Appeal details
Counselvise Citation
[2024] 139 COUNSELVISE.COM (IT) 8973 (ITAT-CHANDIGARH)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 year(s) 5 month(s) 19 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-10-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
07-08-2024
Assessment Year
2013-2014
Appeal Filed On
02-05-2019
Judgement Text
" आयकर अपीलीय अिधकरण,च᭛डीगढ़ ᭠यायपीठ , च᭛डीगढ़ \nIN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH \nBENCH ‘B’ CHANDIGARH \n \n BEFORE: SHRI A.D.JAIN, VICE PRESIDENT AND \n SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER \n \n आयकर अपील सं./ ITA Nos. 602 to 605/CHD/2019 \n िनधाᭅरण वषᭅ / A.Y. : 2011-12, 2012-13, 2013-14 & 2014-15 \n \nM/s Shri Ram Cylinders (Unit-II), \nPlot No. 10, MW, Industrial Area-I, \nChandigarh. \nबनाम \nVS \n \nThe ITO, \nWard 2(1), \nSector 17, \nChandigarh. \n᭭थायी लेखा सं./PAN /TAN No: ABRFS3947G \nअपीलाथᱮ/Appellant \n \nᮧ᭜यथᱮ/Respondent \n \nिनधाᭅᳯरती कᳱ ओर से/Assessee by : Shri Sudhir Sehgal, Advocate and \n \n \n \n \n \n Shri A.K.Sood, CA \nराज᭭व कᳱ ओर से/ Revenue by : Shri Dharam Vir, JCIT, Sr.DR \n \nतारीख/Date of Hearing : 07.08.2024 \n उदघोषणा कᳱ तारीख/Date of Pronouncement : 21/10/2024 \n \nPHYSICAL HEARING \n \nआदेश/ORDER \n \nPER A.D.JAIN, VICE PRESIDENT \n These are assessee's appeals for assessment year \n2011-12, \n2012-13, \n2013-14 \nand \n2014-15 \nagainst \nthe \ncommon order dated 19.02.2019 passed by the Ld. CIT(A)-1, \nChandigarh. As common issues are involved in all these \nappeals, these were heard together and are being disposed of \nby this common order. \n2. \nThe facts, for convenience, are being taken from ITA \nNo.602/CHD/2024, \nfor \nassessment \nyear \n2011-12. \nThe \nassessee has taken the following grounds of appeal: \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n2 \n \n1. That the learned CIT (Appeals)-I, Chandigarh is not justified in confirming \nthe rejection of claim of the assessee amounting to Rs 27,10,822/- on account of \ndeduction u/s 80IC of the Income Tax Act, 1961 on the plea that the assessee \nM/s, Shri Ram Cylinders Unit-II does not fulfill the conditions as per clause \n(4)of Section 80IClof the IT Act, 1961 and also the unit does not have \nindependent existence but has been found to have been constituted and formed \nby \"Splitting up of from the earlier manufacturing-unit of Shri Ram Cylinders. \n2. The learned CIT(Appeals)-I, Chandigarh has erred in law and facts by \ndenying deduction u/s 80IC in the current year the basis of facts and statements \nrecorded during survey on 26/27.02.2014 i.e. in the subsequent years as each \nyear has to be considered separately and independently for that particular year \nand there is no adverse finding in the account during the current year. \n3. \nThe Ld CIT (Appeals)-I has erred in confirming reasons recorded u/s 148 \nas the reasons recorded for reopening of assessment u/s 148 dated 27.08.2014 \nare \"income against the law and facts of the case and does not amount to \nchargeable to tax has escaped assessment\" as the reasons for reopening of \nassessment are insufficient and invalid based on incomplete and wrong \ninterpretation of facts during survey operations.” \n \n3. \n At the outset, the ld. Counsel for the assessee has \nstated at the Bar that he does not wish to press Ground \nNo.3. Rejected as not pressed. \n4. \nApropos Ground Nos. 1 and 2, the facts are that the \nassessee claimed deduction of Rs. 27,10,822/- under Section \n80IC of the Income Tax Act. Vide re-assessment order dated \n18.03.2016, the AO rejected this claim. The AO held that \nthe assessee was asked vide questionnaire dated 09.02.2016 \nto furnish the documentary evidence regarding allocation of \nland and building for running of business/manufacturing \nactivities \nby \nShri \nRam \nCylinders \nUnit-I \nand \nUnit \nII \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n3 \n \nseparately. The assessee, in response thereto, furnished \nreply on 29.02.2016 (Para-I) which is reproduced as under:- \n\"The \nindustrial \nunit \nstarted \nestablished \nindependent \nmanufacturing \nfacilities \nin \nF.Y. \n2009-10 \nat \nHilltop \nIndustrial \nEstate. \nJharmairi. \nEPIP \nPhase-I \n(Ext.). \nBhatolikalan Baddi. The plot on which the unit is operating \nbelongs to Shri Gulshan Kumar Aggarwal. Shri Arun Kumar \nAggarwal and Smt. Kamal Kanta as partners of Shri Ram \nCylinders. Shri Ram Cylinders Unit II was established its \nmanufacturing facility as a partnership firm with the same \npartners Shri Gulshan Kumar Aggrawal. Shri Arun Kumar \nAggarwal and Smt. Kamal Kanta in F.Y. 2009-10. \n ... \n Being same partners in Shri Ram cylinders Unit-I and II \nthe \nUnit-ll \nwas \nallowed \nto \nestablish \nindependent \nmanufacturing facility in front half portion of the plot with \nseparate \nshed, \nseparate \nmachinery, \nseparate \ngate, \nseparate \nstaff, \nseparate \npower \nload \nand \nseparate \nregistrations under all other acts. There is no restriction on \nestablishing more than one independent manufacturing \nfacility in the same plot. A copy of site plan indicating \nindependent units is enclosed\" \n \nAO’s Observations \n4.1 The reply of the assessee had been considered by the \nAO with reference to the material facts available on record \nand it was found that the assessee had not given any \nevidence regarding allocation of land and building for \nrunning of business/manufacturing activities by M/s Shri \nRam Cylinders Unit-I and Unit-ll separately. As per the AO’s \nobservations, moreover, the assessee had stated that the \nUnit started establishing independent manufacturing facility \nin F.Y. 2010-11, which was not true because during course \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n4 \n \nof survey conducted on 26/27.02.2014 it was found that no \nseparate land was earmarked and no separate building as \nwell was constructed for running of the business of the firm \nM/s Shri Ram Cylinders Unit-ll. The assessee firm Unit-ll \nwas formed and established on the land and in the building \nof firm M/s Shri Ram Cylinders known as Unit-I. No separate \nsection/portion was earmarked for Unit-ll in the land and \nbuilding of Unit-I for running the working of unit-ll. Even no \nrent had been paid by the assessee firm M/s Shri Ram \nCylinders Unit-ll to M/s Shri Ram Cylinders Unit-I for using \nits land & building, as no claim of rent expenses paid stands \nclaimed in P&L account in the return of income right from \nthe A.Y. 2011-12, the 1st year of commencement of business. \n4.2 Reply to Q.5 of statement of Arun Kumar recorded \nduring survey shows that the assessee firm was created on \nthe same land which was of unit-l. \n4.3 \nQ.5 This premises has a single entry, single shed, \ncommon material store, common scrap, common back \nyard & common office. In view of this, this seems to be \na single unit only. What do you have to say in this \nregard ? \nAns. The unit is owned by Shri Ram Cylinders with \nSh. Arun Aggarwal, Gulshan Kumar Aggarwal & \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n5 \n \nSmt. Kamal Kanta. 2 independent entities are \noperating from this shed/plot having 2 separate \nsheds. So many units can be operated from a \nsingle plot having different functional area. \nThe managing partner himself has stated that the unit-l & \nunit-ll are merely having some different functional area. He \nhas not been able to establish any independence of these \ntwo units as the premises was covered under survey u/s \n133A of the Income Tax Act. The site plan is an \nafterthought because the assessee totally failed during \nsurvey operation to explain the independent occupation of \nland and building by each unit. Thus the contention of the \nassessee is not acceptable being devoid of facts. \n \n \n \n 2. \nGate Pass Entry: \nThe \nassessee \nwas \nasked \nvide \nquestionnaire \ndated \n09.02.2016 to furnish the proof of gate pass books for the \nperiod of 01/04/2010 to 31/03/2011 pertaining to Unit-I \nand Unit-ll. The assessee in response thereto furnished \nreply on 29.02.2016 (Para-3) which is reproduced as \nunder:- \n \n \n \n \n\"There are separate entry/exit gate of each unit. A \ncopy of site plan indicating independent units is \nenclosed. The units are not maintaining any system \nof gate pass.\" , \n \nThe reply of the assessee has been considered with \nreference to the material facts available on record and \nfound that the reply of the assessee is not tenable because \nsurvey party found on the date of survey that the entry to \nthe firm M/s Shri Ram Cylinders Unit-ll is through the \nsame gate as there is only one entry gate for the land & \nbuilding of Unit-I ( the already existing firm) and there is \nno separate gate for Unit-ll. Thus the said reply of the \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n6 \n \nassessee is also devoid of facts and the site plan is just \nafterthought. \n \n \n 3. \nStore and Raw material Godown: \n \nThe assessee was asked to explain whether it had \nmaintained godown to store raw material and other \nfinished or semi finished goods separately from Unit-I. The \nproof thereof may be given. The counsel for the assessee \nstated vide his letter dated 29/02/2016 which is \nreproduced as under:- \n \n\"both the units are maintaining separate godowns for \nraw material, semi finished goods and finished goods. \nBoth the units are maintaining separate stock for raw \nmaterial and finished goods as there are marking of \nassessee's name on raw material coils and on \nfinished goods which are easily identifiable. The \nfinished goods are in the shape of cylinders with \nengraved marking in the shape of assessee's name. \nBIS Licence number, batch number, test date and \ncontinuous serial number. Every lot is passed by \nBureau of India Standards authorities. The main raw \nmaterial of the unit is MS Coils which are bulky and \nvery big (average weight of MS Coil is 15 to 20 Tonnes \nper coil) and these are stored under the covered shed \noutside the manufacturing sheds near the circle \ncutting machines with distinct markings regarding \nweight, coil number, heat number which matches \nwith the coil number, weight and serial number in \nthe respective bill and test certificate. The semi \nfinished goods are stored near the machines on \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n7 \n \nwhich \nthe \nprocess \nis \ndone \nin \nrespective \nmanufacturing sheds and the finished goods in the \nform of Cylinders are stored in the godown area. \n \n4.4 The AO held that the reply of the assessee was in \ncontradiction to the statement of Sh. Arun Kumar Aggarwal, \npartner of the Firm recorded on the date of survey. The \nrelevant portion is reproduced as under : \n\"Q.20 For all the small store items, there is a common store in main \nshed and a common godown outside whether the store and godown \nare maintained unit wise or commonly what do you have to say? \n \nAns:- Yes, it is maintained for all the small hardware items \ncommonly. \n \nSecondly, reply to question 14 of the statement of Sh. A.R. Nagvi \nquoted below also establish that stock and store room were \ncommon for both the unit i.e. Unit-I & Unit-ll and stock/store of each \nunit could not be bifurcated. \nQ.14. You have produced daily report with regard to stock position \nof all items which are signed by Mr. Navin. Can vou bifurcate the \nstock into both the units? If yes, put up/show stock register of each \nunit? \nAns:- The daily report of stock position as per the register \nmaintained by Mr. Navin are in respect of both the units w/hich \ncannot be bifurcated for each unit separately. \n \nTherefore, the stock register maintained and produced by Mr. Navin \nduring the course of survey is written up to dated 30.06.2013 and \nthe same is pending till the date of survey, as it is (stock register) is \nin respect of both the units. \nAs above, the reply of the counsel of the assessee is misleading the \nfacts already on record in the shape of statement of Sh. Arun \nKumar Aggarwal and Sh. A.R. Nagvi. Thus on this issue the \ncontention of the assessee is also not acceptable. \n \n4. No separate employees: \n \nThe assessee, vide this office questionnaire dated 09.02.2016 was \nasked to furnish the list of employees of unit -I and Unit-ll for the \nyear under scrutiny in the following format: \n \nSr. No. \nName of \nNature of \nDate of Salary/Wages paid PM \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n8 \n \nEmployee \nwork allotted \nappointment \n \n \n \n \n \n \nIn response to the same the counsel for the assessee vide his reply \ndated 29.02.2016 (Para-5) stated that list of employees for unit-l \nand II are enclosed. \n \nThe reply of the counsel of the assessee is not tenable because from \nthe statements of Sh. Arun Kumar Aggarwal. Sh. A.R. Nagvi and \nSh. Makhan Lal Verma. the facts emerge that both the units were \nusing common services of the employees. The relevant part of the \nstatements of these persons are reproduced below:- \n \nReply given by Sh. A.R. Naqvi General Manager to question no. 3 of \nhis statement- \nQ.No. 3 Please give brief profile of your job? \nAns.: I am the overall technical incharge of this place for both the \nUnit-I & II since 2008. \n \nFrom the above quoted three question answers it is evident that the \nassessee firm was not having its employees separately but the \nemployees of already existing unit-l were working for assessee firm \nUnit-ll also.\" Further, list of employees submitted during assessment \nproceedings is contradictory to the evidence in shape of statements \nrecorded during survey. During course of assessment proceedings, \nlist of the employees of the assessee for the period for the financial \nyear 2011-12 was submitted which bears the name of Sh. A.R. \nNaqvi S/o Sh. Q.R. Naqvi resident of V.P.O. Sirsi, Distt. Muradabad. \nWhen the name of this employee is considered with reference to \nstatement of this employee recorded during course of survey, it is \nfound that in reply to question 2 of his statement he has stated- \n \nQ.2. How are you associated with M/s Shri Ram Cylinders, Baddi \nand since when? \n \nAns:- I am working as General manager at M/s Shri Ram Cylinders \nsince 2008. \n \nFurther in reply to question 3 he has stated that- \n \nQ.No. 3:- Please give brief profile of your job? \n \nAns:-1 am the overall incharge of this place for both the units- Unit-I \n& Unit-ll since 2008. \n \nThis statement of Sh. A.R. Naqvi establish that he has been doing \nthe work as overall technical incharge since 2008 when only unit-l \nwas in existence and later on been working in both the Unit-I & Unit-\nll since 2010( the year when the Unit-ll was attempted created). This \nevidence of statement of Sh. A.R. Naqvi discussed above and the \nnon inclusion of the name of Sh. A.R. Naqvi in the list of employees \nprovided for the period 1st April 2011 to 31st March 2012 for Sh. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n9 \n \nRam Cylinders Unit-I establish that the list of employees given by \nthe assessee firm is including false particulars as the employee Sh. \nA. R. Naqvi of M/s Shri Ram Cylinders Unit-I since 2008 have been \nshown to be the employee of the assessee firm only. As such the list \nof the employees submitted for the period under consideration is not \naccepted but is rejected by holding that this manipulation made in \npreparing the list of employees by including the false particulars \ngive rise to the factors that the assessee is not eligible for claiming \ndeduction u/s 80IC. \n \n5. \nUse of Assets of Unit-I by Unit-ll. :- \n \nThe assessee vide questionnaire dated 09.02.2016 was asked to \nfurnish the list of assets which owned by Unit-ll. Whether any of the \nasset is shared by Unit-I or not. In response to the above, the \ncounsel for the assessee vide reply dated 29.02.2016 stated that \nnone of the assets of unit -I are shared with unit-ll, and also \nenclosed the list of assets of unit-ll. \n \nThe reply of the assessee is not true because during the course of \nsurvey Sh. A.R. Nagvi given in reply to question no. 13 of the \nstatement disclosed that the following assets of Unit-I were used by \nthe assessee firm Unit-ll. \n \ni) \nOffice premises. \nii) \nGate \npass \nlongue \niii) Computers \niv) \nKitchen \nv) \nCanteen \nvi) \nStaff quarters \nvii) \nTelephone \nviii) \nTrucks \nix) \nLand & building \nIt is all evident from the question no. 13 and reply to it as quoted \nbelow- \n \nQ. Please state about the sharing facilities with corresponding \nsupporting documents alongwith consideration thereof paid/receipt \nby the other unit. \n \nAns:- There are various items which are shared by both the units \nwhich are as under:- \n \nii) Office premises, gate pass longue, computers, kitchen, canteen, \nstaff quarters, accountant, telephone, trucks and land and building \nare shared by both the units which are shown in the books of Unit-I \nbeing the old and first unit and no payment is being paid by Unit -II \nwith respect thereto the other unit. Similarly, the scrap and raw \nmaterial lying in the store today such as paint, cements, cylinders \nare also combined for both the units and the same cannot be \nbifurcated for each such units. It is also clarified that there is no \nsupporting documents in this respect. It may be further clarified that \nde-color and circle cutting facility is also provided by Unit-I to Unit-ll \nas mentioned in the letter dated 03.03.2009 signed to BIS, \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n10 \n \nParwanoo and no consideration is being charged or received from \nUnit-ll in this respect. \n \n6. \nMachinery for Unit-ll:- \nThe assessee, vide questionnaire dated 09/02/2016 was asked to \nfurnish the list of plant & machinery installed by Unit-ll. It was also \nasked to intimate as to whether any machine is shared by unit-l or \nnot. In response to the same, the counsel for the assessee furnished \nthe reply which is reproduced as under:- \n\"List of Plant and machinery installed by Unit-ll is enclosed \nherewith. No machinery of Unit-ll is shared by Unit-l\" \nThe reply of the assessee's counsel has been examined and found \nnot true for the following reasons- \n \ni) Page No. 13 & 19 of Annexure 47 of loose papers impounded \nduring the course of survey establish that assessee firm Unit-ll was \nusing the machinery of already existing firm Unit-l: These pages are \nthe letter written by assessee firm to Bureau of Indian standard and \napproval given by Bureau of Indian standard, Parwanoo, Distt. \nSolan (H.P) for sharing the machinery of Unit-l by assessee firm \nUnit-ll. Both these letters dated: 03.03.2009 from assessee firm and \ndated 05.03.2010 from Bureau of Indian standard giving the \napproval form part of loose papers impounded during the course of \nsurvey as Annexure-47. Further the aspect is much strengthened, by \nthe reply dated 31.12.2014 received from Bureau of Indian \nStandard in response to information called for u/s 133(6) of the \nIncome Tax Act vide this office letter dated 26.12.2014, as the \nnames given there in the reply appears to be of main basic \nmachinery which is required for performing manufacturing activities \nand giving result to the final product. In this reply of Bureau of \nIndian standard, assessee firm Unit-ll has been mentioned to be in \nuse (sharing of facilities) of the machinery of Unit-l since 08.03.2010 \nto 06.06.2011 and even more the test equipments of already \nexisting Unit-l are still being shared by the assessee firm Unit-ll till \ndate. For ready reference the reply given by Bureau of Indian \nStandard is reproduced here as under: \n \nReference is invited to your letter No. ITO/W-2(1)/CHD/2014-15 \ndated 26.12.2014 on the above subject. \n \nAs such Shri Ram Cylinders Unit-ll has been found and proved to be \nformed/constituted by splitting up from the already existing firm- \nM/s Shri Ram Cylinders Unit-I the another firm of the partners of the \nassessee firm and has been found using plant & machinery being \nalready used by unit-l. \n \n(II) Details of purchase of machinery during 2009-10 by assessee \nfirm Unit-ll submitted during assessment proceedings do not support \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n11 \n \nthe detail of machinery of Unit-ll listed on page-34 and page-33 of \nAnnexure 47 of impounded material as on 19.03.2010. \n \nDuring the course of assessment proceedings of AY 2013-14, \ninformation of plant & machinery established during the period \nstarting from establishment of assessee firm (Unit-ll) was called for \nalong with copies of purchase bills which were submitted by the \nassessee as such. Copy of details of plant & machinery as date, \nsupplier and bill detail from 01.04.2009 to 31.03.2011 alongwith \ncopies of bills submitted has been perused with reference to the list \nof manufacturing machinery of Shri Ram Cylinders (Unit-ll) forming \npart of impounded material- Annexure A47(loose papers) at page 34 \nand page 33 duly signed by Sh. A.R. Naqvi, Authorized Signatory \nand two other officials on 19.03.2010 which is deemed to be the \nmachinery of assessee firm by 19.03.2010 the date on which it was \nsigned under Seal and Stamp by the incharge officials of the \nassessee firm and should have been forming the part in the details \nof purchase of machinery of assessee firm Unit-ll as submitted by \nthe counsel of the assessee during assessment proceedings which is \nnot there. \n \nWhereas the copy of details of purchase of plant & machinery \nsubmitted by the assessee for the period 01.04.2009 to 31.03.2011 \nreferred above reveals that no such machinery items purchased by \nthe assessee firm Unit-ll up to 31.3.2010. On the basis of discussion \nof facts given above it is found that the machinery as detailed at \nserial no. 1,2,6,11 and 20 of the page 34 and serial no. \n23,24,25,27,28,31 and 32 of page 33 of impounded material \nreferred above are important role performer in the manufacturing of \nthe end products of the assessee firm Unit-ll, but these machines \nwere not with the assessee firm Unit-ll and that assessee was \ngiving result to the productions by using these machines of already \nexisting sister concern of the partners of the assessee firm in the \nname of M/s Shri Ram Cylinders (Unit-I). All this is sufficient proof \nthat assessee firm Unit-ll was working as a split-up from already \nexisting firm M/s Shri Ram Cylinders Unit-I and was acting in \ncontravention of provisions of clause 4 of section 80IC right from \nstarting of its business. \n \n(Ill) Inventory of common machinery used by the assessee firm Unit-\nll and its already existing sister concern, prepared during survey \noperation also establish that assessee firm was not valid in \nexistence and in making production by using the machinery of Shri \nRam Cylinders Unit-I. \n \nDuring the course of survey proceedings u/s 133A conducted on \n26/27.02.2014, Sh. Makhan Lal Verma Maintenance Foreman of \nthe assessee firm made the survey party to prepare inventory of \nmachinery at the business premises of M/s Shri Ram Cylinders \nBaddi, which was the common machinery being used by both the \nunits that is Unit-I & Unit-ll commonly wherein year of purchase \nhas also been mentioned. \n \nThe facts and reproduction of inventory of machinery reveals that \nthe assessee firm Unit-ll was using the machinery of Unit-I and was \ngiving result to its manufacturing activities since the starting year \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n12 \n \nof its commencement of business as the machinery in Question \nalmost relates to purchase year 2007 or 2008, when the assessee \nfirm Unit-ll was not in existence. Hence the assessee firm Unit-ll \ncomes to be split-up from its already existing sister concern known \nas Unit-I. \n \nAs explained above, it is evident that the assessee firm was formed \nin the name of M/s Shri Ram Cylinders (Unit-ll) w.e.f.19.01.2010 \nand started its commencement of business during the year 2009-10 \nwith the following partners. \na) Sh. Gulshan Kumar Aggarwal having 35% share \nb) Sh. Arun Kumar Aggarwal having 35% share \nc) Smt. Kamal Kanta having 30% share \n \nAll the above three partners were already running the firm in the \nname of M/s Shri Ram Cylinders (here under called as unit-l) since \nfinancial year 2008-09 in the same share ratio which was involved \nin the same business activities of manufacturing of LPG cylinders \nas were that of the assessee firm M/s Shri Ram Cylinders (Unit-ll) \nBaddi. Thus, assessee is not found eligible for deduction u/s 801C \nof the Act as the assessee firm M/s Shri Ram Cylinders Unit-ll was \ncreated by splitting up from the already existing Unit-I, the sister \nconcern of the assessee having same partners and having been \ninvolved in the same manufacturing business activities i.e. \nmanufacturing of LPG cylinders which come evidently proved from \nthe aforementioned factors & facts on record. It further strengthens \nour claim that the unit-ll is not eligible for deduction u/s 80IC of the \nIncome Tax Act, because it has also been found during the survey \nthat new business of the assessee i.e. Unit-ll has been found using \nmachinery/plant which was previously being used by Unit-I. \n \nKeeping in view the facts discussed above it is seen that the \nundertaking M/s Shri Ram Cylinders Unit-ll, 10, MW, Indl. Area, \nPhase-1, Chandigarh (Baddi) does not fulfill the conditions as per \nclause(4) of 80IC of the I.T.Act. The unit does not have independent \nexistence but has been found to have been constituted and formed \nby splitting up from the earlier manufacturing unit (Unit-I), 10 MW, \nIndl. Area, Phase-1, Chandigarh which was already being run by \nthe partners of the assessee firm since 2007 because the assessee \nfirm Unit-ll was carrying on manufacturing activities by using the \nemployees of Unit-I- 10, MW, Indl. Area, Phase-1, Chandigarh as the \nassessee firm was not having its independent employees, by using \nthe machinery of Unit-I- as assessee firm was not owning that \nmachinery, by using the other assets of Unit-I- as the assessee firm \nwas not having that assets as its own, by using the godown and \nstores for raw material and for end products as well of Unit-I ,as \nthere was no separate godown and store of the assessee firm as all \nproved \nevidently \nin \nabove \ndiscussions, \nhence \nthe \nformations/constitution of assessee firm Unit-ll is not held valid \nsince its starting in view of the requirement of the provisions of \nsection 80IC for becoming eligible for deduction. \n \nThe assessee Shri Ram Cylinders Unit-ll, 10, MW, Indl. Area, Phase-\n1, Chandigarh been considered not eligible for deduction claimed \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n13 \n \nu/s 80IC, hence the assessee firm, for its activities done during the \nyear 2010-11 relevant to A. Y. 2011-12 is held not eligible for \ndeduction claimed u/s 80IC of the Income Tax Act for Rs. \n27,10,822/-, on the basis of the factors discussed in detail in the \npreceding paras. Hence deduction of Rs. 27,10,822/- for A.Y. 2011-\n12 claimed by the assessee is disallowed. Accordingly an addition \nofRs. 27,10,822/- is made to the income of the assessee. Penalty \nproceedings u/s 271(1)(c) are initiated separately for concealment of \nincome by furnishing inaccurate particulars as discussed above.\" \n \n \nCIT(A)’s Findings \n5. \nBy virtue of the impugned order dated 19.02.2019, the \nCIT(A) confirmed the assessment order and dismissed the \nassessee's appeal. While doing so, it was held that the AR’s \nsubmission that no machinery of Unit-ll is shared by Unit-I has \nbeen duly rebutted by the Ld.AO. If we peruse Page Nos. 13 & 19 \nof Annexure 47 of loose papers impounded during the course of \nsurvey establish that assessee firm Unit-ll was using the \nmachinery of already existing firm Unit-I. It is pertinent to \nmention here that these pages are the letters written by assessee \nfirm to Bureau of Indian standard (BIS) and approval given by \nBureau of Indian standard, Parwanoo, Distt. Solan (H.P) for \nsharing the machinery of Unit-I by assessee firm Unit-ll. Both \nthese letters dated: 03.03.2009 from assessee firm and dated \n05.03.2010 from Bureau of Indian standard giving the approval \nform part of loose papers impounded during the course of survey \nas Annexure- 47. When an information was called from the BIS \nu/s 133(6) of the Act, the BIS submitted its reply vide dated \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n14 \n \n31.12.2014 from where it is found that assessee firm Unit-ll has \nbeen mentioned to be in use (sharing of facilities) of the \nmachinery of Unit-I since 08.03.2010 to 06.06.2011 and even \nmore the test equipments of already existing Unit-I are still being \nshared by the assessee firm Unit-ll till date. \nThe CIT(A) held that the appellant has claimed that the first \ncommercial manufacturing activity was started in the AY 2010-11 \nand most of the common machinery is minor machinery and has \nbeen used as a precautionary measure for not getting delayed in \nstart of commercial production as there was a time gap between \nthe placement of order and actually delivery of these machines. \n'AO during the course of assessment proceedings of AY 2013-14 \ncalled for information of plant & machinery established during \nthe period starting from establishment of assessee firm (Unit-ll). \nThe AR submitted Copy of details of plant & machinery as date, \nsupplier and bill detail from 01.04.2009 to 31.03.2011 alongwith \ncopies of bills. The AO analysed assessee's submissions with \nreference to the list of manufacturing machinery of Shri Ram \nCylinders (Unit-ll) forming part of impounded material-Annexure \nA-47 (loose papers) at page 34 and page 33 duly signed by Sh. \nA.R. Naqvi, Authorized Signatory and two other officials on \n19.03.2010 which is deemed to be the machinery of assessee firm \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n15 \n \nby 19.03.2010 the date on which it was signed under Seal and \nStamp by the incharge officials of the assessee firm and should \nhave been forming the part in the details of purchase of \nmachinery of assessee firm Unit-ll as submitted, by the counsel \nof the assessee during assessment proceedings. \nThe CIT(A) held that on the basis of discussion of facts given \nabove the AO has rightly concluded that the machinery as \ndetailed at serial no. 1,2,6,11 and 20 of the page 34 and serial \nno. 23,24,25,27,28,31 and 32 of page 33 of impounded material \nreferred above are important role performer in the manufacturing \nof the end products of the assessee firm Unit-ll, but these \nmachines were not with the assessee firm Unit-ll and that \nassessee was giving result to the productions by using these \nmachines of already existing sister concern of the partners of the \nassessee firm in the name of M/s Shri Ram Cylinders (Unit-I). \nMoreover, AR has not submitted all the bills of plant & machinery \npertaining to from the inception of Unit-ll. \nThe CIT(A) held that further, AO has analysed an Inventory \nof common machinery used by the assessee firm Unit-ll and its \nalready existing sister concern, prepared during survey operation \nalso establishes that assessee firm was not valid in existence and \nin making production by using the machinery of Shri Ram \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n16 \n \nCylinders Unit-I. It is undisputed fact that during the course of \nsurvey proceedings Sh. Makhan Lal Verma Maintenance Foreman \nof the assessee firm made the survey party to prepare inventory \nof machinery at the business premises of M/s Shri Ram \nCylinders Baddi, which was the common machinery being used \nby both the units that is Unit-I & Unit-ll commonly wherein year \nof purchase has also been mentioned. \nThe CIT(A) held that on perusal of Panchnama dated \n20.04.2010 drawn on account of search conducted by the DGCEI \nLudhiana Regional Unit, an observation has been made which \nreads as under: \n\"The said Unit was not working at the time of search \n......................... Further, \nit \nwas revealed Unit-ll has not implied any work force so far and they could not \nproduce any attendance register of the same and most of the machinery installed \nwas not affixed to any foundation in earth. On enquiry Sh. Naqvai informed that \ncertain machinery are not required to be affixed to the ground.\" \n \n \nThe CIT(A) held that it is clear that the assessee i.e. Unit-\nll \nhas \nnot \nstarted \nits \ncommercial \nmanufacturing \nas \non \n20.04.2010. Assessee is misleading that Unit-ll has started its \nfirst commercial manufacturing as in Financial Year 2009-10 i.e. \nas on 31.03.2010. Meaning thereby that two different agencies \nhave independently established the said facts that Unit-ll was not \nworking on its own as no commercial manufacturing was found \nstarted as on 20.04.2010. There was no separate attendance \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n17 \n \nregister of Unit-ll. Above all most of the machinery was not found \naffixed to any foundation in earth. Assessee has created Second \nEmpire on the foundation of Old Empire. The claim of Ld.AR that \nplant & machinery of Unit-ll was grouted in the floor does not \nhold good. \n \nThe CIT(A) held that the AO of the Unit-I in AY 2012-13 \nwhile disallowing depreciation has made following observations: \n\"Above reply reveals that the machinery of the assessee firm which \nwas used by the sister concern of the assessee is of plying main role in \nthe process from start of manufacturing to the end of testing of the \nproduct and this machinery have been reported to be used by the sister \nconcern of the assessee from 08.03.2010 to 06.06.2011 but the testing \nequipment are being used till the date of sending the reply by Bureau \nof Indian Standard. The value of the machinery detailed in above reply \nis calculated on the basis of facts on record as under:- \n \n1) \nDeep Draw Hydrolic Press\nRs. \n 14,00,000/- \n2) \nCircle Cutting Machine \nRs. \n3,00,000/- \n3) \nJoggling Machine \nRs. \n 75,000/- \n4) \nHydrolic Decoiler \nRs. \n 7,50,000/- \n5) \nRoller Conveyer \nRs. \n 1,00,000/- \n \n \nRs. \n 26,25,000/- \n \nTax \nRs. \n 3,28,283/- \n \nTotal value \nRs. \n29,53,283/- \nAs the machinery was allowed to be used by the sister concern of \nthe assessee up to June 2011, the depreciation cost of above \nmachine @15% which comes to Rs.4,42,992/- for the year 2011-\n12 relevant to assessment year 2012-13 is at least liable to be \ncharged from the sister concern of the assessee to the extent of \nthe use of machinery for three months which comes to \nRs.1,10,740/-, specifically in view of the fact that assessee has \nestablished business in Himachal Pradesh to be eligible for \ndeduction u/s 80IC for income from manufacturing activities. \nAssessee is held liable to charge hire charges for allowing the use \nof its machinery to its sister concern for Rs. 1,10,740/- as \ndiscussed above and subject it to tax. Accordingly an addition of \nRs. 1,10,740/- is made to the income of the assessee on account \nof hire charges of machinery.\" \n \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n18 \n \n \nThe CIT(A) held that if we peruse the details of fixed assets \nof Unit-ll as on 31.03.2010 or 01.04.2010 the total opening \nbalance of Plant & Machinery etc amounts to Rs. 71,67,593/-. \nMeaning thereby that the percent of machinery used by the \nassessee unit of the Old Unit-I is at 41.20% which exceeds 20% \nof the total plant and machinery of the assessee. Hence, \nappellant is squarely hit by the provisions of section 80IC (4) of \nthe Act. \n \nThe \nCIT(A) \nheld \nthat \nthe \nabove \nfactual \npositions \nestablishes that when commercial production started in the AY \n2010-11 as admitted by the AR, the above machinery pertaining \nto Unit-I was used by the assessee. Above discussed facts clearly \nprove \nthat \nShri \nRam \nCylinders \nUnit-ll \nhas \nbeen \nformed/constituted by splitting up from the already existing firm- \nM/s Shri Ram Cylinders Unit-I the another firm of the partners of \nthe assessee firm and has been found using plant & machinery \nbeing already used by unit-l. The AR of the appellant has failed to \nestablish that the Unit-ll is not formed by splitting up of a \nbusiness already in existence as per provisions of u/s 80IC(4) of \nthe Act. \n \nThe CIT(A) held that the findings of the Ld.AO are further \nstrengthened by the facts collected by the survey party and \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n19 \n \nconfronted to the appellant during assessment proceedings of all \nthe years i.e. 2011-12 to 2014-15 which are as follows. The Land \n& Building was not earmarked in the case of Unit-ll. No rent has \nbeen paid by the current unit. If we peruse the balance Sheet of \nthe appellant no such Land & Building is shown in the Fixed \nAsset Schedule. To say that Land & building is owned by the \npartners further strengthens AO's conclusions that the Unit has \nnot started establishing independent manufacturing facility in \nF.Y. 2009-10 because during course of survey conducted on \n26/27.02.2014 it was found that \nno separate land was \nearmarked and no separate building as well \"was constructed for \nrunning of the business of the firm M/s Shri Ram Cylinders Unit-\nll. The assessee firm Unit-ll was formed and established on the \nland and in the building of firm M/s Shri Ram Cylinders known \nas Unit-I. No separate space was earmarked for Unit-ll in the \nland and building of Unit-I for running the working of Unit-ll. \nEven no rent has been paid by the assessee firm M/s Shri Ram \nCylinders Unit-ll to M/s Shri Ram Cylinders Unit-I for using its \nland & building, as no claim of rent expenses paid stands \nclaimed in P&L account in the return of income right from the \nA.Y. 2010-11, the 1st year of commencement of business. The \nManaging partner Sh. Arun Aggarwal himself has stated during \nthe survey operation that the unit-l & unit-ll are merely having \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n20 \n \nsome different functional area. Therefore, the site plan is an \nafterthought because the assessee totally failed during survey \noperation to explain the independent occupation of land and \nbuilding by each unit. On perusal of Registered Deed executed \nand registered on 30.12.2005 with the Registrar Office, Nalagarh, \nit is found that the said Land is registered in the name M/s Shri \nRam Cylinders Unit-I. So it is all the more important that if at all \nthere is establishment of New Unit-ll, then it has to pay rent to \nUnit-I. This fact is not emerging from the record. The facts \nsubmitted by the Ld. AR are incorrect. \n \nThe CIT(A) held that the survey party found on the date \nof survey that the entry to the firm M/s Shri Ram Cylinders \nUnit-ll is through the same gate as there is only one entry gate \nfor the land & building of Unit-I ( the already existing firm) and \nthere is no separate gate for Unit-ll. Above all both the Units \nhave same Gate Pass Entry. When confronted, the AR has himself \nadmitted that no gate pass in respect of raw material and stock \ndispatched is issued. He has failed to submit any proof of Gate \nPass Book. The Ld. AR has conveniently tried to cover up the \nmain issue which has emerged due to survey operation. \n \nThe CIT(A) held that when the AO asked the appellant \nduring assessment proceedings to explain whether it had \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n21 \n \nmaintained \"Godown\" to store raw material and other finished or \nsemi finished goods separately from Unit-I. The proof thereof may \nbe given. The Ld. AR argued that both the units are maintaining \nseparate godowns for raw material, semi finished goods and \nfinished goods. But the reply of the AR is devoid of any fact in the \nlight of the statement of Sh. Arun Kumar Aggarwal, the Managing \nPartner of the Firm recorded on the date of survey. He stated that \nthe store and godown are maintained for all the small hardware \nitems commonly. In reply to Question No.14 of the statement of \nSh. A.R. Naqvi stated that the stock and store room were \ncommon for both the unit i.e. Unit-I & Unit-ll and stock/store of \neach unit could not be bifurcated. Even Mr. Navin, Store \nIncharge has stated in answer to question No.5 that the daily \nreport of stock position as per the register maintained by him are \nin respect of both the units which cannot be bifurcated for each \nunit separately. This stock register is maintained and produced \nby Mr. Navin during the course of survey was written up to dated \n30.06.2013 and the same is pending till the date of survey, as it \nis (stock register) is in respect of both the units. The AR has \nfailed to rebut these facts. \nThe CIT(A) held that during survey it was found that same \nemployees are used for both the units. When asked by the AO to \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n22 \n \nsubmit details of employees of unit -I and Unit-ll for the year \nunder scrutiny in the following format: \nSr. No. \nName of \nEmployee \nNature of \nwork allotted \nDate of \nappointment \nSalary/Wages \npaid PM \n \n \n \n \n \nThe AR submitted separate lists for both the units. But he has \nfailed to rebut the various statements given by Sh. Arun Kumar \nAggarwal- the Managing Partner, Sh. A.R. Naqvi and Sh. Makhan \nLai Verma. The facts emerged from their statements are that both \nthe units were using common services of the employees. In reply \ngiven against Question No. 21 Sh. Arun Kumar, Managing \nPartner that he cannot name or identify \"A Few\" employees of \neach unit. Similarly in reply given by Sh. A.R. Naqvi General \nManager to question No. 3 of his statement, it is emerging that he \nis the overall technical Incharge of this place for both the Unit-I \n& II since 2008. From the quoted statements, it is evident that \nthe assessee firm was not having its employees separately but the \nemployees of already existing unit-l were working for assessee \nfirm Unit-ll also. The details provided about employees during \nassessment proceedings do not match with the content of the \nstatements. For example in the list supplied during assessment \nproceedings for the financial year 2011-12 the name of Sh. A.R. \nNaqvi S/o Sh. Q.R. Naqvi resident of V.P.O. Sirsi, Distt. \nMoradabad is included in the UNIT-II employees. But in reply to \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n23 \n \nquestion 2 & 3 of his statement he has stated that he is working \nas General manager at M/s Shri Ram Cylinders since 2008 and \nthat he is overall technical incharge of this place for both the \nunits i.e. Unit-I & Unit-ll since 2008. The AR has failed to rebut \nthis bare fact during appellate proceedings. \n \nThe CIT(A) held that on asking to furnish the list of \nassets which are owned by Unit-ll and whether any of the asset is \nshared by Unit-I or not by the AO, the AR has categorically \nsubmitted that none of the assets of unit -I are shared with unit-\nll, and also enclosed the list of assets of unit-ll. But on the other \nhand, during survey proceedings in responses to Question No. \n13, Sh.A.R. Naqvi disclosed in his statement that the following \nassets of Unit-I were used by the assessee firm Unit-ll, (i) Office \npremises, (ii) Gate pass longue, (iii) Computers, (iv) Kitchen, (v) \nCanteen,(vi)Staff quarters, (vii)Telephone, (viii) Trucks, and (ix) \nLand & building. \n The CIT(A) held that on the basis of these facts, the Ld. AO has \nrightly concluded \"Office premises, gate pass longue, computers, \nkitchen, canteen, staff quarters, accountant, telephone, trucks \nand land and building are shared by both the units which are \nshown in the books of Unit-I being the old and first unit and no \npayment is being paid by Unit -II with respect to the other unit. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n24 \n \nSimilarly, the scrap and raw material lying in the store today \nsuch as paint, cements, cylinders are also combined for both the \nunits and the same cannot be bifurcated for each such units. It \nis also clarified that there is no supporting documents in this \nrespect.\" It may further be clarified that de-color and circle \ncutting facility is also provided by Unit-I to Unit-ll as mentioned \nin the letter dated 03.03.2009 of the BIS, Parwanoo and no \nconsideration is being charged or received from Unit-ll in this \nrespect. When a survey is conducted on a place, the survey party \nhas to prepare the list as per claim of the assessee and as per \nreturn filed by the entity. This procedure cannot be used as an \nevidence by the AR in his favour. The content of the matter \nemerges only after completion of survey and understanding the \nfacts in holistic analysis. Mere brushing aside the list of facilities \ncommonly used as supporting services does not help assessee to \nrebut AO's claim. The emphasis by the Ld. AR on rejection of \nbooks of accounts also does not hold good as this is not required \nas per provisions of section 80IC (4) of the Act. No person whose \nstatements were recorded under oath has ever retracted from his \nor her statement be it Sh. Arun Kumar Aggarwal, the Managing \nPartner, or Sh.A.R. Naqvi, General Manager, or Sh.Makhan Lal \nVerma, Supervisor/cashier etc. Further, it is AO's duty to follow \na consistent stand on an issue for all the years where common \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n25 \n \nissue is involved. It is in these facts and circumstances, the AO \ncannot consider each year a separate year. In the light of detailed \ndiscussion above, the Ld.AR has failed to establish that the \nassessee unit is out of the ambit of provisions of section 80IC (4) \nof the Act. The addition made by the AO is confirmed. The \nGrounds of Appeal Nos.2 & 3 are dismissed. \nOur Findings \n6. \nHeard. The question is as to whether the authorities below \nhave rightly held the assessee not eligible for deduction under \nSection 80IC of the Act, as it did not fulfil the conditions \ncontained in Section 80IC(4) of the Act. \n \nSection 80IC(4) reads as follows : \n\"[Special provisions in respect of certain undertakings or enterprises in certain \nspecial category States. \n80-IC. (1) Where the gross total income of an assessee includes any profits and \ngains derived by an undertaking or an enterprise from any business referred to \nin sub-section (2), there shall, in accordance with and subject to the provisions \nof this section, be allowed, in computing the total income of the assessee, a \ndeduction from such profits and gains, as specified in sub-section (3). \n…………………………. \n(4) This section applies to any undertaking or enterprise which fulfils all the \nfollowing conditions, namely:— \n(i) it is not formed by splitting up, or the reconstruction, of a business already in \nexistence: \n \nProvided that this condition shall not apply in respect of an undertaking which \nis formed as a result of the re-establishment, reconstruction or revival by the \nassessee of the business of any such undertaking as is referred to in section 33B \nin the circumstances and within the period specified in that section; \n(ii) it is not formed by the transfer to a new business of machinery or plant \npreviously used for any purpose. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n26 \n \nExplanation.—The provisions of Explanations 1 and 2 to sub-section (3) of \nsection 80-1 A shall apply for the purposes of clause (ii) of this sub-section as \nthey apply for the purposes of clause (ii) of that sub-section. \n \n6.1 For our purposes, Section 80IC(4)(i) is relevant, since the \nauthorities below have held that the assessee was formed by the \nsplitting up of a business already in existence. \n6.2 \n The background facts are that the assessee is a \npartnership firm of Unit-ll having partners Shri Gulshan Kumar \nAggarwal, Shri Arun Kumar Aggarwal and Smt. Kamal Kanta. The \nfirm came into existence w.e.f. 19.01.2010 for the purpose of \nmanufacturing LPG Cylinders at village Bhatolikallan, Baddi in \nHimachal Pradesh. The premises in which Unit-ll was established \nbelongs to Shri Gulshan Kumar Aggarwal, Shri Arun Kumar \nAggarwal and Smt. Kamal Kanta as partners of Shri Ram \nCylinders, which was established as a separate independent \nindustrial unit for manufacturing LPG cylinders at half back side \nof the shed. The AO denied the deduction claimed by the assessee \nafter action u/s 133A of the Act in February 2014, it was found \nthat the New Unit-ll has been established by splitting up the Old \nUnit-I. The basis of his conclusion is that the same land & \nbuilding, store & raw material Godown, Gate Pass Entry and \nabove all, Machinery and employees have been used for \nestablishing the new unit. \n6.3 The CIT(A) confirmed the assessment order. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n27 \n \n7. \nThe Ld. CIT(A), it is seen , has held the assessee not to be eligible \nfor the deduction claimed, on the following four points: \n1. Plant and Machinery of Unit-I used by Unit-II on the basis of \npermission given by BIS. \n2. Use of Land and Building belonging to Unit-I used by Unit-II, common \ngate, common godown and no rent charged \n3. Common employees \n4. Use of common facilities \n8. \nUse of Plant and Machinery of Unit-I by the assessee Unit-II \n8.1 \nNow, so far as regards the first issue, the Ld. CIT(A) has held the \nassessee to have utilized the Plant & Machinery of Unit-I. In this \nregard, it has been observed that permission was sought by the \nassessee for this from Bureau of Indian Standards (BIS), vide letter dt. \n03/03/2010 and such permission was granted by BIS. As per the Ld. \nCIT(A), information was called for under section 133(6) of the Act from \nBIS. This information revealed that the assessee (Unit No. II of Shri \nRam Cylinders) was sharing the machinery of Unit No. I from \n08/03/2010 to 06/06/2011. The assessee contends that such finding \nis entirely a result of misinterpretation of dates. It is seen that the \nPartnership Firm of the assessee was formed [APB-1 page 103-106] on \n19/01/2010. The permission was sought (APB-1 pages 238-241) vide \nletter dt. 03/03/2010 from BIS for the use of certain machinery of \nUnit-I. It is this date which has wrongly been mentioned as \n03/03/2009. Importantly, no opportunity in this regard was afforded \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n28 \n \nto the assessee. The permission was granted by the BIS, for the period \nfrom 08/03/2010 to 06/06/2011 , vide letter dt. 05/03/2010. As \navailable from APB-2, page 307, trial production was done by the \nassessee on 31/03/2010, whereas according to APB-2 page 308, \ncommercial production commenced from 07/12/2010. The deduction \nclaimed by the assessee was available to it from 2011-12 onwards. So, \nno deduction was claimed by the assessee for A.Y. 2010-11. All \nconcerned \nregistrations \nwere \ngranted \nto \nthe \nassessee \nfrom \n31/03/2010 to 07/12/2010. The bill for the first commercial \nproduction was issued on 07/12/2010, after installation and \ncommissioning of all the machinery meant for manufacturing of \ncylinders. As such, it was only minor machinery and the assessee \ncannot be said to be wrong in contending so, for which, the permission \nwas sought from the BIS further, as per the details available, as filed \nbefore both the authorities below. Even then minor machinery was \npurchased by the assessee prior to commencement of commercial \nproduction. According to this detail: \nMachinery \nAmount \nPurchase date \nDeep \nDraw \nHydraulic \nPress \n14,00,000 \n30.03.2010 \nCircle Cutting Machine \n3,00,000 \nJoggling Machine \n75,000 \nHydraulic Decoiler \n7,50,000 \n19.09.2010 \nRoller Conveyer \n1,00,000 \n27.03.2010 \n \n26,25,000 \n \nTax \n3,28,283 \n \nTotal Value \n29,53,283 \n \n \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n29 \n \n8.2 \nFrom the above, there is nothing available on record to show \nthat the assessee was, in fact, utilizing machinery of Unit-I. \n8.3 \nThe Ld. CIT(A) has held that the machinery of the assessee was \ninstalled as on 19/03/2010. The said conclusion has been arrived at \nby comparing the material impounded, i.e, loose papers, Annexure A-\n47 (APB 33 & 34) with the list and details of machinery furnished by \nthe assessee during the assessment proceedings as well as before the \nLd. CIT(A). In fact, 19/03/2010 is the date on which the seal and \nstamp of the assessee’s incharge, were appended. The details of the \nmachinery installed as on 31/03/2010 and 31/03/2011 is in \naccordance with the assessee’s balance sheet (APB-2, page 303-306), \nfor the period ending 31/03/2010 and balance sheet (APB-1, page 12-\n17) for the period ending 31/03/2011, respectively. Paper Book-1, \npage 242-286 contain copies of complete details of the machinery as \non 31/03/2011 and copies of the bills. Then, APB-128 to 130 is a list \nof machinery of the assessee and APB 125-127 is the list of the \nmachinery for the assessee, i.e, Unit –II. These lists were prepared by \nthe Department itself during the survey. Therein, all main machines \nemployed for manufacturing have been clearly mentioned. This itself \ngoes to show that both the units are using independent separate \nmachinery. So much so, even the Transformers and DG Sets are \ndistinct for the two units. Further, as stands identified by the survey \nparty itself, the main machines, like Circle Cutting Machines, D-\n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n30 \n \nCoiler, Hydraulic Press, Power Presses, Mig Weilding machines and \nother items are employed parallelly by both the untis. Still, even in the \nface of this documentary evidence, particularly the lists , which cannot \nbe doubted, having not been disputed to have been prepared by the \nsurvey team at the time of survey. \n8.4 \nThough the Ld. CIT(A) has observed that the assessee did not \nsubmit all the details of the Plant & Machinery pertaining to the period \nfrom its inception, as noted hereinabove, commercial production of the \nassessee began from 07/12/2010. Grant of permission by BIS, on \n05/03/2010, for the use of some minor machinery of the Unit-I by the \nassesee for trial run, during the setting up of the machinery required \nfor commercial production, was for the period from 08/03/2010 to \n06/06/2011. As considered hereinabove, the details of the machinery \naccount, alongwith bills had duly been filed by the assessee. This \nbeing so the observation made by the Ld CIT(A) has no legs to stand \non. \n8.5 \nThe Ld. CIT(A) has observed, from an analysis of the inventory of \ncommon machinery used by the assessee, prepared at the time of \nsurvey, that according to the statement of Shri Makhan Lal Verma, \nMaintenance Foreman, the machinery list was mainly machinery of \nthe year 2007, which was used by both the units. As noted \nhereinabove, during the survey proceedings, the survey team prepared \nseparate list of Plant & Machinery installed at both the units. This list \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n31 \n \nincludes separate parallel machineries used by both the units for the \nproduction in each ground separately. The list of common machineries \nwas also separately prepared (page 131) by the survey team. This \nincludes mainly scrap minor machineries, to a large extent of the \nassessee of Unit-I and parallely of the assessee. These machineries as \nfollows: \n \nName \nQty \nYear of Purchase \n1 \nCrane \n1 \n2008 \n2 \nPower Press \n6 \n2007/12 \n3 \nRing drill Machine \n1 \n2007 \n4 \nPipe \nCoiling \nMachine \n1 \n2007 \n5 \nRing Grinder \n1 \n2007/10 \n6 \nRing \nCutting \nMachine \n1 \n2007 \n7 \nRing Press Machine \n1 \n2007 \n8 \nMig \nWelding \nMachine \n4 \n2007/10 \n9 \nArc \nWelding \nMachine \n2 \n2007 \n10 \nFurnish oil pump \n1 \n2007 \n11 \nHSS Pest \n1 \n2007 \n12 \nFartik Pest \n1 \n2007 \n \n8.6 \nThe details of the above machineries shows that as compared to \nCrane (Sr. No. 1), the rest of the machineries are of much lesser value. \nThis Crane, also, is not a machinery required for production, which, in \nthe assessee’s case, is LPG Cylinders. \n8.7 \nThe Ld. CIT(A) has, further, made reference to the search \nconducted by the DGCEI, Ludhiana Regional Unit, particularly with \nregard to Panchnama dt. 20/04/2010, observing that the unit was not \nworking at the time of search, i.e. on 20/04/2010. Now, as noted \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n32 \n \nhereinabove, the commercial production of the assessee got started \nonly on 07/12/2010, since prior to that, this complete machinery had \nnot been installed. Rather, at that time, the assessee was in the \nprocess \nof \ngetting \nitself \nregistered \nwith \nvarious \nGovernment \nAuthorities. 20/04/2010 is a date prior to 07/12/2010. Therefore, \nobviously, the unit was not working as on that date. Undisputedly, the \nfirst bill for the sale from commercial production was issued on \n07/12/2010. The commercial production, as such, began in the later \nhalf of the A.Y. 2011-12. To reiterate, as has also not been disputed, \nno deduction under section 80IC of the Act was claimed for the A.Y. \nprior to that year, i.e. for A.Y. 2010-11. It is a further observation of \nthe Ld. CIT(A) that the assessee had misleadingly stated that it had \nstarted its first commercial production as on 31/03/2010, i.e, in F.Y. \n2009-10; and that no commercial manufacturing was found as on \n20/04/2010 and most of the machinery was not found fixed to the \nfoundation. Now, once, as observed hereinabove, as on that date, the \nassessee had not installed the entire machineries, such complete \nmachineries could not have been found affixed to the ground and \ncommercial manufacturing could not have been started by then. To \nreiterate, it started only on 07/12/2010, as is evident from the first \nbill of sale from the commercial production(supra). In this regard, as \navailable from the APB-1, page 245, the total machinery purchased up \nto 31/03/2010 was of Rs. 71,67,593/-. It was later, that more \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n33 \n \nmachinery was purchased, as can be seen from pages 245 to 248, \nbefore commencement of commercial production. The observation of \nthe Ld. CIT(A) is without basis, since the assessee was in the process \nof installation of machineries. \n8.8 \nThe next observation of the Ld. CIT(A) is with regard to \ndisallowance of depreciation of three months, i.e., upto June 2011, \namounting to Rs. 1,10,740/- (1/4th of 15% of Rs. 29,53,328/-) for A.Y. \n2012-13, during the assessment of Unit-I, for machineries used by the \nassessee. Concerning this, scrutiny assessment orders (APB-3, pages \n310-324) Unit –I, for A.Y-s 2012-13 to 2014-15, dt. 18/03/2015, \n18/03/2016 and 26/12/2016, respectively are on record. These \norders were passed after survey was conducted on both the units. Unit \n–I was also availing deduction under section 80IC of the Act, which \nwas allowed for all these three assessment years. For A.Y 2012-13, \ndepreciation was allowed for three months, upto June 2011, for \nmachineries used by the assessee. The disallowance was a \npresumptive disallowance. It was the aforementioned BIS letter dt. \n05/03/2010 , which formed the basis of such presumptive \ndisallowance. This letter, to remind oneself, permitted the use of \nmachineries of Unit –I by the assessee. However, as rightly stated and \nnot rebutted, it was merely the permission for use. There is nothing on \nrecord, on the other hand, to establish the actual use by the assessee \nof the machineries of Unit-II during the said period, but for the minor \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n34 \n \nmachineries, as discussed. The actual date of purchase of machineries \nrequired for manufacture by the assessee was undisputedly much \nprior to 07/12/2010, the date of commencement of commercial \nproduction. The observation made by the Ld. CIT(A) is not based on \nthe correct facts. \n8.9 \nThe Ld. CIT(A) has observed that the details of the fixed assets of \nthe assessee as on 31/03/2010, or 01/04/2010 shows that the total \nopening balance of Plant & Machinery, etc., amounted to Rs. \n71,67,593/-; that this meant that the percentage of machinery of \nUnit-I used by the assessee was 41.20%, which exceeded 20% of the \ntotal Plant & Machinery of the assessee, attracting the provisions of \nSection 80IC(4) of the Act. Again, as taken note of in the preceding \nparagraphs, as on 31/03/2010, the machinery installed was of this \namount, i.e., of Rs. 71,67,593/-. The Partnership Firm, as taken note \nof, was established on 19/01/2010 . From this itself, it cannot be \nimagined that the assessee could have gone into commercial \nproduction by 31/03/2010, within two months and ten days of its \ncoming into existence. To state again, undisputedly, deduction under \nsection 80IC was claimed for the first time in A.Y. 2011-12. Thus, for \nA.Y. 2010-11, since it was not due, no deduction under section 80IC \nwas claimed. \n8.10 The Ld. CIT(A) has also observed that the AR of the assessee \nadmitted that when commercial production started in A.Y. 2010-11, \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n35 \n \nmachinery of Unit-I was used by the assessee; that this proves that \nthe assessee Unit-II was formed by splitting up from the already \nexisting firm, M/s Shri Ram Cylinders Unit-I. In view of the elaborate \ndiscussion made hereinabove, this observation of the Ld. CIT(A) is \nentirely baseless. The assessee, we find, on the basis of the cogent \ndocumentary evidence discussed in the preceding paragraphs, is \nentirely an independent unit, having not been formed by splitting up \nof Unit-I. This was a wholly new unit involving fresh investment in \nPlant & Machinery, leading to additional capacity in the national \neconomy, as well as enhancement in gross domestic production, \nwhich, evidently, are pre-conditions for seeking to avail deduction \nunder section 80IC of the Act, as envisaged by the legislature. It is a \ndeduction to support industrial unit existing solely on its own, as a \nviable unit. The physical identity of the old Unit-I is not at all shown to \nhave been carried over in the assessee’s fresh unit and the \nundertaking has not been proved as having been formed out of the \nexisting business. There is no transfer of any asset of the old business \nto the new undertaking indicating any reconstruction or splitting of \nthe old business. There has been substantial employment of new \ncapital, which is a pre-condition for becoming eligible for availing \ndeduction under section 80IC. As available from APB page14, which, \nagain, remains unchallenged however, capital of Rs. 2,49,19,000/- \nhas been infused to establish the new unit. The investment in the new \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n36 \n \nmachinery was of Rs. 1,67,89,202.78, as is available at APB page 16, \nbefore depreciation as on 31/03/2011. The depreciation chart \nshowing such depreciation is at APB-1, pages 144-155. The Schedules \nof fixed assets of both the units does not show the transfer of any \nasset from Unit-I to the assessee Unit –II. Too, both the units have \nbeen independently formed under independent partnership deeds. \nEach of them operates under different manufacturing facilities. There \nare different independent sheds. There are independent machineries. \nBoth Unit-I and Unit-II stand registered as separate SSI Units. They \nhave separate distinct Excise Registration and Sales Tax Registration. \nTheir PANs are different. They have different individual licenses under \nthe Factories Act. The Pollution Control Board has registered both the \nunits under different registrations. There are separate power \nconnections. The licenses under the Chief Controller of Explosives are \nalso separate. The BIS Registrations are also distinct. There is \nseparate ESI Registration. The PF Registrations are also separate and \ndistinct. Both the units are separately registered as vendors of all the \ndifferent three oil companies. All in all, both the units are inter se \nindependent distinct individual manufacturing units. \n8.11 For the above discussion, we do not agree with the findings \nrecorded by the Ld. CIT(A) qua the issue of Plant & Machinery of Unit-I \nbeing employed by the assessee Unit-II. The order under appeal is, \ntherefore, un-sustainable on this and we hold so. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n37 \n \n9. \nUse of Land and Building of Unit –I by the assessee Unit-II \n9.1 \nThe Ld. CIT(A) has held the assessee Unit-II of M/s Shri Ram \nCyilinders to be not entitled to the benefit of deduction under section \n80IC of the Act since according to the Ld. CIT(A), the assessee has put \nto use Land & Building of Unit-I, with common gate, and a common \ngodown and for the reason that no rent was charged there-for. It has \nbeen observed that the site plan is an afterthought and no separate \nland was earmarked. It has been observed that Shri Arun Aggarwal, \npartner stated that both units were having different functional areas. \nIt was observed that the Registered deed of the land is in the name of \nonly Unit-I. \n9.2 \nIn this regard, it remains undisputed that as per the details \nprepared separately for both the Units by the survey party, there are \ntwo distinct demarcated sheds with entirely independent distinct \nmachineries installed, with independent power connections and \nindependent generator sets in those sheds. Some of the heavy \nmachineries, like Deep Draw press, Heavy power presses, Generator of \n380KVA each are grouted on the ground with foundation. All these are \nregistered with the three oil companies, and the BIS, besides other \nconcerned Government departments. \n9.3 \nThe conditions laid down under section 80IC(4) of the Act, as \ncorrectly stated stand fulfilled, making no mention of the assessee \nbeing the owner of the building concerned. That being so, the non- \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n38 \n \ncharging of rent does not erase the otherwise eligibility of the \nassessee’s claim of deduction under section 80IC(4). There is otherwise \nno interlacing or intermixing in the sense that there are independent \nsheds and employment of independent manufacturing machineries by \nboth the Units. \n9.4 \nThe factum of Shri Arun Aggarwal, partner having stated in his \nstatement that both the Units are having different functional areas \ngoes in favour of the assessee rather than against it. As observed, both \nthe Units are separate independent Unit interse. There are separate \nbills of machineries, as listed by the survey party itself during the \nsurvey. \n9.5 \nApropos the observation that there was only one gate for the \nland and building of both the units, the same is not detrimental to the \nclaim of the assessee. It is on record that both the Units have separate \ngates and separate entries to the sheds. So far as regards the question \nof non-issue of gate passes, again, it is on record that in respect of raw \nmaterial and stock dispatched, there is no gate pass. The material is \nrecorded directly in the records of the respective firms. Otherwise, \nseparate \ninward \nmaterial \nand \noutward \nmaterial \nregister \nare \nmaintained by both the Units. This is available from APB-1 page 107-\n109, i.e. the documents impounded as well as the list of books. There \nis a layout plan (APB-1 page 139-143). Such layout plan is both a \ncombined lay out plan and a separate layout plan for both Units. APB-\n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n39 \n \n134-136 contains list of stock of Unit-I, whereas there is a list of stock \nof \nthe \nassessee \nUnit-II, \nat \nAPB-137-138. \nThese \ndocuments, \nundisputedly, were made available before both the authorities below. \nElse, it has not been shown that the assessee would be disentitled for \nthe deduction claimed for the same gate for Land & Building for both \nUnits, or for non issuance of gate pass. \n9.6 \nThe Ld. CIT(A) has further observed that in the statement of the \npartner, it has been mentioned that there is common godown to store \nraw material and finished and semi finished goods, for small hardware \nitems. It has also been observed that even the employees stated that \nthere is a common store and stock room for both units and that there \nare common stock and record of both Units. \n \n9.7 \nHere, it has not been opposed that both Units maintained \nseparate stock and stock register for raw material and finished goods. \nThere are markings on raw material, coils and finished goods, which \nclearly distinguish them in the Units interse. The finished goods, i.e., \ncylinders, bear engraved markings, i.e. the Unit name, BIS License \nnumber, batch number, test date and continuous serial number. The \nBIS passed every lot of cylinders. The MS coils, which is the chief raw \nmaterial for the cylinders produced, are very bulky. They are stored in \nthe covered sheds located outside the manufacturing sheds. These MS \ncoils weigh 15 to 20 tons per coil. They bear distinct markings \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n40 \n \nindicating weight, coil number, wight number, which match with the \ncoil number and weight and serial number in the respective bill and \ntest certificate. The manufacturing process is carried out separately \nfor the two Units and the respective cylinders are stored in the godown \nareas. Scrap is stored in the open backyard of the Units. It is identified \nby weight. The HR coils, the chief raw material, is stored in the open \nunder \nthe \ntemporary \nshed \nlocated \noutside \nthe \nmain \nshed. \nUndisputedly, stock taking was done by the survey party. They \nprepared separate lists of raw material and finished goods for both \nUnits. This was possible since the raw material as well as stock of \nfinished goods were identifiable separately, with separate markings. In \nhis statement Mr. Sandeep stated that entries of stock are in separate \nregister. APB-1, pages 156-234 shows different registers. APB-1, pages \n107-109, i.e. list of books and documents impounded shows separate \ninward material and outward material registers being maintained by \nboth the Units. APB-1, pages 133-138 contain the separate list of \nstocks for both Units. \n \n9.8 \nIn view of the above, the overwhelming documentary evidence \nwas illegally ignored by the Ld. CIT(A) while making unsustainable \nobservations in this regard. Such documentary evidence stands \nunrebutted all through. In view of this, finding no force therein, the \nobservations of the Ld. CIT(A) on this issue are rejected. \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n41 \n \n10. \nCommon Employees \n \n10.1 The Ld. CIT(A) observed that it was evident from the statement, \nthat the employees of the already existed Unit-I were working for the \nasessee also; that the details about the employees, as were provided \nbefore the AO, did not match with the contents of the statement, for \ninstance, for F.Y. 2011-12, in the list supplied before the AO, the \nname of Shri A.R. Naqvi S/o Shri Q. R. Naqvi, R/o VPO Sirsi, Dist. \nMoradabad was included in the Unit-II employees, whereas in replies \nto Question Nos. 2 & 3 of his statement, he stated that he was working \nas General Manager at M/s Shri Ram Cylinders since 2008 and that \nhe was the overall technical incharge of this place for both the units \nsince 2008. The Ld. CIT(A) observed that the Ld.AR of the assessee \nhad failed to rebut this before him. \n10.2 The statement of the assessee in this regard has been, and this \nis not rebutted, that there are separate employees for both the \nindependent Units, but in case of emergencies and exceptional \ncircumstances, some workers work for both Units. There is no \ncontradiction in the list of employees which was submitted in the \nassessment proceedings and the statement recorded during the \nsurvey. The survey was conducted on 26/27.02.2014. The year under \nreference is A.Y. 2012-13. The AO rejected the list of employees \nworking during the A.Y. 2012-13 without any further verification / \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n42 \n \nobservation, only on the basis of the statement of some employees, \nrecorded on 26/27.02.2014. Even as at the time of the survey, both \nthe Units had separate employees working for them. Shri A.R. Naqvi \nwas working as an employee of Shri Ram Cylinders till Decebmer \n2009. It was subsequently that he got employment with Unit-II, from \nJanuary 2010. This is the deposition of Shri A.R. Naqvi, before the \nsurvey team at the time of survey. Evidently, there is no contradiction \ninterse between this statement and the list of employees. Otherwise, \nhe being an employee of Unit-II at the relevant time, inclusion of his \nname in the list of employees for the period from 01/04/2011 to \n31/03/2012, considering Unit-1 cannot be said to be incorrect. All \nthese facts, as available from the record, have not been objected to, \nnay successfully contradicted at the hands of the department before \nus. Moreover, the use of some employees of the other Unit by the \nassessee Unit in emergency and exceptional circumstances does not \nalter the position that the manufacturing facility of both the Units are \nindependent of each other and there is no interlacing interse which \nwas detrimental to the claim of deduction. Further, even otherwise, it \nis not unlikely that some employees might simultaneously be working \nat the same time in the two different Units. In the assessment orders \n(supra), of Unit-I for A.Y’s. 2012-13, 2014-15, the deduction under \nsection 80IC was allowed. There was disallowance of 50% of the salary \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n43 \n \nof Shri A.R. Naqvi and Shri Makhan Lal , the AO being of the view that \nthey were working for both the Units, for A.Y. 2012-13 and 2013-14. \n10.3 For the above discussion, based on cogent documentary \nevidence, which remains unrebutted, the conjectural and surmisical \nobservations made by the Ld. CIT(A) qua this issue are rejected. \n \n11. \nUse of Common facility \n \n11.1 The Ld. CIT(A) confirmed the conclusion of the AO that office \npremises, gate pass lounge, computers, kitchen, canteen, staff \nquarters, accountant, telephone, trucks, land and building are shared \nby both the Units, as in the books of Unit-I, and that no payment is \nbeing made by Unit-II(the assessee) to Unit-I. Now, undisputedly, \nthese are merely supporting services. They have no direct connection \nwith the manufacturing process of cylinders, as carried out by both \nthe Units. Land & Building, however, may be acquired on rent. Thus, \nnon payment of rent of the supporting services does not disentitle the \nassessee to its claim of deduction under section 80IC, the \nmanufacturing activity of the assessee, as considered hereinabove, \nbeing entitled independent of the manufacturing activity of Unit-I. In \nthe assessment orders (supra) of Unit-I, for A.Y 2012-13 to 2014-15 , \nthe deduction was allowed. The additions of minor discrepancies were \nmade. The presumptive addition was made on account of rent. This \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n44 \n \ncannot form the basis for disallowance of deduction claimed under \nsection 80IC. \n11.2 So, even with regard to this issue, the order of the Ld. CIT(A) is \nfound to be unsustainable and qua this issue also, the disallowance \nmade is rejected. \n \n11.3 In ‘‘Textile Machinery Corporation Ltd. Vs. CIT’, (1977) 107 ITR \n0195 (SC), it has been held that reconstruction of business involves \nthe idea of substantially the same persons carrying on substantially \nthe same business in order to entitled to the benefit [(under section \n15C of the 1922 Act) (Section 80J of the 1961 Act)]. The assessee \nwould have to establish investment of substantial fresh capital in the \nindustrial undertaking setup, employment of requisite labour therein, \nmanufacture or production of articles in the said undertaking, earning \nof profits clearly attributable to the said new undertaking and above \nall, a separate and distinct identity of the industrial set up. \n \n11.4 Our elaborate decision on the four issues raised by the Ld. \nCIT(A) clearly brings the assessee with-in the parameters laid down by \nthe Hon’ble Supreme Court in case of ‘Textile Machinery Corporation \nLtd. Vs. CIT’ (supra). This decision was followed by the Hon’ble \nSupreme Court in case of ‘CIT Vs. M/s Indian Aluminium Co. Ltd.’, \n(1977) 108 ITR 0367 (SC). ‘Textile Machinery Corporation Ltd. Vs. CIT’ \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n45 \n \n(supra) was has been followed by the Hon’ble Jurisdictional Punjab & \nHaryana High Court in case of ‘M/s Oswal Woollen Mills Ltd. Vs. CIT’, \n(1982) 138 ITR 0338. The Coordinate Chandigarh Bench of the \nTribunal has also followed ‘Textile Machinery Corporation Ltd. Vs. CIT’ \n(supra) in case of ‘ITO, Baddi Vs. M/s Yash International Inc.’, vide \norder dt.23/11/2012 (assessee’s case law paper book pages19-29), for \nA.Y. 2007-08, in ITA No. 1012/Chd/2011. Further, in ‘CIT Vs. \nMetropolitan Springs(P) Ltd.’, (1991) 191 ITR 0288 (Bom), while, under \nsimilar circumstances, holding the assessee to be entitled to deduction \nunder section 80J, it was observed that the mere fact that a part of the \npremises used by the old undertaking was used for the new industrial \nundertaking also, or that some members of staff were common does \nnot make any material difference in the situation. \n \n11.5 No contra decision has been cited before us on behalf of the \nDepartment. \n \n11.6 In view of the above, finding the grievance sought to be raised by \nthe assessee to be justified, the same is hereby accepted. The order \nunder appeal is hereby set aside and cancelled. \n \n12. \nIn the result, the present appeal of the Assessee is allowed. \n \n\nITA 602 to 605/CHD/2019 \nA.Y.2011-12 to 2014-15 \n46 \n \n13. \nBoth \nthe \nparties \nfairly \nsubmitted \nthat \nthe \nfacts \nand \ncircumstances of the cases in ITA nos. 603 to 605/Chd/2019 are \nidentical and, therefore, our findings and direction in ITA No. \n602/Chd/2019 shall apply mutatis mutandis to these appeals and the \nappeals of the assessee are allowed. \n \nOrder pronounced on 21/10/2024 \n Sd/- \n \n \n \n \n \n \n Sd/- \n \n(VIKRAM SINGH YADAV) (A.D.JAIN ) \nACCOUNTANT MEMBER \n \n \n \n VICE PRESIDENT \n \n“AG” \nआदेश कᳱ ᮧितिलिप अᮕेिषत/ Copy of the order forwarded to : \n1. \nअपीलाथᱮ/ The Appellant \n2. \nᮧ᭜यथᱮ/ The Respondent \n3. \nआयकर आयुᲦ/ CIT \n4. \nिवभागीय ᮧितिनिध, आयकर अपीलीय आिधकरण, च᭛डीगढ़/ DR, ITAT, CHANDIGARH \n5. \nगाडᭅ फाईल/ Guard File \n \n \n \n \n \n \n \n \n \nआदेशानुसार/ By order, \nसहायक पंजीकार/ Assistant Registrar \n \n"
Mehul