TaxTMI 
TaxTMI 
2012 (7) TMI 188
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.... 3. That, Ld. CIT(A) has failed to comprehend the factual substratum of the case and has further overlooked that, the ld. AO had erred in disallowing the claim of deduction made u/s 80IB(1) of the Act, of a sum of Rs. 7,01,56,903/- in respect of two separate and independent undertakings, set up by the assessee company, (which undertakings were separate and independent and could not regarded as those, which can be held to have been framed by splitting up on the reconstruction of the business already in existence, or had been formed by the transfer of a new business of machinery or plant used for any purpose). The denial of deduction, when there had been no violation or infringement of the statutory provisions of law was highly arbitrary, rendering the order of the assessment as unsustainable in law. 3.1 That, Ld. CIT(A) has failed to comprehend that the two undertakings ( in respect of which the deduction u/s 80IB had been claimed) though were situated on the same plot of land, (where its old undertaking I, was situated), yet were independent and had been set up with the new plant and machinery, in the years 1999 and 2003. Further, the undertaking set up in the year 2003 was als....
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.... the comments of the AO ( not a remand report as stated in the order) which were based upon such of the material which had not been made the basis for making the assessment and the comments were based on the survey proceedings, which was in the nature of "fresh evidence" and/or material. In fact, the survey had been conducted subsequent to the assessment and the alleged evident gathered could not be made use in the appellate proceedings. As held by the Rajasthan High Court in the case of CIT v. Rao Raja Hanut Singh reported in 252 ITR 528 as such the purported and alleged evidence could not have been used by the ld. CIT(A). That in any case and without prejudice the alleged evidence was no evidence and no adverse inference could have been drawn on the purported evidence/material. 3.9. That the Ld. CIT(A) has erred in placing heavy reliance on the report of the handwriting expert appointed by the AO in preference to the report of handwriting expert by the assessee. He ought to have referred the difference to be resolved by third handwriting expert in any case, so as to conclude that the Auditors Report has not been preferred by Sh. K.S. Aggarwal. 4. That the order of the Ld. C....
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....pose of business, is entirely misconceived and is incorrect and has arbitrarily been made. 8.1 That the ld. CIT(A) has failed to appreciate that the disallowance made was pre-mediated as no opportunity whatsoever was granted to the assessee company before making the disallowance. 9. That the ld. CIT(A) has erred, in holding that the claim of depreciation aggregating to Rs.11,43,293/- was excessively made. He has failed to appreciate that the AO had unilaterally held the 'plant' as 'building' and before so concluding the AO had provided no opportunity whatsoever that the alleged building was plant and as such the findings there was an excessive claim made was based on arbitrary findings, which are unsustainable in law. 10. That the Ld. CIT(A) has further erred in sustaining the addition of Rs. 42,123/- which sum had actually been paid by the assessee towards employee's contribution to Provident fund, within the time i.e. before furnishing the return of income and as such, such an amount was allowable deduction and could not have been treated as income u/s 2(24)(x), read with section 36(1)(va) of the Act. 11. That the ld. CIT(A) has further erred in confirming the levy of....
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....s income from Net profit as per profit & loss account on the basis of Net profit at Rs. 9,87,68,564/- and there was a difference of Rs. 2,13,45,418/-. The said sum was demonstrated by the ld. counsel from the paper book filed by the assessee that includes Rs. 1,30,43,418/- being the loss from 100% exported oriented unit and balance of Rs. 83,21,960/- from Meat Export division. The said Rs. 1,30,43,418 was not claimed by the assessee. It was argued that instead of Rs. 1,30,43,458/-, the loss which was to be allowed was Rs. 5,33,53,582/-being the difference in the rates of depreciation as per Income-tax Act and Companies Act. The set off of loss of Rs. 1,30,43,458/- was not claimed by the assessee for the reason that income of the assessee was exempt. It was argued by the ld. counsel for the assessee, Mr. C.S. Aggarwal, Advocate that the claim made by the assessee is supported by the decision of ITAT, Mumbai Bench in the case of Navin Bhart Industries Ltd. v. DCIT reported in 90 ITD 1 and in the case of CIT v. Galaxy Surfactants Ltd. 69 DTR 42 (ND). The Ld. counsel for the assessee argued that all the facts in the present claim were on record before both the authorities below. It was....
