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TMI Blog2023 (10) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... istrar of Firms vide certificate in Form-A dated 12.04.10. In this registration certificate, the date of joining has been specified as 01.01.2009 . It shows that during the period 01.01.09 till 31.03.09, the old as well as the appellant firm, simultaneously existed. This construction of the dates persuaded him to reach to a diabolic conclusion that the old firm got closed and immediately new firm got started. It is a fact on record that 1 st export dispatch has taken on 05.05.2009. The old machinery has not been used as indicated by the invoices of the new machinery which was purchased from the third party. The evidences proves that it is a case where new plant machinery has been acquired which was not previously used. Hence, the conditions for the eligibility of claim u/s 80IC in the case of a new industrial undertaking stands satisfied. Decided in favour of assessee. 80-IC on Duty Draw Back - As per the A.O., these incentives may be attributable to the business activity, but they are not the profits derived by an industrial undertaking from an eligible business therefore no deduction u/s 80IC was allowable on duty drawback - HELD THAT:- In view of the decision in the case of Megh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in facts and law of the case to make various observations in their respective orders. 3. That the Authorities below had either ignored or had not appreciated the submissions made by the appellant on the duty draw back claim made by the Assessee firm. 4. That the Interest charged under section 234B and 234C being wholly ill- legal deserve to be deleted, at any rate without prejudice the interest has charged was very excessive." 4. In ITA No. 6568/Del/2018, following grounds have been raised by the Revenue: "1. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in allowing deduction u/s 80IC of the I.T. Act, 1961 @100% on the total business income ignoring the principle of natural justice as neither any remand report was called for from the A.O. nor any opportunity of hearing was provided to the A.O. inspite of the fact that the A.O. had made request for hearing to the CIT(A) through ITNS-51. 2. Whether in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) has erred in law and fact in allowing deduction u/s 80IC of the I.T. Act, 1961 @100% on the total business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi Gupta. 5. That in the facts and circumstances of the case, the order of the Id. Commissioner of Income Tax(A), Meerut may be set aside and that of the A.O. be restored." Brief facts: 5. M/s Sharda Exports (PAN: AACFS8466H) started business in 1983 from Meerut having partners namely, Shri Jitendra Kumar Gupta Smt Meenakshi Gupta W/o Sh. J.K. Gupta Shri Aditya Gupta S/o Sh. J.K. Gupta Shri Ashish Gupta S/o Sh. J.K. Gupta 6. M/s Sharda Exports (PAN: AAYFS1694N) came into existence in the F.Y.2004-05 and this firm was dissolved in the F.Y.2009-10. 7. The assessee M/s Sharda Exports (PAN: ABOFS0079G) came into existence from 01.04.2009 having partners namely, Shri Jitendra Kumar Gupta Shri Aditya Gupta S/o Sh. J.K. Gupta Shri Ashish Gupta S/o Sh. J.K. Gupta 8. The assessee claimed deduction u/s 80IC of the Income Tax Act, 1961 from the A.Y. 2010-11 onwards. The instant assessee had turnover of Rs. 75 Cr. in the first year of business. The moot allegation of the Assessing Officer was that the assessee went on changing the firm structure only to claim deduction u/s 80IC and the assessee could not have had a turnover of Rs. 75 Cr. at the beginning of the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, the assessee filed appeal before the ld. CIT(A) who deleted the addition made by the AO. Ergo, the revenue filed appeal before us. 12. During the arguments before us, the ld. DR succinctly brought to our notice, the similarities of the business as mentioned in the Assessment Order which have been duly quoted in the above part of the order, provisions of the Act and explained at length with regard to reconstruction and splitting of the entity. The ld. DR has also argued that the machinery which has been used earlier is still being used in the existing entity and hence no deduction is allowable. 13. On the other hand, the ld. AR argued that the firm came into existence w.e.f. 01.01.2009 and it began to manufacture articles from 01.04.2009 and hence the Assessment Year 2010- 11 is the initial Assessment Year for claiming of deduction u/s 80IC @ 100% which has been wrongly allowed by the AO @ 25% treating it as 6th year of the old firm. 14. Heard the arguments of both the parties and perused the material available on record. 15. We find that deed of partnership dated 01.01.2009 was duly registered with Registrar of firms, New Delhi and VAT registration certificate was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arpets is assessed to income tax. This transaction stands declared in the books of Tirupathi Carpets for A.Y. 2010-2011 which was accepted in its Income Tax assessment. 17. The old Firm was dissolved vide deed of dissolution dated and effective from 01.04.2009, as per the copy of dissolution deed. The assessee firm came into existence on 01.01.2009 which is evident from the copy of deed of partnership dtd. 01.01.2009 as per records which the A.O. wrongly noted in the assessment order as 01.04.2009. The said partnership deed has also been got registered with the "Registrar of Firms" vide certificate in "Form-A" dated 12.04.10. In this registration certificate, the date of joining has been specified as "01.01.2009". It shows that during the period 01.01.09 till 31.03.09, the old as well as the appellant firm, simultaneously existed. This construction of the dates persuaded him to reach to a diabolic conclusion that the old firm got closed and immediately new firm got started. 18. It is a fact on record that 1st export dispatch has taken on 05.05.2009. The old machinery has not been used as indicated by the invoices of the new machinery which was purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court is subsequent to the amendment hence, the decision cannot be distinguished on this argument. In view of the above discussion, we direct the assessing officer to allow the deduction u/s 80IC of the Act as per law excluded on the DEPB receipts." 22. Further, we find that the matter has been adjudicated recently by the Hon'ble Apex Court in the case Saraf Exports Vs. CIT in CA No. 4822 of 2022. In view of the decision in the case of Meghalaya Steel where the transport and interest subsidies were held to be eligible for deduction as they were held to have been derived from the business of the undertaking and thus an argument was made that the said decision has widened the scope of deduction. The case of Meghalaya Steels Limited dealt with transport subsidy, interest subsidy and power subsidy and the Hon'ble Apex Court held that since these subsidies directly affect the cost of manufacturing, they have a direct nexus with the profits and gains of the undertaking and since these subsidies have a direct nexus, they can be said to be derived from the industrial undertaking. While dealing with the decision in the case of Liberty India, the Hon'ble Apex Court distinguishe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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