M/s. BIO-VET INDUSTRIES, MUMBAI v. DC - 25(1), MUMBAI

ITA 5928/MUM/2006 | 2003-2004
Pronouncement Date: 25-02-2010 | Result: Allowed

Appeal Details

RSA Number 592819914 RSA 2006
Assessee PAN AADFB3600L
Bench Mumbai
Appeal Number ITA 5928/MUM/2006
Duration Of Justice 3 year(s) 3 month(s) 15 day(s)
Appellant M/s. BIO-VET INDUSTRIES, MUMBAI
Respondent DC - 25(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-02-2010
Assessment Year 2003-2004
Appeal Filed On 10-11-2006
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI R.S.PADVEKAR JM ITA NO.5928/MUM/2006 : ASST.YEAR 2003-2004 M/S.BIO - VET INDUSTRIES SHOP NO.9 B WING DEVKI NAGAR EKSAR ROAD BORIVALI (WEST) MUMBAI 400 103. PA NO.AADFB3600L VS. THE DY.COMMISSIONER OF INCOME - TAX CIRCLE 25 (1) MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.6826/MUM/2006 : ASST.YEAR 2003-2004 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 25 (1) MUMBAI. VS. M/S.BIO-VET INDUSTRIES SHOP NO.9 B WING DEVKI NAGAR EKSAR ROAD BORIVALI (WEST) MUMBAI 400 103. (APPELLANT) (RESPONDENT) REVENUE BY : S/SHRI L.K.AGRAWAL S.S.RANA & PITAMBA R DAS ASSESSEE BY : SHRI S.N.DIVATIA O R D E R PER : R.S.SYAL AM : THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND T HE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 8.9.2006 IN RELATION TO THE ASSESSMENT YEAR 2003-20 04. SINCE COMMON ISSUES ARE INVOLVED IN THESE APPEALS WE ARE THEREFORE PROCEE DING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE WAS ENGAGED IN THE MANUFACTURING AND PRODUCTION OF POULTRY AND CATTLE FEED GRADE AND VITAMIN PREMISES SUPPLEMENTS. IT HAD TWO MANUFACTURING UN ITS VIZ. UNIT-I AND UNIT-II. UNIT-I WAS CLAIMED AS OLD UNIT AND UNIT-II WAS STAT ED TO BE SET UP FOR THE FIRST TIME IN THE PREVIOUS RELEVANT TO THE ASSESSMENT YEAR UND ER CONSIDERATION. THE ASSESSEE ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 2 MADE CLAIM FOR DEDUCTION U/S.80-IB(10) IN RESPECT OF PROFITS PERTAINING TO UNIT-II AT THE RATE OF 100% OF PROFIT. SEPARATE PROFIT AND LOSS ACCOUNTS AND BALANCE SHEETS WERE FILED FOR BOTH THE UNITS. NO DEDUCTION WAS CLA IMED U/S.80-IB IN RESPECT OF UNIT-I IN THIS YEAR FOR NO POSITIVE INCOME THEREIN. THE ASSESSEE HAD CLAIMED 100% DEDUCTION FROM ASSESSMENT YEAR 1997-98 TO 2001-2002 AND 25% FOR ASSESSMENT YEAR 2002-2003 IN RESPECT OF UNIT-I PROFIT. 3. IN ORDER TO ASCERTAIN THE CORRECT POS ITION ABOUT THE COMPLIANCE OF THE RELEVANT CONDITIONS FOR THE CLAIM OF DEDUCTION U/S .80-IB(10) A SURVEY ACTION WAS TAKEN U/S.133A ON 28.9.2005 DURING WHICH THE FOLLOW ING FACTS EMERGED:- (I) SALARY/WAGES REGISTER SHOWED 10 PERSONS EMPLOYED P ER UNIT I.E. 10 FOR UNIT-I AND 10 FOR UNIT-II. THE ATTENDANCE REGIS TER WHICH WAS COMMON FOR BOTH THE UNITS SHOWED 12 TO 14 PERSONS ATTENDING PER DAY FOR BOTH THE UNITS PUT TOGETHER. (II) PRODUCTION REGISTER MAINTAINED WAS COMMON FOR BOTH THE UNITS. (III) LETTER ISSUED BY DAMAN AUTHORITY SPOKE ABOUT PERMIT TING THE ASSESSEE TO HAVE ADDITIONAL BUSINESS FACILITY IN THE EXISTIN G BUSINESS. IT DID NOT SPEAK ABOUT STARTING A FRESH UNIT. THE S.S.I. CERTI FICATE MENTIONED IN THE LETTER BY THE DAMAN AUTHORITY REFERRED TO THE EXISTING UNIT I.E. UNIT- I ONLY. (IV) LETTER DATED 14.2.04 WRITTEN BY SHRI Y.S.UDANI CL EARLY BROUGHT OUT THE FACT THAT THE CONDITION LAID DOWN ABOUT THE NUM BER OF EMPLOYEES TO BE EMPLOYED WAS NOT FULFILLED. 4. THE ASSESSING OFFICER ISSUED NOTICE TO THE ASSES SEE POINTING OUT CERTAIN DISCREPANCIES IN THE EXPENSES CLAIMED VIS--VIS TUR NOVER DECLARED IN UNIT-I AND ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 3 UNIT-II AS UNDER:- UNIT-I (RS.) UNIT-II (RS.) SALES 4 40 51 775 7 92 58 820 COST OF PRODUCT SOLD 3 61 19 570 6 07 67 675 ADMINISTRATION EXPENSES 41 91 049 7 43 817 SELLING & DISTRIBUTING EXPENSES 38 11 382 81 027 FINANCIAL EXPENSES 10 34 312 15 348 MANUFACTURING EXPENSES 4 93 594 77 555 5. THE ASSESSING OFFICER OBSERVED THAT THE EMPLOYEE S SHOWN AS PER THE ATTENDANCE REGISTER FOUND DURING THE COURSE OF SURV EY DID NOT TALLY WITH THE NUMBER OF EMPLOYEES FOR WHICH DEDUCTION WAS CLAIMED TOWARD S SALARIES AND WAGES. ON BEING CALLED UPON TO GIVE REASONS FOR VARIATION IN THE ATTENDANCE REGISTER FOUND DURING THE COURSE OF SURVEY AND THE EXPENSES CLAIME D BY THE ASSESSEE IT WAS STATED ON BEHALF OF THE ASSESSEE THAT THE SURVEY ACTION WA S TAKEN ON 28.9.2005 AND THE PERIOD COVERED IN THE ATTENDANCE REGISTER WAS THE C URRENT YEAR AT THAT TIME AND IT DID NOT COVER THE ASSESSMENT YEAR 2003-2004. THE AS SESSING OFFICER INVITED ATTENTION OF THE ASSESSEE TOWARDS THE FACT THAT THE RE WAS A COMMON PRODUCTION REGISTER FOUND AT THE TIME OF SURVEY WHICH INDICATE D THAT UNIT-II WAS EXTENSION OF UNIT-I AND NOT A NEW UNIT ELIGIBLE FOR 100% TAX HOL IDAY PERIOD OF FIVE YEARS. THE ASSESSEE SUBMITTED THAT NO COMMON PRODUCTION REGIST ER WAS MAINTAINED BY THE ASSESSEE AND IT WAS THE MANAGERS PERSONAL RECORD AS STATED BY HIM DURING THE COURSE OF SURVEY ALSO THAT HE KEPT THIS RECORD F OR HIS OWN KNOWLEDGE AND IT WAS NOT OFFICIAL RECORD. IN SUPPORT OF THE CONTENTION THAT UNIT-II WAS A NEW UNIT THE ASSESSEE PUT FURTHER THE CONTENTION THAT TOTALLY N EW MACHINERY WAS PURCHASED FOR UNIT-II WHICH HAS SET UP IN A DIFFERENT LOCATION FROM THE EXISTING UNIT. IT WAS ALSO STATED THAT IN UNIT-I ONLY NOVATEX FEED TOXIN WAS M ANUFACTURED WHEREAS THE OTHER ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 4 ITEMS WERE MANUFACTURED IN UNIT-II. THE ASSESSEE AL SO SUBMITTED THAT A SEPARATE CERTIFICATE WAS ISSUED BY CHIEF INSPECTOR OF FACTOR Y IN RESPECT OF UNIT-II WHICH WAS DATED 11.9.2002. SINCE THE PRODUCTION IN UNIT-II CO MMENCED IN SEPTEMBER 2002 THE ASSESSEE CLAIMED THAT IT WAS ENTIRELY A DIFFERE NT UNIT DISTINCT FROM THE EXISTING UNIT. THE ASSESSING OFFICER FOUND CERTAIN DISCREPAN CIES IN THE CERTIFICATE ISSUED BY CHIEF INSPECTOR OF FACTORY INASMUCH AS THE FIRST LI CENSE WAS DATED 20.1.1997 AND THE SECOND WAS DATED 11.9.2002. THE ONLY DIFFERENC E OBSERVED BY THE AO IN TWO CERTIFICATES WAS THAT IN THE SECOND CERTIFICATE BUI LDING NO.2 GALA 8 WAS ADDED. IT WAS ALSO NOTICED THAT THE LETTER DATED 5.7.2002 ISSUED BY THE CHIEF MANAGER (DIC) DAMAN SPOKE ABOUT ADDITIONAL SPACE OF BUSINESS WHIC H IN THE OPINION OF THE AO INDICATED THAT IT WAS A CASE OF EXTENSION OF THE EX ISTING UNIT. THE ASSESSING OFFICER PROCEEDED TO EXAMINE THE EXPENSES CLAIMED IN UNIT-I AND UNIT-II AND FOUND THAT THE ASSESSEE HAD SHIFTED EXPENSES OF UNIT-II TO UNI T-I WITH A VIEW TO SHIFT THE PROFIT TO UNIT-II ON WHICH 100% DEDUCTION WAS CLAIMED U/S .80-IB(10). CHART OF SUCH UNIT-WISE EXPENSES HAS BEEN DRAWN AT PAGES 9 AND 10 OF THE ASSESSMENT ORDER. HE THEREFORE CAME TO THE CONCLUSION THAT THE TURNOVER OF EACH UNIT WAS TO BE CONSIDERED WITH REFERENCE TO THE TOTAL TURNOVER OF UNITS-I AND II PUT TOGETHER FOR BIFURCATION OF EXPENSES BETWEEN THESE TWO UNITS. AC CORDINGLY THE PROFIT OF UNIT-I WAS REDUCED BY RS.57 97 235. IN VIEW OF HIS CONCLUS ION THAT THE ASSESSEE DID NOT SET ANY NEW UNIT IN THE YEAR THE A.O. ALLOWED D EDUCTION U/S.80-IB AT THE RATE OF 25% BEING 7 TH YEAR OF THE MANUFACTURING ACTIVITY ON COMBINED PRO FIT OF UNIT-I AND UNIT-II. 6. WHEN THE MATTER CAME UP BEFORE THE LEA RNED CIT(A) THE ASSESSEE MADE ELABORATE ARGUMENTS ABOUT THE INDEPENDENCE OF TWO U NITS FROM EACH OTHER. THE LEARNED CIT(A) CONCURRED WITH THE SUBMISSIONS ADVAN CED ON BEHALF OF THE ASSESSEE AND ACCEPTED THE PLEA THAT BOTH THE UNITS WERE SEPA RATE I.E. UNIT-II WAS NEWLY SET UP. REGARDING THE BIFURCATION OF EXPENSES IN UNIT-I AND UNIT-II THE LEARNED CIT(A) ACCEPTED THE VIEW POINT OF THE AO IN PRINCIPLE THA T THE ASSESSEE HAD ARTIFICIALLY ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 5 INCREASED THE PROFIT OF UNIT-II THEREBY SHIFTING EX PENSES OF UNIT-II TO UNIT-I. HE NOTED THAT THE EXPENSES RELATING TO CONSUMPTION OF RAW MATERIAL ELECTRICITY CHARGES AND WAGES WERE DEBITED BY THE ASSESSEE AS ACTUALLY INCURRED IN EACH UNIT SEPARATELY WHILE REST OF THE EXPENSES WERE COMMON WHICH WERE INCURRED BY HEAD OFFICE. OUT OF SUCH COMMON EXPENSES THE LEARNED CI T(A) SEGREGATED MANUFACTURING EXPENSES AT RS.3 08 717 AND DIRECTED THE AO TO APPORTION THEM TO BOTH THE UNITS ON THE BASIS OF GOODS MANUFACTURED. AS REGARDS ADMINISTRATIVE SELLING AND FINANCIAL EXPENSES THE LEARNED CIT(A) DIRECTED TO APPORTION SUCH EXPENSES ON THE BASIS OF TURNOVER OF BOTH THE UNITS . HE DIRECTED THE A.O. TO CALCULATE PROFIT OF UNIT-I AND UNIT-II SEPARATELY A CCORDINGLY AND ALLOW DEDUCTION AT THE RATE OF 100% IN RESPECT OF PROFITS OF UNIT-II. 7. GROUND NO.1 OF THE ASSESSEES APPEAL I S AGAINST THE BIFURCATION OF ADMINISTRATIVE SELLING AND FINANCIAL EXPENSES ON T HE BASIS OF TURNOVER. GROUND NO.2 OF THE ASSESSEES APPEAL IS AGAINST NOT ALLOWI NG DEDUCTION U/S.80-IB IN RESPECT OF PROFITS OF UNIT-I THOUGH THE SAME WAS ALLOWED BY THE A.O. AT THE RATE OF 25%. THE REVENUE IS AGGRIEVED AGAINST THE DECISION OF TH E LEARNED CIT(A) THAT UNIT-II WAS A NEW UNIT AND NOT AN EXTENSION OF UNIT-I AND HENCE 100% DEDUCTION BE ALLOWED IN RESPECT OF PROFIT OF UNIT-II. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. FIRSTLY WE SHALL DEAL WITH GROUND OF THE RE VENUE AS TO WHETHER UNIT-II IS EXTENSION OF UNIT-I OR A SEPARATE MANUFACTURING UNI T. ON A SPECIFIC QUERY RAISED FROM THE BENCH IT WAS STATED ON BEHALF OF THE ASSES SEE THAT BOTH UNITS WERE SEPARATELY LOCATED. WHEREAS UNIT-I WAS AT GALA 6 AN D 7 ON ONE SIDE OF THE ROAD AND UNIT-II WAS LOCATED AT GALA 8 BEING THE OTHER SID E OF THE ROAD. ON A PERTINENT QUERY THE LEARNED DEPARTMENTAL REPRESENTATIVE ACCE PTED THAT THE MACHINERY IN UNIT-II WAS NEW ONE AND NO PART OF THE MACHINERY OF EXISTING UNIT-I WAS USED IN UNIT-II. ABOUT THE ITEMS MANUFACTURED IN UNIT-I AND UNIT-II VIS--VIS COMMON ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 6 PRODUCTION REGISTER WE FIND FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE SURVEY TEAM FOUND SEPARATE ISSUE REGISTER AND PURCHASE REG ISTER FOR BOTH THE UNITS. COMMON PRODUCTION REGISTER ON WHICH THE AO HAS PLA CED STRONG RELIANCE WAS MAINTAINED BY THE PRODUCTION MANAGER ONLY FOR HIS R ECORD AS WAS STATED SO DURING THE COURSE OF SURVEY ITSELF. THE SAID STATEMENT WAS NOT FOUND TO BE INCORRECT. WE FIND FROM THE STATEMENT RECORDED AT THE TIME OF SU RVEY THAT THE ITEMS PRODUCED IN UNIT-I WAS MAINLY TOXIN WHICH WAS NOT VERY COSTLIER WHILE UNIT-II PRODUCED MAINLY VITAMINS WHICH WERE COSTLIER. EVEN THE RAW M ATERIAL USED FOR BOTH THE UNITS IS DIFFERENT AS WAS STATED IN REPLY TO QUESTI ON NO.19 WHICH HAS BEEN REPRODUCED AT PAGE 15 OF THE IMPUGNED ORDER. THERE IS NO REFERENCE IN THE ASSESSMENT ORDER TO ANY CONTRARY MATERIAL FOUND AT THE TIME OF SURVEY. ON THE QUESTION OF DISCREPANCY FOUND BY THE ASSESSING OFFI CER ABOUT THE SSI CERTIFICATE WE FIND THAT THE LEARNED CIT(A) HAS RIGHTLY TAKEN N OTE OF THE FACT THAT THE ADDITIONAL PLACE OF BUSINESS WAS GIVEN TO THE ASSESSEE AT BUIL DING NO.2 GALA 8. IN RESPONSE TO QUESTION NO.15 ABOUT THE CONTENTS OF THE LETTER TAK EN NOTE OF BY THE ASSESSING OFFICER SHRI KALPESH SHAH THE PARTNER OF THE ASSE SSEE-FIRM STATED THAT THE CERTIFICATE WAS ISSUED BY THE DISTRICT INDUSTRIES A T DAMAN AS PER DAMAN (DIC RULES) AND THE SAME WAS ONLY FOR SETTING UP A NEW U NIT. WE FURTHER NOTE THAT IN RESPECT OF GALA 6 AND 7 I.E. UNIT-I THE LICENSE WAS ISSUED TO THE ASSESSEE IN 1997 WHEREAS IN RESPECT OF UNIT-II A NEW LICENSE WAS ISS UED IN RESPECT OF GALA 8 ON 11.9.2002. THESE FACTS AMPLY INDICATE THAT VIEW POI NT OF THE ASSESSING OFFICER ABOUT UNIT-II BEING EXTENSION OF UNIT-I HAS RIGH TLY NOT BEEN SUSTAINED IN THE FIRST APPEAL. WE THEREFORE UPHOLD THE VIEW CANVASSED BY THE LEARNED CIT(A) THAT UNIT-I WAS SEPARATE AND DISTINCT FROM UNIT-II. 9. NOW COMING TO THE ASSESSEES GRIEVANCE HERE IT IS IMPORTANT TO MENTION THAT THE LD. AR CONCEDED THAT THE EXPENSES WERE NOT PROPERLY REFLECTED BY THE ASSESSEE IN ACCOUNTS OF BOTH THE UNITS. HE DID NOT OBJECT TO THE CATEGORIZATION OF THE AMOUNT OF EXPENSES UNDER THE ABOVE REFERRED THREE B ROAD HEADS VIZ ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 7 ADMINISTRATIVE FINANCIAL AND SELLING EXPENSES. HI S GRIEVANCE WAS RESTRICTED TO THE FINDING GIVEN BY THE LD. CIT(A) FOR APPORTIONING S UCH EXPENSES ON THE BASIS OF TURNOVER OF BOTH THE UNITS. HE ARGUED THAT THE EXP ENSES OUGHT TO HAVE BEEN BIFURCATED ON THE BASIS OF NUMBER OF UNITS PRODUCED IN UNIT-I AND II. WE ARE NOT CONVINCED WITH THIS SUBMISSION FOR THE REASON THAT BIFURCATION ON THE BASIS OF NUMBER OF UNITS PRODUCED MAY BE WORKABLE WHEN THE ITEMS MANUFACTURED ARE OF THE SAME VALUE. IF HOWEVER THERE IS DIFFERENCE IN T HE VALUE OF GOODS MANUFACTURED AS IS THERE IN THE INSTANT CASE THEN THIS MODE OF APPORTIONMENT WILL GIVE UNWANTED RESULTS. THE OBJECT OF BIFURCATION OF EXPENSES BET WEEN THE TWO UNITS IS THAT THE COSTS INCURRED FOR THE RESPECTIVE UNITS SHOULD GET REFLECTED IN THE CORRECT UNITS SO THAT THE FIGURE OF PROFIT IN BOTH THE UNITS IS NOT DISTORTED. WHEN THERE IS DIFFERENCE IN THE VALUE OF RAW MATERIAL FOR THE PRODUCTS OF B OTH THE UNITS AND THE ULTIMATE FINISHED PRODUCT IS ALSO DIFFERENT IN VALUE THEN APPORTIONMENT OF EXPENSES ON THE BASIS OF NUMBER OF UNITS PRODUCED WILL NOT DIVULG E CORRECT PICTURE OF PROFITABILITY IN BOTH THE UNITS. 10. COMING TO THE BIFURCATION OF EXPENSES WE FIND THAT DISPUTE IS ONLY QUA ADMINISTRATIVE EXPENSES SELLING EXPENSES AND FINAN CIAL EXPENSES. THE ASSESSEE HAS NO OBJECTION ON THE MANUFACTURING EXPENSES BEI NG APPORTIONED ON THE BASIS OF GOODS MANUFACTURED. THE LEARNED CIT(A) DIRECTED TO APPORTION THESE THREE TYPES OF EXPENSES ON THE BASIS OF TURNOVER OF BOTH THE UNITS . IN OUR CONSIDERED OPINION THE SELLING EXPENSES HAVE DIRECT RELATION WITH THE TURN OVER. WE THEREFORE HOLD THAT THE APPORTIONMENT OF SELLING EXPENSES ON THE BASIS OF T HE AMOUNT OF TURNOVER IN BOTH THE UNITS IS APPROPRIATE. THE FINANCIAL EXPENSES RE PRESENT THE COST OF MONEY BORROWED FOR USE IN BUSINESS. RAW MATERIAL FOR A PRODUCT IN UNIT-I MAY COST RS.100 WHILE IN THE OTHER UNIT MAY COST RS.1000. BI FURCATION OF THE EXPENSES ON THE BASIS OF QUANTITY PRODUCED WOULD OBVIOUSLY LEAD TO ABSURD SITUATION BECAUSE THE NUMBER OF UNITS MANUFACTURED WITH DIFFERENT VAL UES CANNOT BE THE BASIS OF APPORTIONING THE EXPENSES. IN OUR CONSIDERED OPINI ON THE APPORTIONMENT OF ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 8 FINANCIAL EXPENSES NEEDS TO BE DONE ON THE BASIS OF VALUE OF GOODS MANUFACTURED IN BOTH THE UNITS. COMING TO THE LAST ITEM BEING AD MINISTRATIVE EXPENSES WHICH INCLUDED RENT TRAVELLING AND TELEPHONE EXPENSES ET C. IN OUR CONSIDERED OPINION AGAIN THE CONTENTION OF THE LD AR IS NOT ACCEPTABLE FOR APPORTIONING SUCH EXPENSES ON THE BASIS OF NUMBER OF UNITS MANUFACTURED. THERE IS NO CONNECTION OF SUCH EXPENSES WITH THE QUANTITY OF GOODS MANUFACTURED. I N OUR VIEW SUCH EXPENSES NEED TO BE APPORTIONED ON THE BASIS OF VALUE OF TURNOVER IN BOTH THE UNITS. WE ORDER ACCORDINGLY. 11. THE OTHER OBJECTION OF THE ASSESSEE IS AGAINST NOT GIVING ANY FINDING ON THE AVAILABILITY OF DEDUCTION IN RESPECT OF PROFITS OF UNIT-I AT THE RATE OF 25%. THE ASSESSING OFFICER HAS RECORDED IN THE ASSESSMENT OR DER THAT IT IS 7 TH YEAR OF THE EXISTING UNIT. GOING BY THAT STANDARD THE ASSESSEE IS STILL ENTITLED TO DEDUCTION U/S.80-IB FOR THE REMAINING PERIOD. WE FIND THAT IN FACT THE LEARNED CIT(A) INADVERTENTLY OMITTED TO GIVE FINDING ABOUT ALLOWAB ILITY OF DEDUCTION U/S.80-IB IN RESPECT OF PROFITS OF UNIT-I WHEN HE CATEGORICALL Y HELD THAT UNIT-II WAS A NEW UNIT INDEPENDENT OF UNIT-I. WE THEREFORE DIRECT THE AS SESSING OFFICER TO GRANT DEDUCTION AT THE ELIGIBLE RATE ON THE PROFIT OF UNI T-I COMPUTED ON THE BASIS OF BIFURCATION OF THE EXPENSES IN THE AFORE-SAID MANNE R. 12. GROUND NO.2 OF THE REVENUES APPEAL IS AGAINST THE REDUCTION IN THE DISALLOWANCE OF SALARY AND WAGES IN RESPECT OF UNIT -II FROM RS.2 17 442 MADE BY THE ASSESSING OFFICER TO RS.14 799. THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEE FAILED TO PRODUCE ATTENDANCE REGISTER. HE OPINED THAT THERE WERE INFLATED NUMBERS OF EMPLOYEES. HE THEREFORE DISALLOWED 20% OF THE EXPENSES CLAIMED BY THE ASSESSEE UNDER THE HEAD `SALARY AND WAGES. TH E LEARNED CIT(A) NOTED THAT THE WAGES REGISTER OF UNIT-II CONTAINED 12 NAMES BUT IT WAS SIGNED ONLY BY 10 PERSONS. SHRI SURA RANA AND SHRI CHANDU RAWAL HAD NOT SIGNED THE WAGES REGISTER IN ANY OF THE MONTHS. EVEN NO EVIDENCE WAS PRODUCED BEFORE TH E ASSESSING OFFICER THAT ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 9 SALARY WAS ACTUALLY PAID TO THEM. HE THEREFORE DI RECTED THE A.O. TO DISALLOW WAGES CLAIMED WITH RESPECT OF ABOVE STATED TWO PERS ONS IN UNIT-II. IN THE ABSENCE OF ANY SPECIFIC FINDING GIVEN BY THE A.O. IN RESPEC T OF SALARY PAID TO EMPLOYEES OF UNIT-I THE LEARNED CIT(A) HELD THAT NO ADDITION CO ULD BE MADE. 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE LEARNED CIT(A) HAS GIVEN A VERY REASONABLE DIRECTION TO THE ASSESSING OFFICER FOR DISALLOWING SALARY OF TWO EMP LOYEES IN UNIT-II WHO HAD NOT SIGNED THE WAGES REGISTER IN ANY OF THE MONTHS. IN RESPECT OF THE OTHER EMPLOYEES WHO HAD ACTUALLY SIGNED THE WAGES REGISTER THE ASS ESSING OFFICER COULD NOT HAVE MADE ANY ADDITION WITHOUT BRINING ON RECORD ANY MAT ERIAL TO SHOW THAT THE ENTRIES IN THIS REGISTER WERE NOT CORRECT. SIMILARLY ABOUT UNIT-I EMPLOYEES WE FIND THAT NO ADVERSE FINDING HAS BEEN RECORDED BY THE ASSESSING OFFICER. IN SUCH A SITUATION NO DISALLOWANCE IS PERMISSIBLE. WE THEREFORE UPHOLD THAT THE IMPUGNED ORDER ON THIS ISSUE. 14. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND THAT OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 25 TH DAY OF FEBRUARY 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 25 TH FEBRUARY 2010. DEVDAS* ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 10 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XXV MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI. ITA NOS.5928 & 6826/MUM/2006 M/S.BIO-VET INDUSTRIES. 11 DATE INITIAL 1. DRAFT DICTATED ON 24.02.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 25.02.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *