The DCIT, Circle-1(1), Baroda V. M/s. Amigo Brushes Pvt.Ltd., Baroda

ITA 2674/AHD/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89645 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-06-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 13-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Question of law; Deemed dividend; Capital expenditure
• Section: 11A; 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.2674/AHD/2010 ASST. YEAR 2000-01 DY. CIT, CIR-1(2), BARODA VS. AMIGO BRUSHES (P) LTD., (NOW JEWEL CONSUMER CARE (P) LTD.)SUBHAAG, B/15-16, RAMIN PARK, OLD PADRA ROAD, BARODA. PAN :AAACA 6891 M APPELLANT RESPONDENT AND ITA NOS.2617/AHD/2010 ASST. YEAR 2000-01 DY. CIT, CIR-1(2), BARODA VS. JEWEL CONSUMER CARE P. LTD. (FOR AND ON BEHALF OF GORADIA INNOVATIVE TECHNOLOGIES (P) LTD./DIAMOND MOULDERS (P) LTD., SUBHAAG, B/15- 16, RAMIN PARK, OLD PADRA ROAD, BARODA. PAN: AAACD 8040 L APPELLANT BY : SHRI B. L. YADAV, SR. DR RESPONDENT BY : SHRI S. N. SOPARKAR, AR ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 2 DATE OF HEARING : 10/06/2015 DATE OF PRONOUNCEMENT :29/06/2015 O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER. BOTH THESE APPEALS OF REVENUE PERTAIN TO THE SAME GROUP OF COMPANIES AND THE ISSUES BEING SIMILAR, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP ITA NO. 2674/AHD/2010 FOR AY 20 00-01 WHEREIN THE FOLLOWING GROUNDS HAVE BEEN RAISED:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.58,12,248/- MADE U/S 2(22)(E) OF THE ACT ON ACCO UNT OF ADVANCE RECEIVED FROM SISTER CONCERN WITHOUT APPREC IATING THE DEEMING PROVISIONS U/S 2(22)(E) OF THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.10,91,373/- ON ACCOUNT OF DISALLOWANCE OF FOREIG N TRAVEL EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD FAILED TO ESTABLISH THAT THE EXPENDITURE WAS IN CURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,01,80 4/- MADE ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 3 ON ACCOUNT OF REPAIRS FOR EXCAVATION OF POND, PURCH ASE OF WOOD SHAFT, PLY, BURMA TEAK WOOD, TILES ETC. TREATI NG THE SAME AS CAPITAL IN NATURE. THE LD. CIT(A) ERRED IN NOT A PPRECIATING THE FACT THAT THE EXPENDITURE INCURRED HAD AN ENDUR ING BENEFIT. 3. IN ITA NO.2674/AHD/2010 FOR AY 2000-01. GROUND N O.1 IS REGARDING OF ADDITION OF RS.58,12,248/- U/S 2(22)(E ) CONSIDERING THE SAME TO BE DEEMED DIVIDEND. ASSESSING OFFICER OBSERVED THAT ASSESSEE COMPANY HAD RECEIVED LOANS FROM M/S BARODA PRECIMOUND (P) LTD., M/S PEARL BRISTLERS (P) LTD., M/S OPAL BRISTLERS PVT. LTD. & M/S DAISY PACKERS PVT. LTD. I T WAS FURTHER NOTED THAT SMT. GEETA GORADIA HAD SHARE HOLDING IN EXCESS OF 20% IN THE ASSESSEE COMPANY AS WELL AS MORE THAN 20% IN EACH OF THE ABOVE COMPANIES. HE ALSO FURTHER OBSERVED THAT EAC H OF THE ABOVE COMPANIES HAD ACCUMULATED PROFITS AS ON THE FIRST D ATE OF THE ACCOUNTING PERIOD. HENCE IT WAS HELD THAT THE PROVI SIONS OF SECTION 2(22)(E) WERE ATTRACTED AND THE ADVANCES/LOANS AS U NDER WERE BROUGHT TO TAX AS DEEMED DIVIDEND :- A) BARODA PRECIMOULD PVT. LTD. RS.41,00,000/- B) PEARL BRISTLERS PVT. LTD. RS.8,92,00/- C) OPAL BRISTLERS PVT. LTD. RS.4,20,248/- D) DAISY PACKERS PVT. LTD. RS.4,00,000/- TOTAL RS.58,12,248/- ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 4 3.1. THE MATTER WAS CARRIED IN APPEAL BEFORE THE FI RST APPELLATE AUTHORITY WHEREIN IT WAS SUBMITTED THAT IDENTICAL I SSUE HAS BEEN DECIDED BY THE HONBLE ITAT IN FAVOUR OF ASSESSEE, IN CASE OF ASSESSEES GROUP COMPANIES I.E. DAISY PACKERS PVT. LTD. VS. ACIT AND DENTA BRUSHES PVT. LTD. VS. ACIT FOR AY 2000-01 (ITA NO.1747 & 1086/AHD/2006), M/S JEWEL BRUSHES PVT. LT D. VS. ACIT FOR AY 2003-04 (ITA NO.157/AHD/2008), GARODIA INNOVATIVE TECHNOLOGIES PVT. LTD. FOR AY 2000-01 (I TA NO.1655/AHD/2006). IT WAS PRAYED THAT SINCE THE ISS UE WAS IDENTICAL, THE TRIBUNALS ORDERS INDICATED MAY BE F OLLOWED. IN THIS BACKGROUND, THE LD. CIT(A) OBSERVED THAT IN THE CAS E OF ASSESSEES GROUP COMPANIES, IN THREE SEPARATE ORDERS, THE TRIB UNAL HAS HELD THAT THE PROVISIONS OF SECTION 2(22)(E) WOULD NOT B E ATTRACTED IN THE CASE WHERE THE LOAN WAS MADE TO A PERSON WHO WAS NO T A SHAREHOLDER OR BENEFICIAL OWNER OF SHARES OF THE LE NDER COMPANY. IN THE INSTANT CASE ALSO THE ASSESSEE DID NOT HAVE EVEN A SINGLE SHARE IN THE LENDER COMPANY. HENCE FOLLOWING THE DE CISION OF THE ITAT, MUMBAI SPECIAL BENCH IN ACIT VS. BHAUMIK COLO UR PVT. LTD. (2009) 313 ITR (AT) 146 AS WELL AS IN THE CASE OF ASSESSEES GROUP COMPANIES AS MENTIONED ABOVE, THE ADDITION OF RS.58,12,248/- WAS DELETED BY CIT(A). THE SAME HAS BEEN OPPOSED BY THE REVENUE BEFORE US. ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 5 3.2 THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFF ICER AND STATED THAT LD. CIT(A) HAS WRONGLY DELETED THE ADDI TION. SO, THE IMPUGNED ORDER MAY BE SET ASIDE AND THAT OF THE ASS ESSING OFFICER BE RESTORED. ON THE OTHER HAND, THE LD. AR SUPPORT ED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT THE ISSUE IS NOW COVE RED IN FAVOUR OF ASSESSEE BY THE DECISIONS OF HONBLE GUJARAT HIGH C OURT IN THE CASE OF CIT VS. DAISY PACKERS PVT. LTD. VIDE ORDER DATED 18/07/2012 (COPY OF ORDER HAS BEEN SUBMITTED WHICH IS PLACED ON RECORD). 3.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH MATERIAL ON RECORD, WE FIND THAT HONBLE GUJARAT HI GH COURT IN THE CASE OF CIT VS. DAISY PACKERS PVT. LTD. VIDE ORDER DATED 18/07/2012 IN TAX APPEAL NO.212 OF 2010, HAS DECIDE D THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER:- 2.0 THE BRIEF FACTS ARE THAT THE ASSESSEE FILED RE TURN OF INCOME FOR THE ASSESSMENT YEAR 200001 DECLARING A LOSS OF RS.4,22, 792/. THE RETURN WAS PROCESSED UNDER SECTION 143(1)(A) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') AND INCOME OF THE ASSESSEE WAS DEC LARED UNDER SECTION 115JA OF THE ACT. THEREAFTER THE CASE WAS REOPENED UNDER SECTION 147 OF THE ACT WHICH WAS SERVED ON THE ASSESSEE. THE CASE OF THE DEPARTMENT WAS THAT THE AMIGO BRUSHES PVT. LTD. HAD A TOTAL SU RPLUS OF RS.70 LACS AS ON 31ST MARCH 1999 AND IT HAS ADVANCED A LOAN TO TH E ASSESSEE TO THE TUNE OF RS.25 LACS. WHEREAS THE ASSESSEE CONTENDED THAT HE RECEIVED DEPOSIT FROM AMIGO BRUSHES PVT. LTD. AND DAISY PACK ERS PVT. LTD. WAS NOT A SHAREHOLDER IN AMIGO BRUSHES PVT. LTD. THE ASSESS ING OFFICER BY HIS ORDER DATED 30TH SEPTEMBER 2004 REJECTED THE CLAIM OF THE ASSESSEE AND TREATED THE DEPOSITS AS LOAN AND CONSEQUENTLY DEEME D TO BE A DEEMED DIVIDEND UNDER SECTION 2(22)(E) OF THE ACT AND ACCO RDINGLY COMPUTED THE TAX. THE ASSESSEE FILED APPEAL WHICH WAS DISMIS SED BY CIT(A) ON 11TH ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 6 MAY 2006. THE ASSESSEE FILED SECOND APPEAL WHICH HA S BEEN ALLOWED BY THE TRIBUNAL ON 5TH JUNE 2009 AND THE TRIBUNAL HAS HOLD THAT IT WAS NOT THE CASE OF THE DEEMED DIVIDEND AND IT WAS THE CASE OF THE DEPOSITS. THE TRIBUNAL FURTHER RECORDED FINDING THAT IT WAS NOT A LOAN GIVEN BY AMIGO BRUSHES PVT LTD. TO THE ASSESSEE COMPANY AND IT WAS INTERCORPORATE DEPOSITS. HOWEVER, WE NEED NOT GO INTO VARIOU S QUESTIONS RAISED BY LEARNED COUNSEL FOR THE PARTIES AS ADMI TTEDLY THE ASSESSEE WAS NOT SHAREHOLDER IN THE AMIGO BRUSHES PVT. LTD. THE DIVISION BENCH OF THIS COURT INCOMMISSIONER OF INCOME TAX VS. ANKITACH(P) LTD. [(2012) 340 ITR 14]. THE DELHI HIGH COURT HAS HELD THAT IF THE ASSESSEE COMPANY DOES NOT HOLD A SHARE IN OTHER COMPANY FROM WHICH I T HAD RECEIVED DEPOSIT THEN IT CANNOT BE TREATED TOBE A DEEMED DIV IDEND UNDER SECTION 2(22)(E)OF THE ACT. IN VIEW OF THIS ADMITTED POSITI ON THAT ASSESSEE IS NOT A SHAREHOLDER IN AMIGO BRUSHES PVT. LTD. AND THER EFORE, THE DEPOSIT RECEIVED BY THE ASSESSEE OF RS.25 LACS FROM AMIGO B RUSHES PVT LTD. WAS AN INTERCORPORATE DEPOSIT AND NOT A DEEMED DIVIDEND AND, THEREFORE, THOUGH THIS ASPECT HAS NOT BEEN CONSIDERED BY THE T RIBUNAL BUT SINCE THE ORDER OF THE TRIBUNAL CAN BE SUPPORTED BY ANOTHER L EGAL REASON ON THE ADMITTED FACTS, WE NEED NOT SEND THE MATTER BACK. 3.0 FOR THE AFORESAID REASONS, WE ARE OF THE CONSID ERED OPINION THAT SUBSTANTIAL QUESTION OF LAW FORMULATED BY THE DIVIS ION BENCH IS TO BE ANSWERED IN AFFIRMATIVE AGAINST THE ASSESSEE IN FAV OUR OF THE DEPARTMENT. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE IN THIS REGARD. FACTS BEING SIMILAR SO FOLLOWING SAME REASONING, WE ARE N OT INCLINED TO INTERFERE IN THE ORDER OF LD. CIT(A) WHO HAS DELETE D THE IMPUGNED ADDITION OF RS.58,12,248/- MADE U/S 2(22)(E) ON ACC OUNT OF ADVANCE RECEIVED FROM SISTER CONCERN. THE ASSESSEE COMPANY DOES NOT HOLD A SHARE IN LENDER COMPANY FROM WHICH IT HA D RECEIVED DEPOSIT THEN IT CANNOT BE TREATED TO BE A DEEMED DI VIDEND UNDER SECTION 2(22)(E) OF THE ACT. IT IS AN UNDISPUTED F ACT THAT ASSESSEE IS NOT A SHAREHOLDER OF LENDER COMPANY, THEREFORE, THE DEPOSIT RECEIVED BY THE ASSESSEE FROM SAID LENDER COMPANIES WAS AN INTER- ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 7 CORPORATE DEPOSIT AND NOT A DEEMED DIVIDEND, THEREF ORE, CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. WE UPHOLD THE SAME. 4. GROUND NO.2 RELATES TO DISALLOWANCE OF FOREIGN T RAVEL EXPENSES OF RS.10,97,373/- ON THE GROUND THAT THE S AME WERE NOT ESTABLISHED TO BE FOR BUSINESS PURPOSES. 4.1 THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT(A) AND HAVING CONSIDERED THE SUBMISSIONS OF ASSESSEE THE L D. CIT(A) DELETED THE IMPUGNED ADDITION. THE REVENUE BEING AG GRIEVED BY THE ORDER OF CIT(A) HAS COME IN APPEAL BEFORE US. 4.2 THE LD. DR SUPPORTED THE ORDER OF AO AND SUBMIT TED THAT CIT(A) HAS WRONGLY DELETED THE ADDITION. SO HIS ORD ER MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. ON THE OTHER HAND, THE LD. AR SUPPORTED THE ORDER OF LD. CIT(A) AND CONTENDED THA T SIMILAR ISSUE CAME UP BEFORE THE TRIBUNAL IN THE CASE OF JEWEL CO NSUMER CARE PVT. LTD. VS. ACIT IN ITA NO.158/AHD/2008 FOR AY 20 04-05 AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF ASSESSEE. C OPY OF ORDER PLACED ON RECORD. 4.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL ON RECORD, WE FIND FORCE IN THE SUBMIS SIONS OF LD. AR. ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 8 WE FIND THAT THE TRIBUNAL IN THE CASE OF JEWEL CONS UMER CARE (P) LTD. (SUPRA) HAS DECIDED THE ISSUE WITH THE FOLLOWI NG OBSERVATION:- 5. WE FIND FROM THE FACTS OF THE CASE THAT THE AS SESSEE IS IN THE BUSINESS OF MANUFACTURING OF TOOTH BRUSHES AND THE ASSESSEES MD SHRI AMIT GORADIA, WHO IS AN IIT MECH ANICAL ENGINEER VISITED M/S ANTON ZAHARONSKY, A LEADING TO OTH BRUSH MACHINERY MANUFACTURING COMPANY IN GERMANY. T HE ASSESSEE COMPANY MANUFACTURES TOOTH BRUSHES USING B RISTLING MACHINES AND MOULDS AND OTHER ACCESSORIES SUPPLIED BY M/S ANTON ZAHARONSKY. ACCORDING TO THE ASSESSEE, THESE MACHINES AND MOULDS ARE HIGHLY TECHNICAL AND PRECIS ION ITEMS AND REQUIRE FREQUENT CHANGES AND REPAIRS OF S PARES AND REQUIRED TO BE IMPORTED FROM GERMANY. WE FIND FROM THE FACTS OF THE CASE THAT THE ASSESSEE SUBMITTED TWO R EPORTS WHICH CONTAINED THAT THE ASSESSEE VISITED GERMANY T O NEGOTIATE SUPPLY OF SPARES FOR THE COMPANYS MACHIN ES AND ALSO UNDERSTAND CERTAIN TECHNICAL ISSUES RELATED TO THE OPERATIONS OF THE MACHINES. IN VIEW OF THESE FACTS, THE ASSESSEE INCURRED THIS FOREIGN TRAVELING EXPENDITUR E. WE FIND NO EVIDENCE THAT THESE TOUR EXPENDITURES ARE NOT FO R THE PURPOSE OF THE BUSINESS RATHER IT IS FOR NEGOTIATIN G FOR SPARES AND PURCHASES OF MANUFACTURING MACHINERY OF TOOTH B RUSHES, THE VISIT WAS UNDERTAKEN BY THE MANAGING DIRECTOR. WE FIND THAT THE TOUR EXPENDITURE INCURRED BY THE ASSESSEE COMPANY WAS FOR THE PURPOSE OF BUSINESS WHOLLY AND EXCLUSIV ELY. ACCORDINGLY, WE DELETE THE DISALLOWANCE AND ALLOW T HIS ISSUE OF THE ASSESSEES APPEAL. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE BY THE R EVENUE. FACTS BEING SIMILAR SO FOLLOWING SAME REASONING WE FIND N O INFIRMITY IN THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 9 5. NEXT GROUND IS REGARDING DELETION OF ADDITION OF RS.1,01,804/- MADE ON ACCOUNT OF REPAIRS FOR EXCAVA TION OF POND, PURCHASE OF WOOD SHAFT, PLY, BURMA TEAK WOOD, TILES ETC. TREATING THE SAME AS CAPITAL IN NATURE. THE FACTS OF THE CA SE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIM ED EXPENDITURE ON ACCOUNT OF REPAIRS FOR EXCAVATION OF POND, PURCH ASE OF WOOD SHAFT, PLY, BURMA TEAK WOOD, TILES, DOOR, ETC. AGGR EGATING TO RS.1,13,116/-. HE HELD THE SAME TO BE OF CAPITAL NA TURE. THE NET EXPENDITURE OF RS.1,01,804/- WAS DISALLOWED AFTER A LLOWING DEPRECIATION AMOUNTING TO RS.11,311/-. 5.1 AGGRIEVED WITH THE ACTION OF ASSESSING OFFICER THE ASSESSEE WENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY . IT WAS SUBMITTED BY THE ASSESSEE THAT THE EXPENDITURE WAS INCURRED F OR REPAIRING OF POND AND SIMILARLY FOR REPLACEMENT OF VARIOUS PARTS OF DOORS/WINDOWS OF THE BUILDING AND HENCE WAS ALLOWAB LE. THE EXPENDITURE INCURRED AMOUNTS TO CURRENT REPAIR AND NOT CAPITAL EXPENDITURE. THE SAME IS ALLOWABLE. THE CIT(A) AFTE R CONSIDERING THE SUBMISSIONS OF ASSESSEE ALLOWED THE IMPUGNED AM OUNT OF RS.1,01,804/- OBSERVING THAT THE EXPENDITURE WAS ON ACCOUNT OF REPAIRS AND REPLACEMENT AND HENCE LAY IN THE REVENU E FIELD AND NOT IN THE CAPITAL FIELD. ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 10 5.2 BEING AGGRIEVED BY THIS ORDER THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR RELIED ON THE ORDER OF ASSESSING OF FICER WHEREAS THE LD. AR SUPPORTED THE ORDER OF CIT(A). 5.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL WE FIND THAT SOME IMPORTANT PRINCIPLES HAVE BEEN CULLED OUT ON THE ISSUE ON THE BASIS OF VARIOUS JUD ICIAL PRONOUNCEMENTS. AN EXPENDITURE WHICH INVOLVES MERE REPLACEMENT OF A PART OF THE MACHINE AND NOT THE EN TIRE MACHINE, OR DOES NOT RESULT IN THE CREATION OF ANY NEW ASSET, C ANNOT BE TERMED AS CAPITAL EXPENDITURE. THEREFORE, THE IMPUGNED REP AIR EXPENDITURE WOULD AMOUNT TO A REVENUE EXPENSE AND IT WOULD QUAL IFY FOR DEDUCTION AS REPAIRS AND MAINTENANCE. IN VIEW OF T HIS, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A). WE UPHOLD THE SAM E. 6. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. 7. NOW WE TAKE ITA NO.2617/AHD/2010 FOR AY 2000-01 FILED BY REVENUE ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS .20,00,000 CONSIDERING THE SAME AS DEEMED DIVIDEND WITHOUT APPRECIATING THE FACT THAT THE DIRECTOR OF THE ASSE SSEE COMPANY HAD SHARE HOLDING TO THE EXTENT OF 75.98% I N THE ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 11 ASSESSEE COMPANY AS WELL AS MORE THAN 20% SHARE IN AMIGO BRUSHES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION UNDE R SECTION 80IA OF THE ACT CLAIMED BY THE ASSESSEE AFTER CONSI DERING THE REPORT OF THE CHARTERED ENGINEER WITHOUT APPRECIATI NG THE FACT THE ASSESSEE HAD NOT PRODUCED SSI CERTIFICATE ISSUE D BY THE DISTRICT INDUSTRIES COMMISSIONER ESPECIALLY BECAUSE THE ASSESSEE HAD PLANT AND MACHINERY WORTH RS.3 CRORES AT THE BEGINNING OF THE YEAR. 7.1 THE FIRST ISSUE OF ITA NO.2617/AHD/2010 FOR AY 2000-01 IS REGARDING DELETION OF ADDITION OF RS.20,00,000/- BE ING DEEMED DIVIDEND. THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE COMPANY HAD RECEIVED LOAN OF RS.20 LAKHS FROM M/S A MIGO BRUSHES. IT WAS FURTHER NOTED THAT A DIRECTOR OF TH E ASSESSEE COMPANY, M/S GEETA GORADIA, HAD SHARE HOLDING TO TH E EXTENT OF 75.98% IN THE ASSESSEE COMPANY AS WELL AS MORE THAN 20% IN AMIGO BRUSHES. IT WAS ALSO OBSERVED THAT THE ACCUMU LATED PROFITS OF AMIGO BRUSHES AS ON THE FIRST DAY OF ACCOUNTING PERIOD STOOD AT RS.73,78,514/-. HENCE IT WAS HELD THAT THE PROVISIO NS OF SECTION 2(22)(E) WERE ATTRACTED AND THE ADVANCE/LOAN OF RS. 20,00,000 WAS BROUGHT TO TAX AS DEEMED DIVIDEND. 7.2 THE MATTER WAS CARRIED IN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY AND VARIOUS CONTENTIONS WERE RAISED IN SU PPORT OF ITS ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 12 CLAIM. THE FIRST APPELLATE AUTHORITY AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT INDEED ON THE SAME FACTS IN THE CASE OF ASSESSEES GROUP COMPANIES, IN THREE SEPARATE ORDERS, THE ITAT HAS HELD THAT THE PROVISIONS OF SECTION 2( 22)(E) WOULD NOT BE ATTRACTED WHERE THE LOAN WAS MADE TO A PERSON WH O WAS NOT A SHAREHOLDER OR BENEFICIAL OWNER OF SHARES OF THE LE NDER COMPANY. IN THE INSTANT CASE ALSO THE ASSESSEE DID NOT HAVE EVEN A SINGLE SHARE IN THE LENDER COMPANY, I.E. AMIGO BRUSHES. HE NCE FOLLOWING THE DECISION OF THE TRIBUNAL, MUMBAI SPECIAL BENCH IN ACIT VS. BHAUMIK COLOUR PVT. LTD. 313 ITR (AT) 146 AS WELL A S IN THE CASE OF ASSESSEES GROUP COMPANIES ADDITION OF RS.20,00, 000 ADDITION WAS DIRECTED TO BE DELETED. 7.3 BEING AGGRIEVED WITH THIS ORDER, THE REVENUE HA S COME IN APPEAL BEFORE US. THE LD. DR SUPPORTED THE ORDER O F ASSESSING OFFICER, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE R ELIED ON THE ORDER OF CIT(A). 7.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS I DENTICAL TO THE ISSUE RAISED IN ITA NO.2674/AHD/2010 FOR AY 2000-01 IN THE CASE OF AMIGO BRUSHES (P) LTD. WHICH HAS BEEN DECIDED BY US AFTER DETAILED DISCUSSION VIDE PARA NO.3.3 OF THIS ORDER. FACTS BEING ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 13 SIMILAR SO SAME REASONING WE UPHOLD THE FINDING OF CIT(A) ON THIS ISSUE. 