2008 (4) TMI 468 - HC - Income Tax

Industrial undertaking Commissioner initiate proceeding on the ground that since the manufacturing work was done by you on the machine hired by you and you have not got your own machines you are not entitled for deduction under section 80-I of the Act. The deduction was therefore wrongly allowed by Assessing officer. Held that- since it was found by the Tribunal that the machinery and plant used by the assessee were not new, the assessee was not entitled to the special deduction u/s 80I of the Act.

Summary

Issues:
Interpretation of conditions for deduction under section 80-I of the Income-tax Act, 1961.
Jurisdiction of Commissioner (Appeals) to entertain appeals against orders made under section 263 of the Act.

Analysis:
Issue 1:
The case involved the interpretation of conditions for claiming deduction under section 80-I of the Income-tax Act, 1961. The assessee, a private limited company, used machines leased from another company for manufacturing activities. The Commissioner of Income-tax initiated proceedings under section 263, contending that the assessee was not entitled to the deduction under section 80-I due to non-fulfillment of conditions. The Commissioner directed the Assessing Officer to withdraw the relief granted for one assessment year and set aside the assessment for another year for fresh consideration. The Tribunal upheld the Commissioner's decision, stating that the machines leased were not new and had been previously used by the lessor company, thus not meeting the conditions for the deduction. The Tribunal rejected the assessee's plea for modification, emphasizing the factual findings regarding the non-newness of the machines leased.

Issue 2:
Regarding the jurisdiction of the Commissioner (Appeals) to entertain appeals against orders made under section 263 of the Act, the Tribunal held that the Commissioner (Appeals) rightly refused to entertain the appeal against the order giving effect to the Commissioner of Income-tax's decision. The Tribunal dismissed the assessee's appeal against the Commissioner (Appeals) decision, as it upheld the orders made by the Commissioner of Income-tax for the relevant years. The Tribunal emphasized the identical nature of facts in subsequent years, leading to the refusal to reconsider the earlier decision based on the same set of facts. Ultimately, the Tribunal confirmed the order made by the Commissioner of Income-tax under section 263, denying the assessee relief under section 80-I of the Act.

This detailed analysis of the judgment highlights the issues involved, the arguments presented, and the final decision rendered by the Tribunal in each aspect of the case.