TMI Blog2012 (12) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... ember, whereas the assessee has claimed export in the months of September and October it is observed that this is not the fact of the present case that there was a bill in August and October, 2007 also in which there was no power consumption and power consumption has started from November, 2007 only. When there is no bill for the months of August, September and October, 2007, it cannot be said that there was no power consumption during that period - Other objection are held to be invalid rejecting claim on ground that printer, AC, and steel safe was purchased after the first export bill. Since none of the objections raised by the AO is valid for rejecting the claim of the assessee for exemption u/s 10AA, particularly, when the same claim was allowed by the AO himself in the next year, deduction u/s 10AA is allowed in the present year. Addition u/s 68 - unexplained cash credit - capital introduced by partners - Held that:- Issue is now fully and squarely covered in favour of the assessee by decision in case of CIT Vs. Pankaj Dyestuff Industries (2005 (7) TMI 601 - GUJARAT HIGH COURT) wherein it was held that the Revenue is at liberty to examine the issue in the hands of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.90 lakhs was introduced by the partners towards their capital. This issue is now fully and squarely covered in favour of the assessee by the judgment of the Hon ble Gujarat High Court in the case of CIT Vs. Pankaj Dyestuff Industries (supra) wherein it was held by the Hon ble Gujarat High Court that the Revenue is at liberty to examine the issue in the hands of the partners, and if such partners are not able to satisfy regarding the source of investment, then the addition can be made in the hands of the partners, but no addition can be made in the hands of the firm in respect of introduction of capital by the partners. Respectfully following the judgment of the Hon ble Gujarat High court, this issue is decided in favour of the assessee and this addition is deleted. Accordingly, the additional ground is allowed. 6. Regarding the main ground as per the Memo of appeal, the fact till assessment stage are noted by the learned CIT(A) in para 3 of his order, which is reproduced below: 3. The only ground in this appeal is regarding rejection of claim of deduction u/s.10AA of the appellant amounting to Rs.3,87,83,095/-. Brief facts in this regard are that the appellant filed it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture from such plywood has been debited to it showing that any furniture has been made out of it. iv) Fan was purchased on 27.8.2007. v) Electrical installation for socket and PVC cable was door vide hill dated 20.3.2008 and 27.3.2008. vi) Computer system purchased on 09.8.2007 and printer was purchased on 22.9.2007 i.e. after the first export bill dated 10.9.2007. vii) Onida split AC delivered on 27.6.2007. viii) Weighting scale was delivered on 27.8.2007. ix) Steel safe was purchased on 26.7.2007 which was delivered vii 03.8.2007 i.e. after the purchase of diamonds on 25.7.2007 till that date where the diamonds were kept. x) None of the partners residing at Mumbai visited the unit at Surat for inspection or supervision of the manufacturing of jewellery. xi) As per the application the plant and machinery required for this unit was shown at Ps. 29 lakhs, but the assessee has installed machinery of only Rs.4,16,050/-. xii) The first electricity bill of unit was received in the month of November but the assessee has claimed export in the month of September/October. On the basis of above observation, it was held that though the appellant has claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction shown by the assessee. It was also brought to the notice of the learned CIT(A) in the statement of the facts that the computer system was purchased on 9.8.2007 and the air-conditioner was purchased on 27.8.2007 along with weighing scale and the purchases are before the export as per the first bill on 10.9.2007. Regarding steel safe and storage of diamond before its purchase, it was submitted that the steel safe was purchased on 26.7.2007 and before this date, the diamonds were kept in locked table. Regarding the absence of CCD camera, it is stated in the statement of facts that there is strict security of SEZ management and no local visitors are allowed to enter the SEZ area itself, and therefore, there is no compulsion and requirement of CCD camera as such. It is also brought on record in the statement of facts that there was a regular communication by the partners from Mumbai and one relative was handling the factory at Surat. Regarding the electric meter reading, it is brought on record that the office of Development Commissioner, Surat SEZ itself confirmed that commercial production has started from 16th August, 2007 and it was only the meter reading that was done in Nove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses incurred includes expenditure for purchase of gate and fitting charge of the gate. Merely because some gate fitting was not done, it cannot be said that the building was not ready for commencement of the production. Hence, this objection is not valid and sufficient for rejecting the claim of the assessee. The second objection of the AO is that the machine purchased by the assessee of Rs.4,16,050/- on 20.7.2007 is not adequate for manufacture of the jewellery. But no basis is indicated by the AO for holding so. In the next year, the claim of the assessee was allowed by the AO by passing the assessment order under Section 143(3) of the Act. As per the balance sheet of the assessee as on 31-3-2009 appearing at page no.58 to 68 of the PB, there is no addition in fixed assets during that year. Hence, if the same machineries were sufficient for effecting the export sale of Rs.2892.35 lakhs in A.Y.2009-2010, the claim of the assessee for export of Rs.1190.42 lakhs in the present year working of about six months cannot be doubted. Hence, this objection of the AO is also not valid for disallowing the claim of the assessee regarding exemption under Section 10AA of the Act. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afe, diamonds were kept in locked table. In the beginning of a business, many a time, business has to be run with the available facility and merely because some facilities were obtained later on, it cannot be said that the business has not commenced, particularly when a Government Department i.e. Development Commissioner, Surat SEZ has given a certificate that commercial production has commenced on 16.8.2007. The next objection is regarding absence of visit by the partners to the manufacturing site. Regarding this aspect, it was explained by the assessee in the statement of facts filed before the CIT(A) that partners have not visited, but were on regular and continuous touch and affairs were looked after at Surat by a relative of the partners. Nothing adverse has been brought on record by the Revenue regarding this explanation of the assessee, and hence, it is also not a valid basis for rejecting the claim of the assessee. Next objection is that as per the application, it was explained by the assessee that the plant and machinery required for this unit are of Rs.29 lakhs, but the assessee has installed machinery of only Rs.4,16,050/-. This again not a valid basis, particularl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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