TaxTMI 
TaxTMI 
2015 (5) TMI 512
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....s. The assessee is a company which is engaged in the business of manufacture of bulk drugs and intermediaries. The return of income for A.Y. 2008-2009 was filed by it on 27.09.2008 declaring total income of Rs. 2,57,83,609 after claiming deduction of Rs. 1,10,50,118 under section 80IB. During the course of assessment proceedings, the claim of the assessee for deduction under section 80IB was examined by the A.O. and on such examination, he found that the value of plant and machinery of the assessee company having been exceeded to Rs. 5 crores, it was not a SSI (Small Scale Industrial) Unit eligible for claiming deduction under section 80IB. In this regard, he relied on Notification No.S.O.2(E) dated 01.01.1993 wherein the method of calculating the value of plant and machinery was prescribed as under : "In calculating the value of plant and machinery for the purposes of this Notification, the original price there of irrespective of whether the plant and machinery are new of second hand shall be taken into account." In calculating the value of plant and machinery, the following shall be excluded, namely :- i. The cost of equipments such as tools, jigs, dies, moulds and spare parts ....
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....He further noted that the items shown by the assessee company under the head "Electrical Equipment" were consisting of electrical motors, pump sets, gear boxes, drilling machines, vacuum pumps, split air-conditioners etc. He held that all these items thus were not liable to be reduced to compute the value of plant and machinery of the assessee company as per Notification No.S.O.2(E) dated 01.01.1993 and the classification of machinery resorted by the assessee company was to camaflouge the fact that value of plant and machinery had exceeded to Rs. 5 crores which was the upper limit for the units to be eligible as small scale industry. Accordingly, he computed the value of plant and machinery of the assessee company at Rs. 6,93,52,414 as per Notification No.S.O.2(E) dated 01.01.1993 and disallowed the claim of the assessee for deduction under section 80IB amounting to Rs. 1,10,50,118 in the assessment completed for A.Y. 2008-2009 under section 143(3) of the Act vide order dated 31.12.2010. 3. For A.Y. 2009-2010, the assessee company filed its return of income on 28.09.2009 declaring total income of Rs. 7,05,77,433 after claiming deduction of Rs. 3,03,11,757 under section 80IB of the....
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....I am inclined to accept the submissions of the assessee for the following reasons. 6.1. The basic reliance placed by the Assessing Officer for rejecting the claim of deduction under section 8018 of the Act is that the value of plant and machinery invested by the appellant exceeded Rs. 5 crores, and precisely it is valued at Rs. 820.17 lakhs against the value of Rs. 430.69 lakhs arrived at by the appellant. As claimed by the appellant in its written submissions, in paras 3.3 to 3.6 of the assessment order, the Assessing Officer has glossed over the very exceptions provided in the IDR Act in valuing the plant and machinery as well as the method of valuation of plant and machinery adopted by the appellant. Going by the bills and vouchers produced evidencing the additions to fixed assets and the classification of plant and machinery, I find that the clause-wise classification of assets submitted by the appellant fits into the clause-wise exceptions provided in the Notification No.2(E), dated 01.01.1993 relied upon by the Assessing Officer. Except going by the name of the assets and their apparent use, the Assessing Officer had not brought on record any factual finding that the classif....
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.... 6.4.The appellant was first recognized as a permanent SSI Unit in the year 1992 and at the time of recognition the investment limit was Rs. 60 lakhs. Thereafter, it was increased to Rs. 3 crores in the year 1997 and later in the year 1999 it was reduced back to Rs. 1 crore and clarifications were given by the Ministry concerned that where the units have taken steps for implementation of their project and investment exceeded Rs. 1 crore in the years 1997 and 1998, they should continue to be regarded as SSI Units. It is only after formation of a new agency by name Micro, Small and Medium Enterprises, under the Ministry of Industries, in the year 2006 the investment limit was fixed at Rs. 5 crores. 6.5. It is the submission of the appellant that over the years, they are running their unit adhering to the norms fixed by the Government from time to time and, in any case, when all the conditions stipulated for SSI Units are being followed by them and recognized as SSI Unit by the prescribed authority, they cannot be disallowed the deduction under section 80IB of the Act. 6.6. Considering all the foregoing facts and circumstances, I am inclined to accept the submissions of the....
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....ition is, the said industrial undertaking employs 10 or more workers in a manufacturing process carried or: with the aid of power or employs 20 or more worker» in a manufacturing process carried on without the aid of power Once these four conditions are fulfilled, the assessee is entitled to the benefit under Sec.80IB of the Act. Subsec.( 3) of Sec.80IB provides the extent of deduction eligible under Sec.80IB and also the number of years such a deduction is available to such an undertaking. Sub-sec.(3) mandates that the industrial undertaking shall be eligible for the said deduction for a period of 10 consecutive years, beginning with the initial assessment year. However, it is subject to two conditions as stipulated therein. The second condition is what is applicable to the case on hand which provides, if the industrial undertaking is a small scale industry undertaking, it has to begin manufacture or produce articles or things at any time during the period beginning on the 1st day of April 1995 and end on the 31st day of March 2002. This is a condition which a small scale industry has to fulfil in addition to the conditions mentioned in Sub-sec. (2) of Sec.80IB. Once all the....