TMI Blog2006 (7) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee company, incorporated on 21st Jan., 1981, was manufacturing mechanical and power steering gears. The mechanical steering gears are indigenous products and did not require imported components/parts, whereas the power steering gears are based on hydraulic operation system and have about 50-60 per cent imported components: It decided to establish a new undertaking to manufacture exclusively power steering gears-8043 (302 Type), for light and medium commercial vehicles like Tata 407, Tempo-Traveller, Tempo Trax, Tata 608, Tata Sierra and off-road vehicles. The construction of a new shed for the new unit commenced in April, 1994. During the accounting year relevant to asst. yr. 1995-96 nine machines costing about Rs. 90 lacs were installed. In the return filed for asst. yr. 1995-96 on 29th Nev., 1995 the assessee claimed deduction under s. 80-IA of the Act in respect of the new undertaking. The AO while dealing with the assessee's claim in the assessment order for asst. yr. 1995-96 dt. 2nd Jan., 1998 made a cryptic observation as under: "During the year company has established new industrial undertaking. The details of the shade undertaking along with the working of loss of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction of the old unit and therefore, assessee was not entitled for deduction under s. 80-IA, and hence the claim for deduction was denied. 8. The original assessment order for asst. yr. 1995-96 dt. 2nd Jan., 1998 was set aside by the CIT, Pune vide his order under s. 263 dt. 9th Feb., 2000. In para 4 of his order under s. 263 the CIT, inter alia observed, that during the assessment proceeding for asst. yr. 1996-97 the AO made detailed inquires and came to the conclusion that the new unit did not start functioning before 31st March, 1995, but while framing the assessment for asst. yr. 1995-96, this important issue was not properly examined by the AO and no proper finding was recorded, and therefore on that ground the assessment was erroneous as well as prejudicial to the interest of Revenue. The CIT accordingly set aside the assessment order for asst. yr. 1995-96 and directed the AO to examine the issue afresh after considering the relevant facts and the legal position and to record proper finding. 8.1 The consequential assessment order for asst. yr. 1995-96 was passed by the AO on 28th March, 2002, which was confirmed by the CIT(A) vide his order dt. 29th Nov., 2002. This or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 608, Tata Sierra and off-road vehicles. During the accounting year relevant to asst. yr. 1995-96 nine machines costing Rs. 90,32,912 were installed as under: ------------------------------------------------- S. No. Name of machine Cost (Rs.) ------------------------------------------------- 01. CNC Vertical Machines Centre 27,26,163 (Hard Ford Type) ------------------------------------------------- 02. CNC ACE Auto Lathe 9,84,303 ------------------------------------------------- 03. Grinding Machine (2 Nos.) 20,57,716 ------------------------------------------------- 04. Gear Hobing Machine 10,73,856 ------------------------------------------------- 05. Air Receiver 27,320 ------------------------------------------------- 06. Lubro System 9,024 ------------------------------------------------- 07. Testing Machine 20,05,487 ------------------------------------------------- 08. Micron Conveyor Machine 1,49,043 ------------------------------------------------- T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings at any time during the period beginning on 1st April, 1991 and ending on 31st March, 1995. 16. The primary purpose of s. 80-IA is to grant relief to a new industrial undertaking. Therefore, whenever an assessee claims relief under s. 80-IA, the assessee will have to establish that a new unit had come into existence which independently produced articles and that this new unit was not dependent upon the old existent unit, in the sense that the new unit could not be equated as an expansion of the old unit. 17. Where an assessee makes a claim for relief under s. 80-IA the burden lies upon him to produce cogent material in support of his claim. Canara Wire Wire Products Ltd. vs. CIT (1993) 109 CTR (Kar) 82 : (1992) 196 ITR 426 (Kar), CIT vs. Anil Hardboards Ltd. (1993) 114 CTR (Bom) 230 : (1994) 207 ITR 802 (Bom). In order to avail tax concession under s. 80-IA, employment of fresh capital in the new unit is imperative. But it does not mean that for the employment of the capital, it should have been newly raised. If surplus/reserve capital is available with an assessee in his existing business, the assessee can utilize such capital for the purpose of plant, machinery, etc., f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aning of sub-s. (2) of s. 80-IA, so as to be eligible for deduction under s. 80-lA for asst. yr. 1995-96. Therefore, for deciding this issue, the relevant questions, which need to be answered, are as under: (i) Whether the nine machines, costing Rs. 90,32,912, which were installed before 31st March, 1995, brought into existence an integrated independent unit, which by themselves, independently of the old unit, were capable of producing the product-8034 (Type 302)? (ii) Whether the new machinery costing Rs. 2,74,52,116 installed, and the old machinery of WDV of Rs. 64,21,458 transferred from the old unit, in the subsequent year, were needed to make the impugned unit integrated and independent? (iii) Whether the product-8034 (Type 302) was also being manufactured in the old unit during the period 1st April, 1994 to 31st March, 1995? (iv) Whether the product-8034 (Type 302), was shown to have been manufactured simultaneously, in the old unit, as well as in the new unit independently of the old unit during the months of February and March, 1995? (v) Whether there is any evidence, from the relevant contemporaneous production records maintained in the factory, to prove that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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