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2015 (8) TMI 412 - AT - Income TaxDisallowance of deduction u/s.10B - assessee is a partnership firm carrying on business as 100% export oriented unit - CIT(A) deleted the addition - whether CIT(A) has erred in holding that the assessee firm cannot be said to have came into existence by way of splitting up or reconstruction of old business? - Held that:- The list of customers of Metal Recycling industries and assessee has been submitted and it was found that there is not a single customer of assessee who was purchasing material from M/s metal Recycling Industries. There are separate licenses/registration and permissions governed both the units under various statutory laws. This establishes that assessee’s undertaking is separate; Investments of the funds, separate production facilities, separate goods produced with different installed capacities and separate customers of the unit. Therefore under the facts and circumstances of the case, CIT(A) was justified in holding that unit is not setup by splitting up or reconstruction of the existing business. Mere fact that while setting up factory a small amount of plant and machinery was transferred from previous business cannot be basis to come conclusion that it is a reconstruction. Moreover, there is no commonality in the business of undertaking of the M/s. Metal Recycling Industry and the undertaking of assessee except that three partners were also the partners of assessee’s undertaking. This cannot be basis to hold that undertaking setup by assessee has arisen because of splitting up or reconstruction of existing business of assessee. Thus CIT(A) justified in holding that new unit set up by assessee is not formed by splitting up or reconstruction of existing business and therefore deduction u/s. 10B cannot be denied to assessee especially when in the last year, same was allowed after examining the facts in detail and there was no change in the facts during the year. - Decided in favor of assessee.
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