Commissioner Of Income Tax v. Apex Packing Products Pvt. Ltd

IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 58 OF 2014 COMMISSIONER OF INCOME TAX VersusAPEX PACKING PRODUCTS PVT. LTD., ... Appellant... Respondent Mr. Asha A. Desai, Advocate for the Appellant.Mr. S. R. Rivankar, Advocate for Respondent. -Coram:R. M. BORDE &F. M. REIS, JJ.-Date:27th November, 2014 P.C.: Heard learned counsel for the parties. The Revenue is challenging the order passeded by the Income TaxAppellate Tribunal, Panaji, dated 3/1/2014 dismissing the appealpresented by the Revenue thereby confirming the order passed by theCIT (Appeals), where under the Commissioner of Income Taxreversed the order passed by the Assessing Officer holding thatmanufacturing units established by the respondent/assessee are notseparate and independent units eligible for deduction under section80IB of the Income Tax Act. It is the contention of the revenue thatthe assessee is not entitled to claim deduction under section 80IBsince the units are not independent manufacturing units. Assesseecompany operates two separate units for manufacturing wax coatedwrappers as well as laminated plastic wrappers for packaging Parlebiscuits. It cannot be controverted that for operating two separate units, separated machinery is required since the products are distinct,and such, machinery has been acquired by assessee by investing hugecapital. The assessee had filed returns for the relevant assessmentyear 2004-2005 on 27/10/2004 declaring total income ofRs.19,64,344/-. It is the contention of assessee that unit-II has beenestablished and assessment was done in the year 2003 and it was thefirst assessment year of the company. The assessee claimed benefitsunder section 260-A of IT Act against the assessment year 2004-05and has been considered eligible. The existence of the independentunit was accepted and assessee has been considered eligible fordeduction under section 80IB of the Act. Even in the revision petitionfiled under section 264 of the Act, Commissioner has categoricallyadmitted the existence of the independent unit and thereafter, thebenefits under section 80IB was granted right from the assessmentyear 2003-04 up to the assessment year 2007. In this background, theCommissioner CIT as well as the Appellate Tribunal came to theconclusion that the denial of the benefits to the assessee company forthe assessment year 2007-08 by the assessment officer is erroneous. 2. So far as the objection raised by the Revenue that there is noexistence of two separate independent manufacturing units also doesnot deserve consideration since a finding of fact has been recorded by the CIT (Appeals) and which has been confirmed by the AppellateTribunal holding against the view adopted by Revenue. Theobjection raised by the Revenue that no separate licence for the manufacturing exists and that the business is operating in the samepremises also does not deserve consideration in view of thejudgment, in the matter of "Textile Machinery Corporation Ltd. Vs.Commissioner of Income Tax" reported in 1977 CTR (SC) 151. It isobserved by the Hon'ble Supreme Court in the above judgment thus : "If any undertaking is not formed by reconstruction of the oldbusiness that undertaking will not be denied the benefit of s. 15Csimply because it goes to expand the general business of the assesseein some directions. As in the instant case, once the new industrialundertakings are separate and independent production units in thesense that the commodities produced or the results achieved arecommercially tangible products and the undertakings can be carriedon separately without complete absorption and losing their identity inthe old business, they are not to be treated as being formed by areconstruction of the old business." 3. In view of the above, the objection raised by the revenue isunsustainable. We do not find any infirmity or irregularity in theorder passed by the Tribunal, confirming the order passed by CIT(Appeals). The appeal, as such, stands dismissed. ap/- F. M. REIS, J. 3. In view of the above, the objection raised by the revenue isunsustainable. We do not find any infirmity or irregularity in theorder passed by the Tribunal, confirming the order passed by CIT(Appeals). The appeal, as such, stands dismissed. ap/- F. M. REIS, J. R. M. BORDE, J.