Shri Hari Krishna Papers Private Limited, Udamalpet V. DCIT, Coimbatore

ITA 1190/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7979 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 08-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 19-05-2015
• Court: TRIBUNAL
• Department Lawyers: PATHALAVATH PEERYA
• Assessee Lawyers: A DHANANJAYANC A
• Keywords: Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , ! . ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.1190 /MDS./2015 ( / ASSESSMENT YEAR :2010-11) SHRI HARI KRISHNA PAPERS PVT. LTD ., 54/2,JOTHI NAGAR,VENATESA MILLS POST, UDUMALPET 642 128 VS. THE DEPUTY COMMISSIONER OF INCOME TAX, SALARY CIRCLE I, COIMBATORE. PAN AADCS 0649 B ( %& / APPELLANT ) ( '(%& / RESPONDENT ) / APPELLANT BY : MR.A.DHANANJAYAN,C.A / RESPONDENT BY : MR.PATHALAVATH PEERYA ,CIT, D.R / DATE OF HEARING : 08.02.2016 !' /DATE OF PRONOUNCEMENT : 15.02.2016 ) / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX-3, COIMBATORE ITA NO.1190/MDS/2015 2 DATED 27.03.2015 PASSED U/S.263 OF THE ACT PERTAINI NG TO THE ASSESSMENT YEAR 2010-11. THE ORDER OF THE COMMISSIO NER OF INCOME TAX, MADURAI. 2. THE ASSESSEE HAS RAISED THE GROUNDS IN APPEAL REGARDING INVOKING THE JURISDICTION U/S.263 OF THE ACT BY THE CIT SO AS TO RECONSIDER THE DEDUCTION CLAIMED BY THE ASSESSEE U/ S.80-IA OF THE ACT BY THE AO. 3. THE BRIEF FACTS OF THE CASE ARE THAT CIT HAS G ONE THROUGH THE ASSESSMENT ORDER PASSED BY THE AO U/S.143(3) OF THE ACT DATED 18.12.2012 WHEREIN THE AO HAS ACCEPTED THE RETURN O F INCOME OF ASSESSEE. ACCORDINGLY THE CIT ISSUED A NOTICE DATE D 03.12.2013, FINALLY HE ISSUED A NOTICE DATED 05.01.15 ASKING TH E ASSESSEE TO APPEAR BEFORE HIM. FINALLY, CIT CONCLUDED THAT THE ASSESSEE CLAIMED DEDUCTION U/S.80-IA OF THE ACT AND THE AO ACCEPTED THE SAME, THOUGH IT WAS DISALLOWED IN THE ASSESSMENT YEAR 2009-10 BY THE AO. ACCORDING TO THE CIT, THE CLAIM OF ASSESSEE U/S.80- IA OF THE ACT REQUIRES REEXAMINATION BY THE AO. FURTHER, CIT DI RECTED THE AO TO ITA NO.1190/MDS/2015 3 PASS APPROPRIATE ORDER ON THE BASIS OF MERIT. AGAI NST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, LD.A.R SUBMITTED THAT FOR THE ASSE SSMENT YEAR 2009- 10, ON THE BASIS OF WHICH THE CIT EXERCISED JURISDI CTION U/S.263 SO AS TO RE-EXAMINE THE DEDUCTION U/S.80-IA BY THE AO. TH E CLAIM OF ASSESSEE U/S.80-IA WAS GRANTED TO THE ASSESSEE BY T HE TRIBUNAL VIDE ORDER DATED 24.07.2015 IN ITA NO.663/MDS./2014, AS SUCH THERE CANNOT BE ANY EXERCISE OF JURISDICTION U/S.263 OF T HE ACT BY THE CIT. MORE SO, THE LD.A.R SUBMITTED THAT CIT CANNOT INVOK E THE JURISDICTION U/S.263 OF THE ACT WITHOUT POINTING OUT ANY ERROR I N THE ASSESSMENT ORDER. THE LD.D.R RELIED ON THE ORDER OF CIT PASSED U/S.263 OF THE ACT. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN OUR OPINION, IF AN ASSESSMENT ORDER IS P ASSED BY AO WITHOUT MAKING REQUISITE ENQUIRIES OR EXAMINING THE CLAIM OF ASSESSEE PERSE AN ERRONEOUS ORDER AND HENCE, IT IS AMENABLE TO REVISIONARY JURISDICTION U/S.263 OF THE ACT; AO HAV ING SIMPLY ACCEPTED THE INCOME DECLARED BY THE ASSESSEE AND WITHOUT ANY APPLICATION OF ITA NO.1190/MDS/2015 4 MIND OR ENQUIRY, THOUGH THE ASSESSEE COMPANY WAS N OT GRANTED WITH THE SIMILAR DEDUCTION IN EARLIER ASSESSMENT YEARS, THEREFORE, THE CIT CAN EXERCISE HIS JURISDICTION U/S.263 OF THE ACT. B UT EVERY LOSS OF REVENUE AS A CONSEQUENCE OF THE ORDER OF THE AO CAN NOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. IF T HE AO ADOPTED ONE VIEW OF THE COURSE PERMISSIBLE IN LAW AND IT IS RES ULTED IN LOSS TO THE REVENUE, WHERE TWO VIEWS ARE POSSIBLE AND WITH WHI CH CIT DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER, PREJUDICIAL TO THE INTEREST OF THE REVENUE, UNLESS THE VIEW TAKEN BY T HE ITO IS UNSUSTAINABLE IN LAW. IN THE PRESENT CASE AS THE F ACTS BROUGHT ON RECORD SUGGESTS THAT THE SIMILAR CLAIM OF ASSESSEE U/S.80-IA FOR ASSESSMENT YEAR 2009-10 WAS A SUBJECT MATTER OF APP EAL BEFORE THE TRIBUNAL IN ITA NO.633/MDS./14 VIDE ORDER DATED 24. 07.2015 WHEREIN HELD AS FOLLOWS:- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE COMPANY WAS ENGAGED IN MANUF ACTURE OF PAPER AND PRODUCTION OF ELECTRICITY FROM WINDMILLS U PTO THE ASSESSMENT YEAR 2003-04. THE ASSESSEE COMPANY CONST RUCTED CO- GENERATION BUILDING DURING FINANCIAL YEARS 2003-04 AND 2004-05 TO ITA NO.1190/MDS/2015 5 HOUSE THE NEW TURBINE CUM BOILER UNIT TO PRODUCE STEA M AND ELECTRICITY. THE COMPANY INVESTED '1,77,39,233/- TOWA RDS CO-GEN MACHINERY AND INVESTED '36,78,188/- IN CO-GEN BUILD ING TOTALLING ' 2,14,17,421/- TOWARDS NEW UNIT. THE COMPANY ALSO REC EIVED TERM LOAN ASSISTANCE FROM SBI, COMMERCIAL BRANCH, COIMBA TORE FOR A SUM OF '1,50,00,000/- FOR NEW INVESTMENTS. SEPARATE BOOKS OF ACCOUNTS WERE MAINTAINED FOR THE NEW UNIT. THE UNIT ST ARTED OPERATION SINCE SEPTEMBER 2004. THE YEAR WISE POWER GE NERATED FROM SEPTEMBER 2004 TO 2009 WAS PROVIDED TO THE ASSE SSING OFFICER. THE ASSESSEE STARTED CLAIMING DEDUCTION U/S 80LA FROM ASSESSMENT YEAR 2008-09 ONWARDS WHICH WAS ACCEPTED BY THE DEPARTMENT. THE DEPARTMENT ALLOWED 80LA DEDUCTION AS CLAIMED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2010-11 AND 2 012-13 UNDER SCRUTINY ASSESSMENT U/S 143(3). THE ASSESSEE COMPAN Y FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 28/09/2009, DECLARING TOTAL INCOME OF '2,51,37,806/- UNDER NORM AL PROVISIONS AND BOOK PROFIT OF '4,02,67,104/-. FORM NO. 10CCB - AUDIT REPORT U/S 80LA DATED 31.08.2009 WAS ALSO SUBMITTED. HOWEVE