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2013 (6) TMI 70 - HC - Income TaxDeductions under Section 80-I - ITAT allowed the claim - whether ITAT was right in holding that Unit Nos. 2 & 3 are industrial undertakings for purposes of Sec. 80-I - Held that:- Unable to accept the contention of the revenue that there is no material to indicate that the integrity of the business carried out by Unit No.1 or the integrity of Unit had been broken in any manner. Admittedly, Unit No.1 continues to function and carry on the business even after Unit Nos.2 & 3 were established. As it is not disputed that Unit Nos. 2 & 3 were established in addition to the existing Unit and were not formed by transfer of any asset from Unit No.1. Unit No. 1 was mainly engaged in publication and also carried on the job of composing, processing and printing of sheet fed presses. Merely, because the activity of printing was carried on by Unit No.1 also and the Unit No.1 was utilising the capabilities of Unit Nos.2 & 3 by getting job work done from them does not lead to the conclusion that Unit Nos.2 & 3 had been formed by splitting of the business of Unit No.1. The test whether industrial undertaking fulfills the condition as imposed under Section 80-I(2)(i) is not whether some part of the business of an assessee is carried on by the newly established undertaking but whether the newly established undertakings are formed by splitting up or reconstruction of the business of the existing Unit. Considering the case of Textile Machinery Corporation Ltd [1977 (1) TMI 3 - SUPREME Court] & Indian Aluminium Company Limited [1977 (1) TMI 5 - SUPREME Court] unable to find any material from the records to support the contention that Unit Nos.2 & 3 have been formed by splitting up of the business of the assessee and thus, the condition under Section 80-I(2)(i) has not been met. Admittedly, the activities being carried on by the assessee in Unit No.1 have not been discontinued and the Unit Nos.2 & 3 were established in addition to Unit No.1. It has been admitted that neither any machinery nor any equipment were transferred from Unit No. 1 to Unit Nos.2 & 3. Thus not inclined to entertain the contention of revenue that Unit Nos.2 & 3 fail to fulfill the condition under Section 80-I(2)(i). Whether it was open for AO to deny the benefit of Section 80-I to the assessee having allowed benefit to the assessee in the preceding three years - Held that:- AO over a period of three years being assessment years 1988-89, 1989-1990 and 1990-1991 have consistently accepted the claim of the assessee for deduction under 80-I and it would not be open him to deny the deduction on the ground of non fulfillment of the conditions under 80-I(2 without disturbing the assessment for the assessment years relevant to the previous year in which the Unit Nos.2 & 3 were established. See Saurashtra Cement & Chemical Industries v. CIT [1979 (2) TMI 21 - GUJARAT High Court] & CIT Tax v. Paul Brothers [1992 (10) TMI 5 - BOMBAY High Court] wherein held that where relief of a tax holiday had been granted to an assessee in an initial assessment year in which the conditions for grant of tax holiday had to be examined, denial of relief in the subsequent years would not be permissible without disturbing the assessment in the initial assessment year. In favour of assessee.
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