TMI Blog1994 (9) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... 700 machines per annum. In the asst. yr. 1983-84 the assessee claimed that it had started new unit of the same business since 1st Sept., 1982, by expanding its old business. It had purchased new machineries. The assessee further asserted that Govt. of India vide letter dt. 18th Jan., 1983 had agreed to increase the registered capacity to 1600 Nos. of machines per annum for manufacturing and claimed deduction under s. 80-I in new industrial unit/undertaking. The ITO processed the claim of the assessee and observed that copies of audited accounts show that common accounts for old unit and new unit are maintained and no separate account for salaries/wages are maintained nor for trading and other expenditure. The repairs and maintenance of machineries, depreciation, office and administrative expenses and production expenses are bifurcated between trading and P L accounts at the ratio of 70:30 respectively. The Assessing Officer concluded that in view of these facts it was not possible to believe that new unit was an independent undertaking. He did not find force in the law relied upon by the assessee and disallowed the claim of the assessee under s. 80-I. The assessee came in appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention to the particulars of partners' capital account from year ending 1982 to 1986. The assessee has filed details of number of electronic yarn cleaners machines produced in old and new units after 1982 onwards and copy thereof is appearing on p. 29 of compilation. The sale of electronic yarn cleaners machines from 1982-83 onwards is also filed and it shows that sale which was about Rs. 5.43 lacs in asst. yr. 1982-83 increased to Rs. 66.09 lacs approx. in asst. yr. 1987-88 and income returned was more than 12 times as apparent from copy of details of sales and income appearing on p. 30 of paper book. These facts, according to the learned counsel for assessee were sufficient for authorities below to conclude that new unit has come in existence. No doubt the production is of the same articles but that is not going to debar the assessee from claiming deduction under s. 80-I of the Act in view of the reasoning of the Hon'ble Supreme Court in the case of CIT vs. Indian Aluminium Co. (1977) 108 ITR 367 (SC) in which the facts were identical as in that case the assessee was having four units at Belur, Kalwa, Alupuram and Hirakund for manufacturing aluminium ingots and assessee-comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of machinery or plant previously used for any purposes. It was also contended that these were also the requirements of s. 15C of the old Act and Hon'ble Supreme Court while deciding the claim of the assessee under s. 15C [Textile Machinery Corpn. Ltd.] dealt with that issue in detail and further in the case of Indian Aluminium Co. even expansion in the existing unit was held entitled for claim under s. 15C. The learned counsel for the assessee contended that observations of the ITO and CIT(A) that provisions of s. 15C of old Act are not in uniformity with that of s. 80-I, is not correct. The second point of the learned counsel for the assessee is that it is not expected from the assessee to claim benefit under s. 80-I that he should maintain separate accounts of new industrial unit as different High Courts have decided that no separate books of accounts are necessary for granting the benefit of s. 80J to the assessee and these provisions of s. 80J are alike to the provisions of s. 80-I of the Act so far as the setting up of new industrial unit is concerned. First reliance of the reasoning in the case of CIT vs. Dunlop Rubber Co. (P) Ltd. (1977) 107 ITR 182 (Cal) which was follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and sales and income increased manifolds after asst. yr. 1982-83. These facts were given to the ITO and CIT(A) and if these facts are read and considered in view of the reasoning of the Hon'ble Supreme Court in the case of CIT vs. Indian Aluminium Co. in which extension of existing unit was also held entitled in the claim under s. 15C of the old Act, the assessee is to be treated as entitled under s. 80-I because the assessee is fully covered in the reasoning of the case of Textile Machinery Corpn. Ltd. and this case in particular. We have already pointed out that requirements of setting up of new industrial unit were the same of s. 15C of old Act as in the s. 80-I of the present Act because their Lordships of Hon'ble Supreme Court in the case of Textile Machinery Corpn. Ltd. vs. CIT have quoted the provisions of s. 15C(2) consisting the same words as that of s. 80-I 4(a). 6. After perusal of the above facts, we are of the opinion that approach of the authorities below was not justified in disallowing the claim of the assessee under s. 80-I when the assessee has expanded the old unit by introducing new machines through investing huge capital which have resulted into increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. The assessee gets relief. 10. Ground No. I of ITA No. 4934/Ahd/89, Ground No. I of ITA No. 4935/Ahd/89, Ground No. I of ITA No. 4936/Ahd/89 and Ground No. I of ITA No. 4937/Ahd/89 These grounds are common and these relate to disallowance of sales-tax liability amounting to Rs. 51,908 for asst. yr. 1984-85, Rs. 16,557 for asst. yr. 1985-86, Rs. 1,03,980 for asst. yr. 1986-87 and Rs. 1,10,059 relating to asst. yr. 1987-88, which were added to the total income of the assessee by ITO by invoking the provisions of s. 43B of the Act and the learned CIT(A) confirmed the same. 11. Both the parties agreed that the issue involved is fully covered by the view being followed by the Tribunal Benches of Ahmedabad as laid down in the case of Chandulal Venichand vs. ITO (1991) 40 TTJ (Ahd) 358 : (1991) 38 ITD 138 (Ahd), which was approved by the Hon'ble Gujarat High Court in reference application arising out of that decision, in CIT vs. Chandulal Venichand (1994) 118 CTR (Guj) 257 : (1994) 209 ITR 7 (Guj) : (1994) 73 Taxman 349 (Guj). The matter is decided accordingly and ITO is directed to verify the amounts of sales-tax paid by the assessee before filing of returns of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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