Case Law Details
ITO Vs Indica Industries Pvt. Ltd. (ITAT Delhi)
Conclusion: Since assessee had not transferred any old machinery from the existing unit to new unit and the transactions of purchase of raw material from the existing unit were at arm’s length price, deduction u/s 80IC was allowable as there was no splitting up or reconstruction of the business already in existence at Noida Unit.
Held: Assessee started supplying its products to Hero Honda and other customers from the new undertaking at Kotdwar-III unit which were earlier manufactured at Noida unit. AO disallowed deduction u/s 80IC on the ground that Unit-III Kotdwar was set up by splitting up and reconstruction of a business already in existence at the Noida unit. In this regard, it was observed that there was no splitting up of the existing unit inasmuch as there was no finding by AO that any machinery earlier used in Noida unit was transferred to Kotdwar-III unit. Except for the fact that assessee purchased raw material from its Noida Unit, there was no reference to any interconnectivity between Kotdwar-III unit and Noida Unit. In fact, the new unit at Kotdwar-III was set up for reducing the transportation cost from Noida to the State of Uttarakhand where the assessee was making supplies to M/s Hero Honda and its ancillary company. In view of the fact that assessee did not transfer any old machinery from the existing unit at Noida to Kotdwar-III unit and the transactions of purchase of raw material from the Noida unit were at arm’s length price, deduction u/s 80IC was allowable as there was no splitting up or reconstruction of the business already in existence at Noida Unit.
FULL TEXT OF THE ITAT JUDGEMENT
This batch of three appeals has two cross appeals for the assessment year 2012-13 and one Departmental appeal for the assessment year 2011-12. Since some of the issues raised in these appeals are common, we are, therefore, disposing of these appeals by this consolidated order for the sake of convenience.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
