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2019 (11) TMI 869 - AT - Income TaxDeduction u/s.80-IA in respect of profits derived from its new industrial undertaking of manufacturing surface coating systems - HELD THAT:- Location of the manufacturing action had to be therefore primarily outside the four walls of the assessee’s establishment but by that fact the sanctity of the business of manufacturing is not lost. Thus, merely because some components are bought out or the parts are got fabricated under the direct supervision and control of the assessee on the basis of own drawing and designs cannot mean that the undertaking was not set up or it constitutes ‘reconstruction of the existing business’ rather the drawing and designs constitutes the heart of the manufacturing process. CIT(A) has not dealt with the manufacturing processes/details and it is also not apparent from his order as to how he has come to a conclusion that (i) the surface coating systems is nothing but providing spray painting equipments at the site of the assessee with additional accessories; (ii) it is only minor modification of the existing product; (iii) surface coating systems constitutes as a reconstruction of the existing business. On careful perusal of the CIT(Appeals)’s order and the findings arrived therein, he has not dealt with specifically as to why he has not accepted the analysis of the Assessing Officer. He has not passed a speaking order nor has reasons backing his order which is not apparent from his order. These issues (i) whether the factual parameters for getting deduction u/s.80-IA are complied by the assessee or not; (ii) whether surface coating systems constitutes “reconstruction of the existing business” requires detailed factual analysis and verification coupled with a speaking order. We set aside the orders of the Ld. CIT(Appeals) for both the assessment years and restore them back to his file for necessary adjudication as per law after following principles of natural justice. Appeals of the assessee for the assessment years 1995-96 and 1997-98 are allowed for statistical purposes.
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