Sodecia India P. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1959/CHNY/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2689 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2014
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Depreciation; Audit objection; Question of law
• Section: 143(3); 11A; 142(1); 80IB; 32; 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' ! # . $ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NOS. 1959, 1960 & 1961/MDS/2014 / ASSESSMENT YEARS : 2006-07, 2007-08 & 2008-09 M/S. SODECIA INDIA P. LTD., FORMERLY KNOWN AS M/S. AUTO- MOTIVE ANCILLARY SERVICES P. LTD., TAPALMEDU, PUKKATHURAI, MATHURANTHAGAM TALUK, KANCHEEPURAM DIST. 603 308. PAN AAACA7391P APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(1), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI SASIKUMAR, JCIT ! / DATE OF HEARING : 09.02.2016 '# ! / DATE OF PRONOUNCEMENT: 16.03.2016 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAIN ST THE COMMON ORDER OF THE COMMISSIONER OF INCOME-TAX(APPE ALS) - - ITA 1959 TO 1961/14 2 DATED 23.1.2014 FOR THE ASSESSMENT YEARS 2006-07, 2 007-08 AND 2008-09. SINCE, THE ISSUES INVOLVED IN THESE A PPEALS ARE COMMON, THESE ARE CLUBBED TOGETHER, HEARD TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE. 2. THE FIRST COMMON GROUND IN THESE APPEALS IS WITH REGARD TO DISALLOWANCE OF THE CLAIM OF DEDUCTION U/S.80IB( 10) OF THE ACT. 3. THE F A CTS OF THE CASE ARE THAT THE ASSESSEE, MANUFACTURING AUTOMOBILE COMPONENTS, FILED ITS RETU RN OF INCOME FOR THE ASSESSMENT YEARS 2006-07, 2007-08 AND 2008-09 AFTER CLAIMING DEDUCTION U/S.80IB OF TH E ACT AS UNDER: ASST. YEAR INCOME RETURNED 2006 - 07 ` 11,15,337/ - 2007 - 08 ` 62,31,868/ - 2008 - 09 ` 44,22,629/ - THE CASE WAS SELECTED FOR SCRUTINY AND NOTICES U/S .143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE. SCRUTINY ASSESSMENTS U/S. 143(3) OF THE ACT WAS COMPLETED AS UNDER: - - ITA 1959 TO 1961/14 3 ASST. DATE OF ORDER INCOME ADDITION I DISALLOWANCE ON YEAR ASSESSED ACCOUNT OF 2006-07 24.12.2008 ` .1,47,03,293 DISALLOWANCE OF DEDUCTION U/S.80IB. 2007-08 30.09.2009 ` 1,72,02,104 DISALLOWANCE OF DONATION PAID AND DEDUCTION U/S.80IB. . 2008 - 09 27.12.2010 ` 1,42,51,436 DISALLOWANCE U/S.14A AND DEDUCTION U /S.80IB. 3.1 THERE IS ONLY ONE MAIN ISSUE INVOLVED IN ALL THE THREE APPEALS AND THE SAME IS WITH REGARD TO DISALLOWANCE OF THE CLAIM OF DEDUCTION UNDER SECTIO N 801B.. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE ALSO DIRECTED TOWARDS THE ACTION OF THE AO IN DISALLOWING THE ASSESSEES CLAIM U/S.801B OF THE AC T. 3.2 IT IS SEEN THAT OUT OF THE ASSESSEE'S 4 UNITS OF MANUFACTURING AUTOMOBILE COMPONENTS, THE ASSESSEE CLAIMED DEDUCTION WITH RESPECT TO UNIT 2 AT PUKKATHURAI IN CHINGLEPET DISTRICT WHICH IS ABOUT 5 0 KMS AWAY FROM CHENNAI. THE ASSESSEE'S UNDERTAKING COMMENCED THE MANUFACTURING ACTIVITY IN THE YEAR 1998-99, HOWEVER, IT STARTED CLAIMING THE BENEFIT U NDER SECTION 80-IB OF THE ACT AND THE SAID BENEFIT UNDER SECTION 80-IB IS AVAILABLE TO ONLY A SMALL-SCALE INDUSTRIAL UNDERTAKING HAVING COMMENCED ITS BENEFIT S - - ITA 1959 TO 1961/14 4 EQUITY BETWEEN 1 ST APRIL 1995 AND 31 ST MARCH 2002. THE AO, AFTER REFERRING TO THE PROVISIONS OF SEC.80 - IB(3), OBSERVED THAT A NORMAL INDUSTRY UNDERTAKING (OTHER THAN THE SMALL SCALE INDUSTRIAL UNDERTAKING) IS ELIGIBLE FOR DEDUCTION U/S. 80- IB ONLY IF IT HAD COMMENCED ITS MANUFACTURING ACTIVITY BEFORE 31 MARC H 1995 AND SINCE THE ASSESSEE'S UNDERTAKING HAD COMMENCED ITS MANUFACTURING ACTIVITY AFTER 31 ST OF MARCH 1995 BUT BEFORE 31 ST OF MARCH 2002, IT COULD BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80-IB ONLY IF IT WAS A SMALL-SCALE INDUSTRIAL UNDERTAKING. THE AO REFERRED TO THE DEFINITION OF THE TERM 'SMALL SCALE INDUSTRIAL UNDERTAKING' AS PER CLAUSE (G) OF SECTIO N 80- IB (14) AND HELD THAT THE ASSESSEE'S UNDERTAKING WAS NOT A SMALL-SCALE INDUSTRIAL UNDERTAKING, AS IT HAD EXCEEDED THE PRESCRIBED LIMIT OF INVESTMENT IN PLAN T AND MACHINERY VIZ. ` 3 CRORES. THE DETAILS OF THE INVESTMENT IN PLANT AND MACHINERY, AS PER THE ASSESSMENT ORDERS OF ALL THE THREE YEARS ARE AS FOLLOWS: - - ITA 1959 TO 1961/14 5 ASSESSMENT YEAR 2006-07 - ` 6,07,90,175/- ASSESSMENT YEAR 2007-08 ` 6,84,40,590/- ASSESSMENT YEAR 2008-09 - ` 8,93,32,125/- 3.3 THESE FIGURES OF INVESTMENTS IN THE RESPECTIVE ASST. YEARS ARE NOT DISPUTED BY THE ASSESSEE. IT I S ALSO NOT IN DISPUTE THAT IF ASSESSEES INDUSTRIAL UNDERTAKING IS HELD AS A NON-SMALL SCALE INDUSTRIAL UNDERTAKING UNDER INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951, THEN THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S.80IB OF THE ACT. HOWEVE R, THE CONTENTION OF THE ASSESSEE IS THAT THE CONDITIO N AS PRESCRIBED UNDER SUB-SEC.(3) IS REQUIRED TO BE SEEN ONLY IN THE INITIAL YEAR OR THE FIRST YEAR OF THE C LAIM AND THAT THE CONDITION NEED NOT BE SATISFIED EVERY YEAR OR YEAR AFTER YEAR. THE AO DID NOT ACCEPT THE CONTENT ION OF THE ASSESSEE AND DISALLOWED THE CLAIM OF DEDUCTI ON U/S.80IB OF THE ACT. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS), WHO OBSERVED THAT THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S.80IB OF THE ACT, AS THE ASSESSEE IS CEASED TO BE A SMALL INDUSTRIAL UNDERTAKING. AGAINST THIS, THE ASSESSEE IS IN - - ITA 1959 TO 1961/14 6 APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. AR RELIED ON THE JUDGM ENT OF THE KARNATAKA HIGH COURT IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD. V. DCIT IN ITA NO.477 OF 2013 DATED 28.7.2014, WHEREIN THE KARNATAKA HIGH COURT CONSIDERING THE OBSERVATION OF THE TRIBUNAL T HAT THE CIT IS JUSTIFIED IN INVOKING THE JURISDICTION U /S.263 OF THE ACT SO AS TO WITHDRAW THE DEDUCTION U/S.80IB OF THE ACT ON THE REASON THAT AS IN THE 9 TH YEAR, THE ASSESSEE IS CEASED TO BE A SMALL SCALE INDUSTRY, REVERSED THE ORDER OF THE TRIBUNAL BY OBSERVING AS FOLLOWS : 4. SEC.80IB IS AN INCENTIVE PROVISION. IT PROVIDES DEDUCTION IN RESPECT OF PROFITS AND GAINS FROM CERT AIN INDUSTRIAL UNDERTAKINGS OTHER THAN INFRASTRUCTURE DEVELOPMENT UNDERTAKINGS. FOR AN INDUSTRIAL UNDERTA KING TO BE ELIGIBLE FOR THE SAID DEDUCTION, IT HAS TO FU LFILL ALL THE CONDITIONS MENTIONED UNDER SUB-SEC.(2) OF SEC.80IB. THE FOUR CONDITIONS WHICH ARE STIPULATED THEREIN AR E, FIRSTLY, THE INDUSTRIAL UNDERTAKING MUST NOT HAVE B EEN FORMED BY SPLITTING UP OR RECONSTRUCTION OF A BUSIN ESS ALREADY IN EXISTENCE. THE SECOND CONDITION IS, SUCH AN UNDERTAKING IS NOT FORMED BY TRANSFER OF MACHINERY OR PLANT PREVIOUSLY USED FOR ANY PURPOSE. THE THIRD CONDITION IS THAT THE INDUSTRIAL UNDERTAKING MANUFA CTURES - - ITA 1959 TO 1961/14 7 OR PRODUCES ANY ARTICLE OR THING NOT BEING ANY ARTI CLE OR THING SPECIFIED IN THE LIST IN ELEVENTH SCHEDULE. H OWEVER, IN RESPECT OF A SMALL SCALE INDUSTRY UNDERTAKING, E VEN THAT CONDITION IS WAIVED. IN OTHER WORDS, A SMALL S CALE INDUSTRY MANUFACTURING OR PRODUCING ANY ARTICLE OR THING SPECIFIED IN THE LIST IN THE ELEVENTH SCHEDULE, IS ALSO ENTITLED TO THE AFORESAID DEDUCTION. THE FOURTH CON DITION IS, THE SAID INDUSTRIAL UNDERTAKING EMPLOYS 10 OR M ORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITH THE AID OF POWER OR EMPLOYS 20 OR MORE WORKERS IN A MANUFACTURING PROCESS CARRIED ON WITHOUT THE AID OF POWER. ONCE THESE FOUR CONDITIONS ARE FULFILLED, TH E ASSESSEE IS ENTITLED TO THE BENEFIT UNDER SEC.80IB OF THE ACT. SUB-SEC.(3) OF SEC.80IB PROVIDES THE EXTENT OF DEDUCTION ELIGIBLE UNDER SEC.80IB AND ALSO THE NUMB ER OF YEARS SUCH A DEDUCTION IS AVAILABLE TO SUCH AN UNDERTAKING. SUB-SEC.(3) MANDATES THAT THE INDUSTRI AL UNDERTAKING SHALL BE ELIGIBLE FOR THE SAID DEDUCTIO N FOR A PERIOD OF 10 CONSECUTIVE YEARS, BEGINNING WITH THE INITIAL ASSESSMENT YEAR. HOWEVER, IT IS SUBJECT TO TWO COND ITIONS AS STIPULATED THEREIN. THE SECOND CONDITION IS WHAT IS APPLICABLE TO THE CASE ON HAND WHICH PROVIDES, IF T HE INDUSTRIAL UNDERTAKING IS A SMALL SCALE INDUSTRY UNDERTAKING, IT HAS TO BEGIN MANUFACTURE OR PRODUCE ARTICLES OR THINGS AT ANY TIME DURING THE PERIOD BE GINNING ON THE 1ST DAY OF APRIL 1995 AND END ON THE 31 ST DAY OF MARCH 2002. THIS IS A CONDITION WHICH A SMALL SCALE INDUSTRY HAS TO FULFILL IN ADDITION TO THE CONDITIO NS MENTIONED IN SUB-SEC.(2) OF SEC.80IB. ONCE ALL THES E CONDITIONS ARE FULFILLED, A SMALL SCALE INDUSTRY IS ENTITLED TO THE BENEFIT OF DEDUCTION FOR A PERIOD OF 10 CONS ECUTIVE YEARS BEGINNING WITH THE INITIAL ASSESSMENT YEAR. 5. IN THE ENTIRE PROVISION, THERE IS NO INDICATION THAT THESE CONDITIONS HAD TO BE FULFILLED BY THE ASSESSEE ALL THE 10 YEARS. WHEN ONCE THE BENEFIT OF 10 YEARS, COMMENCIN G FROM THE INITIAL YEAR, IS GRANTED, IF THE UNDERTAKI NG SATISFY ALL THESE CONDITIONS INITIALLY, THE UNDERTAKING IS ENTITLED TO - - ITA 1959 TO 1961/14 8 THE BENEFIT OF 10 CONSECUTIVE YEARS. THE ARGUMENT T HAT, IN THE COURSE OF 10 YEARS, IF THE GROWTH OF THE IND USTRY IS FAST AND IT ACQUIRES MACHINERY AND THE TOTAL VALUE OF THE MACHINERY EXCEEDS RS.1 CRORE, IT CEASES TO HAVE THE SAID BENEFIT, DO NOT FOLLOW FROM ANY OF THE PROVISI ONS. IT IS TRUE THAT THERE IS NO EXPRESS PROVISION INDICATING EITHER WAY, WHAT WOULD BE THE POSITION IF THE SMALL SCALE INDUSTRY CEASES TO BE A SMALL SCALE INDUSTRY DURING THE SAID PERIOD OF 10 YEARS. BECAUSE OF THAT AMBIGUITY, A NEED FOR INTERPRETATION ARISES. IF WE KEEP IN MIND THE OBJECT OF THE LEGISLATURE PROVIDING FOR THESE INCEN TIVES AND WHEN A PERIOD OF 10 YEARS IS PRESCRIBED, THAT I S THE PERIOD, PROBABLY, WHICH IS REQUIRED FOR ANY INDUSTR Y TO STABILIZE ITSELF. DURING THAT PERIOD THE INDUSTRY N OT ONLY MANUFACTURES PRODUCTS, IT GENERATES EMPLOYMENT AND IT ADDS TO THE WEALTH OF THE COUNTRY. MERELY BECAUSE A N INDUSTRY STABILIZES EARLY, MAKES PROFITS, MAKES FUT URE INVESTMENT IN THE SAID BUSINESS, AND IT GOES OUT OF THE DEFINITION OF THE SMALL SCALE INDUSTRY, THE BENEFIT UNDER SEC.80IB CANNOT BE DENIED. IF SUCH A LITERAL INTERP RETATION IS PLACED ON THE SAID PROVISION, IT WOULD RUN COUNT ER TO THE VERY OBJECT OF GRANTING INCENTIVES. IT WOULD KI LL THE INDUSTRY. THEREFORE KEEPING IN MIND THE OBJECT WITH WHICH THESE PROVISIONS ARE ENACTED, KEEPING IN MIND THE INDUSTRIAL GROWTH WHICH IS REQUIRED TO BE ACHIEVED, IF TWO INTERPRETATIONS ARE POSSIBLE, THE COURTS HAVE TO LE AN IN FAVOUR OF EXTENDING THE BENEFIT OF DEDUCTION TO AN ASSESSEE WHO HAS AVAILED THE OPPORTUNITY GIVEN TO H IM UNDER LAW AND HAS GROWN IN HIS BUSINESS. THEREFORE WE ARE OF THE VIEW, IF A SMALL SCALE INDUSTRY, IN THE COURSE OF 10 YEARS, STABILIZES EARLY, MAKES FURTHER INVESTMEN TS IN THE BUSINESS AND IT RESULTS IN ITS GOING OUTSIDE T HE PURVIEW OF THE DEFINITION OF A SMALL SCALE INDUSTRY , THAT SHOULD NOT COME IN THE WAY OF ITS CLAIMING BENEFIT UNDER SEC.80IB FOR 10 CONSECUTIVE YEARS, FROM THE INITIAL ASSESSMENT YEAR. THEREFORE THE APPROACH OF THE AUTHORITIES RUNS COUNTER TO THE SCHEME AND THE INTE NT OF THE LEGISLATURE. THEREBY THEY HAVE DENIED THE LEGIT IMATE BENEFIT, AN INCENTIVE GRANTED TO THE ASSESSEE. BOTH THE SAID ORDERS CANNOT BE SUSTAINED. THEREFORE THE - - ITA 1959 TO 1961/14 9 SUBSTANTIAL QUESTION OF LAW IS ANSWERED IN FAVOUR O F THE ASSESSEE AND AGAINST THE REVENUE. HENCE WE PASS THE FOLLOWING: ORDER THE APPEAL IS ALLOWED. THE IMPUGNED ORDER IS HEREBY SET ASIDE. THE ORIGINAL ORDER OF GRANTING THE BENEFIT O F DEDUCTION UNDER SEC.80IB, IS RESTORED. 4.1 HOWEVER, THE LD. DR BROUGHT TO OUR NOTICE THE P ROVISIONS OF SEC.80IB(14) OF THE ACT, WHICH READS AS UNDER : SMALL-SCALE INDUSTRIAL UNDERTAKING MEANS AN INDUST RIAL UNDERTAKING WHICH IS AS ON THE LAST DAY OF THE PREV IOUS YEAR REGARDED AS A SMALL-SCALE INDUSTRIAL UNDERTAKING UN DER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951 (65 OF 1951). ACCORDING TO THE LD. DR, IT IS TO BE SEEN THAT WHET HER THE ASSESSEE IS A SMALL SCALE INDUSTRY OR NOT, DURING T HE LAST DAY OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR A ND THE SAME HAS NOT BEEN LOOKED INTO BY THE KARNATAKA HIGH COUR T IN THE AFORESAID CASE CITED SUPRA. 4.2 WE HAVE GONE THROUGH THE JUDGMENT OF THE KARNA TAKA HIGH COURT CITED SUPRA AND WE FIND THAT THERE IS ME RIT IN THE ARGUMENT OF THE LD. DR. MORE SO, SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN THE CASE OF M/S CARESS BEAUTY CARE PRODUCTS PVT. LTD. IN ITA NO.79/MDS/2011 DATED 15.1.2013, WH EREIN IT WAS HELD AS FOLLOWS : 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND MATERIALS AVAIL ABLE ON - - ITA 1959 TO 1961/14 10 RECORD. IN THE INSTANT CASE, THE CIT OBSERVED THAT THE ASSESSEES INVESTMENT IN PLANT AND MACHINERY EXCEED ED THE LIMIT SPECIFIED U/S 11B OF THE INDUSTRIES (DEVE LOPMENT AND REGULATION) ACT, 1951 AND THEREFORE, THE ALLOWA NCE OF DEDUCTION TO THE ASSESSEE U/S 80IB VIDE ORDER OF ASSESSMENT DATED 3.12.2008 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 14. THE ASSESSEE, BEFORE US, CHALLENGED THE ABOVE O RDER OF THE CIT. THE ASSESSEE HAS NOT DISPUTED THE FACT THAT ITS INVESTMENT IN PLANT AND MACHINERY WAS ACTUALLY MORE THAN THE LIMIT OF ` 1 CRORE SPECIFIED U/S 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. THE A.R OF THE ASSESSEE, IN FACT, HAS FILED A CHART DURING THE COU RSE OF HEARING SHOWING THE INVESTMENT IN PLANT AND MACHINE RY OF THE ASSESSEE FROM ASSESSMENT YEAR 2000-01 TO 2006-0 7 WHICH IS AS FOLLOWS: ASSESS- MENT YEAR GROSS VALUE OF PLANT AND MACHINERY AS PER BOOKS DEPRECIATION BOOKS NET VALUE OF PLANT AND MACHINERY AS PER BOOKS ASSESSMENT PARTICULARS 2000-01 93,16,360.38 14,91,427.00 78,24,933,38 80IB CLAIM ALLOWED U/S 143(1) 2001-02 1,09,35,909.26 38,36,331.43 70,99,577.83 80IB CLAIM ALLOWED U/S 143(1). INTIMATION NOT TRACEABLE 2002-03 1,35,67,232.26 62,73,385.43 72,93,846.83 80IB CLAIM ALLOWED U/S 143(1). INTIMATION NOT TRACEABLE 2003-04 2,14,11,103.89 1,00,22,823.43 1,13,88,280.46 80IB CLAIM ALLOWED IN PROCESSING OF RETURN U/S 143(1) AND IN RE- ASSESSMENT U/S 147. 