i.t.a. no 477 of 2013 · - 3 - sec.143(3) of the act. the assessing officer concluded the...
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 28TH DAY OF JULY 2014
PRESENT
THE HON’BLE MR.JUSTICE N. KUMAR
AND
THE HON’BLE MR. JUSTICE B. MANOHAR
I.T.A. NO. 477 OF 2013
BETWEEN: M/S ACE MULTI AXES SYSTEMS LTD., A-50/49, II MAIN ROAD II STAGE, PEENYA INDUSTRIAL ESTATE BANGALORE 560 058 REPRESENTED BY ITS MANAGING DIRECTOR MR H L RAMESH AGED ABOUT 52 YEARS SON OF SRI H S LINGAHAIAH
... APPELLANT (BY SRI. S PARTHASARATHI, ADV.) AND THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 11(1) NO.59, HMT BHAVAN GANGANAGAR BELLARY ROAD BANGALORE - 560032
... RESPONDENT (BY SRI. K V ARAVIND, ADV.) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 24/05/2013 PASSED IN ITA
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NO.516/BANG/2011, FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE APPELLATE TRIBUNAL IN ITA NO.516/Bang/2011 DATED 24/05/2013; AND ETC.
THIS ITA COMING ON FOR ADMISSION THIS DAY, N. KUMAR
J. DELIVERED THE FOLLOWING:
JUDGMENT
The assessee has preferred this appeal against the
order passed by the Tribunal affirming the finding
recorded by the Commissioner of Income Tax that the
assessee is not entitled to claim deduction under
Sec.80IB(3) of the Income Tax Act, 1961 (for short, the
‘Act’), as in the 9th year it ceased to be small scale
industry.
2. Assessee is a company engaged in the business of
manufacture and sale of components/parts of CNC lathes
and similar machines. The assessee furnished its return
of income, admitting a total income of Rs.1.76 crores
which was initially processed under Sec.143(1) of the Act.
Subsequently, the case was subjected to scrutiny under
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Sec.143(3) of the Act. The Assessing Officer concluded the
assessment, determining the assessee’s income at
Rs.1,79,82,653/-, after disallowing certain expenses,
aggregating to Rs.2.91 lakhs. The Commissioner of
Income Tax, by virtue of the power conferred under
Sec.263 of the Act, initiated suo motto proceedings on the
ground that the assessment order was erroneous and pre-
judicial to the Revenue. According to the Commissioner,
the Assessing Officer has wrongly allowed deduction
under Sec.80IB(3) of the Act, as claimed by the assessee.
After hearing the assessee, he passed an order setting
aside the assessment order with a direction to decide the
claim under Sec.80IA/80IB. In pursuance to the said
direction issued, the Assessing Authority disallowed the
assessee’s claim of Rs.75,81,910/- under Sec.80IB(3) of
the Act. Aggrieved by the said order, the assessee
preferred an appeal to the Commissioner. The
Commissioner dismissed the appeal. Aggrieved by the
said order, the assessee preferred an appeal to the
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Tribunal. The Tribunal, on consideration of the rival
contentions, held, each assessment order is separate and
independent. The Revenue authorities had every power to
examine and analyze the facts and figures, as well as
relevant law point of each year to find out, all the
conditions are fulfilled or not. The value of the plant and
machinery exceed Rupees One Crore during the year
under consideration, which incidentally deprived the
assessee to call itself as a small scale industry and
therefore the Tribunal was of the view that the authorities
below were justified in denying the assessee’s claim for
deduction under Sec.80IB(3) of the Act. Accordingly the
appeal came to be dismissed. Aggrieved by the said order,
the assessee is before this court.
3. The substantial question of law that arises for
our consideration in this appeal is as under:
When once the eligible business of an
assessee is given the benefit of deduction under
Sec.80IB on the assessee satisfying the conditions
mentioned in Sub-sec.(2) of Sec.80IB, can the
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assessee be denied the benefit of the said
deduction on the ground that during the said 10
consecutive years, it ceases to be a small scale
industry?
