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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI PAWAN SINGH & SHRI RAMIT KOCHAR
आयकर अपीऱीय अधिकरण “E” न्यायपीठ म ुंबई में। IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER आयकर अपीऱ सं./I.T.A. No.5388/Mum/2016 (नििाारण वर्ा / Assessment Year : 2010-11) बिाम/ Shree Puskhar Chemicals DCIT 7(2) & Fertilisers Ltd., Aayakar Bhavan, 202-A Wing, Mumbai v. Building No. 3, Rahul Mittal Industrial Estate, Sir M V Road, Andheri (E), Mumbai-400059 स्थायी ऱेखा सं./ PAN: AAACS9372E (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. Assessee by: None Revenue by: Shri. V. K. Chaturvedi (DR) सुनवाई की तारीख /Date of Hearing : 09.04.2019 घोषणा की तारीख /Date of Pronouncement : 30.05.2019 आदेश / O R D E R PER RAMIT KOCHAR, Accountant Member: This appeal, filed by assessee, being ITA No. 5388/Mum/2016, is directed against appellate order dated 28.06.2016 in appeal no. CIT(A)-14/IT-108/2012-13, passed by learned Commissioner of Income Tax (Appeals)-14, Mumbai (hereinafter called ―the CIT(A)‖), for assessment year 2010-11, the appellate proceedings had arisen before learned CIT(A) from assessment order dated 09.01.2013 passed by learned Assessing Officer (hereinafter called ―the AO‖) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called ―the Act‖) for AY 2010-11.
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The grounds of appeal raised by assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called ―the tribunal‖) read as under:- ―1. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeal) erred in confirming rejection made by the Assessing Officer of deduction under section 80IB of the Act of Rs. 2507133/-. Provisions of the Act ought to have been properly construed and regard being had to facts of the case deduction claimed under section 80IB of the Act should not have been rejected. 2. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming order made under section 143(3) of the Act by the learned Assessing Officer which is illegal, bad-in-law, ultra vires and without allowing reasonable opportunity of the hearing, without appreciating facts, submission and evidences in their proper perspective, and liable to be annulled. 3. The learned assessing officer erred in charging interest under section 234A, 234B, 234C and 234D of the Act. 4. The appellant crave leave to add, amend, alter and / or vary any of the grounds of appeal before or at the time of hearing.‖
The assessee is engaged in the business of manufacturing & trading of dyes and dyes intermediates . The solitary issue in this appeal before the tribunal is with respect to allowability of deduction to the tune of Rs. 25,07,133/- u/s. 80IB of the 1961 Act. The AO observed that total value of investment in Plant & Machinery in small scale industrial undertaking contemplated u/s. 80IB(3)(ii) was Rs. 13,84,69,072/- , while the benefit of claim of deduction u/s. 80IB can be granted only to small scale industrial undertaking if investment in Plant & Machinery is less than Rs. 1 crore and hence the assessee is not eligible for deduction u/s 80IB of the 1961 Act as the assessee is not an SSI unit. Without prejudice, the AO also observed that the
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assessee is not eligible for claiming deduction u/s 80IB(5) of the 1961 Act as the unit is not located in any notified backward area. The AO , thus, disallowed the said claim of deduction raised by the assessee to the tune of Rs. 25,07,133/- u/s 80IB of the 1961 Act and the same was added back to the income of the assessee by AO , vide assessment order dated 09.01.2013 passed by the AO u/s 143(3) of the 1961 Act.
Aggrieved by an assessment framed by the AO vide assessment order dated 09.01.2013 passed u/s 143(3) of the 1961 Act, the assessee filed first appeal with Ld. CIT(A) which stood dismissed by Ld. CIT(A), vide appellate order dated 28.06.2016, by holding as under:-
― 5.2 I have considered the submissions made. The appellant submitted that the amount of investment has now been increased to Rs 5 crores for the unit to be categorized as SSI Unit. In the statement of facts, it is also submitted that the auxiliary and other investments not directly related to production are to be excluded for ascertaining the investment in Plant & Machinery. The details of investments and relevant submissions appearing in the statement of facts is as under:- 1. Section 80IB(13)(g) defines the SSI unit as below: " Small-scale industries undertaking" means an industrial undertaking which is, as on the last day of the previous year, regarded as small-scale industries undertaking under section 11B of the Industrial (Development and Regulation ) Act,1951 ( 65 of 1951}. Accordingly, in view of section 11B of IDRA, 1951, Central Govt is empowered to issue notification to declare certain class of industry as SSI. The Central Govt has notified from time to time to have limit of investment in plant & Machinery by an industrial undertaking, a summary of which is as under: Notification No. Date Limit (Rs. in Lacs) SO 232(E) 02-04-1991 100 SO 857{E) 10-12-1997 300 SO 1288(E) 24-12-1999 100 SO 1642(E) 29-09-2006 500
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Note -2 of the Notification No, SO 857(E)/dated 10-12-1997 also defines Nature of Plant & Machinery which exclude the auxiliary and other equipment not directly related to production of an article or thing. The relevant para reads as under: "....In calculating the value of plant and machinery the following shall be excluded namely (i) the cost of equipment such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores. (ii) the cost of installation of plant and machinery; (iii) cost of research and development equipment and pollution control equipment; (iv) the cost generation sets, extra transformer, etc installed by the undertaking as per the regulations of the state Electricity Board; (v) the bank charges and service paid to the National Small Industries Corporation or the state Small Industries Corporation; (vi) the cost involved in procurement or installation of cables, wiring, bus bars, electrical control panels {not those mounted or individual machines), oil circuit breakers / miniature circuit breakers, etc., which are necessarily to be used for providing electrical power to the plant and machinery /safety measures; (vii) the cost of gas producer plant; (viii ) transportation charges (excluding of taxes, i.e., sale tax, excise, etc.) for indigenous machinery from the place of manufacturing to the site of the factory; charge paid for technical know-how for erection of plant and machinery; (ix) cost of such storage tanks which store raw materials finished products only and are linked with the manufacturing process; and (x) cost of fire fighting equipment's...." 3. As of 31-3-2010, the Gross block of Plant & Machinery of the industrial undertaking as per the books of accounts and within the meaning of the above notification is as under; Particulars Amount (Rs. In Lacs) Pant & Machineries 444.65 Electric Installations 40.91
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Transformer & Power Saving Devises 56.90 Storage Tanks and piping 511.05 Store & Spares capitalised 149.63 R & D Equipments 3.71 Interest & Preoperative Expenses 20.36 Capitalized Civil Foundation 17.49 Erection & Installation Charges 17.77 Transportation & Others charges 19.24 Shed Fabrication 98.92 Lab Equipments 4.06 TotaL:- 1384.69
Therefore, the value of plant & machinery accounted in books of accounts also include the value of other auxiliary equipments/assets. Thus the Appellant never lost its SSI Character as per true meaning of law. In the detailed note given in the statement of facts, it is concluded that the cost of installation of Plant & Machinery, cost of consumable stores and other items not related to direct production of article or thing are to be excluded. However, even going by this definition, the amount of investment in Plant & Machinery is more than Rs 5 crores as per chart reproduced above as besides the direct investment in Plant & Machinery is shown at Rs 444.65 lacs, further Rs 56.9 lacs is shown as investments in transformers and power saving devices and Rs 511.05 lacs is shown as investment in storage tanks and piping. The transformers and power saving devices are to be included in the definition of Plant & Machinery and only the extra transformers and generator sheds are to be excluded as per submissions of appellant himself. Further the storage tanks and piping are very much part of Plant & Machinery. Therefore looking into the facts of the case, the investments otherwise also exceeds Rs 5 crores, and therefore the argument of the appellant does not hold ground. Hence this ground of appeal is dismissed.
