Section 80-IA deduction denied where the unit was found to be a reconstruction of an existing business.

Deduction under Section 80-IA was unavailable because the industrial undertaking did not satisfy the statutory requirements for a newly set-up unit. The material supported the findings that the business was formed by reconstruction of an existing undertaking and involved impermissible use of old plant and machinery beyond the prescribed limit. The Tribunal erred in treating the unit as new and in dislodging the concurrent findings of the lower authorities without adequate basis, so the Revenue's challenge succeeded and the assessment position was restored.

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Issues: Whether the assessee was entitled to deduction under Section 80-IA of the Income-tax Act, 1961 for the relevant assessment year, having regard to the statutory conditions governing a newly set up industrial undertaking and the restriction on reconstruction of an existing business and substantial use of old plant and machinery.

Analysis: Eligibility under Section 80-IA required the industrial undertaking to be newly set up within the prescribed period, not formed by splitting up or reconstruction of an existing business, and not to use transferred assets of the old business beyond the permissible limit. On the record, the conditions were not satisfied. The findings of the Assessing Officer and the Appellate Authority that the assessee was not entitled to the deduction were supported by the material, while the Tribunal had erred in treating the unit as a new unit and in reversing the concurrent findings without sufficient basis.

Conclusion: The assessee was not entitled to deduction under Section 80-IA, and the Revenue's challenge succeeded.

Final Conclusion: The order of the Tribunal was set aside and the assessment order, as affirmed in appeal, stood restored, with the Revenue succeeding on the substantive tax issue.

Ratio Decidendi: Deduction under Section 80-IA is unavailable where the industrial undertaking is found to be a reconstruction of an existing business or otherwise fails the statutory conditions regarding formation and permissible use of old plant and machinery.

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