4. Sec.80IB is an incentive provision. It provides
deduction in respect of profits and gains from certain
industrial undertakings other than infrastructure
development undertakings. For an industrial undertaking
to be eligible for the said deduction, it has to fulfill all the
conditions mentioned under Sub-sec.(2) of Sec.80IB. The
four conditions which are stipulated therein are, firstly,
the industrial undertaking must not have been formed by
splitting up or reconstruction of a business already in
existence. The second condition is, such an undertaking
is not formed by transfer of machinery or plant previously
used for any purpose. The third condition is that the
industrial undertaking manufactures or produces any
article or thing not being any article or thing specified in
the list in Eleventh Schedule. However, in respect of a
small scale industry undertaking, even that condition is
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waived. In other words, a small scale industry
manufacturing or producing any article or thing specified
in the list in the Eleventh Schedule, is also entitled to the
aforesaid deduction. The fourth condition is, the said
industrial undertaking employs 10 or more workers in a
manufacturing process carried on with the aid of power or
employs 20 or more workers in a manufacturing process
carried on without the aid of power. Once these four
conditions are fulfilled, the assessee is entitled to the
benefit under Sec.80IB of the Act. Sub-sec.(3) of Sec.80IB
provides the extent of deduction eligible under Sec.80IB
and also the number of years such a deduction is
available to such an undertaking. Sub-sec.(3) mandates
that the industrial undertaking shall be eligible for the
said deduction for a period of 10 consecutive years,
beginning with the initial assessment year. However, it is
subject to two conditions as stipulated therein. The
second condition is what is applicable to the case on hand
which provides, if the industrial undertaking is a small
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scale industry undertaking, it has to begin manufacture or
produce articles or things at any time during the period
beginning on the 1st day of April 1995 and end on the 31st
day of March 2002. This is a condition which a small
scale industry has to fulfill in addition to the conditions
mentioned in Sub-sec.(2) of Sec.80IB. Once all these
conditions are fulfilled, a small scale industry is entitled to
the benefit of deduction for a period of 10 consecutive
years beginning with the initial assessment year.
5. In the entire provision, there is no indication that
these conditions had to be fulfilled by the assessee all the
10 years. When once the benefit of 10 years, commencing
from the initial year, is granted, if the undertaking satisfy
all these conditions initially, the undertaking is entitled to
the benefit of 10 consecutive years. The argument that, in
the course of 10 years, if the growth of the industry is fast
and it acquires machinery and the total value of the
machinery exceeds Rs.1 crore, it ceases to have the said
benefit, do not follow from any of the provisions. It is true
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that there is no express provision indicating either way,
what would be the position if the small scale industry
ceases to be a small scale industry during the said period
of 10 years. Because of that ambiguity, a need for
interpretation arises. If we keep in mind the object of the
Legislature providing for these incentives and when a
period of 10 years is prescribed, that is the period,
probably, which is required for any industry to stabilize
itself. During that period the industry not only
manufactures products, it generates employment and it
adds to the wealth of the country. Merely because an
industry stabilizes early, makes profits, makes future
investment in the said business, and it goes out of the
definition of the small scale industry, the benefit under
Sec.80IB cannot be denied. If such a literal interpretation
is placed on the said provion, it would run counter to the
very object of granting incentives. It would kill the
industry. Therefore keeping in mind the object with which
these provisions are enacted, keeping in mind the
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industrial growth which is required to be achieved, if two
interpretations are possible, the courts have to lean in
favour of extending the benefit of deduction to an assessee
who has availed the opportunity given to him under law
and has grown in his business. Therefore we are of the
view, if a small scale industry, in the course of 10 years,
stabilizes early, makes further investments in the
business and it results in it’s going outside the purview of
the definition of a small scale industry, that should not
come in the way of its claiming benefit under Sec.80IB for
10 consecutive years, from the initial assessment year.
Therefore the approach of the authorities runs counter to
the scheme and the intent of the Legislature. Thereby
they have denied the legitimate benefit, an incentive
granted to the assessee. Both the said orders cannot be
sustained. Therefore the substantial question of law is
answered in favour of the assessee and against the
Revenue. Hence we pass the following:
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ORDER
The appeal is allowed. The impugned
order is hereby set aside. The original order of
granting the benefit of deduction under
Sec.80IB, is restored.
Ordered accordingly.
SD/-
JUDGE
SD/-
JUDGE
Rd/-
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IN THE INCOME TAX APPELLATE TRIBUNAL,
BANGALORE BENCH ‘C’
BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND
SHRI JASON P BOAZ, ACCOUNTANT MEMBER
ITA No.516/Bang/2011
(Asst. year 2005-2006)
M/s Ace Multi Axes Systems
Ltd., A-50/49, II Main Road,
II Stage, Peenya Industrial
Estate, Bangalore-58.
