1 JUDGEMENT RESERVED ON- 30.1.2019 JUDGEMENT DELIVERED ON-.13.02.2019 Case :- INCOME TAX APPEAL No. - 263 of 2012 Appellant :- M/S G.Surjiwear Limited Respondent :- Commissioner Income Tax Bareilly And Another Counsel for Appellant :- Rakesh Ranjan Agarwal,Rakesh Ranjan Agarwal,Suyash Agarwal Counsel for Respondent :- Praveen Kumar,S.S.C. I.T. Hon'ble Bharati Sapru,J. Hon'ble Piyush Agrawal,J. Delivered by Hon'ble Piyush Agrawal, J. Hear Sri Suyash Agarwal, learned counsel for appellant and Sri Praveen Kumar, learned counsel for respondents. Present appeal has been filed against order dated 14.12.2011 passed by Income Tax Appellate Tribunal, Lucknow Bench "A" Lucknow in ITA No. 295/LKW/2011 for assessment year 2008-09 in which following substantial questions of law have been framed:- "I. Whether ITAT was right in holding that Appellant was not entitled to claim deduction of Rs. 45,50,025 under Section 35(1)(iv) of Act? II. Whether VAT Return of March 2008 and certificates dated 05.06.2010 and 13.08.2010 issued by statutory Vat Authorities are Public Documents under Section 74 of Evidence Act, certifying first date of production of food division on 25.03.2008, ITAT rightly held as not valid piece of evidence to allow deduction amounting to Rs. 40,50,025/- u/s 35(1)(iv) of IT Act? III. Whether Assessment order for A.Y. 2007-08 (01.01.2008 to 31.03.2008) dated 31.01.2011 and rectification order dated 29.07.2011 passed by Deputy Commissioner Commercial 2 Tax Sector -3, Shahajahanpur confirming commencement of production of Food Division as well as assessing purchases/sales of Food Division, ITAT was right in denying deduction u/s 35(1)(iv) of IT Act? IV. Whether ITAT rightly allowed Commissioner's Appeal on issue which was not subject matter of Appeal? V. Whether ITAT was right in setting aside depreciation of Rs. 29,29,610/- on account of machinery and Rs. 5,63,110/- on building of Food Division granted by CIT Appeal?" Brief facts of case, which arise in present appeal are that assessee engaged in manufacture of Implantable Surgical Devices and Disposable Drops and Dressup. During year appellant has alleged to have started new business of Food Division for manufacture of Ready to Cook Food and were producing following items:- 1.Punjabi Chhole 2.Dall Tadka 3.Kashmiri Rajma 4.Dall Makhani 5.Shahi paneer 6.Kadi Pakorra 7.Paneer Chunk Soya sauce It alleged to made first sale of Food Division on 25.3.2008. appellant in disputed year has claimed deductions of Rs. 45,50,025/- under Section 35(1)(iv) of Income Tax Act, Rs. 29,29,610/- on machinery and Rs. 5,63,110/- on building of Food Division. Assessing Authority while framing assessment order have noticed Form No. 3CD which gives statement of particulars required to be furnished 3 under Section 44AB of Income Tax Act in which against column No. 8 appellant has furnished information that it was engaged in manufacture of Implantable Surgical Devices and Disposable Drops and Dressup and there was no change in nature of business or profession. Further, it was also noticed by Assessing Authority from profit and loss account of assessee and details of raw-materials consumed, nowhere appellant has made any reference with regard to production and profit from Food Division. Further, from Auditor's Report, it also does not reveal any change in business activities as compared to activities in immediately preceding year. appellant was called to reply as to why deduction claimed under Section 35(1)(iv) as well as deduction in machinery and Food Division was carried on during year under consideration may not be rejected . In response to notice, appellant submitted that preserved Ready to Cook Food Production was started from 25th March, 2008. certificate issued by Commertial Tax Department certifying date of starting production i.e. 25.3.2008 as well as cash purchase vouchers of M/s Sahai Traders from whom appellant has purchased Dal, Haldi, Mirch, Dhania, Chola, etc., were also submitted . Further computerized generated sales voucher amounting to Rs. 13,000/- being sales of certain items to M/s Raju General Stores were also submitted. On aforesaid information received from appellant, Assessing Officer made necessary inquiry from above two parties. In absence of 4 confirmation from above parties with regard to purchase or sale and also in light of surrounding circumstances, while passing assessment order dated 13.12.2010 has held that business of Food Division has not commenced during year under consideration. Accordingly, Assessing Officer, disallowed deduction of Rs. 45,50,025/- as claimed by appellant under Section 35(1)(iv) of Income Tax Act as well as deduction of Rs. 29,29,610 /- on machinery and Rs. 5,63,110/- on building of Food Division. Against aforesaid order, appellant preferred appeal before Commissioner of Income Tax (Appeals) Bareilly who, vide its order dated 4.3.2011, allowed appeal of assessee and allowed deduction as claimed. Against order of CIT (Appeals), Revenue filed appeal before Tribunal. Tribunal by impugned order has allowed appeal of Revenue and restored order of Assessing Authority. Against impugned order present appeal has been filed. We have perused record of appeal which shows that appellant in support of its claim has not only produced relevant purchase and sale vouchers/bills but has also submitted survey report and certificate issued by Commercial Tax Department. On 14.1.2008, survey was conducted at business premises of appellant and it was noticed that plant and machinery were established. In said survey statement was made that production was likely to be started in month of March or April, 2008. 5 Further appellant has also filed its annual return as prescribed under U.P. VAT Act, 1998 and in pursuance of said return so submitted, assessment order under Section 28(2) of U.P. VAT Act was also framed. While passing assessment order under U.P. VAT Act Assessing Authority has observed that on sale of cooking food rate of tax is 12% but appellant has accepted tax and deposit same only at rate of 4%. bare perusal for record, more precisely assessment order and survey report dated 14.1.2008 filed by assessee shows that production was started in March, 2008 and sale was also made. Tribunal, being last court of fact, was not justified in brushing aside certificate, survey report and assessment order passed by one Government Department, i.e., Commercial Tax Department of U.P. In view of aforesaid facts, view taken by Tribunal in brushing aside assessment order relevant for year under consideration is not correct. impugned order of Tribunal dated 14.12.2011, is set aside and matter is remanded back to Tribunal for reconsideration in accordance with law. question of law is answered accordingly in favour of assessee-appellant and against Revenue. Order Date :- 13.2.2019 SY G.Surjiwear Limited v. Commissioner Income-tax Bareilly And Another