TaxTMI 
TaxTMI 
2013 (11) TMI 168
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....30.9.2009 admitting total income of Rs.3,04,81,422/-. While admitting aforesaid income, the assessee had claimed deduction to the tune of Rs. 1,25,17,185/- under section 80IB. The case of the assessee was selected for scrutiny and notice under section 143(2) was issued to the assessee. The Assessing Officer vide order dated 22.12.2011 made certain additions/disallowances in the income returned by the assessee. The Assessing Officer made disallowances/additions inter-alia on account of deduction claimed by the assessee under section 80IB and under section 35 towards in house research and development cost. Aggrieved against the assessment order, the assessee preferred an appeal before the CIT(A). The CIT(A) vide order dated 10.7.2012 partly allowed the appeal of the assessee and held that the claim of the assessee under section 80IB(4) and deduction claimed under section 35 of the Act are justified. 3. The Revenue has come in second appeal before the Tribunal impugning the order of the CIT(A) on the ground that assessee while claiming deduction under section 80IB could not satisfy the conditions laid down under the Industrial (Development and Regulation) Act, 1951 for being small ....
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....shows that the claim of the assessee under section 80IB(4) has been rejected by the Assessing Officer only on the ground that the assessee is not SSI and has not been able to establish that products manufactured by the assessee do not come under the items listed in Schedule III of the Notification under IDRA Act. We are of the considered opinion that the Assessing Officer has misinterpreted the provisions of law. The CIT(A) in its order has clearly given the facts of the instant case and has also spelt out the requirements for claiming deduction under section 80IB in case of an industrial undertaking in an industrially backward State. The same are reproduced herein below:- "In the instant case, the following are the undisputed facts: (a) The assessee's unit is engaged in manufacturing of automobile garage equipments, (b) The assessee's manufacturing unit is located in the state of Pondicherry. The state of Pondicherry is an 'industrially backward state' (as included in Sth Schedule at S1.No.16), (c) The assessee has been reg....
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....in this clause shall, in relation to a small scale industrial undertaking or an industrial undertaking referred to in sub-section(4) shall. apply as if the words "not being any article or thing specified In the list In the Eleventh Schedule" had been omitted. Thus, there are two exceptions to the conditions laid down in clause (iii) above. One exception is the Small Scale Industries (SSI) and the other exception is industrial undertaking referred to in sub-section (4). The industrial undertaking referred to in sub-section (4) means an industrial undertaking situated in an industrially backward State specified in the Eighth Schedule. Thus, in the case of a "SSI" or "industrial undertaking situated in an industrially backward State", the assessees will be eligible for deduction u/s.80-IB even if they are manufacturing items specified in 11th Schedule. This is particularly so because the words "not being any article or thing specified in the list in the Eleventh Schedule" are to be omitted from the clause (iii) if it was a SSI or industrial undertaking situated in an industrially backward State, as per the proviso to the said clause. Fur....
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....ption to clause (iii) of sub-sec.(2) of sec.80-IB, i.e. from the words "not being any article or thing specified in the list in the Eleventh Schedule", if they fulfill all the norms prescribed under the SSI guidelines / Industries (Development and Regulation) Act 1951. Once the requirements of SSI are fulfilled, the assessee falls under the first limb of exceptions of proviso to clause (iii). In such a case, the assessee is eligible for deduction even if they manufacture items specified in 11th schedule. And they are eligible for deduction irrespective of the location of the undertaking i.e. whether located in an industrially backward State or other states. Thus, the assessees whose industrial undertakings are recognized as "Small Scale Industries" or "located in an industrially backward State" are eligible for deduction u/s.80-IB of the Act, even if they manufacture 'article or thing specified in the list in the Eleventh Schedule'. Further, as stated earlier, the exceptions specified in the proviso to clause (iii) i.e. being "Small Scale Industries" or "located in an industrially backward State" are independent of each order. The assessee need not f....