9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (9) TMI 1283 - AT - Income TaxClaim of deduction u/s 80IB denied - treatment to both the units as one and the same - Held that - Merely because the second unit was shown as branch unit or expanded unit, it cannot be said that the branch unit is not an independent unit. In fact, the injection moulded plastic components are manufactured at 55-D, SIDCO Industrial unit. This method is not used in the main unit. This Tribunal is of the considered opinion that both units are functioning differently even though the end product in both units are plastic components. Therefore, both the authorities below are not justified in treating both the units as same unit. Merely because one unit is treated as branch unit for administrative convenience, it does not mean that both the units are one and the same. In view of the above, both the authorities below are not justified in treating both the units as one and the same. This Tribunal is of the considered opinion that both main and branch unit are separate and independent one, therefore, the authorities below are not justified in rejecting the claim of the assessee u/s 80IB of the Act. Accordingly, the orders of the authorities below are set aside and the Assessing Officer is directed to allow the claim of the assessee u/s 80IB of the Act. - Decided in favour of assessee.
Issues:
Claim of deduction u/s 80IB of the Income Tax Act for assessment years 2008-09 and 2009-10. Analysis: The primary issue in this case revolves around the eligibility of the assessee for deduction u/s 80IB of the Income Tax Act. The assessee, engaged in manufacturing and sale of plastic cans and containers, claimed to be a small scale industry eligible for the deduction. The representative for the assessee argued that the cost of plant and machinery did not exceed the prescribed limit of Rs. 3 crores, thus maintaining the small scale industry status. The argument was supported by a registration certificate from the Directorate of Industries, Tamilnadu, and references to relevant legal provisions and judicial precedents. On the contrary, the Departmental Representative contended that the second unit of the assessee was not independent from the first unit, and therefore, the claim for deduction was not valid. The Assessing Officer had disallowed the claim based on the investment in plant and machinery exceeding Rs. 1 crore, as per the guidelines under the Industries (Development and Regulation) Act, 1951. The Tribunal analyzed the provisions of section 80IB of the Act and the definition of a small scale industrial undertaking. Citing a previous judgment, it was established that if the investment in plant and machinery did not exceed Rs. 3 crores, the assessee was entitled to the deduction. In this case, the investment was well below the threshold, making the assessee eligible for the deduction. The Tribunal emphasized the importance of following the guidelines issued by the State Industries Department when determining the status of a small scale industry. Another aspect of contention was whether the branch unit of the assessee could be considered independent for the purpose of claiming the deduction. The Tribunal carefully examined the nature of operations in both the main and branch units, highlighting the differences in production methods and end products. It was concluded that both units operated independently, despite administrative categorization as a branch unit. Therefore, the Tribunal set aside the orders of the lower authorities and directed the Assessing Officer to allow the claim of the assessee u/s 80IB of the Act. In conclusion, the Tribunal allowed both appeals of the assessee, emphasizing the importance of adherence to legal provisions and proper interpretation of the small scale industry status for claiming deductions under the Income Tax Act.
|
