The Commissioner Of Income-Tax, Patiala v. M/S. Swastika Oils And Fertilizers,Bahadurgarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH --- Income-tax Reference No. 105 of 1996Date of Decision: July 5, 2010 The Commissioner of Income-tax, Patiala --- Applicant Versus M/s. Swastika Oils and Fertilizers,Bahadurgarh --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL *** PRESENT:Ms. Urvashi Dhugga, Advocatefor the applicant-Revenue. --- Ajay Kumar Mittal, J. The Income-tax Appellate Tribunal, Chandigarh Bench,Chandigarh (in short “the Tribunal”), at the instance of the Revenue,pursuant to the directions of this Court, issued vide order dated22.11.1995, in petition filed under Section 256(2) of the Income-taxAct, 1961 (for short “the Act”), has referred the following question oflaw for the opinion of this Court: “Whether, on the facts and in the circumstances of thecase, the Appellate Tribunal was right in law in upholdingthe order of the CIT (A) allowing deduction u/s. 80HHA,when the ITAT vide its order dated 21.7.1987 passed in appeal No. 889/Chandi/1984 in the case for assessment year 1981-82 confirmed the action of the AssessingOfficer on the same facts?” The controversy between the parties relates to theassessment years 1979-80, 1980-81 and 1982-83. The facts are,however, being taken from the case relevant for the assessment year1980-81. The Assessing Officer, Patiala framed assessment on totalincome of Rs. 3,03,454/- on 31.8.1981 and subsequently the saidorder was rectified twice under Section 154 of the Act, and finally,the income was assessed at Rs.3,88,340/- vide order dated 2.9.1983in which deduction under Section 80HHA amounting to Rs. 90,385/-was withdrawn. The assessing officer disallowed the benefit ofdeduction under Section 80HHA of the Act to the assessee on theground that correct value of machinery and plant on the last day ofthe previous year exceeded Rs. ten lacs and the industrialundertaking of the assessee was not covered under the definition of‘small scale industrial undertaking’. The assessee carried appealagainst the aforesaid order before the Commissioner of Income-tax(Appeals) (in short “CIT(A)”. The appeal was allowed on 6.3.1984holding that the total value of the machinery installed as on the lastdate of the previous year, did not exceed Rs. ten lacs. The incomewas, thus, computed at Rs. 2,98,155/-. Subsequently, action wasinitiated by the assessing officer under Section 148 of the Act fordisallowing deduction earlier allowed under Section 80HHA, on theground that the same was not admissible as the factory of theassessee was situated within 8 Kms from the municipal limits ofPatiala City. The assessing officer, vide order dated 23.2.1985 added the disallowance of the benefit of deduction under section80HHA on the premise that the factory of the assessee was situatedwithin 8 Kms from the Municipal limits of Patiala City. The CIT(A) however, accepted the plea of the assesseethat the factory was situated at a distance of 8.3 Kms. and not 7.3Kms from the Municipal limits and accordingly allowed the appeal ofthe assessee. The Tribunal dismissed the appeal preferred by theRevenue. The Tribunal, while adjudicating the issue, had recordedthe following finding: “The issue that permeates to all these appeals dependsupon the fact whether the location of the appellant’sfactory from the Municipal limit by nearest approach ismore than 8 Kms or not. In this regard the CIT(A) hasgiven a finding of fact on the basis of material producedbefore him that distance was 8.3 Kms from the Municipallimit as against 7.3 Kms. determined by the AssessingOfficer. There is no evidence to controvert this. As suchon facts, the appeals of the Revenue fail. These aredismissed.” The Tribunal, while adjudicating the issue, had recordedthe following finding: “The issue that permeates to all these appeals dependsupon the fact whether the location of the appellant’sfactory from the Municipal limit by nearest approach ismore than 8 Kms or not. In this regard the CIT(A) hasgiven a finding of fact on the basis of material producedbefore him that distance was 8.3 Kms from the Municipallimit as against 7.3 Kms. determined by the AssessingOfficer. There is no evidence to controvert this. As suchon facts, the appeals of the Revenue fail. These aredismissed.” Learned counsel for the Revenue submitted that thefinding recorded by the Tribunal that the factory of the assessee wasbeyond 8 Kms from the municipal limits of Patiala City and thus, theassessee was entitled to deduction under Section 80HHA of the Act,is perverse and against its own order passed in the case of theassessee relating to the assessment year 1981-82. A perusal of the order of the Tribunal shows that thedistance of the factory of the assessee from the Municipal limits ofPatiala City was 8.3 Kms and not 7.3 Kms. as determined by theAssessing Officer. This is a finding of fact based on appreciation ofevidence and once it stands established on record that the factory ofthe assessee was beyond 8 Kms. from the Patiala City, there was noreason to disallow the relief of deduction under Section 80HHA of theAct. Further, the order passed by the Tribunal does not show that theRevenue had ever relied upon or had argued before it with regard tothe order in respect of assessment year 1981-82. Moreover, neitherthe order of the Tribunal in the case of the assessee for theassessment year 1981-82 has been produced before this Court nor ithas been shown as to on what basis the Tribunal had recorded thatthe factory of the assessee was situated within 8 Kms of themunicipal limits in that year. In the absence thereof, the findingswhich have been recorded in the present case relating to theassessment years 1979-80, 1980-81 and 1982-83 cannot be said tobe perverse merely on the ground that the Tribunal for theassessment year 1981-82 had decided the issue in favour of theRevenue.In view of the above, we answer the question referred,against the Revenue and in favour of the assessee. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) JUDGE Income-tax Reference No. 105 of 1996 *rkmalik*