2012 (5) TMI 691 - AT - Income Tax

Deduction was claimed u/s 80-I - Held that - There is an apparent mistake in the impugned Tribunal order because the same appears to be not in line with the subsequent judgment of Hon ble Gujarat High Court which is the jurisdictional High Court in the present case rendered in the case of Gujarat Alkalies & Chemicals Ltd. (2012 (3) TMI 267 - GUJARAT HIGH COURT). In our considered opinion the tribunal order on this aspect should be recalled and the matter should be decided afresh after hearing both the sides.

Summary

Issues:
1. Interpretation of Section 80-IA for deduction claim.
2. Determination of new industrial undertaking eligibility.
3. Application of the judgment of Hon'ble Gujarat High Court.

Analysis:
1. The primary issue in this case revolved around the interpretation of Section 80-IA for the deduction claim. The dispute arose when the Assessing Officer (A.O.) rejected the claim of Sec. 80-IA for the new power plant, citing that it was established by the transfer of old and previously used machinery. The Commissioner of Income-Tax (Appeals) upheld this decision, leading to an appeal by the assessee before the Tribunal.

2. The assessee contended that even if the boiler was considered part of the new power plant, the value of the old machinery did not exceed 20% of the total value of the machinery and plant used in the business. By relying on figures provided by the A.O., the assessee argued that the condition in Section 80-IA(3)(ii) was met, as the value of the old machinery was below the threshold specified in Explanation 2 to section 80-IA(3).

3. During the hearing, the Ld. A.R. referred to a judgment of the Hon'ble Gujarat High Court in the case of Gujarat Alkali and Chemicals Ltd. Vs CIT, emphasizing that the new undertaking must not be substantially the same as the old business and should involve a substantial investment of new capital. The Ld. D.R., however, argued that there was no apparent mistake in the tribunal order, as it had determined the new undertaking to be an expansion of the existing industrial unit.

4. The Tribunal, after considering the submissions, found that the tribunal order was not in line with the subsequent judgment of the Hon'ble Gujarat High Court in the case of Gujarat Alkali & Chemicals Ltd. The High Court had clarified that the dependency of the new undertaking on the existing unit did not deprive it of a separate and distinct identity, depending on the nature of technology and production mechanism. Consequently, the tribunal order was deemed to have an apparent mistake, and the matter was directed to be heard afresh after recalling the original order.

5. In conclusion, the miscellaneous application of the assessee was allowed, and the tribunal order was set aside for a fresh hearing in light of the judgment of the Hon'ble Gujarat High Court.