M/s. Controlled Acoustic Inds.Pvt.Ltd., Mumbai V. The Dy.CIT.,S.K.Circle, Himatnagar

ITA 2629/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80385 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-08-2014
• Assessment Year: 1991-1992
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Initiation of penalty proceedings
• Section: 263

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER APPEAL(S) BY APPELLANT VS. RESPONDENT SL. NO(S) ITA NO(S) ASSESSMENT YEAR(S) APPELLANT RESPONDE NT 1. 2629/AHD/2010 1991-92 M/S.CONTROLLED ACOUSTIC INDS. PVT.LTD. 32, MANOJ IND.ESTATE 40A, G.D. AMBEDKAR ROAD WADALA, MUMBAI 400 031 PAN: AABCC 2902P DCIT SK CIRCLE HIMAT- NAGAR DIST.S.K 2. 2630/AHD/2010 1993-94 ASSESSEE REVENUE 3. 2631/AHD/2010 1994-95 ASSESSEE REVENUE 4. 2632/AHD/2010 1995-96 ASSESSEE REVENUE ASSESSEE BY : SHRI S.N.SOPARKAR, A.R. REVENUE BY : SHRI M.K.SINGH, SR.DR ' % & $' / / / / DATE OF HEARING 27/08/2014 )*+ & $' / DATE OF PRONOUNCEMENT 19/09/2014 , / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE FOUR APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-VI, AHMEDABAD (CIT(A) IN SHORT) ALL IDENTICALLY DATED 30/03/20 07 PERTAINING TO ASSESSMENT YEARS (AYS) 1991-92, 1993- 94, 1994-95, 1995- 96. SINCE COMMON ISSUES AND FACTS ARE INVOLVED IN T HESE APPEALS, THESE I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 2 - WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WA Y OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL IN ITA N O.2629/AHD/2010 FOR AY 1991-92 AS A LEAD CASE. THE ASSESSEE HAS RA ISED THE FOLLOWING COMMON GROUNDS OF APPEAL (EXTRACTED FROM ITA NO.262 9/AHD/2010):- [1] THE LD.CIT(A) HAS GROSSLY ERRED IN LAW AND ON FACTS IN CONFIRMING ACTION OF A.O. IN DISALLOWING THE CLAIM OF THE APPELLANT U/S.80I AND 80HH OF THE ACT IN THE PROCEE DINGS UNDERTAKEN IN THE SET ASIDE ASSESSMENT BY THE ORDER OF THE HONBLE INCOME TAX APPELLATE TRIBUNAL. BOTH THE LO WER AUTHORITIES HAVE NOT APPRECIATED THE FACT THAT THE MATTER WAS SET ASIDE FOR DE NOVO PROCEEDINGS TO GRANT OPPORTUNITY TO THE APPELLANT TO MAKE A SCHEMATIC REPRESENTATION IN RES PECT OF PRODUCTION OF BOTH THE UNITS SO AS TO MEET OUT CAUS E OF NATURAL JUSTICE. UNDER THE FACTS AND THE CIRCUMSTANCES OF THE CASE, LD.CIT(A) OUGHT TO HAVE ACCEPTED THE VARIOUS SUBMIS SIONS AND DOCUMENTARY EVIDENCE PRODUCED TO HOLD THAT THE APPE LLANT HAD SET UP A NEW INDUSTRIAL UNDERTAKING ELIGIBLE FOR DE DUCTION U/S.80I OF THE ACT AND OUGHT TO HAVE QUASHED THE ORDER PASS ED BY AO. [2] THE LD.CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN HOLDING THAT THE APPELLANTS CASE WAS OF EXPANSION/MODIFICATION OF OLD UNIT AND NOT OF SETTING UP OF NEW INDUSTRIAL UNDERTAKING AND THUS MAKING IT INELIGIBLE FOR CLAIM OF DEDUCTION U/S.80I OF THE ACT. BOTH THE LOWER AUTHORITIES GRAVELY ERRED IN HOLDING THAT DUE TO VIOLATION OF THE PROVISIONS OF EXPLANATION 2 TO SEC TION 80I(2), EVEN WHILE SETTING U A NEW UNIT, THE APPELLANT WAS NOT ELIGIBLE TO CLAIM THE DEDUCTION U/S.80I OF THE ACT. [3] THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO HOLDING THAT THE CLAIM OF DEDUCTION U/ S.80I AND 80HH OF THE ACT WAS AVAILABLE TO THE APPELLANT ONLY FOR 8 AND 10 YEARS COMMENCING FROM A.Y. 1983-94. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THE SUBMISSIONS, EVIDENCES AND FAC TUAL DATA SUBMITTED DURING THE NEW PROCEEDINGS TO HOLD THE AP PELLANT ELIGIBLE FOR CLAIM OF DEDUCTION U/S.80I AND 80HH OF THE ACT. I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 3 - [4] THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE INITIATION OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, ED IT, DELETE, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OF OR BEFORE THE HEARING OF THE APPEAL. 