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TMI Blog2012 (12) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... ify, rectify, alter, amend or revise any of the aforesaid grounds. 3. Shri L.K.S Dahiya, learned CIT/DR represented on behalf of the revenue and Shri Subash Agarwal, Advocate, learned AR represented on behalf of the assessee. 4. It was submitted by the learned CIT/DR that in regard to ground no. 2, which is against the action of the learned Commissioner of Income-tax (Appeals) in admitting the fresh evidences, the learned Commissioner of Income-tax (Appeals) has violated the Rule 46A of the I.T Rules, 1962. In so far as pages 84 to 88 of the assessee's paper book, the copy of the order of Govt. of India, O/o the Assistant Commissioner of Central Excise, Guwahati, Assam dated 25th June 2003 was a fresh evidence. It was the further submission that page 89 of the assessee's paper book, the copy of letter dated 23-03-96 of M/s. Bharat Calciners Limited addressed to the Regional Executive Engineer, Assam Pollution Control Board, Guwahati was also a fresh evidence. It was further submitted that the letter dated 29-12-95 issued by the Regional Executive Engineer, Pollution Control Board, Assam [at page 91] addressed to assessee was also a fresh evidence. It was the further submission th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the learned Commissioner of Income-tax (Appeals) be reversed. 6. In reply, the learned AR drew our attention to the assessment order. It was the submission that even before the Assessing Officer the letter of the assessee to the Department of Industrial Policy & Promotion, Ministry of Industries, New Delhi dated 14-11-1996 had been specifically brought to attention, wherein it has been mentioned that commercial production has been started only in Sept 1996. It was the submission that the auditors of the assessee have also specifically intimated in their report for the year ended on 31-3-96, which has shown at pages 34-35 of the assessee's paper book that work for construction of the plant of the company is still going. The trial run of various individual machineries are being tested during the course of its installation/erection for which necessary raw materials have been purchased from time to time and sale of finished goods coming out of such trial run was taken as part of construction/erection activities only. It was the further submission that for the year ended on 31/3/96 the total sales was only 2,18,27,046/- whereas sales from 19th Sept 2006 till 31-3-07 being 6 mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uested the Assam Pollution Control Board for monitoring of trial run/production and advise any more equipment etc are to be installed or the capacities of those already installed are to be enhanced. These letters are found at pages 89-91 of the assessee's paper book. At pages 95-98 is the order dated 19-9-96 from the Pollution Control Board, Assam giving consent order for the operation of the chimneys in the assessee's factory. On the basis of this consent order dated 19-9-96 the assessee has written letter dated 14-10-96 to the Department of Industrial Policy & Promotion intimating the commencement of regular commercial production on 19/9/96. 8. Now, coming to the accounts maintained by the assessee it shows that the auditors have specifically mentioned that commercial production is yet to commence and trial run is going on. Further, a perusal of the final accounts for the year ended on 31-3-97 shows that the assessee had consumed raw materials of Rs.1,91,83,079.81 and has sales of Rs.2,18,27,076/-. Further, a perusal of the accounts of the assessee for the year ended on 31-3-97 shows that the assessee has consumed raw materials to the extent of Rs.17,55,30,317.85 and has sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the officer concerned to arrange for monitoring of trial production Admittedly, any factory can go into commercial operation only after obtaining necessary consent order from the Pollution Control Board. The assessee has received consent order on 19/9/97 and assessee has confirmed the commencement of regular commercial production. This is also evident from the confirmation of intimation for commencement of production of the licence/s registered unit, wherein in col.8 being the date of commencement of production of each item for licence/registration has been granted and details of production achieved so far is hand written as "19-9-96" whereas all other columns are typed. Further, as extracted earlier, in the course of trial production the assessee has been able to attain full production capacity and as early as 22-3-96 the assessee has also written to the Pollution Control Board, Assam to do their monitoring for the consent order. This clearly shows that much before 31-3-96 the assessee company was fully operational. In any case, the assessee has not placed before us the copy of the first sale bill. However, a perusal of the financial accounts for the year ended on 31-3-96 shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98 as claimed by the assessee. 13. We are live to the issue that commercial production and not trial production determines the beginning of manufacture or production of articles or things. However, when actual production has began and sales has also been effected of manufactured goods and there is no sales return, that such production is still a trial production just because the consent order from the Pollution Control Board, Assam has not been received to begin the manufacture or produce any articles or things or commences operation as required u/s. 80IC of the Act is unsustainable. The facts in the present case clearly show that the assessee has began to manufacture the calcinated petroleum coke using the raw material of petroleum coke before 31-3-06 and the sale of finished products would clearly establishes the commencement of operation. In the circumstances, we are of the view that 'initial assessment year' for the assessee to claim deduction u/s. 80IC(2) of the Act is the year 31-3-96 relevant to the AY 1996-97. 14. Coming to the claim of the assessee that it has capitalised the expenditure till 18-9-96 and the same has also been accepted by the revenue, we are not convince ..... X X X X Extracts X X X X X X X X Extracts X X X X
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