TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 1296
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....sequently noticed that the assessee had commenced manufacturing activities on 14.6.1995 only, whereas the provisions of sec. 80IB(3)(i) mandate that the assessee should have commenced manufacturing prior to 31.3.1995. However the above said time limit commencing production was available upto 31.3.2002 for a Small Scale Undertaking u/s 80IB(3)(ii) of the Act. However, the assessing officer also noticed that the investment made by the assessee in the Plant and machinery has exceeded Rs. 1.00 crores and hence the AO took the view that the assessee cannot be considered to be a small scale undertaking, thus becoming ineligible to claim deduction u/s 80IB(3)(ii) of the Act also. Accordingly, the AO entertained the belief that the income of the assessee has escaped the assessment by reason of deduction u/s 80IB wrongly allowed to the assessee. Accordingly he reopened the assessment of both the years under consideration in order to disallow the deduction allowed u/s 80IB of the Act. The assessee contended before the AO that it is classified as "Small scale undertaking" as per Industries (Development & Regulation) Act 1951 and also furnished a copy of registration certificate. Accordingly i....
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....IT(A) has discussed about the validity of reopening of assessment in a detailed manner in his order. Hence, for the sake of convenience, we extract below the relevant observations made by in AY 2004-05:- "5. I have considered the facts of the case and the submissions made by the appellant. The A.O. has recorded his reasons for reopening and the sad reasons are as under: "On verification Form 10CCB revealed that the date of commencement of operation by the undertaking is mentioned as 14.6.1995. Since unit commenced its operation after 31.3.95, it was not entitled to claim the deduction u/s 801B(3)(i). Further, as per Sr. No. 18(b) of Form 10CCAB, the investment in the plant and machinery is more than Rs. 1 crore and therefore the company is not a Small Scale Industrial Undertaking. Hence, the company does not qualify for deduction u/s 80IB(3)(ii). Therefore, the assessee was neither entitled for deduction u/s 80IB(3)(i) nor u/s 80IB(3)(ii). The deduction allowed u/s 801B(3) was therefore irregular. The incorrect allowance of deduction u/s 80IB(3) of Rs. 72,04,694/- for A.Y. 2004-05 has resulted into escapement of income from assessment within the meaning of provisions of section ....
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....uction under s.80IB as per return of income filed originally. The claim under s. 80IB was supported by Audit Report, in form No. 10CCB filed along with return of income. The claim was made in the status of a Small Scale Industrial Undertaking. Therefore, the claim of the appellant has to be examined in terms of section 80IB(3)(ii) of the Income Tax Act. It is provided that where an industrial undertaking is a Small scale Industrial Undertaking, it must begin to manufacture or produce articles or thing or to operate cold storage plant [ not being the cold storage plant specified in sub-section 4 or sub-section 5 ] at any time during the period beginning on 1.4.1995 and ending on 31.3.2002. Admittedly, the undertaking, commenced operations on 14 June 1995, as is evidenced by the Audit Report in form 10CCB. Thus, the appellant company started commercial production within the eligibility period as prescribed in sub-section (ii) of clause (3) of section 80IB. As mentioned earlier the claim of the appellant has been made considering itself as a Small Scale Industrial Undertaking. Therefore. the claim of the appellant is to be examined in the light of the conditions precedent for deductio....
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....; (e) Foreign exchange, if any, required for the import of any plant or machinery by the industrial undertaking; and (f) Such other relevant factors as may be prescribed." 7.2 From a reading of s.11B of the Industries (Development and Regulation) Act it is evident that an undertaking has to comply with the requirements under the said enactment so as to be regarded as an ancillary or as a small scale Industrial Undertaking. Sub-section 2 of section 11B refer to the factors with which there has to be compliance and one of the factors mentioned is the investment by the undertaking in plant and machinery. It is further seen that the compliance to the said factor or factors shall be as per notified order. Thus, the status of an undertaking that is whether Small Scale or ancillary, shall be decided by the Competent Authority under the said enactment i.e. the Industries (Development & Regulation) Act with reference to the notifications issued by the Central Government from time to time. It is a fact that the company has been registered as Small Scale Industrial Undertaking with the District Industry Center, Dhule which is a prescribed authority under s. 11 B of the Industries (Develo....
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....decision of the Hon'ble Tribunal, when in initial year the deduction has been allowed the implication is that the undertaking fulfils the conditions as prescribed for being eligible for the said relief. In this regard, reliance is also placed on the decision of the Hon'ble 'H' Bench of the Delhi ITAT in Tata Communication Internet Services Ltd. Vs. ITA 2010 39 SOT 106 Delhi. In the said decision the said legal position has again been reiterated that subsequent to the granting of the claim, it is not possible to pick up a subsequent assessment year and to hold that there has been violation of the provisions. In the said case, the Hon''ble Tribunal was dealing with similar claim under s. 80IA and has observed that the bar as provided in s. 80IA(3) has to be considered only for the first year of the claim of deduction. The Hon'ble Tribunal has observed that the bar as provided in sub-section 3 is in relation to the formation of the undertaking and once the formation is complete, the development of the undertaking cannot put cannot be put under the restraints as stipulated in sub- section 3. It has been held by the Hon'ble Tribunal in the said case that "the eligibility....