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2016 (7) TMI 188 - ITAT AHMEDABAD

2016 (7) TMI 188 - ITAT AHMEDABAD - TMI - Disallowance u/s 80IC - Held that:- The objections of the Assessing Officer that the new business is by transfer of earlier business and no production has been actually made by the assessee are contrary to the record. Hence, we do not see any reason to interfere with the order of the ld. CIT(A) and the same is hereby upheld. Thus, the ground raised by the Revenue is rejected. - Decided in favour of assessee. - ITA No. 19/Ahd/2012 - Dated:- 1-7-2016 - SHR .....

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s in deleting the disallowance of the claim of deduction of ₹ 3,89,93,876/- under the provisions of section 80IC of the I.T. Act. 2. The Ld. Commissioner of Income-tax(A) has erred in law and on facts in admitting additional evidences in course of the appellate proceedings in violation of Rule-46A of the I.T. Rules. 3. On the facts and circumstances of the case, the Ld. Commissioner of Income-tax (A) ought to have upheld the order of the Assessing Officer. 4. It is therefore, prayed that t .....

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- on the ground that the assessee does not meet the requirements of law as envisaged u/s 80IC of the Act. 2.1 The assessee, aggrieved by the aforesaid order of the Assessing Officer, preferred an appeal before the ld. CIT(A) who, after considering the submissions of the assessee, came to the conclusion that the Assessing Officer has merely disallowed the claim of the assessee on the basis of presumption. 2.2 Aggrieved by the order of ld. CIT(A), the Revenue has preferred the present appeal. 3. T .....

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ing the business operation of partner-company and formation of business in the newly constituted business in the name and style of assessee-firm is nothing but the shifting of the existing business to the area specified eligible for deduction u/s 80IC of the Act. 3.2 On the contrary, ld. Counsel for the assessee Shri M. K. Patel opposed the submissions of the ld. DR and supported the order of the ld. CIT(A). Ld. Counsel for the assessee submitted that the finding of the Assessing Officer is fact .....

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ers of the lower authorities. The Assessing Officer declined the claim of deduction on the basis that the assessee-firm has been constituted to deal with the products as that of the partner s company M/s. Mahadev Drugs (Guj) Private Limited, one of the partners of the assessee-firm, which discontinued the business and shifted the turnover of its business to the assessee-firm in which it holds 10% share of profits. This shows that the sole object of shifting the existing business of M/s. Mahadev .....

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period from September 2006 to March 2007. For the year under appeal, as per audit report in Form No.3CD, the gross profit of ₹ 4,91,67,597/- and net profit of ₹ 3,89,93,876/- on total sale made on ₹ 9,88,55,292/-. Therefore, the Assessing Officer was of the view that the closing of existing business of the partner company on one hand and constitution of new firm on the same line of business with the similar products on the other hand is nothing but the transfer of existing busi .....

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us for adjudication is whether the assessee-firm is entitled for deduction u/s 80IC of the Act under the facts and circumstances of the year under appeal. As per section 80IC(4) of the Act, following conditions are required to be fulfilled by the undertaking or enterprise who seeks deduction under Section 80IC of the Act:- (i) it is not formed by splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of an undertaking wh .....

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ts after closing the existing business of the partner; that is nothing but the transfer of existing business to new business. Further, the Assessing Officer doubted the actual production by the assessee. The ld. CIT(A) has given the findings of facts in his appellate order in paragraph No.3.3, which read as under:- 3.3 I have carefully perused the assessment order and the submissions given by the appellant. The A.O. disallowed the claim of the appellant by concluding that it was manufacturing th .....

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deduction u/s. 80IC. Since the claim was not made in the first year itself, the appellant cannot claim it in this year. During the course of appellate proceedings, appellant has submitted detailed information regarding establishment of the unit and has also furnished photo copies of the purchase bills of the machinery. It has also submitted various certificates such as registration under Factories Act, drug license with change of name, certificate from environment protection and pollution contr .....

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from one of the partners company and which is below the permissible limit of 20% of total plant and machinery as envisaged in the Act. Regarding the claim of deduction u/s. 10A for A. Y. 2007-08, the appellant has submitted that the same was a typographical error which is evident from the fact that the audit report in the form of 10CCB clearly mentions that the claim is made u/s. 80IC. In fact the appellant could not have claimed deduction u/s. 10A as the appellant did not fulfill the conditions .....

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