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2009 (2) TMI 389 - HC - Income TaxSpecial Deduction- The assessee is a co-operative society running a sugar factory. For the assessment year 1988-89, the assessee claimed expenditure including replacement of complete centrifugal machine unit, ECT crane unit and cane carrier including erection charges as maintenance expenditure. For the assessment years 1988-89, 1989-90 and 1990-91 the assessee claimed the benefit of section 80P(2) on interest earned from its members on advances/credit facilities. The Assessing Officer disallowed the above claims. The Commissioner of Income-tax (Appeals), upheld the Assessing Officer’s orders on both the issues. The Tribunal held that the interest earned from members of the assessee co-operative society on advances/credit facilities provided to them would be eligible for deduction under section 80P(2) (a) (i). The Tribunal further held that where the earlier centrifugal machine unit was demolished and a new unit installed in its place, and the ECT crane was brought in as a substitute of earlier manual machines, it is clearly a case of replacement, and accordingly allowed the appeal. held that- (i) the requisite details in order to claim exemption and the necessary proof that the co-operative society was engaged in carrying on any of the several businesses referred to in sub-section (2) of section 80P was not forthcoming. The matter was remanded to the Tribunal for reconsideration. (ii) that there was no material proof of any increase in the manufacturing capacity, the details regarding the production capacity remaining constant even after replacement of the machine unit. Thus, the matter was remanded to the Commissioner (Appeals) for reconsideration.
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