TMI Blog2008 (3) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... f manufacturing of dairy whitener and skimmed milk powder. The Assessee claimed deduction under Section 80-IA of the Income Tax Act, 1961 (forshort as 'Act') from assessment year 1995-96 onwards. The Assessee's claim ofdeduction was initially not objected to for the assessment year 1995-96 as no scrutiny assessment under Section 143(3) of the Act was made and only processing of the return of income was done under Section 143(1)(a) of the Act. During the course of the assessment proceedings under Section 143(3) of the Act for assessment year 1996-97, the Assessing Officer asked the Assessee to justify its claim of deduction under Section 80-IA of the Act. The Assessee submitted that during the period relevant to assessment year 1995-96 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same products. All that the Assessee had done was to undertake a modernization-cum-expansion programme of the existing undertaking. For this, the Assessing Officer relied upon the extract from the Directors' report for the year 1993-94. It was further held by the Assessing Officer that no separate and independent industrial unit came into existence and it was only absorption of the old business and so-called new industrial undertaking was nothing but modernization of the existing unit and as such the Assessee's case was hit by the provisions of Section 80-IA(2)(i) of the Act. The Assessing Officer, therefore, disallowed the claim of the Assessee under Section 80IA of the Act. 5. Against the assessment order, the Assessee filed ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new industrial undertakings backed with latest technology, higher efficiency and better quality product. The Assessing Officer himself has stated that there was a complete absorption of the old business by the new unit and this absorption makes it all the clear that in certain part of the year, both the units existed independently simultaneously and the old unit gradually faded away after coming into the existence of new industrial unit. All these facts goes on to show that the new unit set up by the Assessee was not formed either by splitting up of the existing industrial undertaking or formed by reconstruction or rehabilitation of an undertaking. In support of his contention, learned counsel for the Assessee has cited a decision of the Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking connotes expansion of the existing business of the Assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business'. 12. As per findings of fact recorded by the Tribunal, it has been stated that 'in the present case the old undertaking no longer existed and remained identifiable. It was completely submerged in the new industrial undertaking of the Assessee. The provisions of Section 80IA of the Act with reference to Explanation 2, do not require that new industrial undertaking should be raised on separate plot of land leaving the earlier undertaking totally untouched. We find that the processes for which the Assessee entered into technological collaborations with M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself has envisaged and approved of a situation in which an old existing smaller industrial undertaking is absorbed by a new much bigger industrial undertaking. 15. In the present case, only capacity was increased and there was expansion of old business with some modifications. As for 'reconstruction' of the business, it is nowhere evident that the old industrial unit was split up or damaged or destroyed that was supposedly reconstructed as a new unit by the assessee. What the Assessee has done is to set up an industrial undertaking with latest technology and with increased capacity and of course, with a fairly good amount of fresh investment. 16. The formation of the new undertaking is not as a consequence of the transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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