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TMI Blog2018 (10) TMI 1594X X X X Extracts X X X X X X X X Extracts X X X X ..... w industrial undertaking, the number of building is wholly irrelevant. As all these units together constituted separate and distinct industrial undertaking eligible for deduction under section 80IB. We have also noted that there is no dispute that, vide registration dated 3rd June 2001, District Industries Centre has confirmed setting up of unit at “No.47 New Grain Market, Opp. Anupam Talkies, Khokhra, Ahmedabad” for production of “Readymade garments for children”. As for the statement made by the partners of the assessee firm, all that has been stated in the said statement is that the activities are carried out at other places as well but then none of these activities were independent activities on standalone basis or resulted in a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid departmental appeal by observing as follows :- 3. The relevant material facts, giving rise to this dispute before us, are as follows. It is a case of reopened assessment. The assessee before us is engaged in the business of manufacturing readymade garments for children. The assessee was claiming, and was duly granted, deduction under section 80IB, with effect from assessment year 2002-03 onwards, in respect of profits of this business. On 12th October 2009, the assessee was subjected to survey proceedings under section 133A, and based on certain findings in the said survey proceedings, the assessments, including for this assessment year, were reopened. In the course of these reassessment proceedings, validity of which has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a different unit and it was inconceivable as to how clothes could be sold without even buttons. The maintenance of separate stock registers for different units, in the opinion of the Assessing Officer, was not sufficient to claim deduction under section 80IB. It was also noted that deduction under section 80IB is not allowable on the entire profits of the firm, but is allowable only in respect of the new undertaking but then since the assessee has not maintained separate books of accounts for activities at the new premises, deduction could not be allowed. It was stated that under rule 10BBB(3), profits of the undertaking were to be computed as if it is a distinct entity. The Assessing Officer thus concluded that the assessee was not eli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the work i.e. stitching of children's garments was done there. Remaining activities were carried out at different units in the same area. In view of this, AO is of the view that items produced from unit no.47 are not articles or things and no separate books of account were kept for this unit and accordingly it is not eligible for deduction under section 80 IB. It is not in dispute that appellant started new industrial activity in this area only in 2001. Appellant submitted that unit number 47 was mentioned as new industrial undertaking just for the sake of convenience and because main activity of stitching was carried out at this place. All other ancillary activities were carried out in other units in the same area. It is also not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using other units as composite manufacturing undertaking. When manufacturing is done by using 5-6 units, it makes sense to mention the number of most prominent unit where major activity is carried out. For setting up a new industrial undertaking, number of buildings is not relevant. An industrial undertaking may constitute several buildings based on requirements or even one building may contain several new industrial undertakings if the building is large enough. Therefore to determine a new industrial undertaking, number of buildings is not relevant. What is relevant is separate and independent industrial undertaking constituting all the activities of the undertaking. Appellant started its new industrial undertaking for manufacturing c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material on record and duly considered facts of the case in the light of applicable legal position. 6. We have noted that section 80IB(2) refers to any industrial undertaking which fulfils the . conditions , but then clearly there is a distinction between the expression industrial undertaking and units carrying out related activities inasmuch as an industrial undertaking may have more than one unit as it s integral part. The mere fact that an industrial undertaking has more than one physical place for it s allied activities, such as storage of raw material, final touches and packing of end products or other ancillary activities would not mean that all these physical places are to be treated as standalone unit and profits ..... X X X X Extracts X X X X X X X X Extracts X X X X
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