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2015 (11) TMI 436

Eligibilty for claim of deduction u/s 80I & 80HH - Held that:- The distinction between the commercial production and trial run needs to be established. This distinction has to be proved by the assessee to the satisfaction of AO. We do not find any disparity on facts. Therefore, following the order of the ITAT Ahmedabad in earlier A.Y. on identical issues, we are of the considered view that the issue be restored to the file of AO for verification so as to whether there was only trial run of the m .....

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ssly erred in law and on facts in confirming action of AO in disallowing the claim of the appellant u/s 80I and 80HH of the Act in the proceedings undertaken in the set aside assessment by the order of the Hon'ble Incometax Appellate Tribunal. Both the lower authorities have not appreciated the fact that the matter was set aside for de-novo proceedings to grant opportunity to the appellant to make a schematic representation in respect of production of both the units so as to meet out cause o .....

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d 10 years commencing from AY 1983-84. The ld. CIT(A) ought to have appreciated the submissions, evidences and factual data submitted during the new proceedings to hold the appellant eligible for claim of deduction u/s 80I and 80HH of the Act. 4. The ld. CIT(A) has erred in law and on facts in confirming the initiation of penalty proceedings u/s 271(1)(c) of the Act. 5. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time .....

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p; 80I for claim of u/s 80I(2)(ii) there are certain condition which are to fulfill for new Industrial undertaking. Assessee company had not fulfill the condition laid down u/s 80I(2) as more than 20% of its plant & machinery had been previously used, therefore claim u/s 80I as rejected. Similar it the company also failed to fulfill the condition laid down u/s 80HH(2)(ii) for claim period in respect of old undertaking was already expire in AY 1992-93. Therefore claim u/s 80HH was rejected in .....

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submission filed vide letter dated 23.11.2007. It is not disputed and denied that the assessee company has started installing new plant and machinery from AY 1988-89 in piece-meal and phasewise. It is also seen that the assessee company also claimed depreciation in respect of plant and machinery and building as they were installed/constructed and put into use in the respective assessment years. From the above there is no escapement from the conclusion that the intention of the assessee company .....

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w industrial undertaking should not be formed by transfer to a new business, machinery or plant previously used for any purpose. Here it is evident from the facts given above that the assessee company has used plant & machinery of so-called new industrial undertaking during the FY 1987-88, 1988- 89, 1989-90 and const of such plant & machinery earlier use by the assessee itself exceeds by more than the 20% of the total cost of plant & machinery of the so-called new industrial undertak .....

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on u/s 80HH and 80I in the case of assessee company was AY 1983-84 and thus the period of 10 year and 8 year had already expired in AY 1992-93 and 1990-91 respectively for the purpose of deductions under sections 80HH and 80I. The assessee company was therefore not eligible or entitled for deductions u/s 80HH and 80I for AY 1996-97." 3. Aggrieved, the assessee went in appeal before CIT(A) who also confirmed the addition made by the AO after giving proper opportunity to the assessee of being .....

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ndustrial undertaking. Consequently, the total set of new plant and machinery installed in the Asst..Years. 1988-89, 89-90 and 90-91 cannot be labeled as an independent, separate and an integrated unit which is capable of manufacturing or producing article or things on its own without the help of old plant arid machinery. It is a fact that it has to be established that a new unit is separate, distinct and also an integrated unit capable of manufacturing an article or thing i.e. the new unit is c .....

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mstances of the appeal under consideration; it is abundantly clear that the set of the plant and machinery installed in the A. Ys. 1988-89, 89- 90 and 90-91 are not capable to function on its own. Thus, so called new unit had the machinery of old unit and the plant and machinery installed subsequently in the A. Ys. 1988-89 to 90-91. It is a fact that the total gross value of the plant and machinery as on 31,03.1990 was of ₹ 23.73.169/- which includes old plant and machinery installed up to .....

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e appellant could have bifurcated the profit between the old and new unit right from the assessment year under consideration and it could have claimed benefit u/s. 80HH in respect of profit of old unit and 801 in respect of new unit. It is a fact that the production has gone up due to expansion/modification of the old unit and due to adoption of new plant technology. Only increase in production and power do not establish that the new unit has been set up. Keeping in view the aforesaid facts and .....

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imed deduction under section 80HH & 80I for AYs, 1991-92, 1992-93, 1994-1995 and 1995-96. The ld. AR further submitted that depreciation was regularly claimed on this expenditure of ₹ 24,36,345/- in view of "TRIAL RUN" being carried out in these years but actually production from this new unit started from AY 1991-92. He further contended that identical issue arose before the Tribunal in AYs. 1991-92, 1993-94 to 1995-96. The Tribunal has set aside this issue again to the file .....

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hd/2010 1993-94 Assessee Revenue 3 2631/Ahd/2010 1994-95 Assessee Revenue 4 2632/Ahd/2010 1995-96 Assessee Revenue dated 19/09/2014, are as under :- "5.1. The Id.CIT(A) confirmed the findings of the AO. The Id. counsel for the assessee placed reliance on the judgment of the Hon'ble Bombay High Court rendered in the case of Commissioner of Income-tax-V, Pune vs. Finolex Cables Ltd. reported at (2012) 24 taxmann.com 279 (Bom.) :: 114 TTJ 785 (Pune), whereas the Hon'ble High Court has .....

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at a Unit produces the same commodity does not disentitle the Assessee to the benefit of the deduction." 5.2 The facts in the case in hand are distinguishable as in the present case the undisputed facts as culled out from the record are that the averment of the assessee for new undertaking was established beginning from the years 1988-89 to 1990-91 by making the following investments:- A.Y. Land Plant & M/c. Building 1988-89 - 559710 714943 1989-90 35820 521677 _ 1990-91 - 294707 20975 .....

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new unit. In this factual background, we have to examine whether the AO was justified in rejecting the claim of the assessee. The contention of the assessee is that during the period AYs 1988-89 to 1990-91 the machineries were put to use and no "commercial production" was made except the "trial run". The case of the Revenue is that there was no requirement for making "trial run" and in fact, the so called explanation of "trial run" is an afterthought and j .....

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there is substantial increase in the production turnover of the old Unit and as per the Revenue, such increase in the production was not possible when the production made in the new Unit is utilized by the old Unit. It is not disputed that the machinery used by the two Units are different, but the product remained same except the length of the product. It is not coming out from the record that what was the nature of the product sold by the assessee during AYs 1988-89 to 1990-91. In the absence .....

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. We do not find any disparity on facts. Therefore, following the order of the ITAT Ahmedabad in earlier A.Y. on identical issues, we are of the considered view that the issue be restored to the file of AO for verification so as to whether there was only trial run of the machinery as claimed by the assessee or the assessee carried out any commercial production from the new unit during AY 1988-89, 1990-91. Ld. AO shall decide the issue in accordance with law after providing due opportunity of hea .....

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