PA No.AACCA 3964 A
Vs
The Deputy
Commissioner of
Income Tax,
Circle-11(1),
Bangalore.
(Appellant) (Respondent)
Date of Hearing : 14.05.2013
Date of Pronouncement : 24.05.2013
Appellant by : Shri Dinesh, Advocate
Respondent by : Shri Etwa Munda, CIT-III
ORDER
PER GEORGE GEORGE K :
This appeal of the assessee company is directed against the order
of the CIT (A)-I, Bangalore dated 15.2.2011. The relevant assessment year is
2005-06.
2. The assessee has, in its grounds of appeal, raised six grounds.
However, all the grounds relate to a solitary issue, namely, whether the CIT(A)
is justified in upholding the disallowance of assessee’s claim of deduction u/s
80IB of the Act.
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Page 2 of 12 ITA No.516/Bang/2011
3. The facts of the issue, in brief, are as under:
3.1. The assessee is a company. It is engaged in the business of
manufacture and sale of components/parts of CNC lathes and similar machines.
During the year under consideration, the assessee had furnished its return of
income, admitting a total income of Rs.1.76 crores which was initially processed
u/s 143(1) of the Act. Subsequently, the case was subjected to scrutiny u/s
143(3) of the Act. After due examination of the books of account and the
details furnished by the assessee, the AO had concluded the assessment,
determining the assessee’s income at Rs.1,79,82,653/- after disallowing certain
expenses, aggregating to Rs.2.91 lakhs.
3.1.1. In the meanwhile, the jurisdictional CIT, in a suo motu action,
invoked the provisions of section 263 of the Act on the premise that the
assessment order was erroneous and pre-judicial to the revenue as the AO,
according to the CIT, had wrongly allowed deduction u/s 80IB (3) of the Act as
claimed. For the reasons set out in his order u/s 263 of the Act dated
16.1.2009, the CIT had set aside the assessment order with a direction to
decide the claim u/s 80IA/80IB accordingly.
3.1.2. Consequently, the AO, vide his order u/s 143(3) r. w. s. 263 of the
Act dated 14.12.2009, as per the directions contained in the CIT ‘ s order u/s
263 of the Act (supra) and for the reasons recorded therein, disallowed the
assessee’s claim of Rs.75,81,910/- u/s 80IB (3) of the Act.
3.2. Aggrieved, the assessee took up the issue with the CIT (A) for
reconsideration. After considering the elaborate contentions put-forth by the
assessee’s counsel, as recorded in his appellate order, the CIT (A) had, however,
negated the assessee’s claim. The relevant portions of the reasoning of the
CIT(A) are extracted as under:
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“16. Summary: S. 80IB is an incentive provision. It stipulates deduction in respect of profits and gains from certain industrial undertakings. Within this section a plethora of industries and business types have been given the benefit of such deduction if they fulfil the conditions mentioned in the concerned sub-section of s. 80IB of the Act. Some of such concerns/industries are ship, hotel, multiplex, theatres, housing projects etc. Sub-section (2) of s. 80IB provides such conditions for industrial undertakings including cold storage and cold chain facility and also Small Scale Industrial Undertakings (in short hence-forth SSIU). All the four conditions mentioned in s. 80IB (2) must be fulfilled to make the industrial undertaking eligible for the benefit of the claim u/s 80IB of the I.T. Act. Condition No.1 is that the industrial undertaking must not have been formed by splitting up or reconstruction of a business already in existence with an exception that in case of units specified u/s 33B of the I.T. Act this condition will not apply. The second condition is that such undertaking must not have been formed by transfer of machinery or plant previously used with the exception that the value of such machinery and plant previously used must not exceed 20% of the value of the total cost of the plant and machinery of such industrial undertaking. The third condition is that the industrial undertaking must produce or manufacture any article or thing other than any article or thing specified in the eleventh Schedule. Exception to this third condition is that an SSIU can avail 80IB benefit even if manufactures or produces articles or things specified in Eleventh Schedule. The fourth condition is that the industrial undertaking running with the aid of power must not have less than 10 employees and if it is run without power, the number of employees must be more than 20 employees. Thus, all the four conditions narrated above must be fulfilled, if the industrial undertaking desires to avail benefit u/s 80IB of I.T. Act. For a SSIU, there is also an extra condition i.e., it must be an IDR Act 1951 which in turn prescribes a limit for investment in plant and machinery to designate the industrial undertaking as SSI Unit. Thus, out of
