P.K. Bansal, Accountant Member. - These appeals filed by the assessee against the orders of CIT(A) since have the common issues, therefore, they are being disposed of by this common order for the sake of convenience.

In ITA No. 447/Agra/2006, the assessee has raised following effective grounds :

"1.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the disallowance of the deduction claimed by the appellant under section 80-IA/80-IB and restricting the claim of Rs. 44,54,807 to Rs. 27,73,066.

2.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the disallowance of Rs. 1,32,913 out of mobile, telephone and car expenses.

3.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in making an addition of Rs. 1982 on account of closing balance of MODVAT."

4.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in charging interest under section 234B and 234C."

2. The effective grounds raised in ITA No. 698/Agra/2008 read as under :

"1.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of the ld. Assessing Officer in not allowing deduction under section 80-IB in full as claimed by the assessee and has further erred in restricting the claim under section 80-IB to Rs. 28,35,748 as against Rs. 45,88,825 as claimed by the assessee in the return of income.

2.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of the ld. Assessing Officer in making disallowance of Rs. 67,417 on account of vehicle expenses.

3.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of the ld. Assessing Officer in making disallowance of Rs. 1,32,389 on account of telephone expenses.

4.That in any case and in any view of the matter, action of ld. CIT(A) in not quashing the impugned order passed by ld. Assessing Officer being illegal, void ab initio, contrary to law and facts and against the principles of natural justice.

5.That having regard to the facts and circumstances of the case, ld. CIT(A) has erred in law and on facts in confirming the action of the ld. Assessing Officer in charging interest under section 234A, 234B, 234C and 234D."

ITA No. 447/Agra/2006

3. The brief facts pertaining to ground No. 1 are that the assessee-company is engaged in the business of manufacture and sale of taps and cocks. During the year under consideration, the assessee company took over the business of the two firms M/s. Aarkay Plumbing and Fixtures and M/s. Faucet Industries as mentioned by the Assessing Officer, but the assessee claimed to have purchased the plant and machinery and other assets of these two firms. The assessee company is claiming deduction under section 80-IA/80-IB for the last several years. This is the 7th year in which the deduction was claimed. The Assessing Officer was of the view that both the firms, the business of which was taken over by the assessee during the year, have exhausted their period of 10 years in which these firms have already claimed deduction under section 80-IA/80-IB of the Act. Therefore, he was of the view that the income earned from manufacturing and trading of these concerns is not eligible for deduction under section 80-IA/80-IB and accordingly gave opportunity to the assessee to explain why the deduction should not be disallowed in respect of the profit from M/s. Aarkay Plumbing and Fixtures and M/s. Faucet Industries. In reply thereto, the assessee submitted as under :

"At the very outset we will like to impress upon that the business of M/s. Faucet Industries and M/s. Aarkey Plumbing Fixture was amalgamated in the company M/s. Aqua Plumbing (P.) Ltd., just to occupy a dominating posi