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| The Tax Publishers2020 TaxPub(DT) 2109 (Chen-Trib) INCOME TAX ACT, 1961
Section 80-IB
No new technology was involved in these new machineries. Further, so called invoice for import of raw material and the so-called invoice for export of products did not conclusively establish that assessee had manufactured distinct products from the products which were already being manufactured. Accordingly, certificate given by Chartered Engineer could not be the basis for holding a view that old machines were not capable of manufacturing so-called new range products and assessee had established entirely new industrial undertaking and, therefore, denial of deduction under section 80-IB was justified.
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Deduction under section 80-IB - Allowability - Non-establishment of new industrial undertaking -
Assessee on the basis of certificate given by Chartered Engineer pleaded to have set up a new unit or undertaking capable to producing entirely different products or articles from the existing unit and thus claimed deduction under section 80-IB. AO enied deduction noticing certain shortcomings in quantum of machinery purchased by the assessee and also holding that the assessee had not satisfied two major conditions, i.e., manufacture of production or article or thing by the so-called new industrial undertaking with reference to investment of substantial capital made in so called new industrial undertaking and assessee company was not able to establish that so called new industrial undertaking was a separate and distinct and identity when compared to the old industrial undertaking. Held: Quantum of new investment was to the tune of Rs. 53,17,373 only, which came to about 4.23% only and thus, same was made by assessee in the normal course of business of expansion rather than the establishment of new industrial undertaking. Machineries were purchased in India and it was evident from copies of invoices that new machineries purchased were not different from machineries which were already existing in the manufacturing process. Therefore, no new technology was involved in these new machineries. Further, so called invoice for import of raw material and the so-called invoice for export of products did not conclusively establish that assessee had manufactured distinct products from the products which were already being manufactured. Accordingly, certificate given by Chartered Engineer could not be the basis for holding a view that old machines were not capable of manufacturing so called new range products and assessee had established entirely new industrial undertaking and, therefore, denial of deduction under section 80-IB was justified.
REFERRED :
FAVOUR : Against the assessee.
A.Y. :
INCOME TAX ACT, 1961
Section 195
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