IN INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE: SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN, JM ITA No.1387/Mum/2009 to 1390/Mum/2009 (Assessment Year : 2002 -2003 to 2005-2006) ITA No.3285/Mum/2011 to 3290/Mum/2011 (Assessment Year : 1999-2000 to 2004-2005) Medley Pharmaceuticals Vs. DCIT CC-44, Mumbai Ltd., Medley House, D-2, MIDC Area, 16th Road, Andheri- East, Mumbai 400 093 PAN/GIR No. : AAACM2764J (Appellant) .. ( Respondent) Assessee by : Shri Prakash Jotwani Revenue by : Shri N.P.Singh Date of Hearing : 12/07/2016 Date of Pronouncement : 19/10/2016 ORDER PER R.C.SHARMA (A.M): These are appeals filed by assessee against order of CIT(A) for assessment years 2002-2003, 2003-2004, 2004-2005 and 2005-2006, in matter of order passed under Section 143(3) read with Section 153A of IT Act. CIT(A) has also confirmed penalty u/s. 271(1)(c) in Assessment Year 1999-2000 to 2004-2005 with respect to disallowance of claim of deduction u/s.80IA. 2. Common grievance of assessee in quantum appeals in all years pertains to decline of claim of deduction under Section 80IA of Daman Unit 1 &2. 3. Rival contentions have been heard and record perused. 2 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 4. Facts in brief are that assessee company is engaged in business of manufacturing and trading of bulk drugs as well as pharmaceutical formulations comprising of oral liquid, tablets and capsules. It is mentioned on page 2 para 6 of impugned assessment order for Assessment Year 2002-2003 that during course of search and survey action U/s. 132 r.w.s. 133A at Aurangabad factory premises various documents were found and seized. AO stated that during course of survey conducted at Aurangabad factory premises of assessee, office File No.4, consisting pages 173 and one Material Exit Pass Book containing pages 132 were found and impounded. said impounded office file no.4 contained details of machines transferred to various group entities and Daman Units of assessee, It is further noticed that books of accounts, documents were seized from Registered Office of assessee at D-2, Medley House, MIDC Area, 16th Road, Andheri (East), Mumbai - 400 093. Some of documents seized from here, particularly Annexure 'A-2' reveal that Plant and Machinery shown on records as existing in Aurangabad plant was in fact not available at Aurangabad factory premises but were transferred to Daman Units and other premises. Page No 111 and 112 of seized Annexure 'A-2' seized from Medley House, Andheri (East) confirmed that certain rncchineries of Aurangabad Unit were indeed transferred to Daman Unit by assessee. Besides above, certain loose paper files and loose paper folders and other documents as per respective panchanamas were found and seized from residence of Directors at Andheri(East) and Aurangabad and residential 3 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., premises. Certain loose papers and documents were also found and seized from factory premises at Plot No.10 and 11 as well as from Plot No.18 and 19 at Kabra Industrial Estate, Kachigam, Nani Daman. These seized materials have been analysed and discussed and used by Ld. Assessing Officer in rejecting claim U/s. 80IB made by assessee during this year. This matter has been discussed by Ld. Assessing Officer from Page Nos 2 to 9 of impugned assessment order. By impugned order CIT(A) confirmed order of AO against which assessee is in further appeal before us. ITA No.3285/Mum/2011 to 3290/Mum/2011 (Assessment Year : 1999-2000 to 2004-2005) 5. These are appeals filed by assessee against order of CIT(A) for assessment years 1999 -2000 to 2004-2005, in matter of imposition of penalty under Section 271(1) (C) of IT Act. 6. At outset learned AR placed on record order passed by Tribunal in assessee s own case for assessment years 1999-2000 to 2001-2002 wherein disallowance made under Section 80IA/ 80IB was deleted by Tribunal vide its order dated 29/06/ 2016. 7. W e had carefully gone through order of Tribunal and found that assessee s claim for deduction under Section 80IA /80IB was allowed by Tribunal in its order dated 29/06/2016 after having following observation:- 4 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 4.1 substantive dispute before us arises from action of income-tax authorities in denying assessee's claim for deduction under Medley Pharmaceuticals Limited. Section 80IA of Act with respect to Unit-1 and Unit-2 at Daman. Considering short controversy before us, we proceed to cull out relevant facts from material on record and orders of authorities below, which would enable us to decide aforesaid dispute appropriately. assessee company is in business of manufacturing of oral liquids, tablets and capsules since 1976 from its initial location at Aurangabad. In 1994, assessee company set up unit at Daman, which is termed as Unit-1. In Unit-1, assessee is undertaking manufacture of oral liquids only. Further, it emerges from record that in year 1998, assessee company set-up another manufacturing unit in Daman, termed as Unit-2. In Unit-2, assessee company is undertaking manufacture of tablets and capsules but some oral liquids and B-lactam antibiotics. In so far as Unit-1 is concerned, notably it has availed benefit under section 80IA of Act from assessment year 1995-96 onwards. claim under section 80IA of Act with respect to Unit-2 is made for first time in assessment year 1999-2000. 4.2 In impugned assessment, claim with respect to Unit-1 has been denied primarily on ground that value of machinery transferred to Unit-1 exceeds 20% of total value of machinery and plant used in business of Unit-1. aforesaid condition is contained in Explanation -2 r.w. clause (ii) of section 80IA(2) of Act. charge made against assessee is that on basis of search and survey action it was found that old used machinery from Aurangabad Unit was transferred to Unit-1 at Daman which was in excess of 20% of total value of plant and machinery used in business of Unit-1. aforesaid objection is sum and substance of dispute before us inasmuch as plea of assessee is that it has complied with requirement contained insection 80IA(2)(ii) r.w. Explanation -2 thereof. 4.3 Before we start to address factual contours of controversy in detail, we may briefly touch upon legal position on subject. Section 80IA of Act postulates deduction in respect of profits and gains from industrial undertakings in certain cases specified therein. Admittedly, manufacturing unit set-up by assessee by way of Unit-1 at Daman is otherwise entitled to claim of deduction because only objection raised by Revenue is what we have stated earlier. Sub-section (2) of section 80IA prescribes that benefits envisaged in section apply to such industrial undertaking, which fulfils conditions prescribed therein. One of conditions prescribed is contained in clause(ii) of section 80IA(2), which is to effect that such industrial undertaking shall not be 5 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., formed by transfer to new business machinery or plant previously used for any purpose. Furthermore, in Explanation -2 thereof, it is provided that where in case of industrial undertaking, any machinery or plant previously used by any purpose is transferred to new business, then total value of machinery or plant so transferred should not exceed 20% of total value of machinery or plant used in business. This condition is subject matter of dispute in present case inasmuch as case set-up by Revenue is that plant and machinery transferred from Aurangabad unit to Daman Unit-1 is in excess of 20% of total value of plant and machinery at Unit-1, Daman. 4.4 In this context, it is to be noted that conditions prescribed in sub-section (2) of section 80IA from clauses (i) to (v) are of varying quality inasmuch as some of them are to be fulfilled at time of set-up or initial year and some conditions are of such nature, which have to be consistently adhered to be by assessee during entire period of claim. Notably, condition which has been invoked by Revenue in present case (i.e. clause (ii)) is to be evaluated at time of formation of unit. Ostensibly, instant assessment year is 1999-2000, which is not year of formation of unit, which admittedly was previous year relevant to assessment year 1995-96. It is also established position that assessee has been allowed benefit of section 80IA of Act right from assessment year 1995-96 in relation to Daman Unit-1. Therefore, on prima-facie basis, action of Assessing Officer in denying deduction in assessment year 1999-2000 is legally untenable and unwarranted as it seeks to disturb accepted position, and that too based on condition which is required to be evaluated in initial year only. Be that as it may, we have also considered factual matrix of case because Assessing Officer has attempted to make out case that documents/ information found in course of search and survey carried out on group on 18/11/2004 has revealed non-compliance with aforesaid condition. 