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TMI Blog2015 (10) TMI 986X X X X Extracts X X X X X X X X Extracts X X X X ..... . Therefore in our opinion, these documents should have been admitted. In any case we further find that the Ld. Counsel for the assessee was able to show us the various letters through which it was ascertained that various bills etc. are being enclosed with those letters and no comments have been given by the authorities in their respective orders. These bills etc. wherever found necessary, were produced even before us for our clarification. Therefore this ground is allowed (in fact during the hearing certain bills and other documents were produced before us which we examined to avoid further controversy) - Decided in favour of assessee. Disallowance of deduction u/s 80IB(11A) - Held that:- 100% deduction cannot be allowed to the assessee because we have already held while discussing the activities of the assessee that processing of paddy cannot be said to be covered by the activities given in Sec 80IB(11A). Therefore to find out the quantum of deduction we refer to the assessment order for Assessment year 2010-11 wherein it was observed that milling expenses vary from 15 to 25 per Qtl depending upon the nature of paddy to be milled. It is also to be noted that some of the bi-produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance of the set off of loss from power plant against the business income - Held that:- Yhe provisions of section 80-I(6) and 80B(5). Since section 80B(5) is starting with non-obstante clause, therefore full effect has to be given to the same. In any case, by reducing the loss of power plant from the other business the assessee is rather losing the deduction on the other business instead of getting any benefit. Therefore, in view of the decision of Synco Industries Ltd v Assessing Officer (Income Tax) & Another [2008 (3) TMI 13 - Supreme court ] we decide this issue in favour of the assessee. Additional depreciation on the power plant - Held that:- he plain reading of the above provision shows that in case of the business of generation and distribution of power, the provision for allowance of additional depreciation was inserted by Finance Ac, 2012 w.e.f. 1.4.2013, therefore, the additional depreciation can be considered in case of assessee engaged in the business of generation or distribution of power only form assessment year 2013-14. Therefore, we set aside the order of Ld. CIT(A) and hold that additional deduction @ 20% is not allowable in the case of assessee against power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the circumstances of the case the Ld. CIT(A) has erred in rejecting the additional ground of appeal No. 2 raised u/s 250 (5) contending that the order u/s 127 transferring jurisdiction of the case from DCIT (Central) Chandigarh was passed by the CIT on 1.12.2010 i.e. just before less than two months for passing the assessment order and hence the assessment order dated 30.12.2010 was apparently passed hurriedly without allowing adequate opportunity of being heard to the appellant to substantiate its claim regarding deduction u/s 80IB(11A)therefore the assessment order passing without adequate opportunity is bad in law and deserves to be quashed. 4.3 That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in rejecting the additional ground of appeal NO. 1 raised u/s 250(5) of Income -tax Act, 1961 contending that the assessment made on 30.12.2010 u/s 153A(1)(b) r.w.s. 143(3) is bad in law as no incriminating material suggesting of any suppression of income was found during the course of search and seizure operation u/s 132(1) on 12.2.2009 and therefore the entire assessment being bad in law, deserves to be quashed. 5 That on the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additional depreciation on plant & machinery allowable u/s 31(1)(iia) of the Income -tax Act, 1961 a claim raised by way of additional ground of appeal No.4. 3. Out of above, grounds No. 2, 4, 4.2, 4.3 and 9 were not pressed before us, therefore the same are dismissed as not pressed. 4 Ground No. 1 is general in nature and does not require any separate adjudication. Though various other grounds have been raised but principally there are three disputes namely: (i) Admission of additional evidence (ii) Disallowance of deduction u/s 80IB(11A) (iii) Disallowance of depreciation on power plant 5 Before we discuss the facts in respect of first issue, it would be pertinent to consider the background of the case. In this group of cases a search was conducted in the office premises of the assessee on 12.2.2009 and some relevant books and documents were found and seized. Thereafter a notice u/s 153A(1)(a) was issued by the Assessing officer, the DCIT (Central), Patiala to the assessee on 6..4.2009 requiring it to file its return of income in respect of Assessment Year 2008-09. A request was made by the assessee-company to transfer their cases from DCIT (Central) Patiala to Chandigarh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch of imagination, be said that these documents were not available for production during the course of assessment proceedings. The case laws cited do not come to the rescue of the assessee either keeping in mind the facts of the case in hand. It is not a case where the assessee was not in the know of the nature of the proceedings, so it was incumbent upon him to lead necessary evidence in the form of the documents which are now sought for admission as additional evidence. In fact, on no occasion has the assessee stated before the A.O the reason why the concerned documents/ certain documents could not be filed during the course of assessment proceedings. Needless to say, before any additional evidence can be admitted, the assessee has to first prove that his case comes within the exceptional calsue as laid down in Rule 46A. I am afraid the assessee has been unable to substantiate his claim. Thus the request of the assessee for admission of additional evidence under clauses (b), (c) and (d) of Rule- 46A of the Income-tax Rules, 1962 cannot be acceded to. 7. Before us it was mainly submitted that cases were finally transferred to Central Circle Chandigarh on 28-10-2010 and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajinder Sandal, Chartered Accountant, was exlusively handling tax matters of M/s Lakshmi Energy & Foods Ltd., its promoters, directors and group companies. xii) The copy of account statement of Mr. Sandal's full & final payment in the books of Co. He was with the company for the period 22.03.2006 to 31.03.2010. xiii) The photograph and CD of storage capacity / godowns year wise and new plant installed after March 2009. xiv) The copy of the letter 27/10/2010 along with its annexures i.e. the judgments passed by the Hon'ble Supreme Court of India & Punjab & Haryana High Court evidencing that the above mentioned orders were duly served upon DCIT-Central Circle-I. Chandigarh Additional Commissioner of Income TaxChandigarh and Commissioner of Income Tax. (C). Ludhiana." 10 For admission of additional evidence Rule 46A of Income -tax Rules, 1962 is relevant which is as under: 46A. (1) The appellant shall not be entitled to produce before the [Deputy Commissioner (Appeals)] [or, as the case may be, the Commissioner (Appeals)], any evidence, whether oral or documentary, other than the evidence produced by him during the course of proceedings before the [Assessing Officer], except in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore the cases should be transferred to the Central circle, Chandigarh. Lot of litigation happened in this regard and ultimately the Revenue agreed to the request and the cases were transferred to the Central circle, Chandigarh on 28.10.2010. In fact the Assessing officer himself has observed in this regard as under: "The request of the group was accepted but in the whole process invaluable time was lost and hence any submission of the assesse that the process of assessment was delayed would have to account for this fact. The above clearly show that the assessee did not have sufficient time to represent in about 105 assessments in the Central Circle, Chandigarh. When a period of less than two months was available and certain documents were not easily traceable then the same would constitute a reasonable cause for not producing the documents sought to be admitted as additional evidence. This has to be further considered in the light of the fact that the assessee had serious disputes with its auditor, Shri Rajinder Sandal whose services were ultimately terminated. Keeping these two constraints, we are of the opinion that the Ld. CIT(A) should have admitted the additional evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nery was discarded and new machinery was installed and even land and building for new venture were purchased afresh which have been shown in the schedule of fixed assets. It was pointed out that in case of CIT Vs. Hindustan General Industries Ltd, 137 ITR 851 it was held by the Hon'ble Delhi High Court that the word "splitting up " of the business already in existence indicate a case where the integrity of a business earlier in existence is broken up and different sections of the activities previously conducted are carried on independently. In this case there is no such case as the entire machinery was reinstalled by discarding the one