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2013 (5) TMI 495 - AT - Income TaxReopening of assessment - as per CIT assessee had wrongly claimed exemption u/s. 10A as apparent from the balance-sheet of the Noida Unit, the said Unit had no plant and machinery of its own - Held that:- Revenue's case is based on presumption alone. The assessee, right from the time of responding to the audit query in August, 2010, i.e., when this aspect was taken up by the Revenue for the first time, has continuously maintained that the gold ornaments for its Mumbai and Delhi branches are got made from Karigars on job work basis. That the Noida unit is it's only manufacturing facility, whereat, apart from some nominal labour charges, expenses in the form of wages and electricity stand incurred. Further, the entire machinery of the Delhi unit was transferred to the Noida unit, and the same was used for the first time only at the 'transferee' unit the transferor (Delhi) unit being a trading unit. The Revenue brings nothing on record to meet or rebut this clarification, which is consistent with the disclosure made per the return, as well as the assessee's accounts. Nothing on record to support the finding of the CIT(A) that the manufacturing activity was being undertaken at the Delhi unit. Rather, if so, that would imply a change in the nature of the operations at the Delhi unit after the transfer of its entire machinery to the Noida unit in October, 2003. As such, its accounts should bear and reflect the said change, i.e., pre and post 01.10.2003 when the machinery gets transferred. No such case is made out by the Revenue at any stage while the operations of the Delhi unit appear to continue in the same manner. Continuing further, it may well be that the machinery was used by the Delhi unit prior to 01.07.2003, when the assessee firm comes into existence. Nothing has been brought on record by the Revenue to the effect that the nature of the activity at the Delhi unit had witnessed a change after 01.07.2003 or roundabout. Rather, the only inference, in the absence of any adverse or contrary material or finding, would be of a continuity of operations. The fact that the address of the Delhi branch, as stated in the purchase bills of machinery which is at variance with its actual address, as evidenced from other materials, viz. invoices and letter-head, etc. further buttress the assessee's claim that the machinery was delivered at the address stated in the purchase bills of machinery, and continued to be kept there till its transfer, so that it was never put to use after its purchase and prior to its transfer. The inference by the CIT(A) that the machinery could not have been purchased for the Noida unit, which perhaps was not even in conception in May, 2003, is not without merit however, the question is not the idea with, or the purpose for, which the machinery was initially purchased, but whether it was, prior to its transfer to the Noida unit, used for any purpose, and toward which find no material. It may well be that the machinery was initially purchased for the Delhi unit, and the idea of the SEZ unit cropped up later, on the formation of the partnership. Any inference not backed by material would only be a conjecture or surmise. Thus no merit in the Revenue's case qua denial of claim u/s.10A on account of contravention of section 10A(2)(iii) - appeals by the assessee allowed.
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