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2010 (9) TMI 577 - AT - Income TaxDeduction u/s.80-IC - substantial expansion - Held that:- substantial expansion would constitute a distinct business, which would be separate from the existing business of the undertaking or enterprise. Any other interpretation would make some of the provisions of section 80-IC of the Act redundant. If some plant and machineries are replaced in the same unit during the period as specified in section 80IC(2)(b)(iii), it would not amount to substantial expansion, but would merely amount to reconstruction of the existing unit/business - Thus, the assessee would not be entitled to deduction u/s.80-IC of the Act. However, if in the same unit it starts a new line for processing tea, where all the machineries required for such processing are installed during the period specified in the above clause of the sect ion and the processing starts in the AY 2004-05 or any of the subsequent Assessment Years, then the assessee will be entitled to deduct ion u/s.80IC of the Act, that too if the actual cost of plant and machinery of such new unit is at least 50% of the book value of plant and machinery as on the 1st day of the previous year , in which the substantial expansion was undertaken. In such a case depreciation on the plant and machinery of the said unit would be availed of for the first time only in the AY, when the plant and machinery of the said unit is first used for the purpose of business - In such a case depreciation on the plant and machinery of the said unit would be availed of for the first time only in the AY, when the plant and machinery of the said unit is first used for the purpose of business - therefore, set aside the orders of the authorities below on this issue, and remit the matter back to the file of the Assessing Officer with the direction that afresh order be passed in the light of our above observations and as per law after giving the assessee adequate opportunity of being heard - Appeal are allowed
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