Blow Packaging (India) Pvt Ltd., CHENNAI V. ACIT, CHENNAI

CO 52/CHNY/2017

• Counselvise Citation: [2017] 119 COUNSELVISE.COM (IT) 3447 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 15-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SRINIVASAN IRSJCIT
• Assessee Lawyers: T BANUSEKARC A
• Keywords: Depreciation
• Section: 80IB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.1750 /MDS/2016 & C.O.NO.104/MDS/2016 / ASSESSMENT YEARS :2010-11 THE JOINT COMMISSIONER OF INCOME TAX (OSD) CORPORATE CIRCLE 1(2) CHENNAI 600 034. VS. M/S. BLOW PACKAGING (INDIA) PVT. LTD, NO.55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR, CHENNAI 600 098. ./I.T.A. NOS. 2288/MDS/2016, 336 &335/2017 & C.O. NOS. 136/2016, 52 & 53/MDS/2017 / ASSESSMENT YEARS : 2003-04, 2004-05 & 2005-06 THE ASSISTANT COMMISSIONER OF INCOME TAX CORPORATE CIRCLE 1(2) CHENNAI 600 034. VS. M/S. BLOW PACKAGING (INDIA) PVT. LTD, NO.55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR, CHENNAI 600 098. [PAN AAACB 3145L ] ( ! /APPELLANT) (RESPONDENT /CROSS OBJECTOR) DEPARTMENT BY : SHRI. A. SRINIVASAN, IRS,JCIT. ASSESSEE BY : SHRI. T. BANUSEKAR, C.A. ' # $ %& /DATE OF HEARING : 25-09-2017 '( $ %& /DATE OF PRONOUNCEMENT : 26-09-2017 ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 2 -: / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: ITA NO.1750/MDS/2016, C.O.NO.104/MDS/2016, ITA NO.2288/MDS/2016, C.O.NO.136/MDS/2016, ITA NO.336/M DS/2017, C.O.NO.52/MDS/2017 AND ITA NO.335/MDS/2017, C.O.NO. 53/MDS/2017 FOR ASSESSMENT YEARS 2010-11, 2003-04, 2004-05 AND 2005-2006 RESPECTIVELY, ARE APPEALS AND CROSS OBJECTIONS OF T HE REVENUE AND ASSESSEE RESPECTIVELY FOR ASSESSMENT YEARS 2010-11, 2003-04, 2004-05 AND 2005-2006. GRIEVANCE OF THE DEPARTMENT ARE SI MILAR FOR ALL THESE YEARS, EXCEPT FOR ASSESSMENT YEAR 2010-2011, WHERE THERE IS ONE OTHER ISSUE. COMMON GRIEVANCE OF THE REVENUE IS ON THE DIRECTIONS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TO AL LOW THE ASSESSEE, DEDUCTION CLAIMED BY IT UNDER SEC. 80IB OF THE INC OME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) IN RESPECT OF ONE OF ITS UNITS AT NO.55D, SIDCO INDUSTRIAL ESTATE, AMBATTUR. 2. FACTS APROPOS ARE THAT ASSESSEE ENGAGED IN THE MANU FACTURE OF DIFFERENT TYPES OF PLASTIC ITEMS, HAD THREE UNIT S. THESE WERE AT 271, SIDCO INDUSTRIAL ESTATE, AMBATTUR, 55-D, SIDCO INDU STRIAL ESTATE, AMBATTUR AND ONE AT SRIPERAMBUDUR. ASSESSEE HAD F OR ALL THESE YEARS CLAIMED DEDUCTION U/S. 80IB OF THE ACT ON ITS UNDER TAKING AT 55-D, ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 3 -: SIDCO INDUSTRIAL ESTATE, AMBATTUR. AS PER ASSESSEE , INVESTMENT IN PLANT AND MACHINERY IN THE SAID UNIT WAS LESS THAN C3,00,00,000/- AND THE SAID UNIT WAS INDEPENDENTLY ELIGIBLE FOR DEDUC TION UNDER SECTION 80IB OF THE ACT AS A SMALL SCALE INDUSTRIAL UNDERTA KING. CONTENTION OF THE ASSESSEE WAS THAT ONCE