ASSTT. C I T vs. AMBICA SPECIFIC FAMILY TRUST

Facts

The appeals were filed by the revenue against the orders of the Income Tax Appellate Tribunal (Tribunal) which had partly allowed the appeals of the assessee. The assessee, Ambica Specific Family Trust, filed returns for Assessment Years 1986-87, 1987-88, and 1988-89, showing total incomes of Rs. 4,89,02,101, Rs. 3,47,60,150, and Rs. 29,22,920 respectively. The Assessing Officer made additions under Section 143(3) read with Section 250 of the Income Tax Act. The Commissioner of Income Tax (Appeals) [CIT(A)] partly allowed the assessee's appeals. The assessee then appealed to the Tribunal, which also partly allowed the appeals, leading to the present appeals by the revenue.

Held

The High Court held that the Tribunal had given cogent and convincing reasons for its conclusion and agreed with the Tribunal's view. The Tribunal had rightly observed that the plant and machinery were never used by the earlier owner, therefore, the assessee was entitled to deduction under Section 80I. The Tribunal's reasoning, as reproduced from the CIT(A)'s order, indicated that the new unit, Harsidh Detergents, was not a split-up or reconstruction of an existing business. The previous owner had its own industrial undertakings elsewhere, and the new unit was started with new plant and machinery, its own staff, finance, and marketing infrastructure. The fact that the premises were hired from M/s Nirma Chemical Works Pvt. Ltd. did not militate against the claim for deduction. The revenue's counsel was not in a position to show how the Tribunal's findings were bad in law or on facts. Therefore, the appeals were dismissed.

Key Issues

1. Whether the Tribunal has substantially erred in law in holding that the assessee is entitled to deduction under Section 80I of the Income Tax Act. Assessee's contentions: The assessee argued that the impugned order of the Tribunal does not warrant interference due to concurrent findings of the CIT(A) and the Tribunal. They relied on the findings of the CIT(A) which were upheld by the Tribunal. Revenue's contentions: The revenue argued that the Tribunal committed an error in deleting the addition and holding that the assessee is entitled to deduction under Section 80I. They further submitted that the Tribunal and CIT(A) did not properly consider the material on record.