The DCIT, Circle-4, Baroda V. M/s. Refoil Earth Pvt.Ltd., Baroda

ITA 456/AHD/2012

• Counselvise Citation: 45620514 RSA 2012
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Period of limitation
• Section: 143(3); 80IB; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY AM ITA NO.456/AHD/2012 (ASSESSMENT YEAR:-2005-06) THE DEPUTY COMMISSIONER OF INCOME- TAX, CIRCLE-4, BARODA V/S M/S REFOIL EARTH PVT. LTD., 23, AMARDEEP APARTMENT PASHABHAI PARK, GOTRI ROAD, BARODA PAN: AAACR 9881 K [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI B L YADAV, SR. DR ASSESSEE BY:- SHRI SUNIL TALATI, AR DATE OF HEARING:- 17-04-2012 DATE OF PRONOUNCEMENT:- 20-04-2012 O R D E R PER D K TYAGI (JM) :- THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST AN ORDER DATED 24-11-2011 PASSED B Y LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-III, [HEREINAF TER REFERRED TO AS THE LEARNED CIT(A)] BARODA FOR ASSESSMENT Y EAR (AY) 2005-06. THE ONLY EFFECTIVE GROUND RAISED BY THE RE VENUE READS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB OF THE A CT DESPITE THE FACTS THAT THE TOTAL VALUE OF THE PLANT AND MACHINE RY EXCEEDED THE LIMIT OF RS.1 CRORE AS PER THE INSTRUCTION PREVAILING WHE N THE COMPANY HAS STARTED PRODUCTION AND THEREFORE, THE ASSESSEE COMP ANY CEASES TO BE A SMALL SCALE INDUSTRY. 2 2 2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A SMALL SCALE INDUSTRY [SSI]. THE RETURN OF INCOME FOR THE YEAR UNDER APPEAL WAS FILED DECLARING TOTAL INCOME OF RS.76,53 ,500/-. THE ASSESSMENT WAS MADE U/S 143(3) DETERMINING THE TOTA L INCOME OF RS.1,09,35,928/-. AGGRIEVED BY THE ASSESSMENT ORDER , THE ASSESSEE FILED AN APPEAL BEFORE THE LEARNED CIT(A) WHO ALLOWED THE APPEAL OF THE ASSESSEE AND ALLOWED DEDUCTION U/ S 80IB OF THE ACT AMOUNTING TO RS.31,10,312/- WHICH WAS CONFIRMED BY THE ITAT. AFTER THE APPEAL EFFECT, THE INCOME WAS REDUC ED TO RS.78,25,616/-. SUBSEQUENT TO THIS, THE CASE WAS RE OPENED BY THE AO ON THE GROUND THAT THE INVESTMENT MADE BY THE AS SESSEE IN PLANT AND MACHINERY WAS MORE THAN RS.1 CRORE AND TH EREFORE, THE ASSESSEE CANNOT BE TREATED AS SMALL SCALE INDUSTRIA L UNDERTAKING AND THE ASSESSEE WAS NOT ENTITLED FOR ANY DEDUCTION U/S 80IB OF THE ACT AND CLAIM OF THE ASSESSEE WAS REJECTED AND ADDITION OF RS.31,10,312/- WAS MADE TO THE TOTAL INCOME IN THE ORDER PASSED U/S 143(3) READ WITH SECTION 147, BY OBSERVING AS U NDER:- 3.6 THE REPLY OF THE ASSESSEE IS CONSIDERED. HOWEV ER, IT IS NOT ACCEPTABLE. ON VERIFICATION OF SUBMISSION AND THE O RDER OF DEPARTMENT OF INDUSTRIAL POLICY AND PROMOTION, NEW DELHI DATED 10/12/1997 S.O. 857(E), IT IS SEEN THAT THE COST: OF GAS PRODUCER P LANTS IS EXCLUDED HOWEVER, THE COST OF GAS FIRE IS NOT EXCLUDED WHILE CALCULATING THE VALUE OF PLANT AND MACHINERY. THEREFORE, IT CLEAR T HAT THE COST OF GAS FIRE AMOUNTING TO RS.17,62,620/- USED BY THE ASSESS EE IS A PART & PARCEL OF THE COST OF PLANT AND MACHINERY. IN VIEW OF THIS, THE COST OF PLANT & MACHINERY (86,51,006/- + 17,62,620/-) EXCEE DS RS.1 CRORE. IT IS, THEREFORE, THE STATUS OF THE COMPANY CANNOT BE TREATED AS SMALL SCALE INDUSTRY. 3 3 IN VIEW OF THE ABOVE, THE ASSESSEE IS NOT ENTITLED TO AVAIL THE DEDUCTION U/S 80IB OF THE ACT AND HENCE, THE CLAIM OF DEDUCTI ON OF RS.31,10,312/- IS DISALLOWED. (ADDITION U/S 80IB RS.31,10,312/-) 3 AGGRIEVED BY THIS ORDER OF THE AO, THE ASSESSEE W ENT IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LEARNED CIT(A) IT WAS ARGUED AT LENGTH ON BEHALF OF THE ASS ESSEE THAT THE ASSESSEE COMPANY IS AN SSI UNIT AS PER PROVISIONAL REGISTRATION CERTIFICATE NO.04/18/10926/TEMP SSI DATED 19-06-199 3 AND THE PRODUCTION WAS STARTED FROM 13 TH AUGUST, 1996. THE PERMANENT REGISTRATION WAS GRANTED ON 01-07-1998. THE LIMIT O F INVESTMENT IN PLANT AND MACHINERY IS RS.3.00 CRORES TO QUALIFY AS SMALL SCALE UNIT AS PER NOTIFICATION NO. S.O. 857(E) DATED 10-1 2-1997. THE ASSESSEE FURTHER SUBMITTED THAT FURTHER CLARIFICATI ON WAS ISSUED VIDE CIRCULARS DATED 27-03-2000 AND 19-10-2000 IN W HICH IT WAS CLARIFIED THAT IF ANY UNIT HAS OBTAINED ANY PROVISI ONAL REGISTRATION ON THE BASIS OF NOTIFICATION DATED 10-12-1997 AND H AS TAKEN CONCRETE STEPS FOR IMPLEMENTING THE PROJECTS PRIOR TO 24-12-1999, IT WOULD CONTINUE THE SSI STATUS SO LONG AS THE INV ESTMENT IN PLANT AND MACHINERY DOES NOT EXCEED RS.3 CRORE. WIT HOUT PREJUDICE TO THIS SUBMISSION, IT WAS ALSO ARGUED TH AT THE AO WHILE CALCULATING THE TOTAL VALUE OF PLANT AND MACH INERY HAD WRONGLY ADDED THE COST OF GAS FIRE OF RS.17,62,620/ -, COST OF EFFLUENT TREATMENT PLANT OF RS.3,10,290/- AND COST OF PIPE LINE OF RS.2,40,875/- AGGREGATING TO RS.23,13,785/- AND ARRIVED AT THE TOTAL VALUE OF RS.1,09,64,791/- WHICH IS TOTALLY IN CORRECT. AS PER NOTIFICATION NO.S.O. 857(E) DATED 10 TH DECEMBER, 1997, THE COST OF GAS PRODUCER PLANT AND EFFLUENT TREATMENT PLANT INCLUDING 4 4 PIPE LINE ARE TO BE EXCLUDED WHILE CALCULATING THE VALUE OF PLANT AND MACHINERY AND ACCORDINGLY, THE VALUE OF PLANT A ND MACHINERY WAS RIGHTLY CONSIDERED AT RS.86,51,006/-. THE ASSESSEE FURTHER SUBMITTED THAT THE COST OF FOLLOWI NG ITEMS ARE ALSO REQUIRED TO BE EXCLUDED FROM THE TOTAL VALUE O F PLANT AND MACHINERY FOR QUALIFYING SSI UNIT. [1] SPARE PARTS [2] CONSUMABLE STORES [3] COST OF EXTRA GENERATOR TRANSFORMER [4] INSTALLATION OF CABLES, WIRINGS, ELECTRICAL CON TROL PANELS USED FOR PROVIDING ELECTRICAL POWER TO PLANT AND MACHINERY [5] TRANSPORTATION CHARGES [6] COST OF STORAGE TANKS [7] COST OF FIRE FIGHTING EQUIPMENTS IF THE VALUE OF THESE ITEMS IS REDUCED, THE VALUE O F PLANT AND MACHINERY FOR THE PURPOSE OF QUALIFYING AS SSI UNIT WILL REMAIN RS.72,20,605/- AND THEREFORE, REJECTION OF CLAIM WA S TOTALLY INCORRECT. THE AO WAS ASKED TO GIVE HIS REMAND REPO RT ON THESE SUBMISSIONS OF THE ASSESSEE. AFTER TAKING INTO CONS IDERATION THE SUBMISSIONS OF THE ASSESSEE AND THE COMMENTS OF THE ASSESSEE ON REMAND REPORT OF THE AO, THE LEARNED CIT(A) DIRECTE D THE AO TO ACCEPT THE CLAIM OF THE ASSESSEE THAT IT WAS A SMAL L SCALE INDUSTRIAL UNIT AS ON 31-03-2005 AND HENCE THE ASSE SSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IB AS CLAIMED BY IT, B Y OBSERVING AS UNDER:- 6.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT, THE REMAND REPORT AND REPLY TO REMAND REPORT. IN ORDER TO ASCERTAIN AS TO WHETHER THE APPELLANT IS ELIGIBLE FOR DEDUCTION UND ER SECTION 80 IB OR NOT ON ACCOUNT OF BEING A SMALLER SCALE INDUSTRY, I T IS IMPORTANT TO TAKE NOTE OF THE LEGAL PROVISIONS IN THIS REGARD OVER TH E YEARS. CLAUSE (G) OF 5 5 SUBSECTION 14 OF SECTION 80IB GIVES THE DEFINITION OF A SMALL SCALE INDUSTRIAL UNDERTAKING AS FOLLOWS: 'SMALL SCALE IND USTRIAL UNDERTAKING MEANS AN INDUSTRIAL UNDERTAKING WHICH IS, AS ON THE LAST DAY OF THE PREVIOUS YEAR, REGARDED AS A SMALL SCALE INDUSTRIAL UNDERTAKING UNDER SECTION 11B OF THE INDUSTRIES (DEVELOPMENT AND REGU LATION) ACT, 1951 (65 OF 1951).' 6.4 AS IS QUITE CLEAR FROM THE DEFINITION OF A SMAL L SCALE INDUSTRIAL UNDERTAKING GIVEN IN SECTION 80IB, IT IS TO BE SEEN AT THE END OF EVERY PREVIOUS YEAR AS TO WHETHER THE INDUSTRIAL UNDERTAK ING FULFILS THESE CONDITIONS OF BEING A SMALL SCALE INDUSTRIAL UNDERT AKING OR NOT. FOR THIS PURPOSE RELIANCE CAN BE PLACED UPON FOLLOWING DECIS IONS: 1 [2009] 34 SOT 1 (JP.)(URO), ITAT JAIPUR BENCH 'B' , ASSISTANT COMMISSIONER OF INCOME-TAX V. SHIV AGREVO LTD. 2 [2009] 226 CTR 652(GUJ.), HIGH COURT OF GUJARAT, COMMISSIONER OF INCOME-TAX V. VIKSHRA TRADING & INV ESTMENTS LTD. ON THE BASIS OF THESE DECISIONS IT IS CLEAR THAT AT THE END OF EVERY PREVIOUS YEAR, IT IS TO BE DECIDED WHETHER IS AN IN DUSTRIAL UNDERTAKING IS A SMALL-SCALE INDUSTRIAL UNDERTAKING OR NOT IN O RDER TO CLAIM DEDUCTION UNDER SECTION 80IB. 6.5 NOTIFICATIONS LAYING DOWN THE PRECISE DEFINITIO N OF SMALL SCALE INDUSTRIES ARE ISSUED BY GOVERNMENT OF INDIA UNDER THE SECTION 11B OF THE IDR ACT 1951 FROM TIME TO TIME. THIS HAS GENERA LLY BEEN DONE IN TERMS OF INVESTMENT LIMIT IN PLANT AND MACHINERY(CA LCULATED AT ORIGINAL VALUE). 6.6 IN EXERCISE OF POWERS GRANTED UNDER SECTION 11B THE OF THE IDR ACT, NUMBER OF NOTIFICATIONS HAVE BEEN ISSUED OVER THE YEARS. THE PRINCIPAL ORDER PRESENTLY IN FORCE WAS PUBLISHED IN THE GAZETTE OF INDIA VIDE NUMBER S.O. 857(E) DATED 10TH DECEMBER, 1997 AND SUBSEQUENTLY AMENDED VIDE NUMBER S.O. 1288(E) DATED 24TH DECEMBER, 1999, S.O. 1013(E) DATED 9TH OCTOBER, 200 1, S.O. 655(E) DATED 5TH JUNE, 2003, S.O. 1109(E) DATED 13THOCT., 2004 AND S.O. 229 (E) DATED 21ST FEBRUARY, 2006. 6.7 THE RELEVANT NOTIFICATIONS REQUIRED TO DECIDE A S TO WHETHER THE APPELLANT IS A SMALL SCALE INDUSTRIAL UNDERTAKING O R NOT ARE AS FOLLOWS: A) S.O.857(E) DATED 10TH DECEMBER, 1997: THIS NOTIF ICATION PROVIDED 6 6 THAT AN INDUSTRIAL UNDERTAKING IN WHICH THE INVESTM ENT IN FIXED ASSETS IN PLANT AND MACHINERY, WHETHER HELD ON OWNERSHIP T ERMS OF ON LEASE OR ON HIRE PURCHASE, DOES NOT EXCEED RUPEES THREE C RORES SHALL BE REGARDED AS SMALL SCALE INDUSTRIAL UNDERTAKING. IT ALSO PROVIDED THAT NO SMALL SCALE INDUSTRIAL UNDERTAKING REFERRED TO ABOV E SHALL BE SUBSIDIARY OF, OR OWNED OR CONTROLLED BY ANY OTHER INDUSTRIAL UNDERTAKING. IT ALSO PROVIDED THAT IN CALCULATING THE VALUE OF PLANT AND MACHINERY FOR THE PURPOSES OF PARAGRAPHS (1) AND (2) OF THIS NOTIFICA TION, THE ORIGINAL PRICE THEREOF, IRRESPECTIVE OF WHETHER THE PLANT AN D MACHINERY ARE NEW OR SECOND HAND, SHALL BE TAKEN INTO ACCOUNT. FURTHE R IN CALCULATING THE VALUE OF PLANT AND MACHINERY, THE FOLLOWING IS TO B E EXCLUDED, NAMELY:- I. THE COST OF EQUIPMENTS SUCH AS TOOLS, JIGS, DIES, M OULDS AND SPARE PARTS FOR MAINTENANCE AND THE COST OF CONSUMA BLE STORES; II. THE COST OF INSTALLATION OF PLANT AND MACHINERY; III. THE COST OF RESEARCH AND DEVELOPMENT EQUIPMENT AND POLLUTION CONTROL EQUIPMENT; IV. THE COST OF GENERATION SETS AND EXTRA TRANSFORMER I NSTALLED BY THE UNDERTAKING AS PER THE REGULATIONS OF THE STATE ELE CTRICITY BOARD; V. THE BANK CHARGES AND SERVICE CHARGES PAID TO THE NA TIONAL SMALL INDUSTRIES CORPORATION OR THE STATE SMALL INDUSTRIE S CORPORATION; VI. THE COST INVOLVED IN PROCUREMENT OR INSTALLATION OF CABLES, WIRING, BUS BARS, ELECTRICAL CONTROL PANELS (NOT TH OSE MOUNTED ON INDIVIDUAL MACHINES), OIL CIRCUIT BREAKERS OR MINIA TURE CIRCUIT BREAKERS WHICH ARE NECESSARILY TO BE USED FOR PROVI DING ELECTRICAL POWER TO THE PLANT AND MACHINERY OR FOR SAFETY MEASURES; VII. THE COST OF GAS PRODUCER PLANTS; VIII. TRANSPORTATION CHARGES (EXCLUDING OF SALES-TAX AND EXCISE) FOR INDIGENOUS MACHINERY FROM THE PLACE OF MANUFACT URING TO THE SITE OF THE FACTORY; IX. CHARGES PAID FOR TECHNICAL KNOW-HOW FOR ERECTION OF PLANT AND MACHINERY; X. COST OF SUCH STORAGE TANKS WHICH STORE RAW MATER IALS, FINISHED PRODUCTS ONLY AND ARE NOT LINKED WITH THE MANUFACTU RING PROCESS; AND XI COST OF FIRE FIGHTING EQUIPMENTS. IN THE CASE OF IMPORTED MACHINERY, THE FOLLOWING IS TO BE INCLUDED IN CALCULATING E VALUE, NAMELY:- 7 7 XII. IMPORT DUTY (EXCLUDING MISCELLANEOUS EXPENSES AS TRANSPORTATION FROM THE PORT TO THE SITE OF THE FAC TORY, DEMURRAGE PAID AT THE PORT); XIII. THE SHIPPING CHARGES; XIV. CUSTOMS CLEARANCE CHARGES; AND XV. SALES TAX. (B) AFTER THIS VIDE, S.O. 1288 (E) DATED 24TH DECEM BER 1999, THE S.O. 857 (E), DATED THE 10TH DECEMBER, 1997 WAS AME NDED AND THE INVESTMENT LIMIT FOR SMALL SCALE INDUSTRIAL UNDERTA KING, WAS REDUCED FROM RS.3 CRORE TO RS.1 CRORE. (C) FURTHER FOLLOWING CLARIFICATIONS WERE ISSUED RE GARDING THE REDUCTION IN THE INVESTMENT LIMIT: (A) NO. 4(I)/2000-SSI BD 14TH MARCH, 2000 PLEASE REFER TO NOTIFICATION NO. S.O. 1288 (E) DAT ED 24TH DECEMBER, 1999 VIDE WHICH THE INVESTMENT LIMIT ON PLANT AND MACHINERY IN RESPECT OF SMALL SCALE/ANCILLARY INDUSTRIAL UNDERT AKINGS WAS REDUCED FROM RS.3 CRORE TO RS.1 CRORE. SINCE THEN THERE HAV E BEEN QUERIES FROM STATE GOVERNMENTS AS WELL AS INDUSTRIAL ASSOCIATION S WITH REGARD TO THE STATUS OF THOSE INDUSTRIAL UNDERTAKINGS WHICH HAD E ITHER ESTABLISHED AFRESH OR ENHANCED THEIR INVESTMENT UP TO RS.3 CROR E BEFORE THE NOTIFICATION DATED 24TH DECEMBER, 1999. IN THIS CON TEXT, IT IS CLARIFIED AS UNDER: I. THE UNITS THAT HAVE OBTAINED PERMANENT REGISTRAT ION ON THE ORDER DATED 10TH DECEMBER, 1997 WOULD CONTINUE TO REMAIN AS SSI UNITS INSPITE OF THE ORDER DATED 24TH DECEMBER, 199 9 REDUCING THE INVESTMENT LIMIT TO RS.1 CRORE. II. THE UNITS WHICH HAD SWITCHED OVER TO THE SSI ST ATUS BASED ON THE ORDER DATED 10TH DECEMBER, 1997 WOULD CONTINUE TO REMAIN AS SSI UNITS IN SPITE OF THE ORDER DATED 24TH DECEM BER, 1999; AND III. THE UNITS WHICH HAVE GOT PROVISIONAL REGISTRAT ION WITH THE STATE AUTHORITIES FOR THEIR SSI STATUS WOULD CONTINUE TO REMAIN AS SSI 8 8 UNITS, IN SPITE OF THE ORDER DATED 24TH DECEMBER, 1 999 PROVIDED THE PROVISIONAL REGISTRATION HAD TAKEN PLACE WITHIN THE PERIOD OF LIMITATION OF 180 DAYS SPECIFIED IN THE ORDER DATED 10TH DECEMBER, 1997. PLEASE TAKE NECESSARY ACTION ACCORDINGLY.' (B) NO. 4(I)2000-SSI BD. & POL. 27TH MARCH, 2000 SUBJECT: REDUCTION IN THE INVESTMENT LIMIT ON SSI/ANCILLARY UNDERTAKINGS-REG. SIR, IN CONTINUATION TO THIS OFFICE LETTER OF EVEN NUMBE R DATED 14TH MARCH, 2000, CLARIFYING THE POSITION IN RESPECT OF THOSE I NDUSTRIAL UNDERTAKINGS WHICH HAD EITHER ESTABLISHED AFRESH OR ENHANCED THE IR INVESTMENT UP TO R.3.00 CRORE BEFORE THE ISSUE OF NOTIFICATION NO. S .O. 1288 (E) DATED 24TH DECEMBER 2000 REDUCING THEREBY THE INVESTMENT LIMIT TO RS.1.00 CRORES, IT IS FURTHER CLARIFIED THAT: 'THE UNITS THAT HAVE OBTAINED PROVISIONAL REGISTRAT ION ON THE BASIS OF THE NOTIFICATION DATED 10TH DECEMBER, 1997, AND HAV E TAKEN CONCRETE STEPS FOR IMPLEMENTING THE PROJECT SUCH AS PREPARAT ION OF PROJECT REPORT, SANCTION OF LOAN, PURCHASE OF LAND, CIVIL C ONSTRUCTION, PLACEMENT OF ORDERS FOR PLANT AND MACHINERY, ETC. P RIOR TO 24TH DECEMBER, 1999 WOULD CONTINUE TO ENJOY THE SSI STAT US SO LONG AS THE INVESTMENT IN PLANT MACHINERY DOES NOT EXCEED RS.30 0 LAKHS NOTWITHSTANDING THE REVISED INVESTMENT LIMIT OF RS. 100 LAKH NOTIFIED ON 24TH DECEMBER, 1999.' (C) NO. 4(I)/2000-SSI BD. & POL. 19TH OCTOBER, 2000 'SUB: REDUCTION IN THE INVESTMENT LIMIT ON SSI/A NCILLARY UNDERTAKINGS-CLARIFICATION REG. SIR, REFERENCE HAVE BEEN RECEIVED FROM DIFFERENT QUARTER S SEEKING CLARIFICATION RELATING TO THE EXPANSION OF SUCH UNI TS, WHICH WERE PROVISIONALLY/PERMANENTLY, REGISTERED PRIOR TO ISSU E OF NOTIFICATION NO. 9 9 S.O. 1288 (E) DATED 24TH DECEMBER, 2000 REDUCING TH EREBY THE INVESTMENT LIMIT FORM RS.300.00 LAKHS TO RS.100.00 LAKH. CLARIFICATIONS IN RESPECT OF STATUS OF SUCH EXISTIN G UNITS AND THE UNITS REGISTERED PROVISIONALLY HAVE ALREADY BEEN ISSUED V IDE THIS OFFICE LETTERS OF EVEN NUMBER DATED 14TH AND 27TH MARCH, 2 000, RESPECTIVELY. THE FURTHER CLARIFICATION TO THE ABOVE QUERY IS AS UNDER: 'ANY UNIT WHICH HAS RECEIVED PROVISIONAL/PERMANENT REGISTRATION PRIOR TO 24TH DECEMBER, 1999 AND HAS TAKEN CONCRETE STEPS FOR IMPLEMENTING THE PROJECT WOULD CONTINUE TO ENJOY TH E SSI STATUS SO LONG AS INVESTMENT IN PLANT & MACHINERY DOES NOT EXCEED RS.300.00 LAKHS. NO TIME LIMIT IS PRESCRIBED FOR SUCH UNITS TO REACH THE CEILING OF RS.300.00 LAKHS' 6.8 FROM ABOVE MENTIONED NOTIFICATIONS AND THE CLAR IFICATIONS, IT IS SEEN THAT THE INVESTMENT LIMIT OF F3 CRORES WAS PRO VIDED TO ALL SMALL- SCALE INDUSTRIAL UNDERTAKINGS WHO HAD RECEIVED PROV ISIONAL/PERMANENT REGISTRATION PRIOR TO 24TH DECEMBER 1999 AND HAD TA KEN CONCRETE STEPS FOR IMPLEMENTING THE PROJECT. THIS CLARIFICATION DO ES NOT MENTION TO ANY SPECIFIC NOTIFICATION, HENCE IT IS EVIDENT THAT ALL THE EXISTING SSIS AS ON 24TH DECEMBER 1999 WERE MADE ELIGIBLE FOR INV ESTMENT IN PLANT AND MACHINERY TO THE VALUE OF RS.3 CRORE. ALSO NO T IME LIMIT WAS PRESCRIBED FOR SUCH UNITS TO REACH THE CEILING OF F 3 CRORE. 6.9 THIS WAS THE DEFINITION WHICH WAS IN FORCE DURI NG THE COURSE OF FINANCIAL YEAR 2006-07. THE APPELLANT'S CLAIM THAT SINCE THE SMALL SCALE INDUSTRIES HAVE BEEN CONVERTED INTO MICRO, SMALL AN D MEDIUM ENTERPRISES THROUGH MSMED ACT, 2006 AND LIMITS HAVE BEEN REVISED VIDE ORDER 1642 (E) DATED 29 - 09 -2006, WHEREIN IN VESTMENT IN PLANT AND MACHINERY IN CASE OF MANUFACTURING SECTOR HAS B EEN INCREASED UP TO RS.5 CRORE, HENCE THE APPELLANT SHOULD BE TREATE D AS A SMALLER SCALE INDUSTRIAL UNDERTAKING, IS NOT CORRECT. THE DEFINIT ION OF A SMALL SCALE INDUSTRIAL UNDERTAKING IN THE INCOME TAX ACT 1961 R EMAINS UNCHANGED EVEN TILL ASSESSMENT YEAR 2009-10. THERE IS NO REFE RENCE OF MSMED ACT, 2006 IN THE I T ACT 1961. HENCE THE ELIGIBILIT Y OF AN UNDERTAKING BEING A SMALLER SCALE INDUSTRIAL UNDERTAKING CAN BE DECIDED ONLY ON THE BASIS OF EXPRESS PROVISIONS AS CONTAINED IN THE I T ACT 1961 AND NOT ON SOME EXTRANEOUS CONSIDERATIONS. 10 10 6.10 FROM ABOVE DISCUSSION IT IS CLEAR THAT: (I) THE INVESTMENT LIMIT IN PLANT AND MACHINERY IN CASE OF THE APPELLANT FOR THE ASSESSMENT YEAR 2005-06 IS RUPEES 3 CRORE FOR THE PURPOSES OF DETERMINING WHETHER THE APPELLANT IS A SMALL SCALE INDUSTRIAL UNDERTAKING OR NOT. (II) FOR THIS PURPOSE THE ACTUAL COST OF INVESTMENT IN THE PLANT AND MACHINERY IS TO BE TAKEN. BUT THE ITEMS MENTIONED I N THE S.O.857(E) DATED 10TH DECEMBER, 97 ARE TO BE EXCLUDED FOR COMPUTING THE INVESTMENT IN THE PLANT AND MACHINERY. (III) THE INVESTMENT IN PLANT AND MACHINERY HAS TO BE SEEN ON THE LAST DAY OF THE PREVIOUS YEAR 2004-05, I.E. ON 31ST OF MARCH 2005. 6.11 IN THE CASE OF THE APPELLANT TOTAL INVESTMENT IN PLANT AND MACHINERY AS ON 31.03.2005, IS RS.10964791/- WHICH IS MUCH LESS THAN THE PRESCRIBED LIMIT OF RS.3.0 CRORES. MOREOVE R, AS SUBMITTED BY THE APPELLANT, THE ABOVE INVESTMENT IN PLANT AND MA CHINERY INCLUDES THE AMOUNT OF RS.1762620/- ON ACCOUNT OF GAS FIRE A ND RS.310290 ON ACCOUNT OF EFFLUENT TREATMENT PLANT. AS PER THE PRO VISIONS OF S.O.857(E) DATED 10TH DECEMBER, 1997, THESE TWO ITE MS ARE NOT TO BE TAKEN INTO ACCOUNT FOR COMPUTING THE VALUE OF INVES TMENT IN PLANT AND MACHINERY. FROM THE DETAILS SUBMITTED BY THE APPELL ANT, IT IS EVIDENT THAT THE GAS FIRE MENTIONED IN THE CHART OF FIXED A SSETS IS NOTHING, BUT GAS PRODUCER PLANT. IN SUCH A SITUATION, THE INVEST MENT IN PLANT AND MACHINERY IS LESS THAN EVEN RS.1.0 CRORE. IN SUCH A SITUATION, THE CLAIM OF THE APPELLANT THAT IT IS A SMALL SCALE INDUSTRIA L UNDERTAKING AS ON 31.3.2005 IS CORRECT AND HENCE THE APPELLANT IS ELI GIBLE FOR DEDUCTION U/S 80 IB AS CLAIMED BY IT. 4 AGGRIEVED BY THE ORDER OF THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE US. AT THE TIME OF HEARING, THE LEARNED DR PLACING RELIANCE ON THE ASSESSMENT ORDER, REMAND RE PORT OF THE AO DURING THE APPELLATE PROCEEDINGS BEFORE THE LEAR NED CIT(A), VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 11 11 5 THE LEARNED AR, ON THE OTHER HAND, PLACED RELIANC E ON THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A). 6 AFTER HEARING BOTH THE PARTIES AND TAKING INTO CO NSIDERATION THE RECORDS, WE FIND THAT THE ORIGINAL ASSESSMENT U /S 143(3) WAS FINALIZED IN ASSESSEES CASE DETERMINING THE TOTAL INCOME AT RS.1,09,35,928/-, DISALLOWING DEDUCTION U/S 80IB OF THE ACT AMOUNTING TO RS.31,10,312/-. IN APPEAL THIS DISALLO WANCE WAS DELETED BY THE LEARNED CIT(A) AND THE ACTION OF THE LEARNED CIT(A) WAS CONFIRMED BY THE TRIBUNAL. SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS REOPENED U/S 147 OF THE ACT ON THE GROUND THAT THE INVESTMENT MADE BY THE ASSESSEE IN PLANT AND MA CHINERY WAS MORE THAN RS.1 CRORE AND THEREFORE, THE ASSESSEE CA NNOT BE TREATED AS SMALL SCALE INDUSTRIAL UNDERTAKING AND T HE ASSESSEE WAS NOT ENTITLED FOR ANY DEDUCTION U/S 80IB OF THE ACT. THE CLAIM OF THE ASSESSEE WAS REJECTED AND ADDITION OF RS31,1 0,312/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSES SEES CONSISTENT STAND HAS BEEN THAT AS PER THE INDUSTRIE S DEPARTMENTS INSTRUCTION THE VALUE OF GAS FIRE AND EFFLUENT TREA TMENT PLANT AMOUNTING TO RS.17,62,620/- AND RS.3,10,290/- RESPE CTIVELY WERE TO BE REDUCED WHILE DETERMINING THE VALUE OF PLANT AND MACHINERY. THE LEARNED CIT(A) AFTER TAKING INTO CON SIDERATION THE SUBMISSIONS OF THE ASSESSEE AND AFTER PROVIDING OPPORTUNITY TO THE AO TO GIVE HIS COMMENTS ON THE SUBMISSIONS O F THE ASSESSEE, HAS GIVEN HIS CATEGORICAL FINDING THAT AS PER THE PROVISIONS OF SO 857(E) DATED 10-12-1999 THESE TWO ITEMS I.E. THE AMOUNT OF RS.17,62,620/- ON ACCOUNT OF GAS FIRE AND RS.3,10,290/- ON ACCOUNT OF EFFLUENT TREATMENT PLAN T ARE NOT TO 12 12 BE TAKEN INTO ACCOUNT FOR COMPUTING THE VALUE OF IN VESTMENT IN PLANT AND MACHINERY. THE DETAILS FILED BY THE ASSES SEE AT PAGES 53 TO 62 OF THE PAPER BOOK SUPPORT THE FINDING OF T HE LEARNED CIT(A) IN PARA 6.11 OF HIS ORDER THAT THE INVESTMEN T IN PLANT AND MACHINERY IS LESS THAN EVEN RS.1 CRORE IN ASSESSEE S CASE AND THEREFORE, THE CLAIM OF THE ASSESSEE THAT IT WAS A SMALL SCALE INDUSTRIAL UNDERTAKING AS ON 31-03-2005 WAS CORRECT AND HENCE THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT AS CLAIMED BY IT. THEREFORE, THE ORDER PASSED BY HIM I S HEREBY UPHELD. 7 IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT TODAY ON 20-04-2012 SD/- SD/- (A MOHAN ALANKAMONY) ACCOUNTANT MEMBER (D K TYAGI) JUDICIAL MEMBER DATE : 20-04-2012 COPY OF THE ORDER FORWARDED TO: 1. M/S REFOIL EARTH PVT. LTD., 23, AMARDEEP APARTME NT PASHABHAI PARK, GOTRI ROAD, BARODA 2. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-4, BARODA 3. CIT CONCERNED 4. CIT(A)-III, BARODA 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE 13 13 BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD