CIT Vs. PAWAN KANSAL

JUDGEMENT

(1.) THE revenue is aggrieved against the order dated 1.3.2011 of the ITAT (Tribunal for short) by which its appeal challenging CIT(A)'s order was dismissed. This Court had framed the following question of law in the order dated 17.1.2012:-

(2.) THE assessee is a proprietor of two units i.e. "Jagdamba Industries" (Unit No.1) and "Jagdamba Exports (Unit No.2). Both units are located opposite to each other at Haryana. The Assessing Officer held that the total investment in the two units was Rs.1,26,90,532/- as on 31.3.2005 and since the amount exceeded Rs.1 crore, the assessee was not eligible to be characterized as a "small-scale industrial undertaking" within the meaning of Section 80IB(3)(ii) of the Income Tax Act, 1961, (Act for short) read with Section 11B of the Industries (Development & Regulation) Act, 1956. The first unit was claimed and was granted benefit under Section 80IB of the Act. The Assessing Officer held that deduction was no longer admissible as the two units have been clubbed together as one industrial undertaking and therefore fell outside the purview of the industrial undertaking. It may be added here that the investment in plant and machinery in respect of first unit was Rs.86.5 lakhs and in respect of second unit it was Rs.38.36 lakhs. The Assessing Officer clubbed both the units and held that the assessee was ineligible for deduction under Section 80IB. The assessee's appeal was accepted and the order of the Assessing Officer, was set aside by the CIT(A) vide order dated 26.5.2010. Thereafter revenue appealed and; by the impugned order dated 1.3.2011 the Tribunal rejected its contentions.

(3.) IN the present case too the assessee has not admittedly claimed the benefit under Section 80IA of the Act for the relevant assessment year in respect of Unit No.2. In these circumstances, the question of clubbing the investment for purpose of common undertaking does not arise. Section 80-IA(5) directs the income tax authorities to treat the initial unit as an entirely separate entity to the extent the benefit has to be given. In these circumstances, the Court is of opinion that there is no merit in the appeal. ITA 1130/2011 is dismissed.