COMMISSIONER OF INCOME TAX Vs. LAKHANPAL NATIONAL LTD.

JUDGEMENT

(1.) THE Tribunal, Ahmedabad Bench 'C' has referred the following question for the opinion of this Court under Section 256(1) of the IT Act, 1961 (the Act') at the instance of the CIT. Whether on the facts and in the circumstances of the case the Tribunal was justified in holding that assessee was entitled for the deduction as claimed by it under Section 80I of the Act?

(2.) THE assessment years are 1982 -83, and 1983 -84. The relevant accounting periods are calendar years ended on 31st Dec, 1981 and 31st Dec, 1982, respectively. The assessee, a public limited company, claimed deduction under Section 80I of the Act, which was disallowed by the AO on the basis of a report tendered by the Inspector on 16th Sept., 1985. The claim for the first assessment year is restricted to a part of year considering the fact that the plant was commissioned w.e.f. 2nd June, 1981 for manufacture of Um -1 and Um -3 types of dry cell batteries. The Inspector, in his report stated as under: During the accounting year under consideration, the assessee company has undertaken manufacturing of two types of dry cell batteries namely Um -1 and Um -3 and for this it has installed new assembly lines. However, as mentioned above for the manufacturing of these two types of cells, all the aforesaid five sections are required out of which the assessee company has installed the new assembly lines. And the rest of the requirements i.e. (1) utilities air, water and gas etc. are met from the existing sections installed earlier for the old unit. Thus, it would appear that only two additional assembly lines have been installed during the year and the other sections namely zinc and electrolyte, utilities. The assessee's contention that new unit has come into existence could have been acceptable if all the five broad sections mentioned above were installed and no assistance was drawn from the existing facilities meant for the old plant.

(3.) THE assessee carried the matter in appeal before the CIT(A) and succeeded. The Revenue carried the matter in second appeal before the Tribunal. The Tribunal has upheld the order of CIT(A) by recording, thus: From the facts and circumstances as have been brought in the appeal records, it cannot be said that the new industrial undertaking has been brought into existence by reconstruction or by splitting up the old business or transferring the old plant and machineries.