TaxTMI 
TaxTMI 
1987 (11) TMI 116
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....st. yr. 1982-83 to the effect that the CIT(A) should have allowed the appeals against the additions and disallowance made by the ITO were not passed at the time of hearing. Hence, they are rejected. Ground No. 3 in the appeal for the asst. yr. 1982-83 to the effect that the CIT(A) should have deleted the interest charged under ss. 139, 215 and 217 of the IT Act was also not pressed. Hence it is also rejected. 3. The common ground in these two appeals is with reference to the rejection by the ITO of the assessee's claim under s. 80J and the maintenance of the same by the CIT(A). For the asst. yr. 1981-82 the assessee claimed deduction under s. 80J amounting to Rs. 1,80,651 in respect of Unit at Konnager which was stated to be a new Unit f....
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....r vielded additional profit attributable to the outlay of fresh capital, that from the details it will appear that there was employment of requisite labour of 4 Chemists and 38 workmen that new items, namely,(i) Tetracycline Capsules,(2) Doxycycline Capsules,(3) Chloramphenicol Capsules and (4) Ampicillin Capsules, have been manufactured in the newly-established undertaking that the said Unit started production in 1978 after obtaining the licences in 1977 and construction of the building on 1978. It was further contended that there were two Units one for the manufacture of Aspirin and another for the manufacture of pharmaceutical products. The assessee's claim under s. 80J was with reference to the Unit at Konnagar for the manufacture of ph....
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....lding from its sister concern. The value of plant and machinery taken over is Rs. 2,95,500. The balance-sheet as on 31st Dec., 1978 show that the value of plant and machinery as on 1st Jan., 1978 was Rs. 4,68,088. The additions during 1978 were Rs. 2,13,002 and the total value of the machinery for the year was Rs. 6,81,090. In the balance-sheet total cost of newly constructed building is shown at Rs. 36,107 only. In the Balance-sheet there is no bifurcation of the plant and machinery into old or new plant and machinery or into units manufacturing different products. The bifurcation given by the assessee does not find a place in the schedule of fixed assets in the balance-sheet. In the balance-sheet of the company all the plant and machinery....
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.... present appeals. 5. The assessee's Counsel filed the following : (1) Order of the Tribunal dt. 21st May, 1987 in the assessee's own case for the asst. yr. 1979-80 in ITA No. 876 Cal 1986. (2) Licence to manufacture for sale drugs in schedule C and C(I) under the Drugs and Cosmetics Rules, 1945 dt. 6h Oct., 1977. (3) Agreement dt. 22nd Sept., 1975 between the assessee and Martin & Marris Pvt. Ltd. (4) Annual reports and accounts for the calendar years 1976, 1977, 1978, 1979, 1980 & 1981. (5) Working of the claims of the assessee under s. 80J for the two years. (6) Details of machinery purchased in the years 1976 to 1981. The arguments of the assessee's counsel were to the following effects: The assessee by agreement dt.....
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....w Unit which is separate from the old Unit as no bifurcation of plant & machinery for two Units has been given in the Balance Sheet. Bifurcation of plant & Machinery into different Units of the company in the Balance Sheet is not a statutory requirement under the Companies Act, 1956. Hence, such a bifurcation was not shown in the annual report and accounts prepared as per provisions of the Companies Act, 1956. However, complete break-up of the plant & machinery installed in the different Units. Aspirin and Pharmaceutical Formulations was furnished before the CIT(A). This has been referred to by the CIT(A) in his appellate order. The CIT(A) confused himself with the plant & machinery installed in the Aspirin Unit with that of the machinery f....
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....and distinct identity. In the order of the Tribunal dt. 21st May, 1987 in the assessee's case for the asst. yr. 1979-80 in ITA No. 576/Cal/1986 the Tribunal already found that the assessee had succeeded in showing that it set up an industrial undertaking for the manufacture of production of pharmaceutical articles and that the assessee's new industrial undertaking began to manufacture new products, namely tablets, capsules and injections in the accounting year 1978. The Patna High Court in the case of Hindustan Malleables and Forgings Ltd. vs. ITO & Ors. 1977 CTR Pat 27 : (1978) 112 ITR 389 (Pat) held that in a case fo reconstruction of business its identity is not lost and the original undertaking continues to function with some minor chan....