PLASTI SURGE INDUSTRIES PVT.LTD., Nagpur V. ADDITIONAL COMMISSIONER OF INCOME TAX, Amaravati

ITA 79/NAG/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9640 (ITAT-NAGPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSARI
• Keywords: Business income; Depreciation; Business expenditure
• Section: 80HHC; 80IB

Judgement Text

ITA NO. 75 TO 80 P LASTI SURGE INDS. P LTD., AMARAVATI IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH , NAGPUR BEFORE: SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI D.T. GARASIA , JUDICIAL MEMBER ITA NO.79/NAG/2010 ASSESSMENT YEAR : 2006 - 07 PLASTI SURGE INDUSTRIES PVT. LTD. AMARA VATI VS. ACIT, AMARAVATI RANGE AMARAVATI (APPELLANT) (RESPONDENT) PAN NO.AAACP 9678A ITA NO.8 7 /NAG/2010 ASSESSMENT YEAR : 200 6 - 0 7 ACIT, AMARAVATI RANGE AMARAVATI VS. PLASTI SURGE INDUSTRIES PVT. LTD. AMARAVATI (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI K.P. DEWANI, ADVOCATE RESPONDENT BY: DR. MILIND BHUSARI, CIT(DR) DATE OF HEARING: 11.10.12 DATE OF PRONOUNCEMENT: 19.10.12 ORDER PER D.T. GARASIA , JUDICIAL MEMBER: - THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY CIT( A) DATED 25.2.2010 CHALLENGING THE VARIOUS ADDITIONS SUSTAINED IN THE APPELLATE ORDER. THE REVENUE HAS FILED THE APPEAL CHALLENGING THE RELIEF GRANTED IN RESPECT TO DEDUCTION U/S 80IB OF THE INCOME - TAX ACT, 1961 BY CIT(A) IN RESPECT TO ACTIVITY IDENTIFIED AS THAPODA UNIT. ITA NO.79/NAG/2010: 2. THE ASSESSEE HAS FILED THE REVISED CONCISE GROUNDS OF APPEAL WHICH ARE AS UNDER: ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 2 1. THE LEARNED A.O. ERRED IN NOT REDUCING INTEREST PAID AT RS.2,86,956/ - OUT OF INTEREST RECEIVED AT RS.4,63,166/ - FOR COMPUTING THE DED UCTION U/S 80IB. 2. THE LEARNED A.O. ERRED IN EXCLUDING OF AMOUNTS WRITTEN BACK AT RS.59,376/ - FOR COMPUTING DEDUCTION U/S 80IB OF I.T. ACT 1961. 3. THE LEARNED A.O. ERRED IN EXCLUDING RS2,67,299/ - AS TRADING PROFIT FOR COMPUTING DEDUCTION U/S 80IB OF I.T. ACT 1961. 4. THE LEARNED CIT(A) ERRED IN DIRECTING TO EXCLUDE 10.05% OF RS.1,60,91,184/ - AS TRADING PROFIT AT PARA - 10.5 OF THE APPELLATE ORDER FOR ALLOWING DEDUCTION U/S 80IB OF I.T. ACT 1961.. 5. THE LEARNED A.O. ERRED IN NOT ALLOWING DEPRECIATION AND EXPENSE S OF THAPODA UNIT AT RS.19,76,740/ - AS CLAIMED IN PROFIT & LOSS ACCOUNT.. 6. THE LEARNED CIT (A) ERRED IN SUSTAINING PART ADDITION OUT OF TOTAL ADDITION MADE BY A.O. AT RS.1,16,757/ - OUT OF CLAIM OF DEPRECIATION. 7. THE LEARNED CIT(A) OUGHT TO HAVE DELETED ADD ITION MADE BY AO. AT RS.3,86,072/ - OUT OF SALE COMMISSION EXPENSES CLAIMED BY ASSESSEE AND ALSO ERRED IN NOT ADMITTING SUBMISSIONS AND DOCUMENTS FILED IN APPELLATE PROCEEDINGS. 8. THE LEARNED A.O. ERRED IN HOLDING THAT SURPLUS ARISING ON SALE OF SHARES AT R S.15,15,246/ - IS ASSESSABLE AS BUSINESS INCOME AS AGAINST CLAIMED BY ASSESSEE TO BE ASSESSED UNDER THE HEAD CAPITAL GAINS. 3. IN GROUND NO. 1 ASSESSEE HAS CHALLENGED ACTION OF A.O. IN NOT REDUCING THE INTEREST PAID FROM INTEREST RECEIVED FOR THE PURPOSE O F EXCLUDING THE INTEREST INCOME FROM COMPUTING DEDUCTION U/S 80IB. THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. THE A.O. HAS EXCLUDED GROSS INTEREST RECEIVED AT RS.4,63,166/ - WHILE COMPUTING DEDUCTION U/S 80IB OF I.T. ACT 1961. IT H AS BEEN HELD BY A.O. THAT INTEREST INCOME IS NOT INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AND IS THEREFORE LIABLE TO BE EXCLUDED FOR THE PURPOSE OF GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 1961. IT IS SUBMITTED THAT ASSESSEE IS NOT DISPUTING THE EXCLUSIO N OF INTEREST INCOME FOR THE PURPOSE OF DEDUCTION U/S 80IB OF I.T. ACT 1961 BUT IS REQUESTING FOR REDUCING THE INTEREST PAID FROM INTEREST RECEIVED SO AS TO ONLY EXCLUDE NET INTEREST FOR COMPUTING INCOME FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. 