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In the result, the appeal is dismissed.‖ 5. Aggrieved by an appellate order dated 28.06.2016 passed by learned CIT(A), the assessee has filed second appeal with the tribunal . None appeared on behalf of the assessee when the appeal was called for hearing. The Ld. DR on the other hand submitted that the issue is no more res-integra as Hon’ble Supreme Court has already adjudicated this issue in favour of Revenue in the case of DCIT v. Ace Multi Axes Systems Ltd., reported in (2018) 400 ITR 141(SC). Thus ,it was prayed by learned DR that since investment in Plant & Machinery is more than threshold limits as prescribed for small scale industrial undertaking, deductions u/s. 80IB(3) of the 1961 Act cannot be allowed. The learned DR also drew our attention to provisions of Section 80IB(14)(g) of the 1961 Act. It was also submitted by learned DR that the assessee’s industrial undertaking was not set up in an industrially backward area and hence deduction u/s 80IB(5) of the 1961 Act was rightly not allowed by lower authorities. 6. We have considered rival contentions and perused the material on record including orders of the authorities below .We have observed that the assessee is engaged in the business of manufacturing & trading of dyes and dyes intermediates. The assessee has claimed deduction u/s. 80IB(3) with respect to its industrial undertaking which the assessee is claiming to be a small scale industrial undertaking eligible for deduction u/s 80IB(3)(ii) of the 1961 Act. The assessee had claimed to have begun to manufacture or produce the articles or things from March 2000 and for the earlier years it has claimed deduction u/s 80IB(3) of the 1961 Act. However, Both the authorities below had denied deduction u/s 80IB(3) to the assessee for the impugned assessment year on the grounds that its investments in Plant and Machinery exceeded the threshold limit for being classified as small scale industrial undertaking and hence the assessee is not eligible for deduction u/s 80IB(3) of the 1961 Act. The AO has considered threshold limit of Rs. 1 crores towards investment in Plant
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and Machinery to be classified as a small scale industrial undertaking while learned CIT(A) has considered threshold limit of Rs. 5 crores for being considered as small scale industrial undertaking for allowing deduction u/s 80IB(3) of the 1961 Act. The learned CIT(A) relied upon notification no. 1642(E) dated 29.09.2006 issued by GOI u/s 7(1) of MSME Act, 2006 for considering eligibility of the assessee to be categorised as small scale industrial undertaking. However, both the authorities concluded that the assessee had breached these ceilings as prescribed for being classified as small scale industrial undertaking and hence the assessee is not eligible for deduction u/s 80IB(3) of the 1961 Act. It is also undisputed that claim of deduction was set up by the assessee by invoking provisions of Section 80IB(3) of the 1961 Act and the assessee had never set up claim for deduction u/s 80IB(5) of being set up in a notified industrial backward area. Thus, we will be confining our discussions to provisions of Section 80IB(3) of the 1961 Act read with Section 80IB(14)(g) of the 1961 Act. At this stage it will be profitable to reproduce provision of Section 80IB(3)(ii) and 80IB(14)(g) of the 1961 Act, which are reproduced hereunder: “Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings. 80IB (1) Where the gross total income of an assessee includes any profits and gains derived from any business referred to in sub-sections (3) to [(11), (11A) and (11B) ] (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains of an amount equal to such percentage and for such number of assessment years as specified in this section. *** *** (3) The amount of deduction in the case of an industrial undertaking shall be twenty-five per cent (or thirty per cent where the assessee is a company), of the profits and gains derived from such industrial undertaking for a period of ten consecutive assessment years (or twelve consecutive assessment years where the assessee is a co-operative society) beginning 7
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with the initial assessment year subject to the fulfilment of the following conditions, namely :— (i) it begins to manufacture or produce, articles or things or to operate such plant or plants at any time during the period beginning from the 1st day of April, 1991 and ending on the 31st day of March, 1995 or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular undertaking; (ii) where it is an industrial undertaking being a small scale industrial undertaking, it begins to manufacture or produce articles or things or to operate its cold storage plant [not specified in sub-section (4) or sub-section (5)] at any time during the period beginning on the 1st day of April, 1995 and ending on the 31st day of March, [2002]. ***
***
(14) For the purposes of this section,— *** *** (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).]‖ 6.2 The assessee has claimed that its Gross Block of Plant and Machinery as per books of accounts as on 31.03.2010 of its industrial undertaking, stood as under:-
Particulars Amount (Rs. In Lacs) Pant & Machineries 444.65 Electric Installations 40.91
Transformer & Power Saving Devises 56.90 Storage Tanks and piping 511.05 Store & Spares capitalised 149.63
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R & D Equipments 3.71 Interest & Preoperative Expenses 20.36 Capitalized Civil Foundation 17.49 Erection & Installation Charges 17.77 Transportation & Others charges 19.24 Shed Fabrication 98.92 Lab Equipments 4.06 TotaL:- 1384.69
6.3 It is claimed by the assessee that the value of Plant and Machinery accounted for in its books of account also included the value of other auxiliary equipments/assets, and hence the assessee never lost its SSI character as defined under law and therefore the assessee is eligible for deduction u/s 80IB(3) of the 1961 Act by relying on notification of 2006 issued u/s 7(1) of the MSME Act, 2006. It is claimed by assessee that applicable threshold prescribed limit for SSI industrial undertaking is investment of Rs. 500 lacs in Plant and Machinery , as applicable during the impugned assessment year.
