2012 (10) TMI 471 - AT - Income Tax

Deduction u/s 80IB - SSI Benefit - Held that - The assessee had Plant and Machinery much exceeded the limit of ₹ 3 crore applicable to an SSI on the last day of the previous year. Assessee cannot be considered as a Small Scale Industrial Undertaking within the meaning of sec. 11-B of the IDR Act, 1951 as on the last day of previous year relevant to the A.Y. 2008- 09. Since the assessee did not comply with the conditions of the Proviso to clause (iii) of subsection 2 of section 80IB, it is not eligible for claiming deduction u/s 80B of the Act - appeal of the assessee is dismissed as infructuous - against the assessee.

Summary

Issues:
- Stay application for outstanding tax demand
- Eligibility for deduction under section 80IB

Stay Application for Outstanding Tax Demand:
The appellant sought a stay of collection of an outstanding tax demand of Rs. 16,16,044 pending the disposal of the appeal by the Tribunal. The appellant argued that they had a strong case on merits and had already paid a significant amount towards the demand. The Tribunal considered the arguments of both parties and decided to take up the corresponding appeal for disposal.

Eligibility for Deduction under Section 80IB:
The appeal filed by the assessee was against the order of the CIT(A) for the assessment year 2008-09. The case revolved around the assessee company's claim for deduction under section 80IB for being a small scale industrial undertaking. The Assessing Officer disallowed the deduction as the company failed to meet the conditions specified under section 80IB(2)(iii) related to the investment in plant and machinery not exceeding Rs. 3 crores. The company argued that it qualified as a small scale industry based on its investment in plant and machinery as per the Industries Development and Regulation Act. However, both the Assessing Officer and the CIT(A) held that the company did not meet the criteria for being considered a small scale industrial undertaking as per the relevant provisions. The Tribunal upheld the decision of the CIT(A) and dismissed the appeal, stating that the company was not eligible for claiming the deduction under section 80IB due to non-compliance with the conditions specified.

Conclusion:
The Tribunal dismissed the appeal of the assessee regarding the eligibility for deduction under section 80IB, upholding the decision of the CIT(A) that the company did not qualify as a small scale industrial undertaking as required by the relevant provisions. The stay application for the outstanding tax demand was also dismissed as infructuous.