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2010 DIGILAW 33 (MP)

Commissioner of Income-tax v. Medicaps Ltd.

2010-01-08

PRAKASH SHRIVASTAVA, VINEY MITTAL

body2010
JUDGMENT Prakash Shrivastava, J. 1. This order will also govern disposal of I. T.A. No. 97 of 2009 and I. T. A. No. 98 of 2009. 2. These two appeals have been filed against the common order dated June 19, 2009 passed by the Income Tax Appellate Tribunal, Indore Bench, Indore in I. T. A. No. 784/Ind/2007 assessment years 2003-04 and 2004-05. I. T. A. No. 97 of 2009 relates to the assessment year 2003-04 and I. T. A. No. 98 of 2009 relates to the assessment year 2004-05. 3. The respondent is a manufacturer of empty hard gelatine Capsules. For the assessment years in question the respondent claimed deductions under Section 80IA of the Income Tax Act, 1961. The case of the respondent is that it had undertaken expansion programme during the financial years 1995-96 and 1997-98. The expansion was defined as unit 2 which started commercial production in the year 1997-98. The DIC, Pithampur had granted the certificate indicating the increase in capacity from 750 to 2750 million units. A separate building was constructed for the unit 2. The deduction was claimed for the first time in the assessment year 2003-04. In the earlier years deduction could not be claimed due to inadequacy of profit. Since the unit 2 was set up in the financial year 1997-98 and it was situated in backward area, therefore, claim under Section 80IA(2) was admissible. 4. The Assessing Officer denied the benefit of Section 80IA to the respondent and the Commissioner of Income Tax (Appeals) while deciding the appeal against the order of assessment, took the view that, the audit report as prescribed under the Act was not filed and the conditions of Section 80IA(2) were not satisfied. 5. The Income Tax Appellate Tribunal by the order under appeal held that the respondent had satisfied the conditions of Section 80IA(2) was entitled to deduction under the said provisions. Aggrieved with the same, the present appeal has been preferred by the Department. 6. 5. The Income Tax Appellate Tribunal by the order under appeal held that the respondent had satisfied the conditions of Section 80IA(2) was entitled to deduction under the said provisions. Aggrieved with the same, the present appeal has been preferred by the Department. 6. Learned Counsel appearing for the appellant submitted that the Income Tax Appellate Tribunal has committed an error in allowing the claim of the respondent under Section 80IA(2) of the Act without appreciating that such a claim was made for the first time in the subject year though the enhancement of purported unit had taken place earlier and that the view taken by the Tribunal is not correct since the audit report was not submitted before the Assessing Officer. 7. We have heard the learned Counsel appearing for the appellant and perused the record. 8. The Income Tax Appellate Tribunal on appreciation of the material available on record, has recorded that commercial production in the unit 2 had started in the year 1997-98 and the machines of the unit are independent to produce the saleable products. The claim of the respondent is supported by the project report as well as the certificate of Directorate of Industries relating to increase of the capacity. Separate building was constructed for the unit 2. These facts are not disputed by the appellant and installation of unit 2 by the respondent is also not in dispute. The Income Tax Appellate Tribunal has also recorded that the fulfilment of the conditions under Section 80IA(2) of the Act were not disputed before the Tribunal. 9. So far as the issue of not making the claim for the earlier years is concerned, it has been found that the assessee did not make the claim in the earlier years because of the brought forward losses. The Tribunal has rightly noted that the assessee would be entitled to the deduction up to the assessment year prescribed under the law, therefore, simply for the reason that he had not made the claim for the earlier years, he cannot be denied to claim the same for the subsequent years. It has also been found that the respondent prepared detailed proportionality and the accounts were audited. It has also been found that the respondent prepared detailed proportionality and the accounts were audited. The respondent has produced sufficient material before the Assessing Officer to establish that the unit 2 had its separate building and the new unit had separate and distinct identity of its own and profits and gains were derived from the same. 10. On the issue of filing the audit report at the appellate stage, the Tribunal by placing reliance upon the various judgments, held that filing the audit report is procedural and directory in nature and the same can be filed at the appellate stage. It is also worth noting that before the Tribunal, the complete details were disclosed in respect of the production in the second unit. As regards the claim under Section 80IA(2) the statement have been found to be supported by the data and figures and the Tribunal has found that proper books of account were maintained and were audited and the audit reports in prescribed forms were filed. 11. Learned Counsel appearing for the appellant could not point out any error or infirmity in the aforesaid facts recorded by the Tribunal and the conclusions drawn by it. In view of the aforesaid position on facts, the Tribunal has not committed any error of law in holding that the respondent was entitled to the benefit of deduction under Section 80IA(2) of the Income Tax Act. 12. Thus, we find that the appeal does not involve any substantial question of law requiring consideration by this Court under Section of the Income Tax Act. 13. The appeal is accordingly dismissed in limine. A copy of the order be retained in connected I. T. A. No. 98 of 2009.