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2023 (10) TMI 687 - ITAT DELHIDeduction u/s 80IC - new industrial undertaking not formed - Claim denied as assessee was using the tool of forming a new firm in the same name at the same premises beyond the time limit permissible as per the law - AO alleged 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 business and the entire new business is the changed form of the old business - HELD THAT:- 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. 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 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 Meghalaya Steel [2016 (3) TMI 375 - SUPREME COURT] 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 [2009 (8) TMI 63 - SUPREME 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 [2009 (8) TMI 63 - SUPREME COURT] distinguished Duty Entitlement Pass Book and Duty Drawback Schemes and specifically observed that the DPEB/Duty Drawback Scheme is not related to the business of an industrial undertaking for manufacturing or selling its products and the DEPB entitlement arises only when the undertaking goes on to export the said product. The same view has been reiterated in the case of Saraf Exports Vs CIT. Hence, respectfully following the judgment of Hon’ble Supreme Court in various cases as mentioned above, we hereby affirm the decision of the ld. CIT(A). As the assessee has opted for VSV for the years before us. In the result, the appeals of the assessee are dismissed.
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