ITAT, DELHI BENCH `H’, NEW DELHI
HLS Asia Ltd. v. DCIT, Appeal No. ITA NO. 1964/DEL/2006 Dated: DECEMBER 24, 2008
RELEVANT EXTRACTS
20. We have heard both the parties and have carefully gone through the orders of the authorities below. Explanation 2 below sub section (2) of section 80IB provides that where in the case of an industrial undertaking, any machinery or plant or any part thereof previously used for any purpose is transferred to a new business and the total value of the machinery or plant or part so transferred does not exceed 20 per cent of the total value of the machinery or plant used in the business, then for the purpose of clause (ii) of sub-section 2 of section 80IB, the condition that the undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose shall be deemed to have been complied with. In the light of the aforesaid explanation, it is thus necessary first to ascertain the total value of the machinery or plant used in the eligible business and the total value of the machinery or plant transferred to the eligible new business which was previously used for other business. The Explanation 2 speaks of expression “total value” without specifying whether value is to be meant as “fair market value” or “book value” or “written down value”. The fact remains that the assessee has transferred these used equipments at the written down value, which goes to prove that the assessee is taking the benefit either of claiming depreciation or of computing the written down value of block of assets with reference to the written down value taken in the books of account. The legislature has nowhere stated that for the purpose of Explanation 2, the value of the machinery should be taken at market value and not the value as recorded in the books of account. It is well settled principle of law that the court cannot read anything into a statutory provision or a stipulated condition which is plain and an unambiguous. The statute is an edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. Thus, we are unable to subscribe to a view that the correct interpretation of expression “value” used in Explanation 2 to section 80IB (2) would be the market value and not the book value or written down value or the depreciated value. Since, the value of plant and machinery used in the eligible business is determined with reference to the value recorded by the assessee in the books of account, the value of the machinery previously used for any purpose would also be taken at the amount at which it has been brought into account of the new eligible unit. At this stage, we may make a reference to the decision of the ITAT, Bangalore Bench A in the case of Barmatics v. DCIT reported in (2005) 2 SOT 845 (Bangalore) where the Tribunal had noted the fact that the assessee started the manufacturing new components for which purpose it installed new machinery costing Rs. 44,89,892 at the new premises, and a fresh lincence was applied for an obtained, and the old machinery was with WDV of Rs. 1,45,557 only which was transferred which constituted only 4 per cent of the value of the new machinery. From the said observation, it is clear that the Tribunal has made a comparison of the cost of new machinery with WDV of old machinery which was transferred to the new machinery. The Assessing Officer shall examine the total value of the machineries or plant used in the eligible business as recorded in the books, and shall also determine the value of the machinery plant previously used for any purpose and transferred to the new eligible business with reference to the value adopted by the assessee in his books of account for the purpose of Explanation (2) to section 80IB (2) of the Act. The Assessing Officer shall provide reasonable opportunity of being heard to the assessee on this count. We order accordingly.