3. BRIEFLY STATED FACTS ARE THAT THIS IS THE SE COND ROUND OF LITIGATION. IN EARLIER ROUND, THE ISSUES REGARDING ELIGIBILITY OF DEDUCTION UNDER SECTIONS 80I AND 80HH OF THE INCOME TAX ACT,1961 (HEREINAFTE R REFERRED TO AS THE ACT) WERE RESTORED BACK TO THE FILE OF AO BY THIS TRIBUNAL (ITAT C BENCH AHMEDABAD) IN ITA NOS.2873, 2874, 2855 & 2556/AHD/2002 FOR AYS 1994-95, 1995-96, 1991-92 & 1993-94 VIDE OR DER DATED 31/10/2007, BY OBSERVING AS UNDER:- 4. WE HAVE HEARD BOTH THE PARTIES, AND PERUSED TH E MATERIAL ON RECORD. 4.1 WE OBSERVE THAT THE ASSESSMENT FOR AYS 1991-92 AND 1993-94 IS MADE PURSUANT TO ACTION UNDER SECTION 263 OF THE ACT, SO THAT THERE HAD BEEN, IN THE FIRST INSTANCE, APPARENTLY, LACK OF PROPER ENQU IRY OR APPLICATION OF MIND, IN THE MATTER, BY THE ASSESSING AUTHORITY. SE CONDLY, WE FIND THAT THE MATTER IS ENTIRELY FACTUAL AND FOR ITS ADJUDICATION WOULD REQUIRE A FACTUAL DETERMINATION OF THE VARIOUS ASPECTS OF THE MATTER, AND FOR WHICH THE ASSESSEE WOULD NEED TO LEAD EVIDENCE; THE MATTER HA VING BEEN HITHERTO DECIDED MORE ON INFERENCES, THAN ON FACTUAL FINDING S. 4.2 THE ISSUE, AS WE DISCERN, IS THE NON-UTILIZATI ON OF THE PLANT AND MACHINERY PURPORTEDLY PURCHASED FOR THE NEW UNIT DU RING THE PREVIOUS YEARS RELEVANT TO AYS 1988-89 TO 1990-91, OTHERWISE THAN FOR ITS PURPOSES, IN THE RELEVANT YEARS; THE SAME BEING SET UP ONLY I N AY 1991-92. THIS BECOMES MATERIAL AS DEPRECIATION STOOD CLAIMED (AND ALSO ALLOWED) FOR THE SAID YEARS, SO THAT, UNDENIABLY, THERE HAS BEEN A U SER OF THE SAID MACHINERY FOR THE PURPOSES OF THE ASSESSEES BUSINESS FOR EAC H OF THE RELEVANT YEARS. AND USER FOR ANY PURPOSE PRIOR TO ITS USER FOR THE ELIGIBLE UNDERTAKING (NEW UNIT) WOULD INVALIDATE THE ASSESSEES CLAIM U/S 80H H(2)(II)/S.80I(2)(II); THE SAID MACHINERY EXCEEDING TWENTY PER CENT IN VALUE O F THE TOTAL MACHINERY ACQUIRED FOR THE SETTING-UP OF THE NEW UNIT. I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 4 - 4.3 THERE HAS, THUS, TO BE A POSITIVE INDICATION B Y THE ASSESSEE OF THE USER OF THE SAID PLANT AND MACHINERY FOR THE RELEVANT YE ARS, AND WHICH SHOULD NOT POSE MUCH OF A PROBLEM AS IT IS IT WHO HAS DEPL OYED THE SAME TO SOME USE DURING THE RELEVANT YEARS. IN FACT, ON THE BASI S OF THE MATERIAL ON RECORD, INCLUDING THE ARGUMENTS AS LED BY BOTH SIDE S, EVEN THE NATURE OF THE SAID MACHINERY IS NOT CLEAR, OR TO WHAT POSSIBLE US ES THE SAME COULD BE PUT TO; THE MATTER BEING ARGUED AND DECIDED ON THE BASI S OF INFERENCES, WHILE, AS AFORE-STATED, THE ASSESSEE HAVING ACTUALLY PUT T HE SAID MACHINERY TO USE DURING THE RELEVANT YEARS, SHOULD BE ABLE TO STATE AND SHOW THE HOW AND/OR WHERE OF IT. PERHAPS A SCHEMATIC REPRESENTATION OF THE PRODUCTION OF BOTH THE UNITS, I.E., WITH REFERENCE TO THE PROCESSES IN VOLVED AND MACHINERY INSTALLED AND OPERATED FOR THE YEARS SINCE AY 1988- 89;THE PRODUCT MANUFACTURED BY THE TWO UNITS BEING STATELY DIFFERE NT, I.E. POWDER COATED ALUMINIUM PANELS WITH LENGTH UPTO 6 MTRS (I.E., BEY OND 2.4 MTRS.) FOR THE NEW UNIT, AND ACRYLIC PAINTED 8 PANELS FOR THE OLD UNIT, EACH REQUIRING DIFFERENT MACHINERY; EXHIBIT AS IT WOULD ALSO THE E XISTENCE OF SEPARATE MACHINERY (WITH CAPACITY) QUA THE COMMON PROCESSES (FROM THE RAW MATERIAL TO THE FINISHED GOOD STAGE), IF ANY, COULD BE RELEVANT. 5. UNDER THE CIRCUMSTANCES, AS ALSO OBSERVED BY THE BENCH DURING THE COURSE OF HEARING, WE WOULD ONLY CONSIDER IT FIT AN D IN THE INTEREST OF JUSTICE, THAT THE MATTER IS REMITTED BACK TO THE FI LE OF THE AO FOR THE PURPOSE, AND ADJUDICATE AFTER ALLOWING A PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE BEFORE HIM, ADDRESSING THE ISSUE A S DELINEATED ABOVE. WE DECIDE ACCORDINGLY 3.1. IN PURSUANCE TO THE AFORESAID DIRECTION OF THE TRIBUNAL, THE AO AFTER GIVING OPPORTUNITY TO THE ASSESSEE OF HEARING , YET AGAIN REJECTED THE CLAIM OF DEDUCTION U/S.80HH AND 8I OF THE ACT. AGA INST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO ALSO CONF IRMED THE ADDITION. 4. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT T HE ACTION OF THE AUTHORITIES BELOW IS UNJUSTIFIED, ARBITRARY AND AGA INST THE SETTLED PRINCIPLES OF LAW. HE SUBMITTED THAT IN PURSUANCE TO THE DIRECTIONS OF THE TRIBUNAL, DETAILED SUBMISSIONS WERE MADE VIDE LETTE R DATED 25/08/2009 AND 05/10/2009 TO THE AO FOR BRINGING TO HIS NOTICE ABOUT DISTINCTION BETWEEN THE OLD UNIT AND THE NEW UNIT. HE SUBMITTE D THAT THE NEW UNIT I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 5 - WAS ESTABLISHED IN PIECEMEAL STARTED FROM THE YEARS OF 1998-89 TO 1990- 91. HE SUBMITTED THAT BOTH THE UNITS (OLD AND NEW) ARE FACTUALLY TO DISTINCT AND DIFFERENT UNITS HAVING DIFFERENT TECHN OLOGY; ONE UNIT CANNOT BE A SUPPLEMENT TO OTHER UNIT AND THE TECHNOLOGY US ED CANNOT BE UTILIZED FOR THE OTHER UNIT. IN SUPPORT OF THIS CONTENTION, HE DREW OUR ATTENTION TOWARDS THE SUBMISSIONS MADE BEFORE THE AO. HE SUB MITTED THAT THE OBJECTION OF THE AUTHORITIES BELOW IS ILL-FOUNDED A ND AGAINST THE LAW SETTLED BY THE HONBLE BOMBAY HIGH COURT AND THE HO NBLE JURISDICTIONAL HIGH COURT. HE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF C IT VS. FINOLEX CABLES LTD. REPORTED AT (2012) 24 TAXMANN.COM 279 ( BOM.) AND JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT REND ERED IN THE CASE OF GUJARAT ALKALIES & CHEMICALS LTD. VS. CIT REPORTED AT (2012) 20 TAXMANN.COM 764 (GUJ.) ::: (350 ITR 94). 4.1. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT THIS TRIBUNAL HAD RESTORED THE ISSUE BACK TO THE FILE OF AO WITH SPECIFIC DIRE CTIONS. HE SUBMITTED THAT IN THE ASSESSMENT YEARS 1998-89 AND 1989-90 TH E ASSESSEE HAS CLAIMED DEPRECIATION ON THE MACHINERY AND BUILDING PERTAINING TO THE CLAIM OF NEW UNIT. HE SUBMITTED THAT IT IS NOT DIS PUTED THAT MACHINERY PURCHASED IN THE YEAR 1998-89 AND THE SUBSTANTIAL P RODUCTION WAS CARRIED OUT. THE ASSESSEE NOW IN ORDER TO TAKE THE BENEFIT OF THE PROVISIONS OF LAW TERMED THAT USAGE OF THE MACHINERY AS TRIAL PR ODUCTION. HE SUBMITTED THAT THE CASE-LAWS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE DO NOT HELP TO THE ASSESSEE SINCE THE FACT S AND CIRCUMSTANCES OF THE PRESENT CASE ARE DISTINGUISHABLE. I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 6 - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENTS RELIED UPON BY THE LD.COU NSEL FOR THE ASSESSEE. WE FIND THAT THIS TRIBUNAL (ITAT C BENCH AHMEDABA D) IN EARLIER ROUND OF LITIGATION IN ITA NOS.2873, 2874, 2555 & 2556/AH D/2002 FOR AYS 1994-95, 1995-96, 1991-92 & 1993-94 VIDE ORDER DAT ED 31/10/2007 HAD RESTORED THE MATTER TO THE FILE OF AO FOR DECISION AFRESH. WE FIND THAT THE ASSESSEE MADE DETAILED SUBMISSIONS TO THE AO VI DE LETTER(S) DATED 25/08/2009 AND 05/10/2009, HOWEVER THE SUBMISSIONS MADE BY THE ASSESSEE WERE NOT ACCEPTED BY THE AO AND REJECTED T HE SAME BY OBSERVING AS UNDER:- 8. THE REPLY FILED BY THE ASSESSEE HAS BEEN CONSID ERED. IT IS SEEN THAT AN ATTEMPT HAS BEEN MADE BY THE ASSESSEE TO DISTORT TH E FACTS AS WELL AS TO MIS- PRESENT THE OBSERVATION MADE BY THE HONBLE ITAT IN ITS REPLIES. AT NO STAGE HONBLE ITAT HAS HELD THAT DEPRECIATION WAS CLAIMED ON TRIAL RUN. THE CRUTIAL ISSUE AS LAID DOWN BY THE HONBLE ITAT WAS THE ISS UE AS WE DISCERN, IS THE NON-UTILISATION OF THE PLANT AND MACHINERY PURPORTE DLY PURCHASED FOR THE NEW UNIT DURING THE PREVIOUS YEARS RELEVANT TO AYS 1988 -89, TO 1990-91, OTHERWISE THAN FOR ITS PURPOSE, IN THE RELEVANT YEARS, THE SA ME BEING SET UP ONLY IN AY 1991-92. THIS BECOMES MATERIAL AS DEPRECIATION STOO D CLAIMED (AND ALSO ALLOWED) FOR THE SAID YEARS, SO THAT, UNDENIABLY, T HERE HAS BEEN A USER OF THE SAID MACHINERY FOR THE PURPOSE OF THE ASSESSEES BU SINESS FOR EACH OF THE RELEVANT YEARS. AND USER FOR ANY PURPOSE PRIOR TO I TS USER FOR ELIGIBLE UNDERTAKING (NEW UNIT) WOULD INVALIDATE THE ASSESSE ES CLAIM U/S 80HH(2)(II); THE SAID MACHINERY EXCEEDING TWENTY PE RCENT IN VALUE OF THE TOTAL MACHINERY ACQUIRED FOR SETTING UP OF A NEW UNIT. 8.1. IN ITS REPLIES, THE ASSESSEE HAS ADMITTED TWO CRUC IAL ACTIONS ON ITS PART. A. THAT THE MACHINES INSTALLED IN EARLIER YEARS HAD BE EN PUT TO USE IN THE YEARS OF THEIR INSTALLATION. THE ASSESSEE STATES IN ITS SUBMISSION THAT THE NEW MACHINERY PURCHASED/MANUFACTURED BY THE COMPANY PURCHASED / MANUFACTURED BY THE COMPANY AND WAS PUT TO USE FOR PURPOSE OF ITS I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 7 - BUSINESS CO-OPTING THE SAME IN ITS PRODUCTION STREA M FOR TRIAL PRODUCTION. CO-OPTING THE SAME IN ITS PRODUCTIO N STREAM CLEARLY INDICATES THAT THE PRODUCTION OF THESE MACHINES WAS INTEGRATED WITH THE OLD MACHINES AND THESE MACHINES HAD BEEN PUT TO USE DURING THE PERIOD 1988-89 TILL 1990-91 I.E. BEFORE COMMENCEMENT OF PR ODUCTION FROM NEW EQUIPMENTS. B. THE ASSESSEES CLAIM THAT THE MACHINES WERE IN TRAI L PRODUCTION DURING THREE YEARS IS ABSURD. THE NATURE OF EQUIPMENTS AND PROCEDURE HAS BEEN LAID OUT BY THE ASSESSEE. SUCH ITEMS DO NOT NEED EV EN ONE DAY OF TRIAL PRODUCTION BECAUSE THE MACHINES COME PRODUCTION R EADY. IT WAS SIMPLY MANUFACTURING ALUMINUM FALSE CEILING PANELS WHICH W AS ITS OWN OLD BUSINESS OUT OF ALUMINUM SHEETS WHICH DID NOT EVEN INVOLVE CHANGE IN STATE OF METAL, FORMING OF MATERIAL BY WELDING ETC OR THEIR ASSEMBLY. THE ASSESSEE IS ATTEMPTING TO MISLEAD BY TERMING ACTUAL PRODUCTION TO BE TRIAL PRODUCTION. C. THE ASSESSEE HAS AGREED THAT DEPRECIATION ON THESE MACHINES WAS CLAIMED IN THEIR YEAR OF INSTALLATION. HE STATES IN HIS SUB MISSION THAT NOBODY OTHER THAN THE ASSESSEE HAS CLAIMED THE DEPRECIATIO N BEFORE INSTALLATION OF MACHINERY OR PLANT BY THE ASSESSEE. D. WHILE THE ASSESSEES OBSERVATION THAT OLD MACHINES COULD NOT BE USED FOR NEW PRODUCTION IS CORRECT (PARA 5 OF HIS SUBMISSION ), VICE VERSA IS NOT TRUE. THE NEW MACHINES COULD DEFINITELY BE USED FOR PRODUCTION OF OLD ITEMS WITH BETTER QUALITY BY USING THESE MACHINES I N THEIR YEAR OF INSTALLATION. IN FACT, THE PRODUCTION FROM OLD MACH INES (CATEGORIZED BY THE ASSESSEE ITSELF) SHOWS MARKED INCREASE ON ACCOUNT O F SUCH FACTORS INSPITE OF THE FACT THAT THERE WAS NO DEMAND FOR THE OLD PR ODUCTS. THE FOLLOWING TABLE SUPPORTS THIS AVERMENT. AY PRODUCTION VALUE WITH NEW MACHINE RS. PRODUCTION VALUE WITH OLD MACHINE RS. 1991-92 8227794.98 4236288.71 1992-93 6004211.46 3444513.11 1993-94 7944990.49 5059304.21 THE POWDER COATING MACHINE, THE OVEN, THE PRESS ETC . ALL OF THEM COULD BE USED FOR EITHER TYPE OF PRODUCTION. HENCE, THERE IS A CLEAR CASE OF THE MACHINERIES HAVING BEEN PUT TO USE IN THEIR YEAR OF INSTALLATION BEFORE THE SO CALLED NEW UNIT WAS SET UP BY THE ASSESSEE IN 19 91-92 ATTRACTING THE PROVISIONS OF SECTION 80I(2)(II). E. SECTION 80I TALKS ABOUT A NEW UNDERTAKING. THE ASSE SSEE HAS CONFUSED ITSELF THAT SETTING UP OF A NEW UNDERTAKING IS SI MILAR TO INSTALLING A FRESH I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 8 - LINE OF PRODUCTION IN AN EXISTING PLANT. AN UNDERTA KING IS MUCH MORE THAN INSTALLING A NEW PROCESS LINE IN AN EXISTING PLANT. IT NEEDS A VARIETY OF OTHER INFRASTRUCTURE WHICH COULD INCLUDE SAY TOOL R OOM, TOOLS AND TACKLES, JIGS, FIXTURES, STORE ROOM, LIFTING DEVICES, WORKSH OP WHICH WAS COMMON AND HENCE IT WAS A COMMON UNIT RATHER THAN TWO UNIT S SET UP BY THE ASSESSEE 8.2 IN PARA III OF ITS REPLY DATED 05.10.2009 ASSES SEE SUBMITTED THAT HONBLE TRIBUNAL HAS DECIDED THAT ITS NEW UNIT IS A N IDENTIFIABLE UNIT ITSELF AND IT CANNOT BE TREATED AS A MERE EXTENSION OF THE OLD UNIT AND DEPRECIATION IN RESPECT OF PLANT AND MACHINERY IS ALLOWED IN THE YE AR IN WHICH MERE TRAIL PRODUCTION HAS BEEN TAKEN PLACE AND IN SUBSEQUENT Y EAR IN WHICH THE UNDERTAKING MANUFACTURERS ARTICLES, BECOMES THE INI TIAL YEAR FOR ALLOWING THE DEDUCTION U/S.80I (ANNEXURE-A]. THIS AVERMENT OF T HE ASSESSEE IS GROSSLY INACCURATE AND MISLEADING. SUCH AN INFERENCE IS NO T EVIDENT IN THE DECISION OF THE ITAT AND HENCE THIS AVERMENT IS REJECTED OUTRIG HTLY. 8.3. IT