The Tribunal allowed a Miscellaneous Application to address unadjudicated grounds regarding eligibility for tax deductions under Section 10AA based on machinery transfer percentages.

C. Soundarya, C.A ./थ(cid:30) की ओर से /Respondent by : Ms. R. Anitha, Addl. CIT सुनवाई की तारीख/Date of Hearing : 25.04.2025 घोषणा की तारीख /Date of Pronouncement : 11.06.2025 आदेश / O R D E R PER JAGADISH, A.M :

By way of this Miscellaneous Application (MA), the assessee seeks TO amend or recall the order passed by the Tribunal in IT(TP)A No.20/Chny/2021 dated 20.11.2024.

2. The Ld. Authorized Representative (A.R) of the assessee has objected to the findings recorded in para 11 in page 9 of Tribunal’s order as “….the Ld AR has not been able to substantiate the above claim by accounts either before the A.O or DRP or before us”. The para 11 is reproduced as under:

“11. The second unit LU2 had made application to set up new unit in Cheyyar SEZ to Development Commissioner MEPZ on 24^th May 2013 and commenced production from 2^nd April 2014. The AO has noted that as on 31.03.2014, the assessee company has purchased new machinery of Rs.11,99,23,856/ and transferred machinery of value Rs.3,40,34,392/ from the other unit and therefore the percentage of transferred machinery is 22.10%. As per explanation 2 to Section 80IA(3) read with explanation to section 80IA(4), only where machinery transferred to new business does not exceed the twenty per cent of the total value of machinery, it will be said to be not formed by the transfer to a new business of machinery or plant previously used for any purpose which is requirement as per Section 10AA (4)(iii) to be eligible to claim deduction under Section 10AA . In the case of assessee company the percentage of transferred machinery is more that 20%, hence Section 10AA (4)(iii) is clearly attracted. The Ld AR’s argument that production started in financial year 2014-15, therefore the percentage of transferred machinery as on 31.03.2015, which is 9.6% should be taken is not acceptable as assessee company has commenced production on 2^nd April 2014 and the unit was in ready condition as on 31.03.2014. The Ld AR’s argument that AO has not included the capital WIP in new purchase of machinery for LU2 while arriving the 22.10 % of transferred machinery and if WIP is included the percentage of transferred machinery would be 14.57% is rejected as, the Ld AR has not been able to substantiate the above claim by accounts either before the A.O or DRP or before us. We, therefore agree with the order of Ld. AO that the second unit (LU2) is formed by the transfer of machinery previously used and therefore not eligible to claim deduction under Section 10AA as new Unit. Accordingly, these grounds of appeals are dismissed.”

3. The Ld. AR has submitted that the capital work-in-progress, as reflected in the financial statements for the year ended 31^st March 2014, was duly presented as a handout before the Hon’ble Tribunal during the hearing. It was further submitted that the details of capital WIP capitalized on 01.04.2014 were provided to the AO in response to a show-cause notice and are enclosed on Page 157 of the Paper Book dated 13.04.2023. The Ld. AR contended that there is an error in the finding that the assessee failed to substantiate the claim regarding capital WIP. Therefore, it was requested that the AO be directed to consider the capital WIP as reflected in the financial statements for the purpose of computing the ratio of transferred machinery.

4. The Ld. AR further contended that the Hon’ble Tribunal has adjudicated only the issue of transfer of machinery while dismissing the relevant grounds. However, it did not adjudicate the separate statutory ground regarding the splitting up or reconstruction of the existing unit (LU1), which forme