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TMI Blog2016 (3) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice dated 05.01.15 asking the assessee to appear before him. Finally, CIT concluded that the assessee claimed deduction u/s.80-IA of the Act and the AO accepted the same, though it was disallowed in the assessment year 2009-10 by the AO. According to the CIT, the claim of assessee u/s.80-IA of the Act requires reexamination by the AO. Further, CIT directed the AO to pass appropriate order on the basis of merit. Against this the assessee is in appeal before us. 4. Before us, ld.A.R submitted that for the assessment year 2009- 10, on the basis of which the CIT exercised jurisdiction u/s.263 so as to re-examine the deduction u/s.80-IA by the AO. The claim of assessee u/s.80-IA was granted to the assessee by the Tribunal vide order dated 24.07.2015 in ITA No.663/Mds./2014, as such there cannot be any exercise of jurisdiction u/s.263 of the Act by the CIT. More so, the ld.A.R submitted that CIT cannot invoke the jurisdiction u/s.263 of the Act without pointing out any error in the assessment order. The ld.D.R relied on the order of CIT passed u/s.263 of the Act. 5. We have heard both the parties and perused the material on record. In our opinion, if an assessment order is passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declaring total income of "2,51,37,806/- under normal provisions and book profit of "4,02,67,104/-. Form No. 10CCB - Audit Report u/s 80lA dated 31.08.2009 was also submitted. However, deduction u/s 80IA was not granted to the assessee on the reason that it was splitting up or reconstruction of existing business and the assessee has not established any new industrial undertaking. According to the Assessing Officer the steam turbine division was not created for generating electricity but to supply steam to paper industry and the assessee has artificially bifurcated a production process in which the older machinery were replaced by a new machinery which was only required for paper industry and not for turbine division for generating power. According to the Assessing Officer the electricity generated was only an incidental mechanism of the paper industry to save the energy from the steam which otherwise would have lost if they continue to use old boilers and pressure reduction valve. Therefore, the assets acquired under so called Turbine Division are primarily meant for production of steam and recover the energy loss from such steam so as to make the paper industry more energy effici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 33B, in the circumstances and within the period specified in that section; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose: Provided that nothing contained in this sub-section shall apply in the case of transfer, either in whole or in part, of machinery or plant previously used by a State Electricity Board referred to in clause (7) of section 2 of the Electricity Act, 2003 (36 of 2003), whether or not such transfer is in pursuance of the splitting up or reconstruction or reorganisation of the Board under Part XIII of that Act. Explanation 1.-For the purposes of clause (ii), any machinery or plant which was used outside India by any person other than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely :- (a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) no deduction on account of depreciation in respect of such machinery or plant has been allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emselves, independently of the old unit, capable of production of goods then it can be classified as a newly established industrial undertaking. 14. The new industrial unit brought into existence by establishing new plant and machinery and by investing substantial funds may produce the same commodity as of the old business or it may produce some other distinct marketable products, even commodities which may feed the old business. These products may be consumed by the assessee in its old business or may be sold in the open market. One thing is certain that the new undertaking must be an integrated unit by itself wherein articles are produced. The industrial unit must be new in the sense that new plant and machinery are erected for producing either the same commodity or some other distinct commodity. The benefit cannot be denied merely because the new undertaking goes to expand the general business of the assessee in some direction. 15. After considering the facts of the case and the legal position enunciated in the above paras, we are of the opinion, that the crucial question that has to be answered is whether, on the facts of the case, the new industrial unit can be said to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer, in our considered view; the assessee could not be denied the benefit. We also find that a new undertaking for manufacture of power with steam as by-product was formed out of fresh funds, in separately identifiable premises, under a separate license/approvals with manifold increase in capacity with new machinery and buildings without transfer of any portion of the old buildings or machinery which pre-existed. The power and steam produced earlier was part of the paper unit and could service only the paper unit and hence was at best by-product of the paper unit manufacturing facility. The new unit had power as the main product and apart from servicing the captive consumption in the paper unit also could service the other power requirements. The pricing of power is also subjected to the various power tariff prescriptions. It can be clearly seen that the new undertaking is therefore not formed by the splitting up of the old undertaking. There is no case also made out by the lower authorities that the new undertaking is formed by the splitting up of the existing business. Further, the Supreme Court in the case of Textile Machinery Corporation (cited supra) wherein the Supreme C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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