ACIT, Pondicherry V. M/s. Manatech Electronics P. Ltd., Pondicherry

ITA 1955/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0976 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 05-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: FAR A SULTANA
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT ME MBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1955/MDS/2012 & C.O.NO.203/MDS/2012 ( IN ITA NO.1955/MDS/2012) (ASSESSMENT YEAR: 2009-10) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I D.P.THOTTAM, MUTHIALPET, PUDUCHERRY-605 003. VS. M/S.MANATECH ELECTRONICS P.LTD. NO.C-22 & 23, INDUSTRIAL ESTATE, PONDICHERRY-605 009. PAN:AAFCM1685D (APPELLANT) (RESPONDENT/CROSS OBJECTOR ) APPELLANT BY : MR SHAJI P.JACOB, ADDL.CIT RESPONDENT BY : MS. FAR A SULTANA, C.A DATE OF HEARING : 28 TH JANUARY, 2013 DATE OF PRONOUNCEMENT : 28 TH JANUARY, 2013 O R D E R PER VIKAS AWASTHY, JM: THE APPEAL HAS BEEN FILED BY THE REVENUE IMPUGNING THE ORDER PASSED BY THE CIT(A)-XII, CHENNAI DATED 10.07.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10 . THE ASSESSEE HAS FILED CROSS OBJECTION IN SUPPORT OF TH E ORDER OF THE CIT(A). THE REVENUE HAS ASSAILED THE ORDER OF T HE CIT(A) PRIMARILY ON TWO ISSUES:- I) ALLOWANCE OF CLAIM UNDER SECTION 80IB(4) TO THE TUNE OF ` 1,25,17,185/-. & ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 2 II) CLAIM OF DEDUCTION UNDER SECTION 35(1)(I) TO TH E TUNE OF ` 78, 80,649/-. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A C OMPANY REGISTERED UNDER THE PROVISIONS OF THE COMPANIES AC T, 1956 AND IS ENGAGED IN MANUFACTURING, TRADING AND SERVIC ING OF AUTOMOBILE GARAGE EQUIPMENTS. THE ASSESSEE HAD FILE D ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 30.9.2009 ADMITTING TOTAL INCOME OF ` 3,04,81,422/-. WHILE ADMITTING AFORESAID INCOME, THE ASSESSEE HAD CLAIME D DEDUCTION TO THE TUNE OF ` 1,25,17,185/- UNDER SECTION 80IB. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) WAS ISSUED TO THE ASSE SSEE . THE ASSESSING OFFICER VIDE ORDER DATED 22.12.2011 MADE CERTAIN ADDITIONS/DISALLOWANCES IN THE INCOME RETURNED BY T HE ASSESSEE. THE ASSESSING OFFICER MADE DISALLOWANCES/ADDITIONS INTER-ALIA ON ACCOUNT OF DE DUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80IB AND UNDE R SECTION 35 TOWARDS IN HOUSE RESEARCH AND DEVELOPMEN T COST. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) V IDE ORDER ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 3 DATED 10.7.2012 PARTLY ALLOWED THE APPEAL OF THE AS SESSEE AND HELD THAT THE CLAIM OF THE ASSESSEE UNDER SECTI ON 80IB(4) AND DEDUCTION CLAIMED UNDER SECTION 35 OF THE ACT ARE JUSTIFIED. 3. THE REVENUE HAS COME IN SECOND APPEAL BEFORE TH E TRIBUNAL IMPUGNING THE ORDER OF THE CIT(A) ON THE G ROUND THAT ASSESSEE WHILE CLAIMING DEDUCTION UNDER SECTION 80I B COULD NOT SATISFY THE CONDITIONS LAID DOWN UNDER THE INDU STRIAL (DEVELOPMENT AND REGULATION) ACT, 1951 FOR BEING SM ALL SCALE UNDERTAKING. THE ITEM MANUFACTURED BY THE ASSESSEE COMPANY BEING COVERED BY THE ELEVENTH SCHEDULE DISE NTITLES THE ASSESSEE FROM BEING CLAIMING DEDUCTION UNDER S ECTION 80IB OF THE ACT. THE REVENUE FURTHER ASSAILED THE ORDER OF THE CIT(A) IN GRANTING DEDUCTION UNDER SECTION 35 O F THE ACT. 4. SHRI SHAJI P.JACOB APPEARING ON BEHALF OF THE RE VENUE STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFIC ER AND PRAYED FOR SETTING ASIDE THE ORDER OF CIT(A) . ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 4 5. ON THE OTHER HAND MS. FARA SULTANA APPEARI NG ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ORDER OF THE CIT(A) IS A WELL-REASONED AND DETAILED ORDER. SHE SUBMITTE D THAT THE ASSESSEE IS A COMPANY REGISTERED UNDER THE PROVISIO NS OF THE COMPANIES ACT, 1956 AND IS LOCATED IN PONDICHERRY W HICH IS CLASSIFIED AS BACKWARD STATE SPECIFIED IN EIGHTH S CHEDULE AND THE ASSESSEE IS ALSO REGISTERED AS SSI VIDE LET TER DATED 24.3.2008. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE PROVISIONS OF SECTION 80IB(4) OF THE ACT. THE LEARN ED A.R. CONTENDED THAT WHERE AN INDUSTRIAL UNDERTAKING IS E STABLISHED IN AN INDUSTRIALLY BACKWARD AREA AS SPECIFIED IN TH E EIGHTH SCHEDULE, DEDUCTION UNDER SECTION 80IB(4) IS AVAILA BLE TO SUCH AN UNDERTAKING, TO CLAIM DEDUCTION UNDER SECTI ON 80IB(4) THE UNDERTAKING MAY NOT NECESSARILY BE SSI. THE LE ARNED A.R. POINTED OUT THAT THE ASSESSING OFFICER HAS ERR ED IN COMING TO THE CONCLUSION THAT ASSESSEE COMPANY HAS NOT PROVED THAT IT PRODUCES THE ARTICLES MENTIONED IN S CHEDULE II OF THE IDR ACT AND THUS THE ASSESSEE HAS NOT COMPLI ED WITH IDRA REGULATIONS AND IS NOT AN SSI. ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 5 6. WITH REGARD TO CLAIM OF DEDUCTION UNDER SEC TION 35, THE A.R. SUBMITTED THAT THE ASSESSING OFFICER HAS D ISALLOWED THE CLAIM ON ACCOUNT OF THE FACT THAT THE APPELLANT HAS NOT PROVIDED ANY SUPPORTING DOCUMENT TO CLAIM THE EXPEN DITURE INCURRED BY THE ASSESSEE AND IT WAS REQUIRED TO P ROVE THAT THE ASSESSEE IS CARRYING ON SCIENTIFIC RESEARCH. THE A.R. SUBMITTED THAT ASSESSEE HAD PRODUCED LETTER DATED 4 .4.2012 FROM THE DISR IN SUPPORT OF ITS CONTENTIONS THAT R ESEARCH ACTIVITIES ARE BEING UNDERTAKEN SINCE 2.6.2011. TH E BREAK-UP AND NATURE OF EXPENSES INCURRED HEAD-WISE IN THIS R EGARD WERE SUBMITTED BEFORE THE ASSESSING OFFICER TO SUBS TANTIATE ITS CLAIM BUT THE SAME WAS REJECTED. 7. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. A PERUSAL OF THE ORDER OF ASSESSING OFFICER SHOWS THA T THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB(4) HAS BEEN REJ ECTED BY THE ASSESSING OFFICER ONLY ON THE GROUND THAT THE ASSESSEE IS NOT SSI AND HAS NOT BEEN ABLE TO ESTABLISH THAT PRO DUCTS MANUFACTURED BY THE ASSESSEE DO NOT COME UNDER THE ITEMS ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 6 LISTED IN SCHEDULE III OF THE NOTIFICATION UNDER ID RA ACT. WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OF FICER HAS MISINTERPRETED THE PROVISIONS OF LAW. THE CIT(A) IN ITS ORDER HAS CLEARLY GIVEN THE FACTS OF THE INSTANT CASE AND HAS ALSO SPELT OUT THE REQUIREMENTS FOR CLAIMING DEDUCTION U NDER SECTION 80IB IN CASE OF AN INDUSTRIAL UNDERTAKING I N AN INDUSTRIALLY BACKWARD STATE. THE SAME ARE REPRODUCE D HEREIN BELOW:- IN THE INSTANT CASE, THE FOLLOWING ARE THE UNDISPU TED FACTS: A) THE ASSESSEES UNIT IS ENGAGED IN MANUFACTURING OF AUTOMOBILE GARAGE EQUIPMENTS, B) THE ASSESSEE ' S MANUFACTURING UNIT IS LOCATED IN THE STATE OF PONDICHERRY. THE STATE OF PONDICHERRY IS AN 'INDUST RIALLY BACKWARD STATE' (AS INCLUDED IN ST H SCHEDULE AT S1 . NO.16) , C) THE ASSESSEE HAS BEEN REGISTERED AS A 'SMALL SCALE INDUSTRY' (SSI) WITH THE DIRECTOR OF INDUSTRIES AND COMMERCE, PONDICHERRY, BASED ON THE ABOVE FACTS AND THE REQUIREMENTS OF TH E SEC.8O-IB OF THE ACT, LET US EXAMIN E WHETHER THE ASSESSEE IS ELIGIBLE FOR CLAIMING THE DEDUCTION U/S.8O-IB. THE FIRST AND FOREMOST REQUIREMENT IS THE FULFILLME NT OF FOUR CONDITIONS STIPULATED I N SUB-SECTION (2) OF SEC.8O-IB OF THE ACT. THESE CONDITIONS ARE - (I) IT IS NOT FORMED BY SPLITTING UP, OR THE RECON STRUCTION, OF A BUSINESS ALREADY INEXISTENCE (I I ) I T IS NOT FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE; (III) I T MANUFACTURES OR PRODUCES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVE NTH SCHEDULE, OR OPERATES ONE OR MORE COLD STORAGE PLANT OR PLANTS, IN ANY PART OF INDIA: (IV) IN A CASE WHERE THE INDUSTRIAL UNDERTAKING MAN UFACTURES OR ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 7 PRODUCES ARTICLES OR THINGS, THE UNDERTAKING EMPLOY S TEN OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER, OR EMPLOYS TWENTY OR MORE WORKERS IN A MANUF ACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER . THE FULFILLMENT OF THE CONDITIONS MENTIONED AT CLAU SES (I), (II) AND (IV) ABOVE, ARE NOT UNDER DISPUTE. THE ONLY DI SPUTE IS REGARDING THE FULFILLMENT OF CONDITION IN CLAUSE (III) ABOVE , WHEREIN THE ASSESSING OFFICER HELD THAT THE ITEM 'AUTOMOBILE GA RAGE EQUIPMENTS MANUFACTURED BY THE ASSESSEE IS THE THING OR AN ART ICLE SPECIFIED IN SCHEDULE 11 OF THE IT ACT AND HENCE NOT ELIGIBLE FO R DEDUCTION UNDER SECTION 8O-IB. THE ABOVE OBSERVATION OF THE ASSESSING OFFICER THAT THE MANUFACTURER OF THINGS OR A RTICLES SPECIFIED IN 11TH SCHEDULE ARE NOT ELIGIBLE FOR DEDUCTION U/S.8O-IB, IS NOT TOT A LLY CORRECT . AS PER THE CLAUSE (I I I) ABOVE, ONLY THE ASSESSEES WHO MANUFACTURE THINGS/ARTICLES , OTHER THAN THOSE SPECIFIED IN 11TH SCHEDULE, ARE ELIGIBLE FOR DEDUCTION U / S .8 O-IB. HOWEVER, THIS CONDITION IS NOT ABSOLUTE AND TOTAL. THIS CONDITION IS EMBEDDED WITH CERTAIN EXCEPTIONS , AS PROVIDED IN THE PROVISO. THERE IS A PROVISO TO THE CLAUSE ( III) PROVIDED FOR CERTAIN EXCEPTIONS, AS UNDER: PROVISO TO CLAUSE (I I I) OF SUB-SECTION (2) OF SEC.80-IB: PROVIDED THAT THE CONDITION IN THIS CLAUSE SHALL , IN RELATION TO A SMALL SCALE INDUSTRIAL UNDERTAKING OR AN INDUS TRIAL UNDERTAKING REFERRED TO IN SUB-SECTION(4) SHALL . APPLY AS IF THE WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIED IN THE LIS T IN THE ELEVENTH SCHEDULE ' HAD BEEN OMITTED. ~ TH U S , THERE ARE TWO EXCEPT I ONS TO THE COND I T I ONS LAID DOWN IN CLAUSE (III) ABOVE. O N E E X CE P T I ON IS TH E SMALL SCA L E I NDUSTR I ES ( SSI) AND THE OTHER EXCEPTION IS INDUS T R IA L U N D ERTAK I N G REFERRE D TO IN SUB-SECT I ON ( 4). THE INDUSTRIAL UNDERTAKING REFERRED TO I N SU B-SEC TI O N (4 ) MEANS AN I NDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWARD STATE SPECIF I ED I N TH E EIGHTH SCHEDULE . THUS , IN THE C ASE OF A 'SSI' OR 'INDUSTRIAL UNDERTAKING SITUATED IN AN INDUSTRIALLY BACKWAR D STATE', THE ASSESSEES WILL BE ELIGIBLE FOR DEDUCTION U/S.80-IB EVEN IF THEY ARE M ANUFACTUR I NG ITEM S SPECIFIED IN 11TH SCHEDULE. THIS IS PARTICULARLY SO BECAUSE THE WOR D S ' N O T BEING A N Y ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE ' ARE T O B E OM I T T ED FROM T HE CLAUSE ( III) IF IT WAS A SSI OR INDUSTRIAL UNDERTAKING SITUATED IN AN INDUS T RI A LL Y BAC K WARD STATE , AS PER THE PROVISO TO THE SAID CLAUSE. F U RTHER , IF EI T HER OF THESE TWO ( AND NOT NECESSARILY BOTH) SITUATIONS ARE FULFILLED , I.E . IF IT WA S SSI OR IF LOCATED IN AN INDUS T RIALL Y BACKWARD STATE , THE ASSESSEE IS ELIGIBLE FOR D E DU C TI O N U/S.8 O -IB EVEN ON THE I T EMS ( MANUFACTURED) SPECIFIED IN 11 TH SCHEDULE. ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 8 T H E A SSESSE E CLAIMED I TS DEDUCTION U/S.8O-IB(4) OF THE ACT , THE PROVISIONS OF WHI CH AR E AS U NDER : SEC.80-IB: (4 ) THE AMOUNT OF DEDUC T ION IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN INDUSTRIALLY BACKWARD STATE SPECI FIED IN THE EIGHTH SCHEDULE SHALL BE HUNDRED PER CENT OF THE PROFITS A ND GAINS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR FIVE ASSESSMENT YEA RS BEGINNING WITH THE INIT I AL ASSESSMEN T YEAR AND THEREAFTER TWENTY - FIVE PER CENT (OR THIRTY PE R CENT WHERE THE ASSESSEE IS A COMPANY) OF THE PROFITS AND GA I NS DERIVED FROM SUCH INDUSTRIAL UNDERTAKING NO W , LE T US E X A MINE THE ASSESSEE ' S CASE . THE ASSESSEE'S MANUFACTURING UNIT IS LOCA T E D I N T HE STA T E OF PON D ICHERR Y, WHICH IS AN ' INDUSTRIALLY BACKWARD STATE' AS N OTIF I E D I N 8 T H SCH E DULE ( AT S L . NO. 1 6 ). THERE IS NO DISPUTE REGARDING THIS POSITION . TH ER EFOR E, T H E ASSE S SEE ' S CASE IS CO V ERED B Y THE SECOND LIMB OF PROVISO TO CLAUSE (III) OF SUB -SEC T I ON ( 2 ) OF S E C.8O-IB OF THE ACT. H ENCE , THE WORDS 'NOT BEING ANY ARTICLE OR THING SPECIFIE D I N THE L I S T I N THE ELE V ENTH SCHEDU L E ' STANDS OMITTED FROM THE LANGUAGE OF C L A US E (I I I ) O F T HE A C T . MANUFAC T URIN G OF AN Y ARTICLE OR THING (INCLUDING THOSE SPECIFIED IN 1 1 TH S C H E DULE) I S SUFFICIENT F OR CLA I MING DEDUCTION U/S8O-IB OF THE ACT IN SUCH A CASE . ON T H IS ACCO U NT ALONE , THE INSTANT ASSESSEE , BEING LOCATED IN AN 'INDUSTRIALLY BACK W A RD STATE ' OF P ONDICHERRY , IS E L IGIBLE FOR DEDUCTION U/S.8 O-IB OF THE ACT . T H E D EDUCTI O N U/S . 8O-IB IN THE CASE OF AN INDUSTRIAL UNDERTAKING IN AN I N D USTRI A L L Y BACKW A RD STATE SPECIFIED IN THE EIGHTH SCHEDULE IS GOVERNED BY THE PR OV ISIONS O F SUB-S E C.(4). THE ONL Y REQU I REMENT IN SUCH CASES IS THAT THE INDUSTRIAL UNDER T AKI N G S H OU L D BE L O CA TE D IN AN INDUS TRI A LLY BACKWARD STATE . I T MAKES NO D I F FERE NCE W HE TH ER SUCH UNDER TAK ING IS A SM A LL SCALE INDUSTRY OR NOT . IN OTHER WORDS , ONCE T H E INDUS TR IAL UNDERTAKING IS LOCATED IN AN INDUSTRIALLY BACKWARD STATE, ALL UNITS (W H ET HER SSI OR NON - SSI) ARE EQU A LL Y EL I GIBLE FOR DEDUCTION U / S . 80- IB OF THE ACT . ON T H E O T HER HAND , AL L TH E SMAL L SCALE INDUS T RIES (SSI) CAN ALSO TAKE EXCEPT I ON TO CL A US E (I I I) O F SUB-SEC .( 2) O F SE C .80-IB , I . E. F ROM THE WORDS ' NOT BEING ANY ART I CL E OR TH I NG S P EC I F IE D IN THE LIST I N T H E ELE V ENTH SCHEDULE ' , IF THEY FULFILL ALL THE NORMS PRESC R I BED UND E R THE SS I GU I DEL I NES / INDUSTRIE S ( DEVELOPMENT AND REGULATION) ACT 1 9 5 1 . ONC E TH E REQUIREMENT S OF SSI ARE FULFILLED , THE ASSESSEE FALLS UNDER THE FIRST LIM B OF E X C E P TIO NS OF PRO VI SO T O CLAUSE ( II I) . IN SUCH A CASE , THE ASSESSEE IS ELIGIBLE FOR D EDUC T I ON E V EN IF T HE Y MANUFAC T URE I T EMS SPECI F IED IN 11 TH SCHEDULE. AND THE Y ARE ELIGIB L E FO R DEDUCT I ON I RRESP EC T IV E OF THE L OCA TI ON OF THE UNDERTAKING I.E. WHETHER LO CA TE D IN A N I NDUST R IAL LY BACKWARD STATE OR O T HER STATES . THUS , TH E ASSESSEES WHOSE INDUSTRIAL U N DERTAKINGS ARE RECOGNIZED AS ' SMALL SC A L E I NDU S TRIES' OR 'LOCATED IN AN INDUSTRIALL Y BACKWARD STATE' ARE ELIGIBLE FOR D E DU CT ION U /S. 8 0-IB OF THE A CT , EVEN IF THEY MANUFACTURE 'ARTICLE OR THING SPECIFIE D IN THE LIST IN T H E E L EVEN T H SCHEDU LE' . ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 9 F URT HE R , A S STATED EARLI E R , THE E X CEPT I ONS SPECIFIED IN THE PROVISO TO CLAUSE (II I ) I.E . B EI NG ' SMA LL SCALE INDUS T R I ES ' OR ' LOCATED IN AN INDUSTRIALLY BACKWARD STATE ' AR E I ND E P ENDENT OF E ACH ORDER . THE ASSESSEE NEED NO T FULFILL BOTH OF THESE TWO CONDITIONS. I F A N Y ONE OF T H E SE TWO REQUIREMENTS IS FULFILLED T HE ASSESSEE IS ELIGIBLE FOR DEDUCTION , I RRESPE CTI V E OF T H E FULFILLMENT OF T HE OTHER CONDIT I ON . THUS , I N T HE I NS T AN T CA S E , TH E ASSESS E E IS LOCATED IN THE STATE OF PONDICHERRY, W H I CH I S I N A N IN DUS T RI A LL Y BACKWAR D S T A T E. THERE IS NO DISPUTE REGARDING THIS. HENCE , T H E ASS ESSE E I S E LIG I B L E FOR DEDUCT I ON UNDER T HE SUB-SECTION (4) OF SEC . 80-IB OF THE ACT , O N A L L T HE ARTICL E/ THINGS ( INCLUDING THOSE MENT I ONED IN 11T H SCHEDULE) MANUFACTURED B Y IT . I N A L S O M A KE NO DIFFERENCE WHETHER THE UNDERTAKING IS A SSI OR NOT . IN FACT, TH E ASSE S SE E C L A IME D DEDUCTION UNDER THE SUB-SECTION ( 4 ) OF SEC . 80-IB OF THE ACT. O NCE , THE INDUSTRIAL U N DERTAK I NG I S L O CA T ED IN AN INDUSTRIALLY BACKWARD STATE THE A SSE SS E E I S ELI GIBLE FOR DED U C TI ON U/S . 80- I B (4) OF THE ACT . IN SUCH A SITUATION T HERE I S NO NE ED T O F U L FILL THE REQU I R E MEN T S OF ' SS I' NA T URE . IF THE ASSESSEE WANTS TO CLAIM D E DUC TI ON U /S . 80-IB OF THE ACT, BEING IN THE NATURE OF 'SSI' (I.E . IF WANTS TO CLAIM E X C E PTION A S PER THE FIRST LIMB OF PROVISO TO CLAUSE ( III)), THEN ONLY THE ASSESSEE HAS TO PROVE T HA T I T I S R E COGNISED A S A S S I AND ALL THE R E LE V ANT CONDITIONS ARE FULFILLED . I N THE I NSTANT CASE, AS THE ASSESSEE'S INDUSTRIAL UNDERTAKI NG IS 'LOCATED IN AN I NDUSTR I ALLY BACKWARD STATE' OF PONDICHERRY, THERE IS NO NEED TO FULFILL THE RE QUIREMENTS OF SSI . THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.80-IB(4) OF THE ACT . IN VIEW OF THE ABOVE , EXAMINATION OF ASSESSEE'S RECOGNITION AS SSI AND THE I F U LFI LLM E NT OF T HE NECESSAR Y CONDITIONS THEREIN IS OF ONLY ACADEMIC SIGNIFICANCE, AS THE F ULF I LLM E NT OR NON - FULFILLMENT OF T HIS REQUIREMENT WILL NOT HAVE ANY ADVERSE IMPACT ON THE E L IG I BILITY OF DEDUCTION UNDER SUB-SECTION (4) OF SEC.80 -IB OF THE ACT . IN VIEW OF THE ABOVE, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF RS.1,25, 17, 185/- U/S . 