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....e above activity as under: "Unit % age of Deduction Year of operation Amt. of deduction Unit-1, Jammu NIL 11th year Nil Unit-2, Jammu 30% 6th year Rs.49,48,809/- Unit-3, Jammu.` 100% 2nd year Rs.6,52,08,094/- The above details have also been furnished by the assessee through the letter of the Counsel dated 12.10.2007. All the above units are claimed to be operating their industrial undertaking from Lane No.4, Phase-2, SIDCO Industrial Complex, Bari Brahamana, Jammu. As per Form No. 10CCB filed AO observed for FIL Industries Ltd. (Jammu Unit-2) and FIL Industries Ltd. (Jammu Unit-3) shows that both have common Central Excise/Service Tax Registration Number as AAACF3272AXM001.JAMMU and common Sales Tax Registration Number as 01181070576/JAMMU. Normally, if these were separate business and independent manufacturing units, these were required to be registered separately with the Central Excise/Sales Tax Authorities and obtained separate registration numbers. It therefore, appeared that Unit-2, Jammu and Unit-3, Jammu of FIL Industries Ltd. are not separate and independent industrial undertakings of the assessee i.e. FIL Industries L....
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.... 8. You should also furnish the bills relating to additions to Plant and Machinery in Unit-3 Jammu during the Financial Year 2003-04 relevant to the assessment year 2004-05 alongwith the audited accounts of the Unit including the schedule of fixed assets and the ledger where the individual items of Plant and Machinery have been recorded." 7.2 The assessee furnished its explanation vide letter dated 20.12.2007, which for the sake of clarity is reproduced as under: "Your kind attention is drawn towards section 80IB of the Income Tax Act, wherein the conditions for the industrial undertaking eligible for deductions and their compliance which are as follows:-Conditions: (a) Not formed by splitting up of business:- the industrial undertaking should not be formed by splitting up of the existing business. The assessee had not formed the Units by splitting up. All the units of the assessee are in dependent and formed by new plant & machinery. (b) It is not formed by the transfer to new business of machinery previously used for any business. All the manufacturing undertakings are separate and installed by new purchased machineries. (c) It manufac....
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....n obtained from the Pollution Department for different Units as they are in the same premises. It has been further submitted by the assessee in its reply dated 20.12.2007 that registration of all the units have been applied to the DIC, Jammu. Registration certificates of Unit-1 and Unit-2 were received and registration certificate of Unit-3 was under process. Copy of the registration certificate of Unit-1 and Unit-2 and application for registration of Unit-3 was also submitted alongwith the reply. In the reply it has been submitted that no documents were filed with SIDCO, Jammu since no separate capital investment subsidy/land allotment had been applied for Unit-2 and Unit-3. 7.4 It was observed by the AO that Unit 3, Jammu is running from the same premises as that of the earlier two Units, especially, the original unit which is identified by the assessee as Unit-1. As regards the application of Permanent Registration as Small Scale Enterprise for unit-3, the same has not been granted till date, even three and a half years after the formal application. As regards the Pollution clearance consolidated consent to operate all the three units is there. No separate permission has been....
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....O, Industrial Complex, Bari Brahamana, Jammu and neither it is registered with the department as per the records of this office. (2A) Date of original registration is 07/10/1994 with registration Sr. No.49/PBC-II/Jammu/94 in the name of Fungicides India Ltd; Bari Brahamana, Jammu. The name was changed to FIL Industries Ltd. w.e.f. 08.11.2000. Date of commencement of production is 31/03/1995. (B) The capacity expansion claim of the party has been decided by the Asstt. Commissioner Central Excise Division, Jammu vide order in original No.1-2/AC/Expansion/Ref/04 dated 09/03/2004 where under the unit has been adjudged as eligible for exemption benefit under Notification No.56/2002 dated 14.11.2002 The said capacity expansion pertains to the unit already registered with the department and the unit does not change its identity after expansion i.e. the same unit has got the expansion in order to avail the benefits of Notification No.56/2002 dated 14/11/2002 i.e. the same unit has got the expansion in order to avail the benefits of Notification No.56/2002 dated 14/11/2002. (C) Yes, the assessment for Central Excise purpose is done as one unit both for the unit prior to expansion a....
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.... Your kind attention is drawn towards section 80IB(2) of the Income Tax Act, wherein the conditions for the industrial undertaking eligible for deductions and their compliance has been laid out, which the company had complied with. Further, all the units are formed by the new plant & machinery and are operating independently hence eligible for deduction under section 80IB. Since all the conditions are required for claiming deduction u/s 80IB(4) as eligible for an industrial undertaking in an industrially backward state specified in the Eighth Schedule has been complied with, so deduction claimed u/s 80IB should be allowed to the assessee. Further submitted that Unit II was established in the financial year 1999-2000 and claiming deduction since then which has been allowed in the earlier years in assessments u/s 143(1) and 143(3) also. Similarly, Unit III was established in financial year 2003-04 and the deduction for the same has been allowed as per assessment u/s 143(1) in the first year of operation. Your kind attention is also drawn towards the following judgment: Commissioner of Income tax v. Indian Aluminimum Co. Ltd. 88 ITR 257 (Cal), wherein the honourable Hig....
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....milarly, the Inspector of the Factories and Boilers, Circle-2, vide his letter dated 26.12.2007 has confirmed that only one industrial unit in the name of FIL Industries Ltd. is working from Lane No.4, Phase-II, Bari Brahamana. The DIC, Jammu, vide letter dated 27.12.2007 has confirmed that there is no information available with them regarding Unit-3, Jammu. However, FIL Industries Ltd; Unit-2 has been registered as a separate Unit vide No.07/04/08901 dated 18/12/2002. The AO vide pages 27 to 30 of his order concluded the matter and the findings of the AO are reproduced for the sake of clarity as under: "However, capacity expansion of an industrial undertaking already in existence as has been certified to have been done in the case of the assessee by the Excise Authorities does not mean setting up of a completely new industrial undertaking. Capacity expansion is only for the original unit already in existence and which is no longer eligible for the benefits of section 80IB . No new industrial undertaking comes into existence as a result of capacity expansion of an already existing unit/industrial undertaking. It is absolutely clear that the capacity expansion was done in respect....
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....of being recognized as new and separate industrial undertakings, separate and distinct from the original industrial undertaking of FIL Industries Ltd. (which is no longer eligible for deduction u/s 80IB). The assessee has admitted that Excise and Sales records of all the three Units are common, i.e. separate records for the different alleged Units are not maintained for Excise or Sales Tax purposes. The alleged Units, i.e. Unit-2 and Unit-3 are operating from the same premises as the original Unit-1 ( which is no longer eligible for deduction u/s 80IB). The alleged Unit-2 and Unit-3 , Jammu have not filed any documents with SIDCO, Jammu for starting new industrial undertakings which is normally required. The power connection is in the name of the original Unit and the alleged Units 2 & 3 do not have any separate power connection or permission from the Electricity Department. Rather, the power connection is in the name of the industrial undertaking which is no longer eligible for deduction u/s 80IB of the Act. No permission has been taken from the Pollution Department in the name of the alleged Units -2 & 3 which is required to be done in case new industrial undertakings are bein....
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....e profits and gains of the original industrial undertaking which was registered with DIC, Jammu and the Central Excise Authorities in 1994 and, which is no longer eligible for deduction u/s 80IB of the Act. Since the alleged Units 2 and 3 of FIL Industries Ltd. are not industrial undertakings, the benefits of deduction claimed by them cannot be allowed. Since it has been clearly shown that the profits and gains of business claimed to have been derived by the above alleged Units actually relate to the original Unit which is no longer eligible for deduction /s 80IB, the claim of deduction of Rs.49,48,809/- claimed on account of alleged Unit-2, Jammu and the claim of deduction of Rs.6,52,08,094/- claimed on account of the alleged Unit-3, Jammu of FIL Industries Ltd. is disallowed and added to the total income of the assessee. During the course of assessment proceedings and vide its reply dated 26.12.2007, it has been submitted by the Counsel that deduction claimed u/s 80IB by Unit-2 and Unit-3 have been allowed in the earlier assessment years. The assessee has also drawn attention towards the judgment of the Hon'ble High Court of Calcutta in the case of CIT v. Indian Aluminium Comp....
