TMI Blog2013 (2) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of ₹ 26,82,405/- made on account of disallowance of deduction claimed u/s 80IB without appreciating the fact that the assessee did not have sufficient machinery for processing of cloth, no expenses on electricity claimed in the profit and loss account, use of old machinery in manufacturing process, etc., and other irregularities discussed in detail by the A.O. in the order . 3. Facts of the case, in brief, are that the assessee derived income from manufacturing of printed cloth and filed its return of income on 24.10.2005 disclosing total income at Nil after claiming deduction u/s 80IB of the Income-tax Act, 1961 [hereinafter referred to as the Act , for short] amounting to ₹ 26,46,457/-. Assessment was completed u/s 143(3) of the Act on 21.3.2007determing total income at Rs. Nil after allowing deduction u/s 80IB of the Act to the tune of ₹ 26,82,405/-. Thereafter, the ld. CIT-II, Jodhpur passed order dated 24.3.2009 u/s 263 of the Act. In the setting aside order, the CIT-II, Jodhpur observed as under: There is no discussion in the assessment order as to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... workers were engaged for carrying manufacturing activities. In view of the above discussions as also detailed reasons given by the worthy CIT-II, Jodhpur in the order u/s 263, it is clear that the assessee has failed to prove the claim of deduction u/s 80IB and hence deduction u/s 80IB is not allowable. 5. Being aggrieved, the assessee carried the matter to the ld. CIT(A) who allowed the claim of the assessee for deduction u/s 80IB of the Act for the reasons stated in paras 8 to 10.3 of the impugned order. Now the department is in appeal. 6. During the course of hearing, the ld. counsel for the assessee at the very outset, stated that this issue is squarely covered vide order dated 20.12.2012 of this Bench of the Tribunal in the case of ITO, Ward, Balotra Vs. M/s P.T.M. Industries, Balotra in ITA Nos. 111,112 and 104/Jodhpur/2012 for A.Ys. 2005-06, 2007-08 and 2008-09 respectively. Copy of the said order was furnished which is placed on record. In his rival submissions, the ld. CIT, DR, although supported the order of the A.O, but could not controvert the aforesaid contention of the ld. counsel for the assessee. 9. After considering the rival submissions and mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illed, 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 or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Explanation 2.- Where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty per cent of the total value of the machinery or plant used in the business, then, for the purposes of clause (ii) of this subsection, the condition specified therein shall be deemed to have been complied with; (iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers in a manufacturing process carried on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct is altogether different from the raw material in its properties and even the Department in the preceding year has allowed the claim of the assessee for deduction u/s 80IB of the Act by considering that the assessee was engaged in manufacturing activities. Moreover, the various government authorities such as Central Excise, Industrial Department, ESI authorities etc. have accepted by issuing the various certificates that the assessee is an industrial undertaking engaged in the business of manufacturing or production of finished product namely poplin out of grey cloth, which is a different article or thing from the raw material, therefore, the assessee also fulfilled the third condition laid down in section 80IB (2) of the Act. The fourth and last condition provides that the industrial undertaking must employ 10 or more workers, if manufacturing process is carried out with the aid of power or employ 20 or more workers if the manufacturing process is without aid of power. In the present case, the ld CIT(A) after verifying from the wages register found that 12 workers were working continuously form April, 2004 to the end of the Financial Year relevant to assessment year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying various processes like padding, washing, dyeing, furnishing and wrapping of the cloth. The Assessing Officer also accepted the sale of the finished goods shown by the assessee, so there was no reason to deny the claim of deduction u/s 80-IB(5) of the Act when the assessee fulfilled all the conditions laid down in the provisions of section 80IB(2) of the Act. In the present case, the Assessing Officer although alleged that the assessee might have purchased a finished product from other sources and did not manufacture in its unit, however, the purchase of grey cloth which is a raw material in the assessee s industrial undertaking has not been doubted. It is not the case of the Assessing Officer that the assessee sold the grey cloth in raw form and did not use the same in manufacturing Poplin which is the finished product. Therefore, the Assessing Officer was not justified while alleging that the possibility of assessee s purchasing ready goods from the market / sister concern could not be denied. Furthermore, the Assessing Officer accepted the claim of the assessee in the preceding year and allowed deduction u/s 80IB of the Act. Therefore, keeping in view the principle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2004-05 and there is no change in the facts for the assessment year under consideration as well as in the activities of the assessee as compared to the said earlier year, therefore, the Assessing Officer was not justified in denying the claim of the assessee. In our opinion, the ld CIT(A) has passed a just and well reasoned order which requires no interference on our part. In that view of the matter, we do not see any merit in this appeal of the Department. 7. So, respectfully following the afore-referred to order of ITO, Ward, Balotra Vs. M/s P.T.M. Industries [supra], we do not see any merit in these appeals of the department. It is relevant to point out that in the said case of M/s P.T.M. Industries [supra] also, initially the A.O. allowed the claim of the assessee. Thereafter, the CIT-I I, Jodhpur passed order u/s 263 of the Act and directed the A.O. to reframe the assessment, on the direction of the CIT-II, Jodhpur, the A.O. disallowed the claim of the assessee u/s 80IB of the Act as has been done in the present case. The reasoning given by the ld. CIT while setting aside the assessment u/s 263 of the Act and the A.O. while disallowing the claim of the assessee u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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