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2015 (7) TMI 833 - ITAT CHENNAI

2015 (7) TMI 833 - ITAT CHENNAI - [2015] 41 ITR (Trib) 132 (ITAT [Chen]) - Eligibility of claim under section 10A - AO disallowed assessee's claim since the assessee did not furnish details about new machinery purchased and used in 10A unit. - CIT() allowed claim - Held that:- On going through the order of the Commissioner of Income Tax (Appeals) we find that assessee has purchased machines after approval of STPI. Computers and stentura machines were imported thereafter. The return of income for .....

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the Revenue with evidences. In such circumstances, we uphold the order of the Commissioner of Income Tax. - Decided in favour of assessee.

Clim of depreciation - CIT(A) denied depreciation for the reason that assessee has not carried on any business during the year and the assets were not put to use - Held that:- As relying on case of ACIT Vs. Chennai Petroleum Corporation Ltd. [2009 (8) TMI 970 - ITAT CHENNAI] in order to claim depreciation under s. 32 it is not necessary that the ma .....

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ady for being used in the business was not sufficient. When the interpretation of s. 32, especially of the word "used" appearing in that section was the subject-matter of a judgment of the Bombay High Court as long back in 1937 in the old IT Act, the same word which is used in s. 32 of the 1961 Act must receive the same construction. Therefore, the assessee is entitled to the claim of depreciation on the gas sweetening plant which was kept ready for use during the entire previous year, though no .....

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r of Income Tax (Appeals)-III, Chennai dated 11.05.2011. 2. Both the appeals of the assessee were filed with delay of 13 days. Petition for condonation of delay along with affidavit was filed by the assessee separately explaining the reasons as to why appeals could not be filed in time. Having gone through the petition filed by the assessee, we find that assessee was prevented with reasonable cause in not filing the appeals in time and in these circumstances, in the interest of justice, we condo .....

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and profit and loss account dated 12.3.2002 relating to the assessee was found. Therefore, notice under section 153C read with section 153A was issued on 27.11.2008 calling for return of income. In response to the said letter, assessee filed letter stating that it had already filed return for the assessment year 2001-02 on 28.03.2002 and a copy was furnished. The assessment under section 143(3) read with section 153C was completed on 24.12.2008 and while completing the assessment exemption under .....

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ion under section 10A of the Act. Assessee preferred appeal before the Commissioner of Income Tax (Appeals) contending that claim of exemption made under section 10A is proper. The assessee has furnished various details in support of its contention that claim under section 10A is in order. On examining the details furnished by the assessee and the remand report submitted by the Assessing Officer, the Commissioner of Income Tax (Appeals) allowed the claim of the assessee under section 10A against .....

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order of the Assessing Officer in rejecting exemption under section 10A of the Act. Departmental Representative submits that assessee has not furnished Form 56F along with the return. 6. Counsel for the assessee submits that Revenue has not raised any ground challenging the findings of the Commissioner of Income Tax (Appeals) regarding non furnishing of Form 56F along with the return for disallowing claim under section 10A. The grounds raised by the Revenue are only whether new machinery or old .....

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ppeals) with regard to submissions made by the assessee and the remand report received from the Assessing Officer and rejoinder of the assessee and concluded that assessee is eligible for exemption under section 10A of the Act observing as under:- "4.1 The ld. AR has strongly argued against the disallowance made by the AO as above. He has filed written submission and various details in support of his contention that the claim of deduction u/s 10A is proper. He stated that the AO has given a .....

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ed. It clearly proved that all the computers and stentura machines were acquired / imported only after approval from STPI. Thus, the AO's finding that the machineries were purchased before STPI approval is contrary to the facts. He relied on the decision of Punjab and Haryana High Court in the case of CIT v. Excel Softech Lt (2008) 13 DTR (P&H) 201 that exemption u/s 10 B is admissible, even when development of computer software was started prior to AY 2001-02. In appellant's case, t .....

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duly accompanied by audit report and report u/s l0A of the Act in form no. 56F and accordingly deduction u/s 10A of ₹ 18,78,912/- was claimed as per law. 4.2 The written submission of the appellant was forwarded to the AO on 08.09.2010 for his comments. The I.T.O. Company Ward 11(1) vide letter dated 02.06.2010 requested for further time because all the issues needed to be verified and investigated. Subsequently) he has submitted his report vide letter No.F.no.AABCK3723G/00-01 to 03&middo .....

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02. As regards the submission of the appellant vide para 4 to 7 on various additions made in the assessment order, the AO has replied as under: "At the time of assessment proceedings , the returns called for uls 153C r.w.s. 153A for the assessment years 2000-01 to 2005 -06 were not filed by the assessee and hence, only on the basis of information available on records, the assessment were completed ex-parte u/s 144 r.w.s. 153C. There was no co-operation from the assessee during the course of .....

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the first time on 27.11.2008 and the time given to file the return was 15 days. The assessment was required to be completed before 31.12.2008 and accordingly it was completed on 24.12.2008. He further stated that even the AR of the appellant had also attended before the AO. He also stated that the AO has not given any comment in respect of para 3.1 (e), (f), (g) and (b) of the written submission and as such the AO was not at all justified in rejecting the claim u/s l0A and taxing the income as .....

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eeds to be deleted. 4.4 I have carefully considered the facts of the case, submission of the appellant, remand report of the AO and the rejoinder of the appellant. I have also perused various details including copies of the green card issued by the Director of STPI, customs bond register, Form NO.56F etc. The ld. AR has also stated that the entire proceeds were received in foreign exchange and though the appellant was also entitled for deduction u/s. 80HHC, the same was not claimed since the app .....

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ccompanied by audit report and report in Form No.56F and deduction under section 10A was claimed as per law. The Assessing Officer in the remand proceedings except stating that assessee has not co-operated in the assessment proceedings has not offered any comments on the grounds preferred by the assessee before the Commissioner of Income Tax (Appeals). None of the findings of the Commissioner of Income Tax (Appeals) have been rebutted by the Revenue with evidences. In such circumstances, we upho .....

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for income-tax purposes. Counsel for the assessee submits that assessee used these assets for business purposes, all the items of machinery were ready for use and the assessee company was awaiting orders for medical transcription business. Therefore, he submits that there is no reason for not considering the claim for depreciation. Counsel for the assessee submits that during the financial year 2001-02 relevant to the assessment year 2002-03 and 2003-04 the assessee did not get any business of m .....

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ring the relevant previous year, though not actually used due to circumstances beyond control. Counsel for the assessee submits that decision of the Bombay High Court which the Commissioner of Income Tax (Appeals) relied on was also considered by the Third Member. 11. Departmental Representative supports the orders of lower authorities. 12. Heard both the sides. Perused orders of lower authorities and the decisions relied on. Commissioner of Income Tax (Appeals) denied depreciation for the reaso .....

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inery kept ready for use, the assessee could not use the machinery for want of raw materials. In such circumstances, Third Member of Chennai Bench held that assessee is entitled for depreciation as the machinery was kept ready for use during the entire previous year. The relevant portion of the order is as under:- "Even after the introduction of block of assets concept, there is no change in the legal position to the effect that the assessee would be entitled to depreciation even though the .....

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