TMI Blog1995 (5) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Act. The assessee company carried on the business of processing of cashew nuts, cashew kernel and shell oil during the two years under appeal. The industrial undertaking in which the assessee carried on business earlier belonged to the registered partnership firm M/s Narayan Ganesh Prabhu Zantye Co. The said firm by the lease deed dated 26-2-1982 gave on lease the said undertaking comprising of the plant, machinery, tools, equipment and all other things as described in Schedule I to the newly registered private limited company M/s Narayan G.P. Zantye (P.) Ltd. The lessor and the lessee are admittedly sister-concerns. It is the company which is the appellant before us. The assessee claimed deduction under section 80HH in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us. 3. The main plank of the argument of the learned counsel for the assessee before us was that the document dated 26-2-1982 although purports to be a deed of lease, yet it is not so and the transaction embodied in it is only a transaction of leave and licence and there was thus no transfer within the meaning of clause (iii) of sub-section (2) of section 80HH so as to disentitle the assessee to the deduction. In this connection, the learned counsel also claimed that the factory was not in the exclusive possession of the assessee-company. Rather the partnership firm was also carrying on the same business in the factory. The partnership had also accounted for income from this factory in its return of income. The assessee had added pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the deduction under this section is available only in respect of newly established undertakings. At the very outset, on being questioned by the Bench, the learned counsel for the assessee admitted that the same factory had earlier been worked by the firm of M/s Narayan Ganesh Prabhu Zantye Co. for good number of years and it was the same factory which was given on rent to the assessee company. On being further enquired by the Bench as to whether the partnership firm had claimed any deduction under section 80HH in respect of the undertaking and if so for what number of years, the learned counsel expressed his ignorance. It is an admitted position that the two parties are sister concerns. Now, so far as the nature of the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n employed in the factory have also been transferred. It is for this reason that the liability under labour laws in respect of the employed workmen has been taken over by the assessee-company ; clause (2) ensure quiet and peaceful enjoyment of the property by the assessee-company. There is no stipulation in this agreement and no material has otherwise been made available to substantiate the claim of the learned counsel for the assessee that the partnership had also been doing its business in this factory. The lease deed does not entitle the partnership firm to do so. There is no other material to show that the partnership firm had actually done any business in this factory and had earned and accounted for any income from such business. So f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof has been made available. Moreover, where an assessee claims that an industrial undertaking is a new undertaking on account of addition/introduction of new plant and machinery, he has further to show and establish that the total value of the plant or machinery transferred does not exceed 20 per cent of the total value of the machinery or plant used in the business. The assessee has neither made any contention under the Explanation nor adduced any evidence in support thereof. So far as the fact of allowing of depreciation to the partnership firm is concerned, that fact is not of material consequence, inasmuch as depreciation is to be allowed on the basis of ownership. Unquestionably, the ownership of the assets in the present case vest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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