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TMI Blog2023 (9) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of the deduction to the assessee claimed by it under section 80-IA of the Act after the initial assessment year on account of examination of preconditions. In holding so, we draw support and guidance from the judgement of Saurashtra Cement Chemical Industries Ltd. [ 1979 (2) TMI 21 - GUJARAT HIGH COURT] We also draw support and guidance from the judgment of ACE Multi Axes System Ltd [ 2017 (12) TMI 372 - SUPREME COURT] where it was observed, the issue regarding allowances of deduction under section 80IB of Act to small scale industrial undertaking, that certain precondition to allow tax holiday under impugned section can be only examined in the initial assessment year only. It is the choice of the assessee to select the initial assessment year and therefore the same cannot be questioned. Furthermore, there is a possibility that the AO during the assessment proceedings might disallow the expenses which may turn the loss of the assessee into positive income, then in that eventuality the assessee can claim the benefit of deduction under section 80 IA of the Act. Thus we are inclined to hold that the deduction u/s 80IA of the Act was first-time claimed by the assessee in the immed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary facts are that the assessee in the present case is a public limited company and claimed to be engaged in the activity of maintenance of infrastructure facility being solid waste management. As per the assessee, the profit from the impugned activity was eligible for deduction under section 80IA(4) of the Act effective from assessment year 2004-05 being maintenance of infrastructure facilities. The assessee company was established dated 20 January 1993 which has taken over the running business of partnership firm namely M/s Nemi Briquettes Industries from April 1993. The assessee right from the inception has been either claiming, in most of the assessment years, hundred percent depreciation or the benefit under section 80I or 80JJA of the Act in different assessment years subject to the availability of profit. 4.1 As per the assessee, it acquired plants and machinery in the earlier years but the same were under the process of upgradation. But finally, these plants and machinery were put to use effective from 1 January 2004 and thus the initial year is the financial year 2003-04, corresponding to the assessment year 2004-05. Accordingly, the assessee contended that it has s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention, the learned AR has vehemently relied on the several judicial pronouncements which are part of record. 10. On the other hand, the learned AR has filed written submissions dated 27- 02-2023, running from pages 1 to 12 wherein it was inter alia contended as under: 6. Row, before the Hon'ble ITAT the assessee has raised a totally new claim of i.e. setting up of a new industrial undertaking in the FY:2003-04 i.e. AY 2004-05. Though no claim for deduction U/s 80IA(4) was made in the relevant AY;2004-05, but from the subsequent AY i.e 2005-06. During the course of hearing on 21.02.2023 the Ld. AR of the f assessee claimed before the Hon'ble Tribunal that deduction u/s 801A(4) was allowed by, the department for AY:2004-05 is totally false and misplaced. The Ld AR had thus submitted that since its claim for deduction u/s 80IA was accepted and allowed for AY 2004-05, the claim for this year should also be allowed . Pursuant to the above claim the relevant record^ for AY 2004-05 were examined. A copy of the return of income along with the computation; is enclosed for your kind perusal (Annexures- B & c). On perusal of the return of income in Form No. 1 filed on 20.10.2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 wherein it was held as under: 7. This takes us to the questions referred to us in the Income-tax Reference No. 239 of 1975 at the instance of the Revenue. We do not find any justifying reasons to interfere with the order of the Tribunal so far as both these questions are concerned. The Tribunal was perfectly justified in taking the view that if the relief of tax holiday was granted to the assessee-company for the assessment year 1968-69, the assessee was, therefore, entitled to continuance of that relief for the subsequent four years and the ITO would not be justified in refusing to continue the allowance for the assessment year under reference, i.e., 1969-70 without disturbing the relief for the initial year. At this stage, it should be noted that for purposes of entitlement to the relief under section 80J which is corresponding to section 15(c) of the 1922 Act, an industrial unit claiming such relief must be new, in the sense, that new plants and machineries are erected for producing either the same commodities or some distinct commodities-- Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 and CIT v. Indian Aluminium Co. Ltd [1977] 108 ITR 367. It should be emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t manufacture or production of article or thing to be eligible to incentive deduction under section 80-IB of the Act. The assessee by filing chart narrating fact that all through assessment years 1993-94 to 2002-03 assessee had been allowed deduction under section 80-IB of the Act and therefore in the present year being assessment year 2003-04, the claim of the assessee is that it is eligible for deduction under section 80-IB of the Act and that the conditions to be eligible for deduction under section 80-IB have to be considered and decided in the first year of deduction and not in the subsequent years. We find that under the IT Act, each year is separate unit of assessment and taxable income as well as tax liability are to be determined keeping in view the facts prevailing in that year and the law as applicable. Further, res judicata is not applicable in an income-tax assessment is also an established position of law but the principle of consistency is to be followed. In section 80-IB of the Act, there are several conditions like the industrial units should not be formed by reconstruction or splitting up of an existing unit. These conditions are to be examined in the initial year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs has also made submissions regarding the admissibility of his claim under the provisions of section 80IA of the Act. The relevant fact from the assessment order is extracted below: The assessee has no submitted any reply on the point of assessment of income to be taxed u/s. 115JB of the Act, it has submitted the reply on the points of admissibility of deduction u/s. 80IA/80IB and u/s. 80JJA of the Act. It means the assessee has accepted the tax ability of income proposed u/s. 115JB of the Act. Therefore, income of the assesse assessable in the books profit of Rs. 31,52,571/- is worked out from the accounts submitted along with the return of income. 11.5 Besides the above we have perused the paper book filed by the learned AR and find that the assessee has furnished form 10 CCB, a report of the chartered accountant for claiming the deduction under section 80IA of the Act for the assessment year 2004-05 and the year the assessment year in dispute i.e. 2005- 06 which are placed on pages 22 to 29 of the paper book. 11.6 We have also perused the statement of income filed by the assessee pertaining to the assessment year 2004-05 and note that the assessee has clearly made reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the assessee. 14. On appeal the learned CIT (A) also confirmed the order of the AO. 15. Being aggrieved by the order of the learned CIT(A) the assessee is in appeal before us. 16. The learned AR before us contended that the assessee has never claimed the sum of ₹5 lakhs as an expense and therefore the question of making the disallowance does not arise on account of non-deduction of TDS. 17. On the other hand, the learned DR vehemently supported the order of the authorities below. 18. We have heard the rival contentions of both the parties and perused the materials available on record. At the threshold, we note that the assessee has not claimed the deduction of ₹5 lakhs shown as an advance to the party namely Garima Communication. Thus, in such a situation we are of the view that there is no question of making the disallowance of ₹5 lakhs by adding to the total income of the assessee. Accordingly, we set aside the finding of the learned CIT(A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee are allowed. 19. In the result the appeal filed by the assessee is allowed. This Order pronounced in ..... 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