SSI status and plant investment ceiling govern section 80IB eligibility; excess machinery investment defeats the deduction claim.

Deduction under section 80IB is available only where the assessee continues to qualify as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation) Act, 1951. The relevant eligibility test is applied with reference to the last day of the previous year, and investment in plant and machinery must remain within the prescribed ceiling. Where the assessee's fixed-asset investment, including machinery put to use and not put to use, exceeds that limit, SSI status is lost for the year concerned and the section 80IB claim fails.

---

---

Issues: Whether the assessee was entitled to deduction under section 80IB for the assessment year 2008-09 when its investment in plant and machinery exceeded the limit applicable to a small scale industrial undertaking.

Analysis: Deduction under section 80IB read with section 80IB(14)(g) is available only if the assessee satisfies the statutory definition of a small scale industrial undertaking under section 11B of the Industries (Development and Regulation) Act, 1951. The relevant test is to be applied with reference to the last day of the previous year, and the investment in fixed assets in plant and machinery must not exceed the prescribed monetary ceiling. On the facts, the assessee's investment in plant and machinery, including machinery put to use and not put to use, was far above the statutory limit, so the assessee could not retain SSI status for the year in question.

Conclusion: The assessee was not eligible for deduction under section 80IB for the assessment year 2008-09, and the disallowance was ly upheld.

Final Conclusion: The statutory conditions for SSI-based deduction were not satisfied for the relevant year, so the assessee's claim failed.

Ratio Decidendi: Eligibility for deduction linked to small scale industrial undertaking status must be satisfied on the last day of the previous year, and excess investment in plant and machinery disentitles the assessee from the benefit.

---