TaxTMI 
TaxTMI 
2010 (10) TMI 748
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....y to the provisions of section 80IB on a plain reading and literal interpretation of the law and hence deserves to be deleted. 4. On appreciation of the facts and circumstances of the case and interpretation of law, the ld. CIT(A) has erred in confirming the action of the ld. AO treating interest income amounting to Rs.800/- as a non-manufacturing income not eligible for deduction u/s 80IB of the Income-tax Act, 1961. The action of the ld. CIT(A) is contrary to the provisions of section 80IB on a plain reading and literal interpretation of the law and hence deserves to be deleted. 5. On appreciation of the facts and circumstances of the case and interpretation of law, the ld. CIT(A) has erred in confirming the addition made by the ld. AO to the tune of Rs.4,00,000/- out of unsecured loan, treating the same as unexplained cash credit u/s 68 of the Income-tax Act, 1961. The action of the ld. CIT(A) is based on presumption and surmises, and is contrary to the facts and circumstances of the case and deserves to be deleted. 6. On appreciation of the facts and circumstances of the case and interpretation of law, the ld. CIT(A) has erred in confirming the addition made by the ld.....
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....1,350/- as a non-manufacturing income not eligible for deduction U/s, 80IB of the Income tax Act, 1961. The action of !he Learned Commissioner of Income Tax (Appeals) is contrary to the provisions of section 80IB on a plain reading and literal interpretation of the law and hence deserves to be deleted, 04. On appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax Appeals) has erred in confirming the action of the Learned Assessing Officer treating interest income amounting to Rs.1,000/- as a non-manufacturing income not eligible for deduction U/s 8OIB of the Income tax Act, 1961. The action of the Learned Commissioner of Income Tax (Appeals) is contrary to the provisions of section 8OIB on a plain reading and literal interpretation of [he law and hence deserves to be deleted, 05. Oh appreciation of the facts and circumstances of the case and interpretation of law, the Learned Commissioner of Income Tax (Appeals) has erred in confirming the action of the Learned Assessing Officer in not granting deduction U/s. 80IB of the Act from the profits and gains of the appellant on the basis that the industrial undertaki....
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....ufacturing activities till 30.9.2002. The assessee had claimed deduction under section 80IB in respect of this unit. However, after 30.9.2002 the assessee did not claim any deduction under section 80IB for this unit. With effect from 1.10.2002 the assessee started operating from Plot No.49, Survey No.126/P, Amli Industrial Estate, Silvasa, D& N.H. At the new place the assessee carried out manufacturing activities, declared business profit of Rs.11,03,398/- for the period from 1.10.2002 to 31.3.2003. According to the AO assessee claimed 100% deduction for 5 consecutive years in respect of industrial undertaking situated at Piparia called Unit No.1 and thereafter assessee ought to have been only allowed deduction at lesser rate i.e. @ 25% for next five consecutive years. Instead of this assessee shifted his business to new place at Amli, Silvassa and again started claiming 100% deduction. The AO mentions that even though the assessee has constructed building, installed new plant and machinery at the new place but the fact remains that entire business was shifted from one place to another. Thus assessee has not in fact started a new business but only has reconstructed his existing bus....
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....sing down his existing unit the assesses has started a new unit at different place which amounts to reconstruction of a business already in existence. 05. With respect to your good self's allegation that the unit is formed by reconstruction of a business already in existence I would like to bring to your kind notice the factual aspects of the case, which are briefly stated as under: 1. The industrial undertaking is engaged in manufacturing of Corrugated Boxes. 2. From 1st day of October 2002, my client assessee has started a new industrial undertaking with Suitable investments in fixed assets like plant and machinery, factory building, land etc. at Survey No. 126/P, Amli Industrial Estate, Silvassa, Dadra & Nagar Haveli, In view of starting this undertaking with new plant and machinery, factory building and new facilities etc. this undertaking is a new undertaking. 3. My Client assessee has actually created a new infrastructure for manufacturing Corrugated Boxes and the unit so created is independent and is a viable unit by itself and does not need - recourse from any other unit. 4. It in an independent unit capable of manufacturing corrugated boxes on its own which ....