already in existence. Similarly, on the facts of the case it cannot be a case of "reconstruction" as the earlier business was killed and in place a new business was started. Further no part of the old machinery was transferred to the new project. It was also contended that the assessee has complied with all other conditions therefore deduction should be allowed. The Assessing officer observed that no documentary evidence has been filed in this regard and merely stating that old machinery was discarded and replaced with the new machinery was not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 80IB(11A) and explanatory notes on the provisions and observed that deduction was brought on the statute to encourage building of infrastructure to handle food grains to ensure better storage conditions and minimization of wastage. The intention behind Sec 80IB (11A) was to address the basic concern relating to enhanced food security and agricultural development by upgradation and modernization of infrastructure facilities and therefore this aspect of "storage and handling and transport of food grains" were central concerns. According to him the main business of the assessee as per Form 3CD itself was "Manufacturer of rice, cattle feed, crushing of oil, solvent extraction and refinery and generation of power. Thus the assessee was mainly engaged in the manufacture of rice, cattle feed etc. which cannot be equated with integral business of handling, storage and transportation of food items. He referred to the following written submissions of the assessee: "that the assessee buys paddy from different places which is transported to the factory premises by trucks, meeting the requirement of transportation and then the same is stored as such before putting into manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Additions before 30.09.07 Additions after 30.09.07 Sale Total cost as on 31.03.08 1 Land 94892046.00 0.00 2038751.00 0.00 96930797.00 2 Building 124506165.66 20250562.65 18088979.00 0.00 162845707.31 3 Roads 2894471.69 0.00 0.00 0.00 2894471.69 4 Office Building 6325057.41 0.00 0.00 0.00 6325057.41 5 Wooden Structure 0.00 0.00 0.00 0.00 0.00 6 Water Treatment Plant /Pollution Control devices 100162954.77 274671780.30 138481534.96 0.00 513316270.03 7 Plant & Machinery 188627543.96 0.00 0.00 0.00 188627543.96 8 Furniture Fixture 4732918.52 1344474.00 2828937.00 0.00 8906329.52 9 Vehicle 51334804.41 76130.00 8793219.00 0.00 60204153.41 10 Imported Car 650000.00 0.00 0.00 0.00 650000.00 11 Motor cycles /scooter 12623.77 0.00 0.00 0.00 12623.77 12 Office equipments 3197669.10 1302604.00 1837983.87 0.00 6338256.97 13 Computers 1404702.97 241348.00 1139631.00 0.00 2785681.97 He made following observations in this regard: "As per above depreciation chart, which is as per the provisions of Income Tax Act, 1961 it is to be marked that there is absolutely no addition in plant & machinery during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e person would be entitled to exemption if these three activities were in the nature of individual business. Further if the interpretation given by the Assessing officer is accepted then the moment food grains are transported, handled and stored and then converted into rice the assessee will not be entitled to exemption. In other words, according to the Assessing officer the exemption will be available to only the Warehouses which are also transporting such food grains. That cannot be the intention of the legislature. It was contended that if the interpretation given by the Assessing officer was to be accepted and the exemption was to be restricted only to the activities of the transportation, handling and storage and nothing else then how the assessee would get the income because if the activities stops at the stage of storage, no income would ever accrue to the assessee and for generating the income the goods have to leave the hands of the assessee as such or in the shape of extended product. In this regard certain case laws were also quoted. Therefore the activities performed by the assessee were eligible for deduction u/s 80IB(11A). 15 With regard to the issue regarding new pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined the submissions and observed that due date for filing of the return was 30.9.2008 whereas same has been filed on 31.3.2009. He referred to the decision of Hon'ble Supreme Court in case of Parkash Nath Khanna Vs. CIT, 266 ITR 1 and observed that due date has to be reckoned with what is provided u/s 139 (1). Since the assessee has not filed return within the due date, therefore no deduction can be allowed. In respect of filing of Form 10CCB he observed that initially the Form was signed by Shri Amit Gupta which was not in order because tax auditor of the company was Shri Deepak Garg. It was also noted by him that though Shri Amit Gupta had admitted to issuance of form 10CCB but the same was signed on 26.9.2009 which means the same was prepared after filing of return. It was also illogical that why the tax auditor, Deepak Garg has not filed the form. It was also observed that since the assessee was not maintaining separate books of accounts and had claimed 35% deduction before the Assessing officer which was later on raised to 100%, the onus was on the assessee to prove the correctness of its claim by leading some evidences. In this back ground the Ld. CIT(A) rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore this judgment is squarely applicable. He also referred to the decision of Hon'ble Delhi High Court in case of Podder Pigments Vs. CIT, 222 CTR 309 (copy of the judgment filed at page 25 to 28 of the synopsis). In this case it was clearly held that even if time for filing of return had expired the deduction can still be claimed even in the petition filed u/s 264 after seven months. He also relied on the following decisions: (i) ACIT Vs. Dhir Global Industrial (P) Ltd. (supra) (ii) ITO Vs. S. Venkaktaiah, ITA No. 984/Hyd/2011 (copy filed) (iii) Vansheer Builders & Developers P. Ltd Vs. ITO, ITA No. 386/Bang/2012 (copy filed) The Ld. Counsel for the assessee also distinguished the decision of Special Bench in case of Saffire Garments Vs. ITO, 151 TTJ 114. According to him in view of above decision of Courts, the deduction u/s 80IB(11A) cannot be denied merely because the return has been filed late. (b) Non filing of a certificate of C.A in form No. 10 CCB The assessee had a serious problem with the auditor and tax consultant Shri Rajinder Sandal. The assessee-company was entirely dependent on Shri Sandal's advice relating to tax matters for the last six years. He was havi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hart) and pointed out that the assessee-company was procuring paddy from the Mandi. Initial cleaning was done in the Mandi itself and then such paddy was transported to the godowns of the assessee-company which was specifically designed to provide maximum security and safety for the food grains from withering, spoilage, loss because of pests and other natural calamities. He emphasized that the assessee has purchased more than 150 trucks for transportation of paddy etc. from Mandi to its godowns which will fulfill the conditions regarding transportation. Once the paddy is brought to the godown which have been specifically designed to safeguard the food grains through installation of various machinery for controlling of temperature and provide fumigation facilities to protect the food grain from pests and other natural calamities. Before putting the paddy in the stores, husk is removed to prevent the loss from inborn pests. This part would fulfill the conditions of storage. It was contended that milling is part of the handling because though handling is not defined in the Act but he made reference to various Acts where the word "handling" has been defined which clearly show that hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made to the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. Sardari Lal Mehra, 87 ITR 47. It was also submitted that if the deduction has been allowed in the latter year then the deduction cannot be disallowed in the earlier year and in this regard reference was made to the decision of Amritsar Bench of the Tribunal in case of DCIT Vs. Chaman Lal & Sons. 93 TTJ 132 (copy placed at page 57 of the synopsis) and the decision of Hon'ble Delhi High Court in case of Parveen Son (copy placed at page 62 of the synopsis). (d) It was contended that there is no force in the observations of the Assessing officer that deduction was not claimed in the return of income. In this regard he referred to page 2 of the paper book which is computation of income which clearly show that deduction has been claimed. It was pointed out that some how while processing the return deduction was shown at nil but even that processing was got rectified through a rectification application filed by Shri Rajinder Sandal. (e) Compliance with the requirements of Sec 80IB(2)(i) First of all it was submitted that the condition of splitting of and reconstruction of a undertaking was appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s 80IA through various orders including the order of the Settlement Commission. Originally the assessee- company was engaged in the business of paddy processing and even after sanction of mega project, the assessee's main business was manufacture of rice, cattle