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TMI Blog2016 (1) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... applied correctly only, if the relevant facts are very much clear. The foregoing discussions show that there is no clarity on facts of the present case and hence they need to be brought on record correctly. In view of the above, we set aside the orders passed by Ld CIT(A) in all the three years under consideration and restore all the issues to the file of the assessing officer with the direction to examine the issue afresh from all the angles that may be required. - Decided in favour of revenue for statistical purposes. - I.T.A. No.5192/Mum/2010, ITA No.4058/Mum/2011 and ITA No.3213/Mum/2012 - - - Dated:- 4-11-2015 - SHRI B.R.BASKARAN, AM AND PAWAN SINGH, JM For The Revenu : Shri.Ashok Jha For The Assessee : S/Shri P J Pardiwala and P P Bhandari ORDER PER B.R. BASKARAN (AM) These three appeals filed by the revenue are directed against the three separate orders dated 19.4.2010, 15.3.2011 and 20.3.2012 passed by the respective CIT(A)-26, Mumbai and they relate to the assessment years from 2007-08 to 2009-10 respectively. Since the issues urged in all these appeals are common in nature, they were heard together and are being disposed of by this consolid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 308/- was purchased by the assessee from the old firm M/s H K Jewels. The AO also noticed from the Form 56F filed by the assessee that it has commenced production on 27.3.2006. 7. Under the provision of section 10AA of the Act, the assessee is required to commence production after 1.4.2006 in order to claim deduction under that section. Further, the deduction u/s 10AA will not be available if the undertaking is formed by splitting up or reconstruction of business already in existence, and also if any plant and machinery used for any purpose is transferred to the new business. For the sake of convenience, we extract below Sub-section (1) and Sub-section (4) of Section 10AA, wherein the above said conditions are specified: 10AA. (1) Subject to the provisions of this section, in computing the total income of an assessee, being an entrepreneur as referred to in clause (j) of section 2 of the Special Economic Zones Act, 2005, from his Unit, who begins to manufacture or produce articles or things or provide any services during the previous year relevant to any assessment year commencing on or after the 1st day of April, 2006, a deduction of- (i) hundred per cent of profits and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to claim deduction u/s 10AA of the Act on the following reasons:- (a) M/s H.K. Jewels did not start any business activities in SEEPZ. The assessee only has started the business of manufacture of diamond studded jewellery. (b) M/s H.K.Jewels could not complete the project within the stipulated time and hence the uncompleted proejct was transferred to the assessee with all its assets, liabilities and rights. (c) Though the assessee purchased assets for a value of ₹ 43.60 lakhs, the plant and machinery component therein was only ₹ 4.63 lakhs. The assessee itself has purchased machineries worth ₹ 1,32,08,209/-. (d) M/s H.K. Jewels has not started any business and hence the assessee s business cannot be presumed to be reconstruction of erstwhile business. Since the assessee has purchased entire project, it was a case of sale and hence the same cannot be regarded as reconstruction of the business. (e) As per the terms and conditions of LOP issued by the Development Commissioner, SEEPZ, LOP cannot be transferred by such authorities in case of reconstruction of any business. (f) Though the purchases were made in the name of M/s H.K.Jewels, the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tune of ₹ 40,26,308/-. We notice the details of these expenses have not been examined by Ld CIT(A) or the assessing officer. It is also not clear as to what happened to the project between 7.102005 to 1.4.2006, i.e., who implemented the project, what was the details of expenses, who met the expenses etc. (c) If the deed of assignment came into effect only from 1.4.2006, how the auditors of the assessee noted the date of commencement of production as 27.3.2006. It is not clear as to whether the date of commencement is required to be reported to the Development Commissioner, SEEPZ or to be certified by him or not. There should not be any doubt that the statutory auditor s certificate carries lot of recognition, since they certify on verification of relevant facts and documents. There is no dispute that the of Date of Commencement is crucial to determine the eligibility of the assessee to claim deduction u/s 10AA of the Act. (d) The assessee has stated that the trial runs took place on 27.3.2006. However, the fact remains that the assessee got the assets, liabilities and rights only on 1.4.2006. In that scenario, how and when the remaining machineries were purchased and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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