Commissionerof Incometax-Iv v. M/S Dixontechnologies(I)Pvt Ltdthrough

$~12&13 *IN THE HIGH COURT OF DELHI AT NEW DELHI +ITA 545/2013 & ITA 556/2013 COMMISSIONEROF INCOMETAX-IV Appellant ThroughMr. N.P. Sahni with Mr. P.Roychaudhari and Mr. Nitin Gulati,Advocates. versus M/S DIXONTECHNOLOGIES(I)PVT LTDThrough Respondent CORAM:HON'BLE MR. JUSTICE SANJIV KHANNAHON'BLE MR. JUSTICE SANJEEV SACHDEVA .ORDER % 18.12.2013 1.These two appeals by Revenue relate to Assessment Years 2004-05 and 2006-07. We have earlier disposed of and decided ITANos.550/2013 and 554/2013 on 9.12.2013, in the followingterms:- "ITA 550/2013 & ITA 554/2013 1.These two appeals by the Revenue- whichpertain to the Assessment Years2008-09 &2009-10challengetheimpugnedordergranting deduction under Section 80IC of theIncome Tax Act, 1961 on two grounds.(i) that the respondentassessee was notmanufacturingor producingarticles or things.(ii) The units in question were not located innotifiedareas as per the schemeframedby theCentralGovernmentfortheStateof yttranchal. 2.On the first aspect, we are surprised at thestand of the Revenue because the plea taken isthat the manufacture or assembly of air-conditionersandmicrowaveoven,fromdifferent parts supplied or procured from thirdparties did not amount to production ofarticles or things or manufacturing.Thefactum is that the end product manufacturedor produced by the respondent assessee wasentirely different from the parts and wasdistinctly known as a separate commodity andmarketedassuch.Thispositionisnotdisputed. Section SOIC is applicable to bothmanufacture and production of articles orthings.The finding of the Tribunal is clearand lucid in this regard and requires nointerference.stand of the Revenue because the plea taken isthat the manufacture or assembly of air-conditionersandmicrowaveoven,fromdifferent parts supplied or procured from thirdparties did not amount to production ofarticles or things or manufacturing.Thefactum is that the end product manufacturedor produced by the respondent assessee wasentirely different from the parts and wasdistinctly known as a separate commodity andmarketedassuch.Thispositionisnotdisputed. Section SOIC is applicable to bothmanufacture and production of articles orthings.The finding of the Tribunal is clearand lucid in this regard and requires nointerference. 3.On the second aspect, we have examined theassessment order in respect of the AssessmentYear 2008-09.The AssessingOfficer hasreferredto the threeunitsand the evidenceproduced. The three units, it is apparent, werelocated in village Selaqui, Selakui IndustrialArea, Dehradun, Uttranchal and Central HopeTownIndustrialArea,Selaqui,Dehradun,Uttranchal.The khasranumberswerealsomentionedin the assessmentorders as 262M,992/2 and 263. Before the Assessing Officer,the assessee had filed notificationissued bythe Central Excise vide No.50 of 2003.TheAssessing Officer, however, did not conductverificationbut recorded that it was not clear,whether the notification was issued by thecompetent authority. Thereafter the AssessingOfficerrefen-edto the khasranumbersandexpressed his doubt stating that he was not / 4. sure and clear whetherthe khasranumberswerementionedinthelistavailablefordeductionunder Section 80IC of the Act.Itwas the obligationand duty of the AssessingOfficerto examine,check and verify and notdeny relief without inquiry, on mere doubt orsuspicion.It is clear from the assessmentorder that documents and papers in supportwere filed but were not verified. The Commissioner (Appeals) accepted thestand of the respondent assessee and on thequestion of area or location has recorded:- / 4. sure and clear whetherthe khasranumberswerementionedinthelistavailablefordeductionunder Section 80IC of the Act.Itwas the obligationand duty of the AssessingOfficerto examine,check and verify and notdeny relief without inquiry, on mere doubt orsuspicion.It is clear from the assessmentorder that documents and papers in supportwere filed but were not verified. The Commissioner (Appeals) accepted thestand of the respondent assessee and on thequestion of area or location has recorded:- "The appellant's Unit-I is located inKhasra No.262M, Industrial Area,Selakui, Dehradun, Uttranchal (referpages 102-109 of the paperbookfor Form lOCCB).The AO hasalleged that the said unit does notappear in the list of notified areasand thereforedisalloweddeductionforUnit-IAttheoutset,theappellant wishes to submit that theCIT(A)-XVIII in assessment year2007-08,videorderdated15.10.2010 (refer pages 245 to 262of the paperbook), while allowing infavor of the appellant, held, thatUnit - I of the appellant, located atKhasraNo.262Mi,CentralHopeTown,SelakuiIndustrialArea,TehsilVikasNagar,DistrictDehradun,lies withinarea notifiedby the CBDT and is therefore areaeligible for deduction under section80-IC of the Act. j /* It is further respectfully submittedthat in coming to the erroneousconclusion as aforesaid, the AO hasglossed over the following criticalfacts: a) Intermsof NotificationNo.177dated28.06.2004,SelakuiandCentral Hope Town [both fallingunder Tehsil Vikas Nagar, DistrictDehradun]havebeendefinedatseparateserialnos. Further,in termsofNotificationNo.283dated03.10.2006KhasraNo.262Mi,CentralHopeTown,DistrictDehradunhas been notifiedas anareaeligiblefor deductionunderthat section.dated28.06.2004,SelakuiandCentral Hope Town [both fallingunder Tehsil Vikas Nagar, DistrictDehradun]havebeendefinedatseparateserialnos. Further,in termsofNotificationNo.283dated03.10.2006KhasraNo.262Mi,CentralHopeTown,DistrictDehradunhas been notifiedas anareaeligiblefor deductionunderthat section.b) That Selakui Industrial Area is anIndustrial Area falling under theCentral Hope Town, Tehsil VikasNagar,DistrictDehradunand,therefore,ifKhasraNo.262Mi,Central Hope Town is notified byCBDT, then automatically, KhasraNo.262Mi,SelakuiIndustrialAreabecomesanotifiedarea.Thecomplete address of the appellant'sunitbeingKhasraNo.262]VIi,CentralHopeTown,SelakuiIndustrial Area, Tehsil Vikas Nagar,DistrictDehradun.Thisfactisevidenced from the auditor's reportin Form lOCCB in respect of theaforesaid unit, wherein the addresshasbeenmentionedas"KhasraNo.262MiCentralHopeTown,IndustrialArea,Selaqui,DistrictIndustrial Area falling under theCentral Hope Town, Tehsil VikasNagar,DistrictDehradunand,therefore,ifKhasraNo.262Mi,Central Hope Town is notified byCBDT, then automatically, KhasraNo.262Mi,SelakuiIndustrialAreabecomesanotifiedarea.Thecomplete address of the appellant'sunitbeingKhasraNo.262]VIi,CentralHopeTown,SelakuiIndustrial Area, Tehsil Vikas Nagar,DistrictDehradun.Thisfactisevidenced from the auditor's reportin Form lOCCB in respect of theaforesaid unit, wherein the addresshasbeenmentionedas"KhasraNo.262MiCentralHopeTown,IndustrialArea,Selaqui,District V f' Dehradun." c) The Patwari has, also, certified thatthe appellant'sunit is locatedinKhasraNo.262MiCentralHopeTown,SelaquiIndustrialAi*ea,TehsilVikasNagar,DistrictDehradunwhich,admittedly,isnotified by the CBDT as a backwardarea, eligible for deduction undersection 80-IC of the Act. A copy ofthe Patwari'scertificateis attachedherewith at pages 135-140 of thepaperbookthe appellant'sunit is locatedinKhasraNo.262MiCentralHopeTown,SelaquiIndustrialAi*ea,TehsilVikasNagar,DistrictDehradunwhich,admittedly,isnotified by the CBDT as a backwardarea, eligible for deduction undersection 80-IC of the Act. A copy ofthe Patwari'scertificateis attachedherewith at pages 135-140 of thepaperbook V f' Dehradun." c) The Patwari has, also, certified thatthe appellant'sunit is locatedinKhasraNo.262MiCentralHopeTown,SelaquiIndustrialAi*ea,TehsilVikasNagar,DistrictDehradunwhich,admittedly,isnotified by the CBDT as a backwardarea, eligible for deduction undersection 80-IC of the Act. A copy ofthe Patwari'scertificateis attachedherewith at pages 135-140 of thepaperbookthe appellant'sunit is locatedinKhasraNo.262MiCentralHopeTown,SelaquiIndustrialAi*ea,TehsilVikasNagar,DistrictDehradunwhich,admittedly,isnotified by the CBDT as a backwardarea, eligible for deduction undersection 80-IC of the Act. A copy ofthe Patwari'scertificateis attachedherewith at pages 135-140 of thepaperbook d) Thatapart,videNotificationNo.115,dated26.04.2006,theCBDT had revised entry no.11 inNotificationNo. 177(supra)andinstead of only Selakul, even CentralHope Town and Camp Road wereincluded under the same entry apartfromVillageSelakui.Asacorollary, Khasra No.262Mi fallingunder Central Hope Town, SelakuiIndustria Area, Tehsil Vikas Nagar,District Dehradunhas been notifiedas area eligibleunder section 80-ICof the Act.No.115,dated26.04.2006,theCBDT had revised entry no.11 inNotificationNo. 177(supra)andinstead of only Selakul, even CentralHope Town and Camp Road wereincluded under the same entry apartfromVillageSelakui.Asacorollary, Khasra No.262Mi fallingunder Central Hope Town, SelakuiIndustria Area, Tehsil Vikas Nagar,District Dehradunhas been notifiedas area eligibleunder section 80-ICof the Act. e) Thattheappellant'sunitsweresubject to inspection by the Addl.Commissionerof Income-taxandthe Ld. ADIT, during the assessmentfor AY 2004-05.However,in itsreport dated 29.12.2006, the Ld.ADIT, after physical verification ofthe premisesdid not record any suchfinding.The claim of deductionsubject to inspection by the Addl.Commissionerof Income-taxandthe Ld. ADIT, during the assessmentfor AY 2004-05.However,in itsreport dated 29.12.2006, the Ld.ADIT, after physical verification ofthe premisesdid not record any suchfinding.The claim of deduction \) ^ 5. under section 80-IB/IC in this regardhaving been accepted in the year information, it is not possible to denydeduction in the succeeding years,without seeking to revise the initialorder." Aggrieved, the Revenue preferred an appealbefore the Tribunal on the said aspect.TheTribunal in the impugned order has observed:-"The next objection of the AssessingOfficer isabout thegeographicallocationof the assessee'sunit.Wehave perused the record carefully andfindthatlearnedAssessingOfficefailed to construe the revenue record inright perspective.He has comparedthekhasranumberwitha restrictedapproach.It has been demonstratedbefore us that the Board has extendedthe scope of industrial estates by thelast notification bearing No.115 dated26.4.2006 which is applicable fromearlier period also.The Board hassimplicitor removed the confusion. Inthe latest notification, larger area hasbeen shown as a industrial estateswhich includes khasra number 262 MISelokni.The area according to thenewnotificationincludestheareaswhichwerealreadynotifiedplusCentral Hope down.The learnedcounsel for the assessee has placed onrecord report of the Patwari, whereinhe has submittedthat khasraNo.262MI is part of khasra No.262. LearnedAssessing Officer wasconsideringkhasrkNo.262and262MIas \j ^ independentkhasranumber. The copyof the site plan available in the revenuerecord, exhibiting the geographicallocationof eachkillanumberandkhasra number was also filed beforethe LearnedCIT (Appeals)along withpatwari'sreportand this documenthasbeenplacedbeforeus also. Therefore,weareconvincedthatthereis noconfusionabout the locationof theassessee's units.They are situatedwithin the notified area. \j ^ independentkhasranumber. The copyof the site plan available in the revenuerecord, exhibiting the geographicallocationof eachkillanumberandkhasra number was also filed beforethe LearnedCIT (Appeals)along withpatwari'sreportand this documenthasbeenplacedbeforeus also. Therefore,weareconvincedthatthereis noconfusionabout the locationof theassessee's units.They are situatedwithin the notified area. 15.LearnedAssessingOfficerhas not raised any other objection.The basis conditions for allowability ofdeductionundersec.80IBare alsosimilar.Learned Assessing Officerexcept pointing out that these twoobjections has not pointed out anyother objection in assessment year2004-05 also.Therefore, after takinginto considerationthe orders of theLearned CIT (Appeals) in all theassessment we do not findyears, anyerror in them on the issue of grantingdeductionunder sec. 80IB/80ICoftheIncome-tax Act, 1961. We reject allthese grounds of appeal in all theyears." 6.The aforesaid findings recorded by theTribunal are factual in nature.Tribunal are factual in nature. 7.Learned Standing Counsel for the Revenuesubmits that the Commissioner (Appeals) hasrelied certificateissued the Patwari upon bysubmits that the Commissioner (Appeals) hasrelied certificateissued the Patwari upon bybut it is not clear whether the said certificate ^ 8. wasfiledbeforetheAssessingOfficer.Uncertainty cannot be a ground. It is also notaverred in the present grounds of appeal i.e.the grounds of appeal filed before us that theassesseehad fileda fresh or new certificatebefore the Commissioner (Appeals) and thesaid certificateshould not have been admittedin evidence.A perusal of the assessmentorderrevealsthattheassesseehadfiledacertificateof theTehsildargivingdetailsincluding the khasra numbers. Moreover fromthe order passed by the Tribunal it is apparentthat the entire industrial township in questionwas located in village Selaqui i.e. SelaquiIndustrialAreaandCentralHopeTownIndustrial Area were notified.No such pleawas taken before the Tribunal. Before us, the learned Standing Counsel forRevenue has produced two notifications dated26.04.2006but the earlier notificationhas notbeen produced. It is not possible to decipherfrom the said notificationsany fact whichcontradicts the factual findings recorded bythe Tribunal.At item No.(e) against columnNo. 11, it is mentioned that village Selaqui,CentralHope Town and Camp Road shall besubstituted.Incase,theTribunalhadrecorded wrong factual finding, the Revenueshould have ascertainedtrue and correct factsandexaminedtheexactnotificationwhichwasissuedin2003andsubstitutedbynotificationdated 26.04.2006.It cannot beassumed that the finding of the Tribunal isperverse without specific evidence or materialbeing produced on record and specificallyadvertedto and relied.The Commissioner,i.e. the appellant has not examined the 2003notification and the factual position, but has ^ averred that the factual finding recorded bytheTribunalisperverse.Evenpapers/documents referred to in the order oftheAssessingOfficer,Commissioner(Appeals) and Tribunal have not been filed orreferred to in the grounds of appeals.In theabsence of any material and evidence, wecannot state or hold that the findings of theTribunal are perverse. 9.For the Assessment Year 2009-10, the factualremainsthe same.remainsthe same.position 10.In view of the aforesaid position, we are notinclined to issue notice on these appeals andthe same are dismissed. At the request of thecounsel for the appellant, we clarify that wehave not examined the position prior to theissue of notificationdated 26.04.2006."inclined to issue notice on these appeals andthe same are dismissed. At the request of thecounsel for the appellant, we clarify that wehave not examined the position prior to theissue of notificationdated 26.04.2006." 2.The questions raised in the present appeals are:- (i)that the respondent assessee was not manufacturingorproducing articlesor things.producing articlesor things. 9.For the Assessment Year 2009-10, the factualremainsthe same.remainsthe same.position 10.In view of the aforesaid position, we are notinclined to issue notice on these appeals andthe same are dismissed. At the request of thecounsel for the appellant, we clarify that wehave not examined the position prior to theissue of notificationdated 26.04.2006."inclined to issue notice on these appeals andthe same are dismissed. At the request of thecounsel for the appellant, we clarify that wehave not examined the position prior to theissue of notificationdated 26.04.2006." 2.The questions raised in the present appeals are:- (i)that the respondent assessee was not manufacturingorproducing articlesor things.producing articlesor things. (ii)theunitsin questionwere notlocatedin notifiedareasasper the scheme framed by the CentralGovernmentfor the Stateof Uttranchal. 3.On the first aspectof manufacture,we recordthat the respondentin the inwas conditionersafter years question manufacturingairin the inwas conditionersafter years question manufacturingairprocuringparts from thirdparties. Air conditionersare differentfrom theprocuredpartsand aredistinctmarketableproducts.Thereasoninggiven in our orderdated9.12.2013will apply.from theprocuredpartsand aredistinctmarketableproducts.Thereasoninggiven in our orderdated9.12.2013will apply. v> 4.On the second question, learned counsel for the appellantsubmits that in the two assessment years in question, earlierNotification No.177/04 [So 741] F.No.142/47 203-TPL dated28.06.2004 willapplyandthesubsequent notificationNo.115/2006dated 26.04.2006will not apply. He submitsthatin the present case, the khasra in which the units of therespondent assessee were located has been recorded as 262Mi.He further submits that "Mi" stands for "Min" and 262Mi isneitherspecificallymentionedintheNotificationdated28.06.2004 nor in the second Notification No.115/2006 dated26.04.2006. It must be noted that in our earlier order, we hadreferred to Notification No.115/2006 dated 26.04.2006 as it wasapplicable to the said case.submits that in the two assessment years in question, earlierNotification No.177/04 [So 741] F.No.142/47 203-TPL dated28.06.2004 willapplyandthesubsequent notificationNo.115/2006dated 26.04.2006will not apply. He submitsthatin the present case, the khasra in which the units of therespondent assessee were located has been recorded as 262Mi.He further submits that "Mi" stands for "Min" and 262Mi isneitherspecificallymentionedintheNotificationdated28.06.2004 nor in the second Notification No.115/2006 dated26.04.2006. It must be noted that in our earlier order, we hadreferred to Notification No.115/2006 dated 26.04.2006 as it wasapplicable to the said case. 5.We have consideredthe said contentionbut, do not find anyreasonto take a differentview. In Notificationdated28.06.2004,village Selakui was mentioned in column No.2 and in columnNo.3 several khasra numbers khasra No.262 was includingreasonto take a differentview. In Notificationdated28.06.2004,village Selakui was mentioned in column No.2 and in columnNo.3 several khasra numbers khasra No.262 was includingmentioned. "Min" standsfor part and the said wordis usedwhenonly a part of the khasra is covered. In the present case, incolumnNo.3, entireKhasraNo.262 was mentioned. Therefore,entire land in the said khasra including any part of KhasraNo.262 would be covered by Notification dated 28.06.2004.Khasra 262Mi will be part Khasra No.262. Contentionof therevenue is not correct.only a part of the khasra is covered. In the present case, incolumnNo.3, entireKhasraNo.262 was mentioned. Therefore,entire land in the said khasra including any part of KhasraNo.262 would be covered by Notification dated 28.06.2004.Khasra 262Mi will be part Khasra No.262. Contentionof therevenue is not correct. 6.The appealhas no meritand is accordinglydismissed. SANJIVKHANNA,J ijjJ DECEMBER 18,2013st SANJEEV SACHDEVA, J