R, DEDUCTION U/S 80IA WAS NOT GRANTED TO THE ASSESSEE O N THE REASON THAT IT WAS SPLITTING UP OR RECONSTRUCTION OF EXISTI NG BUSINESS AND ITA NO.1190/MDS/2015 6 THE ASSESSEE HAS NOT ESTABLISHED ANY NEW INDUSTRIAL UNDERTAKING. ACCORDING TO THE ASSESSING OFFICER THE STEAM TURBI NE DIVISION WAS NOT CREATED FOR GENERATING ELECTRICITY BUT TO SUPPL Y STEAM TO PAPER INDUSTRY AND THE ASSESSEE HAS ARTIFICIALLY BIFURCAT ED A PRODUCTION PROCESS IN WHICH THE OLDER MACHINERY WERE REPLACED BY A NEW MACHINERY WHICH WAS ONLY REQUIRED FOR PAPER INDUSTRY AND NOT FOR TURBINE DIVISION FOR GENERATING POWER. ACCORDING TO THE ASSESSING OFFICER THE ELECTRICITY GENERATED WAS ONLY AN INCIDE NTAL MECHANISM OF THE PAPER INDUSTRY TO SAVE THE ENERGY FROM THE S TEAM WHICH OTHERWISE WOULD HAVE LOST IF THEY CONTINUE TO USE OLD BOILERS AND PRESSURE REDUCTION VALVE. THEREFORE, THE ASSETS ACQ UIRED UNDER SO CALLED TURBINE DIVISION ARE PRIMARILY MEANT FOR PROD UCTION OF STEAM AND RECOVER THE ENERGY LOSS FROM SUCH STEAM SO AS T O MAKE THE PAPER INDUSTRY MORE ENERGY EFFICIENT. THE STEAM TU RBINE DIVISION CAN WORK ONLY WHEN STEAM FOR PAPER INDUSTRY RUNS. I F FOR ANY REASON, IF PAPER DIVISION STOPS, TURBINE DIVISION A LSO HAS TO BE STOPPED. ACCORDING TO THE ASSESSING OFFICER THE TU RBINE DIVISION CANNOT EXIST WITHOUT THE PAPER DIVISION OF THE COMPA NY. CREATING A PART OF EXISTING PAPER PRODUCTION PROCESS INTO A SE PARATE DIVISION ITA NO.1190/MDS/2015 7 SQUARELY AMOUNTS TO SPLITTING AND RECONSTRUCTION OF BUSINESS ALREADY INEXISTENCE. THEREFORE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE AS SESSEE WAS NOT ENTITLED TO CLAIM OF DEDUCTION U/S.80IA OF THE ACT ON ITS TURBINE DIVISION. IN ORDER TO DECIDE THE ABOVE ISSUE, WE FIR ST PROCEED TO EXAMINE THE LEGAL POSITION IN THIS REGARD. 8. NOW, WE PROCEED TO EXAMINE THE PROVISION OF SECTIO N 80-IA OF THE ACT WHICH WAS AMENDED BY THE FINANCE ACT, 1999 W.E .F. 1ST APRIL, 2000. THE DEDUCTION UNDER S. 80-IA WAS AVAILAB LE TO AN ASSESSEE WHOSE GROSS TOTAL INCOME INCLUDED ANY PROF ITS OR GAINS DERIVED FROM ANY BUSINESS OF AN INDUSTRIAL UNDERTAK ING WHICH FULFILLED ALL THE CONDITIONS LAID DOWN IN THAT BEHAL F IN SUB-S. (2) OF THE SECTION. THE SUB-S. (2) OF S. 80-IA, AS APPLICA BLE TO THIS ASSESSMENT YEAR 2009-2010,INTER ALIA, READS AS UNDE R : (2) THE DEDUCTION SPECIFIED IN SUB-SECTION (1) MAY, AT THE OPTION OF THE ASSESSEE, BE CLAIMED BY HIM FOR ANY TEN CONSECU TIVE ASSESSMENT YEARS OUT OF FIFTEEN YEARS BEGINNING FROM THE YEAR IN WHICH THE UNDERTAKING OR THE ENTERPRISE DEVELOPS AND BEGINS T O OPERATE ANY INFRASTRUCTURE FACILITY OR STARTS PROVIDING TELECOM MUNICATION SERVICE OR DEVELOPS AN INDUSTRIAL PARK (OR DEVELOPS A SPECIAL ECONOMIC ZONE REFERRED TO IN CLAUSE (III) OF SUB-SECTION (4) OR G ENERATES POWER OR COMMENCES TRANSMISSION OR DISTRIBUTION OF POWER (OR UNDERTAKES SUBSTANTIAL RENOVATION AND MODERNIZATION OF THE EXI STING TRANSMISSION ITA NO.1190/MDS/2015 8 OR DISTRIBUTION LINES (OR LAYS AND BEGINS TO OPERAT E A CROSS COUNTRY NATURAL GAS DISTRIBUTION NETWORK))). (3) THIS SECTION APPLIES TO AN UNDERTAKING REFERRED TO IN CLAUSE (II) OR CLAUSE (IV) OF SUB-SECTION (4) WHICH FULFILS ALL TH E FOLLOWING CONDITIONS, NAMELY : (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECON STRUCTION, OF A BUSINESS ALREADY IN EXISTENCE: PROVIDED THAT THIS CONDITION SHALL NOT APPLY IN RES PECT OF AN UNDERTAKING WHICH IS FORMED AS A RESULT OF THE RE-E STABLISHMENT, RECONSTRUCTION OR REVIVAL BY THE ASSESSEE OF THE BU SINESS OF ANY SUCH UNDERTAKING AS IS REFERRED TO IN SECTION 33B, IN TH E CIRCUMSTANCES AND WITHIN THE PERIOD SPECIFIED IN THAT SECTION; (II) IT IS NOT FORMED BY THE TRANSFER TO A NEW BUSI NESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY IN THE CASE OF TRANSFER, EITHER IN WHOLE OR IN PART, OF MA CHINERY OR PLANT PREVIOUSLY USED BY A STATE ELECTRICITY BOARD REFERR ED TO IN CLAUSE (7) OF SECTION 2 OF THE ELECTRICITY ACT, 2003 (36 OF 20 03), WHETHER OR NOT SUCH TRANSFER IS IN PURSUANCE OF THE SPLITTING UP O R RECONSTRUCTION OR REORGANISATION OF THE BOARD UNDER PART XIII OF THAT ACT. EXPLANATION 1.FOR THE PURPOSES OF CLAUSE (II), ANY MACHINERY OR PLANT WHICH WAS USED OUTSIDE INDIA BY ANY PERSON OT HER THAN THE ASSESSEE SHALL NOT BE REGARDED AS MACHINERY OR PLAN T PREVIOUSLY USED FOR ANY PURPOSE, IF THE FOLLOWING CONDITIONS ARE FU LFILLED, NAMELY : (A) SUCH MACHINERY OR PLANT WAS NOT, AT ANY TIME PR EVIOUS TO THE DATE OF THE INSTALLATION BY THE ASSESSEE, USED IN INDIA; (B) SUCH MACHINERY OR PLANT IS IMPORTED INTO INDIA FROM ANY COUNTRY OUTSIDE INDIA; AND (C) NO DEDUCTION ON ACCOUNT OF DEPRECIATION IN RESP ECT OF SUCH MACHINERY OR PLANT HAS BEEN ALLOWED OR IS ALLOWABLE UNDER THE PROVISIONS OF THIS ACT IN COMPUTING THE TOTAL INCOM E OF ANY PERSON FOR ANY PERIOD PRIOR TO THE DATE OF THE INSTALLATION OF MACHINERY OR PLANT BY THE ASSESSEE. EXPLANATION 2.WHERE IN THE CASE OF AN UNDERTAKING, ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY USED FOR AN Y PURPOSE IS TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE O F THE MACHINERY OR PLANT OR PART SO TRANSFERRED DOES NOT EXCEED TWENTY PER CENT OF THE TOTAL VALUE OF THE MACHINERY OR PLANT USED IN THE B USINESS, THEN, FOR THE PURPOSES OF CLAUSE (II) OF THIS SUB-SECTION, TH E CONDITION SPECIFIED THEREIN SHALL BE DEEMED TO HAVE BEEN COMPLIED WITH. ITA NO.1190/MDS/2015 9 9. THE PRIMARY PURPOSE OF U/S. 80-IA IS TO GRANT RE LIEF TO A NEW INDUSTRIAL UNDERTAKING. THEREFORE, WHENEVER AN ASSES SEE CLAIMS RELIEF U/S. 80-IA, THE ASSESSEE WILL HAVE TO ESTABLI SH THAT A NEW UNIT HAD COME INTO EXISTENCE WHICH INDEPENDENTLY PRODUCED ARTICLES AND THAT THIS NEW UNIT WAS NOT DEPENDENT UPON THE OLD EX ISTENT UNIT, IN THE SENSE THAT THE NEW UNIT COULD NOT BE EQUATED AS AN EXPANSION OF THE OLD UNIT. 10. WHERE AN ASSESSEE MAKES A CLAIM FOR RELIEF U/S. 80- IA THE BURDEN LIES UPON HIM TO PRODUCE COGENT MATERIAL IN SUPPORT OF HIS CLAIM. IN ORDER TO AVAIL TAX CONCESSION U/S. 80-IA, EMPLOYMENT OF FRESH CAPITAL IN THE NEW UNIT IS IMPERATIVE. BUT IT DOES NOT MEAN THAT FOR THE EMPLOYMENT OF THE CAPITAL, IT SHOULD H AVE BEEN NEWLY RAISED. IF SURPLUS/RESERVE CAPITAL IS AVAILABLE WITH AN ASSESSEE IN ITS EXISTING BUSINESS, THE ASSESSEE CAN UTILIZE SUCH CA PITAL FOR THE PURPOSE OF PLANT, MACHINERY, ETC., FOR THE NEW UNIT. 11. IN OUR OPINION THE SPLITTING OF OR RECONSTRUCT ION OF THE EXISTING BUSINESS SHOULD BE UNDERSTOOD IN A BROAD C OMMERCIAL ITA NO.1190/MDS/2015 10 SENSE FROM A COMMONSENSE POINT OF VIEW AND ONLY IN R ELATION TO THE NEW INDUSTRIAL UNDERTAKING CLAIMING THE CONCESSION. 12. FURTHER, WHERE THE NEW UNIT WAS STARTED BY FRESH OUTLAY OF CAPITAL AND MANUFACTURED OR PRODUCED ARTICLES YIELD ING ADDITIONAL PROFITS HAVING A SEPARATE PHYSICAL INDEPENDENT EXIS TENCE, IT WAS A NEW INDUSTRIAL UNDERTAKING ELIGIBLE FOR TAX CONCESSI ON. 13. IN OTHER WORDS, THE ESTABLISHMENT OF A NEW INDUST RIAL UNIT AS A PART OF AN ALREADY EXISTING INDUSTRIAL ESTABLI SHMENT MAY RESULT IN AN EXPANSION OF THE INDUSTRY OR THE FACTORY, BUT IF THE NEWLY ESTABLISHED UNIT IS ITSELF AN INTEGRATED INDEPENDEN T UNIT IN WHICH NEW PLANT AND MACHINERY ARE PUT UP AND ARE THEMSELVE S, INDEPENDENTLY OF THE OLD UNIT, CAPABLE OF PRODUCTIO N OF GOODS THEN IT CAN BE CLASSIFIED AS A NEWLY ESTABLISHED INDUSTRI AL UNDERTAKING. 14. THE NEW INDUSTRIAL UNIT BROUGHT INTO EXISTENCE BY ESTABLISHING NEW PLANT AND MACHINERY AND BY INVESTIN G SUBSTANTIAL FUNDS MAY PRODUCE THE SAME COMMODITY AS OF THE OLD BUSINESS OR IT MAY PRODUCE SOME OTHER DISTINCT MARKETABLE PRODUCTS , EVEN ITA NO.1190/MDS/2015 11 COMMODITIES WHICH MAY FEED THE OLD BUSINESS. THESE PR ODUCTS MAY BE CONSUMED BY THE ASSESSEE IN ITS OLD BUSINESS OR MAY BE SOLD IN THE OPEN MARKET. ONE THING IS CERTAIN THAT THE NEW U NDERTAKING MUST BE AN INTEGRATED UNIT BY ITSELF WHEREIN ARTICLE S ARE PRODUCED. THE INDUSTRIAL UNIT MUST BE NEW IN THE SENSE THAT NEW PLANT AND MACHINERY ARE ERECTED FOR PRODUCING EITHER THE SAME COMMODITY OR SOME OTHER DISTINCT COMMODITY. THE BENEFIT CANNOT BE DENIED MERELY BECAUSE THE NEW UNDERTAKING GOES TO EXPAND TH E GENERAL BUSINESS OF THE ASSESSEE IN SOME DIRECTION. 15. AFTER CONSIDERING THE FACTS OF THE CASE AND THE LEGAL POSITION ENUNCIATED IN THE ABOVE PARAS, WE ARE OF TH E OPINION, THAT THE CRUCIAL QUESTION THAT HAS TO BE ANSWERED IS WHETH ER, ON THE FACTS OF THE CASE, THE NEW INDUSTRIAL UNIT CAN BE SA ID TO HAVE COME INTO EXISTENCE WITHIN THE MEANING OF SUB-S. (2) OF S . 80-IA, SO AS TO BE ELIGIBLE FOR DEDUCTION UNDER S. 80-IA FOR ASSESS MENT YEAR 2009- 2010. (I) WHETHER THE MACHINES COSTING 1,77,39,233/- AND BUILDING 36,78,188/-, WHICH WERE MADE DURING THE ASSESSMENT YEARS 2003- 2004 AND 2004-2005 (BEFORE 31 ST MARCH, 2005), BROUGHT INTO EXISTENCE AN INTEGRATED INDEPENDENT UNIT, WHICH BY THEMSELVES, INDEPENDENTLY OF THE OLD UNIT, WERE CAPABLE OF PROD UCING THE STEAM AND ELECTRICITY. ITA NO.1190/MDS/2015 12 16. WE FIND THAT THE ASSESSEE COMPANY COMMENCED A DIST INCT INDUSTRIAL UNDERTAKING FOR THE GENERATION OF POWER. IT IS AN UNDISPUTED FACT THAT THE PREMISES OF THIS UNDERTAKI NG ARE DISTINCT FROM THE PAPER UNIT AS SEPARATE BUILDING WAS CONSTRU CTED VIDE APPROVAL NO. 15442/2003 AT SURVEY NOS.417, 423, 424 & 426 AT NALLUR VILLAGE, PUSHPATHUR PANCHAYAT, PALANI TALUK, DINDIGUL DISTRICT. SEPARATE TECHNOLOGY IS USED AND LOAN WAS ALSO OBTAIN ED FROM STATE BANK OF INDIA, COMMERCIAL BRANCH, TRICHY ROAD, COIMB ATORE. THE LOWER AUTHORITIES ARE NOT CORRECT IN HOLDING THAT TH E POWER PLANT WAS NOT A DISTINCT UNIT. THE TRUE PRINCIPLE AS LAID D OWN BY THE APEX COURT, IN THE CASE OF TEXTILE MACHINERY CORPORATION LTD., VS. CIT 107 ITR 195, DIRECTLY AND SQUARELY APPLIES TO THE F ACTS OF THE CASE. IN THE INSTANT CASE, THE TRUE TEST IS NOT WHETHER TH E NEW INDUSTRIAL UNDERTAKING CONNOTES EXPANSION OF THE EXISTING BUSI NESS OF THE ASSESSEE BUT WHETHER IT IS ALL THE SAME A NEW AN IDE NTIFIABLE UNDERTAKING SEPARATE AND DISTINCT FROM THE EXISTING BUSINESS OF THE ASSESSEE BUT WHETHER IT IS ALL THE SAME A NEW AND IDE NTIFIABLE UNDERTAKING SEPARATE AND DISTINCT FROM THE EXISTING BUSINESS. FOR THE ASSESSMENT YEAR 2008-2009, THE LOWER AUTHORITIES FOR CO- GENERATION PLANT GRANTED DEDUCTION U/S.80IA OF THE ACT. THEY IMPLIEDLY AGREED THAT THE NEW MACHINERY AND PLANT HA VE BEEN INSTALLED UNDER SEPARATE PREMISES AND IT IS NOT APP ROPRIATE TO DENY THE SAME DEDUCTION FOR THE ASSESSMENT YEAR 2009-20 10. 17. EVEN THOUGH THE DECISION OF TEXTILE MACHINERY CO RPORATION LTD [SUPRA] WAS CONCERNED WITH THE CLAUSE DEALING WITH ITA NO.1190/MDS/2015 13 RECONSTRUCTION OF EXISTING BUSINESS BUT THE EXPRESS ION 'NOT FORMED' WAS CONSTRUED TO MEAN THAT THE UNDERTAKING SHOULD NO T BE A CONTINUATION OF THE OLD BUT EMERGENCE OF A NEW UNIT. THEREFORE, EVEN IF THE UNDERTAKING IS ESTABLISHED BY TRANSFER OF BUILDING, PLANT OR MACHINERY, IT IS NOT FORMED AS A RESULT OF SUCH TRANSFER, IN OUR CONSIDERED VIEW; THE ASSESSEE COULD NOT BE DENIED TH E BENEFIT. WE ALSO FIND THAT A NEW UNDERTAKING FOR MANUFACTURE