4. THE ASS ESSEE RELIED UPON THE PROPOSITION HAS PLACED RELIANCE ON THE DECISION OF ITAT MUMBAI BENCH, MUMBAI IN THE CASE OF VOLTAS INTERNATIONAL LTD. VS ACIT ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 3 REPORTED AT (2010) 2 ITR (TRIB.) 410 (MUM). THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF APEX C OURT REPORTED AT 343 ITR 89 (SC) IN THE CASE OF ACG ASSOCIATED CAPSULES PVT. LTD. VS CIT. IT IS SUBMITTED THAT RATIO LAID DOWN BY AFORESAID TWO DECISIONS SQUARELY APPLIES TO THE FACTS IN THE CASE OF ASSESSEE. THE LEARNED CIT (DR) RELIED UPON ON THE ORDE R OF LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. THE HON BLE ITAT, MUMBAI BENCH, MUMBAI IN THE CASE OF VOLTAS INTERNATIONAL LTD. HAS HELD AS UNDER: WE FIND THAT THIS ISSUE IS CONCLUDED BY THE DECISIO N OF THE HON BLE SUPREME COURT IN THE CASE OF LIBERTY INDIA VS. CIT (2009) 225 CTR (SC) 233: (2009) 28 DTR (SC) 73 : (2009) 317 ITR 218 (SC). IN THE PRESENT CASE, THE INTEREST IS NOT DERIVED FROM THE PROJECT BUT FROM THE FIXED DEPOSITS KEPT WITH THE BANK. THUS, ADMITTEDLY THE IMMEDIATE SOURCE OF INTEREST IS FIXED DEPOSITS AND NOT FROM THE FOREIGN PROJECT. LEARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT IN CASE DEDUCTION UNDER S. 80HHB IS NOT TO BE ALLOWED THEN ONLY NET INTEREST IS TO BE EXCL UDED. WE FIND CONSIDERABLE FORCE IN THE ALTERNATE ARGUMENT OF LEARNED COUNSEL FOR THE ASSESSEE AND, ACCORDINGLY, DIRECT THE A.O. TO EXCLUDE ONLY THE NET INTEREST INCOME AS WE HAVE HELD THAT INTEREST INCOME IS ASSESSABLE AS BUSINESS INCOME. 6. THE HON B LE APEX COURT IN THE CASE REPORTED AT 343 ITR 89 (SC) HAS ALSO HELD THAT NET AMOUNT OF INTEREST HAS TO BE EXCLUDED FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 80HHC OF I.T. ACT 1961. THE RATIO LAID DOWN BY AFORESAID TWO DECISIONS SQUARELY SUPPORTS THE SUBM ISSION OF THE ASSESSEE. RESPECTFULLY FOLLOWING THE SAME WE HEREBY DIRECT TO REDUCE INTEREST PAID AT RS.2,86,956/ - FROM INTEREST RECEIVED FOR COMPUTING DEDUCTION U/S 80IB OF I.T. ACT 1961. GROUND OF APPEAL OF ASSESSEE IS ALLOWED. 7 . IN GROUND NO. 2 ASSESS EE HAS OBJECTED FOR NON GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 1961 IN RESPECT TO AMOUNT WRITTEN BACK AT RS.59,376/ - SHOWN AND ASSESSED AS INCOME AT THE HANDS OF ASSESSEE. THE AFORESAID INCOME IS ASSESSED U/S 41(1) OF I.T. ACT 1961. THE A.O. AS WELL AS CIT HAS HELD THAT AFORESAID SUM IS NOT INCOME DERIVED FROM INDUSTRIAL UNDERTAKING AND NOT ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. IT IS SUBMITTED THAT INCOME HAS BEEN ASSESSED AT THE HANDS OF ASSESSEE U/S 41(1) OF I.T. ACT 1961. THE INCOME HAVI NG BEEN ASSESSED U/S 41(1) OF I.T. ACT 1961 ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 4 IT IS INCOME OF INDUSTRIAL UNDERTAKING AND CAN NOT BE EXCLUDED FOR COMPUTING DEDUCTION U/S 80IB OF I.T. ACT 1961. 8. THE ASSESSEE PLACED RELIANCE ON THE DECISION OF ITAT HYDERABAD BENCH, IN THE CASE OF AMAR RAJA BATTERIES LTD. VS ACIT VIDE JUDGMENT DATED 27/04/2004. THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF ITAT VISHAKHAPATNAM BENCH, IN THE CASE OF JOCIL LTD. VS ACIT IN ITA NO. 217 & 218/VIZ/2007 VIDE ORDER DATED 21/01/2011. COPIES OF JUDGMENTS ARE PL ACED IN PAPER BOOK. IT IS SUBMITTED THAT RATIO LAID DOWN BY AFORESAID DECISION SQUARELY APPLIES TO THE FACTS IN THE CASE OF ASSESSEE. 9. WE HAVE CONSIDERED THE SUBMISSIONS AND PERUSED THE EVIDENCE ON RECORD. IN THE CASE OF JOCIL LTD. VS. ACIT IN ITA NO.217 & 218/VIZ/2007, VISHAKAPATNAM BENCH, VISHAKAPATNAM AT PARA 11 OF THE ORDER HAS CONCLUDED THAT CREDIT BALANCE WRITTEN BACK WOULD BE ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. THE CREDIT BALANCES WRITTEN BACK ARE IN RESPECT TO BUSINESS ACTIVIT Y OF INDUSTRIAL UNDERTAKING AND THUS IT CAN NOT BE EXCLUDED FOR THE PURPOSE OF COMPUTING THE DEDUCTION U/S 80IB OF I.T. ACT 1961. RESPECTFULLY FOLLOWING THE DECISION REFERRED TO HEREINABOVE WE HEREBY DIRECT NOT TO EXCLUDE THE SUM OF RS.59,376/ - FOR COMPUT ING THE DEDUCTION U/S 80IB OF I.T. ACT 1961. 10 . IN GROUND NO. 3 & 4 ASSESSEE HAS CHALLENGED THE EXCLUSION OF RS.2,67,299/ - FOR COMPUTING THE DEDUCTION U/S 80IB OF I.T. ACT 1961 IN RESPECT TO PROFIT ON ACCOUNT OF TRADING ACTIVITY. THE CIT(A) - II AT PARA 10.05 OF THE APPELLATE ORDER DIRECTED TO EXCLUDE 10.05% OF RS.1,60,91,184/ - AS PROFIT IN RESPECT TO TRADING ACTIVITY ON THE SAME PARITY OF REASONING AS THAT OF A.O. THE ASSESSEE HAS CONTENDED THAT ENTIRE INCOME ARISING TO ASSESSEE IS FROM MANUFACTURING O F SURGICAL KITS AND THERE IS NO INDEPENDENT TRADING ACTIVITY OF ASSESSEE. THE LOWER AUTHORITIES WERE OF THE VIEW THAT MANUFACTURING ITEM BEING SURGICAL KITS INCLUDES CERTAIN ITEMS LIKE GOGGLE, THREAD AND SOAP WHICH ARE ASSEMBLED IN KITS AND THEY ARE MERE LY PACKED INTO WHAT IS CALLED SURGICAL KITS. THE PURCHASE VALUE OF SUCH GOODS WHICH ARE ASSEMBLED ITEMS HAS BEEN TAKEN INTO CONSIDERATION TO ESTIMATE THE INCOME WHICH IS CONSIDERED TO HAVE BEEN EARNED BY INDUSTRIAL UNDERTAKING OF THE ASSESSEE BY WAY OF T RADING OF ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 5 SUCH ASSEMBLED GOODS. IN VIEW OF ABOVE IT IS HELD BY THAT SUCH INCOME SHALL NOT QUALIFY FOR DEDUCTION U/S 80IB OF I.T. ACT 1961 ALLOWABLE TO ASSESSEE. THE LOWER AUTHORITIES HAVE NOT ACCEPTED THE CONTENTION OF ASSESSEE THAT THERE CAN NOT BE BIFU RCATION OF MANUFACTURED ITEM FOR THE PURPOSE OF GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 1961. IT IS SUBMITTED THAT THERE IS NO DISPUTE IN THE CASE OF ASSESSEE THAT SURGICAL KIT IS AN ARTICLE OR THING MANUFACTURED AND PRODUCED BY ASSESSEE AND ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. A.O. HAS HELD THAT CERTAIN ITEMS PURCHASED LIKE GOGGLES, THREAD, SOAP ETC. ARE ASSEMBLED IN KIT BUT NO PROCESS IS PERFORMED ON SAME. A.O. HELD THAT PROPORTIONATE INCOME ARISING ON SAME IS LIABLE TO EXCLUD ED FOR GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 1961. TO MAKE THE SURGICAL KIT COMPLETE AND FUNCTIONALLY ACCEPTABLE TO END USER THE APPELLANT HAD TO PROCURE CERTAIN ITEMS WHICH ARE OF SMALLER VALUE. SUCH GOODS ARE ALSO PUT THROUGH PROCESS OF STERILIZATION AND PACKING THEM TO MAKE FIT TO BE USED AS SURGICAL KIT. WITHOUT SUCH ITEMS SURGICAL KIT WOULD NOT MEET THE PURPOSE FOR WHICH IT IS MANUFACTURED. IT IS SUBMITTED THAT PRIOR TO ASSTT. YEAR 2001 - 02 NO SUCH DISALLOWANCE WAS MADE BY BIFURCATING THE COST OF PRODUCTS USED FOR MANUFACTURE OF KIT. IN VIEW OF ABOVE IN SUBSEQUENT YEARS THERE IS NO RATIONALE TO DISSECT THE KIT AND HOLD PARTLY AS TRADING. THE SALE BY ASSESSEE IS ENTIRE SURGICAL KIT. THE ASSESSEE DOES NOT SELL ANY INDIVIDUAL PRODUCT. THUS THER E IS NO JUSTIFICATION FOR BIFURCATION AS MADE BY A.O. TO HOLD THAT ASSESSEE HAS DONE SOME TRADING ACTIVITY. IN THE CASE OF MANUFACTURE OF CAR VARIOUS ITEMS LIKE RADIATOR, HEAD LIGHT, BATTERY, WHEELS AND WINDSHIELD ETC. ARE USED AS BOUGHT OUT ITEMS. IT CA NNOT BE SAID THAT MANUFACTURER OF CAR HAS DONE TRADING IN SUCH ITEMS. RELIANCE IS PLACED ON (I) 308 ITR 222 (P & H), (II) 68 ITR 325 (BOM.), (III) 15 SOT 294 (DEL.), (IV) 341 ITR 533 (GUWAHATI), (V) (2010) 4 ITR (TRIB.) 9 (CHENNAI) . 11. WE HAVE CONSI DERED THE SUBMISSIONS MADE BEFORE US AND PERUSED THE EVIDENCE ON RECORD AS WELL AS GONE THROUGH VARIOUS DECISIONS REFERRED TO IN SUBMISSIONS MADE BEFORE US. IN THE CASE OF ASSESSEE IT IS NOT IN DISPUTE THAT SURGICAL KITS ARE ARTICLES MANUFACTURED AND PRO DUCED BY ASSESSEE AND ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. THE SALE INVOICE ISSUED TO CUSTOMERS IS IN RESPECT TO ENTIRE SURGICAL KITS AND IS NOT IN RESPECT TO CERTAIN ITEMS ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 6 WHICH ARE FORMING PART OF SURGICAL KITS. THE GOODS PURCH ASED AND MANUFACTURED ARE COMPONENTS WHICH WHEN ASSEMBLED RESULTS IN PRODUCTION OF SURGICAL KITS. THE ASSESSEE HAS NOT INDEPENDENT ACTIVITY OF TRADING IN RESPECT TO ITEMS LIKE GOGGLE, THREAD, SOAP, ETC. WHICH ARE FORMING PART OF SURGICAL KITS. IN THE CA SE OF ASSESSEE IN ASSESSMENT YEAR 2001 - 02 NO SUCH DISALLOWANCE WAS MADE FROM ALLOWABLE DEDUCTION U/S 80IB OF I.T. ACT 1961 BY BIFURCATING COST OF PRODUCTS PURCHASED FOR MANUFACTURING OF KITS. THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE REPORTED AT 308 ITR 222 IN THE CASE OF CIT VS MAHESH CHANDRA SHARMA HAS HELD THAT ASSEMBLING OF MOTORCYCLE WHEELS FROM VARIOUS PARTS PURCHASED WOULD BE ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961 