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16 October, 2014

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Section 80IB benefit - allowed to industrial undertakings taking plant and machinery on ‘hire’

The case of Cit v. Shri Jyoti Prakash Dutta, ITA no. 540 of 2012 judgement dated 25-07-2014 is regarding deduction to an industrial undertaking allowed u/s 80IB of the Income Tax Act. Following is a brief synopsis of the same.

In this appeal the tribunal has maintained and upheld the view of the CIT(appeals). In upholding the claim of the Assessee, the Commissioner also applies the law laid down by this Court in the case of CIT v/s D.K. Kondke, reported in (1991) 192 ITR 128.

As per the learned counsel appearing in support of this Appeal:

· He raises two questions for supporting the fact that the condition for the deduction has not been fulfilled. He referred to condition No.(ii) in subsection (2) of section 80IB of the Act.

· There is no machinery or plant of the appellant and the business affairs are carried out with hired equipments and machinery. In such circumstances, the Assessee is disentitled to the deduction.

· The assessee is not an industrial undertaking which is pre-requisite for claiming Section 80IB deduction.

As per the learned counsel appearing in support of this Assessee:

· In that regard, he relies upon the order passed by the Tribunal in the case of the very Assessee for the A.Y. 1998-99 in which same contentions were raised and the Tribunal has not accepted the same. The Tribunal has extended the benefit and allowed the deduction. That view was followed by the Tribunal for A.Y. 2001-02.

· The Commissioner therefore committed no error of law, much less, any perversity in allowing the deduction.

· The Revenue's Appeal therefore must be dismissed.

As per the Bombay High Court Judgement:

· Relying upon the deliberations with the learned counsels, legal provisions and the order impugned in this appeal the Bombay High Court is of the view that the appeal deserves to be dismissed

· It says that the assessee satisfies the conditions as mentioned in sub section (1),(2) and (3) of section 80IB and hence is correct in claiming the deduction.

· The high court held that, section 80IB pemits an undertaking to be formed by ‘hire’ of palnt and machinery and does not necessarily require the taxpayer to own the same.

· It also held that the assessee is an ‘industrial undertaking’.

· This very attempt was made by the Revenue and the Tribunal did not accept it in the case of this Assessee as is apparent from the order passed for the Assessment Year 1998-99 by the Tribunal.

· Relying upon the judgment in the case of D.K. Kondke (supra) this Court dismissed the Appeal of the Revenue.


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