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TMI Blog2016 (7) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction u/s. 80 IA/80IB of the Act. Therefore, having regard to the factual matrix, which clearly establishes that the Daman Unit-2 was separate unit having its own plant and machinery, manufacturing of products, independent funds, and separate labour force, it cannot be considered as a mere part of the Daman Unit-1 so as to defeat its claim of deduction u/s. 80IA/80IB of the Act. Thus, on this aspect also assessee succeeds. - ITA No. 1384/MUM/2009 ITA No. 1385/MUM/2009 ITA No. 1386/MUM/2009 - - - Dated:- 29-6-2016 - Shri G. S. Pannu, Accountant Member And Shri Amit Shukla, Judicial Member For the Appellant : Shri Prakash Jotwani For the Respondent : Shri N.P. Singh ORDER Per G. S. Pannu, AM The captioned are three appeals, preferred by the assesssee pertaining to assessment years 1999-2000, 2000-01 and 2001-02. Since these appeals relate to the same assessee and involve common issues, they have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. 2. The appeal in ITA No.1384/Mum/2009 pertaining to assessment year 1999-2000 is taken as the lead case. This appeal is directed against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d survey action various documents/ records were seized / impounded/ found. In the ensuing assessment, the Assessing Officer has mainly objected to the claim of deduction made by the assessee under section 80IA/80IB of the Act in respect of the industrial undertakings set-up by the assessee at Daman. According to the assessee, it had two independent manufacturing units at Daman, namely, Unit-1 and Unit-2. The amount of deduction claimed by the assessee under section 80IA of the Act with respect to Units 1 2 of Daman for the assessment year 1999-2000 amounted to ₹ 2,97,25,838/-. The deduction under section 80IA/80IB claimed with respect to both the units have been denied by the Assessing Officer, which has been further affirmed by the CIT(Appeals). 4.1 The substantive dispute before us arises from the action of the income-tax authorities in denying assessee s claim for deduction under section 80IA of the Act with respect to Unit-1 and Unit-2 at Daman. Considering the short controversy before us, we proceed to cull out the relevant facts from the material on record and the orders of the authorities below, which would enable us to decide the aforesaid dispute appropriately. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in clause(ii) of section 80IA(2), which is to the effect that such industrial undertaking shall not be formed by transfer to new business the machinery or plant previously used for any purpose. Furthermore, in Explanation -2 thereof, it is provided that where in the case of an industrial undertaking, any machinery or plant previously used by any purpose is transferred to new business, then the total value of the machinery or plant so transferred should not exceed 20% of the total value of the machinery or plant used in the business. This condition is the subject matter of dispute in the present case inasmuch as the case set-up by the Revenue is that the plant and machinery transferred from Aurangabad unit to Daman Unit-1 is in excess of 20% of the total value of the plant and machinery at Unit-1, Daman. 4.4 In this context, it is to be noted that the conditions prescribed in sub-section (2) of section 80IA from clauses (i) to (v) are of varying quality inasmuch as some of them are to be fulfilled at the time of the set-up or the initial year and some conditions are of such nature, which have to be consistently adhered to be by an assessee during the entire period of claim. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Working Machine 24,406 2 Semi Automatic R.O.P.P 3,815 3 Conveyor Belt 4,857 4 Automatic Liquid Filling Machine 28,171 Total ₹ 61,049 It has been further explained that ₹ 830/- value of machinery was transferred in previous year 1998-99 relevant to assessment year 1999- 2000 and ₹ 6754/- in relation to assessment year 2000-01. In fact, in the initial year, it has been claimed that no old machinery was transferred to Daman Unit-1. 5. Before the CIT(Appeals), we find that the assessee made varied factual submissions countering the findings of the Assessing Officer. The CIT(Appeals) has also called for a remand report from the Assessing Officer. Such remand report has also been reproduced by the CIT(Appeals) in the impugned order. In such remand report, the Assessing Officer considered that the value of old machinery transferred from Aurangabad Unit to Daman Unit-1 consisted of three tanks of ₹ 5,61,600/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery as on 31/3/1994 at ₹ 19,29,226/-, whereas the correct value is ₹ 31,41,563/-. The aforesaid figure is sought to be justified on the basis of the audited annual accounts filed with the respective return of income and which has also been subjected to assessments in the past years. Ld. Representative for the assessee submitted that all- along the Annual Accounts furnished by the assessee have not been doubted and in fact the depreciation has been allowed with respect to the assets based on asset values depicted in the returns of income. 6.1 Ld. Representative for the assessee also pointed out that the reference made by the CIT(Appeals) to the impounded papers in para 3.4.7 to justify usage of old machinery at 29.1% was erroneous because the same has been incorrectly understood. In this context, it was pointed out that there is no difference in the value of plant and machinery found recorded in the audited accounts vis- -vis the papers found in the course of search. In this context, our attention was specifically invited to the assertions of the lower authorities, whereby it is stated that the seized material reflect the usage of old machinery at Daman Unit-1 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant report has been furnished by Ld. CIT-DR before us in the course of the hearing. Ld. Representative for the assessee has also furnished the say of the assessee on such report of the Assessing Officer. 7. Ld.CIT-DR, appearing for the Revenue has attempted to support the stand of the Revenue to the effect that the usage of old machinery at Daman Unit-1 was more than the permissible limit of 20% and thus, the disallowance of deduction under section 80IA of the Act was quite proper. 8. We have considered the material being put-forth by the assessee in the context of the objections raised by the income-tax authorities. Ostensibly, in so far as the assessment order is concerned, it does not bring out the figures of total plant and machinery of Daman Unit-1 or the old machinery claimed to have been used from Aurangabad unit. The finding of the CIT(Appeals) is that machinery purchased for Daman Unit-1 till 31/3/1994 was for ₹ 19,29,266/- only and that the plant and machinery consisted of three S.S Jacketed Tanks of ₹ 1,87,200/- each. At this stage, the CIT(Appeals) states that the list of plant and machinery impounded from Aurangabad unit shows that three Tanks wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals) does not find any justification even in the report that has been furnished by the Assessing Officer before us. There are only bald assertions from the side of the Department that the usage of old machinery being in excess of 20% was accepted even in the course of assessment proceedings by the employee of the assessee Mr. Anil Bhoot, General Manager(Finance). In our view, in spite of the assertions to the contrary by the assessee right from the level of the CIT(Appeals), the Assessing Officer has not been able to demonstrate and justify how the figure of plant and machinery of Daman Unit-1 has been adopted at ₹ 19,29,266/- as on 31/3/1994. In any case, the first year for the claim of deduction under section 80IA for Daman Unit-1 was assessment year 1995-96 and the value of machinery is depicted at ₹ 31,41,563/-. Even if, we go alongwith the CIT(Appeals) and take the value of old transferred machinery at ₹ 5,61,600/-, even then considering a total value of machinery at ₹ 31,41,563/-, the percentage of usage of old machinery falls below 20%. This aspect was specifically put to the Ld. CIT-DR at the time of hearing but no cogent arguments have been made e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bhoot, General Manager(Finance) during the assessment proceedings. Additionally, it is also asserted that the premise of the Revenue is based on the seized material. The aforesaid assertions of the Revenue, in our view, do not distract from the factual matrix, which clearly support the assertion of the assessee that the total value of the old machinery at Daman Unit-1 is within the permissible limits. In fact, the orders of the authorities below do not bring out any specific material except generalized observations, which we have already dealt with. Even in the report furnished before us, Assessing Officer has not substantiated that how the figure of old machinery at Rs,5,61,600/- and that of the total machinery in Daman Unit-1 at ₹ 19,29,266/- have been adopted. 9. Considering the entirety of facts and circumstances of the case and the material on record, we are unable to uphold the stand of the Revenue that the Daman Unit-1 has been set-up with value of old machinery in excess of 20% of the total value of machinery and, therefore, on facts also, we find no reason to affirm the denial of deduction under section 80IA of the Act with respect to Daman Unit-1. Thus, on this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Daman Unit-2 meets with all the conditions prescribed in section 80IA/80IB of the Act and that there is no specific requirement of obtaining separate excise or sales tax registration. In the course of hearing, Ld. Representative for the assessee relied upon the following decisions in support of the claim of deduction under section 80IA/80IB with respect to Daman Unit-2 as a separate unit:- 1. DCIT vs. M/s. Uniglobe Packaging P. Ltd., ITA No.2669/Mum/2009 Dated 31/12/2010. 2. ACIT vs. M/s. Uniglobe Packaging P. Ltd.,ITA No.5387/Mum/2010, Dated 30/09/2011 3. M/s. FIL Industries Ltd. vs. Addl. CIT,ITA No.415(Asr)/2009 dated 27/06/2012. 4. Aqua Plumbing Pvt Ltd. Vs. ACIT, 140 TTJ 496(Asr) On the basis of the decision of Amritsar Bench of the Tribunal in the case of Aqua Plumbing Pvt Ltd. Vs. ACIT (supra), it has been specifically argued that expansion or extension of an existing unit by itself would not disentitle the assessee from claiming deduction under section 80IA/80IB of the Act . 12. On the other hand, Ld. Departmental Representative appearing for the Revenue has primarily reiterated the stand of the lower authorities, which is to the effect that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the same item which were being produced in the old units. Both the judgments show that the decisive test is that industrial unit set-up must be new in the sense that new plant and machinery should be installed for producing either the same commodity or some new commodity. In the present case, it is abundantly clear that the Daman Unit-2 has been set-up on a later date of time and it is located on a separate piece of land. The objections raised by the Revenue, in our view, do not distract from the fact that Daman Unit-2 is a physically separate industrial unit, inasmuch as, it has been established by the assessee that it has been set-up by investment of fresh funds; employment of separate labour force; manufacturing of different products; earning separate profits attributable to its activity, and is distinct and separate from the old unit. The fact that the business of the new unit comprises of products, which may be understood in the same line of activity, would not defeat the fact that the new unit has its own installed plant and machinery, factory building, etc. In fact, Amritsar Bench of the Tribunal in the case of FIL Industries Ltd. (supra) has specifically noted that there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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