TMI Blog2022 (12) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on or before 31.03.2017, along with supporting documents. This facts has not been denied by the lower authorities. The assessee company has commenced sale on 29.04.2017 and state that the said fact is sufficient to prove that the plant and machineries were installed prior to this as it was impossible to commence the sale without preliminary work such as trial production of run, training of personnel, etc. much before the commencement of sale. The A.O. has only relied on the audited profit and loss account which disclosed loss due to excess of expenses and also the audited balance sheet and the return of income. It is pertinent to point out that the provision of section 32AC is a beneficial provision inserted vide Finance Act, 2014 to promote and encourage business of manufacture or production of any article or a thing by way of investment allowance for plant or machinery and for this purpose even the threshold limit of investment was reduced from Rs.100 crores to Rs.25 crores. This clearly implies that the said beneficiary provision is to be construed so as to entitle the assessee with the benefit of additional deduction. A.O. in the present case has only relied on the aud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04.09.2018, declaring current year loss at Rs.14,12,48,379/- and deemed total income u/s.115JB of the Act (-) 7,79,84,343/-. The assessee s case was selected for scrutiny and assessment order u/s. 143(3) of the Act was passed by the A.O. dated 17.12.2019, by making disallowance of deduction claimed u/s. 32AC(1A) of the Act. 4. The assessee was in appeal before the ld. CIT(A), as against the assessment order who allowed the appeal of the assessee. 5. The Revenue is in appeal before the Tribunal, challenging the order of the ld. CIT(A). 6. It is observed that the assessee has claimed an investment allowance u/s.32AC(1A) of the Act, amounting to Rs.14,12,48,379/-, being 15% of the total installed machinery value of Rs.94,16,55,861/-. It is found that the A.O. has disallowed the same on the ground that the assessee company has not earned any trading and manufacturing activity for the year ending 31.03.2017 and that the income from manufacturing and sale of sweets and namkeen is declared as Nil. The A.O. further observed that the assessee has shown fixed asset under capital work-in-progress and has not claimed any depreciation on fixed assets for the impugned year. The A.O. h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of the said machineries. The ld. DR relied on the order of the A.O. 9. The ld. Authorized Representative (AR for short), on the other hand, controverted the same and contended that all the documentary evidences pertaining to acquisition as well as installation was filed before the A.O. and that the A.O. has failed to consider the same. The ld. AR relied on the decision of the Hon'ble Supreme Court in the case of Carew and Co. Ltd. v. Union of India (A.I.R. 1975 S.C. 2260) and Hon ble Karnataka High Court decision in the case of CIT vs. KBD Sugars Distilleries Ltd. (ITA No. 773/2009, vide order dated 16.10.2015). The ld. AR also relied on the decision of the coordinate bench in the case of DCIT vs. SNJ Distillers Pvt. Ltd. (in ITA No. 2993/Chny/2019 vide order dated 04.11.2020). 10. Having heard the rival submissions and perused the materials on record. It is observed that the assessee has furnished all the supporting evidences before the A.O. as well as before the ld. CIT(A) pertaining to the acquisition of machineries, amounting to Rs.94,16,55,861/-. The assessee s claim for deduction u/s.32AC(1A) of the Act was denied by the A.O. on the ground that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons have specified that engaging in business is different from commencement of production and that engaging in business would according to the assessee also includes trial run of the installed machineries which took place on or before March 31st. 13. The A.O. has relied on the audited balance sheet of the assessee company as on 31.03.2017 and the return of income filed for A.Y. 2017-18. The A.O. held that since there was no installation of new plant and machinery during the impugned year and only the capital work-in-progress was shown at Rs.2,26,89,26,883/- as on 31.03.2017. The A.O. inferred that the plant and machinery was still under construction, establishing, installation, etc. and was not ready to be put to use. The A.O. also held that capital workin- progress will not include plant and machinery. The assessee controverted the same by stating that plant and machinery were shown under capital work-in-progress for the reason that the existing sales of the company was not effected during the financial year 2017 and the A.O s allegation that depreciation was not claimed by the assessee was due to the reason that as it was in the stage of trial run, depreciation was not claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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