SSI status and eligible machinery valuation supported Section 80IB deduction despite the higher gross investment figure.

Deduction under Section 80IB was available to a small scale industrial undertaking where the assessee held provisional SSI registration before the relevant cut-off date and the eligible plant and machinery investment, computed under the applicable governmental clarification and statutory criteria, remained within the prescribed limit. The higher gross investment figure alone was not determinative because notified exclusions had to be applied to the computation. On the facts accepted by the revenue authorities, the unit retained SSI status and satisfied the investment threshold, so the disallowance was rightly deleted and the deduction allowed.

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Issues: Whether the assessee was entitled to deduction under Section 80IB of the Income-tax Act, 1961 as a small scale industrial undertaking despite the Assessing Officer's view that the investment in plant and machinery exceeded the prescribed limit.

Analysis: The assessee had provisional SSI registration prior to the relevant cut-off date and the investment in plant and machinery had to be tested in the light of the applicable governmental clarification and the statutory limit under Section 11B of the Industries (Development and Regulation) Act, 1951. The computation placed on record, after applying the notified exclusions for certain items, showed eligible plant and machinery investment within the permissible limit. The continued SSI registration and the factual position accepted by the revenue authorities supported the assessee's entitlement.

Conclusion: The assessee was entitled to deduction under Section 80IB and the disallowance was rightly deleted.

Ratio Decidendi: Where an industrial unit retains SSI status and the eligible investment in plant and machinery, computed in accordance with the applicable notification and statutory criteria, remains within the prescribed limit, deduction under Section 80IB cannot be denied on a higher gross figure alone.

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