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2014 (3) TMI 328 - AT - Income TaxDeduction u/s 80IB of the Act Limit of exemption for SSI unit Held that - The decision in ACIT, Mehsana Circle, Mehsana Versus M/s. Olympic Laminates Pvt. Ltd. 2014 (3) TMI 98 - ITAT AHMEDABAD followed The limit of investment in plant and machinery to SSI unit is of Rs. 5 crores and not Rs. 1 crore as per provisions of Industries (Development and Regulation) Act, 1951 applicable to the assessee-company as small scale industries as provided in Micro to the Small and Medium Enterprises Development Act, 2006 the assessee s investment in plant and machinery is below the limit of Rs. 5 crores thus, there is no need to interfere with the order in holding that assessee was entitled for deduction u/s 80IB of the Act Decided against Revenue.
Issues:
- Appeal filed by Revenue challenging order of CIT(A) directing deduction u/s. 80IB of the Act. - Discrepancy in investment limit for Small Scale Industrial Units (SSI) as per AO and CIT(A). - Interpretation of the eligibility criteria for deduction u/s. 80IB based on investment in plant and machinery. - Application of legal precedents to determine eligibility for deduction u/s. 80IB. Analysis: 1. The appeal before the Appellate Tribunal ITAT Ahmedabad stemmed from the Revenue's disagreement with the CIT(A)'s order directing the Assessing Officer (AO) to grant deduction u/s. 80IB of the Act. The grounds raised by the Revenue primarily focused on the alleged error in law and facts by the CIT(A) in allowing the deduction. 2. The factual background revealed that the AO had denied the deduction u/s. 80IB to the assessee company, considering its investment in plant and machinery exceeding the prescribed limit for SSI units. The AO contended that the assessee no longer qualified as an SSI unit due to the investment exceeding Rs.1 crore, as per the balance sheet reflecting a total value of Rs.2,95,14,990. Consequently, the claim of deduction amounting to Rs.12,94,294 was rejected by the AO, prompting the appeal. 3. Upon review, the CIT(A) analyzed the investment in plant and machinery vis-a-vis the SSI criteria, emphasizing that the investment did not surpass the limit set for SSI units as per the relevant government notification. The CIT(A) concluded that the assessee remained within the SSI unit limit and was eligible for deduction u/s. 80IB. This decision was based on a thorough examination of the facts, assessment order, and legal provisions. 4. The Tribunal, after considering the case and legal precedents, including a decision by a Co-ordinate Bench in a similar matter, affirmed the CIT(A)'s findings. The Co-ordinate Bench's decision clarified the investment limit for SSI units and upheld the entitlement of the assessee for deduction u/s. 80IB based on compliance with the prescribed investment threshold. Consequently, the Tribunal dismissed the Revenue's appeal, aligning with the established legal position and precedents. 5. The judgment highlighted the importance of interpreting statutory provisions accurately and applying legal precedents to determine the eligibility of entities for tax deductions. By upholding the CIT(A)'s decision and relying on relevant legal precedents, the Tribunal reinforced the consistent application of the law in similar cases, ensuring fair and just outcomes in tax matters.
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