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2012 (12) TMI 748 - ITAT, KOLKATAEligibility of deduction u/s. 80IC(2) - Initial Assessment Year - Held that:- Accepting to the issue that commercial production and not trial production determines the beginning of manufacture or production of articles or things. However, when actual production has began and sales has also been effected of manufactured goods and there is no sales return, that such production is still a trial production just because the consent order from the Pollution Control Board, Assam has not been received to begin the manufacture or produce any articles or things or commences operation as required u/s. 80IC is unsustainable. The facts in the present case clearly show that the assessee has began to manufacture the calcinated petroleum coke using the raw material of petroleum coke before 31-3-06 and the sale of finished products would clearly establishes the commencement of operation. In the circumstances, ‘initial assessment year’ for the assessee to claim deduction u/s. 80IC(2) is the year 31-3-96 relevant to the AY 1996-97. Coming to the claim of the assessee that it has capitalized the expenditure till 18-9-96 and the same has also been accepted by the revenue, not convinced by the said claim as nothing stopped the assessee from claiming expenditure thereto as a revenue expenditure. There is no assessment order for the AY 1996-97 or 1997-98 specifically accepting the claim of the assessee. Further, there is also no scrutiny assessment order accepting the claim of the assessee that the initial AY in the case of the assessee for claiming of deduction u/s. 80IC is the AY 1997-98. In the circumstances the initial assessment year for the assessee for claiming of deduction u/s. 80IC(2) is held as the assessment year 1996-97. Consequently, the assessee would not be entitled to claim of deduction u/s.80IC(2) for the impugned AY 2006-07. In the circumstances, the finding of CIT(A) stands reversed and that of the AO restored - in favour of revenue.
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