I.T.A. NO 477 OF 2013 · - 3 - Sec.143(3) of the Act. The Assessing Officer concluded the assessment, determining the assessee’s income at Rs.1,79,82,653/-, after disallowing certain

- 1 -

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 28TH DAY OF JULY 2014

PRESENT

THE HON’BLE MR.JUSTICE N. KUMAR

AND

THE HON’BLE MR. JUSTICE B. MANOHAR

I.T.A. NO. 477 OF 2013

BETWEEN: M/S ACE MULTI AXES SYSTEMS LTD., A-50/49, II MAIN ROAD II STAGE, PEENYA INDUSTRIAL ESTATE BANGALORE 560 058 REPRESENTED BY ITS MANAGING DIRECTOR MR H L RAMESH AGED ABOUT 52 YEARS SON OF SRI H S LINGAHAIAH

... APPELLANT (BY SRI. S PARTHASARATHI, ADV.) AND THE DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE 11(1) NO.59, HMT BHAVAN GANGANAGAR BELLARY ROAD BANGALORE - 560032

... RESPONDENT (BY SRI. K V ARAVIND, ADV.) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 24/05/2013 PASSED IN ITA

http://www.itatonline.org

- 2 -

NO.516/BANG/2011, FOR THE ASSESSMENT YEAR 2005-06, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN; ALLOW THE APPEAL AND SET ASIDE THE ORDER OF THE APPELLATE TRIBUNAL IN ITA NO.516/Bang/2011 DATED 24/05/2013; AND ETC.

THIS ITA COMING ON FOR ADMISSION THIS DAY, N. KUMAR

J. DELIVERED THE FOLLOWING:

JUDGMENT

The assessee has preferred this appeal against the

order passed by the Tribunal affirming the finding

recorded by the Commissioner of Income Tax that the

assessee is not entitled to claim deduction under

Sec.80IB(3) of the Income Tax Act, 1961 (for short, the

‘Act’), as in the 9th year it ceased to be small scale

industry.

2. Assessee is a company engaged in the business of

manufacture and sale of components/parts of CNC lathes

and similar machines. The assessee furnished its return

of income, admitting a total income of Rs.1.76 crores

which was initially processed under Sec.143(1) of the Act.

Subsequently, the case was subjected to scrutiny under


- 3 -

Sec.143(3) of the Act. The Assessing Officer concluded the

assessment, determining the assessee’s income at

Rs.1,79,82,653/-, after disallowing certain expenses,

aggregating to Rs.2.91 lakhs. The Commissioner of

Income Tax, by virtue of the power conferred under

Sec.263 of the Act, initiated suo motto proceedings on the

ground that the assessment order was erroneous and pre-

judicial to the Revenue. According to the Commissioner,

the Assessing Officer has wrongly allowed deduction

under Sec.80IB(3) of the Act, as claimed by the assessee.

After hearing the assessee, he passed an order setting

aside the assessment order with a direction to decide the

claim under Sec.80IA/80IB. In pursuance to the said

direction issued, the Assessing Authority disallowed the

assessee’s claim of Rs.75,81,910/- under Sec.80IB(3) of

the Act. Aggrieved by the said order, the assessee

preferred an appeal to the Commissioner. The

Commissioner dismissed the appeal. Aggrieved by the

said order, the assessee preferred an appeal to the


- 4 -

Tribunal. The Tribunal, on consideration of the rival

contentions, held, each assessment order is separate and

independent. The Revenue authorities had every power to

examine and analyze the facts and figures, as well as

relevant law point of each year to find out, all the

conditions are fulfilled or not. The value of the plant and

machinery exceed Rupees One Crore during the year

under consideration, which incidentally deprived the

assessee to call itself as a small scale industry and

therefore the Tribunal was of the view that the authorities

below were justified in denying the assessee’s claim for

deduction under Sec.80IB(3) of the Act. Accordingly the

appeal came to be dismissed. Aggrieved by the said order,

the assessee is before this court.

3. The substantial question of law that arises for

our consideration in this appeal is as under:

When once the eligible business of an

assessee is given the benefit of deduction under

Sec.80IB on the assessee satisfying the conditions

mentioned in Sub-sec.(2) of Sec.80IB, can the


- 5 -

assessee be denied the benefit of the said

deduction on the ground that during the said 10

consecutive years, it ceases to be a small scale

industry?

4. Sec.80IB is an incentive provision. It provides

deduction in respect of profits and gains from certain

industrial undertakings other than infrastructure

development undertakings. For an industrial undertaking

to be eligible for the said deduction, it has to fulfill all the

conditions mentioned under Sub-sec.(2) of Sec.80IB. The

four conditions which are stipulated therein are, firstly,

the industrial undertaking must not have been formed by

splitting up or reconstruction of a business already in

existence. The second condition is, such an undertaking

is not formed by transfer of machinery or plant previously

used for any purpose. The third condition is that the

industrial undertaking manufactures or produces any

article or thing not being any article or thing specified in

the list in Eleventh Schedule. However, in respect of a

small scale industry undertaking, even that condition is


- 6 -

waived. In other words, a small scale industry

manufacturing or producing any article or thing specified

in the list in the Eleventh Schedule, is also entitled to the

aforesaid deduction. The fourth condition is, the said

industrial undertaking employs 10 or more workers in a

manufacturing process carried on with the aid of power or

employs 20 or more workers in a manufacturing process

carried on without the aid of power. Once these four

conditions are fulfilled, the assessee is entitled to the

benefit under Sec.80IB of the Act. Sub-sec.(3) of Sec.80IB

provides the extent of deduction eligible under Sec.80IB

and also the number of years such a deduction is

available to such an undertaking. Sub-sec.(3) mandates

that the industrial undertaking shall be eligible for the

said deduction for a period of 10 consecutive years,

beginning with the initial assessment year. However, it is

subject to two conditions as stipulated therein. The

second condition is what is applicable to the case on hand

which provides, if the industrial undertaking is a small


- 7 -

scale industry undertaking, it has to begin manufacture or

produce articles or things at any time during the period

beginning on the 1st day of April 1995 and end on the 31st

day of March 2002. This is a condition which a small

scale industry has to fulfill in addition to the conditions

mentioned in Sub-sec.(2) of Sec.80IB. Once all these

conditions are fulfilled, a small scale industry is entitled to

the benefit of deduction for a period of 10 consecutive

years beginning with the initial assessment year.

5. In the entire provision, there is no indication that

these conditions had to be fulfilled by the assessee all the

10 years. When once the benefit of 10 years, commencing

from the initial year, is granted, if the undertaking satisfy

all these conditions initially, the undertaking is entitled to

the benefit of 10 consecutive years. The argument that, in

the course of 10 years, if the growth of the industry is fast

and it acquires machinery and the total value of the

machinery exceeds Rs.1 crore, it ceases to have the said

benefit, do not follow from any of the provisions. It is true


- 8 -

that there is no express provision indicating either way,

what would be the position if the small scale industry

ceases to be a small scale industry during the said period

of 10 years. Because of that ambiguity, a need for

interpretation arises. If we keep in mind the object of the

Legislature providing for these incentives and when a

period of 10 years is prescribed, that is the period,

probably, which is required for any industry to stabilize

itself. During that period the industry not only

manufactures products, it generates employment and it

adds to the wealth of the country. Merely because an

industry stabilizes early, makes profits, makes future

investment in the said business, and it goes out of the

definition of the small scale industry, the benefit under

Sec.80IB cannot be denied. If such a literal interpretation

is placed on the said provion, it would run counter to the

very object of granting incentives. It would kill the

industry. Therefore keeping in mind the object with which

these provisions are enacted, keeping in mind the


- 9 -

industrial growth which is required to be achieved, if two

interpretations are possible, the courts have to lean in

favour of extending the benefit of deduction to an assessee

who has availed the opportunity given to him under law

and has grown in his business. Therefore we are of the

view, if a small scale industry, in the course of 10 years,

stabilizes early, makes further investments in the

business and it results in it’s going outside the purview of

the definition of a small scale industry, that should not

come in the way of its claiming benefit under Sec.80IB for

10 consecutive years, from the initial assessment year.

