TMI Blog2018 (6) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in allowing 100% deduction u/s 801C. (2) Whether on the facts in the circumstances of the case in law, Id. CIT(A) is justified in allowing the 100P/o deduction u/s 8BIC in the eighth year on the basis of expansion in the fifth year on the same unit which has already claimed 100% exemption in first five years whereas the I.T. Act clearly provides the 100% exemption for first five years 25% exemption on the next five years whereas the Department has not accepted the 100% deduction from sixth year onwards. (3) Whether on the facts in the circumstances of the case In law, Id. CIT(A) is justified in allowing 80lC exemption at 100% in eighth year on the basis of expansion of same unit in the fifth year after availing 100% exemption for first five years which means the unit will avail 100% exemption for 10 years and 25% exemption for next five years totaling exemption for 15 years which is against the provision of law which clearly says that any unit will claim exemption u/s 80lC for 10 years only from the initial assessment year as per provisions 80IC(3)(ii) as the unit is situated in Himachal Pradesh. (4) Whether on the facts in the circumstances of the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from AY 2009-10 onwards. Therefore, the claim of the assessee u/s. 80IC of the Act was rejected and amount of ₹ 6,71,37,497/- was added to the returned income of the assessee and assessment was completed vide order dated 29.3.2014 u/s. 143(3) of the Act. Against the aforesaid assessment order, assessee appealed before the Ld. CIT(A), who vide his impugned order dated 25.8.2014 has deleted the addition in dispute and partly allowed the appeal of the assessee. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal. 4. Ld. DR relied upon the Order of the AO and reiterated the contentions raised in the grounds of appeal. He further stated that assessee is carrying on job work for HEINZ and has not carried out any manufacturing activity during the year under consideration and nor any substantial expansion u/s. 80IC has been carried out by the assessee in FY 2007-08 to claim the benefit of 100% tax exemption beginning from AY 2009-10 onwards. Therefore, the claim of the assessee u/s. 80IC of the Act was rightly rejected and amount of ₹ 6,71,37,497/- was added to the returned income of the assessee, which does not need any interference. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process undertaken by the appellant to manufacture Glucon and other allied food products. As justified in various case laws relating to the definition and activity of term manufacturing and understanding the process of manufacturing undertaken by the appellant, it become crystal clear that Glucon and other allied food products are totally different and distinct from the raw material which goes into the manufacturing of product known as Glucon. It is an accepted principle of law that once from the fact that manufacture product known as Glucon is sold in the market with its manufactured, individual ingredients lose their character to form a uniform product as it is clear manufacture name. Also it is not possible to separate these ingredients since this is not the case of simply mixing the raw material as has been erroneously presumed by the Ld. AO. The appellant has submitted that the nature of the activity of the manufacture and process of manufacturing of Glucon and other allied products remain same as in the preceding assessment years. The appellant has submitted that the manufacturing unit at Batamandi, Paonta Sahib, Himachal Pradesh is owned, controlled and managed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inwall Co. Ltd. vs. CIT 251 ITR 323(SC) 9. Decision of Central Excise and Gold Tribunal (CEGAT), Special Bench 'D', New Delhi in the case of Vijaya Packers V s. Collector of Central Excise 1993(07) LCX0073 dated 21.07.1993. It is further observed from the paper filled by the appellant that the appellant is giving direct employment to local peoples. The salaries and terms and conditions of employment are settled by the assessee. I have considered the above facts and various judgment of authorities as also relied by the appellant in which activity of such kind of manufacturing activity taken by the appellant tantamount to manufacturing and therefore I do not find any reason of not allowing the benefit u/sec 80IC on the ground that it was not manufacturing. I also do not find any merit in the Ld. AO conclusion that the deduction u/sec 80lC could be denied because the appellant was doing job work for M/s Heinz. The appellant has strongly relied on the decision of the jurisdictional tribunal in the case of Gorawara Plastics and General Industries Pvt. Limited vs. DCIT 63 TT J 329 where the principle was exposited thus: There is no distinction b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any benefits under Sahib, Himachal Pradesh during the period from November 2003 to November 2013. The appellant has submitted a chart showing the year wise assessment starting from the very first year of operations i.e. A.y. 2004-05 and it was observed that the appellant is carrying out manufacturing activity since A Y 2004-05 and there has never been any dispute about it ( Annexure- A). In view of the above the appellant is entitled to deduction U/S 80IC being a manufacturer. In the result the grounds of appeal nos. 1 and 2 of the appellant are allowed. Ground no. 3 relates to the disallowance of deduction made by the AO since the appellant has not set up a new unit as part of substantial expansion and there is no increased in the constructed factory area and staff employed. The facts of substantial expansion is borne out from submission made by the appellant and while going through the facts and papers placed on records, it was observed that during the F.Y. 2007-0S, the unit has made investment in the Plant Machinery ofRs.11,442,802/- which is equal to 63.44% (more than 50%) of the book value of the plant Machinery at the beginning of the previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the allowance of the claim of 100% tax benefit on account of substantial expansion subjected to the fulfillment of all the conditions specified in the act. It is observed from the submission filled by the appellant that the appellant has fulfilled all the conditions specified in the section of the act and therefore he shall be allowable to claim 100% tax benefit. The appellant has also submitted that We have religiously followed the definition of substantial expansion as mentioned in section 80IC (8)(ix) which is factually proved by reference to the relevant paper and documents available on records. Hence twisting of the terminology substantial expansion either by the department or by the assessee is not permissible within the framework of Income Tax Law. In case the law makers has desired more detailed commentary or explanation or conditions attached with the concept of substantial expansion in that case the government would have come up with either specifically rules printed in Income Tax rules or CBDT would have issued a detailed circular to its effect. But neither the CBDT has issued any circular nor any specifically any rules have been printed. Hence the definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e detail of addition made in the Plant machinery, copies of the purchase bills evidencing the investment in plant machinery a CA certificate evidencing the same. The AD has nowhere challenged this investment. Although the provision of income tax act dealing with compliance with regards to substantial expansion only speaks about the obligation to be discharges by the appellant namely to increase the investment in Plant and machinery by atleast 50% but on papers and documents will revealed that we have increased the constructed area by 28444 sq ft. Prior to the expansion, the constructed area was 27770 sq ft which was increased to 562J4 sq ft after expansion. We have made an investment of ₹ 103.23 lacs in increasing the constructed area of the building. There has been increased in the power load also from 175 KW to 375 KW Also there has been increased in average numbers of employees deployed per day. Prior to the substantial expansion i.e. in A. Y 2006-07, on an average per day we have deployed 55 Nos of employees which were increased to 93 Nos. in F. Y 2007-08. There is 69.09 % increased in the employment during the F.Y. 2007-08 as compare to F. Y 2006-07. Although ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/sec 80le shall not in any case exceeds 10 assessment years, as specified in sub section (6), the appellant shall be eligible to claim deduction upto A. Y. 2013-14 at rate of deduction as may be applicable. From the submission made by the appellant and facts placed on records, AY 2011-12 is the 8th year of claiming deduction under the section 80IC and same shall be allowed till AY 2013-14. In the result the ground of appeal no. 3 of the appellant is allowed. 6. On going through the aforesaid finding of the Ld. CIT(A) on the issues in dispute, we are of the view that CIT(A) has rightly deleted the addition in dispute and allowed the grounds raised by the assessee, which does not need any interference on our part. Therefore, we do not find any infirmity in the well reasoned order passed by the Ld. CIT(A) on the issues in dispute and hence, we uphold the finding of the ld. CIT(A) on this issue and accordingly, reject the ground no. 1 to 4 raised by the Revenue. 6.1 As regard the ground no. 5 relating to admission of additional evidence u/s. 46A of the Act is concerned, we find there is no mention in the impugned order of accepting any additional evidences. As it is ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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