80 - IB OF THE ACT, MORE SPECIFICAL L Y UNDER SUB-SECTION (4) OF SEC.80-IB OF THE ACT. T HEREF O RE TH E ASSESSING OFFICER IS DIRECTED TO GRANT NECESSARY RELIEF TO TH E ASSESSEE IN T H I S RE G ARD. THE ASSESSEE SUCCEEDS IN ITS APPEALS I N THIS REGARD. THE CIT(A) HAS GIVEN WELL REASONED AND CATEGORIC FINDING WITH RESPECT TO ELIGIBILITY OF THE ASSESSEE FOR CLAIMING DEDUCTION UNDER SECTION 80IB AND WE ARE IN AGREEMEN T WITH ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 10 THE SAME. THERE IS NO FORCE IN THE AGREEMENT OF THE LEARNED DR TO DENY DEDUCTION UNDER SECTION 80IB TO THE ASSE SSEE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIN DINGS OF THE CIT(A) ON THE ISSUE AND UPHOLD THE SAME. WE, THERE FORE, DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 9. THE SECOND GROUND OF APPEAL OF THE REVENUE RELAT ES TO THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 35 OF THE ACT TOWARDS IN HOUSE EXPENDITURE ON SCIENTIFIC RESEARCH. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSE E HAS NOT BEEN ABLE TO FURNISH ANY DETAILED INFORMATION W ITH REGARD TO EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT EXCEPT THE BREAK UP HEAD-WISE. ON THE CONTRARY THE ASSESSE E HAS SUBMITTED THAT IT HAS BEEN SPENDING HUGE AMOUNT ON RESEARCH AND DEVELOPMENT OF NEW PRODUCTS AND TO IMPROVE THE EXISTING ONES. THE CONTENTION OF THE ASSESSEE IS THAT SINCE THE ASSESSEE IS SPENDING MONEY ON RESEARCH AND DEVELOPM ENT FACILITY IN ITS OWN UNIT AND IS RELATED TO ITS OWN BUSINESS, NO APPROVAL FROM THE PRESCRIBED AUTHORITY FOR CLAIMING DEDUCTION UNDER SECTION 35 OF THE ACT IS REQUIRED. THE A.R HA S RELIED ON ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 11 THE JUDGEMENT OF THE HONBLE ALLAHABAD HIGH COURT I N THE CASE OF CIT VS. U.P. ELECTRONICS PVT. LTD., REPORTE D AS 276 ITR 45 (ALL) TO SUPPORT HER SUBMISSIONS. AS PER TH E PROVISIONS OF SECTION 35(1)(I), THE ONLY REQUIREMENT FOR CLAIM ING DEDUCTION IS THAT THE AMOUNT SHOULD HAVE BEEN SPENT DURING P REVIOUS YEAR ON RESEARCH AND DEVELOPMENT IN RELATION TO ASS ESSEES OWN BUSINESS ONLY. IT IS NOT THE CASE OF THE ASSESS EE OR THE REVENUE THAT THE ASSESSEE IS CONTRIBUTING AMOUNT TO WARDS ANOTHER ORGANIZATION ENGAGED IN RESEARCH AND DEVELO PMENT. IN THE INSTANT CASE, THE ASSESSEE HAS INCURRED EXPE NDITURE ON THE RESEARCH AND DEVELOPMENT ACTIVITY IN RELATION T O ITS OWN BUSINESS. THEREFORE, THE ASSESSEE IS ELIGIBLE FOR D EDUCTION UNDER SECTION 35(1)(I) OF THE ACT. THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED BEING DEVOID OF ANY MERIT . 10. SINCE THE APPEAL OF THE REVENUE IS DISMISSED, T HE CROSS OBJECTION OF THE ASSESSEE FILED IN SUPPORT OF THE O RDER OF THE CIT(A) HAS BECOME INFRUCTUOUS AND THE SAME IS ALSO DISMISSED. ITA NO.1955/MDS/2012 & CO NO.203/MDS/2012 12 11. IN THE RESULT, THE APPEAL OF THE REVENUE AND TH E CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON MONDAY, THE 28 TH DAY OF JANUARY, 2013 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 28 TH JANUARY, 2013 SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.