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these five conditions, the first two conditions may be called static or unchangeable. In other words, if in the initial year of manufacture or production it is substantiated that it has fulfilled these two conditions the AO cannot on this ground in subsequent eligible years of the block period deny the benefit u/s 80IB. The rest three conditions are volatile and unstable. The industrial undertaking must show in each subsequent year of claim that these three conditions have not been violated. Such claims of the assessee have to face the analysis and scrutiny of the AO. Thus, since each AY is separate and independent, the revenue authorities had every power to examine and analyse the facts and figures as well as relevant law points of each year to find out whether all these three conditions are fulfilled or not. It is also the ratio of the cited in that case that the first two conditions have already been satisfied and it is assumed that the fourth condition has been fulfilled in that year and, hence, the relief. The same is also the ratio in the case of M/s. Nanak Dehydration (P) Limited v. Asst. CIT (2010) 134 TTJ Ahd D Tribl-1. The facts of that case was that the assessee was allowed deduction u/s 80IB from 1993-94 to 2002-03 but in the AY 2003-04 the claim was disallowed on the ground that in the initial year the industrial unit has been formed by reconstruction or splitting up of the existing unit. The ITAT held that it is not open to the AO to doubt the earlier acceptance of the Department in respect of reconstruction and splitting up to deny the claim in subsequent year because that violates the principles of consistency. But, it also laid down that – ‘Under the I.T. Act each year is a separate unit of assessment and taxable income as well as tax liability are to be determined keeping in view of the facts prevailing in that year and the law as applicable in that year.’
In the light of the above legal matrix as elaborated in Para 15 above, it can be palpably seen that the appellant has violated, the mandatory fifth condition. It is not doubted that in the initial AY, the appellant was an SSI unit, but, in the AY 2005-06, the investment in plant and machinery has admittedly exceeded the prescribed limit
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of Rs.1 crore. Therefore, it cannot be held as an SSIU. Thus, the fifth condition being violated openly and admittedly by the appellant, the relief sought for has to be denied in the AY 2005.06”
4. Aggrieved, the assessee has come up before us with the present
appeal. During the course of hearing, the learned AR contended more or less
what was presented before the first appellate authority. In furtherance, it was
argued that –
- the CIT (A) ought to have accepted the explanation and
refrained from upholding the disallowance of deduction u/s
80-IB of the Act;
- the CIT (A) ought to have appreciated that the assesse was
entitled to deduction u/s 80IB of the Act for the relevant
assessment year in accordance with s. 80IB (3) of the Act;
- the first appellate authority had also erred in upholding the
stand of the assessing officer that the condition that the
assessee was a Small Scale Industry which was required to
be proved for each of the year for claiming the deduction
u/s 80IB of the Act;
- he ought to have appreciated that the condition was required
to be proved in the initial year and once the eligibility is
proved in the initial year, the assessee was entitled to relief
for ten consecutive years and that the assessee having
satisfied the conditions, the CIT (A) ought to have allowed
the deduction as claimed in full.
4.1. To drive home his point, the learned AR had placed strong reliance
on the following case laws:
(i) CIT v. Nippon Electronics (India)(P) Ltd – (1990) 181 ITR 528 (Kar); &
(ii) Sami Labs Ltd v. ACIT -(2011) 334 ITR 157 (Kar)
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4.2. On his part, the learned D R had supported the stand of the
authorities below on the issue. The learned D R had relied upon the ruling of
the Hon’ble Delhi High Court in the case of Praveen Soni v. CIT reported in
(2011) 333 ITR 324 (Del).
5. We have carefully examined the rival submissions, perused the
relevant case records and also the case laws on which the parties concerned
have placed their reliance.
5.1. It was the stand of the AO that the assessee had invested in plant
and machinery at the end of the previous year relevant to the assessment year
under consideration which exceeded the prescribed limit for qualifying as a
SSIU as per the relevant provisions of s. 80IB (3) of the Act and, thus,
proposed to deny the claim of the assessee. This was contested by the
assessee on the premise that ‘nowhere in the section it is stated that the
manufacturing unit should be in the small scale sector for the entire period of
ten years or this is applicable for every previous year during the full tenure of
ten years.” [Source: Para 6 of the Asst. Order].