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....separately and, therefore, were not liable for deduction u/s 80IB of the Act. The said industrial undertakings were created to claim deduction u/s 80IB of the Act. The only Unit-1 of the assessee which at present is not eligible for deduction has been registered. It was also stated by the AO that a survey under section 133A of the Act was carried out on 05/03/2008 at business premises of the assessee. During the course of survey, evidences were discovered which prove that the assessee did not set up an industrial undertaking separately. Statements on oath of different employees were recorded that only one industrial undertaking was set up in the year 1994. Survey under section 133A of the Act was also carried out in the premises of the auditors' of the company M/s. K.S. Aggarwal & Co. CAs and statements of Sh. K.S. Aggarwal and Sh. Aditya Aggarwala were recorded, who denied having any knowledge of the assessee company and they have never audited books of account of the assessee. It was submitted by the said Auditors' that Form No.10CCB filed by the assessee is false and forged. 8.1 The assessee in response to the comments of the AO submitted that survey action cannot be the basi....
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.... AO is justified in making the disallowance of the claim of deduction u/s 80IB amounting to (Rs.7,01,56,903/- (Rs.49,48,809/-Unit-2 & Rs.6,52,08,094/- Unit-3) The AO's action is upheld and the appeal of the appellant is dismissed on this ground." "In this respect I have carefully considered the facts of the case and the material available on record. In view of the categorical statements of Sh. K.S. Aggarwal, CA and Sh. Aditya Aggarwal, CA (Partners of K.S. Aggawal & Co., CAs) New Delhi, wherein they have categorically denied having audited the books of account of the appellant company, the statement of Sh. B.Lal, Forensic Document Expert, where in he has stated that his opinion is only with reference to the signature produced before him for examination by M/s. FIL Industries Ltd and that he has no personal knowledge of any K.S. Agarwal of M/s. K.S. Agarwal & Co.; 165 , Sukhdev Vihar, New Delhi and also in view of the report of Sh. D.D. Goel, Forensic Document Examiner, 17, Harsh Vihar, Pritampura, Delhi - 110034, wherein he has given his opinion that the stamp impressions and the signatures on the said Audit Report are different and not the same, I hold that the genuineness and ....
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....sment year 1997-98 and was allowed by the department up to the assessment year 2004-05. The impugned year is 11th year of operation and it is not allowable in the 11th year of operation, as per provisions contained in section 80IB of the Act. On the basis of enquiries with various authorities, the AO had denied deduction u/s 80IB of the Act for the impugned year with regarding to Unit-2 &Unit-3 being the 6th year of operation and 2nd year of operation inspite of the fact having allowed deduction u/s 80IB for five years continuously for Unit-2 and one year for Unit-3 as mentioned hereinabove. The assessee had prepared a separate Profit & Loss account of each Unit and have declared unit-wise separate profits which is a matter of record and have not been disputed. 8.3 It was argued by the Ld. counsel for the assessee, Mr. C.S. Aggarwal relying upon the decision in the case of Coca Cola Export Corporation v ITO reported in 231 ITR 200 (SC) that there is no requirement to obtain separate registration for each of the unit even assuming that there is violation of the said requirement. Accordingly, even such violation cannot be the basis to deny the claim of deduction u/s 80IB of the Ac....
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.... further argued that as per section 250(4), the ld. CIT(A) may, before disposing of any appeal make such further inquiry as he thinks fit, or may direct the AO to make further inquiry and report the result of the same to the CIT(A). Whereas in the present case, there is no such inquiry made by the Ld. CIT(A) and no direction to the AO to make further inquiry has been directed by the CIT(A). Under Rule 46A, the appellant only is allowed to produce any evidence whether oral or documentary other than the evidence produced by him during the course of proceedings before the A.O. It is not the prerogative of the AO to produce any additional evidence before the Ld. CIT(A) which in the present case has been done by the A.O. by making survey on the assessee. Therefore, the Ld. counsel Mr. C.S. Aggarwal, argued that in the absence of any inquiry made by the CITA), the evidences relied upon by the AO during the appellate proceedings are without jurisdiction. The Ld. counsel for the assessee relied upon the decision of the Hon'ble Rajasthan High Court in the case of CIT v. Rao Raja Hanumant Singh reported in 252 ITR 528 and decision of ITAT, Delhi Bench in the case of Mitsui and Co. Ltd. New D....
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....cted to the contention of the assessee that no proper and valid opportunity was granted by the A.O. is factually incorrect. He further argued that the valid and proper opportunity was granted by the AO to the assessee. Mr. Girish Dave, read out all the order-sheet entries of the AO. He further pointed out at various pages of the assessment order that the assessee had not taken the separate registration for Unit-2 & Unit-3 and therefore, in order to claim deduction under section 80IB of the Act, the setting up of the Units was not independent and separate undertaking. He further argued with regard to the inquiry from various statutory authorities like Central Excise Department, Commercial Tax Officer, Inspector Factory and Boiler, DIC, Plant Protection Department etc. that the assessee has not set up separate and independent undertaking. Mr. Dave, the Ld. counsel for the Revenue relied upon the order of Central Excise Authority in which it has been held that Unit-3 was not a separate and independent undertaking. Mr. Dave, invited our attention to the Insecticides Act, 1968 and copy of the said Act was placed on record with regad to the Rule 9, Form-III, Form-IV, Rule 9(3), Form-V, F....
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....maintained and therefore, no reliance can be placed on such accounts on the basis of which assessee has declared profits unit-wise. 9.3 As regards the Forensic Report of Sh. D.D. Goel, which clearly proves the signatures of Sh. K.S. Aggarwal was not genuine and as regards the production of cross-examination of Sh. K.S. Aggarwal, it was the burden on the assessee to produce him for cross-examination. As regards the report of Sh. B.Lal submitted by the assessee, it was argued and stated by Mr. Girish Dave, the ld. counsel for the Revenue that these documents considered as admitted were denied by Sh. Aditya Aggarwal. 10. Sh. C.S. Aggarwal, the Ld. counsel for the assessee, in the rejoinder argued that the A.O. has not disputed the correctness or completeness of books of account including production of record and has not rejected the books of account by invoking the provisions of section 145(3) of the Act. All the more the ld. CIT(A) has given finding at page 27 that the assessee had produced complete books of account and has not disturbed the findings of the AO in this regard. It was also submitted by Sh. C.S. Aggarwal, the Ld. counsel for the assessee with regard to affording o....
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....s the claim of deduction under section 80IB of the Act., has been ignored by the ld. counsel for the Revenue. The letter written by DIC, Jammu to the assessee that machinery has been installed on 28.03.2003 has also been ignored by the ld. counsel for the Revenue. The case relied upon by the ld. counsel for the Revenue is with regard to refund of Excise Duty has no applicability in the present facts and circumstances. 10.1 As regards the statements taken during the course of survey, which has not evidentiary value, the ld. counsel for the Revenue has not disputed the contentions and arguments raised by the ld. counsel for the assessee and once deduction is allowed in the initial assessment year, it will not be denied in the succeeding assessment years. An opportunity was not provided to the assessee for cross examination of the CA, Sh. K.S. Aggarwal and such statement cannot be relied upon. The case relied upon in the case of UOP LLC v. Addl. Director of Income Tax (supra) is misconceived, which was rendered in the context of Rule 29 of ITAT Rules, 1963. He further argued that decision of ITAT Delhi Bench in the case of Mitsui Co. Ltd. (supra) is rather applicable in the present....
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....and perusal of records, the dispute before us, when the assessee is having maintained common record of Excise Duty, Sales Tax, Service tax and having common registration and no separate permission from Pollution Department, having common electricity connection can be a basis to deny deduction u/s 80IB of the Act. As per reading of the provisions of section 80IB(1), 80IB(2) and 80IB(4) jointly, it shows that where gross total income of the assessee includes any profits and gains derived from any industrial undertaking in Jammu & Kashmir, the assessee shall be eligible to derive profits from such industrial undertaking subject to that (i) it is not formed by splitting up or the reconstruction of a business already in existence, (ii) it is not formed by the transfer of a news business of machinery or plant previously used for any purpose, (iii) it manufactures or produces any article or thing, not being any article or thing specified in the list in the Eleventh Schedule, or operates one or more cold storage plant or plants, in any part of India, and (iv) in a case where the industrial undertaking manufactures or produces articles or things, the undertaking employs ten or more workers ....
