S. 80-I: Despite “Dependence” on Old Unit, Unit Can Be “New Industrial Undertaking”

Gujarat Alkalies & Chemicals Ltd vs. CIT (Gujarat High Court)

The assessee had a plant to produce caustic soda. It increased capacity from 37425 MT to 70425 MT by installing “12 new cells” and incurred expenditure of Rs.7.5 crore towards new machinery and plant added to the existing plant. The assessee claimed that a “new industrial undertaking” had come into being which was eligible for relief u/s 80-I. The AO, CIT (A) & Tribunal disallowed the claim on the ground that it was a case of substantial expansion and not a “new industrial undertaking” on the ground that though new plant and machinery by investing substantial funds had been installed, the undertaking was not an “integral unit by itself” but was dependent on the old undertaking for its functioning. On appeal by the assessee to the High Court, HELD reversing the lower authorities: