TaxTMI 
TaxTMI 
2008 (11) TMI 48
X X X X Extracts X X X X
X X X X Extracts X X X X
....n that the respondent/assessee was entitled to the claim made by it for the reasons given in the impugned judgment. We are of the view that the impugned judgment of the Tribunal deserves to be sustained for the reasons given hereinafter. Before we elucidate the reasons for arriving at such a conclusion, the following undisputed brief facts require to be noted :- 3.1 The respondent/assessee in the previous year 1993-94 had set up an industrial undertaking for the purpose of manufacture of photo albums. The respondent/assessee commenced manufacture on 24.03.1994. The respondent/assessee also got itself registered as a small scale industrial undertaking. 3.2 In the assessment year 1994-95, which was the first and the initial year, the assessee suffered a loss. The respondent/assessee continued to suffer losses till assessment year 1997-98. Consequently, the assessee did not claim any deduction, in particular under Section 80-IA of the Act, as it appeared on the statute book at the relevant point in time, till the assessment year 1997-98. In the assessment years 1998-99 and 1999-00, the respondent/assessee having earned profits, filed a return claiming a deduction under the relev....
X X X X Extracts X X X X
X X X X Extracts X X X X
....overnment of Haryana, that the assessee commenced the production on 24.03.1994, came to the conclusion that it was not entitled to the deduction as it had commenced production outside the defined statutory period. Consequently, the respondent/assessee's claim for deductions both under Sections 80-IA and 80-IB was disallowed and a sum of Rs 8,46,602/- was added back to the income. 5. Aggrieved by the order of the Assessing Officer, the respondent/assessee preferred an appeal to the Commissioner of Income-tax (Appeals)-XVI, New Delhi [hereinafter referred to as 'CIT(A)']. The CIT(A) dismissed the appeal of the respondent/ assessee and, in particular, rejected the plea of the respondent/ assessee that it was entitled to a deduction under sub section 3 (i) of Section 80-IB on the ground that when there was a specific clause and provision for a Small Scale Industrial (in short 'SSI') unit, the assessee could not take benefit of the general clause and this being a beneficial clause, strict compliance will have to be made for being accorded benefit under the Act. The CIT(A) sustained the order and reasoning of the Assessing Officer, in respect of, the respondent/assessee's claim ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with effect from 01.04.1995, then by Finance Act, 1995 with effect from 01.04.1996, then by Finance Act (No. 2), 1996 with effect from 01.04.1997, by Finance Act, 1997 with retrospective effect from 01.04.1996 and with effect from 01.04.1998, and then the Income Tax (Amendment) Act, 1998 with retrospective effect from 01.04.1995 and with effect from 01.04.1998 and the Finance Act ( No. 2), 1998 with retrospective effect from 01.04.1998 and with effect from 01.04.1999 etc. 8.1 In the present case, even though it is an admitted fact that the respondent/assessee commenced production on 24.03.1994 it did not claim deduction in the initial year relevant to the assessment year 1994-95, and thereafter, till the assessment year 1997-98 in view of the fact that both in the initial year and the three succeeding years, it had not earned any profit. In the fifth and sixth year relevant for the assessment years 1998-99 and 1999-00, the respondent/assessee had claimed deductions under Section 80-IA and the Assessing Officer accepted the return under Section 143 (1) (a) of the Act. The Assessing Officer, however, disallowed the deductions as claimed by the respondent/assessee for the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w :- '80-IB (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to (11) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computation the total income of the assessee, a deduction from such profits and gains of an amount equal to the percentage and for such number of years as specified in this Section. (2) xxxx xxxxx xxxxx (3) The amount of deduction in the case of an industrial undertaking shall be twenty-five percent (or thirty per cent where the assessee is a company), of the profits and gains derived from such industrial undertaking for a period of ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a cooperative society) beginning with the initial assessment year subject to the fulfilment of the following conditions, namely :- (i) it begins to manufacture or produce articles or things or to operate such plant or plants, at any time during the period beginning on the 1st day of April, 1991 and ending on the 31st day of Marc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dent from the narration herein above, to claim deduction in the assessment year 2000-01 and 2001-02. The rationale advanced by the Assessing Officer that the assessee was not entitled to deductions either under Section 80-IA or 80-IB (3) (ii) was erroneous for the reason that the Assessing Officer overlooked the fact that in the initial year relevant to the assessment year 1994-95, the deduction to the assessee would have been available under Section 80-IA (2) (iv) (a) of the Act as it then obtained in the assessment year 1994-95. There was no distinction between a small scale undertaking and any other undertaking. The Assessing Officer in our view, wrongly rejected the claim of the respondent/assessee for the assessment years under consideration i.e., assessment years 2000-01 and 2001-02 under the provision of Section 80-IB (3) (ii). The Assessing Officer failed to note that by virtue of the Finance Act,1999 with effect from 01.04.2000, Section 80-IA had been bifurcated, and consequently, substituted by Sections 80-IA and 80-IB. In these circumstances, the respondent/assessee was entitled to deduction as the legislature in its wisdom continued that original deduction available to ....