4.5 perusal of assessment order reveals that as per Assessing Officer transferred plant and machinery in Daman Unit-1 constitutes 29% of total value of plant and machinery. Furthermore, Assessing Officer also says in para 9.2 of his order that after discussion with one Mr. Anil Bhoot, General Manager(Finance), correct percentage of old used machinery vis- -vis total plant and machinery works out to 22%. Be that as it may, entire discussion in this regard is contained in para 9.2 of assessment order and apart from asserting that percentage of old used machinery vis- -vis total plant and machinery is 29% or 22%, Assessing Officer has not tabulated either value or 6 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., names of such machinery. For this very reason, assessee had raised specific point before CIT(Appeals). Before CIT(Appeals), assessee had asserted, and reference to which has been made by CIT(Appeals) in para 2.3 of his order, that item-wise and value of machinery transferred from Aurangabad Unit to Daman Unit-1 in course of previous year 1996-97 relevant to assessment year 1997-98 is as under:- S.No. Name WDV - Amount (Rs.) 1 Rotary Bottle Working Machine 24,406 2 Semi Automatic R.O.P.P 3,815 3 Conveyor Belt 4,857 4 Automatic Liquid Filling Machine 28,171 Total Rs. 61,049 It has been further explained that Rs.830/- value of machinery was transferred in previous year 1998-99 relevant to assessment year 1999- 2000 and Rs.6754/- in relation to assessment year 2000-01. In fact, in initial year, it has been claimed that no old machinery was transferred to Daman Unit-1. 5. Before CIT(Appeals), we find that assessee made varied factual submissions countering findings of Assessing Officer. CIT(Appeals) has also called for remand report from Assessing Officer. Such remand report has also been reproduced by CIT(Appeals) in impugned order. In such remand report, Assessing Officer considered that value of old machinery transferred from Aurangabad Unit to Daman Unit-1 consisted of three tanks of Rs.5,61,600/- and total value of machinery in Daman Unit- 1 being Rs.24,90,866/-, thereby reflecting that proportion of old machinery was 22%. We shall deal with this aspect little later. 5.1 Before CIT(Appeals), assessee pointed out that figure of Rs.19,29,266/- referred by Assessing Officer in remand report was unverifiable. said amount was stated to be value of new plant and machinery of Daman Unit-1 as on 31/3/1994. As per assessee, it had purchased three S.S Jacketed Tanks for Rs.1,87,200/- each when Daman Unit-1 was started. manufacturing facilities at Aurangabad Unit was for liquid orals, which was old facility using plain S.S Tanks without top and without any jacket for manufacturing of syrups, whereas for its Daman Unit-1, assessee acquired Jacketed Tanks, which were totally closed with top dish. Thus, allegation by Assessing Officer that tanks from Aurangabad Unit were transferred was untenable. assessee also pointed out that its Aurangabad Unit was working till 1997, whereas Daman Unit-1 had commenced production in 1994 itself, therefore, 7 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., Daman Unit-1 could not have been started by transferring said tanks from Aurangabad unit. 5.2 All these factors have been considered by CIT(Appeals), so however, he has ultimately upheld stand of Assessing Officer. In para 3.4.9 of his order, CIT(Appeals) records that all plant and machinery from Aurangabad unit could not be considered to have been transferred to Daman Unit-1, but atleast two tanks were transferred from Aurangabad unit and two from another concern. CIT(Appeals) has also referred to statement given by Mr. Sahir Khatib in course of search action. failure of assesse to produce delivery challans of certain machineries