6.4 Section 80IB(14)(g) has stipulated that for the purposes of claiming deduction under Section 80IB of the 1961 Act, small scale industrial undertaking shall mean an 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 . It is important to refer to provisions of Section 11B of the IDR Act, 1951, which provides as under:
“[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 and so as to be effective in—
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(a)promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and (b)securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good, specify, having regard to the factors mentioned in sub-section (2), by notified order, the requirements which shall be complied with by an industrial undertaking to enable it to be regarded, for the purposes of this Act, as an ancillary, or a small scale, industrial undertaking and different requirements may be so specified for different purposes or with respect to industrial undertakings engaged in the manufacture or production of different articles: Provided that no industrial undertaking shall be regarded as an ancillary industrial undertaking unless it is, or is proposed to be, engaged in— (i)the manufacture of parts, components, sub-assemblies, toolings or intermediates; or (ii)rendering of services, or supplying or rendering, not more than fifty percent. of its production or its total services, as the case may be, to other units for production of other articles. (2)The factors referred to in sub-section (1) are the following, namely:— (a)the investment by the industrial undertaking in— (i)plant and machinery, or (ii) land, buildings, plant and machinery; (b)the nature of ownership of the industrial undertakings; (c)the smallness of the number of the workers employed in the industrial undertaking; (d)the nature, cost and quality of the product of the industrial undertaking; (e)foreign exchange, if any, required for the import of any plant or machinery by the industrial undertaking; and (f)such other relevant factors as may be prescribed. (3)A copy of every notified order proposed to be made under sub-section (1) shall be laid in draft before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in disapproving the issue of the proposed notified order or both Houses agree in making any modification in the proposed notified order, the notified order shall not be made,or, as the case may be, shall be made only in such modified form as may be agreed upon by both the Houses (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 (4 of 1984), under the definition of an ancillary,or small scale,industrial
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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).]” 6.5 On perusal of the provisions of aforesaid Section 11B of the IDR Act,1951, it is clear that GOI issues notification while specifying criteria for an undertaking to be eligible to be classified as small scale industrial undertaking, including ceiling on investments in Plant and Machinery. Section 80IB(14)(g) of the 1961 Act stipulates that 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 IDR Act,1951. At this stage it will be pertinent to mention about the Preamble of the IDR Act, 1951 which is to provide for development and regulation of certain industries. While introducing this Act of 1951 , it was provided that on 6th April 1948 , the Central Government announced its industrial policy which was approved by the Central Legislature. As per the policy the development and regulation of a number of important industries, the activities of which affected the country as a whole and the development of which ought to be governed by economic factors of all-India import , were required to be brought under Central Control. It will be relevant to produce hereunder various notifications issued by GOI for defining small scale industrial undertaking u/s 11B of the IDR Act,1951 from time to time which are reproduced hereunder:
“MINISTRY OF INDUSTRY (DEPARTMENT OF INDUSTRIAL DEVELOPMENT) NOTIFICATION NEW DELHI,THE 2nd APRIL, 1991 S.O. 232 (E) - Whereas the Central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption or other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951), (hereinafter referred to as the
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said Act) to enable them to maintain their viability and strength so as to be effective in: - a. promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and b. securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good. And whereas the draft notification was laid before each House of Parliament for a period of 30 days as required under sub-section (3) of section 11B of the said Act. And whereas no modification in the proposed notification has been suggested by both Housese of Parliament. Now, therefore, in exercise of the posers conferred by sub-section (I) of section 11B and sub-section (I) of Section 29B of the said Act, and notwithstanding anything contained in any earlier notification issued by the department, the Central Government hereby specifies having regard to the factors mentioned in sub-section (2) of the said section 11B, the requirements mentioned in the Table below, which shall be complied with by the industrial undertakings to enable them to be regarded, as an ancillary, or a small scale industrial undertaking for the purpose of the said Act. Tabular matter available on request III. Requirements to be complied with by an industrial undertaking for being regarded as small scale industrial undertaking - a. An industrial undertaking in which the investment in fixed assets in plant and machinery whether held on ownership terms or on lease or by hire purchase does not exceed rupees sixty lakhs. b. In case of an industrial undertaking referrred to in (a) above the limit of investment in fixed assets in plant and machinery shall be rupees seventy five lakhs provided the unit undertakes to export atleast 30 percent of the annual production by the end of 3rd year from the date of its commencing production. IV. Requirements to be complied with by an industrial undertaking for being regarding as ancillary industrial undertaking- In industrial undertaking which is engaged or is proposed to be engaged in the manufacture or production of parts, components, sub-assemblies, tooling or intermediates, or the rendering of services, and the undertaking supplies or renders or proposes to supply or render not less than 50 percent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery whether held on ownership terms or on lease or on hire purchase, does not exceed rupees seventy five lakhs. 2. Every industrial undertaking which has been issued a certificate of registration by the Department of Industrial Development or Director General of Technical Development under the said Act and now falls within the above definition of ancillary
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or small scale industrial undertaking, may be registered, at the discretion of the owner, as such, within six months from the date of issue of this notification. This notification shall come into force on the date of its publication in the Official Gazette. 'Note: - No small scale or ancillary industrial undertaking referred to above shall be subsidiary of or owned or controlled by any other industrial undertaking'. [File No. 10/71/90-LP] (N.R. KRISHNAN) Addl. Secretary Circular “ --------------------------------------------------------------------------------
“ MINISTRY OF INDUSTRY (Department of industrial Policy and promotion) ORDER New Delhi, the 10th December, 1997 S.O.857(E).- Whereas the central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption or other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) herein after referred to as the said Act) to enable them to maintain their viability and strength so as to be effective in – a. promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and b. securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good. And whereas the draft notification was laid before each House of Parliament for a period of thirty days as required under sub-section (3) of section 11B of the said Act: And whereas no modification in the proposed notification has been suggested by both the Houses of Parliament; Now, therefore, in exercise of the powers conferred by sub-section (1) of section 11B and sub-section (1) of section 29B of the said Act, and in supersession of the notification of the Government of India in the Ministry of Industry (Department of Industrial Development) number S.O.232(E), dated the 2nd April, 1991, the Central Government hereby specifies the following factors on the basis of which an industrial undertaking shall be regarded as a small scale or as an ancillary industrial undertaking for the purposes of the said Act:- 1. Small scale industrial undertaking: An industrial undertaking in which the investment in fixed assets in plant and machinery, whether held on ownership terms of on lease or on hire purchase, does not exceed rupees three crores; 2. Ancillary industrial undertaking: An industrial undertaking which is engaged
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or is proposed to be engaged in the manufacturing or production of parts components, sub-assemblies, tooling or intermediates, or the rendering of services, and undertaking supplies or proposes or supply or renders not more than fifty per cent of its production or services, as the case may be, to one or more other industrial undertakings and whose investment in fixed assets in plant and machinery, whether held on ownership terms or on lease or on hire purchase, does not exceed rupees three cores. Note No small scale or ancillary industrial undertaking referred to above shall be 1 - subsidiary of, or owned or controlled by any other industrial undertaking. Explanation – For the purposes of this note,- A. "owned" shall have the meaning as derived from the definition of the expression "owner" specified in clause (1) of section 3 of the said Act; B. "subsidiary" shall have the same meaning as in clause (47) of section 2. read with section 4, of the Companies Act, 1956 (1 of 1956), C. the expression "controlled by any other industrial undertaking" means as under:- i. where two or more industrial undertakings are set up by the same person as a proprietor, each of such industrial undertakings shall be considered to be controlled by the other industrial undertaking or undertakings, ii. where two or more industrial undertakings are set up as partnership firms under the Indian Partnership Act, 1932 (1 of 1932) and one or more partners are common partner or partners in such firms, each such undertaking shall be considered to be controlled by the other undertaking or undertakings, iii. where industrial undertakings are set up by companies under the Companies Act, 1956 (1 of 1956), an industrial undertaking shall be considered to be controlled by other industrial undertaking if,- a. the equity holding by other industrial undertaking in it exceeds twenty four per cent of its total equity; or b. the management control of an undertaking is passed on to the other industrial undertaking by way of the Managing Director of the first mentioned undertaking being also the Managing Director or Director in the other industrial undertaking or the majority of Directors on the Board of the first mentioned undertaking being the equity holders in the other industrial undertaking in terms of the provisions of the following items(a) and (b) of sub-clause (iv); iv. the extent of equity participation by other industrial undertaking or undertakings in the undertaking as per sub-clause (iii) above shall be worked out as follows:- a. the equity participation by other industrial undertaking shall include both foreign and domestic equity; b. equity participation by other industrial undertaking shall mean total equity held in an industrial undertaking by other industrial undertaking or undertakings, whether small scale or otherwise, put together as well as the equity held by persons who are Directors in any other industrial undertaking or undertakings even if the person concerned is a Director in other in other Industrial Undertaking or Undertakings; c. equity held by a person, having special technical qualification 14
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and experience, appointed as a Director in a small scale industrial undertaking, to the extent of qualification shares, if so provided in the Articles of Association, shall not be counted in computing the equity held by other industrial undertaking or undertakings even if the person concerned is a Director in other industrial undertaking or undertakings; v. where an industrial undertaking is a subsidiary of, or is owned or controlled by, any other industrial undertaking or undertakings in terms of sub-clauses (i); (ii) and if the total investment in fixed assets in plant and machinery of the first mentioned industrial undertaking and the other industrial undertaking or undertakings clubbed together exceeds the limit of investment specified in paragraphs (1) or (2) of this notification as the case may be, none of these industrial undertakings shall be considered to be a small scale or ancillary industrial undertaking. Note 2- a. In calculating the value of plant and machinery for the purposes of paragraphs (1) and (2) of this notification, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken into account. b. In calculating the value of plant and machinery, the following shall be excluded, namely:- i. the cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores; ii. the cost of installation of plant and machinery; iii. the cost of research and development equipment and pollution control equipment; iv. the cost of generation sets and extra transformer installed by the undertaking as per the regulations of the State Electricity Board; v. the bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation; vi. the cost involved in procurement or installation of cables, wiring, bus bars, electrical control panels (not those mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures; vii. the cost of gas producer plants; viii. transportation charges (excluding of sales-tax and excise) for indigenous machinery from the place of manufacturing to the site of the factory; ix. charges paid for technical know-how for erection of plant and machinery; x. cost of such storage tanks which store raw materials, finished products only and are not linked with the manufacturing process; and xi. cost of fire fighting equipments. c. In the case of imported machinery, the following shall be included in calculating the value, namely:- i. import duty (excluding miscellaneous expenses as transportation from the port to the site of the factory, demurrage paid at the port); ii. the shipping charges; iii. customs clearance charges; and iv. sales tax.
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Every industrial undertaking which has been issued a certificate of registration under section 10 of the said Act or a license under sections 11, 11A and 13 of the said Act by the Central Government and are covered by the provisions of paragraphs (1) and (2) above relating to the ancillary or small scale industrial undertaking, may be registered, at the discretion of the owner, as such, within a period of one hundred and eighty days from the date of publication of this notification in the Official Gazette. This notification shall come into force from the date of its publication in the Official Gazette [File No.10/6/97-IP] ASHOK KUMAR. Jt. Secy.‖ ------------------------------------------------------------------------------------------------------------------------------ This notification dated 10.12.1997 was modified by a notification dated 24.12.1999 , which is reproduced hereunder:
“ The Gazette of India EXTRAORDINARY PART II-Section 3-Sub-Section (iii) PUBLISHED BY AUTHORITY No.798 NEW DELHI, FRIDAY, DECEMBER 24, 1999/PAUSA 3. 1921 MINISTRY OF COMMERCE AND INDUSTRY (Department of Industrial Policy and Promotion) ORDER New Delhi, the 24th December, 1999 S.O.1288 (E). – Whereas the Central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption or other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) (herein after referred to as the said Act) to enable them to maintain their viability and strength so as to be effective in- a. promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and b. securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; And whereas the Central Government considers it necessary to amend the order of the Government of India in the erstwhile Ministry of Industry (Department of Industrial Policy and Promotion) number S.O.857(E), dated the 10th December, 1997 for the said purpose: And whereas a copy of the said amendment of the notified order in draft was laid before each House of Parliament for a period of thirty days as required under sub-section (3) of section 11B of the said Act;
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And whereas no modification in the draft of the proposed notified order has been suggested by both the Houses of Parliament; Now, therefore, in exercise of the powers conferred by sub-section(1) of section 11B and sub-section (1) of section 29B of the Industries (Development and Regulation) Act; 1951 (65 of 1951), the Central Government hereby makes the following amendments in the Order of the Government of India in the erstwhile Ministry of Industry, Department of Industrial Policy and Promotion number S.O. 857 (E), dated the 10th December, 1997, namely:- In the said Order,- a. in the paragraph relating to Small Scale Industrial Undertaking, for the words "rupees three crores", the words "rupees one crore" shall be substituted; and b. in the paragraph relating to Ancillary industrial undertaking, for the words "rupees three crores", the words "rupees one crore" shall be substituted. [No.10(6)/97-[P] ASHOK KUMAR Jt. Secy. Note:- The Principal notified order was published in the Gazette of India, Part II, section 3, sub-section (ii), Extraordinary dated the 11th December, 1997‖ ------------------------------------------------------------------------------------------------------------------------------ The above notification was later clarified as under:
“No. 4(I)/2000-SSI Bd 14th March, 2000 To The Secretaries/ Director of Industries of all States/ UTs. Sub: Clarification regarding investment limit for Small Scale/Ancillary Industrial Undertakings. Sir, Please refer to Notification No. S.O. 1288 (E) dated 24th December, 1999 vide which the investment limit on plant and machinery in respect of Small Scale/Ancillary Industrial Undertakings was reduced from Rs.3 crore to Rs. 1 crore. Since then there have been queries from State Governments as well as industrial associations with regard to the status of those industrial undertakings which had either established afresh or enhanced their investment upto Rs.3 crore before the notification dated 24th December, 1999. In this context, it is clarified as under: i. The units that have obtained permanent registration on the order dated 10th
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December, 1997 would continue to remain as SSI units inspite of the order dated 24th December, 1999 reducing the investment limit to Rs.1 crore. ii. The units which had switched over to the SSI status based on the order dated 10th December, 1997 would continue to remain as SSI units in spite of the order dated 24th December, 1999; and iii. The units which have got provisional registration with the State authorities for their SSI status would continue to remain as SSI units, in spite of the order dated 24th December, 1999 provided the provisional registration had taken place within the period of limitation of 180 days specified in the order dated 10th December, 1997. Please take necessary action accordingly. Yours faithfully, Sd/- (C. S. PRASAD) Additional Development Commissioner
Copy for information to: 1. P.S. to Minister (Commerce & Industries), Udyog Bhavan, New Delhi. 2. P.S. to MOS (SSI&ARI), Udyog Bhavan, New Delhi. 3. P.S. to Shri Jagdish Capoor, Dy. Governor, RBI, Mumbai. 4. General Manager (RPCD), RBI, Mumbai. 5. Chairman, Small Industries Development Bank of India, Mumbai. 6. Managing Director, Small Industries Development Bank of India, Lucknow. 7. Chairman, National Small Industries Corporation, New Delhi. 8. P.S. to Secretary (IPP), Udyog Bhavan, New Delhi. 9. P.S. to Secretary (SSI&ARI), Udyog Bhavan, New Delhi. 10. All Members of the Small Scale Industries Board. 11. AS&FA (I.P.&P.), Udyog Bhavan, New Delhi. 12. All Officers of Ministry of SSI&ARI. 13. All Officers at DCSSI Headquarters. 14. All Directors, SISIs. 15. PIB-for wide publicity. Sd/- (Dr. C. S. Prasad) Addl. Development Commissioner‖
“No. 4(I)2000-SSI Bd. & Pol. 27th March, 2000
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The Secretaries/Director of Industries All States/UTs The Director, Small Industries Service Institutes, All States/UTs. Subject: Reduction in the investment limit on SSI/Ancillary Undertakings-reg. Sir, In continuation to this office letter of even number dated 14th March, 2000, clarifying the position in respect of those industrial undertakings which had either established afresh or enhanced their investment up to Rs.3.00 crore before the issue of notification No. S.O. 1288 (E) dated 24th December 2000 reducing thereby the investment limit to Rs.1.00 crores, it is further clarified that: "The units that have obtained provisional registration on the basis of the notification dated 10th December, 1997, and have taken concrete steps for implementing the project such as preparation of project report, sanction of loan, purchase of land, civil construction, placement of orders for plant and machinery, etc. prior to 24th December, 1999 would continue to enjoy the SSI status so long as the investment in plant machinery does not exceed Rs.300 lakhs notwithstanding the revised investment limit of Rs.100 lakh notified on 24th December, 1999." Please take necessary action accordingly, Yours faithfully, Sd/- (C. S. PRASAD) Additional Development Commissioner(SSI) The notification dated 24.12.1999 was further clarified as under:
No. 4(I)/2000-SSI Bd. & Pol. 19th October, 2000 The Secretaries/Director of Industries (All States/UTs) The Director Small Industries Service Institute (All States/UTs) Sub: Reduction in the investment limit on SSI/Ancillary Undertakings- Clarification reg.