OF POWER WITH STEAM AS BY-PRODUCT WAS FORMED OUT OF FRESH FUNDS, I N SEPARATELY IDENTIFIABLE PREMISES, UNDER A SEPARATE LICENSE/APP ROVALS WITH MANIFOLD INCREASE IN CAPACITY WITH NEW MACHINERY AND BUILDINGS WITHOUT TRANSFER OF ANY PORTION OF THE OLD BUILDINGS OR MACHINERY WHICH PRE-EXISTED. THE POWER AND STEAM PRODUCED EARLI ER WAS PART OF THE PAPER UNIT AND COULD SERVICE ONLY THE PAPER UNIT AND HENCE WAS AT BEST BY-PRODUCT OF THE PAPER UNIT MANUFACTURI NG FACILITY. THE NEW UNIT HAD POWER AS THE MAIN PRODUCT AND APART FROM SERVICING THE CAPTIVE CONSUMPTION IN THE PAPER UNIT ALSO COUL D SERVICE THE OTHER POWER REQUIREMENTS. THE PRICING OF POWER IS ALSO SUBJECTED TO THE VARIOUS POWER TARIFF PRESCRIPTIONS. IT CAN BE CL EARLY SEEN THAT THE NEW UNDERTAKING IS THEREFORE NOT FORMED BY THE SPLIT TING UP OF THE OLD UNDERTAKING. THERE IS NO CASE ALSO MADE OUT BY T HE LOWER ITA NO.1190/MDS/2015 14 AUTHORITIES THAT THE NEW UNDERTAKING IS FORMED BY TH E SPLITTING UP OF THE EXISTING BUSINESS. FURTHER, THE SUPREME COURT I N THE CASE OF TEXTILE MACHINERY CORPORATION (CITED SUPRA) WHEREIN T HE SUPREME COURT CATEGORICALLY HELD THAT NEW UNIT ESTABLISHED B Y THE ASSESSEE FOR MANUFACTURING ARTICLES USED AS INTERMEDIATE PRO DUCTS IN THE OLD DIVISION, WHICH THE ASSESSEE WAS BUYING FROM THE MARK ET EARLIER, IS NOT RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE . TO CONSTITUTE RECONSTRUCTION, THERE MUST BE TRANSFER OF ASSETS OF THE EXISTING BUSINESS TO THE NEW INDUSTRIAL UNDERTAKING. IN OUR O PINION, GENERATION OF POWER UNIT IS SEPARATE AND DISTINCT UN DERTAKING FOR WHICH SEPARATE APPROVAL WAS OBTAINED AND IT CANNOT BE SAID THAT SPLITTING OF EXISTING BUSINESS STRUCTURE. THEREFORE, IN OUR CONSIDERED OPINION, THE LOWER AUTHORITIES ARE NOT CORRECT IN DE NYING THE DEDUCTION UNDER SECTION 80IA OF THE ACT. HENCE, WE D ECIDE THIS ISSUE IN FAVOR OF THE ASSESSEE COMPANY AND AGAINST THE REVENUE. IN VIEW OF THE ORDER OF THE TRIBUNAL, THE ISSUE IS SETTLED IN FAVOUR OF THE ASSESSEE. ON THE DATE OF PASSING THE ORDER BY THE CIT DATED 27.03.2015, THE ORDER OF THE TRIBUNAL WAS NOT AVAIL ABLE, WHICH WAS ITA NO.1190/MDS/2015 15 PASSED ON 24.07.2015. BEING, SO, IN OUR OPINION A S OF NOW THE ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE. AS SUCH THE ORDER OF CIT IS HAVING NO LEG TO STAND. ACCORDINGLY, THIS GROUND R AISED BY THE ASSESSEE IS ALLOWED. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 15 TH FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( . ) (G.PAVAN KUMAR) ( ( #$ % ) ) & CHANDRA POOJARI '( JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 15 TH FEBRUARY,2016. K S SUNDARAM. )*((+,(-, /COPY TO: ( 1. /APPELLANT 2. /RESPONDENT 3. ( .(&' /CIT(A) 4. ( . /CIT 5. ,/0 (1 /DR 6. 02(3 /GF