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....ndertaking is substantially expanded and the manner of such expansion is such that the newly installed plant, machinery and other facilities such as factory buildings, godowns etc; when taken together are capable of being regarded as industrial undertaking, the requirements of the section are met. The fact that the industrial undertaking so established by way of substantial expansion is at a location which is adjacent to the existing undertaking would not in any way render such an undertaking any the less a new undertaking for the purpose of determining its eligibility under section 80J of the Act. 11.3 It was also held in the case of CIT v. Mahan Foods Ltd. 216 CTR 148 (Del) that only capacity was increased in that case and there was expansion of old business with some modifications. In this regard, it was held that as far reconstruction of the business, it is nowhere evident that the old industrial unit was split up or damaged or destroyed that was supposedly reconstructed as a new unit by the assessee. What the assessee has done is to set up an industrial undertaking with latest technology and with increased capacity and of course, with fairly good amount of fresh investment.....
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....lding, splitting machine, galvanized plant, threading machine, store room, workshop, generating set and factory office proved that it was a case of splitting up of the old business. On the aforesaid fact, merely because some of the facilities were common that would not mean reconstruction or splitting up. 12. From the reading of the decisions of various courts of law mentioned hereinabove, we are of the view that expansion of an industrial undertaking is not a bar for claim of deduction u/s 80IB of the Act. The same product or same location, common procurement, manufacturing and common employees cannot be the basis to hold that the assessee was not an industrial undertaking viable and separate undertaking. What is important is that there must be a set up of independent and separate viable undertaking. In this regard, the assessee has placed on record that it has made separate investment in the plant & machinery account and the building which is evident from the separate financial statements placed on record by the assessee alongwith return of income. The investment in the Plant & machinery and building at the beginning of the year in dispute and at the close of the year in Unit-....
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.... company. In view of the above, it is obvious that no separate registration is required to the assessee company. 13. As regards the inquiries made during the assessment proceedings especially with Central Excise Authorities with regard to the reply dated 24.12.2007 of the Central Excise Division, Jammu that there is only unit registered with Central Excise Department. The said Department has confirmed that there were expansions carried out. In this regard, we are of the view that inspite of such reply, the fact doest not in any manner detract from the claim that independent undertaking was not set up by the assessee, since neither the AO nor the ld. counsel for the Revenue has brought on record that as per Central Excise Act, separate registration is required, if the assessee is manufacturing a different products at the same place, when they have different undertaking. In the case of J & K Synthetic Limited; reported in (1991) 52 E.L.T. 116 (Trib) relied upon by the Ld. AR (supra), it was held that if two units falls within one premises then only one consolidated license for the manufacture of goods has to be obtained as the object behind the grant of consolidated license is tha....
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..... As regards reply of the Inspectors of Factories and Boilers, the same cannot help the Revenue. As regards the Insecticides Act, 1968 and Insecticides Rules, 1971, under Rule 9(2) if manufacturing activities are carried out at more than one place, only then separate registration is required whereas the assessee is carrying out manufacturing only from the same premises as different units. Now the question arises whether any requirement under different provisions of different Acts can be a pre-condition to allow deduction u/s 80IB of the Act, especially when the assessee had fulfilled all the requirements of section 80IB of the Act. We are convinced with the arguments made by the ld. counsel for the assessee, Mr. C.S. Aggarwal, Advocate that section 80IB(3) of the Act read with Explanation (g) to section 80IB(14) of the Act, which specifically provides for fulfillment of condition u/s 11B of Industries (Development and Regulation) Act, 1951. Under section 80IB(3) read with Explanation (g) to section 80IB(14), if read show that deduction can only be claimed if the assessee is a small scale industrial undertaking under section 11B of the Industries (Development and Regulation) Act, 19....
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....was argued that such evidence cannot be considered by the Ld. CIT(A) in the absence of the enquiries by ld. CIT(A) under section 250(4) of the Act and the AO could not lead any additional evidence under Rule 46A of the Income Tax Rules, 1962. The Ld. counsel for the Revenue, Mr. Girish Dave, however, opposed the arguments by stating that powers of the Ld. CIT(A) are co-terminus with that of the A.O. In this regard, we rely upon the decision of the co-ordinate Bench in the case of Mitsui Co. Ltd. v. ACIT, New Delhi (supra) placed on record wherein it has been held that such evidence as collected the post completion of assessment by the AO, could be considered in the appellate proceedings in the absence of requisite order under section 250(4) of the Act by the Ld. CIT(A). 13.3 As regards reliance in the case of UOP LLC v. Additional Director of Income Tax 108 ITD 196 (ITAT, Delhi) (supra) by the Ld. counsel for the Revenue, we find that in the said order, the Revenue as respondent moved an application under Rule 29 of the I.T.A.T. Rules, for admission of additional evidence. It was held that the Tribunal has the power to allow additional evidence, not only if it requires such evid....
