2012 (8) TMI 32 - AT - Income Tax

Denial of claim of deduction u/s 80IB - the industrial undertaking should not be formed by splitting up or re-construction of a business already in existence - Held that - No evidence with the AO through which it could be demonstrated that the machinery was transferred from old unit to new unit with no iota of evidence to say that it was a case of splitting up of the old business . The old unit was closed down way back in the year 1998 and the new unit had come up in the year 2002 and an entirely new building was constructed with the deployment of new technology to manufacture new type of telephone instrument - as assessee has successfully demonstrated that the new unit was set up with the substantial investment in plant & machinery no force in the grounds of the Revenue for denial claim of deduction - in favour of assessee.

Summary

Issues:
- Delayed filing of appeal
- Disallowance of deduction U/s.80IB of the Income Tax Act

Delayed Filing of Appeal:
The appeal was filed belatedly by about 270 days due to a mistake by the appellant's staff. The Tribunal cited precedents emphasizing that a meritorious matter should not be dismissed solely due to a delay in filing, as it may lead to a denial of justice. The delay was condoned, and the appeal was considered on merits.

Disallowance of Deduction U/s.80IB of the Income Tax Act:
The Assessing Officer and the CIT(A) disallowed the deduction claimed by the appellant under section 80IB, arguing that the industrial undertaking should not be formed by splitting up or reconstruction of an existing business. However, the ITAT decisions in the appellant's own case clarified that setting up a new unit with new machinery and infrastructure, even for the same business, does not constitute reconstruction. The key distinction lies in the change of location and installation of new assets. The Tribunal found no merit in the Revenue's grounds and allowed the appellant's claim under section 80IB for the new unit.

In conclusion, the Tribunal allowed the appeal, holding that the appellant was entitled to the deduction under section 80IB for the year in question based on the precedents and legal interpretations provided in the judgment.