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TMI Blog2014 (1) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... icense subsequently would relate back to the original date of application- thus, the date of making an application for factory licence and its date of issue needs to be examined by the Assessing Officer – the matter remitted back to the AO for fresh adjudication – Decided in favour of Revenue. Scrap sales allowable as deduction u/s 80IB of the Act – Held that:- The Assessing Officer has noted that the Assessee has not filed details of the scrap generated during the year - These details have also not been filed either before CIT(A) or before the Tribunal - the matter needs to be examined at the end of Assessing Officer for verification the nature of scrap generated by Assessee the matter remitted back to the AO for verification and give a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out any merits. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not considering the point that the assessee has failed to prove the manufacturing activity was started on or before 31.03.2004, as stipulated in Section 80 IB of the Act. 3. On the facts and circumstances of the case and in law, the ld. CIT(A) has also erred in allowing scrap sales income as allowable deduction u/s. 80 IB. 4. Ground No. 1 and 2 are interconnected and therefore they are considered together. 5. During the course of assessment proceedings, Assessing Officer noticed that Assessee had started its manufacturing activity from A.Y. 2004-05. He also noticed that the Assessee had claimed deduction of Rs. 11,41,094/- u/s 80 IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 2006-07, 2007-08 and 2008-09 respectively. The aforesaid issue has also been decided in favour of the appellant by the Hon.'ble Income-Tax Appellate Tribunal, Ahmedabad, vide Appellate order in Appeal No.1327/ Ahd/2OO9 dated 21-12-2011 for the Asstt. Year 2005-06, in case of the appellant firm itself. Following the factual and legal matrix described in the aforesaid orders, I direct the AO to grant deduction amounting to Rs. 11,41,094/- u/s. 80 IB of the Act, 1961. Thus, this ground of appeal is allowed. 6. Aggrieved by the aforesaid order of CIT(A) the Revenue is now in appeal before us. 7. Before us the learned D.R. submitted that as per section 6 read with Rules 3 and 4 of the Factory Act, no person can start manufacturing without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the file of Assessing Officer for verification. 8. The learned A.R. on the other hand submitted that in assessee's own case for A.Ys. 2005-06, 2006-07,2007-08 and 2008-09, the issue has been decided in assessees favour. He also placed on record the copy of the order in ITA No. 1327/A/2009 for assessment year 2005-06. He thus supported the order of CIT(A). 9. We have heard the rival submissions and perused the material on record. As per sub-section (4) of section 80 IB, one of the essential requirement is that the industrial undertaking should begin to manufacture or produce articles or things on or before 31.03.2004 We find that the Assessing Officer in his order has noted that the licence was issued by the Chief Inspector of Fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the nature of scrap generated, the details of its sales and therefore the profit derived from sale of scrap cannot be held to be a manufacturing profit. He thus relying on the decision of Hon. Apex Court in the case of CIT vs. Sterling Foods (1999) 237 ITR 579 the sale of scrap amounting to Rs. 54,106/- (25% of 2,16,424/-) excluded from the profit eligible for deduction under 80IB. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) allowed the appeal of the Assessee by holding as under:- 6.3 I have considered the observations of the AO in the assessment order as well as contentions made by the AR of the appellant in his written submission. Considering the rival contentions, I found AO to be n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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