Bio Tech Vision Care Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD)Range-1, Ahmedabad

ITA 1021/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0856 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR WITH P M MEHTA
• Keywords: Business income; Opportunity of being heard
• Section: 234B; 80IB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S.S. GODARA, JUDICIAL MEMBER) ITA. NO: 1021/AHD/2011 (ASSESSMENT YEAR: 2006-07) M/S. BIO TECH VISION CARE PVT. LTD. 305, ASIATIC TRADE CENTRE, NR. JAIN DERASAR, NAVRANGPURA, AHMEDABAD V/S ACIT,(OSD) RANGE-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCB3639E APPELLANT BY: SHRI S.N. SOPARKAR WITH P.M. MEHTA, AR RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 09 -08-201 6 DATE OF PRONOUNCEMENT : 12 -08-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-VI, AHMEDABAD DATED 27.01.2011 PERTAINING TO A.Y. 2006-07. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 2 2. THE SUBSTANTIVE GRIEVANCE OF THE ASSESSEE READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND IN FACT BY UPHOLDING THE ADDITION MADE BY LD. A.O. ON ACCOUNT OF DISALLOWANCE MADE U/S. 80IB. THE APPELLANT AFFIRMS THAT IT HAS D ULY SATISFIED ALL THE CONDITIONS OF A SMALL SCALE INDUSTRIAL UNIT AND ITS CLAIM FOR DEDUCTION U/S. 80IB IS JUSTIFIED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION CARRIED ON BY LD. A.O. ON A CCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO P.F. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN UPHOLDING LEVY OF INTEREST U/S. 234A, 234B & 234C. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE A SSESSEE COMPANY FILED ITS RETURN OF INCOME ON 25/11/2006 DECLARING TOTAL INCOME AT RS. 84,80,100/-. DURING THE COURSE OF THE SCRUTINY ASSE SSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB. THE A.O. OBSERVED THAT THE ASSESSEE HAS CONSIDERED THE WIND FARM AS A SEPARATE UNIT AND HAS CONSEQUENTLY R EDUCED INCOME AS WELL AS EXPENDITURE OF THE SAID UNIT WHILE ARISING OUT OF THE AMOUNT ELIGIBLE FOR DEDUCTION. THE A.O. WAS OF THE OPINION THAT THE SAID WIND FARM UNIT WAS PART AND PARCEL OF THE SSI UNIT IN RE SPECT OF WHICH THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IB OF THE ACT . THE A.O. FURTHER FOUND THAT THE VALUE OF TOTAL PLANT AND MACHINERY E MPLOYED IS 8.77 CRORES WHEREAS THE VALUE OF TOTAL PLANT AND MACHINE RY EMPLOYED IN THE SSI UNIT IS LESS THAN 5 CRORES. THE A.O. AGGREGATED THE TOTAL VALUE OF PLANT AND MACHINERY EMPLOYED IN THE WIND FARM UNIT AND SSI UNIT AND CAME TO THE CONCLUSION THAT THE TOTAL INVESTMENT CO MES TO RS. 13.70 CRORES WHICH EXCEEDS THE MONETARY LIMIT OF RS. 5 CR ORES FIXED FOR SSI UNIT. THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSE SSEE IS NOT ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 3 4. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF DEDU CTION. THE ASSESSEE STRONGLY SUBMITTED THAT SSI UNIT IS ENGAGED IN THE MANUFACTURING OF INTRA OCULAR LENSES AND IN RESPECT OF WHICH IT HAS CLAIMED THE DEDUCTION U/S. 80IB OF THE ACT. IT WAS FURTHER EXPL AINED THAT THE OTHER UNIT IS THE WIND FARM UNIT. THE ASSESSEE IS MAINTAI NING SEPARATE BOOKS OF ACCOUNTS FOR BOTH THESE UNITS AND, THEREFO RE, THE SAID WIND FARM UNIT CANNOT BE CONSIDERED AS AN INTEGRAL PART OF SSI UNIT AND, THEREFORE, THERE IS NO REASON FOR THE CLUBBING OF I NVESTMENT OF RS. 8.77 CRORES OF THE WIND FARM UNIT WITH THE INVESTMENT MA DE IN SSI UNIT. 5. ALTERNATIVELY, THE ASSESSEE CLAIMED THAT EVEN IF TH E WIND FARM IS CONSIDERED TO BE AN INTEGRAL PART OF SSI UNIT THEN ALSO THE INVESTMENT MADE IN WIND FARM UNIT HAS TO BE EXCLUDED IN VIEW O F THE CIRCULAR NO. 4(1)/ 91- DATED 24.01.1994 OF THE GOVERNMENT OF IND IA, MINISTRY OF INDUSTRY, DEPARTMENT OF SSI AND ARI OFFICE OF DEVEL OPMENT COMMISSIONER. 6. THE SUBMISSIONS AND THE CONTENTIONS OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE A.O. WHO WAS OF THE OPINION THAT TH E SAID CIRCULAR OF THE GOVERNMENT OF INDIA IS FOR THOSE WIND FARM UNIT S WHICH ARE GENERATING POWER FOR CAPTIVE USE WHEREAS THE ASSESS EE HAS SOLD THE ELECTRICITY GENERATED TO TAMIL NADU ELECTRICITY BOA RD AND GUJARAT ELECTRICITY BOARD. THEREFORE, THE INVESTMENT IN WIN D FARM UNIT CANNOT BE EXCLUDED. THE A.O. DENIED THE CLAIM OF DEDUCTION U/S. 80IB OF THE ACT. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 4 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY SUBMITTED THAT THE TWO UNITS ARE LOCATED IN TO DIVERSIFIED PARTS O F THE COUNTRY. THE SSI UNIT IS LOCATED IN THE STATE OF GUJARAT WHEREAS THE WIND FARM UNIT IS SITUATED IN TAMIL NADU. IT IS THE SAY OF THE LD. CO UNSEL THAT BOTH THE UNITS ARE SEPARATE AND DISTINCT AND ARE MAINTAINING SEPARATE BOOKS OF ACCOUNTS. THEREFORE, THERE IS NO QUESTION OF MERGIN G THE INVESTMENT TOGETHER. THE LD. COUNSEL STRONGLY CONTENDED THAT T HE UNIT WHICH IS ENGAGED IN THE MANUFACTURING OF INTRA OCULAR LENSES IS A RECOGNIZED SSI UNIT AND, THEREFORE, ELIGIBLE FOR DEDUCTION U/S . 80IB OF THE ACT. 9. PER CONTRA, THE LD. D.R. SUPPORTED THE FIND INGS OF THE REVENUE AUTHORITIES. 10. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FA CTS IN ISSUES. THERE IS NO DENYING THAT THE TWO UNITS ARE LOCATED IN TWO DIFFERENT AREAS. THERE IS ALSO NO DENYING THAT THE UNIT WHICH IS MAN UFACTURING INTRA OCULAR LENSES IS A REGISTERED SSI UNIT. ALL THAT HA S TO BE CONSIDERED IS WHETHER THE INVESTMENT MADE IN PLANT AND MACHINERIE S IN THESE TWO SEPARATE UNITS CAN BE CLUBBED TO EXAMINE THE ELIGIB ILITY OF DEDUCTION U/S. 80IB OF THE ACT. 11. THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT HA D THE OCCASION TO CONSIDER A SIMILAR ISSUE IN THE CASE OF PRABHUDA S KISHORDAS TOBACCO PRODUCTS PVT. LTD. 154 TAXMANN.COM 404. THE HONBLE HIGH COURT HAD TO CONSIDER THE FOLLOWING FACTS:- SECTION 80-I/80-IA OF THE INCOME-TAX ACT, 1961 D EDUCTIONS- PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS, ETC., AFTER CERTAIN D ATES/INFRASTRUCTURE UNDERTAKINGS, ASSESSMENT YEARS 1984-85 AND 1985-86 WHETHER FOR ASCERTAINING MONETARY LIMIT LAID DOWN FOR PURPOSE OF DETERMINING WHETHER A UNIT IS A SMALL-SCALE ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 5 INDUSTRIAL UNDERTAKING ELIGIBLE FOR RELIEF UNDER SE CTION 80-I, ONLY ACTUAL COST OF PLANT AND MACHINERY, RELATABLE TO INDUSTRIAL UNDERT AKING HAS TO BE ADOPTED AND NOT ALL ASSETS OF BUSINESS AS A WHOLE HAVE TO BE TA KEN INTO CONSIDERATION HELD, YES WHETHER, THEREFORE, BUSINESS ASSETS LIKE CARS , TRUCKS, PUMPS, ETC., WHICH ARE NOT PLANT AND MACHINERY WOULD NOT BE TAKEN INTO CON SIDERATION FOR PURPOSE OF ASCERTAINING MONETARY LIMIT FOR TREATING SAID UNIT AS A SMALL-SCALE INDUSTRIAL UNDERTAKING. 12. THE HONBLE HIGH COURT, INTERALIA, HELD AS UNDER:- 11. IN RELATION TO THE ADDITIONAL REASON GIVEN BY T HE ASSESSING OFFICER FOR DENYING RELIEF SECTION 80-I OF THE ACT, BOTH THE CIT(A) AND THE TRIBUNAL HAVE FOUND THAT, FOR THE PURPOSES OF DETERMINING WHETHER A UNIT IS A SMALL-SCALE INDUSTRIAL UNDERTAKING OR NOT, WHILE ASCERTAINING THE MONETARY LIMIT LAID DOWN IN THE PROVISION, ALL ASSETS OF THE BUSINESS HAVE NOT TO B E TAKEN INTO CONSIDERATION. THIS IS CORRECT READING OF THE PROVISION. THE EXPLANATIO N STIPULATES THAT AN INDUSTRIAL UNDERTAKING SHALL BE DEEMED TO BE A SMALL-SCALE IND USTRIAL UNDERTAKING IF THE AGGREGATE VALUE OF THE MACHINERY AND PLANT INSTALLE D DOES NOT EXCEED THE SPECIFIED LIMIT. FOR THIS PURPOSE, THE VALUE THAT H AS TO BE ADOPTED IS ON THE BASIS OF ACTUAL COST OF PLANT AND MACHINERY WHICH IS INST ALLED IN THE INDUSTRIAL UNDERTAKING, AND USED FOR THE PURPOSES OF THE BUSIN ESS OF THE UNDERTAKING. THE PROVISION DOES NOT STIPULATE TAKING THE AGGREGATE V ALUE OF PLANT AND MACHINERY OF THE BUSINESS AS A WHOLE, BUT LIMITS THE SAME TO THE PLANT AND MACHINERY RELATABLE TO THE INDUSTRIAL UNDERTAKING. THUS, ON THIS COUNT ALSO, THERE IS NO INFIRMITY IN THE VIEW ADOPTED BY THE CIT(A) AND THE TRIBUNAL CONCURR ENTLY. 13. THE CO-ORDINATE BENCH IN THE CASE OF KHS MACHINERY PVT. LTD. 20 TAXMANN.COM 44 ALSO CONSIDERED A SIMILAR ISSUE AND THE RELEVANT PART READS AS UNDER:- SECTION 80-IB OF THE INCOME-TAX ACT, 1961 DEDUCT ION- PROFITS AND GAINS FROM INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE D EVELOPMENT UNDERTAKINGS ASSESSMENT YEAR 2004-05 ASSESSEES CLAIM FOR DEDU CTION UNDER SECTION 80-IB ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 6 WAS DENIED ON GROUND THAT IT WAS NOT A SMALL SCALE INDUSTRY (SSI) AS TOTAL VALUE OF ITS PLANT AND MACHINERY WAS MORE THAN RS. 1 CRORE ASSESSEE, HOWEVER, CONTENDED THAT ITS INVESTMENT IN PLANT AND MACHINER Y WAS LESS THAN RS. 1 CRORE AFTER ELIGIBLE ITEMS OF EXCLUSION WERE EXCLUDED W HETHER COST