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TMI Blog2020 (4) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the issue may be sent back to the files of the CIT(A) and he has to obtain a remand report from the Assessing Officer, because this issue has not decided by the CIT(A). In our opinion, if we remand back the issue to the files of the CIT(A), he has to call for remand report from the A.O. before deciding the same and no useful purpose would be served. Hence we prefer to remit the issue to the files of the Assessing Officer for fresh consideration. In our opinion, the Assessing Officer has to see whether the capital gain arising out of the transfer of assets mentioned in section 54G of the Act is utilized for the acquisition of assets for the purpose of its business, should be qualified for the purpose of exemption u/s 54G, as there is no requirement that the land and building should be used for the purpose of business of the industrial undertaking - we remit the entire issue in dispute to the files of the Assessing Officer to examine the issue afresh after giving an opportunity of being heard to the assessee. The assessee shall place necessary evidences to substantiate its claim and cooperative with the AO - Decided in favour of assessee for statistical purposes. - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st this the assessee carried the matter in appeal before the CIT(A). It was stated by the assessee before the CIT(A) as under:- (i) Your appellant Company invested the proceeds of sale in developing an industrial and research centre. We are enclosing herewith a copy of the Valuation Report in this regard. (ii) It was held by Income Tax Appellate Tribunal Mumbai in the case of Dy.Commissioner of Income-tax v. Enpro Finance Ltd., that, if the amounts are utilized for acquisition of Assets for the purpose of its business, this should qualify for the purpose of exemption u/s 54G as there is no requirement that the land and building should be used for the purpose of the business of industrial undertaking. (iii) Section 54G(1) is clear that construction of building for the purpose of his business is one of the condition to avail the exemption and your Appellant case fairly and squarely falls under this provision. (iv) Your Appellant has honestly invested the money in developing the business unit as such deserved to have a liberal approach in this connection. 4. After considering the submission of the assessee, the CIT(A)observed as under:- 7.1 The submissions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o evidence has been furnished by the appellant to establish the fact that it had relocated its existing business concern to the new property. It is also relevant to note that section 54G of the Act applies to capital gains arising from transfer of assets in connection with shifting of an industrial undertaking situated in an urban area to a non-urban area. Therefore, the primary condition for claiming deduction under this section is that the assessee must have shifted its industrial undertaking from an urban area to a new location in any non-urban area. For this purpose the appellant is required to acquire building or land for the purposes of setting up the new industrial undertaking and shift the original assets of the earlier establishment to the new location. In the present case, the appellant has not been able to establish this fundamental condition. The appellant has not been able to provide any evidence either before the assessing officer or during the appellate proceedings to establish the fact that it has shifted the original assets for transferring the existing establishment to the new location. Similarly no evidence has been furnished to establish if the appellant had pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven owned by the appellant company and apparently, no evidence has been furnished to substantiate if any investment was made by the appellant company for setting up the industrial undertaking in this property. The appellant 'has clearly failed to substantiate its claim that the sale proceeds were invested for developing an Industrial and Research Centre in the new location. Therefore, considering all the material facts discussed above and the prescribed legal provisions, the appellant is not found to be eligible to claim deduction under section 54G of the Act. The addition of ₹ 1 ,20,00,000/- made by the assessing officer by disallowing the deduction claimed by the appellant uls 54G of the Act is accordingly, confirmed. The grounds of appeal raised in this regard are dismissed. 5. Against this, the assessee is in appeal before us. The learned AR reiterated the submissions made before the lower authorities. On the other hand, the learned Departmental Representative submitted that the assessee failed to establish that amount deposited in capital gains exemption scheme account with Canara Bank are actually used for acquisition of plant and machinery in new location ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is that if it had given adequate opportunity of hearing by the lower authorities, it could have explained the investments whether it was reflected in assessee s balance sheet. It was also stated before us that acquisition of assets for the purpose of business is sufficient to qualify the deduction u/s 54G of the Act and there is no requirement that the land and building should be used for the purpose of business of the industrial undertaking in the assessment year under consideration. In other words, if the amounts received on transfer of capital asset being machinery or plant or building or land or any rights in building or land used for the purposes of the business of an industrial undertaking situated in an urban area etc. As per section 54G capital gain invested in purchase of new machinery or plant for the purpose of business of the industrial undertaking, for the purpose of business in non-urban area, is qualified for deduction u/s 54G of the Act. In other words, the phrase of the industrial undertaking , which is there in clause 1(a) is conspicuously missing in clause 1(b). Hence, the law clearly makes a distinction between the eligible purposes for utilization of the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tile title; it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for the carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business. The only limitation is that it should be for the purpose of the business, that is to say, the expenditure incurred should be for the carrying on of business and assessee should incur it in his capacity as a person carrying on the business . 13. Further in the case of CIT vs. Lake Palace Hotels and Motels (P) Ltd, 251 ITR 0644, the Hon'ble Rajasthan High Court interpreted: a perusal of the scheme of section 32A of the Income Tax Act, 1961, makes it abundantly clear that investment in anything which can be termed in a generic sense as plant and machinery used for the purposes of business has not been made eligible to claim investment allowance and a deduction in respect of such investment, but only such plant and machinery used in business which fulfils further essential conditions and requirements required for laying claim to such deductions. The key words used in this section are for the purpose of business of construction, manufacture or produc ..... 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