TaxTMI 
TaxTMI 
2016 (1) TMI 891
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.... these appeals are common in nature, they were heard together and are being disposed of by this consolidated order, for the sake of convenience. 2. The revenue is assailing the decision of ld. CIT(A) in holding that the assessee is eligible for deduction u/s 10AA of the Income Tax Act, 1961 without considering following aspects:- a) The ld. CIT(A) has ignored the fact that the undertaking has been formed by reconstruction of business already in existence; b) The ld. CIT(A) has accepted the plea that the earlier undertaking did not carry on any business without examining the said claim. c) The ld. CIT(A) has ignored the fact that the assessee has purchased old machinery, which is in violation of provision of sec....
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.... assessee claimed deduction u/s 10AA of the Act. 6. During the course of assessment proceedings, the AO noticed that the assessee had purchased all the materials in the name of M/s H K Jewels. Further the AO noticed that the plant and machinery worth Rs. 40,26,308/- was purchased by the assessee from the old firm M/s H K Jewels. The AO also noticed from the Form 56F filed by the assessee that it has commenced production on 27.3.2006. 7. Under the provision of section 10AA of the Act, the assessee is required to commence production after 1.4.2006 in order to claim deduction under that section. Further, the deduction u/s 10AA will not be available if the undertaking is formed by splitting up or reconstruction of business already in exis....
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....lized for the purposes of the business of the assessee in the manner laid down in sub-section (2). .............. (4) This section applies to any undertaking, being the Unit, which fulfils all the following conditions, namely:- (i) it has begun or begins to manufacture or produce articles or things or provide services during the previous year relevant to the assessment year commencing on or after the 1st day of April, 2006 in any Special Economic Zone; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence: Provided that this condition shall not apply in respect of any undertaking, being the Unit, which is formed as a result of the re-establishment, r....
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....lakhs. The assessee itself has purchased machineries worth Rs. 1,32,08,209/-. (d) M/s H.K. Jewels has not started any business and hence the assessee's business cannot be presumed to be reconstruction of erstwhile business. Since the assessee has purchased entire project, it was a case of sale and hence the same cannot be regarded as reconstruction of the business. (e) As per the terms and conditions of LOP issued by the Development Commissioner, SEEPZ, LOP cannot be transferred by such authorities in case of reconstruction of any business. (f) Though the purchases were made in the name of M/s H.K.Jewels, the payment for the purchases has been made by the assessee only. (g) The labour charges received fro....
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.... notice that there are apparent contradictions with regard to the facts prevailing in the instant case:- (a) The assessee has claimed that M/s H.K. Jewels (new) was formed to implement the project of M/s H.K. Jewels (old), even though the LOP was in the name of the later. This explanation was offered before Ld CIT(A) only and the effect of this explanation could not be examined by the AO. Further, it is not clear as to whether the person who is not holding LOP, i.e., H.K. Jewels (new) could implement a project in SEEPZ without letter of permission from Development Commissioner, SEEPZ. (b) It is stated that the deed of assignment took effect from 1.4.2006 only even though the agreement was reached on 7.10.2005. It was furth....
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....t was a case of reconstruction of business or not. (e) The ld D.R has pointed out that the observations of the Ld CIT(A) that the LOP cannot be transferred in case of reconstruction of business are not supported by any document. Hence the said observations of the Ld CIT(A) require examination. (f) The Ld CIT(A) has also observed that M/s H.K. Jewels (it is not clear whether it was old firm or new firm) did not use the machineries purchased by it. The Ld D.R contended that the said observations have been made without carrying out any examination. (g) Unless the details and value of machineries purchased from M/s H.K. Jewels and the details and value of machineries available with the assessee were examined, one cann....