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2020 (10) TMI 1053 - HC - Income TaxExemption u/s 10B - denial of exemption as Assessee Company has expanded its existing processing capacity with the new plant and machinery installed in the factory - HELD THAT:- ITAT has observed that, to be deprived of the benefit, the new undertaking must have been a simple reconstructed old unit, with at least 20% of the assets from the old unit transferred to the new unit. But the Assessee did not face any allegation of transferring the assets from the old unit to the new unit. It did construct a new unit adjacent to the old unit. And the Tribunal refused to accept the Revenue's contention that the adjacent unit should be termed an expanded old unit. We find no reason to disagree. We reckon the Tribunal's findings are in accord with the established industrial practice. In fact, the Revenue argued that the Assessee has installed “new plant and machinery”. Regrettably, plant and machinery are not synonymous; the plant is where machinery is installed. And the plant is erected, not installed - whether the new plant erected and the new machinery installed amounts to adding to an existing unit or amounts to a separate unit on its own is a matter of fact. On that, the Tribunal supplied cogent reasons and concluded in a particular way: The unit is separate, distinct, and new. The old unit has not been expanded; a new unit was established. We agree. Approval from an official amounted to approval from the Central-Government appointed Board under section 14 of the Industrial (Development and Regulation) Act 1951 and the Rules made thereunder - HELD THAT:- Assessee, to begin with, had the approval in December 1985 as 100% EOU to claim deduction under section 10B of the Act. That approval held the field from 1990-91 to 1994-95. After that, the Assessee had the approval renewed, and the period stood extended by five more years-up to March 2001. Finally, in October 2001, the Assessee had the approval renewed once again for another five years - Tribunal has held that though it was termed “a renewal”, the benefit was applied to a new unit. And the Ministry has been well aware of that. Within the given window of the extended period, the Assessee claimed the exemption for the first time in AY 2002-03. Tribunal has quoted with approval its own earlier ruling that it is not a statutory requirement that there has to be separate permission for each unit. Just because the Government granted permission by amending the original permission letter, it does not affect the eligibility for deduction under section 10B in any manner. In our considered opinion, the Tribunal's conclusions that (1) the unit is new, (2) the permission has been duly granted, and (3) the period of exemption has still been subsisting call for no interference. - Decided against revenue. Disallowance u/s 14A r.w.r. 8D - whether the Assessee incurred any expenditure while earning that exempted income and whether he included that expenditure in the common indirect expenditure of its own? - HELD THAT:- AO noted, rather guessed, that the Assessee borrowed funds to invest and that there ought to be an interest element. But the Assessee asserts that it utilized its surplus funds. We reckon there is no material for the AO to conclude that the Assessee borrowed the funds. Second, given the volume of investment, the Assessee is said to have received charge-free services from the managers of the banks and other financial institutions with whom they have invested. So the Assessee has insisted that it has not incurred any expenditure. On the contrary, the AO reasons that whenever those managers of the banks and other financial institutions came to the Assessee company, its personnel must have spent time with them, in assisting them. According to him, at least that amounts to an indirect expenditure in relation to exempted income. We are afraid the reasoning is far-fetched. Calcutta Knitwears [2014 (4) TMI 33 - SUPREME COURT]held that in a taxing statute, one has to look at what is clearly said. There is no room for any internment. There is no equity about a tax. There is no presumption as to a tax. So, in the face of the above facts we reckon the Tribunal has correctly held that the Assessee has been entitled to the exemption under section 14A of the IT Act, read with Rule 8D of the IT Rules, as well. - Decided against revenue.
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