bgp bgp bgp IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORDINARY ORDINARY ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION ORIGINAL CIVIL JURISDICTION INCOME INCOME INCOME TAX APPEAL NO.691 OF 2008 TAX APPEAL NO.691 OF 2008 TAX APPEAL NO.691 OF 2008 ABB Limited ..Appellants Vs. The Commissioner of Income Tax Bangalore and Anr. ..Respondents Mr.Pardiwalla, Senior Advocate a/w.Ms.Vasanti B.Patel for the Appellants. Mr.B.M.Chatterji a/w.Mrs.Anamika Malhotra for the Respondents. CORAM CORAM CORAM :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & :- DR.S.RADHAKRISHNAN & S.J.KATHAWALLA,JJ. S.J.KATHAWALLA,JJ. S.J.KATHAWALLA,JJ. DATE DATE DATE : 4TH AUGUST,2008 : 4TH AUGUST,2008 : 4TH AUGUST,2008 P.C. P.C. P.C. . Heard the learned Counsel for the parties. In the above Appeal, Mr.Pardiwalla, the learned Senior Counsel appearing for the Appellant is seeking to raise the following four substantial questions of law; i. The Tribunal was correct in holding that the Appellant’s Anta project did not constitute a new industrial undertaking within the meaning of Section 80-I of the Act? ii. The Tribunal’s observation that the Appellant had failed to establish on record that it had established a separate recognizable new industrial unit is perverse as being wholly contrary to the facts and materials brought on record ? iii. The Tribunal’s observation that the Revenue authorities had recorded a finding of fact that already existing machineries had been used by the Appellant in carrying out its project and that contrary to this finding of fact except arguments, nothing was brought to its notice from the Appellant’s side is equally perverse in the face of the material placed before the Tribunal ? iv. The Tribunal grossly erre :2: distinguishing the ruling of the Tribunal in the case of Degremont India Ltd. reported in 59 ITD 423 on wholly extraneous grounds whereas that was also a similar case of setting up an effluent treatment plant for a customer being construed as an new industrial unit? 2. We have perused the judgment and order of the Income Tax Appellate Tribunal dated 25th September, 2006 in the above. The Tribunal has clearly held as under in paragraph Nos.63 to 65: 63. We have duly considered the rival contentions and gone through the record carefully. We are conscious of the fact that the provisions of section 80-I are intended to encourage the setting up of new industrial enterprise which can generate more employment. Thus we do not have dispute with the proposition of ld.Counsel for the assessee that being incentive provision should be construed liberally while applying on the claim of assessee. Let us see, how the facts brought on record do exhibit the admissibility or denial of the Assessee’s claim. Deduction under Section 80-I us is available to an assessee whose gross total income includes any profits and gain derived from an industrial undertaking which fulfil all the conditions laid down in that behalf in sub-section (2) of section 80-I. Thus for appreciating the controversy it is necessary to take note of all those conditions which an industrial undertaking must fulfil before claiming the deduction. Such conditions read as under: "(i) It is not formed by the splitting up, or reconstruction of a business already in existence. (ii) It is not formed by the transfer of a new business of machinery or plant previously used for any purpose. (iii) It manufactures or produces any article or thing not being any article or thing specified in the list in the Eleventh Schedule to 1961 Act. (iv) In a case where industrial undertaking :3: manufactures or produces articles or things, the undertaking employ 10 or more workers in a manufacturing process carried on with the aid of power or employs 20 or more workers in a manufacturing process carried on without the aid of power." In the light of above conditions we have gone through the facts brought on the record and the finding of the revenue authorities below on that facts. That Section 80-I pre-supposes that there should a separately identifiable new industrial undertaking. The assessee failed to establish on the record that it had established a separate recognizable new industrial unit. The alleged Anta Project is only separate contract entered into by the assessee with NTPC to supply and install certain material/machinery in collaboration of West German Company as per the specification of NTPC. The assessee also accepted that it has entered into numerous such contracts in the course of its existing business and that execution of project is thus an integral part of the already established business of the assessee. If the assessee was already having such contracts in the course of its existing business and it is executing such contract during the course of its regular business then how the set up of Anta Project which is in furtherance of execution of one its numerous contracts can be held as setting up of a new industrial undertaking as contemplated by section 80-I of the Act. 64. During the course of arguments ld.Counsel for the assessee pointed out that for rejecting the assessee’s claim ld. Commissioner has recorded a finding that assessee has not advanced any arguments exhibiting its stand that Anta Project is not formed by the transfer of the machineries or plant previously used for this purpose by the assessee in its business. In this connection he invited our attention towards para-3 of the note filed in support of its claim and submitted that assessee has purchased new plant and machinery and also recruited skilled, semiskilled and unskilled employees. We do not find force in this contention of the assessee because both the revenue authorities have recorded a finding of fact that already existing machineries have been used by the assessee in carrying out this project. Contrary to this finding of fact except this arguments nothing was brought to our notice. It has been established by the A.O. that for execution of the project in question the :4: assessee company has utilized the assets i.e. Plant and Machinery, technical and non technical staff and capital available with it. No doubt on account of increase in the volume of work assessee might have engaged few skilled or unskilled labourers as pointed out by ld.D.R. that, that does not indicate the setting up of new unit at all. 65. That as far the decision of ITAT rendered in the case of Degremont India Ltd. (supra) we find that deduction under Section 80 was denied in that case on the basis that assessee is not engaged in manufacturing activity. The Tribunal on re-appreciation of the facts and circumstances has held that assessee is engaged in the manufacturing activity. In that connection, the Tribunal has high lighted the various steps taken right from designing to erection of Effluent Treatment Plant. These steps have been taken note of at Page 458 to 460 of the report. Thus it is a decision on the peculiar facts of that case. The assessee could not draw much support from this decision. From the arguments of the assessee we do not find differences between its undertaking i.e. alleged Industrial unit vis-a-vis its product. According to the assessee the Anta Project is finished product produced by it and simultaneously it is its unit also. We are of the view that the assessee has just erected a Gas based Cycle Power Plant, which is part of its main activity. The main concern is not entitled for deduction under section 80-I. Thus taking into consideration the reasonings assigned by the ld. revenue authorities we do not find any merit in this ground of appeal, it is rejected. 3. In view of the aforesaid categorical findings of fact, there is no substantial questions of law involved in the above. The Appeal is totally devoid of merit, hence the same stands dismissed. (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (S.J.KATHAWALLA,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.) (DR.S.RADHAKRISHNAN,J.)