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Sir, Reference have been received from different quarters seeking clarification relating to the expansion of such units, which were provisionally/permanently, registered prior to issue of notification No. S.O. 1288 (E) dated 24th December, 2000 reducing thereby the investment limit form Rupees 300.00 Lakhs to Rupees 100.00 Lakh. Clarifications in respect of status of such existing units and the units registered provisionally have already been issued vide this office letters of even number dated 14th and 27th March, 2000, respectively. The further clarification to the above query is as under: "Any unit which has received provisional/permanent registration prior to 24th December, 1999 and has taken concrete steps for implementing the project would continue to enjoy the SSI status so long as investment in plant & machinery does not exceed Rs. 300.00 lakhs. No time limit is prescribed for such units to reach the ceiling of Rs.300.00 lakhs" The clarification may please be brought to the notice of all concerned for taking further necessary action accordingly. Sd/- (Dr. C.S. Prasad) Additional Development commissioner (SSI) Copy for information to: 1. PS Ministrer (Commerce & Industry)/PS MOS.(SSI & ARI), Udyog Bhavan, New Delhi 2. PS to Secy (SSI & ARI)AS & DC(SSI) 3. All as per mailing list including RBI/SIDBI/Nationalized Banks/NSIC 4. The President, Mahratta Chamber of Commerce, Industries and Agriculture, Post Box No.525, Tilak Road, Pune-411002, w.r.t his letter dated May 29, 2000. addressed to DC(SSI), copy endorsed to the Cabinet Secretary, GOI, New Delhi. 5. Shri J.P. Prakash, Director, Cabinet Secretariat, Rashtrapati Bhavan, New Delhi, w.r.t. his u.o. No. 601/1/1/2000-CA.IV dt. 14th July, 2000. Sd/- (Dr. C.S. Prasad) Additional Development commissioner (SSI)
6.6 Later on in 2006 , a new separate Central enactment was brought into statute namely The Micro, Small and Medium Enterprises Development Act, 2006 on 16.06.2006 . The Preamble to MSME Act provided for facilitating the promotion , development and enhancing 20
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the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto. Thus , if we compare preamble of IDR Act, 1951 with MSME Act, 2006, it is clear that now a separate special statute is created to deal with MSME sector while earlier IDR Act was a general statute to deal with industrial sector generally including small industrial undertaking while newly enacted legislation namely MSME Act deals specifically with MSME sector. Section 7 of the 2006 Act provided as under :
―7. (1). Notwithstanding anything contained in section 11 B of the Industries (Development and Regulation) Act, 1951, the Central Government may, for the purposes of this Act, by notification and having regard to the provisions of sub-sections (4) and. (5), classify any class or classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called,- (a) in the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, as- (i) a micro enterprise, where the investment in plant and machinery does not exceed twenty- five lakh rupees; (ii) a small enterprise, where the investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees; or (iii) a medium enterprise, where the investment in plant and machinery is more than .five crore rupees but does not exceed ten crore rupees;
(b) in the case of the enterprises engaged in providing or rendering of services, as- (i) a micro enterprise, where the investment in equipment does not exceed ten lakh rupees; (ii) a small enterprise, where the investment in equipment is. more than ten lakh rupees but does not exceed two crore rupees;or
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(iv) a medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees. Explanation 1.-For the removal of doubts, it is hereby clarified that in calculating the investment in plant and machinery, the cost of pollution control, research and development,· industrial safety devices and such other items as may be specified, by notification, shall be excluded. Explanation 2.-It is clarified that the provisions of section 29B of the Industries (Development and Regulation) Act, 1951, shall be applicable to the enterprises specified in sub-clauses (i) and (ii) of clause (a) of sub-section (1) of this section. *** *** ― 6.7 Later , there was a notification issued by GOI vide S.O. No. 1642(E) dated 29.09.2006 u/s 7(1) of MSME Act, 2006 after having obtained the recommendations of the Advisory committee u/s 7(4) of MSME Act, 2006 which stipulated the eligibility criteria for small Enterprises shall be where the investment in plant and machinery is more than Rs. Twenty five lacs but does not exceed Rs. 5 crores
6.8 Explanation 1 to Section 7(1) of MSME Act, 2006 stipulated exclusion while computing threshold limits of investment in plant and machinery which is subject to exclusion of cost of pollution equipment, research and development, industrial safety devices and such other items as made by specified, by notification. The said exclusions to be specified by notification as provided in explanation 1 to Section 7(1) of MSME Act, 2006 while computing investments in Plant and Machinery were notified by GOI vide SO 1722(E) dated 5.10.2006. which is reproduced hereunder: ―MINISTRY OF SMALL SCALE INDUSTRIES NOTIFICATION
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New Delhi, the 5th October, 2006 S.O. 1722(E) – In exercise of the powers conferred by sub-section (1) of 2006) herein referred to as the said Act, the Central Government specifies the following items, the cost of which shall be excluded while calculating the investment in plant and machinery in the case of the enterprises mentioned in Section 7(1)(a) of the said Act, namely: (i) equipment such as tools, jigs, dyes, moulds and spare parts for maintenance and the cost of consumables stores; (ii) installation of plant and machinery; (iii) research and development equipment and pollution controlled equipment (iv) power generation set and extra transformer installed by the enterprise as per regulations of the State Electricity Board; (v) bank charges and service charges paid to the National Small Industries Corporation or the State Small Industries Corporation; (vi)procurement or installation of cables, wiring, bus bars, electrical control panels (not mounded on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant and machinery or for safety measures; (vii)gas producers plants; (viii)transportation charges ( excluding sales-tax or value added tax and excise duty) for indigenous machinery from the place of the manufacture to the site of the enterprise; (ix)charges paid for technical know-how for erection of plant and machinery; (x)such storage tanks which store raw material and finished produces and are not linked with the manufacturing process; and (xi)fire fighting equipment.‖ 2. While calculating the investment in plant and machinery refer to paragraph 1, the original price thereof, irrespective of whether the plant and machinery are new or second handed, shall be taken into account provided that in the case of imported machinery, the following shall be included in calculating the value, namely; (i)Import duty (excluding miscellaneous expenses such as transportation from the port to the site of the factory, demurrage paid at the port); (ii)Shipping charges;
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(iii)Customs clearance charges; and (iv)Sales tax or value added tax. (F.No.4(1)/2006-MSME- Policy) JAWHAR SIRCAR, Addl. Secy.‖
6.9 As could be seen from above , the original price of Plant and Machinery whether new or second hand is to be taken into account while computing threshold investment limits in Plant and Machinery. It is also provided vide Explanation 2 to Section 7(1) of the MSME Act that provisions of Section 29B of IDR Act, 1951 will be applicable to small enterprises. 6.10 These notifications of 2006 are under Micro, Small and Medium Enterprises Development Act, 2006. However, Section 80IB(14)(g) of the 1961 Act provides that small scale industrial undertaking means an industrial undertaking which is, as on the last day of previous year, regarded as a small-scale industrial undertaking under section 11B of the IDR Act,1951 . As we have seen earlier that MSME Act, 2006 was a special statute dealing with micro, small and medium enterprises while IDR Act, 1951 was a general statute dealing with certain industries while objective of both the acts are similar. MSME Act, 2006 was enacted in 2006 while IDR Act, 1951 was enacted in the year 1951. Both the Act(s) provides for classification of industries based on investment threshold limits in Plant and Machinery. But there was no simultaneous amendment made in Section 80IB(14)(g) of the 1961 Act to determine eligibility criteria for small scale industrial undertaking based on newly enacted statute i.e. MSME Act, 2006 read with notifications issued u/s 7(1) of the MSME Act, 2006. It is for the Parliament to have amended the provisions of Section 80IB(14)(g) of the 1961 Act to bring it in tune with MSME Act, 2006 to determine eligibility criteria for small scale industrial undertaking for computing deduction u/s 80IB(3) of the 1961 Act . We cannot read into statute
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any provision which is not existing in the statute. Thus, for calculating eligibility criteria/threshold limits for determining whether assessee is a small scale industrial undertaking, we have to go back to notifications issued under section 11B of IDR Act, 1951 and not under newly enacted MSME Act, 2006. The reliance of the assessee on notification SO 1642(E) issued in 29.09.2006 under MSME Act was not justified. The exclusions while computing Investments in Plant and Machinery are to computed vide notifications issued under IDR Act, 1951 and not under MSME Act, 2006. It is well settled that the exemption provisions are to be strictly construed at the first stage to establish entitlement of the tax-payer to claim exemption. Once, the assessee establishes its eligibility by fulfilling conditions stipulated at the first stage for falling within four corners of exemption provisions , then the said exemption provisions are to be liberally construed at second stage to give full effect to the exemption/deduction provisions to fulfil the objective/mandate of the said exemption provision. Reference is drawn to the judgment of five judge Constitution Bench of Hon’ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai v. M/s. Dilip Kumar and Company & Ors. in Civil Appeal no. 3327 of 2007 vide judgment dated 30.07.2018 , wherein Hon’ble Supreme Court held that exemption provisions are to be strictly construed by concluding as under:- ―52.To sum up, we answer the reference holding as under (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. (2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. (3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands over-ruled.‖
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6.11 Moreover, the assessee has to establish its eligibility to claim deduction u/s 80IB(3) of the 1961 Act every year by demonstrating that the assessee continues to be small scale industrial undertaking in that year . The issue is no more res Integra as three judge Bench of Hon'ble Supreme Court has decided the issue in favour of Revenue in the case of DCIT v. Ace Multi Axes Systems Ltd., (2018) 400 ITR 141(SC), wherein Hon'ble Supreme Court held as under:-
―10. Section 80 IB is in Chapter VI A of the Act which provides for deductions to be allowed from total income which is to be computed under the relevant provisions. The scheme is to provide incentives for purposes mentioned in different provisions of the said Chapter. Section 80 IB provides for deductions of specified percentage from the profits and gains of the specified industrial undertakings other than infrastructure development undertakings (which are separately dealt with under Section 80 IA). The clause relevant for purposes of this appeal is Clause 2 which makes the deductions permissible in respect of industrial undertakings fulfilling the conditions specified therein. The scheme applies to small scale industrial undertakings as defined in Clause 14(g) which in terms refers to Section 11 B of the Industries (Development and Regulation) Act, 1951. The extent of deduction permissible is mentioned in Clause 3 which is 25% (30% in the case of a company) of the profits and gains derived from such industrial undertakings for 10 consecutive assessment years beginning with the initial assessment. The 'initial assessment year' is defined in Clause 14 (c) as the year in which manufacturing/production commences. 11. As already noted, the question for consideration is whether deduction under Clause 3 for 10 consecutive assessment years remains permissible irrespective of compliance of conditions subject to which the said deduction is permitted in the relevant assessment years. For purposes of deduction, the industrial undertakings covered by Section 80 IB are of different categories. Under the second proviso to Clause 2, disqualification applicable to industrial undertaking, other than small scale industrial undertakings, i.e., not being in 8th Schedule is not applicable. The small scale industrial undertakings eligible are only those which begin manufacture or produce, articles or things during the beginning of 1st day of April, 1995 and ending on 31st day of March, 2002 [Clause 3(ii)]. For other categories of industrial undertakings, different periods are prescribed, e.g. under sub-clause (i) of Clause (3). 12. The scheme of the statute does not in any manner indicate that the incentive provided has to continue for 10 consecutive years irrespective of continuation of eligibility conditions. Applicability of incentive is directly related to the eligibility and not de hors the same. If an industrial undertaking does not remain small scale undertaking or if it does not earn profits, it cannot claim the incentive. No doubt, certain qualifications are required only in the initial assessment year, e.g. requirements of initial constitution of the undertaking. Clause 2 limits eligibility only to those undertakings as are not formed by splitting up of existing business, transfer to a new business of machinery or plant previously used. Certain other qualifications have to continue to exist for claiming the incentive such as employment of particular number of workers as per sub-clause 4(i) of Clause 2 in an assessment year. For industrial undertakings other than small scale industrial undertakings, not manufacturing or producing an article or things specified in 8th Schedule is a requirement of continuing nature. 13. On examination of the scheme of the provision, there is no manner of doubt that incentive meant for small scale industrial undertakings cannot be availed
