there is no substantial question of law which arises for consideration. These appeals are accordingly dismissed.