TaxTMI 
TaxTMI 
2010 (12) TMI 724
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....per the provisions of section 10B deduction is allowable only in the case of merger of company with another company. (iii) Whether, on the facts and in the circumstances of the case and in law the Commissioner of Income-tax (Appeals) was justified in deciding the case without giving proper opportunity to the Assessing Officer to appear by passing the order on February 4, 2010 before the due date of hearing, i.e., February 8, 2010." The learned Commissioner of Income-tax-Departmental representative requested the Bench to take ground No. 3 first. It was stated that the case of the assessee was fixed for hearing on February 8, 2010. However, the learned Commissioner of Income-tax (Appeals) has decided the appeal of the assessee on February 4, 2010 without affording opportunity of being heard to the Assessing Officer. The relevant provisions of law were also explained before the Tribunal that as per the provisions, it is mandatory on the part of the learned Commissioner of Income-tax (Appeals) to afford opportunity to the Assessing Officer before deciding any appeal of the assessee. Therefore, it was submitted that the matter should be sent back to the file of the learn....
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....ee on December 31, 2009 and demand fall due after 30 days. Copy of this letter is placed in the paper book at page 219. It was further submitted that the Assessing Officer told learned counsel for the assessee who filed this letter, that the Department will take coercive measure if the demand is not paid in response to notice dated January 29, 2010. In these circumstances, it was submitted that the assessee requested the learned Commissioner of Income-tax (Appeals) for advancement of hearing of the appeal from February 8, 2010 to February 4, 2010. The learned Commissioner of Income-tax (Appeals) fairly agreed and he directed counsel for the assessee to inform the Assessing Officer and to give a copy of written submissions filed before him. Accordingly, as stated above, the Assessing Officer was informed along with the copy of written submissions filed before the learned Commissioner of Income-tax (Appeals). It was further submitted that the Assessing Officer based at Jaipur itself even has not bothered to request the learned Commissioner of Income-tax (Appeals) to give a date if he wants to file any reply in response to the written submissions filed on behalf of the assessee. There....
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.... as the regular Commissioner of Income-tax-Departmental representative Smt. Irina Garg was on leave. The learned Commissioner of Income-tax-Departmental representative stressed upon the Bench that the legal issue raised through ground No. 3 should be decided first as as per the mandatory provisions of law, the matter should be sent back to the file of the learned Commissioner of Income-tax (Appeals) to decide the issue afresh after affording opportunity of being heard to the Assessing Officer. Various discrepancies noted by the Assessing Officer in his order, were also explained by the learned Commissioner of Income-tax-Departmental representative Shri Rajeev Sahai. It was pointed out by the Bench that on last hearing the argument have already been made in respect to legal issue raised through ground No. 3 and thereafter it was thought proper to give opportunity to the Assessing Officer to file his written submissions. Therefore, it is not correct to say on this date that the legal issue should only be decided. It was also pointed out that the Tribunal is supposed to dispose of all the grounds raised before it. Therefore, it is incumbent upon the Tribunal to dispose of all the grou....
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....sessing Officer explained various discrepancies noted by him in his order and attention of the Bench was drawn on various defective certificates filed by the assessee before him as well as before the learned Commissioner of Income-tax (Appeals). It was submitted that firstly it is stated that M/s. Anjali Exports was purchased on slump sale basis by the then M/s. Veto Electropowers by entering into a memorandum of understanding dated January 15, 2007 and thereafter by another assignment of agreement dated March 24, 2007 again M/s. Veto Electric Power P. Ltd. acquired M/s. Anjali Exports. Accordingly it was submitted that how there could be two memorandum of understanding for acquiring same firm, i.e., M/s. Anjali Exports. It was explained that M/s. Anjali Exports was purchased on slump sale basis by M/s. Veto Electropowers, thereafter M/s. Veto Electric Power P. Ltd. has entered into another agreement of assignment on March 24, 2007 with same firm M/s. Anjali Exports and acquired all the assets with effect from April 1, 2006. Therefore, the memorandum of understanding are sham in nature. It was further submitted that they have reconstructed the business and, therefore, as per the pr....
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.... 2 to 6 are as under:- "The only issue involved in the aforesaid grounds of appeal is that whether under the facts and circumstances of the case the Assessing Officer was justified in disallowing deduction claimed under section 10B of the Income-tax Act in respect of industrial undertaking acquired from Anjali Exports amounting to Rs. 8,25,38,959. On a perusal of assessment order it is noticed that the appellant-firm had filed the return of income for the present assessment year having previous year from April 1, 2006 to March 19, 2007. The appellant-firm was engaged like last year in manufacturing and export activity of PVC insulated armoured and unarmoured control purpose copper cables. The appellant-firm started business activity with effect from April 1, 2001. Thereafter, the firm has set up an 100 per cent. export oriented undertaking (EOU) at B-9, (B-1), Malviya Industrial Area, Jaipur, which commenced operation on October 18, 2001. Another location was added on September 5, 2005 at B-9A, Malviya Industrial Area, Jaipur which commenced operation on September 15, 2005. The appellant-firm claimed exemption/deduction under section 10B of the Income-tax Act in respect of ....
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.... of understanding on slump sale basis. Subsequently, on March 24, 2007 the appellant-firm converted into a private limited company in the name of "M/s. Veto Electropowers P. Ltd.". The said P. Ltd. has signed another memorandum of understanding with M/s. Anjali Exports. According to the Assessing Officer the books of account of M/s. Anjali Exports are not maintained separately and no separate audit of the accounts of M/s. Anjali Exports and M/s. Veto Electropowers was made. In this background during the course of assessment proceedings a show cause was issued explaining the claim made under section 10B and such show cause has been reproduced in the body of assessment order. Thereafter, the Assessing Officer has referred certain extracts from the memorandum of understanding of the appellant-firm with M/s. Anjali Exports on January 15, 2007. On the basis of the said memorandum of understanding the Assessing Officer has formed a prima facie opinion that a new concern has come into existence in place of M/s. Veto Electropowers and M/s. Anjali Exports. Thereafter, he had referred Schedule 16 of the audit report which was regarding acquiring the business of M/s. Anjali Exports. According....
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....duction under section 10B of Income-tax Act for the income of M/s. Anjali Exports. According to the Assessing Officer as per the provisions of section 10B(1) the deduction is allowable for 10 consecutive assessment years to the same assessee and, therefore, such deduction for the income of M/s. Anjali Exports is not allowable to the appellant-firm. Thereafter, the Assessing Officer has referred Circular No. 7 of 2003 ([2003] 263 ITR (St.) 62) on the issue of insertion of new sub-section (7A) to section 10B according to which the intention of statute is to allow merger or acquisition of only Indian company and no merger is allowable other than Indian company such as firm, foreign company, etc. Subsequently, the Assessing Officer has referred the speech to the Finance Bill, 2003 according to which no deduction shall be allowable where the ownership or the beneficial interest in the undertaking is transferred to any means in other than Indian company. Since, with effect from April 1, 2006 M/s. Anjali Exports has been merged with M/s. Veto Electropowers, therefore, the deduction of profit of M/s. Anjali Exports is not allowable in the case of the appellant-firm. These facts were furthe....
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....ribunal, Chennai Bench decision in the case of Kumaran Systems P. Ltd. v. Asst. CIT [2007] 14 SOT 1. Copy of the audited final accounts of M/s. Veto Electropowers (formerly V. K. Exports). Besides this Sh. Shah has made following further submissions:- "5. By a memorandum of understanding (MoU) executed on January 15, 2007 the above firm of M/s. Veto Electropowers acquired the export oriented undertaking from a partnership firm of M/s. Anjali Exports. This industrial undertaking was an 100 per cent. export oriented undertaking unit set up by M/s. Anjali Exports on January 2, 2002 at F-6, Malviya Nagar Industrial Area, Jaipur. This unit had commenced operation on July 18, 2004 and it manufacturing PVC/copper wires and cables which were exported out of India. M/s. Anjali Exports was claiming exemption/deduction in respect of the income of this unit under section 10B and this was being granted by its Assessing Officer. M/s. Veto Electropowers had acquired the above export oriented undertaking unit of M/s. Anjali Exports with effect from April 1, 2006 by the above memorandum of understanding. The above unit was acquired on slump sale basis. It may be noted that by the above acqu....
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....wers (now converted under Part IX of the Companies Act into Veto Electropowers (India) P. Ltd.). The company requested him to make necessary changes in importer-exporter code, RCMC and green card etc. On the basis of this request, the Development Commissioner has made the following endorsements on the certificate of importer-exporter code (IEC) number. 'Address of factory at Sr. No. 3 may be read as:- (1) B-9 (B-1) and B-9A, Malviya Industrial Area, Jaipur. (2) F-6, Malviya Industrial Area, Jaipur. (3) E-2, Malviya Industrial Area, Jaipur.' 'Name of the unit V. K. Exports to read as M/s. Veto Electropowers (India) P. Ltd.' Similar amendments were made in the RCMC and green card. This shows that the export oriented undertaking unit of M/s. Anjali Exports was recognised by the Government authorities as belonging to the above M/s. Veto Electropowers known as M/s. Veto Electropowers (India) P. Ltd. 8. During the accounting period April 1, 2006 to March 19, 2007 (assessment year 2007-08) the firm of M/s. Veto Electropowers (firm) have maintained separate books for its existing export oriented undertaking and for export oriented und....
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.... during the course of the hearings held on various dates. The books of account were also produced before the learned Assessing Officer on November 27, 2009. The appellant-firm is eligible for deduction under section 10B in respect of both the units and has also furnished, the copy of the letter of permission and green card as a proof of 100 per cent. export oriented undertaking vide submission dated October 5, 2009. The said permission also have necessary endorsements duly enshrined thereon. 13. The case was discussed and order under section 143(3) dated December 30, 2009 was served on December 31, 2009 assessing total income at Rs. 8,25,38,959 after disallowing the deduction under section 10B for the undertaking M/s. Anjali Exports acquired during the year by the appellant-firm. 14. Disallowance of deduction under section 10B for M/s. Anjali Exports. During the year under consideration, the appellant-firm purchased the undertaking on slump sale basis of one of its group concern M/s. Anjali Exports, which is also eligible for claiming deduction under section 10B for a valuable consideration with effect from April 1, 2006. 15. The appellant claimed as....
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.... deduction under section 10B and the same was registered with the Joint Development Commissioner, Noida, NEPZ. After acquisition by the appellant-firm, the undertaking was included in the certificate of the appellant-firm for importer exporter code (IEC) number issued by the Joint Development Commissioner, Noida, NEPZ. The acquisition was informed to the authority under paragraph 9-1 of Chapter of Exim Policy 2004-09 vide letter of the appellant-firm dated March 15, 2007 filed with them on the same date, since the amendment in the certificate was made on March 24, 2007 on the basis of our intimation vide our letter dated March 22, 2007 about the conversion of the appellant-firm into private limited company under Part IX of the Companies Act, 1956 on dated March 20, 2007, the certificate has been issued in the name of the corporatised entity directly due to the above conversion. 16. While rejecting the claim of the appellant, the learned Assessing Officer has assigned reasons as under:- 16.1 M/s. Veto Electropowers is formed after constitution of M/s. V. K. Exports on December 30, 2006. 16.2 The partners and name of the assessee-firm have changed during the r....
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....isition and merger only in case of an Indian company. Other than Indian company, in case of acquisition, merger, change of ownership no deduction under section 10B is allowable. From the above discussion, it is clear that the deduction under section 10B for profit of M/s. Anjali Exports is not allowable in case of M/s. Veto Electropowers for the year under consideration. 17. The appellant submits that the allegations of the learned Assessing Officer are against the facts on record. 17.1 No new concern as alleged, has come into existence. The acquisition of M/s. Anjali Exports has not given birth to a new concern. Both M/s. Veto Electropowers and M/s. Anjali Exports were in existence which is proved by the following facts:- (a) PAN (AACFV8795P) of prior and post acquisition existing firm, i.e., M/s. Veto Electropowers is same and the return for the assessment year 2007-08 has been filed by the same firm which has been filing the return since the assessment year 2002-03. (b) All other registration of M/s. Veto Electropowers such as IEC No., Registration with Ministry of Commerce and Industry, Excise and Customs authorities, etc., continued to remain in....
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.... with 'reconstruction' and has observed as under:- 'An undertaking is formed out of the existing business if the physical identity with the old unit is preserved. This has not happened here in the case of the two undertakings which are separate and distinct. If any undertaking is not formed by reconstruction of the old business that undertaking will not be denied the benefit of section 15C simply because it goes to expand the general business of the assessee in some directions. As in the instant case, once the new industrial undertakings are separate and independent production units in the sense that commodities produced and the result achieved are commercially tangible products and the undertakings can be carried on separately without complete absorption and losing their identity in the old business, they are not to be treated as being formed by reconstruction of the old business.' The two undertakings of the assessee were physically separate units for all purposes and no reconstruction/setting up of plant and machinery have been taken place in physical terms also. Both the units of M/s. Veto Electropowers have separate identities and continued to use the same plan....
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....n 10B. Your honour will appreciate that even the learned Assessing Officer on page 5 of the assessment order has agreed that the exemption under section 10B is for undertaking and not for the assessee. 23. Section 10B(2) of the Income-tax Act, 1961, provides as under:- This section applies to any undertaking, which fulfils the following conditions, namely,- (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence:- Provided that this condition shall not apply in respect of any undertaking, which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is referred to in section 33B. In the circumstances and within the period specified in that section; (iii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Therefore, from the language of section it is clear that the assessee concern does not come in clutches of the above section as there is no reconstruction or splitting u....
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....ise change in the name of company or implementing agency and change from a company to another'. 6.34 (10) 'Permit merger of two or more units into one unit provided units fall within jurisdiction of same DC/Designated Officer subject to conditions that activities are covered under the provision of board banding'. 63.37.1 'Existing DTA units, may also apply for conversion into an export oriented undertaking/EHTP/STP/BTP unit, but no concession in duties and taxes would be available under scheme for plant, machinery and equipment already installed. On conversion, they would get income-tax concessions but limited to period of 10 years from the original commencement of manufacture or that prescribed under section 10 of the Income-tax Act whichever is earlier. For this purpose, DTA unit may apply to DC/Designated Officer concerned in the same manner as applicable to new units. In case, there is an outstanding export commitment under EPCG Scheme/Advance Authorisation Scheme, it will follow the procedure laid down in Appendix 14-1-0 of HBP vl'. 6.37.2 'Existing EHTP/STP/BTP units may also apply to conversion/merger to export oriented undertaking unit and vice versa....
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.... merely a change in the ownership of undertaking. There was no change in the business of the undertaking which was already in existence. Neither the business activity was rearranged of reorganised nor the same was reconstructed. The business activity carried out by the firm remained the same without any alteration or change. After incorporation the company continued to carry out the same business, i.e., software export. In fact on conversion even in the ownership there was little change because even the firm was formed by the shareholders of the American company and in the company incorporated on conversion the same partners became the shareholders and subsequently all the shares were sold to the American company, which was exercising full control earlier also. However, we are not concerned with the change in the ownership. Rather we are to enquire as to whether there was any change or reconstitution of the building of the undertaking. On close scrutiny and analysis of the terminology adopted in clause (ii) of sub-section (2) of section 10B, it becomes clear that the word 'splitting-up' and the word 'reconstruction', are attached to business 'already in existence'. Hence, these wor....
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....at the business of the undertaking has been reconstructed. Finally the hon'ble Members have observed that undertaking acquired by the assessee-company remained the same and the observation of the Assessing Officer that undertaking acquired by the company is nothing but reconstruction of business already in existence cannot be accepted. In the abovesaid judgment, in the case of CIT v. Texspin Engineering and Manufacturing Works [2003] 263 ITR 345 has also been considered by the Bombay High Court. In this case it has been held that when a firm is treated as a company, all the property of the firm vest in the limited company, but debt vesting is not consequent or incidental to a transfer. It has been followed by the Jodhpur Bench in case of Chetak Enterprises P. Ltd. v. Asst. CIT [2005] 281 ITR (AT) 162 ; 95 ITD 1. In this case also it has been held that it cannot be said that export oriented undertaking owned by the assessee-company is formed as a result of reconstruction of export oriented undertaking owned by the firm. 27. The same analogy has been adopted by the hon'ble Supreme Court in the case of Textile Machinery Corporation Ltd. [1977] 107 ITR 195 as su....
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....be. The conditions laid down in clauses (ii) and (iii) of section 10A are to be fulfilled. The industrial undertaking is required to be approved by Electronic Hardware Technology Park or Software Technology Park and required to produce certificate from the auditor in the prescribed Form No. 56F with Annexure 'A' as per rule 16D of the Income-tax Rules, 1962. The main reason for which the exemption was denied by the lower authorities was that the assessee was not approved by the STPI for the assessment year under consideration and it was approved only on February 15, 1999, which fell under the assessment year 2000-01. The assessee was not a new unit and it was carrying on the business which was entitled to deduction under section 10A vide STPI recognition dated October 6, 1998, was in the name of the firm which was converted into a private limited company, due to operation of law as per Part IX of the Companies Act, 1956 and all the properties and liabilities of the firm were vested with the limited company. There was a mere change of name and the composition in the ownership of the undertaking and business of the undertaking had not changed as the same partners had become directors....
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....s also not correct on record. I may invite your attention to copy of audited balance-sheet dated January 7, 2007 where the balance-sheets of M/s. Anjali Exports and M/s. Veto electropowers have been separately compiled along with the balance-sheet of both the concerns. I really fail to understand as how the learned Income-tax Officer could make such a wrong statement copy of audited balance-sheet, profit and loss account, along with annexures thereto were enclosed. Copy of the relevant pages are enclosed. 30. (a) The next issue raised by the learned Income-tax Officer is relating to the provision of section 10B(7A) and according to the learned Income-tax Officer, the said provision deals with merger of the assessee companies only debars claim of the assessee under section 10B, this view is not correct, it is a special provision for companies but does not debar the assessees other than companies. (b) The learned Income-tax Officer has not looked into the provisions of sub-section (9) and sub-section (9A) of section 10B which were omitted with effect from April 1, 2004 by the Finance Act, 2003, the relevant provisions are reproduced below:- (9) 'Where during a....
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.... a firm or sole proprietary concern is succeeded by a company, due to the provisions of sub-section (9A) of section 10A and sub-section (9A) of section 10B. The Explanation 1 below sub-section (9A) allows the continuance of the benefit where as a result of change in ownership, the resultant entity is a public limited company or is a venture capital company. With the view to give boost to the export-led growth, it is necessary to eliminate the hurdles in the mergers and acquisitions (M and A) and other modes of business restructuring. It is accordingly, proposed to insert a new sub-section (7A) in section 10A and sub-section (7A) in section 10B, to provide that where an undertaking of an Indian company is transferred to another company under a scheme of amalgamation or demerger, the deduction shall be allowable in the hands of the amalgamated or the resulting company. However, no deduction shall be admissible under these sections to the amalgamating company or the demerged company for the previous year in which amalgamation or demerger takes place. As a consequence, sub-section (9), (9A) and the Explanation thereafter in sections 10A and 10B, become redundant and are propose....