BEING ENGAGED IN ACTIVITY OF MANUFACTURING OF GOODS. SIMILARLY HO N BLE GUWAHATI HIGH COURT IN THE CASE REPORTED AT 341 ITR 533 IN THE CASE OF CIT VS I. TECH ELECTRONICS HAS HELD THAT PRODUCING OF TV SET BY PURCHASING AND ASSEMBLING ITEMS LIKE CABINET CHASSIS, IC, PICTURE TUBE, ETC. COULD BE HELD TO BE MANUFACTURING A CTIVITY AND THUS WOULD BE ENTITLED FOR CLAIM OF DEDUCTION U/S 80IC OF I.T. ACT 1961. THE RATIO LIAID DOWN BY AFORESAID TWO DECISIONS AND VARIOUS OTHER DECISIONS REFERRED TO IN SUBMISSIONS OF THE COUNSEL FULLY SUPPORTS THE SUBMISSION OF ASSESSEE. RESPECTF ULLY FOLLOWING THE SAME WE HOLD THAT SURGICAL KITS SOLD BY ASSESSEE IS MANUFACTURED ITEM AND COST OF PARTS OF SUCH MANUFACTURING ITEM CAN NOT BE SEPARATED TO REDUCE THE CLAIM OF DEDUCTION U/S 80IB OF I.T. ACT 1961OF THE ASSESSEE. THE A.O. IS NOT JUSTIFIED IN REDUCING THE CLAIM OF ASSESSEE BY HOLDING THAT RS.2,67,299/ - IS TRADING PROFIT OF THE ASSESSEE. SIMILARLY THE DIRECTION OF CIT(A) TO EXCLUDE 10.05% OF RS. 1,60,91,184/ - I.E. RS.16,17,163/ - FOR THE PURPOSE OF GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 19 61 IS ALSO HELD TO BE NOT JUSTIFIED. THE GROUNDS OF APPEAL OF ASSESSEE ARE ACCEPTED AND ARE ALLOWED. 12 . IN GROUND NO. 5 ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF DEPRECIATION OF THAPODA UNIT AND ADMINISTRATIVE EXPENSES OF RS. 19,76,740/ - . THE A.O. WHILE COMPUTING THE INCOME OF ASSESSEE AS AT PAGE 9 &10 OF THE ASSESSMENT ORDER DETERMINED INCOME IN RESPECT TO THAPODA UNIT. THE A.O. HAS TAKEN FIGURE TO COMPUTE INCOME AS APPEARING IN PROFIT & LOSS ACCOUNT AT PAGE 23 OF THE PAPER BOOK. THE A.O. HOWEVE R WHILE GRANTING DEDUCTION ON ACCOUNT OF EXPENSES HAS OBSERVED THAT SAME ARE ESTIMATED AT RS.2,00,000/ - AS AGAINST 21,76,740/ - SHOWN IN AUDITED ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 7 PROFIT & LOSS ACCOUNT. THE PERUSAL OF ASSESSMENT ORDER REVEALS THAT THERE IS NO ADVERSE OBSERVATION WITH REGAR D TO ANY OF THE EXPENSES SHOWN IN AUDITED FINANCIAL STATEMENT SUBMITTED ALONG WITH RETURN OF INCOME. THE A.O. THUS HAS TAKEN TAKEN INCOME FROM THAPODA UNIT AT RS.2,33,70,204/ - AS AGAINST 2,13,93,462/ - SHOWN IN AUDITED FINANCIAL STATEMENT OF THE ASSESSEE. THE CIT(A) WHILE DEALING THE GROUNDS OF APPEAL HAS RECORDED FINDINGS AT PARA 6.2 THAT A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY SUCH DISALLOWANCE WHEN THE INCOME OF THAPODA UNIT IS TAKEN INTO ACCOUNT FOR ARRIVING AT TOTAL INCOME OF THE APPE LLANT. THE CIT(A) FINALLY DIRECTED TO DELETE THE DISALLOWANCE OF RS. 2,00,000/ - MADE ON ACCOUNT OF ADMINISTRATIVE EXPENSES PERTAINING TO THAPODA UNIT. 13. THE A.O. HAS RECORDED FINDING AT PAGE 9 & 10 OF ASSESSMENT ORDER THAT IN THAPODA UNIT SOME PACKI NG AND SEALING ACTIVITY IN RESPECT TO GOODS MANUFACTURED AT AMRAVATI UNIT IS CARRIED OUT. AFTER BLOCK OF ASSETS INDIVIDUAL USE OF EACH ASSET LOSSES SIGNIFICANCE AND NO DEPRECIATION CAN BE DISALLOWED. RELIANCE FOR THIS PROPOSITION IS PLACED ON DECISION I N THE CASE OF CIT VS. BHARAT ALUMINUM CO. LTD. (2010) 187 TAXMAN 111 (DEL.) DATED 15/10/2009. CIT(A) HAS RECORDED THAT A.O. HAS NOT BROUGHT ANY MATERIAL ON RECORD TO JUSTIFY SUCH DISALLOWANCE WHILE CERTAIN INCOME ATTRIBUTED TO THAPODA UNIT HAS BEEN ASSESSE D. HOWEVER WHILE GIVING DIRECTION HAS STATED DISALLOWANCE OF RS.2,00,000/ - IS DELETED. IN FACT DIRECTION OF DELETION SHOULD HAVE BEEN FOR RS.19,76,740/ - . A.O. HAS ASSESSED PROFIT OF THAPODA UNIT AT RS.2,33,70,204/ - . NO MISTAKE OR DEFECT IS FOUND IN THE EX PENDITURE CLAIMED AS IS EVIDENT FROM PERUSAL OF ASSESSMENT ORDER. GENUINENESS OF EXPENDITURE IS NOT IN DISPUTE. THE LEARNED CIT (DR) HAS PLACED RELIANCE ON THE ORDER OF LOWER AUTHORITIES. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH PARTIES AND LOOKI NG TO THE FACTS OF THE CASE WE FIND EVIDENCE ON RECORD. IT IS EVIDENT FROM ASSESSMENT ORDER THAT THERE IS NO ADVERSE OBSERVATION WITH REGARD TO ALLOWABILITY OF EXPENSES CLAIMED IN AUDITED FINANCIAL STATEMENT. THE CIT(A) HAS ALSO RECORDED FINDING THAT A .O. HAS NOT BROUGHT EVIDENCE OR MATERIAL ON RECORD TO JUSTIFY SUCH DISALLOWANCE WHILE CERTAIN INCOME PERTAINING TO THAPODA UNIT HAS BEEN ASSESSED TO TAX. THE FINDINGS RECORDED BY CIT (A) - II IS NOT UNDER CHALLENGE BY REVENUE BEFORE US, EVEN THOUGH THE REVE NUE ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 8 HAS FILED APPEAL IN RELATION TO DEDUCTION U/S 80IB OF I.T. ACT 1961. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW THAT NO ADDITION AS MADE BY A.O. IS JUSTIFIED AS DEMONSTRATED HEREINABOVE. THE INTEREST EXPENSES, DEPREC IATION, EMPLOYEES EXPENSES, ADMINISTRATIVE EXPENSES AND SELLING EXPENSES ARE IN THE NATURE OF ALLOWABLE BUSINESS EXPENSES. THE ADDITION MADE BY A.O. AT RS.19,76,740/ - IS HELD TO BE UNJUSTIFIED AND IS THEREFORE DIRECTED TO BE DELETED. IN THE CASE OF ASSE SSEE RELIEF OF RS.2,00,000/ - HAS ALREADY BEEN GRANTED IN ORDER OF CIT(A) - II AT PARA 6.2. THUS A.O. IS DIRECTED TO GRANT FURTHER RELIEF OF RS.17,76,740/ - . THE GROUND OF APPEAL IS DISPOSED OFF AS PER ABOVE DIRECTION. 15. IN GROUND NO. 6 ASSESSEE HAS CHA LLENGED NON - GRANT OF DEPRECIATION IN RESPECT TO CERTAIN ADDITIONS TO ASSETS AS DETAILED IN ASSESSMENT ORDER AT PARA 3 & 4. IT WAS EXPLAINED THAT COMPLETE DETAILS ARE SUBMITTED BEFORE A.O. AND ADDITION TO ASSETS IS DULY RECORDED IN REGULAR BOOKS OF ACCOUNT . THE AUDITOR IN FORM 3CD HAS NOT MADE ADVERSE OBSERVATION ABOUT ADDITION TO ASSETS. CERTAIN BILLS WERE IN THE FORM OF OFFICE VOUCHERS. THE ASSETS AS AUDITED IN FINANCIAL STATEMENT ARE ACTUALLY USED FOR THE PURPOSE OF BUSINESS ACTIVITIES. IT IS SUBMITT ED THAT THERE WAS NO JUSTIFICATION TO DISALLOW DEPRECIATION. THE CIT (DR) PLACED RELIANCE ON THE ORDER OF LOWER AUTHORITIES. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND SUBMISSIONS OF BOTH THE PARTIES AND PERUSED RECORD AND MATERIAL AND EVIDENCE ON RECO RD. CONSIDERING THE FACTS THAT OUT OF TOTAL ADDITIONS TO FIXED ASSETS OF RS.61.96 LACS LOWER AUTHORITIES HAVE GRANTED DEPRECIATION ON RS.54.98 LACS TO BALANCE VALUE. THE ASSESSEE HAD PRODUCED OFFICE VOUCHERS AND INVESTMENT IN FIXED ASSETS IS RECORDED IN REGULAR BOOKS OF ACCOUNT. THE USER OF ASSETS HAS NOT BEEN DENIED BY A.O. AS IS EVIDENT FROM PERUSAL OF ASSESSMENT ORDER. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES WE ARE OF THE OPINION THAT THERE IS NO JUSTIFICATION FOR DENIAL OF DEPRECIATIO N IN THE CASE OF ASSESSEE. THE A.O. IS DIRECTED TO GRANT DEPRECIATION ON FIXED ASSETS AS SHOWN IN FINANCIAL STATEMENT AS CLAIMED. GROUND OF APPEAL IS DISPOSED OF AS DIRECTED HEREINABOVE. 1 7. IN GROUND NO. 7 ASSESSEE HAS CLAIMED THE RELIEF OUT OF COMMIS SION PAID OF RS.3,86,072/ - . THE A.O. HAS DISCUSSED THE ADDITION AT PARA 2 & 3 OF THE ASSESSMENT ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 9 ORDER. THE A.O. HAS DISALLOWED COMMISSION HOLDING THAT ASSESSEE HAS NOT ESTABLISHED NATURE OF SERVICE RENDERED FOR WHICH COMMISSION IS PAID AS WELL AS IN THE CASE OF DINESH TDS HAS NOT BEEN DEPOSITED WITHIN SPECIFIED TIME. THE ASSESSEE HAS FURNISHED COMPLETE DETAILS BEFORE A.O. WITH REGARD TO BILLS AND DETAILS OF TDS OF VARIOUS PERSONS TO WHOM COMMISSION HAS BEEN PAID. THE PARTIES TO WHOM COMMISSION IS PAID A RE OUTSIDE PARTIES WHERE ASSESSEE HAS SUPPLIED ITS GOODS MANUFACTURED. THE MAJOR COMPONENT OF COMMISSION HAS BEEN ALLOWED AND ACCEPTED BY A.O. THE BILLS AND VOUCHERS ALONG WITH EVIDENCE OF TDS CERTIFICATE WERE SUBMITTED BEFORE CIT(A) - II ARE PLACED IN PAP ER BOOK IN APPELLATE PROCEEDINGS. THE CIT(A) - II HAS OBSERVED THAT AFORESAID EVIDENCE WAS NOT PRODUCED BEFORE A.O. AND IS THEREFORE NOT ADMITTED. IT IS SUBMITTED THAT COMMISSION HAS BEEN PAID THROUGH PROPER BANKING CHANNEL AND TDS HAS BEEN MADE AND PAID, WHEREVER APPLICABLE. BILLS IN RESPECT TO COMMISSION WERE PRODUCED BEFORE A.O. ALL COMMISSION AGENTS ARE LOCATED AT PLACES OUTSIDE AMRAVATI. ACCORDING TO ASSESSEE EVIDENCE PRODUCED WERE SUFFICIENT TO GRANT DEDUCTION OF EXPENDITURE. CIT(A) HAS NOT EVEN CO NSIDERED THE SUBMISSION OF ASSESSEE AS MADE BEFORE HIM AND HAS REJECTED BY OBSERVING THAT SAME IS NOT ADMITTED. RELIANCE IS PLACED ON 231 ITR 1 (BOM.) IN THE CASE OF SMT. PRABHAVATI S. SHAH VS. CIT . IT IS SUBMITTED THAT PAYMENT TO DINESH HAS BEEN MA DE DURING THE YEAR AND NO SUM IS PAYABLE AS ON 31/3/2006. TDS IS PAID ON 26/12/2006 IN RESPECT TO COMMISSION PAID TO DINESH. IN VIEW OF DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORTS IN ITA NO.477/VIZ/2008 VIDE ORDER DATE D 29/3/2012 NO DISALLOWANCE CAN BE MADE FOR PAYMENT MADE TO DINESH U/S 40(A)(IA) OF I.T. ACT, 1961. 