TMI Blog2010 (8) TMI 974X X X X Extracts X X X X X X X X Extracts X X X X ..... IC of the Act, since the increase in assets exceeds 50% of book value, without taking depreciation into account also there is no justification to deny the exemption because the assessee had failed to mention the correct section. HELD THAT:- The assessee after the start of production on 28.4.2005, in Assessment Year 2006-07 i.e. year under appeal had claimed deduction u/s 80 IB. The plea of the assessee was that there was an error in the mention of section 80 IB as against 80IC. The assessee claims that it was entitled to the deduction available to its Baddi Unit on expansion u/s 80IC. We find merit in the plea of the assessee. The intention of the assessee undertaking expansion under the amended provisions, was to avail deduction u/s 80IC on the start of operations at its Baddi Unit. Even in notes to accounts relating to Assessment Year 2005-06, it was reported that no depreciation is being claimed on additions to plant and machinery after 30.9.2004 as plant and machinery was put to use on 28.4.2005, which were part of substantial expansion undertaken for claiming deduction u/s 80 IC. Mere mention of wrong section would not disentitle the assessee to claim the aforesaid ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 473/P/2008-09 for the Assessment Year 2006-07 has erred in allowing deduction u/s 80 IC to the assessee whereas the assessee has not increased its plant machinery by 50% as on Ist day of the previous year so as to qualify for the benefit of substantial expansion envisaged u/s 80IC. 4 It is prayed that the order of the Ld. CIT(A) be set aside and that of the Assessing Officer may be restored. 3 The Ground No. 1 raised by the revenue is general and is dismissed. 4 The issue raised in Grounds No. 2 3 are against the order of Ld. CIT(A) in allowing deduction u/s 80IC of Act whereas the assessee has claimed deduction u/s 80 IB of the Act. 5 The brief facts of the case are that the assessee company was engaged in the business of manufacturing, installation of effluent treatment plants for Air and water, sewerage treatment plant, reverse osmosis plants, Air Conditioning and ventilation and air handling units. The manufacturing process was being carried out by the assessee at its plant in Baddi (H.P). The assessee had claimed deduction u/s 80 IB of the Act. Similar deduction was being claimed in the earlier years also. During the year under consideration, the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. However, in the case of the assessee, the Assessing Officer noted the increase in plant and machinery during the Financial Year 2005-06 was less than 50% as the value of plant machinery as on 1.4.2006 was Rs. 20,95,356/- and during the concerned year, the addition was Rs. 3,11,737/-. Hence, the claim of deduction u/s 80 IC of the Act was also rejected. 6 In appeal before CIT(A), contention of the Ld. A.R. for the assessee was that the assessee had started its unit at Baddi and claimed exemption u/s 80 IB of the Act since Assessment Year 1999-2000. The assessee claimed in initial 5 years full exemption and subsequently 30% of the profits as exempt for next year. Subsequently the assessee went for expansion as per the new policy and made additions and exemption was available u/s 80 IC of the Act. The wrong mention of sub-section was no ground in disallowing the claim of the assessee. Further the contention of the Ld. A.R. for the assessee before the CIT(A) was that substantial expansion was started in the Financial Year 2004-05 where the addition of Rs. 11,54,610/- was made after 30.9.2004 on which no depreciation was claimed. The aforesaid fact was mentioned in the notes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions otherwise were satisfied. The CIT(A) directed the Assessing Officer to allow the benefit of deduction u/s 80 IC of the Act. The Revenue is aggrieved by the order of the CIT(A) and hence the present appeal before us. 9 The Ld. D.R for the revenue relied on the order of Assessing Officer pointing out that in order to avail deduction u/s 80 IC of the Act, the conditions have to be fulfilled. The assessee had claimed deduction u/s 80 IB of the Act and with regard to his claim of deduction u/s 80 IC of the Act, the facts have to be brought on record before allowing deduction. The Ld. D.R. for the Revenue requested in case deduction is to be allowed u/s 80 IC of the Act, the matter should be sent back to the Assessing Officer. The Ld. A.R. for the assessee pointed out that there is no dispute regarding fact that the assessee is eligible for claiming deduction u/s 80 IC of the Act. It was claimed by the Ld. A.R. for the assessee that deduction was claimed u/s 80 IB of the Act by putting the wrong section. Placing reliance on the order of Ld. CIT(A), the Ld. A.R. for the assessee pointed out that one of the duty of the Assessing Officer was to assist the tax payer in the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim any depreciation on the said assets in Assessment Year 2005-06. 12. During the financial year 2005-06, the assessee made further additions to plant and machinery totaling Rs. 3,11,737/- and the production, after the expansion scheme, was started on 28.4.2005. The assessee explained before the authorities below that it had revised the capacity of its unit under the Central Capital Subsidy Scheme 2003, under which subsidy was available for a period of ten years for new industrial units set up after 7th January 2003 or by the existing industrial unit existing on 7th January 2003, which had undergone substantial expansion i.e increase of not less than 25% in the value of fixed capital investment in plant and machinery of an industrial unit for the purpose of expansion of capacity / modernization. The expansion of the unit and increase in capacity was certified by the Directorate of Industries vide inspection done by a Committee set by DIC, Solan. The observations and findings of Report are incorporated and tabulated in the assessment order. As reported in the said report, the value of plant and machinery had increased by 178% i.e. as against value of Rs. 7.61 lacs (book value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in any of the North-Eastern States; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule and undertakes substantial expansion during the period beginning (i) on the 23rd day of December, 2002 and ending before the 1st day of April, [2007], in the State of Sikkim; or (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; or (iii) on the 24th day of December, 1997 and ending before the 1st day of April, 2007, in any of the North-Eastern States. (3) The deduction referred to in sub-section (1) shall be (i) in the case of any undertaking or enterprise referred to in sub-clauses (i) and (iii) of clause (a) or sub-clauses (i) and (iii) of clause (b), of sub-section (2), one hundred per cent of such profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied by the Central Government; (ii) Industrial Estate means such estates, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (iii) Industrial Growth Centre means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (iv) Industrial Park means such parks, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (v) Initial assessment year means the assessment year relevant to the previous year in which the undertaking or the enterprise begins to manufacture or produce articles or things, or commences operation or completes substantial expansion; (vi) Integrated Infrastructure Development Centre means such centres, which the Board, may, by notification in the Official Gazette, specify in accordance with the scheme framed and notified by the Central Government; (vii) North-Eastern States means the States of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Naga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n plant and machinery in financial year 2005-06 Up 30.9.2005 Upto 31.3.2006 Total 1,34,888.00 1,76,849.00 3,11,737.00 The commercial operation started on 28.4.2005 and as such profits were generated by use of assets including Rs. 11,54,610/- installed in financial year 04-05 on which no depreciation was claimed in AY 2005-06. 16. The assessee in financial year 2004-05, initiated substantial expansion plan of his unit and an addition of Rs. 11,54,610/- was made to the plant machinery after 30.9.2004, on which no depreciation was claimed as on 31.3.2005. The assessee by way of notes on accounts attached to the audited accounts for the financial year 2004-05 as per schedule 16, clause (7) declared as under:- Depreciation on fixed assets has been charged on WDV method on rates prescribed under Income Tax Act. However, no depreciation has been charged on the additions after 30.9.2004 to plant machinery as the plant machinery was put to use on 28.4.2005 as a part of substantial expansion undertaken by the company for claiming the benefits of deduction u/s 80IC as per provisions of the said sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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