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....tiary value, the survey officer should have authorized to record sworn statement. It was noted that section 132(4) of the Act specifically authorizes an officer to examine a person on oath whereas section 133A does not permit the same. We rely upon the decision of the Hon'ble Kerala High Court in the case of Paul Methews & Sons v. CIT 263 ITR 101 (Kerala) and Hon'ble Madras High Court in the case of CIT v. S. Khader Khan Son [2008] 300 ITR 157 (Mad). Therefore, we are of the view that statement recorded during survey u/s 133A of the Act, cannot be used against the assessee, as the same did not have any evidentiary value. Reliance placed by the Ld. CIT(A) on such statements denying claim under section 80IB of the Act, cannot be approved. 13.5 As regards the statements recorded of employees, though they did not have any evidentiary value, we consider the statements recorded of various employees of the assessee company and Auditors' of the Company. On perusal of the same, they do not warrant any inference that Unit-2 & Unit-3 were not set up as an industrial undertaking. Rather in the statement of Sh. M.C. Sharma, General Manager, who in his statement and answer to question Nos. 6,....
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....essee . The assessee as stated earlier has stated a new unit for which new machines were purchased and, therefore, this new unit of the assessee was eligible for relief u/s 80J. 13.7 The Ld. counsel for the Revenue, Mr. Girish Dave, fairly stated that there is no dispute to the ratio laid down of the above decisions, though in his opinion separate books of account are required to be maintained u/s 80IA(5) of the Act and in view of the decision of the Hon'ble Delhi High Court, in the case of Commissioner of Income Tax-III v. Sona Koyo Steering Systems Limited in ITA 1279/2008, dated 10.02.2010 (supra). In the said decision, it was held that deduction u/s 80IB is to be allowed without set off of loss from other unit. It was held that while computing the quantum of deduction under section 80IA(6) of the Act, only the profits shall be taken into account as if it was the only source of income. We find no dispute to the above proposition but this judicial pronouncement does not lead to an inference that separate record of each of the industrial undertakings are required to be maintained by the assessee company. 13.8 As regards the books of account were produced before this Bench an....
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....he AO has never disputed either the accounts were not audited by Sh. K.S. Aggarwal, CA. The audit remuneration paid to Sh. K.S. Aggarwal and debited by an amount of Rs.20,000/- has been accepted. 13.11 As regards the report of the hand-writing expert is concerned, the hand-writing expert has compared the signatures of Mr. K.S. Aggarwal with the signatures that were put by him at the time of recording the statement and it is obvious that the signatures below statement would not have been correctly recorded by him to make distinction and thus cannot be made the basis. The assessee's hand-writing expert compared his signatures with those signatures which were on record in respect of other companies where he too had audited the accounts. The Ld. CIT(A) has failed to examine this aspect of the matter. Also no proceedings under section 271B of the Act were initiated by the A.O. Had the accounts were not audited by the Auditors', the AO would have initiated proceedings for having not got the accounts audited as per law. The President of the Company Mr. Navin Prothi and Mr. Neeraj Karwall Counsel, in his statement had confirmed on the day of survey that M/s. K.S. Aggarwal & Co., CAs are....
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.... of the new machinery and utilizing the same machinery. Thus, it was held that the assessee was not entitled to claim deductions us/ 80HH and 80-I of the Act. There was no such moderanisation in the case of the present assessee. 14. The judgments relied upon by the Ld. counsel for the Revenue have no application to the facts of the present assessee's case. In view of findings hereinabove, denial of deduction under section 80IB of the Act amounting to Rs.7,01,56,903/- is deleted. Thus, ground Nos. 1 to 4 and 7 & 7.1 of the assessee are allowed. 15. As regards ground Nos. 5 & 5.1 relating to the disallowance of claim under section 80IB of the Act, amounting to Rs.3,10,11,113/- in respect of the refund of excise duty , the A.O. has observed that the assessee is not eligible for refund of excise duty being income 'not derived from the industrial undertaking' but the income attributable to the receipt of excise duty refund from the industrial undertaking. 15.1 On appeal, the learned CIT(A) confirmed the action of the Assessing Officer. 15.2 It was argued by the ld. counsel for the assessee, Mr. C.S. Aggarwal, Advocate that the issue in dispute is squarely covered by the deci....
