Composite industrial undertaking treatment allowed for interconnected manufacturing units despite no separate books

An integrated industrial undertaking carrying on interconnected manufacturing activities through multiple connected premises was treated as one composite unit for deduction under section 80IB. The stitching, cutting, buttoning, storage and packing operations for children's garments formed a single manufacturing process, so the existence of allied locations did not create separate independent undertakings. Identification as Unit No. 47 and the absence of separate books for each connected activity did not, by themselves, justify denial of the claim. The recorded statement under section 131 did not displace the composite character of the undertaking, and the deduction was allowed.

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Issues: Whether the assessee was entitled to deduction under section 80IB in respect of a composite industrial undertaking where manufacturing operations were carried on through several closely connected units and separate books of account were not maintained for each unit.

Analysis: Section 80IB applies to an industrial undertaking that satisfies the statutory conditions, and the existence of multiple physical locations for allied or ancillary activities does not by itself convert each location into a separate standalone unit. The manufacturing process for children's garments involved interconnected activities such as stitching, cutting, buttoning, storage and packing, all of which formed part of one integrated undertaking. The fact that the unit was identified as Unit No. 47 did not make the other connected premises independent industrial undertakings. The registration for production of readymade garments for children and the absence of any distinct product from the allied activities supported the view that the undertaking was composite. The statement recorded under section 131 did not displace this position, and there was no basis to deny the claim merely because separate books were not maintained for each connected activity.

Conclusion: The assessee's undertaking was a composite industrial undertaking eligible for deduction under section 80IB, and the disallowance was not justified.

Final Conclusion: The appellate order granting deduction under section 80IB was upheld and the Revenue's appeal failed.

Ratio Decidendi: For section 80IB, an integrated industrial undertaking carrying on interconnected manufacturing activities through multiple connected premises is to be treated as one undertaking, and deduction cannot be denied merely because separate books are not maintained for each component location.

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