TMI Blog2022 (4) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has failed to prove that the items of old machinery excluded from manufacturing process is not more than 20% for the purpose of deduction u/s 80IC, therefore, such order of the CIT(A), in our opinion is not a speaking order. We, therefore, deem it proper to restore the issue to the file of the CIT(A) with a direction to pass a speaking order considering the findings in the survey report and decide the issue as per fact and law, after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground raised by the Revenue is accordingly allowed for statistical purpose. - ITA Nos.6315 And 6314/Del/2012 - - - Dated:- 27-4-2022 - Shri R.K. Panda, Accountant Member And Shri Anubhav Sharma, Judicial Member For the Assessee : Shri Saurabh Gupta, CA For the Revenue : Smt. Poonam Sharma, Sr. DR ORDER PER R.K. PANDA, AM: ITA No.6315/Del/2012 filed by the Revenue is directed against the order dated 11.10.2012 of the CIT(A)-II, Dehradun, for AY 2007-08. ITA No.6314/Del/2012 filed by the Revenue is directed against the order dated 12th October, 2012 of the CIT(A)-II, Dehradun, for AY 200910. Since identical issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Nivaran-90 cough syrup sachets and shampoo sachets was not old machinery. It was explained that the manufacturing was carried exclusively out of new machinery whose value was ₹ 33,95,881/-. The assessee produced the list of both type of machinery along with bills and vouchers with the manufacturing capacity. It was also submitted that the claim made originally is a sum of ₹ 133.96 lakhs in terms of entry against column No.26E of Form No.10CCB and the relevant claim made for depreciation at ₹ 17,48,433/- was an inadvertent error. It was submitted that the depreciation disallowed would otherwise be covered by the exemption u/s 80IC of the Act and as such there was no separate benefit to the assessee out of the excess claim of depreciation. 4. The AO analysed the submissions made by the assessee and rejected the claim of deduction u/s 80IC of the Act by observing as under:- The assessee has drawn my attention to the survey report whereas per Annexure A1 the unused items of machinery numbering 13 items are listed. It is the case of the assessee that all these machines were mostly electric motors and other electrical appliances which were meant for use in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee and that there is no dispute with regard to the assessment by those Departments for the subject year. It is also urged by the assessee that in respect of the claim u/s 80 1C of the Act, it is only the machinery that has been actually utilized for the purpose of manufacture of the product produced during the year which would be relevant and which has to be reckoned. My attention has specifically been invited to Explanation-2 to sub-section (3) of Section 80IA to state that usage of old machinery alongwith new ones is permitted under the Act subject to the conditions that the old machinery does not exceed the value of the total machinery by 20%. It is stated that by and large the old machinery has not been used for the purpose of manufacture and, therefore, the claim u/s 80 1C made by the assessee is both correct and proper. It is also further stated that junk machinery is not required to be taken into account for the purpose of computing value of machinery for computing rebate under section 80 1C of the Act. The sub-section itself provides for reckoning only the value of the machinery used in the manufacturing operations during the year. The assessee has produced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of record that the plant and machinery actually used for manufacturing comprised less than 20% of used machinery. In view of this fact and the clear language of the relevant statute indicating that the plant and machinery actually used for the purposes of manufacturing should contain not more than 20% of old machinery, the contention of the Appellant is accepted. Strength is also drawn from the case of CIT vs Kopran Chemicals Co. Ltd. reported in 112 ITR 893 (Bom) where a claim u/s 80J (corresponding to section 15-C of the I.T. Act, 1922) was being considered. In this case also the machinery actually used for the purposes of business was determined to decide the case. Thus the Appellant succeeds with respect to these 5 grounds. 6. Aggrieved with such order of the CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds:- Whether Ld. CIT (A) has erred in law and on the facts of the case by allowing claim of deduction u/s 80IC of the I.T. Act, 1961 by interpreting the provisions of Explanation 2 to sub-section (3) of section 80IA made applicable to section 80IC by sub-section (4) of section 80IC to mean that for the purpose of determining ratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue is accordingly allowed for statistical purpose. ITA No.6314/Del/2012 (A.Y. 2009-10) 8. The ground raised by the Revenue reads as under:- Whether Ld. CIT-A was justified in law and on the facts of the case to allow the claim of deduction under section 80IC of the I.T. Act, 1961 for assessment year 2007-08 in spite of the fact that the assessee did not fulfill the conditions laid down in Section 80IC Sub Section (4) and consequently allowing claim of deduction for the assessment year 2009-10 9. After hearing both the sides, we find, the ld.CIT(A), following his order for AY 2007-08 has allowed the claim of deduction u/s 80IC. We have already decided the issue for AY 2007-08 and the matter has been restored to the file of the CIT(A) with certain directions to decide the issue afresh. Following similar reasonings, the matter is restored to the file of the ld.CIT(A) with similar directions for deciding the issue afresh. The ground raised by the Revenue is accordingly allowed for statistical purposes. 10. In the result, both the appeals filed by the Revenue are allowed for statistical purpose. Order pronounced in the open court on 27.04.2022. - - Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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