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....e pages 90 & 91 of his order has confirmed the action of the Assessing Officer, which for the sake of clarity is reproduced as under: "On due consideration of the facts and circumstances, the appellant company's submissions, the AO's order and remand reports, I find that the submissions made by the appellant in this respect are devoid of merit and thus not acceptable. Whereas the AO has given a detailed and valid reasoning for making the disallowance. As per the provisions of law, S.80IB(11A), deduction is available to an industrial undertakings deriving profit from the business of setting up and operating a cold chain facility for agricultural produce. Apparently, the appellant's unit has not derived its income from the activity stipulated in the section. As per the provisions of section 80IB (IIA), the undertaking deriving profit from the business of processing, preservation and packaging of fruits or vegetables is eligible for deduction subject to conditions mentioned therein. The eligible undertaking is required to be involved in all the above three activities i.e. processing, preservation and packaging of fruits. In case even one activity out of the above three is not ca....
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....nvited our attention to page 263 of the flow chart, where it was shown that the assessee gets apples harvested and such harvested apples are placed at specially manufactured plastic trays in order to enable it to get it deheated from the atmospheric conditions before transportation of apples. If such fruits are not kept in the specially designed trays, the fruits loose its longevity. 17.4 The Ld. counsel for the Revenue, Sh. Girish Dave, on the other hand, placed material on record to demonstrate technical aspects of the CS Stores especially publication by one Mr. Adel A Kader Department of Pomology, University of Callifornia. The Ld. counsel for the Revenue argued that it would be appropriate to examine the technology being maintained by the assessee to understand in detail whether CS stores can come within the ambit of an industrial undertaking deriving profit from the business of processing of vegetables as per section 80IB(11A) of the Act. 18. We have heard the rival contentions and perused the facts of the case. From the facts on record, we observed that the assessee is engaged in the preservation and packaging but there is not processing of fruits. Since there is no cha....
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..... Girish Dave during the course of hearing and from the same, it is evident that the assessee had failed to explain specific expenditure amounting to Rs. 2,00,209/- incurred by Mrs. Ruhi Tariq and Mr. M.S.T. It was conceded during the course of assessment proceedings by the assessee the disallowance of the said expenditure of Rs.2,00,209/- . In view of the fact and circumstances of the case, mentioned hereinabove, action of the Ld. CIT(A) is confirmed with regard to expenditure of Rs.2,00,209/-. As regards the remaining expenditure, the assessee is engaged in the business of export and import of apples juice. The assessee being 100% EOU and these facts have not been considered by any of the authorities below and having regard to the volume and genuineness of expenditure not in dispute, we are of the view to allow 35% of the remaining expenses amounting to Rs.6,87,837/-. The AO is directed accordingly to allow the said expenditure. Thus, ground Nos. 8 & 8.1 are partly allowed. 21. As regards ground No.9 of the assessee with regard to disallowance of Rs.11,43,293/- for claim of depreciation on CS stores and Tetra Division, the facts are that the expenditure amounting to Rs.42,6....
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....ction 234B of the Act, it was argued that interest is not leviable as per Notification No.275/12/2007 issued by the CBDT under section 119(2)(a) of the Act. The Ld. counsel for the Revenue, Mr. Girish Dave, fairly conceded and stated that no interest is leviable in view of the above instruction. 24.1 We have heard the rival contentions and perused the facts of the case. In view of Notification No.275/12/2007 dated 26.04.2007, which was perused by us and in view of the same notification which provides waiver of interest u/s 234B upto the assessment year 2007-08in respect of the assessee residing in Kashmir and having their principal place of business in the Kashmir Valley. Accordingly, levy of interest under section 234B of the Act is in conformity with the instruction issued by CBDT which is binding in nature. Such interest u/s 234B of the Act in the present case cannot be levied. Therefore, order of the ld. CIT(A) is reversed on this issue and the AO is directed to delete the same. Thus, ground No.11 of the assessee is allowed. 25. As regards the additional ground, the claim of the assessee is loss of 100% EOU of other industrial undertaking. The claim of the assessee is sup....