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2017 (9) TMI 957
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....ted as per provisions of section 44AB of the Act. The assessee claims to be 100% Export Oriented Unit (EOU) and stated to have commenced its commercial production/manufacture from 03/04/2001 relevant to AY 2002-03. The return of income for the AY 2011-12 was filed declaring total income of Rs. 61,630/- after claiming deduction/exemption under s.10B of the Act amounting to Rs. 9,50,53,560/-. The return was subjected to scrutiny assessment. The AO rejected the aforesaid claim of deduction/exemption claimed under s.10B of the Act on the alleged ground that the year under consideration is the 11th year of production and therefore the assessee is not entitled to aforesaid exemption/deduction. 4. Aggrieved, the assessee moved appeal before the CIT(A). The CIT(A) examined the issue in length and found on facts that first year of manufacture was Financial Year (FY) 2001-02 viz. AY 2002-03 and therefore impugned AY 2011-12 is tenth year of manufacture/production. The CIT(A) noted with reference to copy of accounts relevant to FY 2000-01 (AY 2001-02) that there was no machinery or other fixed assets except sheds allotted by the GIDC. The assessee has made no claim towards depreciation and....
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....whether the manufacture or production was commencement on 26.12.2000 or from 03.04.2001. The auditor has mentioned the date of commencement of manufacture or production as 26.12.2000, however for that it was clarified that it was inadvertent mistake which can be seen from the column 8 of the form 56G wherein it is specifically mentioned that "This is the Tenth year in which the deduction is claimed." Thus principle of natural justice demands to read a document in its entirety and not in piece meal. Further the AO also failed to bring on record any material to the effect that the appellant had claimed the first exemption u/s 10B in the assessment year 2001-02 from the records maintained by the department. (e) In support of claim of exemption in the tenth year the appellant in the course of assessment proceedings furnished a copy of Central Sales Tax (Registration & Turnover) Rules 1957 certificate dated 21.04.2001 (copy attached) wherein it was specifically stated that this certificate is valid from 03.04.2001 until it is cancelled. The AO termed this certificate as mere a registration as a trader and has no relevance for proving the date of commencement of manufacture. The appel....
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....the machineries, electrical fittings and the construction of shed took place in FY 2001-02 relevant to AY 2002-03. Thus, even if the appellant wish to manufacture any article or thing in FY 2000-01 relevant to AY 2001-02, it was not in a position to do so. Thus, even under the circumstantial evidence available on record it can be said that there was no commencement of manufacture or production during the financial year 2000-01 relevant to AY 2001-02. (g) In view of the above position emerges from the records, the assessment year 2011-12 is the 10th year of claim of exemption u/s 10B of the Act and as such it is prayed to restore the returned income. Reliance placed on following decisions: * The Hon'ble Supreme Court had the occasion to interpret the beneficiary provision of section 15C of the Indian Income-tax Act, 1922, in the case of Bajaj Tempo Ltd. Vs. CIT 196 ITR 188. The relevant part of the observations of the Hon'ble Court is reproduced below (from the Head Notes): "Section 15C of the Indian Income-tax Act, 1922, read as a whole, Is a provision directed towards encouraging industrialization by permitting an assessee setting up a new industrial undertaking t....
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.... Gujarat Oil and Allied Industries 201 ITR 325. In the context of section 80-3(1) read with sub- section (6A) thereof, the Hon'ble Court observed as under (from the Head Notes) : "......It is obvious that the main purpose and object of section 803(1) is to give incentive and development benefit to the new industries covered by the provisions of the Act. Consequently, while considering it, care has to be taken to see that the relevant purpose underlying section 803 is augmented and fortified and not frustrated by the construction put upon the said provision. Even assuming that another view is possible on the construction of the second part of sub-section (6A) of section 80J, as that view is likely to frustrate the very object and purpose of the scheme underlying section 80J(1) and would result in absurdity, the other view by which the beneficial provision of section 80J(1) is made fully operative should be preferred. Hence, the word "shall" as employed by the Legislature in sub-section (6A) of section 803(1) will have to be read as "may"(emphasis supplied). * The Hon'ble Mumbai High Court in the case of CIT vs. Chanda Diesels 216 ITR 639 observed that section 80HH is i....
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.... has produced copy of the sales tax registration certificate, as per which, the firm was allowed to operate as "manufacturer' from 3.4.2001. This certificate is forming part of the paper book. As per this document, the validity of the certificate issued by the sales tax department starts from 3.4.2001. It is quite obvious that without getting sales tax registration, the appellant cannot commence manufacturing activities. The AO erred in holding that this certificate is a self serving document. In fact, it is a document issued by a Government Official of a government department, which is a valid piece of evidence as per the Indian Evidence Act, 1872. Section 35 of the Indian Evidence Act holds relevancy of entry in public record or an electronic record made in performance of a duty. According to this section, any entry In any public or other official book, register or record or an electronic record, stating a fact in issue or relevant fact, and made by a public servant in discharge of his official duty, or by any other person in performance of a duty specially enjoined by the law of the country in which such book, register, or record is kept, is itself a relevant fact. Thus, the....
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....m 03/04/2001. The correct date of commencement of the business would be the date on which the assessee intimated to the Development Commissioner, Kandla Free Trade Zone in pursuance of its agreement dated 03/08/2000. The Ld.DR submitted that the assessee did not have machinery even on 03/04/2001 and therefore date of commencement cannot be taken to be the date of registration with the sales tax authorities by that standard. The Ld.DR submitted that the CIT(A) has observed that the balance-sheet shows only factory shed as on 31/03/2001. However, if the assessee could be manufacturer on 03/04/2001 with the same factory shed for the purposes of sales tax authorities, it could be a manufacturer/producer on any earlier date also with the same shed. Ld.DR asserted that the case made out by the CIT(A) that the assessee cannot be a manufacturer with only a factory shed, are thus contrary to the facts. The Ld.DR referred to agreement dated 03/08/2000 given by the assessee to the Ministry of Commerce to enable it for placing the order for import or to enable it execute the order of export to submit that the assessee was in a position to execute the manufacture/production. The DR next contend....
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....foresaid assertion, the Ld.AR referred to copies of screen-shots of consumer personal ledger from system of Gujarat Electricity Board and copies of Electricity Bills for the relevant period to demonstrate that the electric meter was noted as 'locked' and therefore impliedly no manufacturing activity could have been carried out. The location for manufacturing activity was later shifted from Plot No.267 to Plot No.347 for which the permission was granted by the Development Commissioner Kandla Free Trade Zone vide letter dated 13/06/2001. The manufacturing activity could be started only thereafter. The Ld.AR relied upon the sample electricity bill for the period November-2001 to show that the consumption of electricity started only during that month and onwards. There was hardly electric consumption in the past. The Ld.AR thereafter referred to return of income for AY 2001-02 and submitted that no claim of exemption under s.10B of the Act was made for the FY 2001-02 as no business activity was carried out at all. The Ld.AR thereafter submitted that section 10B is a beneficial provision to encourage activity of manufacturing/processing as a 100% EOU and for promotion of growth and deve....