AI Drafter 
TaxTMI 
TaxTMI 
2014 (12) TMI 249
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....rains, fertilizers, etc. The assessee had filed its return of income declaring total loss of Rs. 36,45,830/-. The assessment was completed on 27.3.2006 on a loss of Rs. 20,73,950/-. Subsequently, proceedings u/s.147 of the Act were initiated. The assessment was completed at a total income of Rs. 2,20,72,240/-, inter alia, making an addition of Rs. 278,80,000/- on account of excess depreciation allowed to the assessee. 5. Ld CIT(A) confirmed the addition made by the Assessing Officer. 6. Being aggrieved with the order of ld CIT(A), the assessee is in appeal before us and has taken following grounds: "1. That the order appealed against is bad in law, without jurisdiction and void. 2. That the order appealed against is bad in law as it is passed on the prejudices, surmises, guesses and misunderstanding of the facts and law and is contrary to the evidence on record., 3. That the Id CIT(Appeal) has erred in confirming the order u/s 147 of the Act without taking note of the fact that for the instant Assessment Year already an assessment has been made under the Provisions of Section 143(3) of the Act and there being no new facts available to the A.O., the order u/s 147 is n....
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....aran Yojana (Rural Godown Scheme) filed by the appellant. The scheme makes abundantly clear that the subsidy is for setting up a network of Rural Godowns. The modality of the disbursement has been spelt out in para 4 of the scheme. The subsidy has been linked to institutional credit. It is released to the banks/NCDC to be kept in the Subsidy Reserve Fund Account of the concerned Borrower to be adjusted finally against the loan amount of the bank on completion of the project. The contention of the appellant is that the adjustment regarding subsidy has to be done after all the stipulations are satisfied and as and when the subsidy is actually adjusted against last installments of the loan. I do not find myself in agreement with the above view. The appellant has actually received the subsidy. It is being kept in its name by the concerned bank against its name. The only difference is that he is being allowed to use the subsidy not in the beginning but at the end. The deferment of use of the subsidy does not alter the fact that the subsidy has actually been received. Therefore, the appellant is required to reduce the cost of assets by the above amount. Therefore, the stand taken by the ....
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....in the annexure to computation statement, assessee had claimed deduction u/s. 80-IB as under: "Income from new eligible Business : 13,66,57,998/- Less: allowable, expenses i) Proportionate handling & transportation expenses 3,97,09,570/- (Rs.8,94,9l,618/Rs.U,14,73,643*Rs.4/94,63,520) ii) Interest on term loan 52,34,509/- iii) Depreciation 1,80,80,929/- iv) Proportionate operating expenses (Rs.5,67,58,483/ Rs. 23,96,72,677*Rs.13,66,57,998) 3,23,62,891/ 9,53,87,899 Taxable profit for eligible business (U/s. 80 IB) 4,12,70,099/-" 17. The Assessing Officer examined the issue of eligibility of the assessee to the deduction claimed under section 80 IB(11A) and has noted following facts: I. "The company is engaged in the business of handling, storage and transportation of food grains and other materials. Mostly the company handles the food-grains on behalf of M/s. Food Corporation of India apart from storage of fertilizers etc. for few other parties. II. The assessee was hitherto claiming exemption on warehousing, handling & transportation receipt u/s. 10(29) of the I.T. Act till A/Y 2002-03. This exemption has been removed w.e.f. AY-03-04. III. As per ....
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....exceed 10 consecutive assessment years and subject to the fulfillment of the condition that such business is operated on or after 1.4.2001." 19. He disallowed the assessee's claim of deduction u/s. 80-IB, inter alia, observing that there has been mere construction of additional warehouses enhancing the capacity. He did not accept assessee's contention that these were new undertaking. Assessee relied on following decisions: (i) CIT Cs. ACC Ltd. 118 ITR 406 (Bom) (ii) CIT Vs. Rohtas Ind Ltd. 120 ITR HO (Cal) (iii) CIT v Gaekwar Foam & Rubber Co Ltd 35 ITR 662 (Bom) (iv) CIT v Ganga Sugar Corporation Ltd 92 ITR 173 (Del) (iv) CIT Vs. Gedore Tools (Ind) Pvfc. Ltd. 126 ITR 673 (Del) (v) Textile Machinery Corpn. Ltd. Vs. CIT 107 ITR 195 (SC) 20. The AO observed that these decisions emphasizes if fresh capital is introduced for purchase of Plant & Machinery and the new unit is capable of production of goods, then the unit can be claimed as a newly established industrial undertaking. He further observed that these judgments were rendered in the context of industrial units engaged in production whereas, in case of the assessee, the warehouses were mere buildi....
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....easons of the lower authorities for making the disallowance. We may now examine the correctness or otherwise of these reasons given by the lower authorities. 12. We find that the assessee-corporation owns premises accommodating godowns at different places all over the State. In each area it either constructs or offers an investor to construct new godowns, which the corporation takes on lease. It is the claim of the assessee before the CIT(A) that the plinth area of construction of the godowns varies from minimum area of 10,000 sft. up to a maximum area of 50,000 sft. and the scheme of construction of godowns started in the year 2002. Each unit is an undertaking because food-grains are stored and handled and transported thereto and therefrom. It may be noted at this juncture that there is no restriction in S.80-IB that an existing business unit cannot set up new undertakings to carry on the integrated business of handling, storage and transportation of food grains. The godowns where this business is to be carried on need not be owned by the assessee. When the assessee-corporation has set up these godowns in as many as in 73 towns and at different places in those towns, it is very....
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....s main business is to provide warehousing facility for foodgrains. The Assessee has been constituted under with these very objects in view. Merely because the Assessee has engaged outsiders for transportation or leased out some of the godowns for storage does not mean that the Assessee is not engaged in the integrated business of handling and storage of foodgrains. In the course of their integrated business, the assessee had collected rentals for storing foodgrains and had engaged outsiders to transport the food grains. Further, the fact that the assessee had been carrying on similar business would not disentitle the assessee from claiming relief u/s 80IB(11 A), in respect of the new warehouses put to use after the introduction of sec 80IB(11A) i.e on or after 1.4.2001. The assessee has furnished in the paper-book list of new Godowns, which have been put to use by the assessee after 1.4.2001. It is well settled that deduction under Chap VIA, in respect of new undertakings set up by the assessee by way of expansion of the existing undertakings, as held by the Apex Court in the cases of Textile Machinery Corpn. Ltd. v. CIT [1977] 107ITR195(SC) and CIT v. Indian Aluminium Co. Ltd. [19....