2018 (10) TMI 1594 - AT - Income Tax

Deduction u/s. 80IB - CIT-A holding Unit No.47 as new Industrial Undertaking and allowing the deduction - industrial undertaking has more than one physical place for it s allied activities - Held that - The mere fact that an industrial undertaking has more than one physical place for it s allied activities, such as storage of raw material, final touches and packing of end products or other ancillary activities would not mean that all these physical places are to be treated as standalone unit and profits for each of these places are to be computed separately. As learned CIT(A) rightly puts it, for setting up of new industrial undertaking, the number of building is wholly irrelevant. As all these units together constituted separate and distinct industrial undertaking eligible for deduction under section 80IB. We have also noted that there is no dispute that, vide registration dated 3rd June 2001, District Industries Centre has confirmed setting up of unit at No.47 New Grain Market, Opp. Anupam Talkies, Khokhra, Ahmedabad for production of Readymade garments for children . As for the statement made by the partners of the assessee firm, all that has been stated in the said statement is that the activities are carried out at other places as well but then none of these activities were independent activities on standalone basis or resulted in a distinct product. In any event, as is the settled legal position, statement recorded under section 131 has no evidentiary value, and there is nothing more than the statement which is put against the assessee in the present case. - Decided against revenue

Summary

Issues:
Challenging correctness of order under section 143(3) r.w.s. 147 for assessment year 2008-09 - Deduction under section 80IB disallowed due to lack of separate books of accounts for new industrial undertaking.

Analysis:
The Assessing Officer challenged the order dated 19th December 2011 by the CIT (A) regarding the assessment under section 143(3) r.w.s. 147 for the assessment year 2008-09. The main issues raised by the appellant were related to the deduction under section 80IB for Unit No.47 as a new Industrial Undertaking. The Assessing Officer noted that the deduction was granted based on the assumption that the assessee had started a new industrial undertaking at Plot No.47, New Grains Market, Khokhara, Ahmedabad. However, the Assessing Officer observed that no separate books of accounts were maintained for this undertaking, and the plot was partly let out to a sister concern. The Assessing Officer concluded that since no separate accounts were maintained for different units run by the firm, the assessee was not entitled to the deduction under section 80IB. The CIT (A) reversed the Assessing Officer's decision, stating that all units together constituted a new industrial undertaking eligible for the deduction under section 80IB. The CIT (A) emphasized that the number of buildings for the industrial undertaking was irrelevant, and the final product was marketable, thus allowing the deduction. The ITAT upheld the CIT (A)'s decision, highlighting that the statement recorded under section 131 had no evidentiary value, and the activities carried out at different units were not independent. The ITAT approved the conclusions of the CIT (A) and declined to interfere in the matter, dismissing the appeal.

This case involved a dispute over the eligibility of deduction under section 80IB for a new industrial undertaking due to the lack of separate books of accounts. The Assessing Officer contended that since no separate accounts were maintained for different units, the deduction was not allowable. However, the CIT (A) and ITAT held that all units together constituted a new industrial undertaking eligible for the deduction, emphasizing that the number of buildings was irrelevant, and the final product was marketable. The ITAT affirmed the CIT (A)'s decision and dismissed the appeal, stating that the statement recorded under section 131 had no evidentiary value and the activities at different units were not independent, supporting the allowance of the deduction under section 80IB for the composite industrial undertaking.