2004-05 3,28,35,650.05 1,40,71,742.43 1,87,63,907.62 80IB CLAIM ALLOWED U/S 143(1) 2005-06 4,25,98,617.91 2,08,31,032.19 2,17,67,585.72 80IB CLAIM ALLOWED U/S 143(3) 2006-07 6,44,57,445.74 3,09,41,157.19 3,35,16,288.55 ORIGINALLY ALLOWED U/S 143(3). ORDER 143(3) R.W.S 263 HAS BEEN PASSED DENYING THE 80IB CLAIM. THE APPELLANT HAS APPEAL- ED AGAINST 263 ORDER. - - ITA 1959 TO 1961/14 11 15. IT IS ALSO NOT IN DISPUTE BEFORE US THAT IF ASS ESSEES INDUSTRIAL UNDERTAKING IS HELD AS A NON-SMALL SCALE INDUSTRIAL UNDERTAKING UNDER INDUSTRIES (DEVELOPMEN T AND REGULATION) ACT, 1951, THEN THE ASSESSEE IS NOT ELI GIBLE FOR DEDUCTION U/S 80IB OF THE ACT. THE CONTENTION OF TH E ASSESSEE IS THAT AS IT IS HOLDING A CERTIFICATE OF REGISTRATION ISSUED BY A GOVERNMENT DEPARTMENT, WHEREIN THE ASSESSEES INDUSTRIAL UNDERTAKING WAS ACCEPTED AS A SMALL SCALE INDUSTRIAL UNDERTAKING AND THEREFORE, THE ASS ESSEE SHOULD BE TREATED AS SMALL SCALE INDUSTRIAL UNDERTA KING UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AN D REGULATION) ACT, 1951. WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE ASSESSEE. WE FIND THAT CLAUSE (G) OF SUB- SECTION(14) OF SECTION 80IB READS AS UNDER: SMALL SCALE INDUSTRIAL UNDERTAKING MEANS AN INDUS TRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PRE VIOUS YEAR, REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTAK ING UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AN D REGULATION) ACT, 1951 (65 OF 1951). 16. A PLAIN READING OF THE ABOVE PROVISIONS SHOWS T HAT FOR BEING A SMALL SCALE INDUSTRIAL UNDERTAKING U/S 80IB OF THE ACT, THE CONDITION OF THE SECTION IS THAT THE UNDER TAKING MUST BE REGARDED AS A SMALL SCALE INDUSTRIAL UNDERT AKING U/S 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATI ON) ACT, 1951 AS ON THE LAST DAY OF THE PREVIOUS YEAR. WE FIND THAT THE CERTIFICATE RELIED UPON BY THE ASSESSEE IS A CERTIFICATE DATED 11.9.2000 AND NOT A CERTIFICATE W HICH HAS BEEN ISSUED ON THE LAST DAY OF THE RELEVANT PREVIOU S YEAR OR ON ANY DATE SUBSEQUENT THERETO. 17. FURTHER, WE FIND THAT AS PER PROVISIONS OF SEC TION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT , 1951, AN UNDERTAKING TO BE REGARDED AS SMALL SCALE INDUST RIAL UNDERTAKING THEREIN MUST NOT HAVE INVESTMENT IN PLA NT AND MACHINERY EXCEEDING ` 1 CRORE. THUS, IN OUR CONSIDERED VIEW, THE ASSESSEES UNDERTAKING CANNOT BE REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING FOR THE YEAR UND ER - - ITA 1959 TO 1961/14 12 CONSIDERATION U/S 11B OF THE INDUSTRIES (DEVELOPMEN T AND REGULATION) ACT, 1951. MOREOVER, WE FIND THAT THERE IS NO REQUIREMENT AS PER THE ABOVE PROVISIONS OF SECTION 80IB(14)(G) TO HAVE A CERTIFICATE OR OTHERWISE FOR BEING REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING U/S 80IB OF THE ACT. OUR ABOVE VIEW FINDS SUPPORT FROM THE DECI SION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF PRAVEEN SONI VS CIT, [2011] 199 TAXMAN 26 (DEL)WHERE IT WAS HELD AS UNDER: 8. THE OTHER QUESTION AS TO WHETHER IT IS INCUMBENT UPON THE ASSESSEE THAT IT IS REGISTERED UNDER THE IDR ACT FOR CLAIMING THE BENEFIT UNDER SUB-SECTION (3) OF SECTION 80-IB OF THE INCOME-TAX ACT. THE ANSWER TO THIS DEPENDS ON THE INTERPRETATION WHICH IS TO BE GIVEN TO CLAUSE (G) OF SUB-SECTION (14) OF SECTION 80-IB OF THE INCOME-TAX ACT, WHICH READS AS UNDER: '(G)'SMALL-SCALE INDUSTRIAL UNDERTAKING' MEANS AN INDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PREVIOUS YEAR, REGARDED AS A SMALL-SCALE INDUST RIAL UNDERTAKING UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951.' 9. AS POINTED OUT ABOVE, AS PER SUB-SECTION (3) OF SECTION 80-IB OF THE INCOME-TAX ACT WHERE INDUSTRIA L UNDERTAKING IS SMALL INDUSTRIAL UNDERTAKING, IT IS ENTITLED TO DEDUCTION OF 25 PER CENT OF THE PROFITS AND GAIN S DERIVED FROM SUCH INDUSTRIAL UNDERTAKING FOR A PERI OD OF 10 CONSECUTIVE YEARS. SMALL SCALE INDUSTRIAL UNDERTAKING FOR THIS PURPOSE IS DEFINED IN CLAUSE ( G) SUB-SECTION (14) OF SECTION 80-IB OF THE INCOME-TAX ACT REPRODUCED ABOVE. AS PER THIS PROVISION, SMALL SCAL E INDUSTRIAL UNDERTAKING IS REGARDED AS 'SMALL-SCALE INDUSTRIAL UNDERTAKING UNDER SECTION 11B OF THE IDR ACT'. THE IDR ACT IS ENACTED TO PROVIDE FOR DEVELOPMENT AND REGULATION OF CERTAIN INDUSTRIES. F OR THE PURPOSE OF REGULATING THOSE INDUSTRIES IN THE MEANING PRESCRIBED UNDER THE ACT, INDUSTRIAL UNDERTAKING IS DEFINED IN SECTION 3(D) TO MEAN ANY UNDERTAKING PERTAINING TO A SCHEDULED INDUSTRY CARR IED - - ITA 1959 TO 1961/14 13 ON IN ONE OR MORE FACTORIES BY ANY PERSON OR AUTHOR ITY INCLUDING GOVERNMENT. THE FIRST SCHEDULE ATTACHED T O THE SAID ACT SPECIFIES THOSE INDUSTRIES. IN ORDER T O REGULATE THESE SCHEDULED INDUSTRIES, SECTION 10 MANDATES THAT ALL EXISTING INDUSTRIAL UNDERTAKING H AVE TO GET REGISTERED UNDER THIS ACT. SECTION 11 OF THE IDR ACT DEALS WITH NEW INDUSTRIAL UNDERTAKING WHICH WOU LD COME INTO EXISTENCE AFTER THE PASSING OF THE ACT AN D ESTABLISH ANY NEW INDUSTRIAL UNDERTAKING, EXCEPT UN DER AND IN ACCORDANCE WITH A LICENCE ISSUED IN THAT BEH ALF BY THE CENTRAL GOVERNMENT. HOWEVER, IN CASE OF SMAL L SCALE INDUSTRIAL UNDERTAKING, EXEMPTION AND FAVOURA BLE BENEFITS ARE PROVIDED WHICH MEANS THOSE SMALL SCALE INDUSTRIAL UNDERTAKINGS WHICH FULFIL THE CONDITIONS OF BEING SMALL SCALE INDUSTRIAL ARE NOT TO BE REGULATE D AS PER THE PROVISIONS OF IDR ACT. IT IS IN THIS CONTEX T, SECTION 11B IS INSERTED IN THE STATUTE WHICH GIVES POWER TO THE CENTRAL GOVERNMENT TO SPECIFY THE REQUIREMENTS WHICH SHALL BE COMPLIED WITH BY SMALL SCALE INDUSTRIAL UNDERTAKINGS. OMITTING THOSE PORTI ONS OF SECTION 11B, WHICH ARE NOT RELEVANT FOR OUR PURPOSES, REST OF THE SECTION IS EXTRACTED BELOW : '11B. POWER OF CENTRAL GOVERNMENT TO SPECIFY THE RE QUIREMENTS WHICH SHALL BE COMPLIED WITH BY THE SMALL SCALE IND USTRIAL UNDERTAKINGS. 1.THE CENTRAL GOVERNMENT MAY, WITH A VIEW TO ASCERT AINING WHICH ANCILLARY AND SMALL SCALE INDUSTRIAL UNDERTAKINGS N EED SUPPORTIVE MEASURES, EXEMPTIONS OR OTHER FAVOURABLE TREATMENT UNDER THIS ACT TO ENABLE THEM TO MAINTAIN THEIR VIABILITY AND STRENGT H SO AS TO BE EFFECTIVE IN : ( A )PROMOTING IN A HARMONIOUS MANNER THE INDUSTRIAL EC ONOMY OF THE COUNTRY AND EASING THE PROBLEM OF UNEMPLOYMENT, AND ( B )SECURING THAT THE OWNERSHIP AND CONTROL OF THE MAT ERIAL RESOURCES OF THE COMMUNITY ARE SO DISTRIBUTED AS BEST TO SUBS ERVE THE COMMON GOODS,SPECIFY, HAVING REGARD TO THE FACTORS MENTION ED IN SUB-SECTION (2), BY NOTIFIED ORDER, THE REQUIREMENTS WHICH SHAL L BE COMPLIED WITH BY AN INDUSTRIAL UNDERTAKING TO ENABLE IT TO BE REG ARDED, FOR THE PURPOSES OF THIS ACT, AS AN ANCILLARY, OR A SMALL S CALE INDUSTRIAL UNDERTAKING AND DIFFERENT REQUIREMENTS MAY BE SO SP ECIFIED FOR - - ITA 1959 TO 1961/14 14 DIFFERENT PURPOSES OR WITH RESPECT TO INDUSTRIAL UN DERTAKINGS ENGAGED IN THE MANUFACTURE OR PRODUCTION OF DIFFERENT ARTIC LES : PROVIDED THAT NO INDUSTRIAL UNDERTAKING SHALL BE REGARDED AS AN ANCILLARY INDUSTRIAL UNDERTAKING UNLESS IT IS, OR I S PROPOSED TO BE, ENGAGED IN: ( I )THE MANUFACTURE OF PARTS, COMPONENTS, SUB-ASSEMBLI ES, TOOLING OR INTERMEDIATES; OR ( II )RENDERING OF SERVICES, OR SUPPLYING OR RENDERING, NOT MORE THAN FIFTY PER CENT OF ITS PRODUCTION OR ITS TOTAL SERVI CES, AS THE CASE MAY BE, TO OTHER UNITS FOR PRODUCTION OF OTHER ARTICLES . 2.THE FACTORS REFERRED TO IN SUB-SECTION (1) ARE TH E FOLLOWING, NAMELY : ( A )THE INVESTMENT BY THE INDUSTRIAL UNDERTAKING IN : ( I )PLANT AND MACHINERY, OR ( II )LAND, BUILDINGS, PLANT AND MACHINERY; ( B )THE NATURE OF OWNERSHIP OF THE INDUSTRIAL UNDERTAK ING; ( C )THE SMALLNESS OF THE NUMBER OF WORKERS EMPLOYED IN THE INDUSTRIAL UNDERTAKING; ( D )THE NATURE, COST AND QUALITY OF THE PRODUCT OF THE INDUSTRIAL UNDERTAKING; ( E )FOREIGN EXCHANGE, IF ANY, REQUIRED FOR THE IMPORT OF ANY PLANT OR MACHINERY BY THE INDUSTRIAL UNDERTAKING; AND ( F )SUCH OTHER RELEVANT FACTORS AS MAY BE PRESCRIBED.' 10. SECTION 29B OF THE IDR ACT GIVES POWER TO THE CENTR AL GOVERNMENT TO EXEMPT, INTER ALIA, SUCH SMALL SCALE INDUSTRIAL UNDERTAKINGS FROM THE PROVISIONS OF IDR ACT. 11. AS IS CLEAR FROM THE READING OF SECTION 11B OF THE IDR ACT, IT IS FOR THE CENTRAL GOVERNMENT TO SPECIFY THE REQUIR EMENTS WHICH SHALL BE COMPLIED WITH BY THE INDUSTRIAL UNDERTAKIN G TO ENABLE IT TO BE REGARDED FOR THE PURPOSE OF THE SAID ACT AS S MALL SCALE INDUSTRIAL UNDERTAKING. APPROPRIATE EXERCISE IN THI S BEHALF HAS BEEN CARRIED OUT BY THE CENTRAL GOVERNMENT BY ISSUI NG NOTIFICATION DATED 10-12-1997. OPERATIVE PORTION OF THE SAID NOTIFICATION LAYS DOWN THE FOLLOWING CONDITIONS TO BE FULFILLED BY THE INDUSTRIAL UNDERTAKINGS BEFORE IT COULD BE REGA RDED AS A SMALL SCALE OR ANCILLARY INDUSTRIAL UNDERTAKINGS: - - ITA 1959 TO 1961/14 15 'NOW, THEREFORE, IN EXERCISE OF THE POWERS CONFERRE D BY SUB- SECTION(1) OF SECTION 11B AND SUB-SECTION (1) OF SE CTION 29B OF THE SAID ACT,AND IN SUPERSESSION OF THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE MINISTRY OF INDUSTRY (DEPARTMENT OF IN DUSTRIAL DEVELOPMENT) NUMBER S.O.232(E), DATED THE 2ND APRIL , 1991, THE CENTRAL GOVERNMENT HEREBY SPECIFIES THE FOLLOWING F ACTORS ON THE BASIS OF WHICH AN INDUSTRIAL UNDERTAKING SHALL BE R EGARDED AS A SMALL SCALE OR AS AN ANCILLARY INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF THE SAID ACT : 1. SMALL SCALE INDUSTRIAL UNDERTAKING.AN INDUSTRIA LUNDERTAKING IN WHICH THE INVESTMENT IN FIXED ASSETS IN PLANT AN D MACHINERY, WHETHER HELD ON OWNERSHIP TERMS OF ON LEASE OR ON H IRE PURCHASE, DOES NOT EXCEED RUPEES THREE CRORES; 2. ANCILLARY INDUSTRIAL UNDERTAKING.AN INDUSTRIAL UNDERTAKING WHICH IS ENGAGED OR IS PROPOSED TO BE ENGAGED IN TH E MANUFACTURING OR PRODUCTION OF PARTS COMPONENTS, SUBASSEMBLIES, TOOLING OR INTERMEDIATES, OR THE REN DERING OF SERVICES, AND UNDERTAKING SUPPLIES OR PROPOSES OR S UPPLY OR RENDERS NOT MORE THAN FIFTY PER CENT OF ITS PRODUCT ION OR SERVICES, AS THE CASE MAY BE, TO ONE OR MORE OTHER INDUSTRIAL UNDERTAKINGS AND WHOSE INVESTMENT IN FIXED ASSETS I N PLANT AND MACHINERY, WHETHER HELD ON OWNERSHIP TERMS OR ON LE ASE OR ON HIRE PURCHASE, DOES NOT EXCEED RUPEES THREE CRORES. ' 12. AT THE END OF THIS NOTIFICATION, IT IS PROVIDED THA T EVERY INDUSTRIAL UNDERTAKING WHICH HAS BEEN ISSUED A CERT IFICATE OF REGISTRATION UNDER SECTION 10 OF THE SAID ACT OR A LICENSE UNDER SECTIONS 11, 11A AND 13 OF THE IDR ACT BY THE CENTR AL GOVERNMENT AND ARE COVERED BY THE PROVISIONS OF PAR AGRAPHS (1) AND (2) ABOVE RELATING TO THE ANCILLARY OR SMAL L SCALE INDUSTRIAL UNDERTAKING, MAY BE REGISTERED AT THE DI SCRETION OF THE OWNER AS SUCH WITHIN A PERIOD OF 180 DAYS FROM THE DATE OF PUBLICATION OF THIS NOTIFICATION. TWO THINGS FOLLOW FROM THE READING OF THE AFORESAID NOTIFICATION : ( A )TO BE REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTA KING - SUCH AN UNDERTAKING SHOULD BE GIVEN WHICH HAS INVESTED I N FIXED ASSETS IN PLANT AND MACHINERY EITHER ON OWNERSHIP T ERMS OF ON LEASE OR ON HIRE PURCHASE. ( B )WORTH OF SAID ASSET DOES NOT EXCEED RS. 3 CRORES. THE PRESCRIPTION OF RS. 3 CRORES WAS REDUCED TO RS. 1 C RORE VIDE AMENDMENT NOTIFICATION, DATED 4-12-1995. - - ITA 1959 TO 1961/14 16 13. IT IS NOT IN DISPUTE THAT THE APPELLANT-ASSESSEE FU LFILS THESE REQUIREMENTS. HOWEVER, AS MENTIONED ABOVE, BENEFIT IS DENIED ONLY ON THE GROUND THAT IT IS NOT REGISTERED UNDER THE PROVISIONS OF IDR ACT. WE ARE OF THE CONSIDERED OPINION THAT T HE REGISTRATION UNDER THE IDR ACT WILL BE OF NO CONSEQ UENCE FOR AVAILING THE BENEFIT UNDER SECTION 80-IB OF THE INC OME-TAX ACT. CLAUSE ( G ) OF SUB-SECTION (14) OF SECTION 80-IB OF THE INCOM E- TAX ACT ONLY MANDATES THAT SUCH AN INDUSTRIAL UNDER TAKING SHOULD BE REGARDED AS SMALL SCALE INDUSTRIAL UNDERT AKING UNDER SECTION 11B OF THE IDR ACT. AS PER SECTION 11B OF T HE IDR ACT, IT IS FOR THE CENTRAL GOVERNMENT TO LAY DOWN THE CONDI TIONS WHICH ARE REQUIRED TO BE FULFILLED AS REGARDS SMALL SCALE INDUSTRIES. IN THE AFORESAID NOTIFICATION, THE CONDITIONS WHICH AR E MENTIONED FOR BEING REGARDED AS SMALL SCALE INDUSTRIES ARE TH E OWNERSHIP OF PLANT AND MACHINERY AND VALUE THEREOF. REGISTRAT ION OF SUCH AN UNDERTAKING UNDER THE IDR ACT IS NOT A CONDITION FOR TREATING THE SAME AS SMALL SCALE INDUSTRIAL UNDERTAKING. THA T REGISTRATION IS PRESCRIBED FOR ALTOGETHER DIFFERENT PURPOSE, VIZ., TO AVAIL THE BENEFIT UNDER THE IDR ACT EITHER OF SECTION 11B OR SECTION 29B. THUS, INSOFAR AS EXTENDING THE PROVISION OF SECTION 80-IB OF THE INCOME-TAX ACT IS CONCERNED, THE ONLY ASPECT WHICH IS RELEVANT AND IS TO BE CONSIDERED IS AS TO WHETHER THE CONDIT IONS STIPULATED IN THE NOTIFICATION ISSUED UNDER SECTION 11B OF THE IDR ACT FOR REGARDING THE SAME AS SMALL SCALE INDUSTRIA L ACT ARE FULFILLED OR NOT. IT WOULD BE OF INTEREST TO NOTE T HAT SECTION 80- IB(14)( G ) USED THE EXPRESSION REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING UNDER SECTION 11B OF THE ID R ACT. LIKEWISE, EVEN THE NOTIFICATION DATED 10-12-1997 WH ILE LAYING DOWN THE CONDITIONS FOR CLAIMING THE BENEFIT OF SMA LL SCALE INDUSTRIAL UNDERTAKING USED THE SAME EXPRESSION WHE N IT STATES FOLLOWING FACTORS ON THE BASIS OF WHICH AN INDUSTR IAL UNDERTAKING IS REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING. 14. WHEN WE LOOK INTO THE MANDATORY FORM PRESCRIBED FOR AVAILING THIS BENEFIT, VIZ., FORM 10CCB, SUCH A FORM HAS TO BE FILLED AND SUBMITTED BY THE ASSESSEE TO THE ASSESSI NG OFFICER FOR CLAIMING THE BENEFIT. THE DETAILS WHICH ARE REQ UIRED TO BE GIVEN AS PER THIS FORM INCLUDE THE INFORMATION WHIC H IS TO BE SUPPLIED TO ASCERTAIN, WHETHER SUCH INDUSTRIAL UNDE RTAKING WOULD BE REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING F OR THE PURPOSE OF SECTION 11B OF THE IDR ACT IN AS MUCH TH E ASSESSEE IS CALLED UPON TO GIVE THE VALUE OF MACHINERY OR PL ANT, NUMBER OF WORKERS EMPLOYED IN THE MANUFACTURING PROCESS, TOTA L SALES OF THE UNDERTAKING AND ALSO PROFITS AND GAINS DERIVED BY THE UNDERTAKING FROM THE ELIGIBLE BUSINESS AND DEDUCTIO N UNDER SECTION 80-IB OF THE INCOME-TAX ACT. - - ITA 1959 TO 1961/14 17 15. THE PURPOSE FOR INDUSTRIAL UNDERTAKING TO BE REGARD ED AS SMALL SCALE INDUSTRIAL UNDERTAKING AS PER SECTION 1 1B OF THE IDR ACT IS NOT FAR TO SEEK. IT WAS TO MAINTAIN PARITY I N PRESCRIBING THE CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED BY TH E INDUSTRIAL UNDERTAKING TO QUALIFY ITSELF AS SMALL SCALE INDUST RIAL UNDERTAKING. SINCE THE CENTRAL GOVERNMENT HAS TO PR ESCRIBE SUCH CONDITIONS BY NOTIFICATION IN VIEW OF PROVISIO NS OF SECTION 11B OF THE IDR ACT, THE LEGISLATURE IN ITS WISDOM D EEMED IT FIT TO INCORPORATE THOSE CONDITIONS FOR THE PURPOSE OF INC OME-TAX ACT AS WELL. THIS ISSUE CAME UP FOR CONSIDERATION BEFOR E THE GUJARAT HIGH COURT, ALBEIT, IN THE CONTEXT OF DEPRECIATION WHICH IS TO BE ALLOWED TO AN ASSESSEE UNDER SECTION 32 OF THE INCO ME-TAX ACT. WE MAY POINT OUT THAT EXPLANATION (3) OF SECTION 32 (1) OF THE INCOME-TAX ACT ALSO GIVES SPECIAL BENEFIT TO THE SM ALL SCALE INDUSTRIAL UNDERTAKING AND READS AS UNDER : '(3)AN INDUSTRIAL UNDERTAKING SHALL BE DEEMED TO BE A SMALL- SCALE INDUSTRIAL UNDERTAKING, IF THE AGGREGATE VALU E OF THE MACHINERY AND PLANT INSTALLED, AS ON THE LAST DAY O F THE PREVIOUS YEAR, FOR THE PURPOSE OF THE BUSINESS OF THE UNDERT AKING DOES NOT EXCEED SEVEN HUNDRED AND FIFTY THOUSAND RUPEES; AND FOR THIS PURPOSE THE VALUE OF ANY MACHINERY OR PLANT SH ALL BE, (A)IN THE CASE OF ANY MACHINERY OR PLANT OWNED BY T HE ASSESSEE, THE ACTUAL POST THEREOF TO THE ASSESSEE; AND (B)IN THE CASE OF ANY MACHINERY OR PLANT HIRED BY T HE ASSESSEE, THE ACTUAL COST THEREOF AS IN THE CASE OF THE OWNER OF SUCH MACHINERY OR PLANT.' 16. THE QUESTION WHICH WAS POSED FOR CONSIDERATION BEFO RE THE GUJARAT HIGH COURT IN THE CASE OF CIT V. J.H. KHARA WALA [1994] 208 ITR 691 WAS AS TO WHETHER IT WAS INCUMBENT UPON A SMALL SCALE INDUSTRIAL UNDERTAKING TO HAVE REGISTRATION U NDER THE IDR ACT TO CLAIM THE BENEFIT OF DEPRECIATION UNDER SECT ION 32 OF THE INCOME-TAX ACT. REPLYING IN THE NEGATIVE AND HOLDIN G THAT THERE WAS NO SUCH REQUIREMENT OF SUCH REGISTRATION TO AVA IL THE SAID BENEFIT, THE GUJARAT HIGH COURT HELD AS UNDER : 'SECTION 32 PROVIDES FOR DEPRECIATION. SUB-SECTION (1) PROVIDES FOR DEPRECIATION IN RESPECT OF BUILDING, MACHINERY, PLANT OR FURNITURE OWNED BY THE ASSESSEE AND USED FOR THE PU RPOSES OF HIS BUSINESS OR PROFESSION. CLAUSE (VI) OF SUBSECTI ON (1) PROVIDED FOR ONE TIME DEPRECIATION OF 20 PER CENT O N THE ACTUAL COST OF SHIP, AIRCRAFT, MACHINERY OR PLANT. IT GAVE AN OPTION TO ASSESSEE TO CLAIM DEPRECIATION EITHER IN THE YEAR I N WHICH THE - - ITA 1959 TO 1961/14 18 MACHINERY OR PLANT WAS INSTALLED OR THE YEAR IN WHI CH THE ASSESSEE HAD PUT IT TO USE. BUT THIS SPECIAL DEPREC IATION WAS CONFINED TO SMALL SCALE INDUSTRIAL UNDERTAKINGS. TH US, IT WAS A SPECIAL PROVISION MADE FOR THE BENEFIT OF SMALL-SCA LE INDUSTRIAL UNDERTAKINGS. BY THE EXPLANATION, 'NEW SHIP' AND 'N EW MACHINERY OR PLANT' WERE DEFINED. THE LEGISLATURE A LSO PROVIDED BY THAT EXPLANATION AS TO WHICH UNDERTAKING WAS TO BE REGARDED AS A SMALL-SCALE INDUSTRIAL UNDERTAKING. BY THE SAI D EXPLANATION, IT ALSO PROVIDED HOW THE VALUE OF THE MACHINERY OR PLANT WAS TO BE DETERMINED. THUS, IT CANNOT BE GAINSAID THAT THE LEGISLATURE THOUGHT IT FIT TO MAKE A SPECIAL PROVISION IN THIS BEHALF. IF REGISTRATION OF AN INDUSTRIAL UNDERTAKING WITH THE RESPECTIVE STATE DEPARTMENT WAS TO BE REGARDED AS SUFFICIENT F OR MAKING SUCH UNDERTAKING A SMALL-SCALE INDUSTRIAL UNDERTAKI NG, THEN THE LEGISLATURE WOULD NOT HAVE MADE THIS SPECIAL PROVIS ION. MOREOVER, THAT WOULD HAVE RESULTED IN DISCRIMINATIO N INASMUCH AS THE TEST LAID DOWN FOR TREATING AN INDUSTRIAL UN DERTAKING AS A SMALL-SCALE INDUSTRIAL UNDERTAKING MIGHT HAVE VARIE D FROM STATE TO STATE. THUS, THE LEGISLATURE, IN ORDER TO SEE TH AT THERE WAS UNIFORMITY, MADE THIS SPECIAL PROVISION AND FOR THA T REASON, IT WILL HAVE TO BE HELD THAT FOR THE PURPOSE OF DETERMINING WHETHER AN INDUSTRIAL UNDERTAKING IS A SMALL-SCALE UNDERTAKING OR NOT, RESORT HAD TO BE TAKEN TO THE EXPLANATION TO SECTION 32(1) (VI) AND NOT TO ANY OTHER PROVISION OF LAW WHEREBY AN INDUSTRIAL UNDERTAKING WAS TO BE REGARDED AS A SMALL-SCALE INDUSTRIAL UNDE RTAKING FOR OTHER PURPOSES. THE TRIBUNAL WAS, THEREFORE, IN ERR OR IN PROCEEDING ON THE BASIS THAT SINCE THE ASSESSEE WAS REGISTERED AS A SMALL-SCALE INDUSTRIAL UNDERTAKING WITH THE SM ALL-SCALE INDUSTRIES DEPARTMENT, THE BENEFIT OF SECTION 32(1) (VI) WAS AVAILABLE TO IT IRRESPECTIVE OF DIFFERENT PROVISION MADE BY THAT EXPLANATION IN THAT BEHALF.' 17. THE UPSHOT OF THE AFORESAID DISCUSSION IS TO ANSWER THIS QUESTION OF LAW IN FAVOUR OF THE ASSESSEE, AS OTHER WISE, THERE IS NO DISPUTE THAT THE ASSESSEE FULFILS ELIGIBILITY CO NDITIONS PRESCRIBED UNDER SECTION 80-IB OF THE INCOME-TAX AC T AND IS TO BE REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING. WE DIRECT THE ASSESSING OFFICER TO GIVE THE BENEFIT OF DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 80-IB OF THE INCOME-TAX ACT FOR THE ASSESSMENT YEAR IN QUESTION, I.E., 2004- 05. 18. THE OTHER ARGUMENT OF THE A.R OF THE ASSESSEE W AS THAT THE ASSESSEE HAS BEEN ALLOWED DEDUCTION U/S 80 IB IN EARLIER YEARS AND AS THIS DEDUCTION HAS NOT BEEN WITHDRAWN, THE DEDUCTION ALLOWED U/S 80IB FOR THE Y EAR UNDER CONSIDERATION CANNOT BE WITHDRAWN. FOR THE AB OVE - - ITA 1959 TO 1961/14 19 SUBMISSION, THE ASSESSEE PLACED RELIANCE ON CERTAIN DECISION. THE FIRST BEING THE DECISION OF HON'BLE B OMBAY HIGH COURT IN THE CASE OF CIT VS PAUL BROTHERS(SUPR A) WHICH WAS FOLLOWED AGAIN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS WESTERN OUTDOOR INTERAC TIVE PVT. LTD(SUPRA). THE HON'BLE BOMBAY HIGH COURT AT P AGE 6 IN PARA 6 OF ITS ORDER HAS HELD AS UNDER: 6. WE HAVE CONSIDERED THE SUBMISSIONS. WE FIND THA T THE SUBMISSIONS MADE BY MR. PARDIWALLA ON THE BASIS OF THE DECISION OF TH I S COURT IN THE MATTER OF PAUL BROTHERS (SUPRA) AND DIRECTOR OF INFORMATION PVT. LTD. (SUPRA) MERITS ACCEPTANCE. THEREFORE, I N THIS CASE, IT IS NOT NECESSARY FOR US TO DECIDE WHETHER SEEPZ UNIT WAS SET UP/FORMED BY SPLI TTING UP OF THE FIRST UNIT . IN BOTH THE ABOVE DECISIONS , THIS COURT HAS HELD THAT WHERE A BENEFIT OF DEDUCTION IS AVAILABLE FOR A PARTICULAR NUMBER OF YEARS ON SATISFACTION OF CERTAIN CONDITIO NS UNDER THE PROVISIONS OF THE INCOME TAX ACT, THEN UNLESS RELIE F GRANTED FOR THE FIRST ASSESSMENT YEAR IN WHICH THE CLAIM WAS MA DE AND ACCEPTED IS WITHDRAWN OR SET ASIDE, THE INCOME TAX OFFICER CANNOT WITHDRAW THE RELIEF FOR SUBSEQUENT YEARS. MO RE PARTICULARLY SO , WHEN THE REVENUE HAS NOT EVEN SUGGESTED THAT THERE WAS ANY CHANGE IN THE FACTS WARRANTING A D I FFERENT VIEW FOR SUBSEQUENT YEARS. IN THIS CASE FOR THE ASSESSMENT YEARS 2000- 01 AND 2001 - 02 THE RELIEF GRANTED U N DER SECTION 10A OF THE ACT TO SEEPZ UNIT HAS NOT BEEN WITHDRAWN . THERE IS NO CHANGE IN THE FACTS WHICH WERE IN EXISTENCE DURING THE ASSESS MENT YEAR 2000-01 VIS A VIS THE CLAIM TO EXEMPTION UNDER SECT ION 10A OF THE ACT . THEREFORE, IT IS NOT OPEN TO THE DEPARTMENT TO DENY THE BENEFIT OF SECTION 10A FOR SUBSEQUENT ASSESSMENT YE ARS I. E. ASSESSMENT YEARS 2002-03 AND 2003-04 AND 2004-05. B ESIDES THAT, ON CONSIDERATION OF THE FACTS INVOLVED BOTH T HE COMMISSIONER OF INCOME TAX (APPEALS) AND THE TRIBUN AL HAVE RECORDED A FINDING OF FACT THAT THE SEEPZ UNIT IS N OT FORMED BY SPLITTING UP OF THE FIRST UNIT . 19. THUS, IT IS OBSERVED THAT THE HON'BLE BOMBAY HI GH COURT HAS RECOGNIZED THE FACT THAT A CHANGE IN FACT WARRA NTS DIFFERENT VIEW IN THE SUBSEQUENT YEAR CANNOT BE RULED OUT. HO WEVER, THE CONDITIONS WHICH ARE REGARDED TO BE SATISFIED IN TH E FIRST YEAR FOR BEING ELIGIBLE FOR DEDUCTION IN THAT YEAR AND SUBSE QUENT YEAR IF SATISFIED IN THAT YEAR AND DEDUCTION WAS ALLOWED TH EN UNLESS THAT DEDUCTION WAS WITHDRAWN IT WAS NOT OPEN FOR TH E REVENUE TO TAKE A DIFFERENT VIEW ABOUT THE SATISFACTION OF THOSE CONDITIONS IN THE SUBSEQUENT YEARS. - - ITA 1959 TO 1961/14 20 20. COMING TO THE FACTS OF THE PRESENT CASE, WE FIN D THAT THE CONDITIONS REGARDING ASSESSEES INDUSTRIAL UNDERTAK ING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING IS OF FACT RELEV ANT TO EACH YEAR AND THE SAME CAN CHANGE ON MAKING OF FURTHER INVEST MENT IN PLANT AND MACHINERY IN SUBSEQUENT YEAR BY THE ASSES SEE OR BY SALE OF PLANT AND MACHINERY USED IN THE UNDERTAKING BY THE ASSESSEE IN THE SUBSEQUENT YEAR. THEREFORE, MERELY BECAUSE OF ALLOWANCE OF DEDUCTION IN AN EARLIER YEAR IN WHICH THE ASSESSEE SATISFIED THE CONDITIONS OF BEING A SMALL SCALE IND USTRIAL UNDERTAKING, IT CANNOT BE HELD THAT THE ASSESSEE MU ST BE ALLOWED DEDUCTION IN SUBSEQUENT ELIGIBLE YEARS IRRE SPECTIVE OF THE FACT WHETHER THE ASSESSEE REMAINS A SMALL SCALE INDUSTRIAL UNDERTAKING IN THE SUBSEQUENT YEARS OR NOT WHEN THE CONDITION FOR ALLOWABILITY OF DEDUCTION IS THAT THE ASSESSEE SHOULD BE A SMALL SCALE INDUSTRIAL UNDERTAKING. THEREFORE, IN O UR CONSIDERED VIEW, THE ABOVE DECISIONS OF THE HON'BLE BOMBAY HIG H COURT ARE NOT APPLICABLE FOR DECIDING THE ISSUE UNDER CON SIDERATION. 21. THEREAFTER, THE ASSESSEE RELIED UPON THE DECISI ON OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TATA COM MUNICATIONS INTERNET SERVICES LTD. VS ITO (SUPRA) WHEREIN THE I SSUE RELATED TO THE FORMATION OF THE INDUSTRIAL UNDERTAKING. IN RESPECT OF THIS ISSUE, THE TRIBUNAL HELD THAT BAR PROVIDED U/S 80IA (3) IS IN RELATION TO THE FORMATION OF UNDERTAKING AND ONCE T HE FORMATION IS COMPLETE THE DEVELOPMENT OF UNDERTAKING CANNOT B E PUT UNDER RESTRAIN OF SECTION 80IA(3); IF FOR ASSESSMEN T YEAR 2004- 05, THE ASSESSEE HAS BEEN GRANTED THE CLAIM OF DEDU CTION U/S 80IA(4)(II) THE SAME CANNOT BE DENIED FOR THE SUBSE QUENT ASSESSMENT YEAR BY APPLYING THE RESTRAINTS OF SECTI ON 80IA(3). 22. IN CONTRAST TO THE ABOVE, IN THE INSTANT CASE, THE FORMATION OF THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE IS NOT A N ISSUE. FURTHER, IT IS NOT THE PROVISIONS OF THE LAW THAT F OR BEING ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT, THE ASSESSEES I NDUSTRIAL UNDERTAKING SHOULD BE SMALL SCALE INDUSTRIAL UNDERT AKING ONLY IN THE YEAR OF FORMATION AND AFTER HAVING BEEN FORMED IN ONE YEAR AND IN THE SUBSEQUENT YEAR EVEN THE INDUSTRIAL UNDE RTAKING DOES NOT REMAIN SMALL SCALE INDUSTRIAL UNDERTAKING THEN ALSO THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT. IN OUR CONSIDERED VIEW, FOR BEING ELIGIBLE FOR DEDUCTION U /S 80IB, IN THE CONTEXT OF THE PRESENT CASE, THE ASSESSEES INDUSTR IAL UNDERTAKING MUST BE A SMALL SCALE INDUSTRIAL UNDERT AKING IN THE YEAR IN WHICH DEDUCTION IS ELIGIBLE. THEREFORE, THE ABOVE QUOTED DECISION OF THE DELHI BENCH OF THE TRIBUNAL IS NOT APPLICABLE IN THE INSTANT CASE. (EMPHASIS SUPPLIED) - - ITA 1959 TO 1961/14 21 23. LASTLY, THE ASSESSEE RELIED UPON THE DECISION O F THE HON'BLE P&H HIGH COURT IN THE CASE OF CIT VS SOHANA WOOLLEN MILLS (SUPRA) WHEREIN IT WAS HELD THAT ME RE AUDIT OBJECTION, AND MERELY BECAUSE A DIFFERENT VIEW CAN BE TAKEN ARE NOT ENOUGH TO HOLD THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS OR PREJUDICIAL TO TH E INTEREST OF THE REVENUE. THUS, THE HON'BLE HIGH COURT HELD T HAT IF TWO VIEWS ARE POSSIBLE THEN MERELY TO TAKE A DIFFER ENT VIEW, THE PROVISIONS OF SECTION 263 CANNOT BE INVOKED BY THE CIT. 24. IN THE INSTANT CASE, WE DO NOT FIND ANY MATERIA L ON THE BASIS OF WHICH IT CAN BE HELD THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION U/S 80IB OF THE ACT IN AN YEAR IN WHI CH ITS INDUSTRIAL UNDERTAKING IS NOT A SMALL SCALE INDUSTR IAL UNDERTAKING. FURTHER, WE ALSO DO NOT FIND ANY MATER IAL ON RECORD ON THE BASIS OF WHICH IT CAN BE HELD THAT EV EN WHEN THE ASSESSEES INVESTMENT IN PLANT AND MACHINERY EX CEEDS THE VALUE OF THE AMOUNT OF ` 1 CRORE AT THE END OF THE PREVIOUS YEAR IT CAN BE REGARDED AS SMALL SCALE IND USTRIAL UNDERTAKING U/S 11B OF THE INDUSTRIES (DEVELOPMENT AND REGULATION) ACT, 1951. THUS, WE FIND THAT THE ABOVE DECISION RELIED UPON BY THE A.R OF THE ASSESSEE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. 25. LASTLY, THE A.R OF THE ASSESSEE ARGUED THAT THE ASSESSEES INVESTMENT IN PLANT AND MACHINERY AT THE LAST DAY OF THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEARS 2004-05 AND 2005-06 ALSO EXCEEDED ` 1 CRORE AND EVEN THEN THE ASSESSEE WAS ALLOWED DEDUCTION U/S 80IB OF THE ACT AND THEREFORE, EVEN IN THE YEAR UNDER CONSIDERA TION, THE SAME VIEW MUST BE ADOPTED. IN OUR CONSIDERED VI EW, THE ABOVE ARGUMENT CANNOT BE ACCEPTED. IN OUR CONSI DERED VIEW, THE ASSESSEE CAN BE ALLOWED DEDUCTION ON THE SATISFACTION OF CONDITIONS ENVISAGED IN THE LAW AND NOT MERELY BECAUSE IT WAS ERRONEOUSLY ALLOWED ANY DEDUC TION IN THE EARLIER YEARS. IT IS A SETTLED POSITION THAT RES JUDICATA IS NOT APPLICABLE IN ADMINISTRATION OF TAX LAWS. NO VESTED RIGHT CAN BE HELD TO BE CREATED IN FAVOUR OF THE AS SESSEE MERELY BECAUSE OF ALLOWANCE OF DEDUCTION IN EARLIER YEARS WHICH WAS NOT LEGALLY ENTITLED TO. - - ITA 1959 TO 1961/14 22 26. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY GOOD R EASON TO INTERFERE WITH THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT. THEREFORE, WE DISMISS THE GROUNDS OF APPEAL RA ISED BY THE ASSESSEE. 27. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. 4.3 FURTHER, WE FIND THAT IN THE CASE OF SAMRUDDHI INDUSTRIES LTD. V. JCIT IN ITA NO.1002/PN/2009 DATED 31.3.2011 , PUNE BENCH OF THE TRIBUNAL OBSERVED AS UNDER : 9. WE HAVE CAREFULLY EXAMINED THE RIVAL CONTENTION S AND FIND OURSELVES UNABLE TO ACQUIESCE TO THE PLEA OF THE AS SESSEE COMPANY. NO DOUBT, THE CONDITIONS PRESCRIBED IN SUB -SECTION (2) OF SECTION 80-IB ARE REQUIRED TO BE EXAMINED IN THE IN ITIAL ASSESSMENT YEAR, HOWEVER, THERE IS NOTHING IN THE PHRASEOLOGY OF SUB-SECTION (2) TO SUGGEST THAT THE CONDITION IN CLAUSE (III) T HEREOF HAS TO BE EXAMINED ONLY IN THE INITIAL ASSESSMENT YEAR. WE AR E IN AGREEMENT WITH THE POSITION OF THE APPELLANT THAT IN SO FAR A S CONDITIONS PRESCRIBED IN CLAUSES (I) AND (II) ARE CONCERNED, T HE SAME RELATE TO A POINT OF TIME WHICH CAN ONLY BE EXAMINED IN THE C OURSE OF THE INITIAL ASSESSMENT YEAR. CLAUSE (I) REQUIRES AN EX AMINATION AS TO WHETHER THE INDUSTRIAL UNDERTAKING IS FORMED BY SPL ITTING UP OR RECONSTRUCTION OF A BUSINESS ALREADY IN EXISTENCE. CLAUSE (II) RELATES TO EXAMINING WHETHER THE INDUSTRIAL UNDERTA KING IS FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR P LANT ALREADY USED IN BUSINESS. EVIDENTLY, THE CONDITIONS IN CLA USES (I) AND (II) CAN ONLY BE EXAMINED AT THE TIME OF FORMATION OF A UNIT, WHICH IS THE INITIAL YEAR. CLAUSE (III), WHICH IS UNDER CONS IDERATION, DOES NOT IMPLY ANY SUCH INTERPRETATION. IN OUR CONSIDERED OP INION, THE IMPORT OF THE CONDITION PRESCRIBED IN CLAUSE (III) IS THAT THE INDUSTRIAL UNDERTAKING OUGHT TO BE A SMALL SCALE UNDERTAKING I N THE YEAR OF CLAIM OF DEDUCTION, BE IT BE THE INITIAL YEAR OR AN Y OF THE SUBSEQUENT YEARS, SO LONG AS IT MANUFACTURES PRODUC TS LISTED IN THE ELEVENTH SCHEDULE. QUITE CLEARLY, IN THIS CASE ADMITTEDLY THE ASSESSEE IS MANUFACTURING ARTICLES OR THINGS STATED IN THE ELEVENTH SCHEDULE AND IT DOES NOT QUALITY TO BE A SMALL SCAL E INDUSTRIAL UNDERTAKING IN THE INSTANT YEAR AND, THUS, THE SAID CONDITION IS NOT FULFILLED. 10. MUCH HAS BEEN ARGUED BY THE APPELLANT TO THE EF FECT THAT THE CONDITIONS ARE TO BE VERIFIED ONLY IN THE INITIAL Y EAR AND SUCH - - ITA 1959 TO 1961/14 23 EXAMINATION IS NOT INTENDED BY THE LEGISLATURE TO B E CARRIED OUT IN THE SUBSEQUENT YEARS BY THE ASSESSING OFFICER. FOR THIS PROPOSITION, HEAVY RELIANCE HAS BEEN PLACED ON THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURA SHTRA CEMENT & CHEMICAL INDUSTRIES LTD (SUPRA). WE HAVE PERUSED THE SAID DECISION. IN THE CASE OF SAURASHTRA CEMENT & CHEMIC AL INDUSTRIES LTD. (SUPRA), THE FACTS WERE AS FOLLOWS. THE ASSESS EE WAS CARRYING ON BUSINESS OF MANUFACTURING CEMENT AND THE CAPACIT Y OF THE FIRST CEMENT PLANT WAS 600 TONS PER DAY. IN THE YEAR RELE VANT TO THE ASSESSMENT YEAR 1968-69, THE CAPACITY WAS EXPANDED AND IT WAS RAISED TO 1600 TONS PER DAY. THE ASSESSEE COMPANY T HEREFORE MADE A CLAIM FOR RELIEF UNDER SECTION 80J OF THE AC T WITH REFERENCE TO THE CAPITAL EMPLOYED IN THE EXPANSION OF THE PLA NT AND MACHINERY. THE ASSESSING OFFICER ALLOWED THE SAID C LAIM FOR THE ASSESSMENT YEAR 1968-69. HOWEVER, IN THE ASSESSMENT YEAR 1969-70 THE ASSESSING OFFICER DISALLOWED THE ASSESS EES CLAIM, AS IN HIS OPINION, THE EXPANSION OF CEMENT MANUFACTURI NG UNIT DID NOT AMOUNT TO SETTING UP A NEW INDUSTRIAL UNDERTAKING, INASMUCH AS THE ACTIVITIES OF THE EXPANDED PART OF THE UNIT AS WELL AS THOSE OF THE ORIGINAL UNITS WERE MUCH INTER-CONNECTED. THUS, HE DISALLOWED THE CLAIM ON THE GROUND THAT NO NEW UNIT CAN BE SAI D TO HAVE BEEN SET UP SEPARATE FROM THE EXISTING UNIT ON ACCOUNT O F MERE EXPANSION. THE APPELLATE COMMISSIONER, IN APPEAL, H ELD THAT IN THE ABSENCE OF THERE BEING ANY SPECIFIC PROVISION I N THE ACT THAT THE NEW UNIT SHOULD BE ALTOGETHER DISTINCT AND EVEN PHYSICALLY AT A DISTANCE FROM THE OLD UNIT, AND THAT, IF THE RELIEF WAS ADMISSIBLE FOR ASSESSMENT YEAR 1968-69, IN RESPECT OF THE EXPANDED UNIT OF THE ASSESSEE COMPANY, THAT RELIEF WOULD CONTINUE TO BE AVAILABLE TO THE ASSESSEE FOR THE SUBSEQUENT PERIOD OF FOUR YEAR S. THE TRIBUNAL ALSO UPHELD THE ORDER OF THE APPELLATE COMMISSIONER GRANTING RELIEF TO THE ASSESSEE SINCE IN THE OPINION OF THE TRIBUNAL UNLESS THE ASSESSMENT FOR THE ASSESSMENT YEAR 1968-69 WAS DISTURBED BY WITHDRAWAL OF THE RELIEF, THERE COULD BE NO SUBS TANCE OR JUSTIFICATION IN THE REVENUES ATTEMPT TO WITHDRAW THE CLAIM UNDER SECTION 80J OF THE ACT FOR THE SUBSEQUENT YEAR, I.E . ASSESSMENT YEAR 1969-70. THE HONBLE HIGH COURT HELD THAT IF T HE RELIEF OF TAX HOLIDAY WAS GRANTED TO THE ASSESSEE FOR THE ASSESSM ENT YEAR 1968-69, THE ASSESSEE WAS ENTITLED TO CONTINUANCE O F THAT RELIEF FOR THE SUBSEQUENT FOUR YEARS AND THE ASSESSING OFFICER WOULD NOT BE JUSTIFIED IN REFUSING TO CONTINUE THE ALLOWANCE FOR THE ASSESSMENT YEAR 1969-70, WITHOUT DISTURBING THE RELIEF FOR THE INITIAL YEAR. IN THE WORDS OF THE HONBLE HIGH COURT, --NO DOUBT, THE R ELIEF OF TAX HOLIDAY UNDER SECTION 80J CAN BE WITHHELD OR DISCON TINUED PROVIDED THE RELIEF GRANTED IN THE INITIAL YEAR OF ASSESSMENT IS DISTURBED OR CHANGED ON VALID GROUNDS. BUT WITHOUT DISTURBING THE RELIEF GRANTED IN THE INITIAL YEAR, THE ITO CANNOT EXAMINE THE - - ITA 1959 TO 1961/14 24 QUESTION AGAIN AND DECIDE TO WITHHOLD OR WITHDRAW T HE RELIEF WHICH HAS BEEN ALREADY ONCE GRANTED. 11. AS THE AFORESAID DISCUSSION SHOWS, THE MATRIX O F THE DISPUTE IN SAURASHTRA CEMENT & CHEMICALS LTD. (SUPRA) STOOD ON AN ALTOGETHER DIFFERENT FOOTING. THE ASSESSMENT YEAR I N DISPUTE WAS 1969-70, WHICH WAS THE SECOND YEAR OF CLAIM OF DEDU CTION UNDER SECTION 80J OF THE ACT. IN THE INITIAL ASSESSMENT Y EAR OF 1968-69 THE CLAIM WAS ALLOWED BY TREATING THE EXPANSION IN CAPACITY AS FORMATION OF A NEW INDUSTRIAL UNDERTAKING. WHETHER EXPANSION IN CAPACITY AMOUNTED TO FORMATION OF A NEW INDUSTRIAL UNDERTAKING WAS A CONDITION REQUIRED TO BE EXAMINED ONLY IN THE INITIAL YEAR, AND WHICH WAS DONE IN THE COURSE OF ASSESSMENT FOR THE ASSESSMENT YEAR 1968-69, BEING THE INITIAL YEAR. IN THE ASSESSMENT YEAR 1969-70, THE ASSESSING OFFICER SOUG HT TO DENY THE DEDUCTION ON THE GROUND THAT EXPANSION OF MANUF ACTURING CAPACITY DID NOT AMOUNT TO SETTING UP OF A NEW INDU STRIAL UNDERTAKING. IN OTHER WORDS, A CONDITION WHICH WAS RELEVANT ONLY AT THE TIME OF FORMATION OF UNIT, WAS EXAMINED AND ACC EPTED IN THE ASSESSMENT YEAR 1968-69 AND THE SAME WAS SOUGHT TO BE REVIEWED BY THE ASSESSING OFFICER IN THE COURSE OF THE ASSESSMENT FOR THE SUBSEQUENT ASSESSMENT YEAR 1969-70 AND ARRI VE AT A DIFFERENT CONCLUSION. THIS ACTION WAS NEGATED BY TH E HONBLE HIGH COURT WITH AFORESAID OBSERVATIONS THAT WITHOUT DIST URBING THE RELIEF GRANTED IN THE INITIAL YEAR, THE REVENUE CANNOT EXA MINE THE QUESTION AGAIN TO DENY THE RELIEF IN SUBSEQUENT YE AR. IN OUR CONSIDERED OPINION, IN THE INSTANT CASE MATRIX STAN DS DIFFERENTLY, INASMUCH IN THE INSTANT CASE THE ASSESSING OFFICER IS NOT ATTEMPTING TO REVIEW A POSITION ACCEPTED WITH REFER ENCE TO THE INITIAL YEAR. IN FACT, IN THE PRESENT CASE ON ACCOU NT OF CHANGED CONDITION NAMELY THE INDUSTRIAL