2013 (12) TMI 899 - AT - Income Tax

Deduction u/s 80IC - Held that - Plant which was used outside India by a person other than the assessee shall not be regarded as plant and machinery previously used for any purpose - In the given case, the plant and machinery was never used within India, as per the documents submitted by the assessee and enquiries made by Ld. CIT(A) - Though the machinery was second hand but it was not used by the assessee outside India, therefore, it cannot be said that machinery was previously used for the purpose of computing deduction u/s 80IC(4) of the Act - Decided against Revenue.

Summary

Issues:
- Allowance of deduction u/s 80IC disallowed by Assessing Officer
- Requirement of documentary evidence to support claim
- Interpretation of section 80IC(4) regarding previously used machinery
- Consideration of machinery imported from abroad

Analysis:

The appeal before the Appellate Tribunal ITAT Chandigarh involved the disallowance of a deduction under section 80IC of the Income Tax Act by the Assessing Officer, which was subsequently allowed by the Ld. CIT(A). The primary issue revolved around whether the machinery claimed for deduction was previously used, as per the provisions of section 80IC(4). The Assessing Officer had denied the deduction based on lack of documentary evidence supporting the claim made by the assessee.

During the assessment proceedings, it was revealed that the machinery in question had been purchased as second-hand machinery from M/s Printers Park, Chennai. The assessee contended that since the machinery was imported from abroad and not used in India, it fulfilled the conditions under section 80IC. However, the Assessing Officer was not convinced due to the absence of concrete documentary evidence.

The Ld. CIT(A) allowed the deduction for the assessment year in question, citing similar allowances made for the preceding year. The Tribunal noted that affidavits and bills of lading were submitted to support the claim that the machinery was not previously used in India. The Tribunal emphasized the provisions of Explanation 1 to section 80IA(3) and section 80IC(4), which clarified that machinery used outside India by a person other than the assessee would not be considered previously used for deduction purposes.

Ultimately, the Tribunal upheld the decision of the Ld. CIT(A) and dismissed the Revenue's appeal. The judgment highlighted that the machinery, although second-hand, had not been used in India prior to its installation by the assessee, thus meeting the criteria for deduction under section 80IC. The Tribunal found no merit in the argument that sufficient documents were not submitted, as evidenced by the documents presented during the assessment proceedings.

In conclusion, the Tribunal's decision underscored the importance of providing documentary evidence to substantiate claims for deductions under the Income Tax Act. The judgment clarified the interpretation of the relevant provisions regarding the usage of imported machinery and reaffirmed the assessee's eligibility for the deduction under section 80IC based on the established facts and legal framework.