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TMI Blog2016 (3) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of Section 80I to the assessee on the ground that the Industrial Undertaking of the assessee during the assessment year 1989-90 situate at Rishra was not eligible for the benefit under Section 80I. But that ground, according to us, is no reason to deny the benefit in the subsequent years when the assessee has set up a new plant at a different place and also fulfills all the terms and conditions laid down in sub-section (2) of Section 80I.- Decided in favour of the assessee. - ITA No. 503, 504, 505 of 2005 - - - Dated:- 10-3-2016 - Girish Chandra Gupta And Asha Arora, JJ. For the Appellant : Mr. J. P. Khaitan, Sr. Adv., Mr. Siddharth Das, Adv. Mr. Asim Choudhury, Adv. Mr. Rohan Poddar, Adv. For the Respondent : Mr. M. P. Agarwal, Adv. Md. Nizamuddin, Adv. JUDGMENT Girish Chandra Gupta J. The subject matter of challenge in the appeal is a judgment and order dated 11th August, 2005 passed by the learned Income-tax Appellate Tribunal B Bench, Kolkata disposing of three several appeals preferred by the revenue challenging orders passed for three several assessment years, viz. the assessment years 1995-96, 1996-97 and 1997-98. All the three appeals we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of a hotel [or the business of repairs to ocean-going vessels or other powered craft], to which this section applies, there shall, in accordance with and subject 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 20% thereof: Provided that in the case of an assessee, being a company, the provisions of this sub-section shall have effect [in relation to profits and gains derived from an industrial undertaking or a ship or the business of a hotel] as if for the words 20% , the words 25% had been substituted. The units to which the section applies are to be found in subsection (2) which reads as follows:- (2) This section applies to any industrial undertaking which fulfils all the following conditions namely:- (i) It is not formed by the splitting up, or the reconstruction, of a business already in existence; (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per cent of the total value of the machinery or plant used in the business, then, for the purpose of clause (ii) of this sub-section, the condition specified therein shall be deemed to have been complied with. Explanation 3. For the purposes of this sub-section, small scale industrial undertaking shall have the same meaning as in clause (b) of the Explanation below subsection (8) of section 80HHA. From clause (ii) of sub-section (2) of section 80I quoted above, it would appear that the industrial undertaking should not have been formed by the transfer to a new business of machinery or plant previously used for any purpose. In the case of the assessee, admittedly, plants worth ₹ 73 lakhs approximately used at Rishra were installed in the new plant at Konnanagar. But the rigour of the aforesaid clause has been relaxed by the Explanation-II quoted above which provides that total value of the machinery or the plant so transferred should not exceed 20% of the total value of the machinery or the plant. Admittedly, in this case, the total value of the plant installed at Konnagar was more than ₹ 6 crores and therefore the total value of the machinery or the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years had been substituted. Mr. Agarwal contended that from a plain reading of sub-section (5)(i) it would appear that unless the assessee qualified for the benefit in the initial year of production, the assessee can have no claim for deduction under section 80I. We are unable to accept this submission. According to us, sub-section 5(i) provides the time limit during which the assessee can enjoy the benefit of deduction. The limit is seven assessment years following the initial assessment year when the assessee became eligible provided the eligibility is retained. The contention that if the assessee did not qualify for the benefit of deduction under section 80I in the initial year of production, he would not be entitled to the benefit in any subsequent years, according to us, is neither backed by authority nor can the aforesaid conclusion be reached by construing the section to which our attention has been drawn by Mr. Agarwal learned Advocate for the revenue which we have quoted above. The assessee in this case is admittedly an industrial undertaking to which section 80I applied once the Konnanagar plant was commissioned and put into production. The finding of the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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