feed, crushing of oil seeds, solvent extraction and refinery. This fact becomes absolutely clear from the following chart which shows the receipts of the assessee-company during various years from different activities: Sl. No. Particulars Sales (Rs. In Millions)* 2003- 04 2004- 05 2005- 06 2006- 07 2007- 08 2008-09 1 Oil Division 66.28 136.01 458.42 374.51 712.76 558.90 2 Rice Division 2157.17 2571.67 4875.08 6126.90 8331.36 7619.42 3 Wheat / Damaged wheat 0.00 1261.54 203.42 295.67 80.74 3.60 4 Other sales 27.57 107.92 46.97 165.58 419.98 419.83 5 Power 514.91 Total 2251.02 4077.14 5583.89 6962.66 9544.84 9116.66 Above clearly show that there was no change in the business. This becomes further clears from the fact that in Assessment Year 2005- 06, 2006-07 and 2007-08 the assessee returned income of ₹ 23.33 crores, 24.61 crores and ₹ 42.79 crores but no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The legislative intentions behind section 80IB(11A) was not to extend the benefit of deduction to existing or new industrial undertaking engaged in manufacturing or production of food grains as the same was available under sub-sec (3) to (5) of section 80IB to such undertaking depending upon the period of commencement of business and the location of industrial undertaking for the period as specified therein. The Memorandum explaining the provisions of section 80IB(11A) makes it explicitly clear that the sole emphasis was to encourage building of storage capacities by undertaking upgradation and modernization of infrastructure for storage, handling and transportation of food grains. 21 The Ld. D.R. for the Revenue referred to the contention raised by the Ld. Counsel for the assessee with respect to the meaning of handling given in various Acts and pointed out that the word "Handling" is polymarphous word and is used in different senses in different contexts. He contended that definition in other Acts or technical meaning of a word or expression in the statute may be relevant but not sacrosanct. In this regard he referred to the decision of Hon'ble Supreme Court in case of CGT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcon Pvt Ltd, 301 ITR 309. He also referred to various other decisions where principles of interpretation of statutes have been given. He referred to the contention of the Ld. Counsel for the assessee with regard to the circular and clarification given by the Ministry of Food Processing wherein various incentive provisions are reproduced. Detail of various benefits in form of duty and tax benefits are disclosed and various sections of processing sectors have been defined and classified on the basis of a data for the purpose of clarity and compilation of data. However, there is nothing in these documents to suggest that the Ministry of Food Processing has classified rice milling as integrated business to handling, storage and transportation of the food grains. Though this is applicable in case of preservation and packing of fruits and vegetables. 22 The Ld. D.R. for the Revenue submitted that reliance placed by the Ld. Counsel for the assessee on the assessment order for Assessment Year 2010-11 is not relevant because the assessment orders are not binding on the Tribunal and the order passed by the Assessing officer is not inconformity with the law. Reference to the decision of Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Rajasthan High Court in the case of Chhogmal Chiranjilal vs. CIT(257 ITR 51) He contended that reliance on the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. MS. Jagriti Aggarwal (supra) was misplaced because in that case the Court was concerned with the interpretation of Sec 54. When a specific provision is there then same cannot be interpreted so as to make the provision redundant. 24. Referring to the objection of the Assessing officer in non filing of form 10CCB he submitted that there is a specific requirement u/s 80IA(7) r.w.s. 80IB(13). Initially this report was not filed and the report which was filed has been signed by Shri Narinder Gulati, C.A. wherein deduction has been worked out at ₹ 50.95 crores whereas the assessee has claimed the deduction at ₹ 17.32 crores which is self contradictory. 25 The Ld. D.R. for the Revenue also referred to non fulfilling of the requirements of Sec 80IB(2)(i) and pointed out that the assessee had not filed any copy of the bills of various plant & Machinery which was purchased by the assessee. (as noted earlier this is not correct). He contended that there is no force in the submissions that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... field of water treatment and pollution control would have no connection with handling, storage and transportation of the food grains and the assessee has not given any evidence to show that these machineries were also for the purpose of integrated business of handling, storage and transportation of food grains. The decisions relied for the proposition that it is WDV which has to be considered in respect of old Plant & Machinery are not relevant because the same were rendered in the context of block of Plant & Machinery where uniform rate of depreciation was provided whereas different rate of 15, 60, 80, and 100%, is provided now and therefore likes have to be compared with likes. If this proposition is accepted and if investment of ₹ 23.50 crores is ignored then new investment of ₹ 9.85 crores is considered then old investment of ₹ 6.05 crores would constitute more than 60% of the machinery. Further as far as contention that the old machinery was discarded for which reliance was placed on the certificate of Chartered Engineer filed at page 394 and certificate of the C.A filed at page 420 are only self serving documents. There are contradictions in these certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely :- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an industrial undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such industrial undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; (iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India : Provided that the condition in this clause shall, in relation to a small scale ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 31st day of March, 1995 or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular undertaking; (ii) where it is an industrial undertaking being a small scale industrial undertaking, it begins to manufacture or produce articles or things or to operate its cold storage plant [not specified in subsection (4) or sub-section (5)] at any time during the period beginning on the 1st day of April, 1995 and ending on the 31st day of March, [2002]. (4) The amount of deduction in the case of an industrial undertaking in an industrially backward State specified in the Eighth Schedule shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from such industrial undertaking : Provided that the total period of deduction does not exceed ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a co-operative society) subject to fulfillment of the conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994 and ending on the 31st day of March, [2004]; (ii) hundred per cent of the profits and gains derived from an industrial undertaking located in a backward district of category 'B' for three assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains of an industrial undertaking : Provided that the total period of deduction does not exceed eight consecutive assessment years (or where the assessee is a co-operative society, twelve consecutive assessment years) : Provided further that the industrial undertaking begins to manufacture or produce articles or things or to operate its cold storage plant or plants at any time during the period beginning on the 1st day of October, 1994 and ending on the 31st day of March, [2004]. (6) The amount of deduction in the case of the business of a ship shall be thirty per cent of the profits and gains derived from such ship for a period of ten consecutive assessment years including the initial assessment year provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the 31st day of March, 1995 or beginning on the 1st day of April, 1997 and ending on the 31st day of March, 2001: Provided that nothing contained in this clause shall apply to a hotel located at a place within the municipal jurisdiction (whether known as a municipality, municipal corporation, notified area committee, town area committee or a cantonment board or by any other name) of Calcutta, Chennai, Delhi or Mumbai, which has started or starts functioning on or after the 1st day of April, 1997 and before the 31st day of March, 2001; (c) the deduction under clause (a) or clause (b) shall be available only if- (i) the business of the hotel is not formed by the splitting up, or the reconstruction, of a business already in existence or by the transfer to a new business of a building previously used as a hotel or of any machinery or plant previously used for any purpose; (ii) the business of the hotel is owned and carried on by a company registered in India with a paid-up capital of not less than five hundred thousand rupees; (iii) the hotel is for the time being approved by the prescribed authority: Provided that any hotel approved by the prescribed authority before the 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed, and duly signed and verified by an accountant, as defined in the Explanation below sub-section (2) of section 288, certifying that the deduction has been correctly claimed.] (8) The amount of deduction in the case of any company carrying on scientific research and development shall be hundred per cent of the profits and gains of such business for a period of five assessment years beginning from the initial assessment year if such company- (a) is registered in India; (b) has the main object of scientific and industrial research and development; (c) is for the time being approved by the prescribed authority at any time before the 1st day of April, 1999. [(8A) The amount of deduction in the case of any company carrying on scientific research and development shall be hundred per cent of the profits and gains of such business for a period of ten consecutive assessment years, beginning from the initial assessment year, if such company- (i) is registered in India; (ii) has its main object the scientific and industrial research and development; (iii) is for the time being approved by the prescribed authority at any time after the 31st day of March, 2000 but before the 1st d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if,- (a) such undertaking has commenced or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; [(iii) in a case where a housing project has been approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] Explanation.-For the purposes of this clause,- (i) in a case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng contained in clause (iii) of sub-section (2) and sub-sections (3), (4) and (5), the amount of deduction in a case of industrial undertaking deriving profit from the business of setting up and operating a cold chain facility for agricultural produce, shall be hundred per cent of the profits and gains derived from such industrial undertaking for five assessment years beginning with the initial assessment year and thereafter, twenty-five per cent (or thirty per cent where the assessee is a company) of the profits and gains derived from the operation of such facility in a manner that the total period of deduction does not exceed ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a co- operative society) and subject to fulfillment of the condition that it begins to operate such facility on or after the 1st day of April, 1999 but before the [1st day of April, 2004]. [(11A) The amount of deduction in a case of [an undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables or [meat and meat products or poultry or marine or dairy products or] from] the integrated business of handling, storag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the initial assessment year, if- (i) the hospital is constructed and has started or starts functioning at any time during the period beginning on the 1st day of April, 2008 and ending on the 31st day of March, 2013; (ii) the hospital has at least one hundred beds for patients; (iii) the construction of the hospital is in accordance with the regulations or bye-laws of the local authority; and (iv) the assessee furnishes along with the return of income, a report of audit in such form and containing such particulars, as may be prescribed, and duly signed and verified by an accountant, as defined in the Explanation to sub-section (2) of section 288, certifying that the deduction has been correctly claimed. Explanation.-For the purposes of this sub-section- (a) a hospital shall be deemed to have been constructed on the date on which a completion certificate in respect of such construction is issued by the local authority concerned; (b) "initial assessment year" means the assessment year relevant to the previous year in which the business of the hospital starts functioning; (c) "excluded area" shall mean an area comprising- (i) Greater Mumbai urban ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had adopted a period of 18 months ending on 30.9.2008 for preparing its accounts and balance sheet was prepared accordingly which was filed with the Registrar of Companies and for carving out the accounts for 12 months ending on 31.3.2008 which was cumbersome procedure and which led to late filing of return. Reliance was placed on various case laws. Sec 80AC has been introduced in the statute w.e.f. 1.4.2006. Similar provision was introduced by way of a proviso u/s 10A(1A) and reads as under: "10A[(1A) Notwithstanding anything contained in sub-section (1), the deduction, in computing the total income of an undertaking, which begins to manufacture or produce articles or things or computer software during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2003, in any special economic zone, shall be,- (i) hundred per cent of profits and gains derived from the export of such articles or things or computer software for a period of five consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce such articles or things or computer software, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and it was observed as under: "One of the significant terms used in section 276CC (offence of failure to furnish return of income) of the Income-tax Act, 1961, is " in due time". The time within which the return of income is to be furnished is indicated only in sub-section (1) of section 139 and not in sub-section (4). Even if a return is filed under section 139(4) that would not dilute the infraction in not furnishing the return within the time as prescribed under sub-section (1) of section 139." Thus above clearly shows that expression "in due time" has to be reckoned with reference to sub-sec (1) of Sec 139. Sec 80AC very clearly refers to sub-sec (1) of Sec 139. Therefore unless and until return is filed within the due date as provided u/s 139 (1), the deduction cannot be allowed. The Ld. Counsel for the assessee placed very strong reliance on the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. MS. Jagriti Aggarwal (Supra) it was vehemently contended that once the Hon'ble Jurisdictional High Court has clearly held that due date has to be reckoned from Sec 139(4) then this Tribunal cannot take a different view. We do not find any force in this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the provision of Sec 80AC. 32 The Ld. Counsel for the assessee has also relied on the decision of ACIT Vs. Dhir Global Industrial Pvt Ltd (supra) wherein it was observed that though the proviso to Sec 10B for filing of return u/s 139 (1) for claiming deduction but the same was of directory nature and not mandatory. In our opinion, this judgment of Division Bench is no more valid after pronouncement of the decision of Special Bench in case of Saffire Garments Vs. ITO (supra). Similarly in ITO Vs. S. Venktaya(supra), Hyderabad Bench of the Tribunal held that if return was filed late then despite the provisions of section 80AC the deduction was held to be allowable if such delay is beyond the control of the assessee. This position also stands reversed after the decision of Special Bench in case of Saffire Garments Vs. ITO (supra) wherein it is clearly held that the provisions of section 80AC are of mandatory nature. As far as decision of Hon'ble Delhi High Court is concerned, the same is distinguishable on facts because in that case the assessee did not have positive gross total income in the initial year, therefore could not claim the deduction for such initial year. There af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly designed trucks. (iv) construction of chain silos at receipt as well as distribution points. (v) encouraging private sector for building storage capacities in which grains procured by Govt agencies would be stored on payment of storage charges; (vi) encouraging private sector for development of infrastructure for the integrated bulk handling, storage and transportation of foodgrains. Therefore for encouraging the private sector, participation in the activities of integrated business of handling, storage and transportation of food grains, Sec 80IB(11A) was inserted in the Act. While introducing this provision the Finance Minister in his speech stated as under: "The storage of food grains and their transportation are our major concern. Sir, I propose to provide a tax holiday for five years and 30% deduction of profits for the next five years to the enterprises engaged in the integrated business of handling, transportation and storage of food grains." Memorandum explaining this provision reads as under: "TAX HOLIDAY FOR UNDERTAKING ENGAGED IN THE INTEGRATED HANDLING, STORAGTE AND TRANSPORTTION OF FOODGRAINS Under the existing provisions of section 80IB of the Income -tax A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tand the meaning of this term first of all we need to understand the definitions of these terms. The Ld. Counsel for the assessee has referred to definition of the term "handling in various Acts which is as under: "According to Section 2(e) of the National Environment Tribunal Act, 1995 (27 of 1995), handling in relation to any hazardous substance, means the manufacture, processing, treatment, package, storage transportation by vehicle, use collection, destruction, conversion, offering for sale, transfer or the like of such hazardous substance. As per section 2(c) of the Public Liability Insurance Act, 1991, (6 of 1991), handling means the manufacture, processing, treatment, package, storage, transportation by vehicle, use collection, destruction, conversion, offering for sale, transfer or the like of such hazardous substance. According to section 2(d) of the Environment (Protection) Act, 1986, handling means the manufacture, processing, treatment, package, storage, transportation, use, collection, destruction, conversion, offering for sale, transfer or the like of such substance. Environment (Protection) Act, 1986(29of 1986), 2(d)." 37 The Ld. Counsel for the assessee has furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... integrated business of storage and handling and transportation of food grains." In our opinion, the processing and packaging cannot be part of the business of handling, storage and transportation of food grains. 38 The Ld. Counsel for the assessee has very strongly referred to the various observations of the Ministry of Food processing and handling particularly the extracts filed in paper book at page 198 to 210. The careful perusal of these observations show that the Ministry of Food processing has firstly described the tax benefits which are allowable under Income -tax Act, 1961, Central Excise Act, Service Tax and in this respect respective provisions have been reproduced. For example Sec 80IB (11A) has been reproduced in respect of business of handling, storage and transportation of food grains. At page 202 to 204 certain observations have been made under the head "Data bank of examining parameters of foodgrains" and ultimately it has been observed that it is important to define the word "food processing". There after it has been noted as under: " The need for defining what should be construed as Food Processing was necessary because of different classifications by various d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rollys comes to the mandi - (4) Paddy is unloaded and mounds are created - (5) Paddy is purchased in terms of mounds through auction - (6) Paddy is cleaned by the labour and filled in the gunny bags which are stitched manually - (7 Bags are loaded in company trucks and transported to the factory - (8) At factory the weight is recorded at the factory gates - (9) The bags are opened and paddy is poured in the open godowns where driers and fans are installed to reduce the moisture for proper storage - (10) After demoisturisation is completed paddy is repacked and loaded into the trucks - (11) These loaded trucks of the company transport the paddy to covered godowns - (12) Paddy is unloaded in the godown and put in stacks - (13) Paddy is stored in such godown for a period of one year to two years depending on the quality and time required for maturing the same - (14) Godowns are fitted with climatic control and fumigation facilities so as to preserve the paddy from withering out - from insets and other natural calamities - (15) Paddy is also kept at a particular moisture level - (16) After maturing of paddy from one year to two years the same is de-husked and sent to moder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again packed and carried to the stores where the same is kept for maturing for a period of one year to two years. All facilities for securing maximum security to the foodgrains i.e; paddy have been installed to safeguard the paddy from withering, spillage and other natural calamities. Regular fumigation is done to preserve the food grains from natural calamities and to save it from various pests. After keeping the paddy for a period of 12 to 24 months the same is transferred to the Silos where the same is again stored for a period of 15 to 60 days and then sent to milling machine. Therefore it is clear that before process of milling of paddy begins it has to be stored in a proper storage so as to prevent the losses of such food grains. This has been definitely done by the assessee. Therefore it is clear that the assessee has definitely done handling and storage of food grains as well as the transportation because the assessee has employed its own trucks. At this stage we posed a question to ourselves that if the facilities created by the assessee are not in the nature of handling and storage then which activities would fall in that category ? The obvious answer which we can think ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 2.88 crores was spent for acquisition of trucks and about ₹ 80 lakhs was spent towards acquisition of computer and office building etc. The assessee has further spent substantial amount amounting to ₹ 123 crores in Financial year 2006-07 and ₹ 191 crores in Financial year 2007-08 and ₹ 52 crores in Financial year 2008-09. Out of this substantial amount have been spent towards acquisition of trucks, creation of storing facility and various handling equipments. Only a sum of ₹ 12.99 crores is said to have been spent for purchase of paddy milling machine. These facts clearly shows that new project came up over a period of time starting with the financial year 2005-06. In our opinion, it is not necessary to start new handling unit separately for claiming benefit of Sec 80IB(11A) even the upgradation of old unit would also entitle a businessman to this benefit. Memorandum explaining the provisions of section 80IB(11A) itself provides so. We have already reproduced relevant paras above but at the cost of repetition we would like to reproduce particular para again as under: ' Under the existing provisions of section 80-IB of the Income-tax Act, a deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be "no" because in the commercial word an entrepreneur would engage in any business only when the same is commercially profitable. Therefore in case of integrated business of handling, storage and transportation of food grains may not itself be very profitable and if the same is combined with the activity of processing of paddy into rice by spending smaller amount of money for milling mills then such entrepreneur would definitely extend the activity and get into the composite business of handling, storage and transportation and processing of the rice. Let us imagine the situation where the businessman is engaged in the business of procuring, handling, storage and transportation of paddy separately and then selling the same to another businessman who is engaged in the business of only processing of paddy into rice then same would involve unnecessary further cost in terms of carrying the paddy from handling and storage unit to processing unit because the paddy bags have to be loaded into the trucks carried to the processing unit and then again unloaded and put in to the milling machines for processing of the paddy. This will make both the businesses unviable. Even the legislature i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and gains derived from any of the eligible businesses, a deduction equal to specified percentage of such profits will be granted in computation of total income, and that this deduction will be given only for such period as may be specified. This section applies only to an industrial undertaking and one of the eligible businesses is that such an industrial undertaking operates one or more cold storage plant or plants in any part of the India. The words in section 80-IB(1) are 'profits and gains derived from any of the eligible business' and it is only specified percentage of such profits which is eligible for deduction under section 80-IB. Therefore, the question that arose for consideration in the instant case was as to whether or not the profits earned by the assessee could be said to be derived from the business of operating cold storage plant, and if so, to what extent the profits earned by the assessee could be said to be derived from the business of cold storage. The assessee bought raw material (i.e. squids, prawns and fish, etc.), washed and cleaned the same, weighted them and stored the material in the chill room before deskinning, grading, further washing, cleaning and g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. Similar view was taken by Mumbai Bench of the Tribunal in case of Samraj Seafoods Pvt Ltd Vs. ITO, ITA No. 2875/Mum/2005. In the case before us the Assessing officer has observed that the assessee has not received any independent income from handling, storage and transportation of the food grains. We have already discussed this aspect earlier and further in view of the decision in case of Sanchita Marine Products (P) Ltd. Vs. DCIT (supra) and Samraj Seafoods Pvt Ltd Vs. ITO (supra). it is clear that it is not necessary for a businessman to receive income from each of the activity separately in case of a composite business. This can be further understood from a simple example of a car manufacturer. Let us say for example a deduction is available for manufacture and sale of engine of the car. Now a car manufacturer could be producing its own engines and using the same in final assembly of the Car then it cannot be said that the assessee has not received separate income from sale of engine, therefore deduction is not allowable. 46 Another contention given by the Ld. Counsel for the assessee is that similar deduction was allowed in case of L.T. Overseas Pvt Ltd (copy filed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t shown that the order in case of L.T. Overseas Pvt Ltd (supra) was reversed later on in any proceedings. Therefore on this principle also we are of the opinion that the assessee is entitled to deduction u/s 80IB(11A). It is also worthwhile to note that the assessee has been allowed deduction in Assessment year 2010-11 and copy of the assessment order has been filed at page 151-197 in the synopsis paper book. After detailed analysis in Assessment year 2010-11 deduction u/s 80IB(11A) was allowed at 70% of the overall profits. It has not been shown before us that this order has been reversed in any legal proceedings. Further the Ld. Counsel for the assessee had relied on the decision of Amritsar Bench of the Tribunal in case of DCIT Vs. Chaman Lal & Sons (supra). In that case the deduction u/s 80IA was denied because there was an issue whether the assessee was manufacturing rice or not. One of the contention before the Tribunal was that in similar facts deduction was allowed in subsequent years. The Tribunal held that the deduction to be allowable and also observed at para 9 as under: " Another important aspect which cannot be lost sight of is that the assessee has claimed before us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the principle of liberal construction. We find that the way Sec 80IB(11A) has been worded there is definitely some ambiguity in the sense that it is not clarified anywhere in the provision whether the activity or integrated business of handling, storage and transportation of food grains has to be carried out independently. Even the term handling and storage has not been defined. We have already observed that economically it was not possible to independently carry on the business of handling, storage and transportation of food grains because normally a person engaged in this activity would also carry next logical steps by processing of the paddy into rice. Otherwise the person who is in the business of handling, storage and transportation of food grains will have to sell such paddy to a businessman who is engaged in the business of processing of paddy into rice which would un-necessary lead to further handling, storage and transportation of the paddy and rather nullify the object of avoiding wastage of food. Therefore in our opinion, the principle given by the Hon'ble SC in case of Bajaj Tempo Ltd have to be applied in this case and this provision has to be interpreted liberally. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd particularly the decision of Hon'ble Punjab and Haryana High Court in case of CIT Vs. Shahzedanand Charity Trust (supra) and CIT Vs. Mahalaxmi Rice Factory (supra). 52 The Ld. Counsel for the assessee had also referred to decision of Hon'ble Punjab and Haryana High Court in case of National Horticulture Board Vs. CCIT, CWP No. 9339 of 2008. In this case an application for exemption u/s 10(23C)(iv) was rejected because audit report in form No. 10BB were not filed with the return and same was not dated even. Hon'ble High Court made the following observations: " The view taken in the impugned order is highly technical. The provision having been substantially complied with, the audit report should have been taken into account even if, strictly speaking, it was not filed with the return and not in Form 10BB but in Form 10B as stated in the impugned order. This made no difference to the spirit of the requirement laid down. Accordingly, we allow this petition and quash the impugned order Annexure P-1 and direct respondent No. 1 to take a fresh decision in accordance with law, within one month from the receipt of a copy of this order." Above clearly shows that the require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to emphasize is that the restriction contained in Sec 80IB(2)(i) refers to only industrial undertaking whereas the deduction itself is allowable under various sub- sections for different kinds of businesses and some of them are industrial undertakings and some of them are not industrial undertaking for example deduction is allowable in case of hotels or operation of ship or for development of housing project, multiplex theatres etc. which cannot be called industrial undertaking. Similarly deduction u/s 80IB(11A) is for the eligible business and specifically for the "integrated business" of handling, storage and transportation of food grains which cannot be called industrial undertaking. Without going into this controversy let us first examine whether the assessee has violated the restrictions provided u/s 80IB(2)(i). 57 Before we consider the addition of new plant & Machinery, let us consider the contention regarding discarding of machines for which a certificate has been filed from an Engineer and C.A. at pages 400-401 and 413-420. However, during the course of hearing it was noticed from the schedule of fixed assets that it does not show any discarding of machines because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue has referred to the decision of Agra Bench of the Tribunal in case of Aqua Plumbing Pvt Ltd Vs. ACIT (supra) and Jain Udai Hotel (P) Ltd Vs. ACIT (Chandigarh Bench) (supra) wherein it was observed that the applicability of the conditions contained in Sec 80IB(2)(i) has to be examined in the first year. We have already concluded that in this case first year has to be reckoned as Assessment year 2006-07. The Ld. D.R. for the Revenue had referred to certain figures and objected that the figure of ₹ 6,05,31,624/- cannot be taken for old machinery because figure is on higher side. The difference is mainly because the Revenue is trying to take up the gross figures and not the WDV. When the question whether the project is formed by splitting old machinery is to be considered then obviously the WDV of the old machinery is to be considered. This is so because in some cases old machinery may be very old and may not have any value and if the gross value was to be taken the distorted results may be obtained. In any case the Ld. Counsel for the assessee relied on the decision of CIT Vs. Rajiv Bhatnagar (supra) (Delhi Tribunal) wherein it has been specifically observed at para 7.(ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess that could not be reconstruction. In the course of the discussion, however, certain observations have been made by the Bombay High Court (which have been underlined*earlier) to indicate the circumstances in which a reorganization of a business can be taken to involve a reconstruction. But it is not every alteration in the mode, method or scope of the activities of a business and it is not every transfer of assets from one unit to another that will involve reconstruction. The expression is no doubt very wide but it does not take in a case of a company setting up or establishing a totally independent and viable industrial unit for carrying on the same or similar business even though it might be so set up by way of expanding the already existing business. The emphasis in s. 84 is not on business but on undertaking. The exemption is granted to new undertakings and the essence of the exemption is that it is a new industrial unit that is established and that it is not merely a rehash of an already existing unit." 62. Similar observations have been made in the case of Textile Machinery Corporation Ltd Vs. CIT 107 ITR 195 and the relevant portion reads as under: "A new activity launc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he submissions of the Ld. Counsel for the assessee that because of the dispute with Shri Rajinder Sandal, C.A the assessee may have wrongly been advised to claim the deduction at 35% but when the company came to know about the actual deduction allowable then same was claimed at 100% and even in the next year the deduction has been claimed @ 100%. Otherwise also as pointed out by the Ld. Counsel for the assessee it was held in case of Concord of India Insurance Co. Ltd. Vs. Smt. Nirmala Devi & Others, 118 ITR 507 (S.C), that mistake committed by the Counsel for the assessee cannot be used for denying a benefit to the appellant. 66 In respect of the rate of deduction both the parties made elaborate submissions. The Ld. Counsel for the assessee mainly contended that in view of the definition of food processing given by the Ministry of Food Processing Industries, milling activity should be included in the integrated business of handling, storage and transportation of food grains, therefore 100% deduction should be allowed. Alternatively he submitted that processing involved only a small effort and plant for this purpose was costing only ₹ 12 crores therefore deduction should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction because return has been filed late in violation of Section 80AC. 70. Third Issue The third issue in this appeal is regarding disallowance of depreciation amounting to ₹ 72,21,35,592/-. This depreciation was claimed at the rate of 50% (1/2 of 100%) for the power plant installed during the second half of financial year. It was claimed before the Assessing Officer that this power plant was commissioned and a certificate from the fabricator M/s Shriram epc was filed for this purpose. The Assessing Officer noticed that no depreciation on this power plant has been claimed under the Companies Act. Even the director's report stated that power plant was commissioned in August 2008. Shri Rajinder Sandal, Chartered Accountant of the assessee company was summoned and his statement was recorded in which he clearly stated that power plant was commissioned in somewhere in July / August 2008. The assessee was confronted with these questions and in response the assessee mainly relied on the repot given by the Shriram epc contractor and fabricator of the power plant which clearly states that since power plant has been commissioned on 25th March 2008, therefore, depreciation should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Rajinder Sandal was recorded at the back of the assessee and, therefore, has no evidentiary value. Moreover, the statement of Mr. Sandal was not correct because earlier he was auditor of the company as well as tax consultant and annexure attached to the balance sheet including depreciation were actually initialed by him. The depreciation schedule given during the statement was fully signed which shows that it was different. It was pointed out that Mr. Sandal has given a false statement perhaps under the duress. Mr. Sandal was involved in the processing of the return filed for the said assessment year wherein depreciation on the Power Plant, had been claimed. In fact, in response to the return filed claiming depreciation on the power plant the assessing office had issued intimation under section 143(1)(a) wherein the claim for 80IB was not given. Mr. Sandal carrying the power of attorney of the assessee company appeared before the AO from time to time and got the intimation rectified on 25.11.2009, whereby the deduction as claimed in the return of income was allowed. In fact, Shri Sandal made oral and written representation before the AO for getting the rectification order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined to go through these bills. In these circumstances, a request was made before us to go through the bills as the same were brought to the Court and we have test checked these bills. 74. The Ld. Counsel further submitted that a confirmation from M/s Shriram epc has been filed, (copy of which is available at page 323 of the paper book). It was submitted that M/s Shriram epc was contractor and fabricator of the power plant and, therefore, this certificate should not have been rejected lightly. It is also pointed out that Assessing Officer misunderstood this certificate by stating that boilers were produced by M/s Thermax Ltd. No doubt the Boiler was manufactured by M/s Thermax Ltd but the same was procured by the assessee and the erection work was done by M/s Shriram epc and, therefore, right person to give the certificate was M/s Shriram epc only. He submitted that this certificate could not have been ignored as held by Hon'ble Punjab & Haryana High Court in the case of CIT v Shahbad Cooperative Sugar Mills Ltd. 10 Taxman.com page 84(copy of the decision filed at page 86(v) of the synopsis paper book.). He also referred to the certificate issued by Director of Boilers, (copy of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation was claimed. However, there was some mistake in the processing and therefore, an application for rectification u/s 154 was filed which was ultimately allowed by the Department and relevant papers in this regard are filed at pages 25 to 27 of the paper book. No cross examination of Mr. Sandal was allowed which was pointed out to the Assessing Officer in a letter (copy of which is placed at pages 312 to 314 of the paper book) and, therefore, this statement could not have been relied. He also contended that a disallowance cannot be made merely on the basis of statement of an expert or a counsel and in this regard he relied on the decision of Hon'ble Delhi High Court in the case of CIT Vs Naresh Khattar(HUF) 261 ITR 664 (Delhi) and Sona Electric Company v CIT 152 ITR 507, Parkash Chand Natha v CIT 301 ITR 134 (M.P.) and page 183 of paper book various other judgments. 76. He further submitted that in respect of this issue that even if a plant is kept in a store or is ready for use, even then depreciation has to be allowed and in this regard he relied on the following decisions:- CIT Vs. Pepsu Road Transport Corporation [2002] 121 Taxman 232 (P&H) CIT Vs. Shahbad Co-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commissioning of the plant. It was further contended that the statement of Shri Rajinder Sandal as well as report of the Director, clearly shows that power plant was commissioned in August 2008, therefore, it cannot be said that power plant was commissioned in March 2008. In this regard he referred to the decision of Allahabad Bench of the Tribunal in the case of India Polyfibres Ltd v ACIT 60 ITD 433 wherein it was held that directors report shall be given a statutory recognition. It was pointed out that certificate issued by the Directors of Boilers only refers to the inspection and passing of the boilers which does not amount commissioning of the plant. The certificate form Shriram epc is from a private company and is of self serving nature. He also pointed out that in the annual report for financial year 2008-09, it bas been mentioned that second phase of 15MW Biomass Power plant came into production making the total capacity of 30 MW. This report relates to the period 1.10.2008 to 30.09.2009, therefore, it clearly shows that second unit of the power plant was started after 30.09.2008. As per Appendix, the rate of depreciation is 80% and the same is in respect of energy saving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustrial Ltd i.e. the assessee company. The turbines have been shown to have been given to ship in November 2006 and February 2007, therefore, the same must have been received by the assessee by March 2007. Once the turbines come as early March 2007 there is every likelihood that plant can be commissioned by March 2008. The perusal of the copy of agreement with Shriram epc ( placed at pages 971 to 979) shows that assessee had issued a letter of intent for erection of the power plant on 4.6.2005 and ultimately an agreement for this erection was entered on 29.6.2005. A letter was issued on 23.5.2006 from the office of Chief Engineer, Commercial Directorate of Tariff Regulation Board which was furnished before us during the hearing wherein the assessee company was invited for negotiation for supply of the power. It is also stated in the letter that office of the Chief Engineer has an understanding that the assessee company was about to start a power plant. This fact clearly shows that the firm's stand for installation of power plant was finalized before June 2006. A certificate has been issued by M/s Shriram epc (copy of which is available at page 323 of the paper book) which reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts the whole plant becomes functional. Therefore even if boiler was manufactured by M/s Thermax Ltd, it was only M/s Shriram epc. who could give a certificate for commissioning of the plant. 81 It was vehemently argued by Ld. DR that there is no certificate available from any statutory authority like Pollution Control Board, Central Excise Department or Customs Dept. or Central Ground Water Board, District Town Planning office. We do not find any force in these submissions. Firstly, a no objection certificate dated 12.4.2007 has been filed before us from the District Town Planner, District Administrative Complex, Fatehgarh Sahib. We fail to understand how Customs and Excise Department have any role to play in giving any certificate to the assessee. Excise authorities are responsible mainly for collection of excise and where any equipment has been purchased, excise duty is charged. The Customs Department was concerned with clearance of goods mainly at the port but they cannot give any certificate that plant has been commissioned. It was not pointed out to us whether the assessee was required under any law to obtain certificate from any statutory authority, therefore, the general a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009. In this regard, we further find force in the contention of Ld. Counsel for the assessee that no major purchases have been made after 31.3.2008 (copy of the account of the power plant has been furnished at pages 992 to 993 of the paper book) which is running from the period 1.4.2008 to 31.3.2008 which clearly shows that only purchase to the tune of ₹ 19,28,949/- have been depicted in the power plant account which was stated to be on account of replacement of minor parts and some small repairs. This makes it clear that purchases in respect of power plant were completed before March 2008. Further revenue has already allowed the depreciation on the basis of WDV as on 1-4-2008 in the assessment year 2009-10, this means if the second turbine was started after September 2009 then such depreciation could not have been allowed and therefore the contention of the Ld. D.R. for the Revenue is totally incorrect. 83. One more important objection have been raised by the Revenue is that Shri Rajinder Sandal has clearly sated in his statement that power plant became operational only in the month of July 2008. Further, the depreciation chart submitted by Shri Rajinder Sandal as per Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven to the assessee. 84 The Ld. DR has also contended that assessee has not provided any depreciation as per section 205 and 350 of the Companies Act and the Ld. Counsel for the assessee has pointed out that part I & II of the Schedule VI of the Companies Act provides that depreciation should be provided u/s 350 over the useful life of any specific asset which means depreciation is to be provided on the useful life of the asset. This clearly shows that no specific rate of depreciation has been provided under part I & II of Schedule VI of the Companies Act. In our opinion, in any case violation under Companies Act, if any, would not have any impact on allowance of depreciation under Income-tax Rules. 85 The Ld. counsel has also relied on various decisions for the proposition that where a plant is ready and in such a case if the same is even kept in a store even then the depreciation is to be allowed. Now let us examine these decisions. 86 The first case relied upon was of CIT Vs Pepsu Road Transport Corporation (supra). In this decision the issue was whether engines kept as spare in the store were entitled to depreciation and the Hon'ble High Court observed at para 10 as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v Dalmia Cement Ltd [1945] 13 ITR 415 (Patna) (iv) Liquidators of Pursa Ltd v CIT [1954] 25 ITR 265 (SC) (v) CIT v Bombay State Transport Corporation [1979] 118 ITR 399 (Bom.) (vi) G.R. Govindarajulu Naidy v CIT [1973] 90 ITR 13 (Mad.) (vii) CIT v Elecon Engineering Co. Ltd [1974] 96 ITR 672 (Guj.) and (viii) CIT v Geo Tech Construction Corporation [2000] 244 ITR 452 (Ker.) Reference was also made to the dictionary meaning of the word 'depreciation' as also the object of allowing depreciation. In the present case, the machinery in question is vapour cell, juice clarifier and fly ash arrester paid pweitier which according to the assessee had to be kept ready for use for its business expediency. Stand of the assessee is that it resulted in increase of capacity of plant and that on account of technical justification for the said machinery, items of the machines were installed. Even though the auditors may not have accepted the said stand, the assessee was entitled to free play in joints in taking a decision to install the machinery if in its view the same was necessary for its business. If the assessee was to install such a machinery on its bonafide business consideration, mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the Ld. CIT(A) has erred in not admitting the crucial additional evidence filed under Rule 46A of the Income -tax Rules on the ground that the appellant was allowed sufficient opportunities to adduce evidence during the course of assessment proceedings and it has failed to substantiate its claim for admission of additional evidence under the said rule. 4 That on the facts and in the circumstances of the case the Ld. CIT(A) has erred in rejecting the additional ground of appeal No. 1 raised u/s 250(5) contending that the assessment made on 30.12.2010 u/s 153A(1)(b) r.w.s. 143(3) is bad in law as no incriminating material suggesting of any suppression of income was found during the course of search and seizure operation u/s 132(1) on 12.2.2009 and therefore the entire assessment being bad in law, deserves to be quashed. 4.1 The Ld. CIT(A) has further erred in summarily dismissing the additional grounds of appeal raised u/s 250(5) of the Act. 5 That on the facts and in the circumstances of the case, the LD. CIT(A) has erred in holding that he appellant company is not entitled to the deduction u/s 80IB(11A) of Income -tax Act, 1961. 5.1 The Ld. CIT(A) has rejected the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, following that decision we are of the opinion that Ld. CIT(A) should have admitted the additional evidence. 92 Through ground Nos.5, 5.1, 5.2, 5.3 & 5.4, the issue regarding allowability of deduction u/s 80 IB(11A) has been raised. In this year, the deduction has been denied to the assessee mainly because the activities of the assessee are not in the nature of integrated business of handling, storage, transportation of food gains . Further the assessee has not submitted proper audit report. The assessee has violated the conditions laid down in section 80IB(2)(i). However, admittedly the return has been filed in time. The facts and circumstances in respect of these issues are identical to the facts and contentions in assessee's own case for assessment year 2008-09 except late filing of return which we have already adjudicated vide para Nos. 34 to 69 in ITA No. 250/Chd/2013 and following that reasoning we hold that assessee is eligible for deduction u/s 80 IB (11A) of the Act @ 70% to the profits of the business. 93 Through ground No. 6, the issue regarding non allowance of the set off of loss from power plant against the business income has been raised. 94 After hearing both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant [only] as interalia raised in the additional ground of appeal is allowed to be availed off. Consequently, I uphold the disallowance made by the AO in not permitting the set off of the loss. The assessee fails on this ground. 97 Before us, Ld. Counsel for the assessee referred to section 70 of the Act and submitted that loss from one business is allowed to be set off against another business. Further, ultimately deduction under Chapter VI can be allowed only after computing the gross total income as per section 80B(5) and therefore, loss is mandated to be set off against the other income before allowing deduction. In this regard, he relied on the following decisions. 1. Synco Industries Ltd v Assessing Officer & Anr (2008) 299 ITR 444 (SC) 2. CIT v Galaxy Surfactants Ltd 343 ITR 108 (Bom.) 3. Bajaj Motors Ltd v CIT 347 ITR 472 (P&H) 98 On the other hand, the Ld. DR strongly supported the order of Assessing Officer and CIT(A). 99 We have considered the rival submissions carefully. This issue came up for consideration of the Hon'ble Supreme Court it that case of Synco Industries Ltd v Assessing Officer (Income Tax) & Another 299 ITR 444. In that case the assessee was eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income in order to arrive at the deduction under Chapter VI-A. However, the non obstante clause in section 80-I(6) is applicable only to the quantum of deduction, whereas, the gross total income under section 80B(5) which is also referred to in section 80-I(1) is required to be computed in the manner provided under the Act which presupposes that the gross total income shall be arrived at after adjusting the losses of the other division against the profits derived from an industrial undertaking. To say that under section 80-I(6) the profits derived from one industrial undertaking cannot be set off against loss suffered from another and that the profit is required to be computed as if the profit making industrial undertaking was the only source of income would almost render the provisions of section 80A(2) of the Act nugatory. Sections 80A(2) and 80B(5) are declaratory and apply to all the sections falling in Chapter VI- A. They impose a ceiling on the total amount of deduction and therefore the non obstante clause in section 80-I(6) cannot restrict the operation of sections 80A(2) and 80B(5) which operate in different spheres. The gross total income of the assessee has first got ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Power plant otherwise is from a source which is exempt to tax, so loss arising from therein cannot be set off against profits from a different source or income under a different head, which in this case at hand is income from rice milling. Furthermore, the assessee is claiming additional depreciation i.r.o its additions to P&M, which includes Power Plant. While adjudicating the appeal for AY 89-09, the Power Plant has been held to be commissioned in August 2008, based on the Director's Report. In other words, the previous year relevant to this AY is treated as the initial year and it is with this reason that the additional depreciation claimed on the Power Plant (only) as inter-alia raised in the additional ground of appeal is allowed to be availed off. Consequently, I uphold the disallowance made by the AO in not permitting the set-off of the loss. The assessee fails on this ground. 9.3.1 Consequently , the AO is directed to allow the claim of additional depreciation as claimed in additional ground no. 4 (refer para 6 ) i.r.o the Power Plant only. Assessee therefore partly succeeds on this additional ground raised. The above clearly shows that Ld. CIT(A) had not allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition is required to be made and consequently he added the sum of ₹ 6 crores as unsecured investment u/s 69 of the Act. 109 On appeal before the CIT(A), submissions made before Assessing Officer were reiterated. It was further stated that assessee had attended the assessment proceedings from time to time along with books of account but the Assessing Officer has not taken the trouble to examine the books and, therefore, it cannot be said that assessee had not produced the books of account. In any case, the different was only ₹ 5.85 crores whereas the addition has been made at ₹ 6 cores. The Ld. CIT(A) after examining the submissions found that during the search, it was observed while asking a question from Chairman and Managing Director, stock had been valued on approximate basis, which shows that exact valuation has not been done and therefore, addition was not justified and accordingly he deleted the addition. 110 Before us, Ld. counsel for the assessee reiterated the submissions made before the Assessing Officer and CIT(A). He strongly supported the order of CIT(A). 111 On the other hand, the Ld. DR supported the order of Assessing Officer. 112 After consid ..... 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