TMI Blog2014 (8) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... is granted, if the undertaking satisfy all these conditions initially, the undertaking is entitled to the benefit of 10 consecutive years - If the object of the Legislature providing for the incentives is kept in mind and when a period of 10 years is prescribed, that is the period, probably, which is required for any industry to stabilize itself - Merely because an industry stabilizes early, makes profits, makes future investment in the said business, and it goes out of the definition of the small scale industry, the benefit u/s 80IB cannot be denied - If such a literal interpretation is placed on the said provion, it would run counter to the very object of granting incentives - the benefit of deduction is given to an assessee who has avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The Commissioner of Income Tax, by virtue of the power conferred under Sec.263 of the Act, initiated suo motto proceedings on the ground that the assessment order was erroneous and prejudicial to the Revenue. According to the Commissioner, the Assessing Officer has wrongly allowed deduction under Sec.80IB(3) of the Act, as claimed by the assessee. After hearing the assessee, he passed an order setting aside the assessment order with a direction to decide the claim under Sec.80IA/80IB. In pursuance to the said direction issued, the Assessing Authority disallowed the assessee s claim of ₹ 75,81,910/- under Sec.80IB(3) of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner. The Commissioner dismi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be eligible for the said deduction, it has to fulfill all the conditions mentioned under Sub-sec.(2) of Sec.80IB. The four conditions which are stipulated therein are, firstly, the industrial undertaking must not have been formed by splitting up or reconstruction of a business already in existence. The second condition is, such an undertaking is not formed by transfer of machinery or plant previously used for any purpose. The third condition is that the industrial undertaking manufactures or produces any article or thing not being any article or thing specified in the list in Eleventh Schedule. However, in respect of a small scale industry undertaking, even that condition is waived. In other words, a small scale industry manufacturing or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year. 5. In the entire provision, there is no indication that these conditions had to be fulfilled by the assessee all the 10 years. When once the benefit of 10 years, commencing from the initial year, is granted, if the undertaking satisfy all these conditions initially, the undertaking is entitled to the benefit of 10 consecutive years. The argument that, in the course of 10 years, if the growth of the industry is fast and it acquires machinery and the total value of the machinery exceeds ₹ 1 crore, it ceases to have the said benefit, do not follow from any of the provisions. It is true that there is no express provision indicating either way, what would be the position if the small scale industry ceases to be a small scale indus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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