INVESTMENT IN A PARTICUL AR UNDERTAKING WAS BELOW C3,00,00,000/-, ELIGIBILITY FOR DEDUCTION U/ S. 80IB OF THE ACT, CONTINUED FOR THE ENTIRE TENURE FOR WHICH SUCH DED UCTION WAS AVAILABLE, SINCE ALL OTHER CONDITIONS WERE SATISFIE D. HOWEVER, THE LD. ASSESSING OFFICER DID NOT ACCEPT THIS CONTENTION. ACCORDING TO HIM, DEFINITION OF SMALL SCALE INDUSTRIAL UNDERTAKING GIVEN IN CLAUSE (G) OF SEC. 80IB(14) OF THE ACT, CLEARLY MANDATED THAT SEC . 11B OF INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 WAS TO BE AP PLIED FOR DETERMINING WHETHER AN INDUSTRIAL UNDERTAKING WAS SMALL SCALE OR NOT. ACCORDING TO THE LD. ASSESSING OFFICER, CLASSIFICA TION MADE BY THE STATE GOVERNMENT WAS NOT RELEVANT FOR THIS PURPOSE. LD. ASSESSING OFFICER ALSO FOUND THAT THE AGGREGATE OF INVESTMENTS MADE B Y THE ASSESSEE IN PLANT AND MACHINERY, WHEN ITS UNITS AT 271, SIDCO INDUSTRIAL ESTATE, AMBATTUR AND 55-D, SIDCO INDUSTRIAL ESTATE, AMBAT TUR, WERE CONSIDERED TOGETHER, EXCEEDED C3,00,00,000/-. FURT HER AS PER THE LD. ASSESSING OFFICER UNIT AT 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR WAS ONLY A BRANCH OF THE UNIT IN 271, SIDCO INDUSTRIA L ESTATE, AMBATTUR AND NOT A SEPARATE INDUSTRIAL UNDERTAKING. ACCORDIN G ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 4 -: TO HIM, PERMANENT REGISTRATION CERTIFICATE ISSUED BY THE STATE GOVERNMENT ON 29.12.2000 CLEARLY INDICATED THAT UNI T AT 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR WAS ONLY AN EXPANSION OF ORIGINAL UNIT AT 271, SIDCO INDUSTRIAL ESTATE, AMBATTUR. LD. ASSE SSING OFFICER HELD THAT ASSESSEE HAD LOST ITS CHARACTER OF SMALL SCALE INDUSTRIAL UNDERTAKING, SINCE ITS INVESTMENT IN PLANT AND MACH INERY EXCEEDED C3,00,00,000/-. ACCORDING TO HIM, LIMITS ON INVEST MENT IN PLANT AND MACHINERY HAD TO BE FULFILLED NOT ONLY IN THE INITI AL YEAR OF THE CLAIM U/S. 80IB OF THE ACT BUT ALSO IN SUBSEQUENT YEARS. THUS, HE DENIED THE CLAIM OF THE ASSESSEE U/S. 80IB OF THE ACT FOR ALL THESE YEARS. 3. AGGRIEVED, ASSESSEE MOVED IN APPEALS BEFORE THE LD . COMMISSIONER OF INCOME TAX (APPEALS). CONTENTION OF THE ASSESSEE WAS THAT DEDUCTION U/S. 80IB OF THE ACT WAS AVAILAB LE FOR EACH UNDERTAKING AND THE TWO UNITS INVESTMENTS OF WHICH WERE AGGREGATED BY THE LD. ASSESSING OFFICER WERE MANUFACTURING DI FFERENT THINGS USING DIFFERENT PROCESSES. AS PER THE ASSESSEE ITS UNI T AT 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR WAS NOT A BRANCH OF IT S UNIT AT 271, SIDCO INDUSTRIAL ESTATE, AMBATTUR. ASSESSEE ALSO RELIE D ON A DECISION OF CO- ORDINATE BENCH IN ITS OWN CASE FOR ASSESSMENT YEARS 2008-09 AND 2009-2010, WHEREIN IT WAS HELD BY THE TRIBUNAL THAT ITS UNIT AT 55-D, ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 5 -: SIDCO INDUSTRIAL ESTATE, AMBATTUR WAS AN INDEPENDEN T ONE AND THEREFORE HAD TO BE CONSIDERED AS SEPARATE INDUSTRI AL UNDERTAKING. ASSESSEE ALSO REITERATED ITS CONTENTION THAT ELIGIB ILITY FOR CLAIMING DEDUCTION U/S. 80IB OF THE ACT WAS TO BE SATISFIED ONLY IN INITIAL YEAR OF PREFERRING SUCH CLAIM AND NOT IN THE SUBSEQUENT YEARS. LD. COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE ORDER OF THE CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSME NT YEARS 2008-09 AND 2009-10 HELD IN FAVOUR OF THE ASSESSEE. ACCORDI NG TO HIM, INVESTMENT OF THE ASSESSEE IN 55-D, SIDCO INDUSTRIA L ESTATE, AMBATTUR WAS ONLY C211.09 LAKHS AND THIS WAS WITHIN THE UPPE R CAP OF C3,00,00,000/-. HE DIRECTED THE LD. ASSESSING OFFIC ER TO ALLOW THE CLAIM OF THE ASSESSEE. 4. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT BY VIRTUE OF THE DEFINITION OF INDUS TRIAL UNDERTAKING GIVEN IN SEC.3(D) OF THE INDUSTRIES (DEVELOPMENT AN D REGULATION) ACT, 1951, AN INDUSTRIAL UNDERTAKING MEANT ANY UNDERTAKI NG PERTAINING TO A SCHEDULED INDUSTRY CARRIED ON IN ONE OR MORE FACTO RIES, BY ANY PERSON. FURTHER, ACCORDING TO HIM BY VIRTUE OF (J) OF SEC.3 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, THE FIRST R EQUIREMENT WAS THAT THE CLAIM PERTAINED TO AN INDUSTRIAL UNDERTAKI NG. AS PER THE LD. ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 6 -: DEPARTMENTAL REPRESENTATIVE , THE TWO UNITS OF THE ASSESSEE THOUGH THEY WERE MANUFACTURING DIFFERENT ITEMS, WERE BOTH PART OF PLASTIC MANUFACTURING INDUSTRY AND COULD NOT BE CONSIDERED AS DIFFERENT UNDERTAKINGS FOR THE PURPOSE OF SEC. 80IB(3) OF THE ACT. ACCORDING TO HIM, AGGREGATE INVESTMENT IN TWO UNITS EXCEEDED C3, 00,00,000/- IN ALL THESE YEARS. THIS AS PER THE LD. DEPARTMENTAL REPR ESENTATIVE DISENTITLED THE ASSESSEE FROM CLAIMING DEDUCTION U/ S. 80IB OF THE ACT. THUS, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE, T HE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING THE CLAIM. 5. PER CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ISSUE STOOD SQUARELY COVERED BY THE DECISION OF CO- ORDINATE BENCH IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 AND 2009-2010 (ITA NOS. 399/2015 AND 1015/2014, DATED 17.07.2015) . FURTHER, ACCORDING TO HIM, INVESTMENT OF THE ASSESSEE IN PLA NT AND MACHINERY IN RESPECT OF UNITS AT 55-D, SIDCO INDUSTRIAL ESTATE , AMBATTUR WAS BELOW C3,00,00,000/-. IN ANY CASE, ACCORDING TO HIM, ONC E THE CLAIM WAS ALLOWED IN AN INITIAL YEAR, IT WAS NOT NECESSARY FO R THE ASSESSEE TO MEET THE THRESHOLD NORMS IN EVERY ONE OF THE SUCCE EDING YEARS WHERE IT WAS ELIGIBLE FOR THE DEDUCTION. RELIANCE WAS P LACED ON THE JUDGMENT OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S. SUNDER FORGING (ITA NOS.242 AND 243 OF 2012 AND 92 OF 2014 DATED 30.07.2015 ) ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 7 -: 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTE D THAT THE CLAIM PREFERRED BY THE ASSESSEE U/S. 80IB OF THE ACT WAS ON ITS UNIT AT 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR. THE QUESTION WH ETHER THE SAID UNIT COULD BE CONSIDERED AS A BRANCH AS ITS UNIT AT 271 , SIDCO INDUSTRIAL ESTATE, AMBATTUR, AND WHETHER THE FORMER COULD BE C ONSTRUED AS AN INDEPENDENT INDUSTRIAL UNDERTAKING, HAVE BEEN DEALT BY THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN C ASE FOR ASSESSMENT YEARS 2008-09 AND 2009-2010 IN ITA NOS.399/2015 AND 1015/2014, DATED 17.07.2015. PARAS 3 TO 8 OF THE SAID DECISION IS REPRODUCED HEREUNDER:- 3. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSES SEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE O F PLASTIC CANS AND CONTAINERS. THE ASSESSEE-COMPANY W AS REGISTERED AS A SMALL SCALE INDUSTRY BY THE DIRECTO RATE OF INDUSTRIES, TAMILNADU. THE COPY OF THE REGISTRATION CERTIFICATE IS AVAILABLE AT PAGE 2 OF THE PAPER BOO K. REFERRING TO THE LETTER DATED 9.9.2004 BY GENERAL M ANAGER, DISTRICT INDUSTRIES CENTRE, THIRUVALLUR, THE LD. REPRESENTATIVE POINTED OUT THAT SO LONG AS THE VALU E OF THE PLANT AND MACHINERY DOES NOT EXCEED ` 3 CRORES, THE ASSESSEE CONTINUES TO BE A SMALL SCALE INDUSTRY. TH E COST OF PLANT AND MACHINERY AS ON 31.3.2002 IS AT ` 1,30,88 ,806/-. AFTER DEPRECIATION, THE NET BLOCK OF PLANT AND MACH INERY AS ON 31.3.2002 IS AT ` 64,21,616/-. THE COST OF PLANT AND MACHINERY OF UNIT-II AS ON 31.3.2002 IS ` 92,97,315 /-. THEREFORE, ACCORDING TO THE LD. REPRESENTATIVE, AS ON TODAY THE COST OF ASSET DOES NOT EXCEED ` 3 CRORES, SO TH E ASSESSEE CONTINUES TO BE A SMALL SCALE INDUSTRY ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. THE ASSESSING OFFICER SIMPLY R EFERRING TO PROVISIONS OF SECTION 80IB(3) OF THE ACT FOUND T HAT THE ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 8 -: COST OF PLANT AND MACHINERY IS NOT LESS THAN ` 1 CR ORES THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTI ON U/S 80IB OF THE ACT. THE CERTIFICATE ISSUED BY THE INDUSTRIE S DEPARTMENT OF GOVERNMENT OF TAMILNADU WAS NOT CONSIDERED BY THE LOWER AUTHORITIES. REFERRING TO T HE PROVISIONS OF SECTIONS 25 & 26 OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, THE LD. REPRESENTATIVE SUBMITTED THAT THE CENTRAL GOVERNMEN T DELEGATED ITS POWER TO THE STATE GOVERNMENT AND ITS OFFICERS TO SPECIFY THE INDUSTRIES WHICH ARE OF SMALL SCALE IN NATURE. ACCORDING TO THE LD. REPRESENTATIVE, TO PROVIDE SIN GLE WINDOW SERVICE TO SMALL SCALE INDUSTRIES, THE ENTIR E PROCEDURAL ASPECT WAS SIMPLIFIED BY DELEGATING THE POWER TO DISTRICT INDUSTRIES CENTRE. THE LD. REPRESENTATI VE HAS ALSO PLACED HIS RELIANCE ON THE JUDGMENT OF THE HON 'BLE KARNATAKA HIGH COURT IN ACE MULTI AXES SYSTEMS LTD VS DCIT IN I.T.A.NO. 477 OF 2013 DATED 28.7.2014, A CO PY OF WHICH IS AVAILABLE AT PAGE 8 OF THE PAPER BOOK. THE LD. REPRESENTATIVE ALSO PLACED HIS RELIANCE ON THE DECI SION OF CHANDIGARH BENCH OF THIS TRIBUNAL IN MICROINSTRUMEN TS CO. VS ITO [2008] 12 DTR 501. THE LD. REPRESENTATIV E HAS ALSO PLACED HIS RELIANCE ON THE DECISION OF THE HYD ERABAD BENCH OF THIS TRIBUNAL IN SAWARIA PIPES (P) LTD VS ACIT [2013] 33 TAXMANN.COM 380. 4. ON THE CONTRARY, SHRI P. RADHAKRISHNAN, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE CLAIMED DEDUCTION U/S 80IB CLAIMING IT AS A SMALL S CALE INDUSTRY. REFERRING TO THE ASSESSMENT ORDER, THE LD . DR SUBMITTED THAT THE CLAIM OF DEDUCTION U/S 80IB WAS MADE IN RESPECT OF SECOND UNIT OF THE ASSESSEE AT 55D, SIDC O INDUSTRIAL ESTATE, AMBATTUR. ACCORDING TO THE LD. D R, THE SECOND UNIT IS ONLY AN EXPANSION OF THE EARLIER UNI T. ACCORDING TO THE LD. DR, TWO UNITS ARE NOT INDEPEND ENT AND SEPARATE, THEREFORE, THE CLAIM OF THE ASSESSEE FOR THE SECOND UNIT CANNOT BE ALLOWED. ACCORDING TO THE LD. DR, BO TH UNITS ARE OWNED AND CONTROLLED BY THE ASSESSEE THEREFORE, THE ASSESSEE CANNOT BE CONSTRUED AS HAVING SEPARATE AND INDEPENDENT UNIT FOR THE PURPOSE OF CLAIMING DEDUCT ION U/S 80IB. THE LD. DR PLACED HIS RELIANCE ON THE DECISIO N OF THIS TRIBUNAL IN M/S CARESS BEAUTY CARE PRODUCTS PVT. LT D VS CIT IN I.T.A.NO. 79/MDS/2011 DATED 15.1.2013, A COP Y OF WHICH IS FILED BY THE LD. DR. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 9 -: ASSESSING OFFICE RDISALLOWED THE CLAIM OF THE ASSES SEE ON THE GROUND THAT THE UNIT AT 55-D SIDCO INDUSTRIAL E STATE, AMBATTUR, IS ONLY A BRANCH UNIT. THE ASSESSING OFFI CER HAS ALSO OBSERVED THAT EVEN ASSUMING IT WAS CONSIDERED TO BE AN INDEPENDENT AND SEPARATE UNIT STILL THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB. THE ASSESSING OFFI CER ALSO FOUND THAT THE INVESTMENT IN PLANT AND MACHINERY WA S AT GROSS VALUE OF 212.71 LAKHS AS ON 31.3.2009. ACCORD INGLY, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE IS NO T ELIGIBLE FOR DEDUCTION U/S 80IB SINCE THE INVESTMENT EXCEEDE D ` 1 CRORES. APPARENTLY, THE ASSESSING OFFICER PLACED HI S RELIANCE ON THE GUIDELINES ISSUED UNDER INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 FOR SMALL SC ALE INDUSTRIES. BOTH THE AUTHORITIES BELOW OVERLOOKED T HE POWER DELEGATED TO STATE INDUSTRIES DEPARTMENT AND THE CR ITERIA DETERMINED BY STATE INDUSTRIES DEPARTMENT FOR SMALL SCALE INDUSTRIES. 6. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SEC TION 80IB OF THE ACT. SEC. 80IB(14)(G) OF THE ACT DEFINE S SMALL SCALE INDUSTRIAL UNDERTAKING AS FOLLOWS: SMALL SCALE INDUSTRIAL UNDERTAKING MEANS AN INDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PREVIOUS YEAR REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTAKING UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951). 7. THE HYDERABAD BENCH OF THIS TRIBUNAL IN THE CASE OF SAWARIA PIPES (P) LTD. (SUPRA), AFTER CONSIDERING T HE NOTIFICATION ISSUED BY THE GOVERNMENT OF INDIA UNDE R THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, FOUND THAT IF THE INVESTMENT ON FIXED PLANT AND MACHINERY OF A SMALL SCALE INDUSTRIAL UNDERTAKING AS ON THE LAST D AY OF THE PREVIOUS YEAR DOES NOT EXCEED ` 3 CRORES, IT IS ENT ITLED FOR DEDUCTION U/S 80IB OF THE ACT. IN THE CASE BEFORE T HE HYDERABAD BENCH OF THIS TRIBUNAL THE INVESTMENT IN THE PLANT AND MACHINERY WAS MORE THAN ` 4 CRORES THEREF ORE, THE TRIBUNAL FOUND THAT THE ASSESSEE IS NOT ENTITLE D FOR DEDUCTION U/S 80IB. IN THE CASE BEFORE US, THE INVE STMENT IN THE PLANT AND MACHINERY DOES NOT EXCEED ` 3 CRORES IN BOTH UNITS OF THE ASSESSEE, THEREFORE, THE DECISION OF T HE HYDERABAD BENCH OF THE TRIBUNAL IS IN FAVOUR OF THE ASSESSEE. IN OTHER WORDS, SO LONG AS THE INVESTMENT IN PLANT ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 10 -: AND MACHINERY DOES NOT EXCEED ` 3 CRORES, THE ASSES SEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. IN THIS CASE, ADMITTEDLY, THE INVESTMENT IN PLANT AND MACHINERY I S ONLY ` 212.71 LAKHS AS ON 31.3.2009, THEREFORE, THIS TRIBU NAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE CONTINUES TO BE A SMALL SCALE INDUSTRY AS ON THE LAST DAY OF THE PREV IOUS YEAR HENCE, IT IS ELIGIBLE FOR DEDUCTION U/S 80IB. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE CENTRAL GOVERNMENT DELEGATES ITS POWER TO STATE GOVERNMENT UNDER (INDUSTRIES AND DELEGATION) ACT 1951, THE GUIDELINE S ISSUED BY THE STATE INDUSTRIES DEPARTMENT HAS TO BE FOLLOW ED FOR DETERMINING WHETHER AN UNDERTAKING IS SMALL SCALE I NDUSTRY OR NOT. 8. THE NEXT CONTENTION OF THE LD. DR IS THAT THE A SSESSEE IS CLAIMING DEDUCTION ONLY IN RESPECT OF THE BRANCH UN IT AT 55D, SIDCO INDUSTRIAL ESTATE, AMBATTUR. WE HAVE CAREFULLY GONE THROUGH THE PERMANENT REGISTRATION CERTIFICATE COPY OF WHICH AVAILABLE AT PAGE 2 OF TH E PAPER BOOK. THE REGISTRATION CERTIFICATE ISSUED BY THE DI RECTORATE OF INDUSTRIES SHOWS THAT THE MAIN UNIT MANUFACTURIN G BLOW MOULDED PLASTIC CONTAINERS ONLY. THE BRANCH UNIT MANUFACTURES INJECTION MOULDED PLASTIC BUCKETS ONLY . THE BRANCH UNIT, IN ADDITION TO THE ABOVE, MANUFACTURIN G INJECTION MOULDED PLASTIC COMPONENTS SUCH AS PAILS AND BUCKETS MADE OUT OF HD, LD. AND PP MATERIAL AND BLO W MOULDED PLASTIC BARRELS, DRUMS AND CONTAINERS. IN F ACT, THE METHODS OF PRODUCTION IN MAIN UNIT AT 271, SIDCO INDUSTRIAL ESTATE AND THE METHOD IN THE BRANCH UNIT AT 55D, SIDCO INDUSTRIAL UNIT ARE DIFFERENT EVEN THOUGH BOT H UNITS PRODUCING VARIOUS PLASTIC PRODUCTS. THE ASSESSING O FFICER FURTHER OBSERVED THAT PRODUCTION WAS COMMENCED ON 20.10.1997 AND EXPANSION-I WAS ON 2.12.2007. IN FAC T, THE EXPANSION-I WAS ON 2.12.2000 AS MENTIONED IN THE CERTIFICATE OF REGISTRATION AND NOT ON 2.12.2007 AS OBSERVED BY THE ASSESSING OFFICER. MERELY BECAUSE T HE SECOND UNIT WAS SHOWN AS BRANCH UNIT OR EXPANDED UN IT, IT CANNOT BE SAID THAT THE BRANCH UNIT IS NOT AN INDEP ENDENT UNIT. IN FACT, THE INJECTION MOULDED PLASTIC COMPON ENTS ARE MANUFACTURED AT 55-D, SIDCO INDUSTRIAL UNIT. THIS M ETHOD IS NOT USED IN THE MAIN UNIT. THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT BOTH UNITS ARE FUNCTIONING DIFFERENTLY EVEN THOUGH THE END PRODUCT IN BOTH UNI TS ARE PLASTIC COMPONENTS. THEREFORE, BOTH THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING BOTH THE UNITS AS SAM E UNIT. ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 11 -: MERELY BECAUSE ONE UNIT IS TREATED AS BRANCH UNIT F OR ADMINISTRATIVE CONVENIENCE, IT DOES NOT MEAN THAT B OTH THE UNITS ARE ONE AND THE SAME. IN VIEW OF THE ABOVE, B OTH THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN TREATING BOT H THE UNITS AS ONE AND THE SAME. THIS TRIBUNAL IS OF THE CONSID ERED OPINION THAT BOTH MAIN AND BRANCH UNIT ARE SEPARATE AND INDEPENDENT ONE, THEREFORE, THE AUTHORITIES BELOW A RE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE U/ S 80IB OF THE ACT. ACCORDINGLY, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE U/S 80IB OF THE ACT. CO-ORDINATE BENCH HAS HELD THAT THE GUIDELINES IS SUED BY THE STATE INDUSTRIES DEPARTMENT WAS BINDING SINCE CENTRAL GOV ERNMENT HAD DELEGATED ITS POWER TO STATE GOVERNMENT TO ISSUE S UCH GUIDELINE UNDER (INDUSTRIES AND DELEGATION) ACT 1951. CO-ORDI NATE BENCH ALSO POINTED OUT THAT THE TWO UNITS WERE IN DIFFERENT MA NUFACTURING LINE AND THEREFORE 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR HAD TO BE CONSIDERED AS A SEPARATE INDUSTRIAL UNDERTAKING. AU DITED FINANCIAL ACCOUNTS OF THE ASSESSEE FOR THE IMPUGNED ASSESSME NT YEARS PLACED BEFORE US SHOW THAT INVESTMENT IN PLANT AND MACHINE RY IN 55-D, SIDCO INDUSTRIAL ESTATE, AMBATTUR REMAINED WITHIN THE LI MIT OF C3,00,00,000/-. THAT APART, THE QUESTION WHETHER AN ASSESSEE HAS TO SATISFY THE THRESHOLD CONDITIONS FOR CLAIMING DEDUC TION U/S. 80IB OF THE ACT IN EVERY YEAR OF SUCH CLAIM AFTER THE INITIAL Y EAR, HAD COME UP BEFORE THE HONBLE PUNJAB AND HARYANA HIGH COURT I N THE CASE M/S. ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 12 -: SUNDER FORGING (SUPRA). PARA 6 OF THE SAID JUDGMENT IS REPRODUCED HEREUNDER:- 6. IN RESPECT OF THE ASSESSMENT YEAR 2006-07, THE ASSESSEE DID NOT CLAIM A DEDUCTION UNDER SECTION 80-IB(3)(II ). BY A NOTIFICATION DATED 10.12.1997 ISSUED IN EXERCISE OF POWERS CONFERRED BY SECTION 11B(1) AND SECTION 29B(1) OF T HE IDR ACT, THE CENTRAL GOVERNMENT SPECIFIED THE FACTORS O N THE BASIS OF WHICH AN INDUSTRIAL UNDERTAKING WOULD BE REGARDE D AS A SMALL SCALE INDUSTRIAL UNDERTAKING FOR THE PURPOSE OF IDR ACT. ONE OF THE CONDITIONS FOR CONSIDERING AN INDUSTRIAL UNDERTAKING TO BE REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTAK ING WAS THAT ITS INVESTMENT IN FIXED ASSETS IN PLANT AND MACHINE RY DID NOT EXCEED RUPEES THREE CRORES. ADMITTEDLY, THE ASSESSE ES INVESTMENT DID NOT EXCEED RUPEES THREE CRORES. IT, THEREFORE, FELL WITHIN THE DEFINITION OF THE WORDS 'SMALL-SCAL E INDUSTRIAL UNDERTAKING' IN SECTION 80-IB(14)(G). THE ASSESSEE ALSO FULFILLED THE OTHER