before Assessing Officer also led CIT(Appeals) to conclude usage of old machinery in Daman Unit-1. CIT(Appeals), in fact, records in para 3.4.7 that usage of old machinery at Daman unit-1 amounts to 29.1%, which according to him was beyond permissible limit of 20%, hence, he sustained action of Assessing Officer in denying claim under section 80IA of Act. 6. Before us, Ld. Representative for assessee has made detailed submissions. primary argument led by assessee is that CIT(Appeals) has incorrectly taken total value of new plant and machinery as on 31/3/1994 at Rs.19,29,226/-, whereas correct value is Rs.31,41,563/-. aforesaid figure is sought to be justified on basis of audited annual accounts filed with respective return of income and which has also been subjected to assessments in past years. Ld. Representative for assessee submitted that all- along Annual Accounts furnished by assessee have not been doubted and in fact depreciation has been allowed with respect to assets based on asset values depicted in returns of income. 6.1 Ld. Representative for assessee also pointed out that reference made by CIT(Appeals) to impounded papers in para 3.4.7 to justify usage of old machinery at 29.1% was erroneous because same has been incorrectly understood. In this context, it was pointed out that there is no difference in value of plant and machinery found recorded in audited accounts vis- -vis papers found in course of search. In this context, our attention was specifically invited to assertions of lower authorities, whereby it is stated that seized material reflect usage of old machinery at Daman Unit-1 in excess of 20%. Countering aforesaid, Ld. Representative for assessee pointed out that there is no material adduced at any stage to justify such inference. 6.2 On facts, Ld. Representative for assessee pointed out that since assessee has furnished bills of purchase of new Tanks, there is no repudiation of same. At time of hearing, Ld. 8 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., Representative for assessee furnished voluminous Paper Books, especially Paper Book-6, which contained detailed note on reconciliation of fixed assets shown in annual accounts for period ending 31/3/1993 to 31/3/1995 for Daman Unit-1. On basis of aforesaid, it is sought to be made out that even if total value of new plant and machinery be taken as Rs.19,29,266/-, as adopted by CIT(Appeals), yet value of old asset transferred is less 20% as it is merely 68,633/-. In any case, it is sought to be asserted that total value of plant and machinery of Daman Unit-1 is Rs.31,41,563/- and considering old transferred machinery of Rs.68,633/-, it constitutes only 2.1% of total machinery. In support, assessee has furnished extract of annual financial statement as also ledger account of fixed assets of Daman Unit-1 for period from 31/3/1993 to 31/3/1995. In particular, following was submitted and referred to:- 1. Summary of fixed assets as on 31/03/1993 - A-1 2. Summary of fixed assets as on 31/04/1993 - A-2 3. Summary of fixed assets as on 31/3/1995 - A-3 to A-7 4. List of additions to Plant and Machinery of Unit 1 during 1993-94 for Rs.25,64,307/- as on 1/4/94 - A-8 toA-10 5. List of additions to Plant & Machinery of Unit 1 during 1993-94 for Rs.5,77,256/- - A-11 to A-13 6. Accounts entries passed while capitalizing to accounts. - A-14 to A-32 6.3 aforesaid submissions put-forth by assessee as well as order of authorities below throw-up issue which revolves around factual appreciation of affairs. Admittedly, there are conflicting findings in orders of authorities below as to total value of plant and machinery of Daman Unit-1, as also value of old plant and machinery stated to have been transferred from Aurangabad unit. Under these circumstances, it was found imperative to obtain remand report from Assessing Officer. relevant report has been furnished by Ld. CIT-DR before us in course of hearing. Ld. Representative for assessee has also furnished say of assessee on such report of Assessing Officer. 7. Ld.CIT-DR, appearing for Revenue has attempted to support stand of Revenue to effect that usage of old machinery at Daman Unit-1 was more than permissible limit of 20% and thus, disallowance of deduction under section 80IA of Act was quite proper. 8. We have considered material being put-forth by assessee in context of objections raised by income-tax authorities. Ostensibly, in so far as assessment order is concerned, it does not 9 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., bring out figures of total plant and machinery of Daman Unit-1 or old machinery claimed to have been used from Aurangabad unit. finding of CIT(Appeals) is that machinery purchased for Daman Unit-1 till 31/3/1994 was for Rs.19,29,266/- only and that plant and machinery consisted of three S.S Jacketed Tanks of Rs.1,87,200/- each. At this stage, CIT(Appeals) states that list of plant and machinery impounded from Aurangabad unit shows that three Tanks were transferred from Aurangabad unit to Daman Unit-1. Considering that total expenditure incurred by assessee on account of Jacketed Tanks was Rs.5,61,600/-, he proceeded to hold usage of old machinery at Daman Unit-1 at 29.1%. 8.1 We have considered aforesaid finding of CIT(Appeals) and find that it does not conform to schedule of fixed assets forming part of Annual Accounts of assessee, copy of which has been placed before us. In terms of details furnished by assessee, based on audited annual accounts, following position has been argued by appellant before us:- "Please refer to page A-1 of PB-VI filed. It is statement of Fixed Assets as at 31.03.1993. As on 31.03.1993, total machinery shown is Rs.36,26,956/-. As on 31.03.1994(Pg A-2) total machinery shown is Rs.31,75,090/- and at bottom is Capital WIP of Rs.101,04362/-. said Capital WIP was capitalized to Accounts as on 01.04.1994 (Page A-4 to A-7). value of Machinery capitalized as on 01.04.1994 to Unit I at Daman is Rs.25,64,307/-. List of Machinery is at page A-8 to A-10. Further Machinery valued at Rs.5,77,256/- was capitalized during period 01.04.1994 to 31.03.1995 for Daman Unit I, list of which is at pg A-11 to A-12. Thus machinery purchased for operations of Daman Unit I is valued at Rs.31,41,563/- as on 31.03.1995. revenue has not given details of value of machinery for Daman Unit I being Rs.19,29,266/- (pg 19 of CIT(A) Order). Further CIT(A) has considered value of machinery at Rs.19,29,266/-(pg 43 of order). At 466 is list of machinery transferred from Aurangabad to Daman Unit I. cost of value machinery transferred from Aurangabad is Rs.3,07,000/- while WDV of all such machinery is Rs.68,633/-. Thus, denominator of value of machinery should be taken at Rs.31,41,563/- in place of Rs.19,29,266/- as considered by CIT(A). figure of Rs.19,29,266/- is misplaced as there is no breakup or details given by AO in his assessment order as well as in his 3 remand reports as well as by CIT(A)." 8.2 Now, on one hand, assessee has justified total value of machinery on basis of annual accounts i.e. at Rs.31,41,563/- in place of Rs.19,29,266/- considered by CIT(Appeals). figure 10 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., adopted by CIT(Appeals) does not find any justification even in report that has been furnished by Assessing Officer before us. There are only bald assertions from side of Department that usage of old machinery being in excess of 20% was accepted even in course of assessment proceedings by employee of assessee Mr. Anil Bhoot, General Manager(Finance). In our view, in spite of assertions to contrary by assessee right from level of CIT(Appeals), Assessing Officer has not been able to demonstrate and justify how figure of plant and machinery of Daman Unit-1 has been adopted at Rs.19,29,266/- as on 31/3/1994. In any case, first year for claim of deduction undersection 80IA for Daman Unit-1 was assessment year 1995-96 and value of machinery is depicted at Rs.31,41,563/-. Even if, we go alongwith CIT(Appeals) and take value of old transferred machinery at Rs.5,61,600/-, even then considering total value of machinery at Rs.31,41,563/-, percentage of usage of old machinery falls below 20%. This aspect was specifically put to Ld. CIT-DR at time of hearing but no cogent arguments have been made except reiterating position contained in order of CIT(Appeals). 8.3 Apart therefrom, we find that assessee had argued before CIT(Appeals) that machinery to extent of Rs.68,633/- only, detailed in earlier part of this order, were transferred from Aurangabad unit to Daman Unit-1. There is no categorical repudiation of such stand of assessee apart from generalized observation of CIT(Appeals) which have been thereafter affirmed by CIT(Appeals). Even before us, stand of appellant company is that only machineries to extent of Rs.68,633/- have been transferred to Daman Unit-I. In fact, in this context reference was made to Page-466 of Paper Book to elaborate that value of transfer in financial year 1996-97 was Rs.61,049/-; Rs.830/- in financial year 1998-99; and, Rs.6,754/- in financial year 1999- 2000. In this detail, it has also been pointed out that transfer of Rs.6,754/- in financial year 1999- 2000 included WDV of two tanks of 1000 litres and 2000 litres. On contrary, it has also been asserted that CIT(Appeals) in Para 3.4.7 has wrongly considered value of machinery transferred at Rs.5,61,600/-, being 3 S.S. Jacketed Tanks of Rs.1,87,200/- each. On this aspect Ld. Representative for assessee vehemently pointed out that Rs.5,61,600/- was cost of three new S.S. Jacketed Tanks purchased by assessee and that same does not reflect any transfer of old machinery from Aurangabad Unit to Daman Unit-I. aforesaid point made out by assessee is liable to be upheld because we find that even in remand report furnished by Assessing Officer before us, there is no substantiation as to how figure of Rs.5,61,600/- has been arrived at although assessee has consistently pointed out that same reflects purchase price of 11 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., new S.S. Jacketed Tanks. As consequence, we have no reason to distract from position that old machinery to extent of Rs. 68,633/- only have been transferred from Aurangabad Unit to Daman Unit-I at relevant point of time and not amount of Rs.5,61,600/- considered by CIT(Appeals). 8.4 We may also refer to stand of Assessing Officer that usage of old machinery is based on statement made by Mr.Sahir Khatib in course of search action and by Mr. Anil Bhoot, General Manager(Finance) during assessment proceedings. Additionally, it is also asserted that premise of Revenue is based on seized material. aforesaid assertions of Revenue, in our view, do not distract from factual matrix, which clearly support assertion of assessee that total value of old machinery at Daman Unit-1 is within permissible limits. In fact, orders of authorities below do not bring out any specific material except generalized observations, which we have already dealt with. Even in report furnished before us, Assessing Officer has not substantiated that how figure of old machinery at Rs,5,61,600/- and that of total machinery in Daman Unit-1 at Rs.19,29,266/- have been adopted. 9. Considering entirety of facts and circumstances of case and material on record, we are unable to uphold stand of Revenue that Daman Unit-1 has been set-up with value of old machinery in excess of 20% of total value of machinery and, therefore, on facts also, we find no reason to affirm denial of deduction under section 80IA of Act with respect to Daman Unit- 1. Thus, on this aspect assessee succeeds. 10. Another aspect of controversy relates to denial of claim of deduction u/s. 80IA of Act in respect of Daman Unit-2. claim of deduction u/s. 80IA of Act for Daman Unit-2 has been made for first time in assessment year 1999-2000. Daman Unit-2 is stated to have been set-up in year 1998 for manufacture of tablets, capsules and B-lactum antibiotics. Assessing Officer as well as CIT(A) have denied claim on identical considerations. In nutshell, stand of Revenue is that Daman Unit-2 does not have independent existence, inasmuch as, it can be viewed as part of Daman Unit-1 itself. According to Revenue, both units have common excise registration, common electricity and water connection and, therefore, Daman Unit-2 is nothing but merely extension of Daman Unit-1. Therefore, Assessing Officer held that Daman Unit-2 could not be considered as new unit and benefits of section 80IB could not be separately available to Daman Unit-2 and it should run concurrently with Daman Unit-1 itself. 12 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 11. On other hand, stand of assessee before lower authorities as well as before us is to effect that Daman Unit-2 is separate and distinct unit which is engaged in business of manufacture of tablets, capsules and B-lactum antibiotics; products which are different from products being manufactured at Daman Unit-1. It has been pointed out that merely because central excise, sales tax registration, etc. are common cannot be considered as good ground to say that Daman Unit-2 was part and parcel of Daman Unit-1. Ld. Representative for assessee pointed out that Daman Unit-1 was set-up in year 1994, whereas Daman Unit-2 has been set-up on adjacent piece of land in 1998. It was pointed out that said land was purchased subsequently and separate building was constructed and manufacturing unit was set-up with purchase of new machinery, new loans were raised and separate labour force was employed. It has been explained that even products manufactured in Daman Unit- 1 and Daman Unit-2 are different. For this purpose reference has been made to Page-480 of Paper Book. Our attention was also invited to page 540 of Paper Book, wherein is placed visual photographs of two units, which are physically separate. It was also pointed out that Daman Unit-2 meets with all conditions prescribed in section 80IA/80IB of Act and that there is no specific requirement of obtaining separate excise or sales tax registration. In course of hearing, Ld. Representative for assessee relied upon following decisions in support of claim of deduction under section 80IA/80IB with respect to Daman Unit-2 as separate unit:- 1.DCIT vs. M/s. Uniglobe Packaging P. Ltd., ITA No.2669/Mum/2009 Medley Pharmaceuticals Limited. Dated 31/12/2010. 2. ACIT vs. M/s. Uniglobe Packaging P. Ltd.,ITA No.5387/Mum/2010, Dated 30/09/2011 3. M/s. FIL Industries Ltd. vs. Addl. CIT,ITA No.415(Asr)/2009 dated 27/06/2012. 4. Aqua Plumbing Pvt Ltd. Vs. ACIT, 140 TTJ 496(Asr) On basis of decision of Amritsar Bench of Tribunal in case of Aqua Plumbing Pvt Ltd. Vs. ACIT (supra), it has been specifically argued that expansion or extension of existing unit by itself would not disentitle assessee from claiming deduction under section 80IA/80IB of Act . 13 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 12. On other hand, Ld. Departmental Representative appearing for Revenue has primarily reiterated stand of lower authorities, which is to effect that Daman Unit-2 was not independent separate unit but is to be seen merely as extension of Daman Unit-1. 13. We have carefully considered rival submissions. As we have noted earlier, assessee company is mainly engaged in business of manufacture and trading of bulk drugs as well as pharmaceutical formulations comprising of oral liquids, tablets and capsules. assessee company has its manufacturing facilities located at different places and so far as controversy before us is concerned, it is confined to manufacturing activities carried out in two units located at Daman, namely, Daman Unit -1 and Daman Unit-2. Daman Unit-1 is in operation since assessment year 1995-96 and has been claiming exemption under section 80IA of Act. Daman Unit-2 is stated to have been set-up in previous year relevant to assessment year 1999-2000 and, therefore, claim for exemption under section 80IA and 80IB of Act has come up for first time in this year. claim of exemption for Daman Unit-2 is sought to be defeated by Revenue on ground that it was merely extension of Daman Unit-1. In this context, Page-480 of Paper Book clearly establishes that products being manufactured in Daman Unit-2 are different from those being manufactured in Daman Unit-1, although common genre of product is in pharmaceutical line of business. In fact, in Daman Unit-1, assessee is undertaking manufacture of oral liquids only, whereas in Daman Unit-2 assessee company is undertaking manufacture of tablets and capsules as also some oral liquids and B- lactum antibiotics. These factual assertions have not been negated by either of lower authorities and in fact even before us there is no material led by Revenue which would negate same. At this point, we may also add that we are not professing that it is imperative for new unit to manufacture entirely different item from what was being manufactured by old unit in order to claim exemption under section 80IA and 80IB of Act. Reference can be made to judgments of Hon'ble Supreme Court in case of Textile Machinery Corporation Ltd. vs. CIT, 107 ITR 195 (SC) as also in case of Indian Aluminium Co. Ltd., 108 ITR 367(SC) in this context. aforesaid decisions would reveal facts that show that new units were set-up for purpose of producing same item which were being produced in old units. Both judgments show that decisive test is that industrial unit set-up must be new in sense that new plant and machinery should be installed for producing either same commodity or some new commodity. In present case, it is abundantly clear that Daman Unit-2 has been set-up on later date of time and it is located on separate piece of 14 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., land. objections raised by Revenue, in our view, do not distract from fact that Daman Unit-2 is physically separate industrial unit, inasmuch as, it has been established by assessee that it has been set-up by investment of fresh funds; employment of separate labour force; manufacturing of different products; earning separate profits attributable to its activity, and is distinct and separate from old unit. fact that business of new unit comprises of products, which may be understood in same line of activity, would not defeat fact that new unit has its own installed plant and machinery, factory building, etc. In fact, Amritsar Bench of Tribunal in case of FIL Industries Ltd. (supra) has specifically noted that there was no requirement for obtaining separate Government registration for each unit for claiming deduction u/s. 80IB of Act. Hon'ble Madras High Court in case of CIT vs. Premier Cotton Mills Ltd.,240 ITR 434(Mad) has laid down that even single legal entity may own and operate more than one industrial undertaking and fact of common ownership would not render undertaking, which is otherwise capable of being separately viewed, into common undertaking. In our view, fact that new undertaking so established by way of expansion is located adjacent to existing undertaking would not render new undertaking ineligible for claim of deduction u/s. 80 IA/80IB of Act. Therefore, having regard to factual matrix, which clearly establishes that Daman Unit-2 was separate unit having its own plant and machinery, manufacturing of products, independent funds, and separate labour force, it cannot be considered as mere part of Daman Unit-1 so as to defeat its claim of deduction u/s. 80IA/80IB of Act. Thus, on this aspect also assessee succeeds. 14. In result, for assessment year 1999-2000 appeal of assessee is allowed to above extent. 15. It was common ground between parties that so far as issues in assessment year 2000-01 and 2001-02 are concerned, they are pari- materia to those considered by us in appeal of assessee for assessment year 1999-2000 and thus our decision in appeal of assessee for assessment year 1999-2000 shall apply mutatis mutandis in other two appeals also. 16. Resultantly, captioned appeals of assessee are allowed to above extent. 15 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 8. It is clear from above order of Tribunal that quantum addition / disallowance so made by Revenue authorities in Assessment Year 1999-2000 to 2001-2002 have been deleted by Tribunal. Facts and circumstances during Assessment Year 2002 -2003 to 2005-2006 are pari-materia, respectfully following order of Tribunal in assessee s own case on exactly similar facts, we set aside order of lower authorities and allow assessee s claim for deduction under Section 80IA/80IB for Assessment Year 2002-2003 to 2005-2006. Since, addition itself has been deleted in Assessment Year 1999-2000 to 2004-2005, penalty orders so passed by AO has no legs to stand. In result, we direct AO to delete penalty in all years under consideration. 11. In result, all appeals of assessee are allowed. Order pronounced in open court on this 19/10/2016. Sd/- Sd/- (SANDEEP GOSAIN) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 19/10/2016 Karuna, Sr. PS Copy of Order forwarded to : 1. Appellant 2. Respondent. 3. CIT(A), Mumbai. 4. CIT 16 ITA No. 1387-1390/2009 & 3285 -3290/2011 Medley Pharmaceuticals Pvt.Ltd., 5 DR, ITAT, Mumbai 6. Guard file. //True Copy// / BY ORDER, (Asstt. Registrar) ITAT, Mumbai Medley Pharmaceuticals Ltd. v. DCIT, CC-44, Mumbai