TaxTMI 
TaxTMI 
2018 (8) TMI 1628
X X X X Extracts X X X X
X X X X Extracts X X X X
....r (AO) completed the assessment by assessing it at the returned income under the normal provisions and at Rs. 88,72,129/- u/s 115JB of the Act. The ld. CIT found the assessment order having been passed without examination of claim of deduction u/s 80-IC of the Act. He noticed that the assessee company was incorporated on 19.08.2004 and it commenced its operations on 29.03.2010. He further noticed that during the course of assessment proceedings for the subsequent assessment year, namely, 2014-15, it transpired that the assessee was engaged in trading activity from Parwanoo area prior to the setting up of the present manufacturing unit. The assessee was also found to have stated in its reply during the course of assessment proceedings for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t page 328 of the paper book. In the next year also, namely, A.Y. 2012-13, the assessee claimed deduction u/s 80IC as is apparent from the computation of income for such year, whose copy has been placed at page 337 of the paper book. The A.Y. under consideration is 2013-14, being, the third year of claim u/s 80IC. The ld. CIT has held the assessee to be not eligible for deduction u/s 80IC on the ground that the eligible unit was formed by reconstruction of a business already in existence. Thus, it is apparent that the only raison d'etre for the revision of the assessment order is the non-fulfilment of the eligibility condition of not setting up a new business. 4. Recently, the Hon'ble Supreme Court has delivered a judgment in DCIT vs. Ace ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....undertaking. Clause 2 limits eligibility only to those undertakings as are not formed by splitting up of existing business, transfer to a new business of machinery or plant previously used'. Then it observed that : `Certain other qualifications have to continue to exist for claiming the incentive such as employment of particular number of workers as per sub-clause 4(i) of Clause 2 in an assessment year. For industrial undertakings other than small scale industrial undertakings, not manufacturing or producing an article or things specified in 8th Schedule is a requirement of continuing nature.' This is how, the Hon'ble Supreme Court laid down that an incentive meant for small scale industrial undertakings cannot be availed by industrial unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....already in existence.... (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. On an analogy drawn from the judgment in Ace Multi Axes Systems Ltd. (supra), it can be easily seen that the condition of manufacturing article or thing, (a) not being an article specified in the Thirteenth Schedule or (b) any article or thing specified in the Fourteenth Schedule, needs to be fulfilled on year to year basis. However, the condition of not formed by splitting up, or the reconstruction of a business already in existence or by the transfer to a new business of machinery or plant previously used for any purpose, are required to be established in the initial year alone. 6. Adverting to the facts....