OF EQUIPMENTS SUCH AS TOOLS, JIGS, DIES, MOULDS, SPARE PARTS FOR MAINT ENANCE AND COST OF CONSUMABLE STORES WERE TO BE EXCLUDED WHILE DETERMINING VALUE OF PLANT AND MACHINERY IN ORDER TO ASCERTAIN STATUS OF INDUSTRIAL UNDERTAKING OF ASSESSEE AS SMALL SCALE UNIT AND CONSEQUENTLY FOR ENTITLEMENT OF DEDUCTION UNDER SECTION 80-IB HELD, YES- WHETHER AS REGARDS COMPUTERS SOFTWARE, IT WAS TO BE ASCERTAINED AS TO WHETHER OR NOT ALL COMPUTERS WERE INSTALLED IN OFFICE OR AS TO WHETHER SOME OF THEM WERE INSTALLED FOR PURPOSE OF MANUFACTURING BOTTLING PLA NTS IN INDUSTRIAL UNDERTAKING HELD- YES WHETHER, FURTHER VALUE OF VEHICLES OWNE D BY ASSESSEE WAS ALSO TO BE EXCLUDED THEREFROM. 14. THE CO-ORDINATE BENCH ANSWERED AS UNDER:- 9.32 AS REGARDS COMPUTER HARDWARE AND SOFTWARE, THE ID. AR ON BEHALF OF THE TAXPAYER ARGUED THAT COMPUTERS ARE INSTALLED IN OFF ICE AND THEREFORE HAVE TO BE EXCLUDED IN TERMS OF DECISION OF THE ITAT IN THE CA SE OF SAMIR DIAMOND MFG. (P) LD. 67 ITD 25 (AHD). THERE IS NO FINDING IN THE ORDER OF EITHER AO OR LD. CIT(A) AS TO WHETHER OR NOT ALL THE COMPUTERS ARE INSTALLE D IN OFFICE LD, CIT(A) OBSERVED THAT SINCE COMPUTERS HAVE NOT BEEN EXCLUDED IN THE NOTE 2(B) OF AFORESAID NOTIFICATION DATED 10.12.1999, ACCORDINGLY THESE HA VE TO BE CONSIDERED FOR DETERMINING THE VALUE OF PLANT AND MACHINERY. HON'B LE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PRABHUDAS KISHORESAD TOBACCO PRODUCTS P LD. 282 ITR 568 (GUJ.) HELD THAT FOR DETERMINING THE VALUE ON P LANT AND MACHINERY FOR ASCERTAINING THE STATUS OF INDUSTRIAL UNDERTAKING S SI, THE ACTUAL COST OF PLANT AND MACHINERY WHICH IS INSTALLED IN THE INDUSTRIAL UND ERTAKING, AND USED FOR THE PURPOSE OF BUSINESS OF THE UNDERTAKING, HAS TO BE A DOPTED. THE PROVISION DOES NOT STIPULATE TAKING THE AGGREGATE VALUE OF PLANT AND M ACHINERY OF THE BUSINESS AS A WHOLE, BUT LIMITS THE SAME TO THE PLANT AND MACHINE RY RELATABLE TO THE INDUSTRIAL UNDERTAKING. SINCE THERE IS NO FINDING EITHER IN TH E ORDER OF THE A.O. OR THE LD. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 7 CIT(A) AS WHETHER OR NOT ALL THE COMPUTERS, INCLUD ING SOFTWARE, VALUING RS. 98.14 LACS ARE INSTALLED IN THE OFFICE OR ARE USED IN THE PROCESS OF MANUFACTURING BOTTLING PLANTS, IN THE LIGHT OF AFORESAID DECISIO N OF HONBLE JURISDICTIONAL HIGH COURT AND IN THE INTEREST OF JUSTICE, WE VACATE THE FINDINGS OF THE LD. CIT(A) ON THIS ASPECT AND RESTORE THE MATTER TO THE FILE OF THE A. O. WITH THE DIRECTIONS TO ASCERTAIN AS TO WHETHER OR NOT ALL THE COMPUTERS AR E INSTALLED IN OFFICE OR AS TO WHETHER SOME OF THESE ARE INSTALLED FOR THE PURPOS E OF MANUFACTURING BOTTLING PLANTS IN THE INDUSTRIAL UNDERTAKING AND THEREAFTER , DETERMINE THE STATUS OF INDUSTRIAL UNDERTAKING AS AN SSI AND CONSEQUENTLY E NTITLEMENT TO DEDUCTION U/S.80IB OF THE ACT, IN ACCORDANCE WITH LAWS AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE TAXPAYER. (F) VEHICLES AS REGARDS VEHICLES, TOTAL VALUE OF PLANT AND MACHI NERY INCLUDES VEHICLES OF THE VALUE OF RS. 78.15 LACS, THE ID. CIT(A) OBSERVED TH AT SINCE VEHICLES HAVE NOT BEEN EXCLUDED IN THE NOTE (2)(B) OF THE AFORESAID NOTIFI CATION DATED 10.12.1999, ACCORDINGLY THESE HAVE TO BE CONSIDERED FOR DETERM INING THE VALUE OF PLANT AND MACHINERY. HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF HYDERABAD DECCAN CIGARETTES FACTORY V. C/7238 ITR 615 (AP) WH ILE ADJUDICATING THE ISSUE OF DETERMINING THE STATUS OF INDUSTRIAL UNDERTAKING AS AN SSI IN THE CONTENT OF PROVISIONS OF SEC. 32A OF THE ACT HELD THAT SINCE THERE IS AN INDEPENDENT DEFINITION IN THE CO NTEXT OF DEFINING A SMALL-SCALE INDUSTRIAL UNDERTAKING, SECTION 43(3) IS NOT APPLIC ABLE TO THE DEFINITION OF A SMALL- SCALE INDUSTRIAL UNDERTAKING. IF SECTION 439(3) DEF INING PLANT INCLUDING VEHICLES IS NOT APPLICABLE, THE VALUE OF THE VEHICLES CANNOT BE ADDED TO THE VALUE OF THE PLANT AND MACHINERY INSTALLED EXCLUDING THOSE ITEMS MENTI ONED IN THE SAID EXPLANATION 9.331 IN THE CASE OF DCIT V. CENTRAL HATCHERIES PVT . LTD. 59 TTJ (JAB) 587, THE ITAT HELD IN THE CASE OF AN ASSESSEE CARRYING ON TH E BUSINESS OF HATCHERIES THAT TRUCK HAS TO BE EXCLUDED WHILE DETERMINING THE VALU E PLANT AND MACHINERY FOR DETERMINING THE STATUS OF INDUSTRIAL UNDERTAKING AS AN SSI. 9.332 SIMILARLY, IN THE CASE OF DCITV. SAMIR DIAMON D MFTG. (P) LTD. 67 ITD 25 (AHD), ITAT HELD THAT VEHICLES NOT CONNECTED WITH T HE PRODUCTION INDUSTRIAL ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 8 UNDERTAKING, HAVE TO BE EXCLUDED WHILE DETERMINING THE VALUE PLANT AND MACHINERY FOR DETERMINING THE STATUS OF INDUSTRIAL UNDERTAKING AS AN SSI. 9.333. IN THE CASE UNDER CONSIDERATION IN THE CONTE XT OF PROVISIONS OF SECTION 80IB OF THE ACT ALSO, THERE IS NOTHING TO SUGGEST THAT V EHICLES WERE USED FOR THE PURPOSE OF MANUFACTURING BOTTLING PLANTS NOR VEHICLES CAN B E INSTALLED. SINCE THERE IS AN INDEPENDENT DEFINITION OF A SMALL-SCALE INDUSTRIAL UNDERTAKING IN CLAUSE (G) OF SEC. 80IB(14), IN THE LIGHT OF AFORESAID DECISION OF HO N'BLE AP HIGH COURT, WE ARE OF THE OPINION THAT VEHICLES HAVE TO BE EXCLUDED WHILE DETERMINING THE VALUE PLANT AND MACHINERY FOR THE PURPOSE OF DETERMINING THE ST ATUS OF INDUSTRIAL UNDERTAKING AS AN SSI CONSEQUENTLY FOR ENTITLEMENT OF DEDUCTION U/S.80IB OF THE ACT. 10. IN THE LIGHT OF ABOVE DISCUSSION, THE AO SHALL RECOMPUTE THE VALUE OF THE PLANT AND MACHINERY INSTALLED IN THE INDUSTRIAL UNDERTAKI NG OF THE TAXPAYER FOR THE PURPOSE OF THE BUSINESS OF THE UNDERTAKINGS AS ON T HE LAST DAY OF THE PREVIOUS YEAR. IF THE VALUE SO WORKED OUT IS BELOW RS. ONE C RORE, THE INDUSTRIAL UNDERTAKING SHOULD BE TREATED AS SMALL SCALE INDUSTRIAL UNDERTA KING AND THE DEDUCTION UNDER S. 80IB OF THE ACT MAY BE ALLOWED IN ACCORDANCE WITH L AW TO IT. 8. FOLLOWING THE ITAT ORDER IN ASSESSEE'S OWN CASE A.Y 2003-04 (SUPRA) AS REGARDS MOULDS, DIES, JIGS, FIXTURES, PATTERNS, TOO LS, CONSUMABLES, FACTORY EQUIPMENTS BEING RACKS, TABLES PALLETS ETC. THE ASS ESSING OFFICER IS DIRECTED TO EXCLUDE THE COST OF EQUIPMENTS SUCH AS: TOOLS, JIGS , DIES, MOULDS, SPARE PARTS FOR MAINTENANCE AND COST OF CONSUMABLES SOURCES WHILE DETERMINING VALUE OF PLANT AND MACHINERY IN ORDER TO ASCERTAIN THE STATUS OF I NDUSTRIAL UNDERTAKING OF THE ASSESSEE. AS REGARDS COMPUTERS SOFTWARE, WE RESTORE THE MATTER TO THE FILE OF AO WITH THE DIRECTION TO ASCERTAIN AS TO WHETHER OR NO T ALL THE COMPUTERS ARE INSTALLED IN OFFICE OR AS TO WHETHER SOME OF THESE ARE INSTAL LED FOR THE PURPOSE OF MANUFACTURING THE BOTTLING PLANTS IN THE INDUSTRIAL UNDERTAKING AND THEREAFTER DETERMINING THIS STATUS OF INDUSTRIAL UNDERTAKING A S AN SSI AND CONSEQUENTLY ENTITLEMENT TO DEDUCTION U/S. 80IB OF THE ACT IN AC CORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. AS REGARDS VEHICLES THE SAME HAVE TO BE EXCLUDED WHILE DETERMINING THE VALUE OF PLANT AND MACHINERY ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 9 FOR THE PURPOSE OF DETERMINING THE STATUS OF INDUST RIAL UNDERTAKING AS SSI AND CONSEQUENTLY FOR ENTITLEMENT OF DEDUCTION U/'S. 80I B OF THE ACT. 9. THE ASSESSING OFFICER ACCORDINGLY SHALL RE-COMPU TE THE VALUE OF THE PLANT AND MACHINERY INSTALLED IN THE INDUSTRIAL UNDERTAKING O F THE ASSESSEE FOR THE PURPOSE OF BUSINESS OF THE UNDERTAKING AS ON THE LAST DAY O F THE PREVIOUS YEAR. IF THE VALUE SO WORKED OUT IS BELOW RS. 1 CRORE THE INDUSTRIAL U NDERTAKING SHOULD BE TREATED AS SSI AND THE DEDUCTION U/S. 80IB OF THE ACT MAY BE A LLOWED IN ACCORDANCE WITH LAW. THUS, GROUND NO. 2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 15. THE HONBLE HIGH COURT OF DELHI IN THE CASE OF PAWA N KANSAL IN TAX APPEAL NO. 1130/2011 CONSIDERED THE FOLLOWING S ET OF FACTS, SIMILAR TO THE FACTS OF THE CASE IN HAND:- 2. THE ASSESSEE IS A PROPRIETOR OF TWO UNITS I.E. ' JAGDAMBA INDUSTRIES' (UNIT NO.1) AND JAGDAMBA EXPORTS (UNIT NO.2). BOTH UNITS ARE L OCATED OPPOSITE TO EACH OTHER AT HARYANA. THE ASSESSING OFFICER HELD THAT T HE TOTAL INVESTMENT IN THE TWO UNITS WAS RS.1,26,90,532/- AS ON 31.3.2005 AND SINC E THE AMOUNT EXCEEDED RS.1 CRORE, THE ASSESSEE WAS NOT ELIGIBLE TO BE CHARACTE RIZED AS A 'SMALL-SCALE INDUSTRIAL UNDERTAKING' WITHIN THE MEANING OF SECTI ON 80IB(3)(II) OF THE INCOME TAX ACT, 1961, (ACT FOR SHORT) READ WITH SECTION 11 B OF THE INDUSTRIES (DEVELOPMENT & REGULATION) ACT, 1956. FIRST UNIT WA S CLAIMED AND WAS GRANTED BENEFIT UNDER SECTION 80IB OF THE ACT. THE ASSESSIN G OFFICER HELD THAT DEDUCTION WAS NO LONGER ADMISSIBLE AS THE TWO UNITS HAVE BEEN CLUBBED TOGETHER AS ONE INDUSTRIAL UNDERTAKING AND THEREFORE FELL OUTSIDE T HE PURVIEW OF THE INDUSTRIAL UNDERTAKING. IT MAY BE ADDED HERE THAT THE INVESTME NT IN PLANT AND MACHINERY IN RESPECT OF FIRST UNIT WAS RS.86.5 LAKHS AND IN RESP ECT OF SECOND UNIT IT WAS RS.38.36 LAKHS. THE ASSESSING OFFICER CLUBBED BOTH THE UNITS AND HELD THAT THE ASSESSEE WAS INELIGIBLE FOR DEDUCTION UNDER SECTION 80IB. THE ASSESSEE'S APPEAL WAS ACCEPTED AND THE ORDER OF THE ASSESSING OFFICER , WAS SET ASIDE BY THE CIT(A) VIDE ORDER DATED 26.5.2010. THEREAFTER REVENUE APP EALED AND; BY THE IMPUGNED ORDER DATED 1 3.2011 THE TRIBUNAL REJECTED ITS CONT ENTIONS. 3. THE TRIBUNAL AFTER NOTICING THE NEXT OF SECTION 80IB AND ANALYZING THE FACTS, HELD AS FOLLOWS : '2.5 IT ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 10 IS CLEAR FROM THE ABOVE DISCUSSION THAT THE CLAIM O F DEDUCTION U/S 80IB IS ALLOWABLE IN RESPECT OF INDUSTRIAL UNIT AND NOT WIT H RESPECT TO INDIVIDUAL ASSESSEE. AN ASSESSEE MAY HAVE MORE THAN ONE INDUSTRIAL UNIT. HE IS ENTITLED FOR CLAIM OF DEDUCTION U/S 80IB IN RESPECT OF EACH OF ITS INDUST RIAL UNDERTAKINGS PROVIDED SUCH INDUSTRIAL UNDERTAKING FULFILS THE CONDITIONS AS LA ID DOWN U/S 80IB OF THE ACT. AS PER THE FINDING RECORDED BY THE LEARNED COMMISSIONE R OF JAGDAMBA EXPORTS WERE BELOW RS.1 CRORE. THEREFORE, THE DEDUCTION DECLINED BY THE ASSESSING OFFICER IN RESPECT OF M/S JAGDAMBA INDUSTRIES ON THE PLEA THAT PLANT AND MACHINERY PURCHASE FOR M/S JAGDAMBA EXPORTS WAS BY THE SAME P ROPRIETOR, THEREFORE, THE INVESTMENT IS TO BE SEEN WITH RESPECT TO THE INDIVI DUAL ASSESSEE.' AS BOTH THE UNITS WERE SEPARATELY LOCATED, THE DEDUCTION IS TO BE SEE N WITH RESPECT TO INVESTMENT MADE IN EACH UNIT SEPARATELY NOT-WITH-STANDING THE FACT THAT PROPRIETOR OF BOTH THE UNITS IS THE SAME. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF LNCOME TAX (SIC) (APPEALS) IN ALLOWING THE CLAIM OF DEDUCTION IN RESPECT OF THE ASSESSEES INDUSTRIAL UNIT M/S. JAGDAMBA INDUSTRIES. 2.6 IN VIEW OF THE ABOVE, FOR EXAMINING THE ELIGIBI LITY OF DEDUCTION U/S 80IB IN RESPECT OF UNIT NO.1, NAMELY, JAGDAMBA INDUSTRIES, THE VALUE OF PLANT AND MACHINERY AMOUNTING TO RS.33,42,334/- ACQUIRED FOR UNIT NO.2, NAMELY, JAGDAMBA EXPORTS HAD TO BE EXCLUDED (SIC) AND ONCE IT IS EXC LUDED THE VALUE OF PLANT AND MACHINERY IN THE EXISTING UNIT, M/S JAGDAMBA INDUST RIES WILL BE WITHIN RS.1 CRORE AND HENCE SUCH UNDERTAKING WILL BE ELIGIBLE FOR DED UCTION U/S 80IB. 16. THE HONBLE HIGH COURT HELD AS UNDER:- 14. IT IS CLEAR THAT WHILE COMPUTING DEDUCTION UNDER SE CTION 80IA OF THE INCOME TAX ACT, 1961 THE PROFITS AND GAINS OF KALAMB UNIT FOR THE PURPOSE OF DETERMINING THE QUANTUM OF DEDUCTION UNDER S. 80-IA(5) OF THE A CT IS TO BE COMPUTED IF SUCH ELIGIBLE BUSINESS OF THE SAID UNIT IS THE ONLY SOUR CE OF INCOME OF THE ASSESSED. THE AO MIXED THE PROFITS OF THE KALAMB UNIT WITH THE PR OFITS OF UNITS AT DELHI AND NOIDA AND, THUS, HE ERRONEOUSLY RESTRICTED THE DEDU CTION TO THE EXTENT OF BUSINESS INCOME AND THIS WAS DONE BY HIM IN TOTAL DISREGARD OF THE PROVISIONS OF SUB-S.(7) OF S. 80-IA OF THE ACT AS MENTIONED ABOVE. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 11 15. THUS, THE KALAMB UNIT BEING THE ONLY UNIT OF THE AS SESSED ELIGIBLE FOR DEDUCTION UNDER S. 80-IA OF THE ACT IS TO BE TREATE D AS AN INDEPENDENT UNIT AND THE SAME IS TO BE TREATED AS THE ONLY SOURCE OF INCOME FOR ASSESSED FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER S. 80-IA OF THE ACT. THE DEDUCTION CLAIMED BY THE ASSESSED UNDER S. 80-IA OF THE ACT, THUS, IS IN ACC ORDANCE WITH THE SAID PROVISIONS AND AS SUCH WE FIND THAT THERE IS NO INFIRMITY IN T HE IMPUGNED ORDER PASSED BY THE INCOME TAX APPELLATE TRIBUNAL.' 5. IN THE PRESENT C ASE TO THE ASSESSEE HAS NOT ADMITTEDLY CLAIMED THE BENEFIT UNDER SECTION 80IA O F THE ACT FOR THE RELEVANT ASSESSMENT YEAR IN RESPECT OF UNIT NO.2. IN THESE C IRCUMSTANCES, THE QUESTION OF CLUBBING THE INVESTMENT FOR PURPOSE OF COMMON UNDER TAKING DOES NOT ARISE. SECTION 80-IA(5) DIRECTS THE INCOME TAX AUTHORITIES TO TREAT THE INITIAL UNIT AS AN ENTIRELY SEPARATE ENTITY TO THE EXTENT THE BENEFIT HAS TO BE GIVEN. IN THESE CIRCUMSTANCES, THE COURT IS OF OPINION THAT THERE I S NO MERIT IN THE APPEAL. ITA 1130/2011 IS DISMISSED. S. RAVINDRA BHAT, J. R.V.EA SWAR, J. JULY 26, 2012 VLD. 17. A CAREFUL READING OF THE AFOREMENTIONED JUDICIAL DE CISIONS WOULD SHOW THAT THE HONBLE HIGH COURTS INCLUDING HONBLE JURISDICTIONAL HIGH COURT AND ALSO THE CO-ORDINATE BENCH HAVE HELD THAT FOR THE DETERMINATION OF THE ELIGIBILITY OF SSI UNIT, SEPAR ATE UNITS HAVE TO BE CONSIDERED SEPARATELY. 18. AS MENTIONED ELSEWHERE, THE VALUE OF INVESTMENT IN THE ELIGIBLE UNIT OF THE ASSESSEE WHICH IS ENGAGED IN THE MANUFA CTURE OF INTRA OCULAR LENSES IS LESS THAN RS. 5 CRORES, THEREFORE, IN OUR CONSIDERED OPINION; THIS UNIT OF THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S. 80IB OF THE ACT. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE DEDUCTION CLAIMED U/S. 80IB OF THE ACT. GROUND NO. 1 IS ACCORDINGLY ALLOWED. ITA NO/ 1021/AHD/2011 . A.Y. 2006-0 7 12 19. GROUND NO. 2 RELATES TO THE DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUN D. 20. THIS ISSUE HAS BEEN DECIDED BY THE HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF GUJARAT STATE ROAD CORPORATION IN 366 ITR 170 IN FAVOUR OF THE REVENUE AND AGAINST THE ASSESSEE. 21. RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE CONFIRM THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS DISMISSED. 22. GROUND NO. 3 RELATES TO THE LEVY OF INTEREST U/S. 2 34A, 234B & 234C OF THE ACT. CHARGING OF INTEREST IS MANDATORY THOUGH CONSEQUENTIAL; WE, THEREFORE, DIRECT THE A.O. TO LE VY OF INTEREST AS PER THE PROVISIONS OF THE LAW. 23. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12 - 08- 2 016. SD/- SD/- (S.S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE.