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TMI Blog2020 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... for AY 2002-03 filed along with the return also stated that it was the first year of claim and that deduction was not claimed solely due to loss. A perusal of the excise returns filed before the Excise Authorities for the period from March 2002 to March 2003 as well as sales tax returns before the Sales Tax Authorities for the quarters pertaining to the financial year 2002-03, clearly indicates that manufacturing activity and corresponding sales was carried out by the assessee. Thus it cannot be said that the manufacturing activity of the assessee had not started till the receipt of the factory license. The ledger account of the plant machinery in the books of the assessee for the year ending 31.03.2002 along with copies of the bills/invoices also indicates purchase of new machinery during the said period. It is further evident that the block of asset had started during AY 2002-03 and fixed asset statement of the assessee for the AY 2003-04 would show opening WDV. find merit in the contentions of the Ld. counsel that although the original certificate was granted to M/s Konkan Plastics, no business was ever carried out by the said entity ; except the SSI license and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license, the subsequent transfer of license, the unabsorbed depreciation as on 31.03.2003 and the opening WDV of Plant Machinery during A.Y.2003-04 etc. 3. Briefly stated, the facts of the case are that during the AY 2005-06, the assessee-company filed a return of income of Rs. Nil after claiming deduction of ₹ 4,36,38,691/- u/s 80IB of the Act. The Assessing Officer (AO) disputed the said claim on the ground that (i) that the actual production started during AY 2002-03 is not established by the assessee as it was not in possession of licenses to start a factory, (ii) the business of assessee was formed by reconstruction of business already in existence and hence the assessee is not entitled to deduction, (iii) the business was initially carried out by the proprietary concern M/s Konkan Plastics ; this was based on the application made before the Licensing Authority for license to work a factory where the said proprietary concern had shown the nature of business which was similar to the business carried out by the assessee, (iv) since the said proprietary concern was subsequently taken over by the assessee, it was a case of reconstruction of business already in existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no change in the form of business. It is merely a case of change of ownership of business. In the present case, the evidences on record prove that there was no activity carried on in the hands of the proprietary concern. The activity started only in the hands of the appellant company. 2.9 In my view, there cannot be reconstruction of business when there was no business carried on in the hands of M/s. Konkan Plastics, proprietary concern. The AO has proceeded to disallow the deduction on the incorrect factual matrix and without noticing that there was no business carried on the hands of M/s. Konkan Plastics so as to call it a re-construction. In my view therefore the disallowance deserves to be deleted on the above ground. 2.10 The AO has also observed that no evidence is produced that the new machinery was acquired by the appellant. The AO has also observed that even though the same type of plant and machinery and man power was required for manufacturing of articles, the assessee company purchased the new plant and machinery and also employed new work force for carrying out the same activity which it was carrying out as a proprietary concern in the name of M/s. Konkan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased new plant machinery and employed new work force for carrying out the same activity, which it was carrying out as a proprietary concern in the name of M/s Konkan Plastics. Thus the Ld. DR submits that the order passed by the AO be restored. 6. On the other hand, the Ld. counsel for the assessee submits that it was already explained before the AO as well as CIT(A) that prior to the electric connection from Reliance Energy, the assessee was availing the electricity connection from the Government of Goa; although the certificate for license to work has been issued to the assessee on 21.03.2003, the date of issue of such license has no bearing on whether manufacturing had commenced and several evidences are on record which proves that the manufacturing activity had started during March 2002 itself. In this respect, the Ld. counsel refers to the evidences of manufacturing activity being carried out by the assessee which were filed in the form of excise returns before the excise authorities for the period from March 2002 to March 2003 as well as the Sales Tax returns for the quarters pertaining to FY 2002-03, which prove that manufacturing activity and the corresponding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghts ; however, the said fact cannot result into disallowance of deduction u/s 80IB of the Act, as there is no re-structuring of any business in existence. Thus the Ld. counsel submits that the deduction claimed by the assessee was rightly allowed by the Ld. CIT(A) and that no interference is required in respect of the same. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We have examined the documents filed before the AO as well as CIT(A) namely (i) copies of the electricity bills of Electricity Department, Government of Goa, (ii) letter dated 30.03.2000 from Asst. Electrical Engineer certifying the change in name of the company, (iii) application for license to use building as factory, (iv) copies of excise returns in Form RT12 for the period from April 2002 to March 2003, (v) copy of the sales tax returns filed with the Sales Tax Department, Goa for the four quarter during AY 2003-04, (vi) profit and loss account and balance sheet with relevant schedules for the year ending 31.03.2001 and 31.03.2005. An examination of the above documents clearly indicates that prior to the electric co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tity ; except the SSI license and the lease hold rights in the plot, no activity was ever carried out by the said entity. The excise returns and sales tax returns filed by the assessee clarify the issues in the instant case. The plant machineries, as evidenced by the invoices, have been purchased by the assessee ; the manufacturing activity was carried out by the assessee at its own premises. In the case of CIT v. Western Outdoor Interactive P. Ltd. (2012) 349 ITR 309 (Bom), the Hon ble Bombay High Court has held that where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income Tax Act, 1961, then unless relief granted for the first year in which the claim was made and accepted is withdrawn or set aside, the Income Tax Officer cannot withdraw the relief for subsequent years. More particularly so, when the Revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years . In view of the above facts and position of law, we affirm the order of the Ld. CIT(A). Facts being identical, our decision for the AY 2005-06 applies mutatis mutan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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