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.... to the undertaking and so the transferee of the undertaking can claim the benefit under the said section. The relevant part of the said circular reads as under:- 'The Board agree that benefit of section 84 attaches to the undertaking and not to the owner thereof. The successor will be entitled to the benefit for the unexpired period for five years provided the undertaking is taken over as a running concern.' 'The principle is followed in various cases while deciding the issue relating to deduction under sections 80HH, 80-I, 80-IA, 80-B, etc. (Reference is invited to decisions in CIT v. P. K. Engg. and Forging P. Ltd. [1996] 87 Taxman 101 (Cal) and A. G. S. Tiber and Chemicals Industries P. Ltd. v. CIT [1988] 233 ITR 207 (Mad)).' In the case of ITO v. Hindustan Petroleum Corporation Ltd. [1986] 25 TTJ (Bom) 28, ITO v. SLM Maneklal Industries Ltd. [1986] 17 ITD 515 (Ahd) and Shah Granites P. Ltd. v. ITO [1987] 28 TTJ (Bom) 83 it has been held that the benefit is attached to the undertaking and not its owner and deduction is available to the successor. In the case of Asst. CIT v. IIS Infotech Ltd. [2004] 82 TTJ (Delhi) 174 also it has been held that a 100 per ....
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....ly on the following judgments:- Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 188 (SC) This judgment related to section 15C of the old Act (section 80J of the new Act). The relevant part of the judgment may be summarised as follows (headnote):- 'A provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objective of the provision and not frustrate it.' As per CIT v. Gujarat Aluminium Extrusions P. Ltd. [2003] 263 ITR 453 (Guj), it is a settled legal position that the provision for exemption or relief should be construed liberally and in favour of the assessee. As already pointed out, section 10A is an exemption provision and, therefore, the same is required to be construed liberally and in favour of the assessee. Even if there is an ambiguity, a view favourable to the assessee must be accepted. If there is any ambiguity regarding the interpretation of the statute, a view favourable to the assessee must be accepted. Reliance for this....
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....il 1, 2006 by the memorandum of understanding dated January 15, 2007 and conversion of M/s. Veto Electropowers into a P. Ltd. Co. with effect from March 20, 2007 as M/s. Veto Electropowers (India) P. Ltd. are already reproduced in the earlier part of this appellant's order and, therefore, it is not considered necessary to reproduce them again. On factual appreciation of development of the events it is undisputedly clear that M/s. V. K. Exports after reconstitution of the firm had changed its name to Veto Electropowers with effect from December 6, 2006 and, thereafter, by a memorandum of understanding dated January 15, 2007 M/s. Veto Electro-powers acquired the export oriented undertaking from a partnership firm, namely, M/s. Anjali Exports. Such industrial undertaking was a 100 per cent. export oriented undertaking unit set up by M/s. Anjali Exports on January 2, 2002 at F-6, Malviya Industrial Area, Jaipur which has commenced manufacturing operation on July 18, 2004 which was claiming exemption/deduction in respect of the income of the said unit under section 10B of Income-tax Act which was also granted by the Assessing Officer of M/s. Anjali Exports. I have also gone through the ....
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....is fact is evidenced by the endorsement made by the Joint Development Commissioner, Noida, Special Economic Zone to the original certificate issued to M/s. V. K. Exports whose name has been changed as M/s. Veto Electropowers which is the case of the present appellant-firm. It is clear that this not a case of new concern coming into existence but the manufacturing and export activity being running 100 per cent. export oriented undertaking by M/s. V. K. Exports and M/s. Anjali Exports was continuing as such. Further, from the perusal of a copy of the profit and loss account and the balance-sheet of M/s. Veto Electropowers (formally V. K. Exports) as on March 19, 2007 and for the period from January 1, 2006 to March 19, 2007 it is clear that separate figures of various accounts namely income and expenditure for Anjali Exports and Veto Electropowers were given along with consolidated figure of the audited accounts and, therefore, the Assessing Officer is factually incorrect in his finding that there were no separate books of account and separate audit of M/s. Anjali Exports and M/s. Veto Electropowers. In fact, with such separate audited figures only the Assessing Officer could come to....
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....Veto Electropowers and M/s. Anjali Exports is complete tax neutral exercise not aimed to gain any undue tax advantage. As per the provisions of section 10B(1) the deduction in respect of an undertaking and it is not to the assessee and, therefore, deduction under section 10B is qua undertaking and qua assessee and, therefore, the change in the ownership of an undertaking will have no effect on the eligibility of the undertaking to claim deduction under section 10B of Income-tax Act. As per paragraph 6.34(6) of the foreign trade policy the name can be changed and the two firms can also be merged as per provisions of paragraph 6.34(10) of the said policy. Further, the observation of the Assessing Officer regarding the provisions of section 10B(7A) for denying the deduction/exemption on the ground that as per this provision the benefit is available to only Indian companies and not to other entity is far from correct. The said sub-section only prohibits the companies other than Indian companies but the Assessing Officer has conveniently ignored the provisions of sub-sections (9) and (9A) of section 10B which were omitted with effect from April 1, 2004 by the Finance Act, 2003, and with....
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.... in abeyance till the disposal of the appeal. However, as stated by the learned authorised representative that the Assessing Officer has not acceded the request of the assessee and he was going to take coercive measure against the assessee. In these circumstances the assessee filed letter dated February 3, 2010 before the learned Commissioner of Income-tax (Appeals) for preponing the hearing of the appeal from February 8, 2010 to February 3, 2010 or February 4, 2010. Accordingly, the learned Commissioner of Income-tax (Appeals) after accepting the request of the assessee preponed the date of hearing from February 8, 2010 to February 4, 2010 and the assessee informed the Assessing Officer that the appeal of the assessee has been preponed from February 8, 2010 to February 4, 2010. Copy of the written submissions filed before the learned Commissioner of Income-tax (Appeals) were also enclosed along with the letter filed before the Assessing Officer. From these facts it is established that the assessee has informed the Assessing Officer that date of hearing of appeal before the learned Commissioner of Income-tax (Appeals) has been preponed from February 8, 2010 to February 4, 2010. If ....
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....information given to the Assessing Officer vide letter dated February 3, 2010 in regard to preponment of the appeal was not filed on behalf of the assessee in the office of ITO, Ward 6(1), Jaipur. Learned counsel for the assessee has relied upon, in support of his contention that matter should not be restored to the file of the learned Commissioner of Income-tax (Appeals) on various case law. The first decision relied upon by the assessee is in the case of Raja Vikramaditya Singh (Decd.) v. CIT [1988] 169 ITR 55, the hon'ble Indore Bench of the Madhya Pradesh High Court has held (headnote) "that the power of the Appellate Tribunal to remand a matter in an appropriate case to investigate fresh facts cannot be disputed, but that power must be exercised with proper discretion and it should not be exercised if all the basic facts required for disposal of the matter are already on record. It would not be a sound exercise of discretion by an appellate authority to remit a case to the subordinate authority for writing such order as would, in the opinion of the appellate authority be a proper and better order." The second case law on which reliance has been placed is in the....
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....ned Commissioner of Income-tax (Appeals), and if they have some other material which has not taken into consideration at the time of completing the assessment also can be relied upon here before the Tribunal now. For this reason only the opportunity was given to the Department to call for the concerned Assessing Officer with his record for making his submission or placing some other material if he wants. No useful purpose will be served if the matter is restored to the file of the learned Commissioner of Income-tax (Appeals) as the learned Commissioner of Income-tax (Appeals) has given a detailed reasoning. In this respect we further find support from the order of the hon'ble apex court in case of Suresh Chand AIR 1988 SC 247 (sic) wherein it was observed that "in case where it is found that no useful purpose will be served by a remand and the issue can be decided on admitted facts, empty formality must be eschewed to advance the cause of justice." Even and otherwise, the Department is free to advance their argument on the merits and to controvert the detailed reasoning given by the learned Commissioner of Income-tax (Appeals). The Department has called upon....
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....not been fulfilled as it being a case of reconstruction as an entirely new undertaking has emerged as a result of purchase of M/s. Anjali Exports by the assessee, and (2) in addition to that even under the provisions of sub-section (7A), deduction under section 10B of the Act in case of succession of an industrial undertaking is allowable only in the case of a transfer of the undertaking of an Indian company in the scheme of amalgamation of demerger, and (3) in the instant case none of the conditions have been met as the assessee neither is a company nor there being any amalgamation or demerger of a company, and (4) all other cases of succession having been made ineligible by implication as having not been specifically prescribed in the statute, and (5) the said transaction gets strengthened by the simultaneous omitting of the provisions of sub-section (9A) of the Act, thus there being no occasion for allowing claim of deduction under section 10B of the Act to the assessee in respect of income of M/s. Anjali Exports and also the other finding in the assessment order. Thereafter the Assessing Officer has mentioned that besides these objections raised in the assessment order, other s....
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.... deduction to the assessee and if deduction can be allowed that can be allowed in case of the successor company M/s. Veto Electropower P. Ltd. It is further submitted that the copies of the income-tax return of M/s. Anjali Exports for the assessment years 2006-07 and 2007-08 along with copy of the Income-tax return of M/s. Veto Electropower P. Ltd. for the assessment year 2007-08 should be called and should be examined. We have gone through the above submissions and found that most of the objections raised by the Assessing Officer in his assessment order have already been taken into consideration by the learned Commissioner of Income-tax (Appeals) while disposing of the appeal of the assessee. The further submissions advanced by the Assessing Officer, we find that they do not have much substance. The first objection raised by the Assessing Officer is that the sale proceeds were not received by the assessee as they were received by M/s. Anjali Exports, in this regard we would like to mention that by a memorandum of understanding dated January 15, 2007 the business of M/s. Anjali Exports have been taken over retrospectively with effect from April 1, 2006. Whatever the sales m....
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....e was no question of claiming deduction by the company who is a successor of the assessee-firm. The assessee-firm has filed its return of income from April 1, 2006 to March 19, 2007 the period for which it was existed. The assessee-firm has filed the return taking into consideration the income of M/s. Anjali Exports and of itself. We further find that on one hand the Assessing Officer has stated that this is a reconstruction of business and on the other hand, the Assessing Officer himself has allowed the deduction under section 10B on the profits earned by the assessee. It means to this extent he has not treated the reconstruction of the business. The Assessing Officer has not allowed deduction on the profit earned by M/s. Anjali Exports. In the course of hearing of the appeal, the Assessing Officer has also submitted that deduction can be allowed in the hands of M/s. Anjali Exports. Whether it is claimed in the hands of M/s. Anjali Exports or in the hands of the assessee or in the hands of the successor company, there is no dispute in allowability of deduction. All the conditions are satisfied for claiming deduction under section 10B at the end of the assessee as well as a....
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....orandum of understanding entered into by the assessee and the successor company. This is a technical objection of the Assessing Officer. There will be no impact on the Revenue either M/s. Anjali Exports is taken over by the assessee-firm or by its successor company. The successor company is not a new entity as the same was converted from partnership firm to private limited company. All its partners were taken as director or shareholder of the successor company. Up to March 19, 2007 there were two firms in existence. M/s. Anjali Exports were taken over by the assessee-firm and, therefore, the profits of M/s. Anjali Exports have been shown in the hands of the assessee-firm. From March 20, 2007 the assessee-firm has converted into a private limited company and from that date the successor company is doing the business in the name of private limited company. In the name of private limited company again there is no dispute in respect to allowability of deduction under section 10B. Only condition is that section 10B deduction is allowable for 10 years. It is not a case that the private limited company will take deduction for another 10 years. For the years the firm M/s. Veto Electropower....