The Commissioner Of Income Tax Raipur, Chhattisgarh v. Manilal Dayalji And Company Gola Bidi Works, Sadar Bazar, Dhamtari,Chhattisgarh

1 HIGH COURT OF CHHATTISGARH, BILASPURTAXC No. 65 of 2019 NAFR The Commissioner Of Income Tax Raipur, Chhattisgarh. ---- Appellant Versus Manilal Dayalji and Company Gola Bidi Works, Sadar Bazar, Dhamtari,Chhattisgarh. ---- Respondent ________________________________________________________________ For Appellant : Shri Amit Chaudhari and Ms. Naushina Ali, Advocates _________________________________________________________________ Hon'ble Shri P. R. Ramachandra Menon, Chief JusticeHon'ble Shri Parth Prateem Sahu, Judge Judgment on Board P.R. Ramachandra Menon, Chief Justice 20.01.2020 1.The present appeal preferred by the Revenue under Section 260A of theIncome Tax Act, 1961 (hereinafter referred to as 'the Act') raises challengeagainst the verdict dated 09.03.2018 passed by the Income Tax AppellateTribunal, Raipur Bench, Raipur in ITA No.32/RPR/2014, contending that itinvolves substantial questions of law.Income Tax Act, 1961 (hereinafter referred to as 'the Act') raises challengeagainst the verdict dated 09.03.2018 passed by the Income Tax AppellateTribunal, Raipur Bench, Raipur in ITA No.32/RPR/2014, contending that itinvolves substantial questions of law. 2.The facts and events show that the assessment was finalized in terms ofSection 143(3) of the Act, but later, the audit party raised an objection asto the deduction claimed by the Assessee in terms of Section 80IB of theAct without furnishing necessary certificate for claiming the benefit as a'Small Scale Industry'. With reference to the audit objection, the AssessingOfficer sought to pursue appropriate action in terms of Section 263 of theAct and based on the directions given by the competent authority, freshSection 143(3) of the Act, but later, the audit party raised an objection asto the deduction claimed by the Assessee in terms of Section 80IB of theAct without furnishing necessary certificate for claiming the benefit as a'Small Scale Industry'. With reference to the audit objection, the AssessingOfficer sought to pursue appropriate action in terms of Section 263 of theAct and based on the directions given by the competent authority, fresh assessment was effected after hearing the Assessee. The AssessingOfficer disallowed the claim for want of necessary certificate as envisagedunder the relevant provisions of the law, which was taken up by theAssessee before the Tribunal. The matter was analysed by the Tribunaland after appreciating the facts and figures, Annexure A/1 verdict wasrendered, virtually allowing the appeal, which is sought to be interdicted inthis appeal preferred by the Revenue. 3.When the matter is taken up for consideration, the learned standingcounsel for the Revenue submits that the issue is squarely covered by theverdict passed by the Apex Court in Deputy Commissioner of IncomeTax, Circle 11(1), Bangalore v. Ace Multi Axes Systems Limitedreported in (2018) 2 SCC 158, pointing out that the production ofcertificate was essential to have the benefit granted. Paragraphs-13, 14and 16 are reproduced below for ready reference : “13. On examination of the scheme of the provision,there is no manner of doubt that incentive meant forsmall scale industrial undertakings cannot be availedby industrial undertakings which do not continue assmall scale industrial undertakings during the relevantperiod. Needless to say, each assessment year is adifferent assessment year, except for blockassessment. 14. The observations in the impugned order are thatthe object of legislature is to encourage industrialexpansion which implies that incentive should remainapplicable even where on account of industrialexpansion small scale industrial undertakings ceasesto be small scale industrial undertakings. We areunable to appreciate the logic for these observations. “13. On examination of the scheme of the provision,there is no manner of doubt that incentive meant forsmall scale industrial undertakings cannot be availedby industrial undertakings which do not continue assmall scale industrial undertakings during the relevantperiod. Needless to say, each assessment year is adifferent assessment year, except for blockassessment. 14. The observations in the impugned order are thatthe object of legislature is to encourage industrialexpansion which implies that incentive should remainapplicable even where on account of industrialexpansion small scale industrial undertakings ceasesto be small scale industrial undertakings. We areunable to appreciate the logic for these observations. Incentive is given to a particular category of industryfor a specified purpose. An incentive meant for smallscale industrial undertaking cannot be availed by anassessee which is not such an undertaking. It doesnot, in any manner, mean that the object of permittingindustrial expansion is defeated, if benefit is notallowed to other undertakings. On this logic, incentivemust be given irrespective of any condition as theincentive certainly helps further expansion byreducing the tax burden. The concept of verticalequity is well known under which all the assesseesneed not be uniformally taxed. Progressive taxation isa well known element of tax policy. Higher slabs of taxor higher tax burden on an assessee having higherincome or higher capacity cannot in any manner, beconsidered unreasonable. 16. The principle of law considered in Bajaj Tempo(supra) is certainly a valid principle of interpretationwhere there is ambiguity or absurdity or whereconditions of eligibility are substantially complied. Inthe present case, the scheme of the statute is clearthat the incentive is applicable to a small scaleindustrial undertaking. The intention of legislature is inno manner defeated by not allowing the said incentiveif the assessee ceases to be the class of industrialundertaking for which the incentive is provided even ifit was eligible in the initial year. Each assessmentyear is a separate unit.” In the instant case, no such certificate in the proper from was stated asproduced by the Assessee and that the certificate produced by theAssessee, much later, was not acceptable, not being in conformity with theprescription. Anu 4.After hearing the learned standing counsel for the Department, we are ofthe view that the said submission, that is, with reference to the nature ofthe certificate, adequacy of proof and the relevant aspects are morerelated to 'question of fact' and not any question of law. The verdict passedby the Apex Court does not come to the rescue of the Appellant insofar asthis matter is concerned, i.e. to consider whether it is a matter to beconsidered in terms of Section 260A of the Act, as involving anysubstantial question of law.the view that the said submission, that is, with reference to the nature ofthe certificate, adequacy of proof and the relevant aspects are morerelated to 'question of fact' and not any question of law. The verdict passedby the Apex Court does not come to the rescue of the Appellant insofar asthis matter is concerned, i.e. to consider whether it is a matter to beconsidered in terms of Section 260A of the Act, as involving anysubstantial question of law. 5.The decision rendered by the Tribunal being one on the basis of facts, thisCourt finds it difficult to entertain the appeal. It is dismissed accordingly.Court finds it difficult to entertain the appeal. It is dismissed accordingly. Sd/- Sd/- (P.R. Ramachandra Menon) Chief Justice Judge Chief Justice Judge (Parth Prateem Sahu)