TaxTMI 
TaxTMI 
2018 (12) TMI 899
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....raised is that "whether the Ld. CIT (A) is correct in deleting the disallowance of assessee's claim of deduction of Rs. 12,80,92,168/-, u/s 80IC of the Income Tax Act 1961." 2. The facts in brief are that the assessee company engaged in the business of manufacturing food products at its plant at Village Subhkhera, Paonta Sahib, Himachal Pradesh and selling the said food product in US on consignment basis through consignee agent, M/s. Global Reliance Inc. (GRI). The assessee company was also setting up a new plant at Vadnagar in District Mehsana, Gujarat, which was expected to be fully operational by October, 2010. The assessee company was also in process of putting a plant at Rajasthan on NH-8 to process almonds and cereals and health bars. 3. The assessee company has claimed substantial expansion and addition undertaken at the Paonta Sahib unit at Himachal Pradesh which was completed in the year under consideration. Hence, it was claimed that this was initial year and accordingly, deduction of Rs. 12,80,92,168/- was made u/s 80IC on the income earned from this unit. As per the audited balance sheet the assessee has shown addition on account of plant and machinery of Rs. 12,8....
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.... The sums and substances of AO's finding is that:- • Firstly, no detail has been filed by the assessee about the status of its units in Gujarat and Rajasthan and company is maintaining consolidated capital work in progress account without having project wise and item wise; • Secondly, the assessee has failed to produce any evidence that goods manufactured by unit at Himachal Pradesh are classified under eligible items as mentioned in 14 Schedule of the Income Tax Act; • Thirdly no details have been provided of the date of commencement of original production and whether any deduction u/s 80IC was ever claimed so as to compute 10 assessment years and no date has been provided when substantial expansion was completed so as to compute the initial assessment year. Thereafter various facts were noted by him in the following manner : "Assessee fails to justify the reason of purchasing machinery in the year 2005 which it claimed form part of addition of machinery for substantial expansion. WDV contains reduction on account of depreciation claimed in earlier years. Therefore, the value of Plant & Machinery installed by financial year ....
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.... the appellate order. It was submitted that assessee has been acquiring and installing various items of machinery during the said expansion period which were being debited under the head "Capital-Work-in-Progress" as per the following details:- Financial Year Mozzarella Cheese Ready to Eat Meals Mushroom Cultivation & Canning Total 2005-06 4,11,74,875 Nil Nil 4,11,74,875 2006-07 15,19,180 Nil Nil 15,19,180 2007-08 32,29,168 6,84,67,101 15,72,346 7,32,68,615 2008-09 19,48,518 4,86,899 99,78,644 1,24,14,061 Total 4,78,71,741 6,89,54,000 1,15,50,990 12,83,76,731 7. Assessee also gave point wise details and the breakup of the plant and machinery acquired. Thereafter, assessee after explaining the details of addition to the plant and machinery, submitted that large scale expansion requires long duration of time spanning over a number of years and the said plant and machinery was never put to use for production in any of the earlier preceding years otherwise assessee would have claimed depreciation in the earlier years and would have been examined in the assessments which were completed u/s 143(3....
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....ied area in the State of Himachal Pradesh The manufacturing unit of the assessee is situated in Hadbust No. 113 (Khasra No. 194) Village Shubhkhera, Tehsil Paonta Sahibm District Sirmaur, H.P. In this respect copies of the following documents given to the AO are enclosed: (a) Notification No. 1269(E), dated 04/11/2003, (b) Certificate dated 07/12/11 from Member Secretary, Single Window Clearance Agency, Paonta Sahib, Distt. Sirmaur, H.P. confirming the address of the manufacturing unit of the assessee, and (c) Certificate dated 03/12/11 from Patwari in this regard 6. The unit is not formed by splitting up or reconstruction of a business already in existence. The said requirement arises in the case of a new unit but is not applicable in the case of substantial expansion of an existing unit. But in any case, it is categorically stated that the unit was not formed by splitting up or reconstruction of a business already in existence. 7. A report of Accountant in support of deduction claimed u/s 80-IC must be filed CA report dated 22/06/09 on Form No. 10CCB was filed vide letter dated 24/11/11 before the AO during the assessment proceedings. Photocopies of the same ....
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....on that assessee was simultaneously establishing plants in Rajasthan and Gujarat has been found to be factually wrong, because till 31st March, 2008, there is no purchase of any machinery of plants by the assessee in any of the unit. He also analysed the various expenses identified by the inspection team and held that even if there is a little doubt with regard to particular expenses and if it is excluded from the investment in the expenses, then also investments in plant machinery still remains more than 50%, which is substantial. • Thirdly, The Central Excise department has clarified to the AO during the assessment proceedings that unit was registered under Central Excise Range with requisite registration number and also referred to the letters written by the assessee to the Supdt. of Central Excise evidencing the intimation to the concerned authorities about expansion of its plant, running of trial production and the commercial production from the new plant and machinery. He has also duly noted that the trial production in the new line of products which was intimated to the central excise department was w.e.f. 27.9.2008. All these facts have been duly verified by th....
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....has been stated to be completed over the span of four year which commenced from the financial year, 2005-06 and the plant and machinery for such an expansion was purchased over a period of four years and such expansion was completed during the year under consideration. Details of year wise break up of plant and machinery acquired for all the three manufacturing lines has been stated to be as under:- S.No. Machine Heads Cost (Rs.) 1. FY 2005-06 Cheese Vat, HTST Pasteurizer, Cold Milk Standardizing, Clarifier, Whey Pot, Cheese cutting knives, Curd Chip Mill, etc. (Custom cleared in Sep., 2005 Importetd from First Family Holding Inc. USA) 4,11,74,875 2. FY 2006-07 Cheese Stretching Machine with Accessories (Custom cleared in Mar., 2007 imported from Almac SRL, Modena, Italy) 15,19,180 3. FY 2007-08 Homogenizer (Custom cleared in July, 2007 Imported from HPM SRL, Italy) Packaging Machines (Custom cleared in Nov. 2007 Imported from LavorozioneAcctaidInox, Italy) 32,29,168 5. F.Y. 2008-09 Steam Generating Boiler, Tanks, etc. (Indian machinery installed in parts up to July, 2008) 19,48,518 Total : 4,78,71,741 S. No.....
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.... not as WDV, because no depreciation was claimed in the earlier years and the WDV of other plant and machinery was separately shown at Rs. 14,78,36,000/-. The gross block of plant and machinery as on 12.4.2008 was Rs. 24,77,55,000/- and the investments made in new plant and machinery on account of substantial expansion during the year has been shown at Rs. 12,83,76,731/- which comes to approx. 52% of the gross block of asset of the earlier plant and machinery. Further, from the inquiry made from the AO from DIC it has come on record that the proposal for expansion was approved by the DIC Committee on 9.1.2008 and commercial production had commenced on 27.9.2008; and therefore, the claim of deduction was made on 2009-10. The assessee had also intimated to the Excise Department about the completion of the substantial expansion and running of trial production vide letter dated 23.6.2008, copy of which has been placed at page 223 of the paper book to show that trial production had commenced w.e.f. 14.6.2008 and commercial production started from 29.9.2008. The copy of intimation has been placed on page 224 of the paper book. 14. Further, the assessee has made a claim for deductio....
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....irmity in the order of the Ld. CIT(A) in allowing the deduction u/s 80IC (8)and therefore same is affirmed and the grounds raised by the revenue is dismissed. 16. In the assessment year 2010-11, AO has disallowed the claim of deduction of Rs. 1,81,27,539/- u/s 80IC based on his finding given in the assessment order for A.Y. 2009-10. Since, Ld. CIT(A) has referred to its decision for the assessment year 2009-10 which has been discussed in detail by us in the foregoing paragraphs, therefore, our finding given above will apply mutatis mutandis for this year also and therefore, we affirm the order of the Ld. CTI(A) in allowing the claim of deduction. Accordingly, the revenue's appeal for the A.Y. 2010-11 is also dismissed. 17. Coming to the assessee's appeal for the asstt. Year 2012-13, the assessee has raised following grounds: 1. The Ld. CIT(Appeals) erred in law and on facts in confirming the disallowance of Rs. 17,17,610/- claimed u/s 80IC - a. By misinterpreting the provisions of section 80AC on legal issue as well as on facts; and b. By incorrectly applying the stipulation contained u/s 80A(5) on deduction claimed u/s 80IC. 18. Here in this yea....
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.... the Tribunal:- i) ACIT vs. Precot Meridian Ltd. ITA No. 1214/Mds/2012 order dated 29th April, 2013; ii) M/s. Symbiosis Pharmaceuticals vs. DCIT ITA No. 501/Chd/2017 order dated 4.10.2017; iii) ACIT vs. M/s. Monarch Innovative Technologies Pvt. Ltd. ITA No. 4815/Mum/2016 order dated 12.2.2018. In all these judgments the Tribunal has considered the similar claim of 80IC, wherein the claim has been made by way of revised return u/s 139(5) after interpreting the provision of section 80A(5). 21. On the other hand, Ld. DR submitted that it is mandatory that claim for deduction has to be made in the return of income filed u/s 139(1) in terms of section 80 AC, otherwise the assessee will not be eligible for deduction nu/s 80IC. He thus strongly relied upon the order of the Ld. CIT (A). 22. We have heard the rival submissions and also perused the relevant finding given in the impugned order. It is undisputed fact that the assessee is otherwise eligible for claim of deduction u/s 80IC in respect of his Himachal Pradesh Unit which is being consistently allowed to the assessee for the assessment year 2009-10 as held by us in the aforesaid appeals. The asses....
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....10. Benefits of certain deductions not to be allowed in cases where return is not filed within the specified time limit. 10.1 Section 139(1) casts an obligation on every assessee to furnish the return of income by the due date. With a view to enforce the compliance in this regard by the assessees who are entitled for deduction under section 10B from their income, a proviso (fourth proviso) to sub-section (1) of section 10B has been inserted so as to provide that no deduction under section 10B shall be allowed to an assessee who does not furnish a return of his income on or before the due date specifled in sub-section (1) of section 139. Similarly, with a view to enforce the compliance for furnishing the return of income by the due date by the assessees who are entitled for deductions under section 80-IA or section 80 IAB or section 80-IB or section 80-IC from their income, a new section 80AC has been inserted so as to provide that no deduction under section 80-IA or section 80-IAB or section 80-IB or section 80-IC shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified in subsection (1) of section 139. 10.2 T....