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....business because old business has not ceased functioning and its identity is not lost or abandoned. (2) Certificates and licences obtained by the assessee from various authorities reveal that it was given permission to shift the factory from old location to new location. (3) The debtors and creditors, ownership of structure and product remained the same as in the old unit. (4) Sales-tax Department has issued certificate for change of location of factory premises to the new address. (5) There are no incorrigible argument supported by logic and cogent facts as to how investing new capital, constructing new building at new location and new plant and machinery would constitute new unit. 11. Since the assessee failed to prove that the industrial undertaking for which deduction u/s 80IB is claimed is a newly established industrial undertaking and not formed by reconstruction of existing business assessee will not be entitled to such deduction for the new unit. 12. We have heard the rival submissions and perused the material on record. The claim of ld. AR is that once new capital is invested, the new industrial undertaking is set up at new location, new plant and machine....
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....r than the assessee shall not be regarded as machinery or plant previously used for any purpose, if the following conditions are fulfilled, namely - (a) such machinery or plant was not, at any time previous to the date of the installation by the assessee, used in India; (b) such machinery or plant is imported into India from any country outside India; and (c) No deduction on account of depreciation in respect of such machinery or plant has been allowed or is allowable under the provisions of this Act in computing the total income of any person for any period prior to the date of the installation of the machinery or plant by the assessee. Explanation 2 -Where in the case of an industrial undertaking any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed twenty percent of the total value of the machinery or plant used in the business then for the purposes of clause (iii) of this sub-section, the condition specified therein shall be deemed to have been complied with. (iv) in a case where the industrial undertaking manufactures or p....
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.... ITR 19 (Ker)held that reconstruction is the rejuvenation or rehabilitation of an existing undertaking. The original business of the undertaking continues to exist without there being identity loss. In CIT vs. Simon Marshal Ltd. (1986) 161 ITR 817 (Bom) Hon. Bombay High Court held where a new plant was set up in an extension of the premises where the assessee was carrying on a business of manufacturing nyloc-nuts, did not mean to reconstruction of business already in existence, therefore, it was a case of new industrial undertaking coming into existence entitling relief under section 80J. 13. Considering all these authorities we are of the considered view that it would be a case of splitting up if process of manufacturing of corrugated boxes is divided into several activities and each activity is separately carried out or a separate and independent account thereof are kept and separate and independent transactions in respect of each activity is carried out generating profit from each activity independently and separately, which were earlier carried out in the single unit. 14. It would be a case of reconstruction if at the same place where the already existing unit is function....
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....Asst. Year 2002-03 in the case of ITO vs. M/s Computer Force, vide order pronounced on 30.7.2010 vide para 8 to 10 as under :- "8. Though, the issue on facts can easily be decided in favour of the assessee because on the fact of it, this is neither a case of re-construction nor a splitting up of an already existing business, but formation of an altogether new industrial unit, however, due to a technical question being raised by the A.O. hence an elaborate discussion is required. On careful appraisal of the facts of the case, it is a clear cut case of a new business undertaking which was set up during the year under consideration. But before appreciating those factual matrix we have to deal with the reasons of the AO which appears to be innovative and in our humble understanding of Statute cannot be sustained in the eyes of law. Words and Expressions used in the Statute have legal meaning. Words which expressed a legal concept must have attributed to their legal meaning. Meaning thereby a technical word used in a Statute must have a technical sense precisely ascribed to them and those technical words should not be given a meaning in popular sense. We take support of maxim "utiloq....
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....onsidered by the AO but in a different manner. The fact was that the old unit at Mogarwada Damon was closed down in the year 1998. This fact was moulded by the AO in the form that the said old unit was closed down which had given birth to a new unit at a different place by shifting the business from one place to another. Even this reasoning of the AO cannot be approved because the presumption that the old unit had give a birth to new unit had no legal basis no legal sanctity and above all without any cogent evidence. Undisputedly the new unit came into existence after the gap of few years. It was undisputedly started in the year 2002. Surprisingly the AO has cited the decision of Hon. Karnataka High Court in the case of Canara Wire and Wire Products Ltd. vs. CIT reported as 196 ITR 426 (Kar). It is in respect of the claim of deduction u/s 80I of the IT Act, 1961. The Hon. Court has found that the assessee had merely invested large amount in an already existing unit. Because of the new installations there was substantial increase in production capacity. However, the Court has clarified that a new unit must come into existence which independently produces articles either same o....