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01-11-2019, Cooper Bussmann India, Section 80IB, 801C(8)(ix), Tribunal Chennai
Appeal No. - I.T.A. Nos.1559 to 1563, 2592 -2594/CHNY/201 4
Asstt. Year - 2001-02 to 2008- 09
PER : DUVVURU RL REDDY
The assessee filed these appeals against the orders of the Commissioner of Income Tax (Appeals)-VI, Chennai in ITA Nos.66,95, 96, 223 & 444/13-14/A-VI dated 28.02.2014 for the assessment years 2001-02, 2002-03, 2006-07 to 2008-09, ITA No.743, 742 & 741/13-14/A-VI dated 30.07.2014 for the for the assessment years 2003-04 to 2005-06 and the orders of the Commissioner of Income Tax (Appeals), Puducherry in ITA No.484/CIT(A)-PDY/2013-14 dated 18.03.2016, ITA No.16/CIT(A)- PDY/2014-15 dated 18.03.2016 and ITA No.001/CIT(A)-PDY/2015- 16 dated 11.11.2016 for the assessment years 2009-10, 2010-11 & 2011-12 respectively.
2. The main issue involved in these appeals are whether the assessee has set up a new unit or undertaking capable of producing entirely different products or articles from the existing unit and also as to whether the assessee is eligible for claim of deduction u/s 80lB in respect of profits declared in the returns of income filed by it. The issue started from the initial A.Y. i.e. 2001-02. Against the assessment order dated 29.03.2004, the assessee filed an appeal before the CIT(A) and the ld CIT(A) vide order in ITA No.23/2004-05, dismissed the appeal . On further appeal by the assessee, the Hon'ble ITAT vide its order in ITA No.2910/Mds/2005 dated 12.10.2007 has remitted back to the AO to consider the issue in de-novo. Subsequently, the AO denied the claim of deduction u/s 80IB noticing certain shortcomings in the quantum of the machinery purchased by the assesse and also holding that the assessee has not satisfied two major conditions as mentioned by the Supreme Court of India in the case of M/s Textile Machinery Corporation vs CIT 107 ITR 195 as under:
1. The manufacture of production or article or things by the so called new industrial undertaking with reference to the investment of substantial capital made in the so called new industrial undertaking.
2. The assessee company was not able to establish that the so called new industrial undertaking is a separate and distinct and identity when compared to the old industrial undertaking. "
2.1 Similar claims made by the assessee u/s 80IB were also disallowed by the AO for the A.Ys. 2002-03 to 2005-06, 2006-07, 2007-08, 2008-09, 2009 - 2010 & 2010-2011.
2.3 This Tribunal in ITA 1559/Mds/2014, dated 01.09.2016, directed the AO, inter-alia, to examine all the bills and vouchers and functions of each and every machinery and thereafter file a report before this Tribunal on or before 01.11.2016 after serving a copy of the same to the assessee. It made clear, in the remand proceeding, the assessing officer may also inspect the so called plant and machinery in person, in case, he doubts the existence of the plant and machinery, said to be purchased by the assessee. It is open to the assessee to file objection to the report filed by the assessing officer before this Tribunal. The AO filed his report on which the assessee has also filed its rejoinder. However, they have not addressed the specific issues as desired by the Hon’ble ITAT, therefore, they are not dealt here. Therefore, the appeal is heard on merit.
3. On the issue of disallowance U/s.80IB, the ld.AR submitted against the various findings recorded by the lower authorities issuewise as under:
1. With regard to the finding that investment was not substantial, the ld.AR submitted that the issue of substantial investment is relevant to be examined when the undertaking manufactures same products as the old undertaking, so as to establish that the undertaking is a new and independent undertaking and not merely extension of the old undertaking formed by reconstruction.
In case, the new undertaking is engaged in manufacturing completely new range of products which the old undertaking was not manufacturing, then issue of substantial investment would not be