18. WE HAVE CONSIDERED THE SUBMISSIONS AND DETAILS OF COMMISSION AND EVIDENCE SUBMITTED BEFORE CIT(A) - II AND COPY OF WHICH IS PLACED IN PAPER BOOK TO DEM ONSTRATE THE GENUINENESS OF PAYMENT. THE EVIDENCE SUBMITTED INDICATES NATURE OF SERVICE RENDERED. THE PAYMENT MADE TO VARIOUS PARTIES IS THROUGH PROPER BANKING CHANNEL AND APPROPRIATE TDS HAS BEEN MADE IN RESPECT TO VARIOUS PAYMENTS MADE. IN RESPECT TO PAYMENT MADE TO SHRI DINESH TDS HAS BEEN DEPOSITED ON 26/12/2006. THE LEDGER ACCOUNT OF SUCH PARTY WHICH IS PLACED IN PAPER BOOK AT PAGE 75 INDICATES THAT NO AMOUNT IS REMAINING AS PAYABLE AS AT THE CLOSE OF ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 10 ACCOUNTING YEAR. IN VIEW OF DECISION OF SPL. B ENCH, ITAT IN THE CASE OF MERILYN SHIPPING & TRANSPORT IN ITA NO. 477/VIZ/2008 VIDE ORDER DATED 29/03/2012 NO DISALLOWANCE U/S 40(A)(IA) OF I.T. ACT 1961 CAN BE MADE IN RESPECT TO AMOUNT WHICH IS NOT SHOWN AS PAYABLE AS ON CLOSE OF THE FINANCIAL YEAR. THE PAYMENT MADE TO DINESH IS ON ACCOUNT OF COMMISSION HAVING ACTUALLY BEEN PAID DURING THE YEAR UNDER CONSIDERATION CAN NOT BE DISALLOWED U/S 40(A)(IA). IN VIEW OF ABOVE NO DISALLOWANCE OF THE COMMISSION AS SUSTAINED BY CIT(A) - II IS JUSTIFIED. GROUND OF AP PEAL OF THE ASSESSEE IS ALLOWED. 19 . IN GROUND NO. 8 ASSESSEE HAS CHALLENGED THE ACTION OF A.O. AND ASSESSING SURPLUS ON SALE OF SHARES AS BUSINESS INCOME AS AGAINST SHOWN IN THE RETURN UNDER THE HEAD CAPITAL GAIN . THE A.O. HAS HELD THAT FREQUENCY IN TRANSACTIONS IN THE CASE OF ASSESSEE BEING LARGE INCOME ARISING ON SALE OF SHARES IS LIABLE TO TAXED AS BUSINESS INCOME AND NOT CAPITAL GAIN AS CLAIMED. 20. IT IS SUBMITTED THAT THE ASSESSEE MADE INVESTMENT OUT OF OWN FUNDS AND NO BORROWED AMOUNT IS UT ILIZED FOR INVESTMENT IN SHARES. IN ORIGINAL REGULAR ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 A.O. HAD ACCEPTED NET SURPLUS ARISING ON SALE OF SHARES AS CAPITAL GAIN. INVESTMENT IN SHARES AS ON 31/3/2005 OF RS.36.77 LACS, 31/3/2006 OF RS.94.42 LACS, 31/ 3/2007 OF RS.151 LACS, 31/3/2008 OF RS.306 LACS AND 31/3/2009 OF RS.235 LACS. IT INDICATES THAT ASSESSEE HAS MADE INVESTMENT AS INVESTOR AND NOT DEALER IN SHARES. MAIN BUSINESS IS THAT OF MANUFACTURING SURGICAL KITS. IT IS SURPLUS MONEY WHICH IS UTILI ZED IN MAKING INVESTMENT IN SHARES. MANY SHARES ARE HELD FOR MORE THAN 90 DAYS. FINDING OF CIT(A) THAT INTEREST IS CLAIMED AS BUSINESS EXPENSES IS FACTUALLY INCORRECT. NO BORROWED AMOUNT IS UTILIZED FOR INVESTMENT IN SHARES. SHARE CAPITAL, RESERVES AND SU RPLUS ARE RS.572.73 LACS WHEREAS INVESTMENT IN SHARES IS RS.94.42 LACS. NO EVIDENCE ON RECORD THAT ASSESSEE IS DEALER IN SHARES. ISSUE COVERED IN FAVOUR OF ASSESSEE BY DECISION OF ITAT IN THE CASE OF GOPAL PUROHIT V/S JCIT REPORTED AT 20 DTR (MUM.)(TRIB. ) 99, THE APPEAL FILED BY REVENUE IS DISMISSED BY HON BLE BOMBAY HIGH COURT REPORTED AT 228 CTR 582 (BOM.). SLP OF REVENUE DISMISSED BY APEX COURT VIDE JUDGEMENT DATED 15/11/2010. RELIANCE PLACES ON (I) JANAK S. RANGWALLA VS. ACIT IN ITA NO.1163/MUM/ 2004 ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 11 DATED 19/12/2006 REPORTED AT (2007 11 SOT 627 (MUM.), (II) ( A) ITA NO.616 /NAG /2008 IN THE CASE OF ACIT VS. DINESHBHAI C. PATEL (HUF) AND (B) APPEAL OF REVENUE DISMISSED BY HON BLE BOMBAY HIGH COURT VIDE JUDGEMENT DATED 28/10/2010 IN ITA NO.67 OF 2009, (III) ITA NO.961/MUM/2010 IN THE CASE OF NAGINDAS P SHETH (HUF) VS. ACIT, (IV) ITA NO.6429/MUM/2009 IN THE CASE OF ACIT VS. NAISHADH V. VACHHARAJANI, 2 1 . WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE CASE LAW AS HAS BEEN CITED BEFORE US. WE FIND THAT IN THE CASE OF CIT (CENTRAL), CALCUTTA VS. ASSOCIATED INDUSTRIAL DEVELOPMENT COMPANY (P) LTD. (82 ITR 586), THE HON BLE SUPREME COURT HAS HELD AS UNDER: WHETHER A PARTICULAR HOLDING OF SHARES IS BY WAY OF INVESTMENT OR FORMS PART OF THE STOCK - IN - TRADE IS A MATTER WHICH IS WITHIN THE KNOWLEDGE OF THE ASSESSEE WHO HOLDS THE SHARES AND HE SHOULD, IN NORMAL CIRCU MSTANCES, BE IN A POSITION TO PRODUCE EVIDENCE FROM HIS RECORDS AS TO WHETHER HE HAS MAINTAINED ANY DISTINCTION BETWEEN THOSE SHARES WHICH ARE HIS STOCK - IN - TRADE AND THOSE WHICH ARE HELD BY WAY OF INVESTMENT. 2 2 . WE NOTED THAT IN THE CASE OF CIT VS. V .A. TRIVEDI 172 ITR 95 (BOM.) HON BLE JURISDICTION HIGH COURT HAS CLEARLY LAID DOWN UNDER PARA 12 OF THE ORDER THAT THE ONUS OF ESTABLISHING THAT A PURCHASE IS MADE WITH THE INTENTION TO TRADE IS ON THE REVENUE. 2 3 . WE NOTED THAT THE MAIN CONTENTION OF T HE REVENUE IN TREATING THE GAIN TO BE THE INCOME FROM BUSINESS IS THE NUMBER OF TRANSACTIONS AND THE PERIOD OF THE HOLDING BY THE ASSESSEE. THE PERIOD OF THE HOLDING AND NUMBER OF TRANSACTIONS CANNOT BE THE ONLY BASIS TO DETERMINE WHETHER THE ASSESSEE HAS CARRIED OUT THE BUSINESS IN SHARE TRANSACTION. IT MAY BE ONE OF THE RELEVANT CONSIDERATION BUT CANNOT BE THE MAIN CONSIDERATION FOR DECIDING WHETHER THE ASSESSEE IS ENGAGED IN A BUSINESS OR NOT. WE HAVE TO LOOK INTO ALL THE SURROUNDING CIRCUMSTANCES. T HIS IS A FACT ON RECORD THAT THE ASSESSEE IN THIS CASE IS ENGAGED MAINLY IN BUSINESS OF MANUFACTURING OF SURGICAL KITS. OUT OF THE SURPLUS FUND AMOUNT IS INVESTED INTO THE SHARES AND THOSE SHARES HAS DULY BEEN SHOWN BY THE ASSESSEE AS INVESTMENT IN HIS ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 12 BA LANCE SHEET. THE ASSESSEE WAS NOT HOLDING THE SHARES AS A STOCK IN TRADE. THE PERIOD OF HOLDING ITSELF HAS BEEN TREATED BY THE LEGISLATURE TO BE A RELEVANT CONSIDERATION FOR DETERMINING WHETHER THE CAPITAL GAIN DERIVED IS A LONG TERM CAPITAL GAIN OR A S HORT TERM CAPITAL GAIN. THERE IS NO PROVISION UNDER THE INCOME TAX ACT WHICH HAS PROVIDE THAT IN CASE THE ASSESSEE IS HOLDING THE SHARES FOR A LESSER PERIOD THAN THE ONE PRESCRIBED, IT WILL BE REGARDED TO BE THE BUSINESS INCOME. IT IS NOT DENIED THAT IN THIS CASE ALSO, THE ASSESSEE WAS HOLDING THE SHARES AS INVESTMENT. HOLDING OF THE SHARES AS INVESTMENT ITSELF PROVE THE INTENTION OF THE ASSESSEE AS REGARDS TO THE NATURE OF THE TRANSACTION. HAD THE SHARES BEEN THE BUSINESS ASSETS, IT WOULD HAVE SHOWN B Y THE ASSESSEE AS A STOCK IN TRADE. APPARENT IS REAL, IF THE REVENUE FEELS THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS INVESTMENT. THE ONUS IN OUR OPINION IS ON THE REVENUE TO PROVE THAT APPARENT IS NOT REAL. NO EVIDENCE WAS BEING P LACED OR BROUGHT TO OUR KNOWLEDGE BY THE LD. D.R. WHICH MAY PROVE THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE SHARES AS INVESTMENT. IT IS ALSO A FACT THAT THE ASSESSEE DERIVED THE DIVIDEND INCOME AND HAS ALSO MADE THE INVESTMENT IN THE SHARES N OT OUT OF THE BORROWED FUNDS, BUT OUT OF ITS OWN SURPLUS FUNDS. WE NOTE THAT THE NAGPUR BENCH OF THIS TRIBUNAL IN THE CASE OF DINESHBHAI C. PATEL (SUPRA) HAS FOLLOWED THE DECISION OF GOPAL PUROHIT VS. JCIT (SUPRA), THAT DECISION HAS ALSO BEEN APPROVED BY THE HON BLE JURISDICTIONAL HIGH COURT AND SLP AGAINST THAT DECISION HAS BEEN DISMISSED BY THE SUPREME COURT. THE ABOVE DECISIONS SUPPORT THE SUBMISSION OF ASSESSEE. 2 4 . WE HAVE CONSIDERED THE SUBMISSIONS MADE BEFORE US AND FIND THAT ASSESSEE HAS MADE INVESTMENT IN SHARES OUT OF OWN FUNDS AND NO BORROWED MONEY IS UTILIZED FOR INVESTMENT IN SHARES. THE INVESTMENT IS REFLECTED IN BALANCE SHEET AS INVESTMENT AND ARE NOT SHOWN AS STOCK IN TRADE. THE RATIO LAID DOWN BY BOMBAY HIGH COURT IN THE CASE OF GOP AL PUROHIT FULLY SUPPORTS THE SUBMISSIONS OF ASSESSEE. RESPECTFULLY FOLLOWING THE SAME WE DIRECT THE A.O. TO ASSESS SURPLUS ARISING ON SALE OF SHARES AS CAPITAL GAIN AND NOT BUSINESS INCOME. 25. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 13 2 6 . IN APPEAL FILED BY REVENUE HAS CHALLENGED DIRECTION OF CIT(A) - II TO ALLOW DEDUCTION U/S 80IB OF I.T. ACT 1961 IN RESPECT TO BUSINESS INCOME OF THAPODA UNIT AS ACTIVITY AT AMRAVATI MANUFACTURING FACILITIES. THE LEARNED CIT(DR) HAS SUBMITTED THAT IT IS FOR ASSESSEE TO SHOW THAT INCOME EARNED BY ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961. THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THAT ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961, IN VIEW OF ABOVE IT IS SUBMITTE D THAT CIT(A) - II WAS NOT JUSTIFIED IN DIRECTING THE TRADING INCOME FROM THAPODA UNIT TO BE THAT OF AMRAVATI UNIT FOR THE PURPOSE OF GRANT OF DEDUCTION U/S 80IB OF I.T. ACT 1961. 2 7 . THE LEARNED COUNSEL OF ASSESSEE HAS SUBMITTED THAT CIT(A) - II DIRECTED T O ALLOW DEDUCTION U/S 80IB OF I.T. ACT 1961 IN RESPECT TO ACTIVITY SHOWN IN BOOKS AT THAPODA AS ACTIVITY AT AMRAVATI MANUFACTURING FACILITY. A.O. HAS ACCEPTED AT PAGE 9 & 10 THAT SALES AT THAPODA ARE FOR GOODS MANUFACTURED AT AMRAVATI. THE ENTIRE SALES AR E IN RESPECT TO MANUFACTURED GOODS. THE A.O. WHILE ALLOWING DEDUCTION FROM SALES HAS REDUCED RAW MATERIAL CONSUMED/MANUFACTURING EXPENSES. THE FINDING OF A.O. THAT IT IS TRADING PROFIT IS CONTRARY TO EVIDENCE ON RECORD AND FINDINGS RECORDED IN ASSESSMENT ORDER. A.O. HAS NOT DISPUTED THE BOOKS OF ACCOUNTS AND RESULTS THEREOF. 2 8 . WE HAVE CONSIDERED THE SUBMISSIONS MADE BEFORE US AND PERUSED THE EVIDENCE ON RECORD. IN THE CASE OF ASSESSEE ELIGIBILITY OF DEDUCTION U/S 80IB OF I.T. ACT 1961 IS NOT IN DISPUT E. THE ASSESSEE HAD CLAIMED TO HAVE SET UP OF A SEPARATE UNIT AT THAPODA IN A.Y. 2004 - 05 WHICH WAS ELIGIBLE FOR BENEFIT OF DEDUCTION U/S 80IB OF I.T. ACT 1961 AT 100% OF PROFIT. IN RESPECT TO ACTIVITY OF AMRAVATI UNIT ASSESSEE WAS ELIGIBLE FOR BENEFIT OF 30% OF PROFIT OF THE INDUSTRIAL UNDERTAKING U/S 80IB OF I.T. ACT 1961. THE ASSESSEE AT THE INITIAL STAGES HAD CLAIMED THAT BOTH ACTIVITIES AT THAPODA AND AMRAVATI ARE IN RESPECT TO GOODS MANUFACTURED BY ASSESSEE COMPANY AND ARE ELIGIBLE FOR DEDUCTION U/S 80IB OF I.T. ACT 1961 AT 100% AND 30% RESPECTIVELY. THE A.O. HOWEVER DID NOT ACCEPT THE CLAIM OF ASSESSEE AND AT PAGE 9 & 10 OF ASSESSMENT ORDER RECORDED FINDINGS THAT GOODS MANUFACTURED AT AMRAVATI ARE SHOWN TO HAVE BEEN MANUFACTURED AT THAPODA. IN FA CT A.O. AT PARA 9 & 10 IN CLEAR TERMS HAS RECORDED THAT ACTIVITY OF MANUFACTURING IS AT AMRAVATI AND FOR ITA NO.75 TO 80 PLASTI SURGE INDS. P LTD., AMARAVATI 14 PACKING AND SEALING THE SAME ARE TRANSFERRED TO THAPODA. ON THE BASIS OF EVIDENCE ON RECORD IT IS ACCEPTED THAT SALES ARE AT THAPODA INSPITE OF GOODS MANUFACTURED AT AMRAVATI. THE ASSESSEE BEFORE CIT(A) - II HAD RESTRICTED THE CLAIM OF ASSESSEE TO GET BENEFIT OF DEDUCTION U/S 80IB OF I.T. ACT 1961 AT 30% OF THE TOTAL INCOME DERIVED FROM INDUSTRIAL UNDERTAKING OF MANUFACTURE OF SURGICAL KITS. IT IS NOT DISPUTED THAT ASSESSEE IS HAVING MANUFACTURING FACILITIES AT AMRAVATI AND SALE SHOWN AT AMRAVATI AS WELL AS THAPODA ARE ONLY IN RESPECT TO GOODS MANUFACTURED AT AMRAVATI UNIT. THE ENTIRE SALES ARE IN RESPECT TO MANUFACTURED GOODS. ON ABOVE UNDISPUTED FAC TUAL POSITION THE CONCLUSION DRAWN BY CIT(A) - II CAN NOT BE FAULTED. THE DECISION OF CIT(A) - II IS ON FAIR AND REASONABLE REASONING AS INDICATED IN APPELLATE ORDER. WE HAVE PERUSED THE VARIOUS REASONINGS AND FINDINGS AS RECORDED IN ORDER OF CIT(A) AND AG REE WITH THE SAME. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. WE FIND NO MERIT IN APPEAL OF REVENUE AND SAME IS DISMISSED. 29. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE STANDS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON 19.10 .20 1 2 SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA ) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS NAGPUR DATED 1 9 TH OCTOBER , 20 1 2 COPY TO 1 PLASTI SURGE INDUSTRIES PVT. LTD ., SIDHARTHA BHAVAN, MORSHI ROAD, AMARAVATI, C/O M/S. DEWANI BROS., ADVOCATES, 1 - AJANTA CHHINDWARA ROAD, NAGPUR - 440 013 2 ACIT, AMARAVATI RANGE 3 THE CIT - III , NAGPUR 4 THE CIT (A) , NAGPUR 5 THE DR, ITAT, NAGPUR 6 GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL NAGPUR