5.1.1. Rejecting the assessee’s assertion, the AO took a view that the
value of plant and machinery had exceeded Rs.1 crore as per the depreciation
schedule annexed to 3CD report, therefore, the assessee doesn’t come under
the purview of the definition of Small Scale Industry for the year under
consideration.
5.1.2. The above stand of the AO was contested before the first
appellate authority. The CIT (A) had analysed in detail the four conditions as
prescribed in s. 80IB (2) of the Act and observed that for an industrial
undertaking to avail such a benefit, it had to fulfil the above conditions. If a
SSI Unit desires to avail such a benefit, it has to fulfil the fifth condition too
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as prescribed in clause (g) of sub-section (14) to s. 80IB of the Act which reads
as under:
(g) “small-scale industrial undertaking” means an industrial undertaking which is as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation)Act 1951 (65 of 1951).”
5.1.3. For ready reference, the relevant portions of s. 11B of I (D & R)
Act, 1951 are extracted as below:
“11B. Power of Central Government to specify the requirements which shall be complied with by Small Scale Industrial Undertakings.
(1) The Central Government may, with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment under this Act to enable them to maintain their viability and strength so as to be effective in –
(a) ………………………………………………………………………………
(4) Notwithstanding anything contained in sub-section (1), an industrial undertaking which, according to the law for the time being in force, fell, immediately before the commencement of the Industries (Development and Regulation) Amendment Act, 1984, under the definition of an ancillary, or small scale, industrial undertaking, shall, after such commencement, continue to be regarded as an ancillary, or small scale, industrial undertaking for the purposes of this Act until the definition aforesaid is altered or superseded by any notified order made under sub-section (1).:
5.2. However, the learned AR argued that once the relief is allowed in
the initial year; such a relief cannot be denied in the subsequent years even if
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the investment in plant and machinery increases beyond the limit prescribed for
that year. Placing reliance on the ruling of the Hon’ble jurisdictional High Court
in the case of Nippon Electronic (I) (Pvt) Limited (supra), the learned A.R
argued that the claim u/s 80IB (3) of the Act should not have been denied.
5.3. We have perused the ruling of the Hon’ble Court (supra) wherein,
while considering the allow-ability or otherwise of deduction u/s 80J of the
Act, it has been held, among others, that …………the eligibility stands determined
in the initial assessment year and once an industrial undertaking is found eligible
in the initial year of manufacture, such benefit could be availed of in any of the
succeeding four years. With due respects, we would like to reiterate that the
assessee cannot take support in the said ruling as the issue, before the Hon’ble
Court, was entirely on a different footing in the sense that “……..the exemption
would not be available if, in the initial assessment year, the proportion of old
assets transferred or utilised for the new business is above 20% of the total
investment…………………” Therefore, the Hon’ble High Court was considering
fulfilment of conditions in formative years of industrial undertaking and once it
is found that the assessee had not fulfilled the conditions in the initial year of
operation, it is not entitled to deduction in the later year, irrespective of
position in those years.
5.3.1. In the instant case, the condition that is not complied with by the
assessee is a condition which is to be fulfilled on an year to year basis and not
merely in the initial/formative year alone. To elaborate further, the industrial
undertaking, to be eligible for the benefit of the claim u/s 80IB of the Act,
four conditions mentioned in section 80IB(2) has to be fulfilled. The first
condition is that the industrial undertaking must not have been formed by
splitting up or reconstruction of a business already in existence with an
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exception that in case of units specified u/s 33B of the I T Act, this condition
will not apply. The second condition is that such undertaking must not have been
formed by transfer of machinery and plant previously used must not exceed
20% of the value of the total cost of the plant and machinery of such industrial
undertaking. The third condition is that the industrial undertaking must
produce or manufacture any article or thing other than any article or thing
specified in the Eleventh Schedule. Exception to this third condition is that a
SSIU can avail the 80IB benefit even if manufactures or produces articles or
things specified in Eleventh Schedule. The fourth condition is that the
industrial undertaking running with the aid of power must not have less than 10
employees and if it is run without power, the number of employees must be more
than 20 employees. Thus all the four conditions narrated above must be
fulfilled if the industrial undertaking desires to avail benefit u/s 80IB of I T
Act. For a SSIU, there is also an extra condition i.e. it must be an SSI unit as
per explanation (g) given in 80IB(14) of I T Act which refers to Section 11B of
the IDR Act, 1951 which in turn prescribes a limit for investment in plant and
machinery to designate the industrial undertaking as SSI unit. Thus, out of
these give conditions; the first two conditions may be called formative or
unchangeable. In other words, if in the initial year of manufacture or
production, it is substantiated that it has fulfilled these two conditions, the
Assessing Officer cannot on this ground in subsequent eligible years of the
block period deny the benefit u/s 80IB. The rest of the three conditions are to
be fulfilled on year to year basis. The industrial undertaking must show in each
subsequent year of claim that these three conditions have not been violated.
