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TMI Blog2015 (8) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... l scale industry, that should not come in the way of its claiming benefit under section 80-IB for 10 consecutive years, from the initial assessment year. Therefore the approach of the authorities runs counter to the scheme and the intent of the Legislature. Thereby they have denied the legitimate benefit, an incentive granted to the assessee . See Ace Multi Axes Systems Ltd. vs. Deputy Commissioner of Income Tax [2014 (8) TMI 596 - KARNATAKA HIGH COURT] - Decided in favour of assessee. - ITA No.242 of 2012 (O&M), ITA No.243 of 2012 (O&M), ITA No.92 of 2014 (O&M) - - - Dated:- 30-7-2015 - S J Vazifdar, ACJ And G. S. Sandhawalia, JJ. For the Petitioner : Mr Rajesh Katoch, Adv. For the Respondents : Mr Akahsy Bhan, Senior Adv. with Mr Alok Mittal, Advs. JUDGMENT S. J. Vazifdar, Acting Chief Justic These three appeals against the orders of the Income Tax Appellate Tribunal raise common questions of law and are, therefore, disposed of by this common order and judgment. The facts are noticed from ITA-242-2012, which pertains to the assessment year 2007-08. 2. The appellant contends that the following substantial questions of law arise in this case:- (i) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... short IDR Act ) in so far as it is relevant reads as under:- Power of Central Government to specify the requirements which shall be complied with by the small scale industrial undertakings. 11B. (1) The Central Government may, with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment under this Act to enable them to maintain their viability and strength so as to be effective in:- (a) promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and (b) securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good, specify, having regard to the factors mentioned in subsection (2), by notified order, the requirements which shall be complied with by an industrial undertaking to enable it to be regarded, for the purposes of this Act, as an ancillary, or a small scale industrial undertaking and different requirements, may be so specified for different purposes or with respect to industrial undertakings engaged in the manufacture or production of different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of its fixed assets being in excess of the amount stipulated in the notification and it was not entitled to a deduction under Section 80-IB even if thereafter its fixed assets did not exceed the limit stipulated in the notification. However, the department did not contend before the authorities that the notification under the MSMED Act is not relevant while determining whether an assessee is a small scale industry for the purpose of Section 80-IB. We noticed this aspect during the course of the hearing. Had we taken a view against the assessee on the next aspect, which we will be dealing with, we may have found it necessary to decide whether the notification dated 29.09.2006 is relevant or not. However, considering the view that we have taken, it is not necessary to do so. 9. Mr. Alok Mittal, the learned counsel appearing on behalf of the assessee, rightly contended that once an assessee is entitled to a deduction under Section 80-IB, the assessee is entitled to the same for ten consecutive years. Sub-section (3) of Section 80-IB entitles the assessee to the deduction for a period of ten consecutive assessment years . . The deduction is subject to the assessee' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al undertaking employs 10 or more workers in a manufacturing process carried on with the aid of power or employs 20 or more workers in a manufacturing process carried on without the aid of power. Once these four conditions are fulfilled, the assessee is entitled to the benefit under section 80-IB of the Act. sub-section (3) of section 80-IB provides the extent of deduction eligible under section 80-IB and also the number of years such a deduction is available to such an undertaking. Sub-section (3) mandates that the industrial undertaking shall be eligible for the said deduction for a period of 10 consecutive years, beginning with the initial assessment year. However, it is subject to two conditions as stipulated therein. The second condition is what is applicable to the case on hand which provides, if the industrial undertaking is a small scale industrial undertaking, it has to begin manufacture or produce articles or things at any time during the period beginning on the 1st day of April 1995 and ending on the March 31, 2002. This is a condition which a small scale industry has to fulfill in addition to the conditions mentioned in subsection (2) of section 80-IB . Once all these c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80-IB for 10 consecutive years, from the initial assessment year. Therefore the approach of the authorities runs counter to the scheme and the intent of the Legislature. Thereby they have denied the legitimate benefit, an incentive granted to the assessee. Both the said orders cannot be sustained. Therefore the substantial question of law is answered in favour of the assessee and against the Revenue. (emphasis supplied) We are entirely in agreement with the judgment. The question is, therefore, answered in favour of the respondent/assessee and against the department/appellant. The appeal regarding this question is dismissed. 11. The second question does not raise a substantial question of law. The assessee availed of loans from the banks with interest at 12% per annum. The assessee also availed of loans from various other persons including family members with interest at 15% per annum. The CIT observed that funds available from family members are available for longer period of time and without any formality. The risk element in such advances is higher. There is nothing unusual in payment of higher rate of interest to persons other than banks. 12. The appeals are, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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