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2015 (6) TMI 212 - AT - Income TaxEntitlement to claim of exemption u/s 10B denied - whether Unit-2 is a separate unit and not expansion of Unit-1? - Held that:- The direct evidence in the facts of the case would be the letter/application addressed by the assessee to the Competent Authority at the time of setting up Unit II as that is the evidence which would demonstrate whether the assessee intended to start a new independent undertaking or did the assessee intend to expand the existing unit as for both the eventualities permission/approval of the Competent Authority was necessary. The permission evidently having been granted which the Revenue on facts considers it to be in the case of expansion it is for the assessee to show that the permission granted was on the application of setting up a new unit and not on an application for expansion. The self-serving note in the accounts cannot be treated to be a direct evidence of any credible relevance. The justification for setting up a new undertaking on the basis of costs incurred for capital acquisition, investments in assets, new employees, new business, new premises etc. would be irrelevant evidences as both for expanding an existing unit or setting up a new unit specific separate bonded premises, assets, employees, separate books of account and bank accounts and business premises would be necessary. Thus reliance placed on decisions rendered in different facts and arguments would be of no relevance. The assessee after setting up Steel Foundry Division and Jute Mill Division started consuming their products instead of procuring them from the market as was done in the past. Rejecting the reasoning of the Revenue their Lordships held that “reconstruction” presupposes that transfer of assets of the existing business took place which was not a fact in that case as fresh capital had been introduced. It was also held that the fact that the product of the two divisions was utilized by the assessee who earlier was purchasing it from outsiders was not a relevant criteria for denying the claim. What was the intention of the assessee at the time of setting up the new unit would be brought out from the application made to the Competent Authority. Introduction of fresh capital is required even for expanding an existing business to a different location. Accordingly in the absence of any discussion on the direct evidence to decide the issue the same is remitted back to the file of the AO with the direction to decide the same afresh by way of a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. - Decided in favour of assessee for statistical purposes.
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