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Shri Hemant Kumar Godara Versus Asstt. Commissioner of Income Tax 15 (1) , Mumbai

2015 (12) TMI 107 - ITAT MUMBAI

Rejection of claim for deduction u/s 80IB - tax authorities have taken the view that the assessee has not actually manufactured goods - Held that:- Perusal of the documents filed in paper book would show that the assessee has obtained permanent SSI certificate, which is normally given after commencement of production only that too after physical inspection. Further, the assessee has also furnished copies of registration made under Central Excise Act, Sales tax Act, Pollution control committee, i .....

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on the basis of denial of supply of machinery to the assessee’s personal name by the supplier. In view of the over whelming evidences furnished by the assessee to support the claim of manufacture and sale of goods, we are of the view that the tax authorities are not justified in holding that the assessee was not manufacturing goods.Accordingly, we set aside the order of Ld CIT(A) and direct the AO to allow the claim for deduction u/s 80IB of the Act to the assessee. - Decided in favour of assess .....

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ance of interest expenditure would depend upon the decision taken in AY 2003-04 on examination of loans in terms of sec. 68 of the Act. Accordingly, we are of the view that the Ld CIT(A) was not justified in examining the loans in AY 2004-05, which were taken in AY 2003-04. Accordingly, we set aside his order on this issue. However, since the assessment order for AY 2003-04 was not passed, we are of the view that no adverse decision could be taken on this issue in AY 2004-05. Accordingly, we dir .....

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ods by using the machineries and sold the same. The registration under Sales tax Act and Central Excise Act also shows that the assessee was furnishing necessary returns under those Act. The said In view of the evidences furnished by the assessee, we are of the view that there is no reason to suspect the purchase of machinery. Accordingly, we set aside the order of Ld CIT(A) on this issue and direct the AO to allow the depreciation.- Decided in favour of assessee. - I.T.A. No. 4185/Mum/2013 - Da .....

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secured loans. (c) Disallowance of depreciation on Plant and Machinery. 2. We heard the parties and perused the record. This is second round of proceedings. The assessee is engaged in the business of manufacture and sale of stainless steel utensils. The original assessment was completed by the AO by rejecting the claim for deduction u/s 80IB of the Act and also disallowing the interest expenditure on loan and depreciation on machinery. In respect of all these additions, the assessing officer fol .....

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er dated 26-06-2009 passed in ITA No.990/Mum/2008, restored all the matters again to the file fo the assessing officer by following the order passed by the Tribunal for AY 2003-04. Hence the impugned assessment order was passed by the AO in the set aside proceedings. 4. Since the assessing officer had made the impugned disallowances by following the order passed for assessment year 2003-04, a specific query was posed to both the parties as to the position of the assessment order passed by the AO .....

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identical disallowances made in AY 2003-04. Thus, we notice that the assessing officer has issued a notice u/s 142(1) of the Act for assessment year 2003-04 only on 31.01.2004 in pursuance of the order passed by the Tribunal on 25.11.2008. 5. The Ld A.R, during the course of hearing, had submitted that the time limit for passing assessment order for AY 2003-04 should have already expired, if the assessing officer had not passed the assessment order in the set aside the proceedings. Since the ass .....

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f fresh assessment in pursuance of an order under section 250, section 254, section 263 or section 264, setting aside or cancelling an assessment, may be made at any time before the expiry of one year from the end of the financial year in which the order under section 250 or section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Chief Commissioner or Commissioner: Provided that where the order under se .....

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be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of April, 2005, the provisions of this sub-section shall have effect as if for the words "one year", the words "nine months" had been substituted. Provided also that where the order under section 254 is received by the Chief Commissioner or Commissioner or, as the case may be, the order under section 263 or section 264 is passed by the Commissioner on or after the 1st day of A .....

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uot;twenty-one months" had been substituted. Since the order was passed by the Tribunal for AY 2003-04 on 25.11.2008, the second proviso to sec. 153(2A) shall be applicable and hence the assessing officer should have passed the assessment order within nine months from the end of the financial year in which the order under section 254 is received by the Chief Commissioner or Commissioner etc. Since the notice u/s 142(1) had been issued on 31-01-2014, it becomes clear that the assessment orde .....

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order in AY 2003-04 in the set aside proceedings. However, the AO has passed the assessment order in AY 2004-05 independently without ascertaining the facts that were found to be deficient in AY 2003-04. 7. The Assessing officer had rejected the claim for deduction u/s 80IB of the Act in AY 2003-04 on the ground that the undertaking of the assessee has violated the conditions prescribed in sec. 80IB of the Act, viz., (a) it has been formed by splitting up or reconstruction of business, since the .....

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t of specified number of employees was also doubted with. 8. In assessment year 2004-05, the assessing officer proceeded to confirm the disallowances again on the reasoning that the assessee did not furnish the details that were called for. Even though, the AO noticed that the assessment of A Y 2004-05 had been set aside by ITAT on the basis of its order passed for AY 2003-04, yet he proceeded to complete the assessment of AY 2004-05 without completing the assessment of AY 2003-04. 9. In the app .....

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l evidences and adjudicate the issues. 10. With regard to the deduction claimed u/s 80IB of the Act, the Ld CIT(A) took the view that the assessee has failed to prove that he was manufacturing the goods. The Ld CIT(A) has also accepted the view of the AO that the assessee s unit has been established by reconstruction, since the partnership firm has been converted into a proprietary concern. He also accepted the view of the AO that the assessee could not have purchased machinery from M/s Mahavir .....

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nd hence the eligible undertaking became the proprietary concern of the assessee. Before the tax authorities, the assessee submitted that the conversion of partnership firm into a proprietary concern cannot be considered to a case of Splitting up or reconstruction of existing business. In support of this contention, the assessee has placed reliance on the following case law:- (a) CIT Vs. Gaekwad Foam & Rubber Co. Ltd (35 ITR 662)(Bom), wherein it was held that the take over of an undertaking .....

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d that there must be some material to hold that either some asset of an existing business is divided and another business is set up from such splitting up of assets or that the two businesses are the same and one formed was an integral part of the earlier one and it was only a question of breaking up of the same business. It implies unity of control in regard to two businesses, i.e., earlier one in existence and a new one which is brought into existence. We notice that the Ld CIT(A) did not exam .....

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d by the assessee. As stated earlier, the assessing officer had issued notices to the supplier of the machinery during the course of assessment proceedings relating to AY 2003-04. The supplier, however, replied that he has not supplied any machinery to the assessee. With regard to the same, the assessee submitted that the AO had asked the supplier about the supplies made to the assessee s personal name, whereas the machinery was purchased in the concern s name M/s Master metals. This explanation .....

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er, the assessee has also furnished copies of registration made under Central Excise Act, Sales tax Act, Pollution control committee, import & export code, electricity payment bills, labour register etc. Further, the books of accounts also support the claim of manufacture of goods. With regard to the purchase of machineries, the assessee has furnished copies of relevant bills supporting the claim of purchase of machinery and also the particulars of payments made. We notice that none of these .....

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rmanent SSI certificate and the labour register and hence the other deficiencies pointed out by the tax authorities are liable to be rejected. Accordingly, we set aside the order of Ld CIT(A) and direct the AO to allow the claim for deduction u/s 80IB of the Act to the assessee. 16. The next issue relates to the disallowance of interest expenditure on unsecured loan. This disallowance was made by following the decision taken by the AO for AY 2003-04. The Ld CIT(A) has also observed that there ha .....

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