TaxTMI 
TaxTMI 
TaxTMI 
2009 (12) TMI 707
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....cord. The facts in brief are that the assessee is a firm. For the assessment year under appeal, it filed the return of income declaring total income of Rs. Nil on October 29, 2005. In this return of income, an amount of Rs. 6,18,451 is claimed as deduction under section 80-IB of the Income-tax Act, 1961. The return of income was accompanied by computation of income and audited accounts along with audit report in Forms 3CB and 10CCB. The assessee is engaged in the business of manufacturing of reprocess granules. The manufacturing unit is located in the Union Territory of Daman, which is a backward area as specified in the Eighth Schedule to the Income-tax Act. The auditor in Form 10CCB stated that the assesse had started its manufacturing....
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....s Act. Therefore, as observed by the hon'ble High Court in the case of Madras Machine Tools Manufacturers Ltd. v. CIT [1975] 98 ITR 119 (Mad) the undertaking means `licensed undertaking'. As stated above, the appellant can only take one stand and that is either it had not started the production before March 31, 2004 or it has violated the provisions of the Factories Act. In either case, in view of the above discussion deduction under section 80-IB cannot be allowed. The appellant has failed to show the applicability of section 6(2) of the Factories Act in its case by producing copy of application that when it started the production three months had already passed from the date of application and no communication was received from the Inspec....
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....tivities were commenced before March 31, 2004. (3) On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) has further erred in not deducting depreciation pertaining to earlier period. (4) The appellant craves leave to add, alter or vary any of the grounds of appeal. At the time of hearing on behalf of the Revenue, Shri Vinod Tanwari appeared and contended that as per rule 3(1) of the Goa, Daman and Diu Factories Rules, 1985, "no site shall be used for the location of a factory or no building in a factory shall be constructed, reconstructed, extended, taken into use as a factory or part of a factory or any other extension of plant or machinery shall be carried out in a factory unless previo....
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...., which is evident from the SSI registration certificate. Further, the assessee has stated that purchases and sales were made as on March 31, 2004. In this background, whether the assessee-company has started its production or not could have been verified by the Assessing Officer by making spot enquiries in this regard. Admittedly no such enquiry has been made. The same issue was decided by this Tribunal in favour of the assessee in I. T. A. Nos. 2253 and 2254/AHD/2009 for the assessment years 2005-06 and 2006-07, order dated November 16, 2009, in the case of Adarsh Packaging v. ITO, wherein the Tribunal decided the issue by observing as under : "The Ahmedabad Benches of the Tribunal have dealt with the identical question in a few cases an....
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....im under the section and that if there is any violation of any provisions of other statutes then the assessee may have to explain the same to the authorities executing those laws and the assessee may even face penal consequences under those laws but that cannot affect the claim under the Income-tax Act which only requires the assessee to manufacture or produce an article or thing. Thus, the Tribunal upheld the order of the Commissioner of Income-tax (Appeals) granting the deduction. A similar order was passed by the same Bench on the same day in the case of ITO v. Samrat Healthcare in I. T. A. No. 1006/Ahd/2009 for the assessment year 2005-06. The order of the Tribunal in the case of Padmey Impex (supra) was followed by another Bench in Ahm....
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....the rules framed thereunder to commence manufacturing activity before issue of the said licence, it would be against public policy to allow the benefit of deduction under one statute in respect of any expenditure incurred by the assessee in violation of the provisions of another statute which also invites penalty under that statute. Thus even the Commissioner of Income-tax (Appeals) does not appear to have doubted the claim of the assessee that the manufacturing activity actually commenced before March 31, 2004. The reasoning of the Commissioner of Income-tax (Appeals) has not been accepted as correct in the aforesaid orders passed by the Ahmedabad Benches of the Tribunal. Therefore, respectfully following them, we hold that the assessee is....