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by industrial undertakings which do not continue as small scale industrial undertakings during the relevant period. Needless to say, each assessment year is a different assessment year, except for block assessment. 14. The observations in the impugned order are that the object of legislature is to encourage industrial expansion which implies that incentive should remain applicable even where on account of industrial expansion small scale industrial undertakings ceases to be small scale industrial undertakings. We are unable to appreciate the logic for these observations. Incentive is given to a particular category of industry for a specified purpose. An incentive meant for small scale industrial undertaking cannot be availed by an assessee which is not such an undertaking. It does not, in any manner, mean that the object of permitting industrial expansion is defeated, if benefit is not allowed to other undertakings. On this logic, incentive must be given irrespective of any condition as the incentive certainly helps further expansion by reducing the tax burden. The concept of vertical equity is well known under which all the assessees need not be uniformally taxed. Progressive taxation is a well known element of tax policy. Higher slabs of tax or higher tax burden on an assessee having higher income or higher capacity cannot in any manner, be considered unreasonable. **** **** **** 21. In view of the above judgments, we do not see any difference in the situation where the assessee, is not initially eligible, or where the assessee though initially eligible loses the qualification of eligibility in subsequent assessment years. In both such situations, principle of interpretation remains the same. 22. Thus, while there is no conflict with the principle that interpretation has to be given to advance the object of law, in the present case, the assessee having not retained the character of 'small scale industrial undertaking', is not eligible to the incentive meant for that category. Permitting incentive in such case will be against the object of law. 23. For the above reasons, we hold that the assessee is not entitled to benefit of exemption if it loses its eligibility as a small scale industrial undertaking in a particular assessment year even if in initial year eligibility was satisfied. The appeal is accordingly disposed of in the above terms. **** ****”
6.12 Thus, in view of our aforesaid discussions, the assessee has to fulfil criteria as laid down u/s 80IB(14)(g) of the 1961 Act every year as every assessment year is a separate unit before claiming deduction u/s 80IB(3) of the 1961 Act. The Section 80IB(14)(g) of the 1961 Act in turn refers to IDR Act, 1951 and not MSME Act, 2006. Thus, notifications issued under IDR Act, 1951 will hold the field. The assessee has referred and relied upon notification issued in 2006 under MSME Act, 2006 before learned CIT(A) . The first appellate
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authority i.e. learned CIT(A) proceeded based on notification issued under MSME Act, 2006 and not on the basis of notification issued under IDR Act, 1951 as stipulated under 80IB(14)(g) of the 1961 Act for computing eligibility criteria for the assessee to be classified as small scale industrial undertaking, although the learned CIT(A) had arrived at conclusion that the assessee’s investments in Plant and Machinery after computing exclusions are more than Rs. 500 lacs . The assessee is challenging that exclusions are not rightly been computed while determining the investment in Plant and Machinery for the purposes of its eligibility for deduction u/s 80IB(3) of the 1961 Act. We have already held that notifications issued u/s 11B of the IDR Act, 1951 Act will hold the field keeping in view express provisions of Section 80IB(14)(g) of the 1961 Act read with Section 80IB(3) of the 1961 Act. If there is an anomaly left in law , it is for Parliament to step in and rectify this anomaly. We cannot supply the omissions as are existing in the statute by reading any provision in the Act which is non-existing in the statute. Exemption/deduction provisions are to be strictly construed is no more res integra. Similarly, the assessee has to satisfy the eligibility criteria every year before claiming deduction u/s 80IB(3) of the 1961 Act, which issue is also no more res integra. Thus, we are inclined to restore this issue back to the file of the learned CIT(A) for denovo adjudication of this issue on merits in accordance with our aforesaid decision and reasoning as stipulated in preceding para’s of this order . The assessee is directed to produce all relevant material/evidences before learned CIT(A) including relevant notifications issued u/s 11B of the IDR Act, 1951 which is applicable to the previous year relevant to impugned assessment year to support its case in its defence . The learned CIT(A) is also directed to make necessary verifications of facts to determine whether assessee is a small scale industrial undertaking as per applicable notifications for the relevant period based on notifications issued u/s 11B of IDR Act, 1951 including computing exclusions as are provided under relevant notifications issued under IDR Act, 1951. Needless to say that powers
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of learned CIT(A) are co-terminus with powers of the AO. The learned CIT(A) shall provide proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. The appeal of the assessee is allowed for statistical purposes. We order accordingly. 7. In the result, the appeal of the assessee is allowed for statistical purposes.. Order pronounced in the open court on 30.05.2019. आदेश की घोषणा खुऱे न्यायाऱय में ददनांकः 30.05.2019 को की गई
Sd/- Sd/- (PAWAN SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, dated: 30.05.2019
Nishant Verma Sr. Private Secretary
copy to… 1. The appellant 2. The Respondent 3. The CIT(A) – Concerned, Mumbai 4. The CIT- Concerned, Mumbai 5. The DR Bench, 6. Master File // Tue copy// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI