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TMI Blog2018 (10) TMI 1524X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in law and on facts in holding Unit No.47 as new Industrial Undertaking and allowing the deduction u/s. 80IB of the Act. 2. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above, since the assessee has failed to disclose his true income" 3. The relevant material facts, giving rise to this dispute before us, are as follows. It is a case of reopened assessment. The assessee before us is engaged in the business of manufacturing readymade garments for children. The assessee was claiming, and was duly granted, deduction under section 80IB, with effect from assessment year 2002-03 onwards, in respect of profits of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l other places at which related activities (i.e. storage, stitching, cutting etc.) were carried out which were closely related to the main activity. The assessee's claim that the unit at plot no.47 produced a saleable product was rejected by the Assessing Officer on the ground that buttoning etc. was done in a different unit and it was inconceivable as to how clothes could be sold without even buttons. The maintenance of separate stock registers for different units, in the opinion of the Assessing Officer, was not sufficient to claim deduction under section 80IB. It was also noted that "deduction under section 80IB is not allowable on the entire profits of the firm, but is allowable only in respect of the new undertaking" but then since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer's comments were forwarded to the appellant who submitted rejoinder. All these submissions, comments and rejoinder have been quoted in earlier para. The crux of assessing officer's argument is that appellant claimed unit number 47 as new industrial undertaking however only part of the work i.e. stitching of children's garments was done there. Remaining activities were carried out at different units in the same area. In view of this, AO is of the view that items produced from unit no.47 are not articles or things and no separate books of account were kept for this unit and accordingly it is not eligible for deduction under section 80 IB. It is not in dispute that appellant started new industrial activity in this area only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial and finished goods etc cannot be considered separate and independent activities. All these activities are linked to each other and these together make industrial undertaking. Just because appellant mentioned unit number 47 as new industrial undertaking, it cannot be deprived of using other units as composite manufacturing undertaking. When manufacturing is done by using 5-6 units, it makes sense to mention the number of most prominent unit where major activity is carried out. For setting up a new industrial undertaking, number of buildings is not relevant. An industrial undertaking may constitute several buildings based on requirements or even one building may contain several new industrial undertakings if the building is large eno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... units. I therefore direct the assessing officer to allow deduction under section 80 IB to the appellant" 4. The Assessing Officer is aggrieved of the relief so granted by the learned CIT(A) and is in appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. 6. We have noted that section 80IB(2) refers to ""any industrial undertaking which fulfils the .......... conditions"", but then clearly there is a distinction between the expression 'industrial undertaking' and 'units' carrying out related activities inasmuch as an industrial undertaking may have more than one unit as it's integral part. The mere fact that an industrial und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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