Such claims of the assessee have to face the analysis and scrutiny of the
Assessing Officer. Thus, since each assessment year is separate and
independent, the revenue authorities had every power to examine and analyse
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the facts and figures as well as relevant law points of each year to find out
whether all these three conditions are fulfilled or not.
5.3.2. We have also perused the ruling of the Hon’ble jurisdictional High
Court in the case of Sami Labs Limited v. ACIT reported in (2011) 334 ITR 157
(Kar), in which the learned AR placed strong reliance. It has been ruled by the
Hon’ble Court that “An assessee is eligible to claim benefit of s. 10B only if it is
found eligible for the same in the initial year of manufacture; if the conditions
of s. 10B (2)(iii) are not satisfied in the year of commencement of production, it
cannot claim deduction in the subsequent years irrespective of the position in
those years………….”
5.3.3. In this connection, we would like to point out that this ruling of the
Hon’ble jurisdictional High Court cannot also come to the rescue of the present
assessee since the Hon’ble High Court was considering fulfilment of a formative
condition; whether the same has been complied with or not in the initial year of
industrial undertaking operation. Whereas the assessee’s claim is specifically
u/s 80-IB of the Act, wherein clause (g) of sub-sec.14 to s. 80-IB of the Act
mandates that (at the cost of repetition) –
(g) “small-scale industrial undertaking” means an industrial undertaking which is as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation)Act 1951 (65 of 1951).”
5.3.4. Incidentally, the assessee had made investment in plant and
machinery during the previous year relevant to the assessment year under
dispute, which exceeded the prescribed limit for qualifying as a small scale
industrial under taking. To avail the deduction u/s 80-IB of the Act, the
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assessee was required to fulfil the conditions as laid down in s. 80IB of the Act
as a whole.
5.3.5. At this juncture, we would like to recall the judicial view on the
issue. The Hon’ble Delhi High Court, in the case of Praveen Soni v. CIT reported
in (2011) 333 ITR 324 (Del), in an identical issue to that of the present one,
had observed, after analysing the provisions of s. 80IB of the Act, as under:
“13………………………………….Clause (g) of sub-s. (14) of s. 80IB of the IT Act only mandates that such an industrial undertaking should be regarded as small scale industrial undertaking under s. 11B of the IDR Act. As per s. 11B of the IDR Act, it is for the Central Government to lay down the conditions which are required to be fulfilled as regards small-scale industries. In the aforesaid Notification, the conditions which are mentioned for being regarded as small-scale industries are the ownership of plant and machinery and value thereof. Registration of such an undertaking under the IDR Act is not a condition for treating the same as small-scale industrial undertaking. That registration is prescribed for altogether different purpose, viz., to avail the benefit under the IDR Act either of s.11B or s. 29B. Thus, insofar as extending the provision of s. 80-IB of the IT Act is concerned, the only aspect which is relevant and is to be considered is as to whether the conditions stipulated in the Notification issued under s. 11B of the IDR Act for regarding the same as small-scale industrial under-taking are fulfilled or not…………”
5.3.6. Taking into account all the facts and circumstances of the issue as
discussed in the foregoing paragraphs and also, as rightly highlighted by the
AO, the value of plant and machinery had exceeded Rs.1 crore during the year
under consideration which incidentally deprive the assessee to call itself as a
Small Scale Industry, we are of the considered view that the authorities below
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were justified in denying the assessee’s claim for deduction u/s 80-IB(3) of the
Act. It is ordered accordingly.
6. In the result, the assessee’s appeal is dismissed.
Order pronounced in the open court on 24th day of May, 2013.
Sd/- Sd/-
(JASON P BOAZ) (GEORGE GEORGE K)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Copy to :
1. The Revenue
2. The Assessee
3. The CIT concerned.
4. The CIT(A) concerned.
5. DR
6. GF
MSP/ By order
Senior Private Secretary, ITAT, Bangalore.
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