REQUIREMENTS. THE ASSESSEE WAS, THEREFORE, ENTITLED TO THE DEDUCTION AS PROVIDED IN SECTION 80 -IB. THE AMOUNT OF DEDUCTION IN RESPECT OF THIS ASSESSEE WAS STIPULATED IN SUB-SECTION(3)(II) OF SECTION 80-IB AND FOR A P ERIOD OF TEN CONSECUTIVE ASSESSMENT YEARS. THE RESPONDENT-ASSES SEE WAS, THEREFORE, ALLOWED A DEDUCTION UNDER SECTION 80-IB FOR THE ASSESSMENT YEARS 2002-03 TO 2005-06. THEIR LORDSHIPS HAD HELD THAT IT WAS NOT NECESSARY FOR AN ASSESSEE TO SATISFY THE CONDITIONS IN EACH YEAR OF THE CLAIM, IF IT HAD SATISFIED THE CONDITIONS IN INITIAL YEAR, IN RESPECT OF A SMALL SCALE INDUSTRIAL UNDERTAKING UNIT. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY LACUNA IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) WITH REGARD TO HIS DIRECTION TO ALLOW THE CLAIM OF THE ASSESSE E U/S. 80IB OF THE ACT. ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 13 -: 7. ONLY OTHER ISSUE THAT HAS TO BE CONSIDERED IS THE GRIEVANCE RAISED BY THE REVENUE IN ITS APPEAL FOR ASSESSME NT YEAR 2010-2011. THIS IS ON THE DIRECTIONS OF THE LD. COMMISSIONER O F INCOME TAX (APPEALS) THAT THERE COULD BE NO ADJUSTMENT OF CA RRIED FORWARD NOTIONAL DEPRECIATION OF EARLIER YEARS, WHILE COMP UTING DEDUCTION AVAILABLE TO THE ASSESSEE ON ITS WINDMILLS U/S. 80I A OF THE ACT. 8. THE ISSUE WHETHER NOTIONAL DEPRECIATION WHICH WAS S ET OFF AGAINST OTHER INCOME OF THE ASSESSEE IN THE EARLIE R YEARS HAD TO BE AGAIN SET OFF WHILE COMPUTING THE DEDUCTION AVAIL ABLE U/S. 80IA OF THE ACT WAS AN ISSUE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. SRI VALAYUTHASAMY SPINNING MILLS LTD VS. ACIT 340 ITR 477 . THEIR LORDSHIP HAD HELD THAT THERE COULD NOT BE ANY FORCED CARRIED FORWARD OF NOTIONAL DEPRECIATION, WHILE W ORKING OUT DEDUCTION AVAILABLE U/S. 80IA OF THE ACT ON WINDMILLS. SPECIA L LEAVE PETITION FILED BY THE REVENUE, AGAINST THIS JUDGMENT HAS BEEN DISM ISSED BY THE HONBLE SUPREME COURT. WE DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) ON THIS ISSUE AS WELL. 9. SINCE APPEALS OF THE REVENUE HAVE BEEN DISMISSED ON MERITS, CROSS APPEALS OF THE ASSESSEE IN WHICH IT A SSAIL THE RE-OPENING DONE FOR THE ASSESSMENT YEARS 2003-04, 2004-05 AND 2005-06 HAVE ITA NOS.1750, 2288/16, 336& 335/17 & CO 104, 136/16, 52 &53/17. :- 14 -: BECOME ACADEMIC. CROSS APPEAL FOR ASSESSMENT YEAR 2010-2011 ONLY SUPPORTS THE ORDER OF THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) AND IS INFRUCTUOUS. 10. TO SUMMARIZE THE RESULT, APPEALS OF THE REVENUE AS WELL AS CROSS APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON TUESDAY, THE 26TH DAY OF SEPTEM BER, 2017, AT CHENNAI. SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER SD/- ( . ) (ABRAHAM P. GEORGE ) !' / ACCOUNTANT MEMBER * # / CHENNAI + / DATED: 26TH SEPTEMBER, 2017. KV , $ -%. / 0 / % / COPY TO: 1 . ! / APPELLANT 3. ' 1% ( ) / CIT(A) 5. /45 -%6 / DR 2. -7! / RESPONDENT 4. ' 1% / CIT 6. 58 9# / GF