TMI Blog2020 (10) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... n before the tribunal, the revenue was not able to rebut any of the findings recorded by CIT (Appeals) by adducing any evidence to the contrary. The concurrent findings of fact do not suffer from any perversity warranting interference of this court in exercise of powers under Section 260A. So far as the submission made on behalf of the revenue that the assessee has failed to comply with the condition viz., that it was not formed by transfer of a new business or machinery or plant previously used for any purpose, suffice it to say that Supreme Court in Bajaj Tempo Limited [ 1992 (4) TMI 4 - SUPREME COURT] while interpreting Section 15C of Income Tax Act, 1922, which corresponds to Section 80J of the Act, dealt with the expression 'not formed' and has held that the aforesaid expression means that the undertaking should not be in continuation of old unit but emergence of a new unit. There are concurrent findings of fact that the assessee is a new export oriented unit, therefore, the aforesaid submission does not deserve acceptance. Similarly, the contention that the submission made by the revenue that its contention that assessee had adopted colorable devise for tax evas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue. The subject matter of I.T.A.No.559/2015 pertains to Assessment Year 2007-08, whereas, the subject matter of I.T.A.No.571/2016 pertains to Assessment Year 2010 11. In I.T.A.No.580/2016, relates to Assessment Year 2008-09. In all the aforesaid appeals, two substantial questions of law are common and the appeals pertain to the same assessee, therefore, they were heard together and are being decided by this common judgment. 2. I.T.A.No.559/2015 was admitted by a bench of this court on following substantial questions of law: (i) Whether in the facts and circumstances of the case, the tribunal is right in dismissing the appeal preferred by the revenue by holding that the assessee is entitled for deduction under Section 10-B of the Income Tax Act, even when the assessing authority on the basis of the facts and materials on record has categorically rightly held that the assessee has not fulfilled the conditions for seeking deduction under said provisions? (ii) Whether in the facts and circumstances of the case, the order of the tribunal can be said as perverse since it has merely affirmed the findings of the first appellate authority that the assessee is eligible fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer disallowed the assessee's claim for deduction under Section 10B of the Act. 5. The Assessing Officer inter alia held that assessee is entitled to deduction under Section 10B of the Act only after verification and the contention of the assessee that old machinery from FFIPL was transferred to it only in April 2007 does not deserve acceptance as the assessee had taken over the premises of FFIPL along with old plant and machinery available and the assessee installed new machinery over a period of time and started its first unit in November 2004 and second unit in March 2005. It was further held that there is no material to indicate that assessee as well as FFIPL are separate entities. It was also held that it took over vacant units of FFIPL in May, June and September 2005 and remaining units in April 2007. From the statements of owners of the premises, it was inferred that second unit was handed over to the assessee in July 2005 as construction was completed in the last week of June 2005 and the assessee started the business of stitching i.e., the job work in the year 2004-05 and then took over the warehouse and certain units of FFIPL and thereafter, took new premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was not in existence. It is contended that it is nothing but a colorable devise adopted by the assessee to avoid tax liability and the assessing authority has rightly lifted the veil. It is also pointed out that from the statement of one Mr.Nagesh, Senior Manager of the assessee, it is evident that the machines belonging to FFIPL were transferred to the assessee and the aforesaid fact has also been admitted by one Mr.Anupam Kothari. It is also pointed out that mere approval of the Development Commissioner given for export oriented unit does not entitle the assessee to claim deduction under Section 10B of the Act. It is also argued that for Assessment Year 2005-06, the assessee had mentioned in Form 3CD that it is involved in job work activity and therefore, is not eligible for deduction under Section 10B of the Act. It is also pointed out that the list of suppliers and customers of both the companies are the same and premises was leased out along with machineries to the assessee. It is also submitted that the finding recorded by the tribunal is perverse as from the material on record, it is evident that the assessee had adopted colorable devise to avoid tax liability, however ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt in 'TEXTILE MACHINERY CORPORATION LTD. VS. COMMISSIONER OF INCOME TAX, 107 ITR 195 (SC), BACHITAR SINGH VS. COMMISSIONER OF INCOME TAX AND ANR.', 328 ITR 400, 'DEPUTY COMMISSIONER OF INCOME TAX, CIRLCE 11(1) VS. ACE MULTI AXES SYSTEMS LTD', 400 ITR 141, 'THERMAL CORPORATION VS. CIT', 229 ITR 383 and 'GOETZE (INDIA) LTD VS. COMMISSIONER OF INCOME TAX', (2006) 284 ITR 323 . 