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TMI Blog2012 (12) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... 17-11-2004 passed by the learned CIT(A)-VIII, Ahmedabad for all the years. The common grounds [except the figures] raised by the Revenue in these appeals are as under:- "1. The Ld. CIT(A) has erred in law and on facts of the case in directing to allow the claim of the assessee u/s 80I disregarding the fact that the report of chartered engineer upon which the Ld. CIT(A) relied does not state categorically that none of the machineries were transferred to new unit. 2. The Ld. CIT(A) has erred in law and on facts of the case by adjudicating the issue without discounting the possibility that even for the assembly work performed at VATVA unit, as claimed by assessee company, old machinery transferred from Mumbai could have been used. 3. The Ld. CIT(A) has erred in law and on facts of the case by deciding the case in favour of the assessee without going through all the issues raised by the Hon'ble ITAT while setting aside the case. 4. Without prejudice to the above, Ld. CIT(A) erred in law and on facts of the case in directing to allow the deduction u/s 80I disregarding the fact that almost whole work was got done from out side on job work basis and assessee simply assembled the mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d conditions No.(i) and (ii) of sub-section (2) of Section 801. From the facts and circumstances of the case, it is held that deduction u/s 801 was wrongly allowed. This deduction is withdrawn and income is to be recomputed accordingly". The CIT(A) allowed the claim of the assessee and thereafter the matter went before the ITAT for all the four years and the ITAT set aside the matter back to the CIT(A) with the following remarks:- (i) To collect the bills, gate-pass, vouchers of the new manufactured circular looms etc., and also verify the same. (ii) To collect the technical report from the factory inspectors regarding capacity to product the existing machinery whether ft can be manufactured the circular looms or not. (iii) To make a deep enquiry regarding the accounts maintained by the purchasers and decide the matter afresh as per law." Accordingly, the learned CIT(A) directed the AO to make necessary inquiries and investigation in view of the above directions of the ITAT. This was done as per Section 250(4) vide letter dated 10.9.04. The AO viz. DCIT, Circle-4, submitted his report as per letter dated 30.9.2004. A copy of the same was made available to the asssessee's repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of the chartered engineer, the machinery's which assessee had were all second hand machinery's which would disentitled the assessee's claim for deduction u/s 80I. 6 It is relevant to mention here that the assessee's claim for deduction u/s 80I would depend solely as to fulfillment of the conditions laid down in that section. On verification of the records it is found that the company came into existence with effect from 17.4.1979 i.e. during the previous year relevant to A.Y. 1980-81 and started production during the previous year relevant to A.Y. 1981-82. The manufacturing activities were done in a factory and machinery hired out from P.K. Industries at Andheri, Bombay. Subsequently, assessee company shifted its production operation from Bombay to Ahmedabad (Vatva), during the previous year relevant to &.Y. 1985-96 in a hired out premises of Impex Engineers at Vatva. The assessee company transferred machinery worth Rs.243891 from Bombay to Ahmedabad during the previous year relevant to A.Y. 1986-87. From the assessment records it is noticed that the assessee company has made addition to plant and machinery/building at Vatva from A.Y. 1985-86 and onwards for the expansion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reference to the case has cited, I am inclined to hold that deduction u/s 80I cannot be denied if an assessee get the machinery manufactured or fabricated from outsiders and thereafter assembling the machine itself. This view is supported by the decision of Mumbai H.C. in 68 ITR 325 in the case of CIT vs. Tata Locomotive & Engineering Co. Ltd. Similar view has also been tauten by I TAT, Chandigarh "B" Bench in the case of Song Bharat Pedals India vs. ITO, 89 TTJ 492, in which the decision of Mumbai H.C. has also referred and relied upon. In view of the above factual and legal position, it is held that the claim u/s 80I to the assesses Co. is eligible heaving reference to the manufacturing activity carried out by the assessee during the relevant years, for which supporting purchase of raw materials and manufacturing have been adduced before me which are reflected in the relevant P & L accounts. In particular, it would be relevant to place on record that as per Schedule-XIII of P & L account ending 31.3.86 material consumed have been shown at Rs.7912430/- and manufacturing expenses have been shown at Rs.489799 which are on account of various components purchased / fabricated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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