Therefore the approach of the authorities runs counter to

the scheme and the intent of the Legislature. Thereby

they have denied the legitimate benefit, an incentive

granted to the assessee. Both the said orders cannot be

sustained. Therefore the substantial question of law is

answered in favour of the assessee and against the

Revenue. Hence we pass the following:


- 10 -

ORDER

The appeal is allowed. The impugned

order is hereby set aside. The original order of

granting the benefit of deduction under

Sec.80IB, is restored.

Ordered accordingly.

SD/-

JUDGE

SD/-

JUDGE

Rd/-


Page 1 of 12 ITA No.516/Bang/2011

IN THE INCOME TAX APPELLATE TRIBUNAL,

BANGALORE BENCH ‘C’

BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND

SHRI JASON P BOAZ, ACCOUNTANT MEMBER

ITA No.516/Bang/2011

(Asst. year 2005-2006)

M/s Ace Multi Axes Systems

Ltd., A-50/49, II Main Road,

II Stage, Peenya Industrial

Estate, Bangalore-58.

PA No.AACCA 3964 A

Vs

The Deputy

Commissioner of

Income Tax,

Circle-11(1),

Bangalore.

(Appellant) (Respondent)

Date of Hearing : 14.05.2013

Date of Pronouncement : 24.05.2013

Appellant by : Shri Dinesh, Advocate

Respondent by : Shri Etwa Munda, CIT-III

ORDER

PER GEORGE GEORGE K :

This appeal of the assessee company is directed against the order

of the CIT (A)-I, Bangalore dated 15.2.2011. The relevant assessment year is

2005-06.

2. The assessee has, in its grounds of appeal, raised six grounds.

However, all the grounds relate to a solitary issue, namely, whether the CIT(A)

is justified in upholding the disallowance of assessee’s claim of deduction u/s

80IB of the Act.



3. The facts of the issue, in brief, are as under:

3.1. The assessee is a company. It is engaged in the business of

manufacture and sale of components/parts of CNC lathes and similar machines.

During the year under consideration, the assessee had furnished its return of

income, admitting a total income of Rs.1.76 crores which was initially processed

u/s 143(1) of the Act. Subsequently, the case was subjected to scrutiny u/s

143(3) of the Act. After due examination of the books of account and the

details furnished by the assessee, the AO had concluded the assessment,

determining the assessee’s income at Rs.1,79,82,653/- after disallowing certain

expenses, aggregating to Rs.2.91 lakhs.

3.1.1. In the meanwhile, the jurisdictional CIT, in a suo motu action,

invoked the provisions of section 263 of the Act on the premise that the

assessment order was erroneous and pre-judicial to the revenue as the AO,

according to the CIT, had wrongly allowed deduction u/s 80IB (3) of the Act as

claimed. For the reasons set out in his order u/s 263 of the Act dated

16.1.2009, the CIT had set aside the assessment order with a direction to

decide the claim u/s 80IA/80IB accordingly.

3.1.2. Consequently, the AO, vide his order u/s 143(3) r. w. s. 263 of the

Act dated 14.12.2009, as per the directions contained in the CIT ‘ s order u/s

263 of the Act (supra) and for the reasons recorded therein, disallowed the

assessee’s claim of Rs.75,81,910/- u/s 80IB (3) of the Act.

3.2. Aggrieved, the assessee took up the issue with the CIT (A) for

reconsideration. After considering the elaborate contentions put-forth by the

assessee’s counsel, as recorded in his appellate order, the CIT (A) had, however,

negated the assessee’s claim. The relevant portions of the reasoning of the

CIT(A) are extracted as under:



“16. Summary: S. 80IB is an incentive provision. It stipulates deduction in respect of profits and gains from certain industrial undertakings. Within this section a plethora of industries and business types have been given the benefit of such deduction if they fulfil the conditions mentioned in the concerned sub-section of s. 80IB of the Act. Some of such concerns/industries are ship, hotel, multiplex, theatres, housing projects etc. Sub-section (2) of s. 80IB provides such conditions for industrial undertakings including cold storage and cold chain facility and also Small Scale Industrial Undertakings (in short hence-forth SSIU). All the four conditions mentioned in s. 80IB (2) must be fulfilled to make the industrial undertaking eligible for the benefit of the claim u/s 80IB of the I.T. Act. Condition No.1 is that the industrial undertaking must not have been formed by splitting up or reconstruction of a business already in existence with an exception that in case of units specified u/s 33B of the I.T. Act this condition will not apply. The second condition is that such undertaking must not have been formed by transfer of machinery or plant previously used with the exception that the value of such machinery and plant previously used must not exceed 20% of the value of the total cost of the plant and machinery of such industrial undertaking. The third condition is that the industrial undertaking must produce or manufacture any article or thing other than any article or thing specified in the eleventh Schedule. Exception to this third condition is that an SSIU can avail 80IB benefit even if manufactures or produces articles or things specified in Eleventh Schedule. The fourth condition is that the industrial undertaking running with the aid of power must not have less than 10 employees and if it is run without power, the number of employees must be more than 20 employees. Thus, all the four conditions narrated above must be fulfilled, if the industrial undertaking desires to avail benefit u/s 80IB of I.T. Act. For a SSIU, there is also an extra condition i.e., it must be an IDR Act 1951 which in turn prescribes a limit for investment in plant and machinery to designate the industrial undertaking as SSI Unit. Thus, out of



these five conditions, the first two conditions may be called static or unchangeable. In other words, if in the initial year of manufacture or production it is substantiated that it has fulfilled these two conditions the AO cannot on this ground in subsequent eligible years of the block period deny the benefit u/s 80IB. The rest three conditions are volatile and unstable. The industrial undertaking must show in each subsequent year of claim that these three conditions have not been violated. Such claims of the assessee have to face the analysis and scrutiny of the AO. Thus, since each AY is separate and independent, the revenue authorities had every power to examine and analyse the facts and figures as well as relevant law points of each year to find out whether all these three conditions are fulfilled or not. It is also the ratio of the cited in that case that the first two conditions have already been satisfied and it is assumed that the fourth condition has been fulfilled in that year and, hence, the relief. The same is also the ratio in the case of M/s. Nanak Dehydration (P) Limited v. Asst. CIT (2010) 134 TTJ Ahd D Tribl-1. The facts of that case was that the assessee was allowed deduction u/s 80IB from 1993-94 to 2002-03 but in the AY 2003-04 the claim was disallowed on the ground that in the initial year the industrial unit has been formed by reconstruction or splitting up of the existing unit. The ITAT held that it is not open to the AO to doubt the earlier acceptance of the Department in respect of reconstruction and splitting up to deny the claim in subsequent year because that violates the principles of consistency. But, it also laid down that – ‘Under the I.T. Act each year is a separate unit of assessment and taxable income as well as tax liability are to be determined keeping in view of the facts prevailing in that year and the law as applicable in that year.’

In the light of the above legal matrix as elaborated in Para 15 above, it can be palpably seen that the appellant has violated, the mandatory fifth condition. It is not doubted that in the initial AY, the appellant was an SSI unit, but, in the AY 2005-06, the investment in plant and machinery has admittedly exceeded the prescribed limit



of Rs.1 crore. Therefore, it cannot be held as an SSIU. Thus, the fifth condition being violated openly and admittedly by the appellant, the relief sought for has to be denied in the AY 2005.06”

4. Aggrieved, the assessee has come up before us with the present

appeal. During the course of hearing, the learned AR contended more or less

what was presented before the first appellate authority. In furtherance, it was

argued that –

- the CIT (A) ought to have accepted the explanation and

refrained from upholding the disallowance of deduction u/s

80-IB of the Act;

- the CIT (A) ought to have appreciated that the assesse was

entitled to deduction u/s 80IB of the Act for the relevant

assessment year in accordance with s. 80IB (3) of the Act;

- the first appellate authority had also erred in upholding the

stand of the assessing officer that the condition that the

assessee was a Small Scale Industry which was required to

be proved for each of the year for claiming the deduction

u/s 80IB of the Act;

- he ought to have appreciated that the condition was required

to be proved in the initial year and once the eligibility is

proved in the initial year, the assessee was entitled to relief

for ten consecutive years and that the assessee having

satisfied the conditions, the CIT (A) ought to have allowed

the deduction as claimed in full.

4.1. To drive home his point, the learned AR had placed strong reliance

on the following case laws:

(i) CIT v. Nippon Electronics (India)(P) Ltd – (1990) 181 ITR 528 (Kar); &

(ii) Sami Labs Ltd v. ACIT -(2011) 334 ITR 157 (Kar)



4.2. On his part, the learned D R had supported the stand of the

authorities below on the issue. The learned D R had relied upon the ruling of

the Hon’ble Delhi High Court in the case of Praveen Soni v. CIT reported in

(2011) 333 ITR 324 (Del).

5. We have carefully examined the rival submissions, perused the

relevant case records and also the case laws on which the parties concerned

have placed their reliance.

5.1. It was the stand of the AO that the assessee had invested in plant

and machinery at the end of the previous year relevant to the assessment year

under consideration which exceeded the prescribed limit for qualifying as a

SSIU as per the relevant provisions of s. 80IB (3) of the Act and, thus,

proposed to deny the claim of the assessee. This was contested by the

assessee on the premise that ‘nowhere in the section it is stated that the

manufacturing unit should be in the small scale sector for the entire period of

ten years or this is applicable for every previous year during the full tenure of

ten years.” [Source: Para 6 of the Asst. Order].

5.1.1. Rejecting the assessee’s assertion, the AO took a view that the

value of plant and machinery had exceeded Rs.1 crore as per the depreciation

schedule annexed to 3CD report, therefore, the assessee doesn’t come under

the purview of the definition of Small Scale Industry for the year under

consideration.

5.1.2. The above stand of the AO was contested before the first

appellate authority. The CIT (A) had analysed in detail the four conditions as

prescribed in s. 80IB (2) of the Act and observed that for an industrial

undertaking to avail such a benefit, it had to fulfil the above conditions. If a

SSI Unit desires to avail such a benefit, it has to fulfil the fifth condition too



as prescribed in clause (g) of sub-section (14) to s. 80IB of the Act which reads

as under:

(g) “small-scale industrial undertaking” means an industrial undertaking which is as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation)Act 1951 (65 of 1951).”

5.1.3. For ready reference, the relevant portions of s. 11B of I (D & R)

Act, 1951 are extracted as below:

“11B. Power of Central Government to specify the requirements which shall be complied with by Small Scale Industrial Undertakings.

(1) The Central Government may, with a view to ascertaining which ancillary and small scale industrial undertakings need supportive measures, exemptions or other favourable treatment under this Act to enable them to maintain their viability and strength so as to be effective in –

(a) ………………………………………………………………………………

(4) Notwithstanding anything contained in sub-section (1), an industrial undertaking which, according to the law for the time being in force, fell, immediately before the commencement of the Industries (Development and Regulation) Amendment Act, 1984, under the definition of an ancillary, or small scale, industrial undertaking, shall, after such commencement, continue to be regarded as an ancillary, or small scale, industrial undertaking for the purposes of this Act until the definition aforesaid is altered or superseded by any notified order made under sub-section (1).:

5.2. However, the learned AR argued that once the relief is allowed in

the initial year; such a relief cannot be denied in the subsequent years even if



the investment in plant and machinery increases beyond the limit prescribed for

that year. Placing reliance on the ruling of the Hon’ble jurisdictional High Court

in the case of Nippon Electronic (I) (Pvt) Limited (supra), the learned A.R

argued that the claim u/s 80IB (3) of the Act should not have been denied.

5.3. We have perused the ruling of the Hon’ble Court (supra) wherein,

while considering the allow-ability or otherwise of deduction u/s 80J of the

Act, it has been held, among others, that …………the eligibility stands determined

in the initial assessment year and once an industrial undertaking is found eligible

in the initial year of manufacture, such benefit could be availed of in any of the

succeeding four years. With due respects, we would like to reiterate that the

assessee cannot take support in the said ruling as the issue, before the Hon’ble

Court, was entirely on a different footing in the sense that “……..the exemption

would not be available if, in the initial assessment year, the proportion of old

assets transferred or utilised for the new business is above 20% of the total

investment…………………” Therefore, the Hon’ble High Court was considering

fulfilment of conditions in formative years of industrial undertaking and once it

is found that the assessee had not fulfilled the conditions in the initial year of

operation, it is not entitled to deduction in the later year, irrespective of

position in those years.

5.3.1. In the instant case, the condition that is not complied with by the

assessee is a condition which is to be fulfilled on an year to year basis and not

merely in the initial/formative year alone. To elaborate further, the industrial

undertaking, to be eligible for the benefit of the claim u/s 80IB of the Act,

four conditions mentioned in section 80IB(2) has to be fulfilled. The first

condition is that the industrial undertaking must not have been formed by

splitting up or reconstruction of a business already in existence with an



exception that in case of units specified u/s 33B of the I T Act, this condition

will not apply. The second condition is that such undertaking must not have been

formed by transfer of machinery and plant previously used must not exceed

20% of the value of the total cost of the plant and machinery of such industrial

undertaking. The third condition is that the industrial undertaking must

produce or manufacture any article or thing other than any article or thing

specified in the Eleventh Schedule. Exception to this third condition is that a

SSIU can avail the 80IB benefit even if manufactures or produces articles or

things specified in Eleventh Schedule. The fourth condition is that the

industrial undertaking running with the aid of power must not have less than 10

employees and if it is run without power, the number of employees must be more

than 20 employees. Thus all the four conditions narrated above must be

fulfilled if the industrial undertaking desires to avail benefit u/s 80IB of I T

Act. For a SSIU, there is also an extra condition i.e. it must be an SSI unit as

per explanation (g) given in 80IB(14) of I T Act which refers to Section 11B of

the IDR Act, 1951 which in turn prescribes a limit for investment in plant and

machinery to designate the industrial undertaking as SSI unit. Thus, out of

these give conditions; the first two conditions may be called formative or

unchangeable. In other words, if in the initial year of manufacture or

production, it is substantiated that it has fulfilled these two conditions, the

Assessing Officer cannot on this ground in subsequent eligible years of the

block period deny the benefit u/s 80IB. The rest of the three conditions are to

be fulfilled on year to year basis. The industrial undertaking must show in each

subsequent year of claim that these three conditions have not been violated.

Such claims of the assessee have to face the analysis and scrutiny of the

Assessing Officer. Thus, since each assessment year is separate and

independent, the revenue authorities had every power to examine and analyse



the facts and figures as well as relevant law points of each year to find out

whether all these three conditions are fulfilled or not.

5.3.2. We have also perused the ruling of the Hon’ble jurisdictional High

Court in the case of Sami Labs Limited v. ACIT reported in (2011) 334 ITR 157

(Kar), in which the learned AR placed strong reliance. It has been ruled by the

Hon’ble Court that “An assessee is eligible to claim benefit of s. 10B only if it is

found eligible for the same in the initial year of manufacture; if the conditions

of s. 10B (2)(iii) are not satisfied in the year of commencement of production, it

cannot claim deduction in the subsequent years irrespective of the position in

those years………….”

5.3.3. In this connection, we would like to point out that this ruling of the

Hon’ble jurisdictional High Court cannot also come to the rescue of the present

assessee since the Hon’ble High Court was considering fulfilment of a formative

condition; whether the same has been complied with or not in the initial year of

industrial undertaking operation. Whereas the assessee’s claim is specifically

u/s 80-IB of the Act, wherein clause (g) of sub-sec.14 to s. 80-IB of the Act

mandates that (at the cost of repetition) –

(g) “small-scale industrial undertaking” means an industrial undertaking which is as on the last day of the previous year, regarded as a small scale industrial undertaking under section 11B of the Industries (Development and Regulation)Act 1951 (65 of 1951).”

5.3.4. Incidentally, the assessee had made investment in plant and

machinery during the previous year relevant to the assessment year under

dispute, which exceeded the prescribed limit for qualifying as a small scale

industrial under taking. To avail the deduction u/s 80-IB of the Act, the



assessee was required to fulfil the conditions as laid down in s. 80IB of the Act

as a whole.

5.3.5. At this juncture, we would like to recall the judicial view on the

issue. The Hon’ble Delhi High Court, in the case of Praveen Soni v. CIT reported

in (2011) 333 ITR 324 (Del), in an identical issue to that of the present one,

had observed, after analysing the provisions of s. 80IB of the Act, as under:

“13………………………………….Clause (g) of sub-s. (14) of s. 80IB of the IT Act only mandates that such an industrial undertaking should be regarded as small scale industrial undertaking under s. 11B of the IDR Act. As per s. 11B of the IDR Act, it is for the Central Government to lay down the conditions which are required to be fulfilled as regards small-scale industries. In the aforesaid Notification, the conditions which are mentioned for being regarded as small-scale industries are the ownership of plant and machinery and value thereof. Registration of such an undertaking under the IDR Act is not a condition for treating the same as small-scale industrial undertaking. That registration is prescribed for altogether different purpose, viz., to avail the benefit under the IDR Act either of s.11B or s. 29B. Thus, insofar as extending the provision of s. 80-IB of the IT Act is concerned, the only aspect which is relevant and is to be considered is as to whether the conditions stipulated in the Notification issued under s. 11B of the IDR Act for regarding the same as small-scale industrial under-taking are fulfilled or not…………”

5.3.6. Taking into account all the facts and circumstances of the issue as

discussed in the foregoing paragraphs and also, as rightly highlighted by the

AO, the value of plant and machinery had exceeded Rs.1 crore during the year

under consideration which incidentally deprive the assessee to call itself as a

Small Scale Industry, we are of the considered view that the authorities below



were justified in denying the assessee’s claim for deduction u/s 80-IB(3) of the

Act. It is ordered accordingly.

6. In the result, the assessee’s appeal is dismissed.

Order pronounced in the open court on 24th day of May, 2013.

Sd/- Sd/-

(JASON P BOAZ) (GEORGE GEORGE K)

ACCOUNTANT MEMBER JUDICIAL MEMBER

Copy to :

1. The Revenue

2. The Assessee

3. The CIT concerned.

4. The CIT(A) concerned.

5. DR

6. GF

MSP/ By order

Senior Private Secretary, ITAT, Bangalore.


Documents

I.T.A. NO 477 OF 2013 · - 3 - Sec.143(3) of the Act. The Assessing Officer concluded the assessment, determining the assessee’s income at Rs.1,79,82,653/-, after disallowing certain