UNDERTAKING OF THE ASSESSEE LOOSING THE STATUS OF A SMALL SCALE INDUSTRIAL UNDE RTAKING UNDER THE IDR ACT, THE ASSESSING OFFICER SEEKS TO HOLD THAT T HE SAID CONDITION IS NOT SATISFIED DURING THE YEAR UNDER CO NSIDERATION. THE SAID ACTION CANNOT BE INTERPRETED TO MEAN THAT THER E IS AN ATTEMPT BY THE REVENUE TO REVIEW AN ACCEPTED POSITION OF TH E INITIAL ASSESSMENT YEAR WHICH WAS THE CASE BEFORE THE HONB LE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMI CAL INDUSTRIES LTD. (SUPRA). IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. (SUPRA) ONCE HAVING ACCEPT ED IN THE INITIAL ASSESSMENT YEAR THAT THE EXPANSION IN CAPACITY AMOU NTED TO SETTING UP OF A NEW UNIT, THE SAME WAS SOUGHT TO BE REVIEWED IN THE SUBSEQUENT YEAR BY HOLDING DIFFERENTLY. IN FACT , THE HONBLE GUJARAT HIGH COURT ITSELF ENVISAGED THAT THE RELIEF OF TAX HOLIDAY UNDER SECTION 80J CAN BE WITHHELD, PROVIDED THE REL IEF GRANTED IN THE INITIAL YEAR IS DISTURBED OR CHANGED ON VALID G ROUND. IN THE - - ITA 1959 TO 1961/14 25 PRESENT CASE, IT IS QUITE CLEAR THAT ON ACCOUNT OF EVENTS SUBSEQUENT TO THE INITIAL ASSESSMENT YEAR THE ASSES SEE FAILS TO FULFIL THE IMPUGNED CONDITION AND, THEREFORE, IT IS INELIGIBLE FOR THE CLAIM OF DEDUCTION IN THIS YEAR. IN OUR CONSIDERED OPINION, THE RATIO OF THE JUDGMENT OF THE HONBLE GUJARAT HIGH COURT I N THE CASE OF SAURASHTRA CEMENT & CHEMICALS LTD. (SUPRA) DOES NOT HELP THE ASSESSEE IN THE PRESENT CASE. 12. THE NEXT DECISION RELIED UPON BY THE APPELLANT IS IN THE CASE OF PAUL BROTHERS (SUPRA) WHEREIN THE FACTS WERE AS FOL LOWS. IN THE CASE OF PAUL BROTHERS (SUPRA), THE ISSUE RELATED TO JURISDICTION ASSUMED BY THE COMMISSIONER UNDER SECTION 263 OF TH E ACT FOR ASSESSMENT YEARS 1981-82 AND 1982-83 WHICH WAS QUAS HED BY THE TRIBUNAL, WHICH WAS APPEALED BY THE REVENUE BEF ORE THE HONBLE HIGH COURT. THE FACTS WERE THAT THE ASSESSE E FIRM HAD BRANCHES IN BACKWARD AREAS CARRYING ON THE BUSINESS OF CONSTRUCTION OF BUILDINGS, TRANSPORTATION AND MANUF ACTURE AND SUPPLY OF BRICKS. FOR THE USE IN CONSTRUCTION ACTIV ITY, ASSESSEE ALSO MANUFACTURED WINDOWS, CONCRETE SLABS ETC. FOR ASSES SMENT YEARS 1980-81 AND 1981-82 IT CLAIMED DEDUCTION UNDER SECT ION 80HH OF THE ACT, WHICH WAS ALLOWED FOR THE ASSESSMENT YEAR 1980-81 BY THE ASSESSING OFFICER WITHOUT DISCUSSION AND SUCH A SSESSMENT HAD BECOME FINAL. IN THE ASSESSMENT YEAR 1981-82 AL SO THE DEDUCTION WAS ALLOWED BY THE ASSESSING OFFICER AND WHILE ALLOWING DEDUCTION, RELIANCE WAS PLACED ON THE JUDGMENT OF T HE HONBLE ORISSA HIGH COURT IN THE CASE OF CIT V N.C. BUDHARA JA & CO 121 ITR 212 (ORI) WHICH WAS THE ONLY DECISION THEN OPER ATING IN THE FIELD. FOR THE ASSESSMENT YEAR 1981-82, THE ASSESSE E HAD PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME-TAX (APPEALS) ON CERTAIN OTHER ISSUES. AGAIN FOR ASSESS MENT YEAR 1982-83 THE ASSESSING OFFICER ALLOWED DEDUCTION UND ER SECTION 80HH OF THE ACT. THE COMMISSIONER EXERCISING JURISD ICTION UNDER SECTION 263 OF THE ACT QUASHED THE ORDERS OF THE AS SESSING OFFICER FOR ASSESSMENT YEARS 1981-82 AND 1982-83. AS PER TH E TRIBUNAL, (I) SINCE THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1981-82 WAS MERGED IN THE APPELLATE ORDER, SECTION 263 JURISDIC TION COULD NOT BE EXERCISED BY THE COMMISSIONER; (II) SINCE THE ASSES SMENT WAS BASED ON A BINDING DECISION OF THE HIGH COURT, IT C OULD NOT BE INTERFERED UNDER SECTION 263 OF THE ACT; (III) UNLE SS DEDUCTION ALLOWED IN THE ASSESSMENT YEAR 1980-81 ON THE SAME GROUND WAS WITHDRAWN, THEY COULD NOT BE DENIED FOR THE SUBSEQU ENT YEARS. THE HONBLE HIGH COURT AFFIRMED THE APPROACH OF THE TRI BUNAL ON ALL THE THREE COUNTS. BEFORE US, THE LEARNED COUNSEL FOR TH E APPELLANT POINTED OUT THAT THE PARITY OF REASONING APPROVED B Y THE HIGH COURT TO THE EFFECT THAT UNLESS DEDUCTION ALLOWED I N A PRECEDING YEAR ON THE SAME GROUND IS WITHDRAWN, SIMILAR RELIE F FOR THE - - ITA 1959 TO 1961/14 26 SUBSEQUENT YEARS COULD NOT BE WITHHELD. SECONDLY, T HE LEARNED COUNSEL ALSO REFERRED TO THE OBSERVATIONS OF THE HO NBLE HIGH COURT THAT IN SECTIONS 80HH OR SECTION 80J THERE IS NO PROVISION FOR WITHDRAWAL OF SPECIAL DEDUCTION FOR THE SUBSEQUENT YEARS FOR BREACH OF CONDITIONS. IT WAS POINTED OUT THAT SIMIL AR IS THE SITUATION WITH REGARD TO THE PROVISIONS OF SECTION 80-IB AND THEREFORE IN THE INSTANT CASE THE RELIEF UNDER SECTION 80-IB COULD N OT BE DENIED IN THIS YEAR. 13. IN OUR CONSIDERED OPINION, THE RATIO OF THE AFO RESAID JUDGMENT ALSO DOES NOT HELP THE ASSESSEE IN THE INSTANT CASE . THE FACTUAL MATRIX IN THE AFORESAID CASE WAS THAT IN EARLIER YE AR THE BENEFIT STOOD ALLOWED TO THE ASSESSEE AND WITHOUT ANY CHANG ED CIRCUMSTANCES, THE SAID CLAIM WAS SOUGHT TO BE DENI ED IN A SUBSEQUENT YEAR, AND SUCH AN ATTEMPT WAS NEGATED BY THE HONBLE HIGH COURT. IN THE INSTANT CASE, AS WE HAVE NOTED EARLIER THE CIRCUMSTANCES HAVE CHANGED AFTER THE INITIAL AS SESSMENT YEAR AND THEREFORE, THE CLAIM IS SOUGHT TO BE DENIED ON VALID GROUNDS AND WITHOUT DISTURBING THE CLAIM IN THE INITIAL YEA R BECAUSE THE CIRCUMSTANCES IN THE INITIAL YEAR HAVE NOT UNDERGON E ANY CHANGE. THEREFORE, THE DECISION IS INAPPLICABLE TO THE INST ANT CASE. 14. IN THE RESULT, WE HEREBY AFFIRM THE ORDERS OF T HE AUTHORITIES BELOW DENYING RELIEF TO THE ASSESSEE UNDER SECTION 80-IB OF THE ACT. THE ASSESSEE FAILS. 4.4 FURTHER, IN OUR OPINION THE JUDGMENT RELIED ON BY THE LD. AR IN THE CASE OF M/S. ACE MULTI AXES SYSTEMS LTD. (SUPRA), IS DELIVERED IN THE CONTEXT OF SEC.263 OF THE ACT AND IN THE PRESENT CASE, WE ARE CONCERNED WITH ASSESSMENT MADE U/S.143 (3) OF THE ACT. THESE SECTIONS ARE STANDING ON DIFFERENT FOOT ING. 4.5 IN VIEW OF THE ORDERS OF THE CO-ORDINATE BENCH ES OF THE TRIBUNAL, WE ARE INCLINED TO HOLD THAT THE COMMISSI ONER OF INCOME-TAX(APPEALS) IS JUSTIFIED IN REJECTING THE C LAIM OF THE - - ITA 1959 TO 1961/14 27 ASSESSEE U/S.80IB OF THE ACT. ACCORDINGLY, THIS GR OUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5. THE NEXT GROUND RELATING TO DISALLOWANCE U/S.SEC .14A OF THE ACT IS NOT PRESSED BY THE LD. AR FOR THE ASSESS MENT YEAR 2008-09. ACCORDINGLY, THIS GROUND IS DISMISSED IN THIS APPEAL, AS NOT PRESSED. HOWEVER, FOR THE ASSESSMENT YEARS 200 6-07 AND 2007-08, THE DISALLOWANCE U/S.14A TO BE MADE AT 2% OF EXEMPTED INCOME, IN VIEW OF JUDGMENT OF THE MADRAS HIGH COURT IN THE CASE OF SIMPSON & CO. LTD. V. DCIT IN TCA NO .2261 OF 2006 DATED 15.10.2012. IF THE ASSESSEE HAS ALREADY DISALLOWED MORE THAN 2% OF EXEMPTED INCOME, IT IS TO BE SUSTAI NED. 6. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN IT A NOS. 1959 & 1960/MDS/2014 ARE PARTLY ALLOWED AND ITA NO.1961/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 16 TH OF MARCH, 2016 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 16 TH MARCH, 2016. MPO* - - ITA 1959 TO 1961/14 28 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.