Itxa/615/2011 Of The Commissioner Of Income Tax -20 Mumbai v. Bombay Jewellary Manufactures

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (LOD )NO.1073 OF 2010 The Commissioner of Income Tax-20 ..Appellant. V/s. M/s. Bombay Jewellary Manufacturers ..Respondent. Mr. A.S. Shivsharan for appellant. Ms. Beena Pillai i/b. D.M. Harish for respondent. CORAM : J.P. DEVADHAR AND MRS. MRIDULA BHATKAR, JJ. DATED : 7TH FEBRUARY, 2011 P.C. :- 1.The only question raised in this appeal is, whether the Tribunal is justified in upholding the order of CIT(A) and cancelling the penalty levied under Section 271(1)(c) of the Income Tax Act, 1961 ('the Act' for short). In the present case, the dispute was, whether the assessee was entitled to Section 10A deduction for 10 years commencing from the assessment year AY 1993-94 or AY 1994-95. The assessee contended that in view of the fact that the plant and machinery was installed during the assessment year 1994-95 the deduction under Section 10A of the Act was liable to be computed from assessment year 1994-95. The revenue contended that commercial production of the unit commenced in 1993 and, therefore, the first year of manufacture and production of goods would be assessment year 1993-94 and, therefore, the period of 10 years would lapse during the assessment year 2002-03 and, therefore, deduction under Section 10A would not be available in the assessment year in question i.e. assessment year 2003-04. The Tribunal accepted the contention of the revenue and accordingly sustained the addition made on account of disallowance of deduction under Section 10A. The Tribunal deleted the penalty levied under Section 271(1)(c) on the ground that the assessee bonafidely believed that the production commenced in AY 1994-95 because the plant and machinery were installed in AY 1994-95 and even the electricity connection was obtained in AY 1994-95. The Tribunal has recorded a finding that the exports made in AY 1993-94 were handcrafted and since the plant and machinery were installed in 1994-95, the assessee had reasonable belief that the production commenced in AY 1994-95. The fact that the disallowance has been sustained by treating that the first year of the production was AY 1993-94, does not mean that that the assessee has concealed any particulars so as to levy penalty. We see no reason to interfere with the order passed by the Tribunal. The appeal is dismissed with no order as to costs. (MRS. MRIDULA BHATKAR, J.) (J.P. DEVADHAR, J.)