9. On the other hand, learned counsel for the assessee submitted that assessee has complied with the conditions mentioned in Section 10B of the Act and the Commissioner of Income Tax (Appeals) as well as the tribunal have rightly held that the assessee is entitled to claim deduction under Section 10B of the Act. It is further submitted that the aforesaid findings are concurrent findings of fact and are based on meticulous appreciation of evidence on record. Learned counsel for the assessee has taken us through the order passed by the Commissioner of Income Tax (Appeals) and it has been pointed out from the order passed by the tribunal that no material has been brought on record by the revenue even before the tribunal to show that the finding recorded by the Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall not apply in respect of any undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in that section ; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation .-The provisions of Explanation 1 and Explanation 2 to sub section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub section as they apply for the purposes of clause (ii) of that sub-section. 11. Undoubtedly the conditions mentioned in Section 10B(2) of the Act have to be complied with by an assessee in order to claim deduction under Section 10B of the Act. Now we may advert to the facts of the case to ascertain whether the assessee in the instant case, has complied with the requirements as laid down in Section 10B(2) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no bar that the assessee should not have customers and suppliers from sister concern as long as it has separate business relations. The assessee has been supplying to the customers out of their own manufacture and has got raw materials from the suppliers from its own resources. (vii) Under the Act, there is no need to maintain a unit wise accounts in order to claim deduction under Section 10B of the Act. The assessee acquired business premises, invested in the plant and machinery and employed the manpower by following rules and procedures and made substantial investment in the new plant and machinery. The investment in the plant and machinery for the Assessment Years 2005-06 to 2007-08 is to the tune of ₹ 12,10,17,890/-, ₹ 36,41,30,102/- and ₹ 18,04,50,402/- respectively. (viii) The assessee acquired some plant and machinery from FFIPL worth ₹ 9.86 Crores during the Assessment Year 2008-09 and the same does not exceed 20% of the total value of plant and machinery. (ix) Mr.Nagesh and Mr.V.Sreedhar had filed affidavits retracting their statements and therefore, the reliance placed on the statements during the course of survey is not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer of business premises, employees and the customers of FFIPL to the assessee, the CIT(A) observed that there was no prohibition in the use of the business premises of FFIPL by the assessee and also of the employees and customers of FFIPL and further that the transfer of employees and customers of the assessee was only a small percentage of the total employees and customers of the assessee respectively. Thus holding, the CIT(A) set aside the finding of the AO and allowed the deduction under Section 10B of the Act. We find that the CIT(A) has given elaborate reasons for coming to the conclusion that the learned Departmental Representative has not been able to rebut any of the findings of the CIT(A) with any evidence to the contrary. Since, the findings of the CIT(A) are based upon the evidence produced by the assessee which has not been rebutted by the revenue, we do not see any reason to interfere with the order of the CIT(A). Thus, the revenue's appeal is dismissed. 13. The question whether or not assessee has complied with the conditions mentioned in Section 10B(2) of the Act in order to enable him to claim deduction under Section 10B of the Act is essentially a que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal substantial question of law in I.T.A.No.571/2016. From perusal of para 12 of the order dated 19.02.2016 passed by the Income Tax Appellate Tribunal, it is evident that admittedly, assessee had filed the revised claim under Section 10B of the Act during the course of the assessment proceedings and the revision resulted in enhancement of the claim from ₹ 113,85,96,681/- to ₹ 123,33,06,953/-. Therefore, the tribunal held that the Commissioner of Income Tax (Appeals) rightly directed the Assessing Officer to verify the claim of the assessee in this regard. The tribunal has taken into account the decision of the Supreme Court in Goetz India Ltd., supra and has held that the aforesaid decision does not restrict the powers of the higher authorities to consider the revised claim and the tribunal and has rightly placed reliance on decision of the Supreme Court in 'NATIONAL THERMAL POWER CORPORATION VS. CIT', 229 ITR 383. Thus, on the facts of the case and in view of the finding recorded by the tribunal in para 12 of the order, the additional substantial question of law framed does not arise for consideration. The same is answered accordingly. 16. Now we may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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