2015 (3) TMI 447 - AT - Income Tax

Non-granting of deduction under section 80 IB - assessee could not produce the parties from whom the assessee had purchased these machinery, the Revenue is doubting about the newness of the impugned machinery - Held that - Right from beginning, it is the case of the assessee that the machinery installed in its premises is new. The evidence furnished by the assessee to support its contention that machinery is new includes evidence from the agencies which cannot be said to be interested parties who will support the contention of the assessee. One of such evidence is in the shape of certificate given by the Department of Industries, vide their certificate dated 23/2/2007. It has clearly described that certificate of permanent SSI Registration to the assessee was granted after due verification of the required guideline and the machinery installed by assessee is new machinery. The second evidence is in the shape of certificate granted by the bank who after getting inspection report from its officials has given the certificate to the assessee that new machinery was installed. Thus we reverse the order passed by Ld. CIT(A) and hold that the machinery installed by the assessee was new and as no other condition for grant of deduction under section 80 IB has been held to be violated by the assessee, the assessee is entitled to get deduction under section 80 IB. - Decided in favour of assessee.

Issues Involved:
1. Non-granting of deduction under section 80 IB of the Income Tax Act, 1961.
2. Whether the machinery installed by the assessee was new or previously used.

Issue-Wise Detailed Analysis:

1. Non-granting of Deduction under Section 80 IB of the Income Tax Act, 1961:

The assessee, as the legal heir of K.H.P. Shetty, contested the non-granting of deduction under section 80 IB of the Income Tax Act, 1961, for various assessment years. The grounds of appeal were identical except for differences in figures. The Tribunal had previously restored the matter to the AO for verification of the claim that the entire machinery purchased was new, which is a condition precedent for the grant of deduction under section 80 IB. The Revenue contended that this condition was not fulfilled by the assessee, thereby disqualifying them from the deduction.

2. Whether the Machinery Installed by the Assessee was New or Previously Used:

The core issue was whether the machinery installed by the assessee was new, as required under section 80 IB(2)(ii) of the Act, which stipulates that the industrial undertaking should not be formed by the transfer to a new business of machinery or plant previously used for any purpose.

The AO, upon reassessment, discarded the evidence provided by the assessee, stating that the primary onus was on the assessee to establish that the machinery was new. The AO summarized and dismissed the submissions, emphasizing that the assessee failed to produce the parties from whom the machinery was purchased or details of the manufacturer and excise registration to prove the newness of the machinery.

The assessee provided various documentary evidences to support their claim, including:
- Purchase invoice from M/s. Manasi Trading Pvt. Ltd.
- Transport bill and unloading bill for the machinery.
- Installation certificate from M/s. Ronak Electronics.
- Inspection report from Bharat Co-op. Bank confirming new machinery installation.
- SSI registration certificate from the Department of Industry confirming new machinery installation.

Despite these submissions, the AO maintained that the assessee did not prove the newness of the machinery, as the primary onus was not discharged satisfactorily.

Tribunal's Findings and Judgment:

The Tribunal considered the evidences provided by the assessee, including certificates from independent and credible agencies like the Department of Industries and the bank, which confirmed the installation of new machinery. The Tribunal noted that the Revenue did not bring any contrary material to disprove these certificates. The Tribunal opined that the assessee had submitted ample evidence to support their claim regarding the installation of new machinery.

The Tribunal held that the deduction under section 80 IB could not be denied on the ground that the machinery was not new, as the assessee had fulfilled the specified conditions by providing verifiable and credible information. Consequently, the Tribunal reversed the order passed by the CIT(A) and directed the AO to allow the deduction under section 80 IB to the assessee for all the years in question.

Conclusion:

The appeals filed by the assessee were allowed, and the Tribunal directed the AO to grant the deduction under section 80 IB of the Income Tax Act, 1961, as the machinery installed by the assessee was proven to be new based on the substantial evidence provided. The order was pronounced in the open court on 25/02/2015.

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