IS MENTIONED HERE THAT ASSESSEE HAS MOSTLY MADE SUBMISSIONS BASED ON GROUNDS WHICH HAVE ALREADY BEEN CONSIDERED BY CI T(A) IN HIS ORDER DATED 12/04/1999. CIT(A) HAD CLEARLY ESTABLISHED IN HIS ORDER THAT THE ALLEGED NEW UNIT VIOLATES THE CONDITION OF EXPLANATION 2 TO SEC .80I(2) OF THE IT ACT WHICH STIPULATES THAT NEW INDUSTRIAL UNDERTAKING SHOULD N OT BE FORMED BY THE TRANSFER TO A NEW BUSINESS OF MACHINERY OR PLANT PR EVIOUSLY USED FOR ANY PURPOSE. AS PER EXPLANATION-2 TO SECTION 80I(2), I F ANY MACHINERY OR PLANT OR ANY PART THEREOF PREVIOUSLY USED FOR ANY PURPOSES I S TRANSFERRED TO A NEW BUSINESS AND THE TOTAL VALUE OF THE MACHINERY OR PL ANT OR PART SO TRANSFERRED EXCEEDS 20% OF THE TOTAL VALUE OF THE MACHINERY OR PLANT PREVIOUSLY USED IN THE BUSINESS THEN SUCH UNIT DISQUALIFY FROM BEING A N ELIGIBLE UNIT FOR THE PURPOSE OF SECTION 80I. 9. ORDER OF THE CIT(A) IS BEING ALSO RELIED HERE B ECAUSE ALL THE ISSUES BEING RAISED BY ASSESSEES AUTHORIZED REPRESENTATIVE HAVE ALREADY BEEN DISCUSSED IN DETAIL BY CIT(A). 10. ASSESSEE HAS TRIED TO JUSTIFY HIS CLAIM TO AVA IL BENEFIT OF DEDUCTION U/S.80I OF THE IT ACT BASED ON NUMEROUS JUDGMENTS OF HONBL E HIGH COURTS AND TRIBUNALS ONLY BUT HAS NOT BEEN ABLE TO ESTABLISH B EYOND DOUBT ESTABLISHMENT OF NEW INDUSTRIAL UNDERTAKING WHICH SHOULD BE AN IN TEGRATED INDEPENDENT UNIT IN WHICH NEW PLANT AND MACHINERY SHOULD BE PUT UP A ND THE SAME SHOULD BE INDEPENDENT OF THE OLD NITS. 11. IN THIS CASE, IT IS VERY IMPORTANT TO MENTION THAT AT PRESENT NEITHER OLD NOT (ALLEGEDLY) NEW UNIT IS IN EXISTENCE. ASSESSEE SOL D BOTH THE UNIT LONG BACK AND AT PRESENT EVEN NO MACHINERY IS IN EXISTENCE SO AS TO VERIFY THE CLAIM OF THE I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 9 - ASSESSEE PHYSICALLY. ASSESSEE HAS TRIED TO SUBSTAN TIATE HIS CLAIM REGARDING ESTABLISHMENT OF NEW UNIT WITHIN THE MEANING OF SEC .80I WITH THE HELP OF DIAGRAMS AND PHOTOGRAPHS BUT STILL HAS NOT BEEN ABL E TO PROVE HIS CLAIM. IN FACT, THE SUBMISSIONS MADE BY HIM POST-ITAT DECISIO N LEAD TO AN CLEAR INFERENCE OF OLD MACHINERY HAVING BEEN USED FOR THE NEW UNIT. 12. ASSESSEE HAS FURTHER RELIED UPON AMENDMENTS BY FINANCE ACT 1990 INSERTING NEW SEC.80IA AND FILED COPY OF CIRCULAR N O.572 DATED 03.08.1990 AND CLAIMED THAT IT IS ELIGIBLE FOR DEDUCTION U/S.8 0IA. THIS CIRCULAR ALSO MENTIONS THAT DEDUCTION U/S.80IA SHALL BE AVAILABLE TO ONLY NEW INDUSTRIAL UNDERTAKINGS AND NOT TO OLD ONE. SINCE THE ASSES SEE HAS NOT BEEN ABLE TO ESTABLISH THAT NEW INDUSTRIAL UNDERTAKING CAME INTO EXISTENCE W.E.F. A.Y. 1991- 92, SUCH DEDUCTION CAN NOT BE ALLOWED. 13. IN VIEW OF FACTS OF THE CASE AS MENTIONED ABOV E AND AFTER TAKING INTO CONSIDERATIONS ALL THE SUBMISSIONS OF THE ASSESSEE, LEGAL AS WELL AS FACTUAL I AM SATISFIED THAT ASSESSEE HAS FAILED IN ITS ATTEMP T TO PROVE THAT NEW INDUSTRIAL UNDERTAKING WAS ESTABLISHED IN A.Y. 1991-92 WITHIN THE MEANING OF SEC. 80I(2) OF THE I.T.ACT ELIGIBLE FOR DEDUCTION. IT IS NO DO UBT A CASE OF EXTENSION OF OLD UNIT NOT CAPABLE OF FUNCTIONING ON ITS OWN. THE VA RIOUS DECISIONS QUOTED BY THE ASSESSEE HAVE ALREADY BEEN DISCUSSED BY THE CIT (A) IN ITS ORDER DATED 20.05.2002 AND ARE THEREFORE NOT REPEATED AGAIN AS THE SAME HAVE BEEN HELD NOT APPLICABLE TO FACTS OF THE ASSESSEES CASE AS T HESE RELATE TO DEFINITION OF INDUSTRIAL UNDERTAKING ONLY. 14. FROM FACTS OF THE CASE AS DISCUSSED ABOVE IT BE COMES CLEAR THAT ASSESSEE CLAIMED DEPRECIATION ON NEW PLANT AND MACH INERY IN A.Y. 1988-89 TO 1990-91 AND THE SAME WAS ALLOWED ALSO. THIS CLEARL Y SHOWS THAT NEW PLANT AND MACHINERY WAS NO DOUBT USED BY ASSESSEE IN HIS BUSINESS AND THIS USE BY ASSESSEE OF NEW PLANT AND MACHINERY IN ITS OLD BUSI NESS FOR THE PURPOSE OF MANUFACTURING OF PANELS INVALIDATES THE ASSESSEES CLAIM OF DEDUCTION U/S.80HH AND 8I OF THE I.T. ACT. MOREOVER VALUE OF THE SAID MACHINERY EXCEEDS TWENTY PERCENT IN VALUE OF THE TOTAL MACHIN ERY ACQUIRED FOR THE SETTING UP OF THE NEW UNIT. USE OF NEW PLANT AND MACHINERY IS IN THREE EARLIER YEARS HAS NOT BEEN DENIED BY ASSESSEE BUT NOW THE ASSESSEE CLAIMS THAT THIS U SE WAS FOR TRIAL PRODUCTION ONLY. BT AS DISCUSSED ABOVE, TRIAL PRODUCTION CANN OT GO CONTINUOUSLY FOR THREE YEARS. QUANTITY MANUFACTURED CLEARLY SHOW THAT IT WAS USED FOR COMMERCIAL PRODUCTION AS TRIAL PRODUCTION CANNOT GO FOR THREE YEARS. WHEN THE FACT OF HAVING USED THE NEW PLANT AND MACHINERY IN THREE EA RLIER YEARS I.E. A.Y. 1988- 89, A.Y. 1989-90 AND A.Y. 1990-91 IS NOT DENIED BY ASSESSEE HIMSELF, ASSESSEE IS CHANGING THE PURPOSE FOR WHICH IT WAS USED. ASS ESSEE IS TAKING A NEW STAND THAT PURPOSE WAS TRIAL PRODUCTION AND NOT COMMER CIAL PRODUCTION BUT THIS STAND ALSO FAILS. VIDE LETTER DATED 25.08.200 9 ASSESSEE SUBMITTED DETAILS OF PRODUCTION TURNOVER IN A.Y. 1987-88 TO 1990-91 W HICH ARE AS UNDER: I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 10 - A.Y. 1987-88 RS. 87,14,813/- A.Y. 1988-89 RS.1,27,63,220/- (20 MONTHS) A.Y. 1989-90 RS.1,53,09,991/- A.Y. 1990-91 RS.2,00,46,759/- ABOVE FIGURES OF PRODUCTION IN THREE EARLIER ASSESS MENT YEARS CAN IN NO SENSE BE TERMED AS TRIAL PRODUCTION BECAUSE TRIAL PRODUCT ION CANNOT BE IN CRORES AS IN EVIDENT. IN A.Y. 1987-88 THE PRODUCTION WAS RS. 87 LACS WHICH INCREASE TO RS.1.27 CRORES IN A.Y. 1988-89 AND TO RS.1.53 CRORE S IN A.Y. 1989-90. THIS HUGE PRODUCTION IS CLEARLY COMMERCIAL PRODUCTION AN D NOT TRIAL PRODUCTION HENCE ASSESSEES EXPLANATION IS NOT FOUND CORRECT. ON GOING THROUGH CASE RECORDS IT IS SEEN THAT NEW I NDUSTRIAL UNDERTAKING ACTUALLY CAME INTO EXISTENCE IN A.Y. 1983-84 AND AS SESSEE CAN CLAIM DEDUCTION U/S.80I FOR 8 YEARS I.E. UPTO A.Y. 1990-9 1 ONLY. IT CAN CLAIM DEDUCTION U/S.80HH FOR 10 YEARS I.E. A.Y. 1992-93. THEREFORE DEDUCTION U/S.80HH IS ALLOWABLE AND DEDUCTION U/S.80I IS NOT ALLOWED BECAUSE NO NEW INDUSTRIAL UNDERTAKING CAME INTO EXISTENCE IN A.Y. 1991-92. 5.1. THE LD.CIT(A) CONFIRMED THE FINDINGS OF THE AO . THE LD.COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGEMENT O F THE HONBLE BOMBAY HIGH COURT RENDERED IN THE CASE OF COMMISSIONER OF INCOME-TAXV, PUNE VS. FINOLEX CABLES LTD. REPORTED AT (2012) 24 TAXM ANN.COM 279 (BOM.) :: 114 TTJ 785 (PUNE), WHEREAS THE HONBLE HIGH COU RT HAS HELD AS UNDER:- 13. THE FOLLOWING PRINCIPLES OF LAW CLEARLY EMERG E FROM THE DECISION OF THE SUPREME COURT:- (I) THERE MUST BE A NEW UNDERTAKING WHERE SUBSTAN TIAL INVESTMENT OF FRESH CAPITAL IS MADE IN ORDER TO ENA BLE EARNING OF PROFIT ATTRIBUTABLE TO WHAT NEW CAPITAL: (II) THE MANUFACTURING OR PRODUCTION OF ARTICLES YIELDING ADDITIONAL PROFIT ATTRIBUTABLE TO A NEW OUTLAY OF C APITAL IN A SEPARATE AND DISTINCT UNIT IS THE HEART OF THE MATT ER; (III) THE TRUE TEST IS NOT WHETHER A NEW INDUSTRIAL UNDER TAKING CONNOTES EXPANSION OF THE EXISTING BUSINESS, BUT WH ETHER IT IS ALL THE SAME A NEW AND IDENTIFIABLE UNDERTAKING SEP ARATE AND DISTINCT FROM THE EXISTING BUSINESS; I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 11 - (IV) IF AN UNDERTAKING CAN EXIST EVEN AFTER CESSATION OF THE PRINCIPAL BUSINESS OF THE ASSESSEE, IT CANNOT BUT B E A NEW AND SEPARATE BUSINESS OR UNDERTAKING; (V) THERE MUST E A NEW UNDERTAKING WHICH CONSTITUTES AN INTEGRATED UNIT BY ITSELF; (VI) A NEW UNIT MUST BE SET UP WITH NEW PLANT AND MACHIN ERY; AND (VII) THE FACT THAT A UNIT PRODUCES THE SAME COMMODITY DO ES NOT DISENTITLE THE ASSESSEE TO THE BENEFIT OF THE DEDUC TION. 5.2. THE FACTS IN THE CASE IN HAND ARE DISTINGUISHA BLE AS IN THE PRESENT CASE THE UNDISPUTED FACTS AS CULLED OUT FROM THE RE CORD ARE THAT THE AVERMENT OF THE ASSESSEE FOR NEW UNDERTAKING WAS ES TABLISHED BEGINNING FROM THE YEARS 1988-89 TO 1990-91 BY MAKING THE FOL LOWING INVESTMENTS:- A.Y. LAND PLANT & M/C. BUILDING 1988-89 - 559710 714943 1989-90 35820 521677 - 1990-91 - 294707 20975 5.3. IT IS ALSO NOT DISPUTED THAT THE DEPRECIATION WAS CLAIMED BY THE ASSESSEE ON THESE MACHINERY AND BUILDING DURING THE ABOVE PERIOD ON THE BASIS THAT THE MACHINERY WAS PUT TO USE. THIS TRIB UNAL IN ITS ORDER DATED 31/10/2007(SUPRA) OBSERVED THAT THE NON-UTILIZATION OF THE PLANT AND MACHINERY PURPORTEDLY PURCHASED FOR THE NEW UNIT DU RING THE PREVIOUS YEARS RELEVANT TO AYS 1988-89 TO 1990-91, OTHERWISE THAN FOR ITS PURPOSES, IN THE RELEVANT YEARS; THE SAME BEING SET UP ONLY IN AY 1991- 92. THIS BECOMES MATERIAL AS DEPRECIATION STOOD CL AIMED (AND ALSO ALLOWED) FOR THE SAID YEARS, SO THAT, UNDENIABLY, T HERE HAS BEEN A USER OF THE SAID MACHINERY FOR THE PURPOSES OF THE ASSESSEE S BUSINESS FOR EACH OF I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 12 - THE RELEVANT YEARS. AND USER FOR ANY PURPOSE PRIOR TO ITS USER FOR THE ELIGIBLE UNDERTAKING (NEW UNIT) WOULD INVALIDATE TH E ASSESSEES CLAIM U/S.80HH(2)(II)/S.80-I(2)(II); THE SAID MACHINERY E XCEEDING TWENTY PER CENT IN VALUE OF THE TOTAL MACHINERY ACQUIRED FOR T HE SETTING-UP OF THE NEW UNIT. IN THIS FACTUAL BACKGROUND, WE HAVE TO EXAMI NE WHETHER THE AO WAS JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSE E. THE CONTENTION OF THE ASSESSEE IS THAT DURING THE PERIOD AYS 1988-89 TO 1 990-91 THE MACHINERIES WERE PUT TO USE AND NO COMMERCIAL PRODUCTION WAS MADE EXCEPT THE TRIAL RUN . THE CASE OF THE REVENUE IS THAT THERE WAS NO REQUIREMENT FOR MAKING TRIAL RUN AND IN FACT, THE SO-CALLED EXPLANATION OF TRIAL RUN IS AN AFTERTHOUGHT AND JUST TO TAKE ADVANTAGE OF THE DEDUCTION AVAILABLE U/S.80I AND 80HH OF THE ACT. A S PER THE OBSERVATION OF THE AO AS TAKEN FROM THE SUBMISSIONS OF THE ASSE SSEE ITSELF CLEAR THAT THERE WAS A SUBSTANTIAL INCREASE IN THE PRODUCTION TURNOVER, WHICH IS REPRODUCED AS UNDER:- A.Y. 1988-89 RS.1,27,63,220/- (20 MONTHS) A.Y. 1989-90 RS.1,53,09,991/- A.Y. 1990-91 RS.2,00,46,759/-. 5.4. UNDER THESE FACTS, THE ONUS WAS ON THE ASSESSE E TO DEMONSTRATE THE QUANTUM OF INPUT USED IN ALL THREE YEARS WHEN THE D EPRECIATION IS CLAIMED AND ALSO THE QUANTITY OF PRODUCTION PRODUCED IN THE TRIAL RUN. SINCE THE TRIAL RUN HAS BEEN MADE IN ALL THE THREE YEARS, I T WAS INCUMBENT UPON THE ASSESSEE TO EXPLAIN THAT HOW MANY DAYS TRIAL R UN WAS CARRIED OUT AND HOW MUCH ELECTRICITY WAS CONSUMED, WHETHER RAW- MATERIAL WAS USED OR NOT, WHETHER ANY FINISHED PRODUCTS WERE PRODUCED AND WHAT WAS THE I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 13 - ACCOUNTING TREATMENT OF THESE GOODS, ETC. AND NOTHI NG HAS BEEN PLACED ON RECORD BY THE ASSESSEE. THE REVENUE HAS DEMONSTR ATED THAT THERE IS SUBSTANTIAL INCREASE IN THE PRODUCTION TURNOVER OF THE OLD UNIT AND AS PER THE REVENUE, SUCH INCREASE IN THE PRODUCTION WAS NO T POSSIBLE WHEN THE PRODUCTION MADE IN THE NEW UNIT IS UTILIZED BY THE OLD UNIT. IT IS NOT DISPUTED THAT THE MACHINERY USED BY THE TWO UNITS A RE DIFFERENT, BUT THE PRODUCT REMAINED SAME EXCEPT THE LENGTH OF THE PROD UCT. IT IS NOT COMING OUT FROM THE RECORD THAT WHAT WAS THE NATURE OF THE PRODUCT SOLD BY THE ASSESSEE DURING AYS 1988-89 TO 1990-91. IN THE ABS ENCE OF SUCH DETAILS AND ALSO COUPLED WITH THE FACTS THAT THE ASSESSEE H AS NOT EXPLAINED UNDER WHAT CIRCUMSTANCES TRIAL RUN WAS NECESSARY FOR AL L THE THREE YEARS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE I SSUE TO BE RESTORED TO THE FILE OF AO FOR VERIFICATION, WHETHER THERE WAS ONLY TRIAL RUN OF THE MACHINERY AS CLAIMED BY THE ASSESSEE OR THE ASSESSE E CARRIED OUT ANY COMMERCIAL PRODUCTION FROM NEW UNIT DURING AYS 19 88-89 TO 1990- 91. IN CASE, THE ASSESSEE IS ABLE TO PROVE ITS CLA IM OF TRIAL RUN IN THAT EVENT THE AO WOULD ALLOW THE CLAIM OF DEDUCTION AS MADE BY THE ASSESSEE. THUS, GROUND NOS.1 TO 3 OF THE ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 6. GROUND NO.4 IS AGAINST INITIATION OF PENALTY PRO CEEDINGS U/S.271(1)(C) OF THE ACT. THIS GROUND IS PREMATURE , HENCE NEEDS NO ADJUDICATION, SAME IS REJECTED AS PREMATURE. I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 14 - 7. IN THE RESULT, ASSESSEES APPEAL (ITA NO.2629/AH D/2010 FOR AY 1991-92) IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS AS INDICATED ABOVE. 8. ITA NOS.2630, 2631 & 2632/AHD/2010 FOR AYS 1993 -94, 1994-95 AND 1995-96. 8.1. IN ALL THESE THREE APPEALS, THE ASSESSEE HAS R AISED THE IDENTICAL GROUNDS AS WERE RAISED IN ITA NO.2629/AHD/2010 FOR AY 1991-92. THERE IS NO CHANGE INTO THE FACTS AND CIRCUMSTANCES , THE RESPECTIVE REPRESENTATIVE OF THE PARTIES HAVE ADOPTED THE ARGU MENTS ADDRESSED IN ITA NO.2629/AHD/2010 FOR AY 1991-92(SUPRA). AFTER HEARING BOTH THE PARTIES, GROUND NOS.1 TO 3 RAISED IN ITA NOS.2630, 2631 & 2632/AHD/2010 FOR AYS 1993-94, 1994-95 & 1995-96 AR E ALSO DECIDED IN THE TERMS AS INDICATED IN PARAS-5 TO 5.4 OF OUR ORD ER PASSED IN ITA NO.2629/AHD/2010 FOR AY 1991-92 AND THE RELEVANT PO RTION IS REPRODUCED HEREINBELOW FOR THE SAKE OF CLARITY. 5.4. UNDER THESE FACTS, THE ONUS WAS ON THE ASSESS EE TO DEMONSTRATE THE QUANTUM OF INPUT USED IN ALL THREE YEARS WHEN THE D EPRECIATION IS CLAIMED AND ALSO THE QUANTITY OF PRODUCTION PRODUCED IN THE TR IAL RUN. SINCE THE TRIAL RUN HAS BEEN MADE IN ALL THE THREE YEARS, IT WAS I NCUMBENT UPON THE ASSESSEE TO EXPLAIN THAT HOW MANY DAYS TRIAL RUN WAS CARRI ED OUT AND HOW MUCH ELECTRICITY WAS CONSUMED, WHETHER RAW-MATERIAL WAS USED OR NOT, WHETHER ANY FINISHED PRODUCTS WERE PRODUCED AND WHAT WAS THE AC COUNTING TREATMENT OF THESE GOODS, ETC. AND NOTHING HAS BEEN PLACED ON RE CORD BY THE ASSESSEE. THE REVENUE HAS DEMONSTRATED THAT THERE IS SUBSTANT IAL INCREASE IN THE PRODUCTION TURNOVER OF THE OLD UNIT AND AS PER THE REVENUE, SUCH INCREASE IN THE PRODUCTION WAS NOT POSSIBLE WHEN THE PRODUCTION MADE IN THE NEW UNIT IS UTILIZED BY THE OLD UNIT. IT IS NOT DISPUTED THAT THE MACHINERY USED BY THE TWO UNITS ARE DIFFERENT, BUT THE PRODUCT REMAINED SAME EXCEPT THE LENGTH OF THE PRODUCT. IT IS NOT COMING OUT FROM THE RECORD THAT WHAT WAS THE NATURE OF THE PRODUCT SOLD BY THE ASSESSEE DURING AYS 1988-89 TO 1990-91. IN THE ABSENCE OF SUCH DETAILS AND ALSO COUPLED WITH THE FACTS THA T THE ASSESSEE HAS NOT EXPLAINED UNDER WHAT CIRCUMSTANCES TRIAL RUN WAS NECESSARY FOR ALL THE THREE YEARS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE TO BE I TA NOS.2629,2630,2631 & 2632/AHD/2010 M/S.CONTROLLED ACOUSTIC INDS.PVT.LTD. VS.DCIT AYS1991-92,1993-94,1994-95 & 1995-96 RESPECTIVELY - 15 - RESTORED TO THE FILE OF AO FOR VERIFICATION, WHETHE R THERE WAS ONLY TRIAL RUN OF THE MACHINERY AS CLAIMED BY THE ASSESSEE OR THE ASSESSEE CARRIED OUT ANY COMMERCIAL PRODUCTION FROM NEW UNIT DURING AYS 19 88-89 TO 1990-91. IN CASE, THE ASSESSEE IS ABLE TO PROVE ITS CLAIM OF T RIAL RUN IN THAT EVENT THE AO WOULD ALLOW THE CLAIM OF DEDUCTION AS MADE BY THE A SSESSEE. THUS, GROUND NOS.1 TO 3 OF THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 8.2. GROUND NO.4 OF THE APPEALS IS AGAINST INITIATI ON OF PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT. THIS COMMON GROUND IS PREMATURE, HENCE NEEDS NO ADJUDICATION, SAME IS REJ ECTED AS SUCH. AS A RESULT, ALL THE THREE APPEALS OF THE ASSESSEE ARE P ARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS AS INDICATED ABOV E. 9. IN THE COMBINED RESULT, ALL THE FOUR APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES IN THE TERMS INDIC ATED HEREINABOVE. SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/ 09/2014 /'.., .../ T.C. NAIR, SR. PS , & 0$1 21+$ , & 0$1 21+$ , & 0$1 21+$ , & 0$1 21+$/ COPY OF THE ORDER FORWARDED TO : 1. 34 / THE APPELLANT 2. 0534 / THE RESPONDENT. 3. !! $ '6 / CONCERNED CIT 4. '6() / THE CIT(A)-VI, AHMEDABAD 5. 1 #7 0$ , , / DR, ITAT, AHMEDABAD 6. 789 :% / GUARD FILE. ,' ,' ,' ,' / BY ORDER, 51$ 0$ //TRUE COPY// ; ;; ;/ // / !< !< !< !< ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD