TMI Blog2013 (11) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of CIT(A)-V, Hyderabad dated 28/02/2013 for the assessment year 2007-08. 2. The assessee has raised the following grounds of appeal: 21(a) That the CIT(A) erred in concluding 10 year period mentioned in section 10B (1) will be reckoned from the assessment year 1995-96 and not from assessment year 2000-01 and that on a true construction of section 10B of the Act, section is applicable to an 100% EOU and hence the earlier period of its operation as an ordinary unit/non-EOU is not relevant for applying/computing 10 year period of exemption. (b) That the CIT(A) erred in not entertaining the ground that the investments in new plant and machinery made after 01/04/2001 constituted an independent new industrial undertaking in itself and hence eligible for deduction u/s 10B. (c) The CIT(A) erred in not appreciating the fact that two (2) new industrial undertakings have been formed in the year 2001-02 and 2004-05, which are distinct from the existing unit and are capable of being operated independently and accordingly as per section 10B the benefit has to be separately extended to each separate undertaking. (d) That the CIT(A) erred in concluding that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 in assessee's own case. On a perusal of the order dated 14/12/2011 in ITA No. 487/Hyd/2011 of the coordinate bench relating to the AY 2006-07, we find that coordinate bench while considering identical issue held in the following manner: 21. On merit, the first moot question arising out of this appeal is whether the period of ten consecutive assessment years is to be reckoned from the date of commencement of the manufacturing as a DTA Unit or from the date of commencement of manufacture as a EOU Unit. We find that that CBDT in its circular number1 dated 6- 1-2005 has clearly clarified that in case of a DTA Unit, which converts into an EOU Unit, the unit can avail the deduction under Section 10B of the Act from the year in which it receives the EOU status approval. Given the fact that the said CBDT circular recognize the conversion, it should be possible to claim and Income Tax exemption post conversion. However, given the provisions of the Act under circular any unit which has been set up before April 1 1999 would not be eligible for the same tax deduction, irrespective of when the conversion happens. Hence it is very clear that the intention of the circular is to reckon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as setting up of new unit which would be entitled for deduction under section 10B of the Act. Even otherwise, on expansion, such benefit cannot be claimed whatever may be the addition to plant and machinery or enhancement of the production capacity. The CIT also categorically found that the assessee had only single unit on verification of the records. It is arguments of the learned counsel for the assessee that a new unit has come into existence on expansion on account of huge investment in plant and machinery and increase in production capacity and hence, the benefit of deduction under section 10B of the Act is to be given for expanded unit, is not correct. The intension of legislation clearly states that the benefit is admissible only to a new undertaking and not for the expansion. Hence, even on this ground, the assessee fails. After considering the totality of facts and circumstances of the case, inour considered opinion, the assessing officer allowed the deduction under section 10B of the Act wrongly and hence, the CIT rightly assumed his jurisdictions under section 263 of the Act in denying the deduction under section 10B of the Act. Accordingly, we confirm the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as with regard to number of years and deduction for which the assessee is entitled to are still pending before the Hon'ble AP High Court in ITTA No. 504 of 2011. It was submitted by the learned AR that since the matter is pending before the Hon'ble High Court, the issue may be kept alive by remitting it to the AO for quantification after disposal of the appeal for AY 2006-07 by the Hon'ble High Court. 11. The learned DR does not have any serious objection with the aforesaid contention of the assessee. 12. We have considered the submissions of the parties and perused the materials on record. On perusal of the judgment dated 20/08/2013 of the Hon'ble Jurisdictional High Court in case of the assessee (supra), we find that the Hon'ble High Court has held that deduction u/s 10B should be allowed first from the income and thereafter from the remaining income set off of brought forward loss and unabsorbed depreciation should be allowed. It is also a fact that the assessee's appeal registered as ITA No. 504 of 2011 against the order of ITAT in assessee's own case for AY 2006-07 is still pending before the Jurisdictional High Court on the issue of brought forward loss as well as with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re eligible for 100% depreciation and assets introduced which are eligible for 50% depreciation, the assessee had adequate internal control system and internal audit system commensurate with the size of the company and nature of its business. It was further submitted that the assessee had maintained proper records showing full particulars including quantitative details and situation of fixed assets. It was submitted that as the company was in the process of shifting its office and since the bills and vouchers were four years old immediately they could not be traced out and submitted before the AO. It was further submitted that the assessee however has submitted all the bills and vouchers relating to the additions made to fixed assets and given an opportunity the same could be produced before the AO. 17. The learned DR, on the other hand, submitted that the assessee has failed to produce the necessary bills and vouchers before the AO as well as the CIT(A), hence, disallowance of depreciation claimed was justified. 18. We have considered the submissions of the parties and perused the material on record as well as the orders of the lower authorities on this issue. It has been cont ..... 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