8. THE NEXT GROUND OF THE APPEAL IS REGARDING ALLOW ING DEDUCTION UNDER SECTION 80IA OF THE ACT CLAIMED BY THE ASSESSEE AFTER CONSIDERING THE REPORT OF CHARTERED ENGINEER WITHOUT APPRECIATING THE FACT THE ASSESSEE HAD NOT PRODUCED SSI CERTIFICATE ISSUED BY THE DISTRICT INDUSTRIES COMMISSIONER ESPE CIALLY BECAUSE THE ASSESSEE HAD PLANT AND MACHINERY WORTH RS.3 CRO RES AT THE BEGINNING OF THE YEAR. BRIEF FACTS OF THE CASE ARE THAT THE COMPANY WAS ENGAGED IN MANUFACTURING TOOTHBRUSH HANDLES ON JOB WORK BASIS FOR ITS ASSOCIATE COMPANIES WHO WERE MANUFACT URERS OF TOOTHBRUSHES. THE COMPANY HAD CLAIMED DEDUCTION UND ER SECTION 80IA ON THE GROUND THAT IT WAS A SMALL SCALE INDUST RIAL UNDERTAKING. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER OBSERVED THAT THE ASSESSEE WAS NOT REGISTER ED AS A SMALL SCALE INDUSTRIAL UNDERTAKING WITH THE DISTRICT INDU STRIES COMMISSIONER. THE ASSESSING OFFICER HENCE CONCLUDED THAT ON THIS ASPECT ITSELF, THE CLAIM OF THE ASSESSEE FOR DEDUCT ION U/S 80IA MUST FAIL. THE ASSESSING OFFICER FURTHER OBSERVED THAT T HOUGH THE ACTIVITY OF MANUFACTURING TOOTHBRUSHES WAS RESERVED FOR THE SSI SECTOR, THE SAME COULD NOT BE SAID TO COVER THE ACT IVITY OF MANUFACTURE OF TOOTHBRUSH HANDLES. IT WAS NOTED THA T UNDER VARIOUS ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 14 NOTIFICATIONS ISSUED UNDER THE INDUSTRIES (DEVELOPM ENT AND REGULATION) ACT (IDRA), THE LIMITS FOR INVESTMENT O F AN SSI UNIT IN PLANT & MACHINERY FROM 10/12/1997 WAS RS.3 CRORES A ND THE SAME WAS REDUCED TO RS.1 CRORE FROM 10/12/1999. THE ASSE SSING OFFICER FOUND THAT INVESTMENT OF THE ASSESSEE AS AT THE BEG INNING OF THE YEAR ITSELF WAS ABOVE RS. 3 CRORES AND HENCE THE AS SESSEE COULD NOT BE CONSIDERED AS AN SSI UNIT. THEREFORE, THE ASSESS ING OFFICER, REJECTED THE CLAIM OF ASSESSEE. 8.1 THE MATTER WAS CARRIED IN APPEAL BEFORE THE FIR ST APPELLATE AUTHORITY WHEREIN THE CIT(A) CONSIDERED THE SUBMISS IONS RAISED ON BEHALF OF THE ASSESSEE, THE REMAND REPORTS OF THE A SSESSING OFFICER AND THE FACTS OF THE CASE. HE OBSERVED THAT UPTO AS ST. YEAR 1999- 2000, SECTION 80IA(2)(IV)(D) ENTITLED A SMALL SCALE INDUSTRIAL UNDERTAKING TO CLAIM DEDUCTION U/S 80IA. HOWEVER, W .E.F. 1.4.2000, I.E. ASST. YEAR 2000-01 AND ONWARDS, SECT ION 80IB CAME INTO THE STATUTE BOOK. THE PROVISIONS OF SECTION 80 IB WOULD BE APPLICABLE TO THE ASSESSEES CASE. AS PER SECTION 8 0IB(II), THE SAME BENEFIT CONTINUED TO BE EXTENDED TO AN INDUSTRIAL U NDERTAKING BEING A SMALL SCALE INDUSTRIAL UNDERTAKING (SSIU). THE AS SESSEE HAD CLAIMED THE DEDUCTION IN ITS CAPACITY AS SSIU. THE ASSESSING OFFICER HAD SOUGHT TO DISALLOW THE DEDUCTION U/S 80 IB TREATING THE ASSESSEE AS BEING AN ENTERPRISE WHICH DID NOT FALL WITHIN THE ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 15 DEFINITION OF SSIU FOR THE REASON THAT THE VALUE OF ITS ASSETS EXCEEDED THE SPECIFIED LIMIT, I.E. RS.3 CRORES AND ALSO ON THE GROUND THAT THE UNIT WAS NOT REGISTERED AS A SMALL SCALE INDUSTRIAL UNDERTAKING WITH THE DEPARTMENT OF INDUSTRIES. SMAL L SCALE INDUSTRIAL UNDERTAKING HAS BEEN DEFINED IN SUB-SECT ION 14(G) OF SECTION 80IB TO MEAN AN INDUSTRIAL UNDERTAKING WH ICH IS, AS ON THE LAST DAY OF THE PREVIOUS YEAR, REGARDED AS A SM ALL SCALE INDUSTRIAL UNDERTAKING U/S 11B OF INDUSTRIES DEVELO PMENT AND REGULARATION ACT (IDRA), 1941. SECTION 11B OF IDR A PROVIDES AS FOLLOWS :- POWER OF CENTRAL GOVERNMENT TO SPECIFY THE REQUIR EMENTS WHICH SHALL BE COMPLIED WITH BY THE SMALL SCALE INDUSTRIAL UNDERTA KINGS. 11B(1) THE CENTRAL GOVERNMENT MAY WITH A VIEW TO AS CERTAINING WHICH ANCILLARY AND SMALL SCALE INDUSTRIAL UNDERTAKINGS N EED SUPPORTIVE MEASURES, EXEMPTION OR OTHER FAVOURABLE TREATMENT UNDER THIS ACT TO ENABLE THEM TO MAINTAIN THEIR VIABILITY AND STRENGTH SO AS TO BE E FFECTIVE IN. (A) PROMOTING IN A HARMONIOUS MANNER THE INDUSTRIAL ECO NOMY OF THE COUNTRY AND EASING THE PROBLEM OF UNEMPLOYMENT, AND (B) SECURING THAT THE OWNERSHIP AND CONTROL OF THE MATE RIAL RESOURCES OF THE COMMUNITY ARE SO DISTRIBUTED AS BE ST TO SUBSERVE THE COMMON GOOD. SPECIFY, HAVING REGARD TO THE FACTORS MENTIONED IN SUB-SECTION (2) BY NOTIFIED ORDER, THE REQUIREMENTS WHICH SHALL BE COM PLIED WITH BY AN INDUSTRIAL UNDERTAKING TO ENABLE IT TO BE REGARDED FOR THE PURPOSES OF THIS ACT, AS AN ANCILLARY OR SMALL SCALE INDUSTRIAL UNDE RTAKING AND DIFFERENT REQUIREMENTS MAY BE SO SPECIFIED FOR DIFFERENT PURP OSES OR WITH RESPECT TO ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 16 INDUSTRIAL UNDERTAKINGS ENGAGED IN THE MANUFACTURE OR PRODUCTION OF DIFFERENT ARTICLES. IN EXERCISE OF THE POWERS CONFERRED BY SECTION 11B, THE CENTRAL GOVERNMENT ISSUED NOTIFICATION SO 857(E) DT.10.12.1 997, WHICH LAYS DOWN THE REQUIREMENTS TO BE COMPLIED WITH BY I NDUSTRIAL UNDERTAKINGS FOR BEING REGARDED AS SMALL SCALE ANCI LLARY INDUSTRIES. THE RELEVANT PORTION OF THE NOTIFICATION IS REPRODU CED BELOW :- IN EXERCISE OF THE POWERS CONFERRED BY SUB-SECTIO N (1) OF SECTION 11B AND SUB-SECTION (1) OF SECTION 29B OF THE SAID ACT, AND IN SUPPRESSION OF THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE MINI STRY OF INDUSTRY (DEPARTMENT OF INDUSTRIAL DEVELOPMENT) NO.S.O. 232( E) DATED THE 2 ND APRIL, 1991, THE CENTRAL GOVERNMENT HEREBY SPECIFIES THE F OLLOWING FACTORS ON THE BASIS OF WHICH AN INDUSTRIAL UNDERTAKING SHALL BE R EGARDED AS A SMALL SCALE OR AS AN ANCILLARY INDUSTRIAL UNDERTAKING FOR THE PURP OSES OF THE SAID ACT. (1) SMALL SCALE INDUSTRIAL UNDERTAKING AN INDUSTRIAL UNDERTAKING IN WHICH THE INVESTMENT IN FIXED ASSETS IN PLANT AN D MACHINERY, WHETHER HELD ON OWNERSHIP TERMS OR ON LEASE OR ON H IRE PURCHASE, DOES NOT EXCEED RUPEES THREE CRORES. 8.1.1 IT WAS FOUND THAT EARLIER LIMIT OF RS.1 CRORE IN RESPECT OF THE INVESTMENT IN FIXED ASSETS IN PLANT AND MACHINERY N OTIFIED VIDE SO 232 (E) DT. 2.4.1991 WAS REVISED UPWARD TO RS.3 CRO RES. NOTE 2(B) OF THE NOTIFICATION DT.10.12.1997 SPECIFIES THE MAN NER OF CALCULATING THE VALUE OF PLANT AND MACHINERY FOR TH IS PURPOSE. THE NOTE READS AS UNDER :- ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 17 NOTE-2 A) IN CALCULATING THE VALUE OF PLANT & MACHINERY FOR T HE PURPOSE OF PARAGRAPHS (1) AND (2) OF THIS NOTIFICATION, THE OR IGINAL PRICE THEREOF IRRESPECTIVE OF WHETHER THE PLANT AND MACHINERY ARE NEW OR SECOND SHALL BE TAKEN INTO ACCOUNT. B) IN CALCULATING THE VALUE OF PLANT AND MACHINERY FOL LOWING SHALL BE EXCLUDED NAMELY I) COST OF EQUIPMENT SUCH AS TOOLS, JIGS, DIES, MOULDS AND SPARE PARTS FOR MAINTENANCE AND THE COST OF CONSUMABLE ST ORES. II) COST OF INSTALLATION OF PLANT AND MACHINERY, III) COST OF RESEARCH AND DEVELOPMENT EQUIPMENT AND POLL UTION CONTROL EQUIPMENT, IV) COST OF GENERATION SETS, EXTR TRANSFORMERS ETC. INS TALLED BY THE UNDERTAKING AS PER THE REGULATIONS OF THE STATE ELE CTRICITY BOARD, V) BANK CHARGES AND SERVICE CHARGES PAID TO THE NATION AL SMALL INDUSTRIES CORPORATION OR THE STATE SMALL INDUSTRIE S CORPORATION, VI) THE COST INVOLVED IN PROCUREMENT OF CABLES, WIRING, BUS BARS, ELECTRICAL CONTROL PANELS (NOT THOSE MOUNTED ON IND IVIDUAL MACHINES), OIL CIRCUIT BREAKERS/MINIATURE CIRCUIT B REAKERS ETC. WHICH ARE NECESSARILY TO BE USED FOR PROVIDING ELEC TRICAL POWER TO THE PLANT AND MACHINERY FROM THE PLACE OF MANUFACTURING/SAFETY MEASURES. VII) THE COST OF GAS PRODUCER PLANT, VIII) TRANSPORTATION CHARGES (EXCLUDING OF TAXES I.E. SAL ES TAX, EXCISE ETC.), IX) CHARGES PAID FOR TECHNICAL KNOW-HOW FOR ERECTION OF PLANT AND MACHINERY, ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 18 X) COST OF SUCH STORAGE TANKS WHICH STORE RAW MATERIAL S FINISHED PRODUCTS ONLY AND ARE LINKED WITH THE MANUFACTURING PROCESS, XI) COST OF FIVE FIGHTING EQUIPMENT. THUS IT WAS FOUND THAT (A) THE VALUE OF PLANT AND MACHINERY SHOULD NOT EXC EED RS.3 CRORES FOR AN UNDERTAKING TO BE CONSIDERED AS SSIU; AND (B) THE METHOD OF CALCULATING THE VALUE OF INVESTME NT IN PLANT AND MACHINERY HAS BEEN CLEARLY LAID DOWN, WHICH PERMITS EXCLUSION OF CERTAIN ITEMS FROM CONSIDERATION FOR THE PURPOSE OF VALUATION. FROM PERUSAL OF THE VALUATION CERTIFICATE ISSUED BY SHAN TI CONSULTING ENGINEERS, BEING GOVERNMENT APPROVED VALUERS, THE V ALUE OF INVESTMENT IN PLANT AND MACHINERY AFTER EXCLUSION A S PER THE ABOVE MENTIONED NOTIFICATION COMES TO RS.2,87,32,967/-. T HUS THE ASSESSEE COMPANY WAS WITHIN THE PRESCRIBED LIMIT OF INVESTMENT OF PLANT AND MACHINERY AND DEDUCTION U/S 80IB OF THIS AMOUNT, CANNOT BE DENIED AS OBSERVED BY CIT(A). 8.1.2 SO FAR AS THE OTHER ISSUE IS CONCERNED I.E. R ELATING TO OMISSION ON THE PART OF THE ASSESSEE TO GET ITSELF REGISTERE D AS SSIU, THE NOTIFICATION ISSUED BY THE DEPARTMENT OF INDUSTRY D T.10.12.1997 ITSELF PERMITS THE ASSESSEE TO EXERCISE AN OPINION WHETHER TO GET ITSELF REGISTERED OR NOT. THE RELEVANT PORTION OF T HE NOTIFICATION IS REPRODUCED BELOW :- ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 19 EVERY INDUSTRIAL UNDERTAKING WHICH HAS BEEN ISSUE D A CERTIFICATE OF REGISTRATION UNDER SECTION 10 OF THE SAID ACT OR A LICENCE UNDER SECTION 11, 11A AND 13 OF THE SAID ACT BY THE CENTRAL GOVER NMENT AND ARE COVERED BY THE PROVISIONS OF PARAGRAPHS (1) AND (2) ABOVE RELATING TO THE ANCILLARY OR SMALL SCALE INDUSTRIAL UNDERTAKING , MAY BE REGISTERED, AT THE DISCRETION OF THE OWNER, AS SUCH, WITHIN A P ERIOD OF ONE HUNDRED AND EIGHTY DAYS FROM THE DATE OF PUBLICATION OF THI S NOTIFICATION IN THE OFFICIAL GAZETTE. THE CIT(A) OBSERVED THAT THE ASSESSEE DID IN FACT O BTAIN TEMPORARY REGISTRATION EARLIER BUT LATER ON DID NOT EXERCISE ITS OPTION TO OBTAIN THE REGULAR CERTIFICATE OF REGISTRATION. HOWEVER, T HIS WOULD NOT TAKE AWAY FROM THE FACT THAT ASSESSEE COMPANY CONTINUED TO BE REGARDED AS A SMALL SCALE UNDERTAKING FOR THE P URPOSES OF SECTION 11B OF THE IDRA. THE ONLY REQUIREMENT AS PE R THE NOTIFICATION ISSUED U/S 11B FOR BEING REGARDED AS S SIU IS THAT THE VALUE OF INVESTMENT IN PLANT AND MACHINERY SHOULD N OT EXCEED RS.3 CRORES, SUBJECT TO ITS EXCLUSIONS. OTHER CONDITIONS RELATING TO OWNERSHIP, CONTROL, ETC. ARE NOT RELEVANT TO THE IN STANT CASE. THE CIT(A) OBSERVED THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS PRESCRIBED VIDE NOTIFICATION DT.10.12.19 97. THE ASSESSEE WAS REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING BY THE DEPARTMENT OF INDUSTRIES. ACCORDINGLY HE HELD THAT THE ASSESSEE HAD COMPLIED WITH ALL THE REQUIREMENTS FOR BEING RE GARDED AS SSIU ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 20 AND THE DEDUCTION U/S 80IB CANNOT BE DENIED ON THIS GROUND AS A WHOLE. 8.2 BEING AGGRIEVED THE REVENUE HAS COME IN APPEAL BEFORE US. THE DR SUPPORTED THE ORDER OF ASSESSING OFFICER WHE REAS ON THE OTHER HAND THE LEARNED AUTHORIZED REPRESENTATIVE RE LIED ON THE ORDER OF CIT(A). LEARNED AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT THE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASST. YE AR 2001-02 AND IN OTHER CASES. HE SUBMITTED A COPIES OF ORDERS WHI CH ARE PLACED ON RECORD. 8.3 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOI NG THROUGH THE MATERIAL ON RECORD, WE FIND THE ISSUE IS COVERE D IN FAVOUR OF ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSE ES OWN CASE. THE TRIBUNAL HAS ALLOWED THE CLAIM OF ASSESSEE IN ITA NO.1094/AHD/2008 FOR AY 2001-02 BY OBSERVING AS UND ER :- 4. NOW BEFORE US, AN ORDER OF THE RESPECTIVE CO-O RDINATE BENCH C OF THE ITAT, AHMEDABAD IN THE CASE OF KHS MACHINERY PV T. LTD. VS. ITO, ITA NO.2278/AHD/2006 DATED 19-12-2008 IS PLACED ON RECORD WHEREIN VIDE PARA-9, AN OBSERVATION HAS BEEN MADE THAT THE REGIS TRATION IS NOT A PRE- CONDITION TO AVAIL THE BENEFIT OF DEDUCTION UNDER S ECTION 80IB OF THE ACT. THE RELEVANT PORTION IS REPRODUCED BELOW: ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 21 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, WE MAY ADVERT TO THE CONT ENTION OF THE LD. DR THAT REGISTRATION OF AN INDUSTRIAL UNDERTAKING AS A N SSI IS NECESSARY FOR CONFERRING THE BENEFIT U/S.80IB OF THE ACT. WE DO NOT FIND ANY SUCH REQUIREMENT I THE SECTION 80IB OF THE ACT NOR THERE IS ANY FINDING ON THIS ASPECT IN THE IMPUGNED ORDER. THE REGISTRATION OF AN INDUSTRIAL UNDERTAKING AS AN SSI MAY ENTAIL CERTAIN BENEFITS UNDER THE INDUSTRIAL AND LABOUR LAWS. THERE IS NO SUCH P RECONDITION OF REGISTRATION TO AVAIL THE BENEFIT OF DEDUCTION U/S. 80IB OF THE ACT. THEREFORE, THE CONTENTION OF THE LD. DR BEING DEVOI D OF MERITS IS REJECTED. THE ONLY DISPUTE BEFORE US IS AS TO WHET HER THE TAXPAYER IS A SMALL SCALE INDUSTRIAL UNDERTAKING WITHIN THE MEA NING OF PROVISO TO SEC. 80IB(2)(III) READ WITH CLAUSE (G) OF SEC.80IB( 14) OF THE ACT. THE RELEVANT CLAUSE (G) DEFINES SMALL SCALE INDUSTRIAL UNDERTAKING (SSI) IN THE FOLLOWING TERMS: XXXXX IN ADDITION TO THE ABOVE DECISION OF THE RESPECTIVE CO-ORDINATE BENCH, WE HAVE ALSO BEEN INFORMED THAT IN ASSESSEES OWN CASE FOR THE SAME ASSESSMENT YEAR, THE REVENUE HAS CHALLENGED CERTAIN FINDINGS OF THE FIRST APPELLATE AUTHORITY PASSED IN THE FIRST ROUND OF TH E APPEAL, AS REFERRED ABOVE, THROUGH WHICH THE MATTER WAS REMANDED BACK TO THE A O WITH CERTAIN DIRECTIONS. HOWEVER, THE TRIBUNAL HAS CONFIRMED A LL THESE FINDINGS IN APPEAL IN ITA NO.3356/AHD/2003 (A.Y.1999-2000) ORDE R DATED 10-10-2006 (BENCH B, AHMEDABAD). THE RELEVANT PORTION IS RE PRODUCED BELOW: LEARNED COUNSEL FOR THE ASSESSEE, IN REPLY CONTEND S THAT ASSESSEE IS MANUFACTURER OF TOOTH BRUSH HANDLES FROM PLASTIC GR ANULES, WHICH IS RAW-MATERIAL. THESE GRANULES ARE PUT TO MANUFACTUR ING PROCESS AND ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 22 VARIOUS TYPES OF HANDLES MANUFACTURED WHICH IN TURN ARE SOLD TO VARIOUS TOOTH BRUSH MANUFACTURING UNIT WHO PUT IN D IFFERENT TYPE OF BRISTLES TO MAKE TOOTH BRUSHES. IT WAS CONTENDED T HAT SIMILAR ISSUE AROSE IN THE CASE OF SISTER CONCERN OF THE ASSESSEE VIZ. RUBY MOULDERS PVT. LTD. CIT(A) HELD THIS TO BE MANUFAC TURING AND ALLOWED CLAIM OF DEDUCTION UNDER SECTION 80IA. WHI LE DECIDING THIS APPEAL, CIT(A) HAS RELIED ON THE CASE OF RUBY MOULD ERS PVT. LTD. AGAINST WHICH DEPARTMENT HAS NOT FILED ANY APPEAL. LEARNED DR COULD NOT CONTROVERT ARGUMENTS OF LEARN ED COUNSEL THAT IN THE CASE OF RUBY MOULDERS PVT.LTD. DEPARTMENT HA S NOT FILED ANY APPEAL. 3. IN THE GIVEN FACTS AND CIRCUMSTANCES, IT EMERGES FROM RECORD THAT DEPARTMENT HAS ACCEPTED FINDINGS OF CIT(A) IN SISTER CONCERN CASE HOLDING SIMILAR ACTIVITY I.E. MANUFACTURE OF T OOTH BRUSH HANDLES FROM GRANULES AS MANUFACTURING ACTIVITY, ON WHICH C LAIM UNDER SECTION 80IA HAS BEEN ALLOWED. IN VIEW THEREOF, WE FIND NO INFIRMITY IN THE ORDER OF CIT(A) ALLOWING SIMILAR CLAIM. THOUGH FROM THE SIDE OF THE REVENUE, THE LEARNED DR HAS TRIED TO EXPLAIN THAT AS PER THE SAID SCHEME, IT WAS NECESSARY TO OB TAIN REGISTRATION BUT WE ARE NOT EXAMINING THE CLAIM OF REGISTRATION OF SSI UNIT AS PER THE GOVT. OF GUJARAT, INDUSTRIES AND MINES DEPARTMENT. RATHER, WE ARE EXAMINING THE PROVISO OF SECTION 80IA WHEREIN VIDE CLAUSE (F) OF SUB-SECTION 12 OF SECTION 80IA HAS DEFINED THE DEFINITION OF SMALL SCALE UN DERTAKING AS FOLLOWS: (F) SMALL-SCALE INDUSTRIAL UNDERTAKING MEANS AN I NDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PRE VIOUS YEAR, REGARDED AS A SMALL-SCALE INDUSTRIAL UNDERTAKING UN DER ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 23 SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGU LATION) ACT, 1951 (65 OF 1951). 5. IF WE CAREFULLY EXAMINE THIS SUB-CLAUSE, AS EMPH ASIZED BY THE LEARNED AR, THE TERM INDUSTRIAL UNDERTAKING IS TO BE REGARDED AS AN SSI UNDER SECTION 11B OF THE INDUSTRIAL (DEVELOPMENT AN D REGULATION) ACT. THE QUALIFYING WORD IS NOT REGISTERED, BUT THE WO RD IS REGARDED. THEREFORE, THE LEARNED AR VEHEMENTLY ARGUED THAT IT WAS AN ADMITTED FACT THAT THE DIC HAS REGARDED THIS UNDERTAKING AS A SMA LL INDUSTRIAL UNIT BY ISSUING A PROVISIONAL CERTIFICATE, BUT SOMEHOW THE FINAL CERTIFICATE OF REGISTRATION COULD NOT BE ISSUED BY THE DEPARTMENT, NEVERTHELESS, THE ASSESSEE HAD ALWAYS BEEN REGARDED AS AN SSI UNIT BY ALL THE DEPARTMENTS, INCLUDING EXCISE DEPARTMENT. WE FIND FORCE IN THE ARGUMENTS OF THE LEARNED AR AND CONSIDERING THE VIEW ALREADY TAKEN BY THE RE SPECTIVE CO-ORDINATE BENCH, AS STATED ABOVE, WE HEREBY HOLD THAT THE ASS ESSEE MUST NOT BE DENIED THE CLAIM OF DEDUCTION UNDER SECTION 80IA MERELY ON THIS TECHNICAL GROUND. WE HEREBY DIRECT THE AO TO ALLOW THE CLAIM AS PER T HE LAW. SINCE THE FACTS OF THE YEAR UNDER CONSIDERATION ARE IDENTICAL, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE ITAT IN ASSESSE ES OWN CASE, DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE UNDER SECTION 80IB IN ACCORDANCE WITH LAW. 5. IN RESULT, THE ASSESSEESS APPEAL IS ALLOWED. WE ALSO FIND THAT ON IDENTICAL ISSUE, SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL IN ITA NO.1342/AHD/2005 FOR AY 1999-20 00 IN THE CASE OF BARODA PRECIMOULD PVT. LTD. VS. ACIT VIDE I TS ORDER DATED 17 TH SEPTEMBER, 2010. NOTHING CONTRARY HAS BEEN BROUGHT TO OUR ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 24 NOTICE BY THE REVENUE. FACTS BEING SIMILAR SO FOLL OWING THE ABOVE VIEWS, WE ARE NOT INCLINED TO INTERFERE WITH THE OR DER OF CIT(A) WHO HAS ALLOWED THE CLAIM OF DEDUCTION U/S 80IA OF THE ACT, AS DISCUSSED ABOVE. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 29 TH DAY OF JUNE, 2015 SD/- SD/- (ANIL CHATURVEDI) ( SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER DATED :_29/6/15 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY.REGISTRAR,ITAT, AHMEDABAD ITA NOS. 2617 & 2674/AHD/2010 ASST. YEAR 2000-01 25 1. DATE OF DICTATION: 10/06/2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 26/6/2015 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 29/6/15 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: