TMI Blog2008 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the assessment years 2000-01 and 2001-02 respectively. These two appeals are being disposed of by this common judgment. 2. The short issue which arose for consideration before the Tribunal was whether the respondent/assessee was entitled to deduction as claimed, in respect of the profits derived from an industrial undertaking set up in assessment year 1994-95. 3. The Tribunal came to the conclusion that the respondent/assessee was entitled to the claim made by it for the reasons given in the impugned judgment. We are of the view that the impugned judgment of the Tribunal deserves to be sustained for the reasons given hereinafter. Before we elucidate the reasons for arriving at such a conclusion, the following undisputed brief facts require to be noted :- 3.1 The respondent/assessee in the previous year 1993-94 had set up an industrial undertaking for the purpose of manufacture of photo albums. The respondent/assessee commenced manufacture on 24.03.1994. The respondent/assessee also got itself registered as a small scale industrial undertaking. 3.2 In the assessment year 1994-95, which was the first and the initial year, the assessee suffered a loss. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bonafide. In examining the claim under the provisions of Section 80-IB (3) (ii), the Assessing Officer noted that in order to be eligible for deduction, an undertaking which was a small scale industrial undertaking had to commence the production at any time during the period beginning on 01.04.1995 and ending on 31.03.2000. The Assessing Officer having noted the fact, based on certificate dated 11.05.1994 granted by the Government of Haryana, that the assessee commenced the production on 24.03.1994, came to the conclusion that it was not entitled to the deduction as it had commenced production outside the defined statutory period. Consequently, the respondent/assessee's claim for deductions both under Sections 80-IA and 80-IB was disallowed and a sum of Rs 8,46,602/- was added back to the income. 5. Aggrieved by the order of the Assessing Officer, the respondent/assessee preferred an appeal to the Commissioner of Income-tax (Appeals)-XVI, New Delhi [hereinafter referred to as 'CIT(A)']. The CIT(A) dismissed the appeal of the respondent/ assessee and, in particular, rejected the plea of the respondent/ assessee that it was entitled to a deduction under sub section 3 (i) of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80-IA with effect from 01.04.1991. This provision has undergone amendment several times. For the purpose of the disposal of the present appeal, it would be sufficient, if a note is made of the fact that the Section was amended by the Finance Act, 1992 with effect from 01.04.1993, thereafter by the Finance Act, 1993 with effect from 01.04.1994, then the Finance Act, 1994 with retrospective effect from 01.04.1994 and with effect from 01.04.1995, then by Finance Act, 1995 with effect from 01.04.1996, then by Finance Act (No. 2), 1996 with effect from 01.04.1997, by Finance Act, 1997 with retrospective effect from 01.04.1996 and with effect from 01.04.1998, and then the Income Tax (Amendment) Act, 1998 with retrospective effect from 01.04.1995 and with effect from 01.04.1998 and the Finance Act ( No. 2), 1998 with retrospective effect from 01.04.1998 and with effect from 01.04.1999 etc. 8.1 In the present case, even though it is an admitted fact that the respondent/assessee commenced production on 24.03.1994 it did not claim deduction in the initial year relevant to the assessment year 1994-95, and thereafter, till the assessment year 1997-98 in view of the fact that both in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. It would be relevant for the purpose of present appeals to note that by virtue of the Finance Act, 1999 with effect from 01.04.2000, Section 80-IA of the Act was bifurcated into two sections namely 80-IA and 80-IB. The deductions which were available under Section 80-IA (2) (iv) (a) were made available under Section 80-IB (3) (i). The relevant extract of Section 80-IB (3) (i) and (ii) are reproduced herein below :- '80-IB (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computation the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage and for such number of years as specified in this Section. (2) xxxx xxxxx xxxxx (3) The amount of deduction in the case of an industrial undertaking shall be twenty-five percent (or thirty per cent where the assessee is a company), of the profits and gains derived from such industrial undertaking for a period of ten consecutive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee earned profit was the assessment year 1998-99. The respondent/assessee claimed deduction in the said assessment year. Similarly, in the assessment year 1999-00, the assessee once again claimed deduction as it had earned profits. In both these years, the Assessing Officer as noted herein above, accepted the return under Section 143 (1) (a) of the Act. The respondent/assessee continued as evident from the narration herein above, to claim deduction in the assessment year 2000-01 and 2001-02. The rationale advanced by the Assessing Officer that the assessee was not entitled to deductions either under Section 80-IA or 80-IB (3) (ii) was erroneous for the reason that the Assessing Officer overlooked the fact that in the initial year relevant to the assessment year 1994-95, the deduction to the assessee would have been available under Section 80-IA (2) (iv) (a) of the Act as it then obtained in the assessment year 1994-95. There was no distinction between a small scale undertaking and any other undertaking. The Assessing Officer in our view, wrongly rejected the claim of the respondent/assessee for the assessment years under consideration i.e., assessment years 2000-01 and 2001-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
