TMI Blog2004 (12) TMI 627X X X X Extracts X X X X X X X X Extracts X X X X ..... e new premises is a new industrial undertaking manufacturing new articles. Even if articles similar to those which were being manufactured at the old premises are also, manufactured relief under section 80-IA cannot be denied. ( v )That having regard to the establishment of a new undertaking, manufacturing activity and the range of products manufactured the assessee satisfies the provisions to earn relief under section 80-IA and such relief should have been granted. ( vi )There was no transfer of the business as such from old premises to the new premises what was commenced in the new premises is a new undertaking. ( vii )That the appellant craves for leave to add to, delete from or amend the grounds of appeal. 2. The assessee filed its return on 31-10-1995 on a total income of Rs. 7,03,758, which was processed under section 143(1)( a ) of the Act on 28-12-1995 accepting the same. Subsequently, a notice under section 148 was issued on 11-2-1998, to which the assessee chose to treat the return already filed as the return in lieu of the notice issued under section 148 as per his letter dated 17-2-1998. The assessee commenced its manufacturing activity in the year relevant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urged for the first time before the Tribunal and relied upon the decision of the Bangalore Bench of the Tribunal in the case of M. Srinivas v. ITO [IT Appeal No. 1200 (Bang.) of 1993, dated 23-7-1996]. The learned Advocate further contended that the assessee is entitled to deduction under section 80-IA and drawn our attention to the written submissions and also the order of the Tribunal, which was opposed by the learned DR by contending that the order of the Tribunal cannot be relied upon to the present facts as far as section 148 is concerned. In nutshell, the learned DR supported the orders of the authorities below. We have considered the rival submissions. 5. Ground Nos. 1 and 7 are general in nature, which requires no deliberation. 6. Basically two issues are emerging out of the grounds of appeal, one is on reopening by issue of notice under section 148 and the next one pertains to denial of relief under section 80-IA of the Act. We have also gone through the recorded reasons, a copy of which is available at pages 25 and 26 of the paper book of the assessee. The reasons for reopening of assessment (assessment years 1995-96 and 1997-98) has been mentioned as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of power of Tribunal, the Hon ble Apex Court hold that Tribunal has the discretion to allow or not to allow a new ground to be raised for the first time, when it is necessary to consider that question in order to correctly assess the tax liability of an assessee. 8. Similar views were expressed by the Hon ble High Court of Mysore in the case of Gundathur Thimmappa Sons v. CIT [1968] 70 ITR 70 , 73 wherein the Hon ble Court hold that the Appellate Tribunal, like any other appellate authority, had the discretion to permit the point of law to be raised for the first time in appeal and because the question went to the root of the case, their refusal to entertain the point must be regarded as an improper exercise of discretion by them and, therefore, erroneous in law. In view of these facts, we are of the considered opinion that the Tribunal has the powers/discretion to allow in such a situation even for the first time any question raised before it. At the same time, it is also an established position that the Assessing Officer cannot travel beyond the recorded reasons for justifying the re-assessment. We are supported by the judicial pronouncements such as Jamna Lal K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is not proper. The reopening cannot be justified. The Assessing Officer has merely put reliance on the order under section 263 and there is not even a mention that there is escapement of income. There is also no reference to the fact as to how the original returns were disposed off, whether it had resulted in order under section 143(3) or under section 143(1)( a ) or 143(1) of the Act. There is also no indication in the recorded reasons as to which of the clauses of the explanation are applicable and the three clauses ( a ), ( b ) and ( c ) therein apply in different circumstances with reference to the disposal of the original returns. In our considered opinion, recording under section 148(2) does not meet the requirements of law and on this ground itself the same deserves to be cancelled. 13. Even on merit also, on the ground of relief under section 80-IA, there is a fact that the assessee undertook commencing the business at new premises by manufacturing new articles. The Assessing Officer itself has found the assessee to be eligible for deduction under section 80-I upto the assessment year 1991-92. The Assessing Officer in its order has pointed out that new plant and m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence. The assessee therein, a heavy engineering concern manufacturing boilers, machinery parts, wagons etc., set up two new units, a steel foundry division and a jute mill division. The issue was as to whether the two industrial undertakings, namely, the steel foundry division and the jute mill division was formed as a result of the reconstruction of the business already in existence or not. In this background, the Hon ble Apex Court opined certain tests to ascertain as to in what circumstances can a new creation in business can be considered as some kind of expansion and advancement or not. Accordingly, as per the Apex Court the true test is not to see as to whether or not the new unit connotes the expansion of the new business of the assessee but in distinction, it should be tested as to whether the new unit is of the same line and an identifiable undertaking separate and distinct from the erstwhile business. According to the Apex Court, apart from the other tests, in order to hold that the new undertaking is said to emerge there must be an emergence of a physically new separate unit which is capable to exist on its own as a viable unit. The following observation of the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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