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TMI Blog2014 (12) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... dated – assessee rightly contended that it could be adjusted in the AY in which it was actually received – Decided in favour of assessee. Disallowance of claim of deduction u/s 80IB – Whether new warehouses are mere extension or expansion of the existing business and should not be considered as an 'undertaking' for the purpose of the provisions of section 80- IB – Held that:- Following the decision in A.P. State Warehousing Corporation vs DCIT [2014 (5) TMI 730 - ITAT HYDERABAD] there is no restriction in section 80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains - The godowns where this business is to be carried on need not be owned by the assessee - The assessee had collected rentals for storing food grains and had engaged outsiders to transport the food grains - the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11A) - deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings. Sec 80IB(11A) is applicable to income derived from the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the evidence on record., 3. That the Id CIT(Appeal) has erred in confirming the order u/s 147 of the Act without taking note of the fact that for the instant Assessment Year already an assessment has been made under the Provisions of Section 143(3) of the Act and there being no new facts available to the A.O., the order u/s 147 is nothing but mere change of opinion on the part of the A.O. 4. That the Id CIT(Appeal) has erred in confirming the disallowance of Depreciation of ₹ 27,80,000/- on the contention that this represents excess Depreciation without considering the fact that the Corporation has not adjusted the subsidy amount against the cost of the Fixed Assets as it was a back ended subsidy and thus has correctly claimed depreciation thereon. 7. Ground Nos.1 2 are general in nature. 8. Ground No.3 was not pressed, therefore, same is dismissed as not pressed. 9. Apropos Ground No.4, facts are that the assessee was granted subsidy of ₹ 2.78 crore under Gramin Bhandaran Yojana instituted by the Ministry of Agriculture, Govt, of India for creation of fixed assets i.e. godowns, which was released by NABARD through Allahabad Bank (Rs. 2.41 crore) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its name by the concerned bank against its name. The only difference is that he is being allowed to use the subsidy not in the beginning but at the end. The deferment of use of the subsidy does not alter the fact that the subsidy has actually been received. Therefore, the appellant is required to reduce the cost of assets by the above amount. Therefore, the stand taken by the AO is upheld. 11. Ld counsel for the assessee submitted that assessee had not received subsidy in the current assessment year because it was subject to satisfactory compliance with the terms and conditions of the scheme and liquidation of the loans. He pointed out that the amount was actually received in assessment year 2010-2011, in which, it has been duly accounted for. 12. Ld D.R. relied on the order of ld CIT(A). 13. We have heard the rival contentions and perused the record of the case. From the facts on record, it is evident that the subsidy was released to the lending banks with the stipulation that the equivalent loan amount would not be charged with interest and subsidy amount would also not earn any interest till the final repayment of loan. Therefore, the main issue is at what stage the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ains and other materials. Mostly the company handles the food-grains on behalf of M/s. Food Corporation of India apart from storage of fertilizers etc. for few other parties. II. The assessee was hitherto claiming exemption on warehousing, handling transportation receipt u/s. 10(29) of the I.T. Act till A/Y 2002-03. This exemption has been removed w.e.f. AY-03-04. III. As per the assessee, since the Financial Year 2002-03, the Corporation has been identified as the Nodal Agency for construction of 2.00 lacs M.T. additional Storage Capacity in Orissa and M/s. Food Corporation of India has been guarantor for use of such additional capacity at least for a period of 7 years. Accordingly, the corporation has undertaken the construction of additional storage capacity of about 2.00 lac M. T. new storage capacity. The Corporation has completed construction of the additional storage capacity of 1.825 lac M. T. during the Financial Year 2002-03 relevant to the Assessment Year 2003-04 and has offered it for commercial use during that year. IV. The assessee in this connection has also submitted an agreement dt.22.04.2002 with FCI for construction of new go-down of 2.00 M. T. capacit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese decisions emphasizes if fresh capital is introduced for purchase of Plant Machinery and the new unit is capable of production of goods, then the unit can be claimed as a newly established industrial undertaking. He further observed that these judgments were rendered in the context of industrial units engaged in production whereas, in case of the assessee, the warehouses were mere buildings and not Plant Machinery. The AO after considering the annual report further observed that this deduction is available to the new undertaking on or after 1.4.2001 and the assessee in the instant case is an old undertaking doing this business since long and so called undertaking was nothing but an extention or an expansion of the existing business. He, accordingly, held that there was no new undertaking and, therefore, denied deduction u/s. 80-IB of the Act. 21. Ld CIT(A) upheld the AO's action. Being aggrieved, assessee is in appeal before us and has taken following grounds of appeal: 1. That the order appealed against is bad in law, without jurisdiction and void. 2. That the order appealed against is bad in law as it is passed on the prejudices, surmises, guesses and misunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not be owned by the assessee. When the assessee-corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is very much entitled for relief under S.80IB(11A) of the Act in respect of each such new undertaking set up by it. It appears from the impugned orders that the lower authorities have proceeded. as if the assessee's claim for relief under S.80IB(11A) is in respect of existing godowns, and not merely in respect of the new ones started after 2001. It is so because the period of five years was sought to be counted from the year of incorporation of the assessee, viz. 1958; and also observing that no new activity was taken up after 2001. Since each new godown is an undertaking in itself, assessee is entitled for such relief under S.80IB(11A) for five years in respect of each such undertaking from the 'initial year' in which it was set up. 13. As for the eligibility of the activity of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings, as held by the Apex Court in the cases of Textile Machinery Corpn. Ltd. v. CIT [1977] 107ITR195(SC) and CIT v. Indian Aluminium Co. Ltd. [1977] 108 ITR 367 (SC). The number of new godowns operated by the Assessee after 1.4.2001 clearly shows that there was substantial expansion of the assessee's business of handling, storing and transportation of food grains, which obviously could have been done only be undertaking new warehousing facilities year after year even after 2001. In respect of these new warehouses, each of which constitutes an eligible undertaking, assessee is separately entitled for deduction under S.80IB(11A) of the Act. In our opinion therefore, the assessee is entitled to deduction u/s 80IB(11A), in respect of income derived from the new undertakings, warehouses, set up and operated from 1.4.2001 for storage, handling and transportation of food grains. We accordingly set aside the impugned orders of the CIT(A) on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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