9911796707
TMI Blog2022 (4) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.12.2009 determining the total income of the assessee at Rs. 5,99,33,417/-. The assessee filed an application u/s 264 of the IT Act before the CIT, who passed an order on 14th May, 2010 u/s 263 restoring the issue to the file of the AO for denovo assessment. The application u/s 264 was later rejected by the CIT. Subsequently, the AO issued notice u/s 143(2) in response to which the ld. AR of the assessee appeared before the AO from time to time and filed the requisite details. 3. During the course of assessment proceedings, the AO noted that the assessee has claimed deduction u/s 80IC of the Act and arrived at nil net income. He noted that the assessee firm deals in the manufacturing of two products namely, Velvette Herbal shampoo and Nivaran-90 cough syrup. He further noted that a survey u/s 133A was conducted at the premises of the assessee on 18th July, 2007 so as to ascertain the correctness of the claim of exemption u/s 80IC of the Act as made by the assessee. During the said survey, the assessee was required to prove the composition and constitution of the machinery as noticed during the survey. The examination revealed that the old machinery valued at Rs. 74,71,382/- had b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that only some part of the other four items had reported previous usage. The items stated be used ones are Reactor machine (a Mixing vessel) and cooker candy (for manufacture of candys). No manufacturing of candy was done during the year and so these machines remained unused. The packing machines at Sr. No.21 and 22 were used for Nirvan Liquid Cough syrup. It is further pointed out that the assessee firm did have junk machinery which were all stored in the adjoining premises of the Bajaj factory. It is submitted that Bajaj factory had no electricity connection or license for manufacturing and was totally in-operational and further that the premises was always utilized for storage of junk. This statement is testified by the classification in the Survey Report. Before me, a reconciliation statement of the total machinery comprising 26 items alongwith their valuation has been filed. These items are stated to have been physically verified at the time of survey and are extracted on pages 5 and 6 of the survey report. The aggregate cost of these items is reported as Rs. 29,49,976/- plus Rs. 4,55,410.80 /- = Rs. 34,05,386.80/-. The assessee submits that only these machines have been util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e which have not taken part in the manufacturing operations is not quite feasible. The presumption is that whatsoever machinery was there with the assessee such had been utilized for the purpose of manufacture during the year which is also supported by the Form 10CCB filed by the assessee which the assessee now claims to be an inadvertent error. It is further seen that these documents have been produced at the fag end of the year and it is impossible to verify the veracity of bills of machines filed and it is also difficult to make third party inquiries. The- assessee had almost twenty months from the date of passing of order u/s 263 when it could have filed documents properly in support of the claim. The Inspector of this Circle was also authorized to make an on the spot inquiry of the unit. He has reported that only herbal cough syrup is being manufactured. His detailed report is placed on record. In the circumstances no deduction can be given for the value of old and junk machinery as claimed by the assessee. The claim of deduction u/s 80IC of the Act as sought for by the assessee, is therefore, rejected." 5. In appeal, the ld.CIT(A) allowed the claim of deduction u/s 80IC of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 80IA made applicable to section 80IC by sub-section (4) of section 80IC of the I.T. Act, 1961?" 7. We have heard the rival arguments made by both sides, perused the order of the AO and CIT(A) and the paper book filed on behalf of the assessee. We find, the ld.CIT(A), without going through the survey report, where the authorized officer had given that most of the machinery physically verified during the survey were found to be old/second hand and were never used by the assessee allowed the claim of deduction u/s 80IC of the IT Act, 1961. Further, the findings of the AO that some of the machinery were transferred to assessee's business premises from Chennai where machines had been used by the assessee were not considered by ld. CIT(A) before allowing the claim of deduction u/s 80IC which in our opinion is not justified under the facts and circumstances of the case. We further find the assesseee did not file any revised form No.10CCB of the audit report before the survey to prove his claim of inadvertent error and value of old machinery and depreciation claimed and this issue was not properly dealt with by the ld.CIT(A). Since the ld.CIT(A) has allowed the claim of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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