TaxTMI 
TaxTMI 
2010 (12) TMI 724
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.... one firm by another firm despite the fact that as 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 ....
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.... assessment year under reference was served on the assessee 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 w....
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....er of the same Ward, i.e., Ward 6(1) Shri Sunil Kumar appeared, 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. Therefor....
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....he learned Commissioner of Income-tax (Appeals)". Thereafter the Assessing 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....
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.... discussed by the learned Commissioner of Income-tax (Appeals) at pages 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 e....
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....resaid export oriented undertaking unit of M/s. Anjali Exports with effect from April 1, 2006 by the above memorandum 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 ....
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.... Malviya Industrial Area, Jaipur as required by the aforesaid circular, therefore, it is not entitled to claim the deduction 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 d....
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....n in the case of Tech Books Electronics Services P. Ltd. [2006] 100 ITD 125 (Delhi), copy of the Income-tax Appellate Tribunal, 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 a....
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.... change of implementing agency of the export oriented undertaking from the name of M/s. Anjali Exports to M/s. Veto Electropowers (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 fir....
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....relation to assessment were filed from time to time. The books of account and other records as required by the Assessing Officer were also produced 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....
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....ports. It was an agreement of assignment of business made for just confirmation of earlier memorandum of understanding. 15.9 M/s. Anjali Exports was an eligible unit for 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:- ....
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.... to the assessees other than Indian company such as firm, foreign company, etc. 16.12 After introduction of section 10B(7A) it is clear that deduction is allowable after change of ownership, acquisition 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 assess....
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....iant organisation will exist in a sector and business activities will be guided by the maxim of 'survival of the fittest'. 19. In the case of Textile Machinery Corporation Ltd. v. CIT [1977] 107 ITR 195 hon'ble apex court has dealt 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 p....
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....ee. So far as the requirements as stipulated in the provisions of section 10B are met and complied with by the undertaking, change in the ownership of an undertaking will have no effect on the eligibility of the undertaking to claim deduction under section 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 form....
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....made application on March 21, 2007 (copies enclosed) and hence there is nothing lacking as alleged. The appellant has fully and truly complied with requisite formalities. The relevant portion of foreign trade policy is reproduced for perusal. 6.34 (6) 'Authorise 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 cas....
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.... and liabilities of firm became the property of the company and all the partners of the firm became shareholders of the company. The capital of the partnership firm became the paid-up capital of the company. In view of the undisputed facts, it is clear that on conversion from firm of company. There was 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 o....
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....s to be seen and not the continuity of the same ownership of the undertaking. Thus, there is a difference between the ownership of the undertaking and the business activity of the undertaking and if the latter remains unaffected or unchanged by subsequent change in the ownership then it cannot be said that 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 b....
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....efit of section 10A is available to an industrial undertaking which has begun or begins to manufacture or produce articles or things during the previous year relevant to the assessment year 1994-95 or any subsequent assessment year in any Electronic Hardware Technology Park or Software Technology Park as the case may 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 operat....
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....he exemption for the assessment year 1999-2000. Hence, the assessee was entitled to exemption under section 10A though the STPI letter was issued on April 15, 1999. 29. The next allegation of the learned Assessing Officer is that books of account of M/s. Anjali Exports, has not been separately maintained. This is 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 ....
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....sions of sub-section (9) of section 10A and sub-section (9) of section 10B, the deductions under sections 10A and 10B are not allowed to the assessee where the ownership or the beneficial interest in the undertaking is transferred by any means. However, this condition is not applicable where as a result of the reorganisation of the business; 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 amalg....
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....section was amended from time to time and was replaced by the present section by the Finance Act, 1999 with effect from April 1, 2000. The Central Board of Direct Taxes has issued a Circular No. F-15/5/63 (IT-AI), dated December 13, 1963 clarifying that the benefit of deduction under section 80J/84 (where the wording is the same as in section 10B) is attached 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 ....
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....beral interpretation and where two views are possible then the view favouring the assessee is to be taken. When the Legislature brings in the statute an incentive provision for the encouragement or advancement of a specific purpose, activity or objective, then such provision has to be liberally interpreted so as to advance the purpose behind it. In this context, one may rely 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....
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....of the case and arguments taken by Sh. Shah quite carefully. The basic facts of the case regarding reconstitution of the firm, introduction of the new partners, retirement of the partner, change of name of the firm as M/s. Veto Electropowers (formally known as M/s. V. K. Exports), acquisition of undertaking, namely, M/s. Anjali Exports and 100 per cent. export oriented undertaking unit with effect from April 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 pe....
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....s is a case of the appellant-firm for the accounting year up to March 19, 2007 because, thereafter, it has converted into a P. Ltd. Co. With this factual discussion supported with documentary evidence it is clear that the appellant-firm had acquired all the assets and liabilities for the 100 per cent. export oriented undertaking of M/s. Anjali Exports situated at F-6. Malviya Industrial Area, Jaipur and this 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 namel....
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....with Ministry of Commerce and Industry, Excise and Customs authorities, etc. continued to remain in same manner in new name namely M/s. Veto Electropowers. This is a clear case of acquisition of an entity of 100 per cent. export oriented undertaking unit by the another 100 per cent. export oriented undertaking unit through slump sale. It shall not be out of place to analyse that the reorganisation of M/s. 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....
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....der should be paid immediately along with interest under section 220(2) of the Act otherwise a coercive measure will be taken against him. Copy of this notice is placed in the compilation at page 216. Thereafter the assessee filed letter in the office of the Assessing Officer that the appeal of the assessee has already been fixed for hearing on February 8, 2010. Therefore, the recovery proceedings should be kept 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, 2....
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....nal should decide the appeal of either party on the merits instead of remanding the matter back. As stated above, there is evidence on record that the Assessing Officer was informed about the pre-ponment of the date of hearing, therefore, it cannot be said that no opportunity was given to the Assessing Officer by the learned Commissioner of Income-tax (Appeals). The Department could not controvert the fact that the 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 prope....
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....d that matter should go back to the file of the learned Commissioner of Income-tax (Appeals). It is not understandable that why they want to go before the learned Commissioner of Income-tax (Appeals). It was stated by the Bench during the course of hearing that there is a material, i.e., in the shape of the order of the learned Commissioner of Income-tax (Appeals) and the Department could easily controvert the finding of the learned 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 ....
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....7 pages written submission. In first 2 pages the Assessing Officer has stated that the matter should be sent back to the file of the learned Commissioner of Income-tax (Appeals). From pages 3 to 7 the argument on the merits have been advanced by the Assessing Officer by which it is submitted that apart from reiterating many observations and findings contained in the assessment order which primarily included conditions of section 10B(2) having 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 statut....
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....rts have been taken over retrospectively by M/s. Veto Electropower P. Ltd. successor company of the assessee-firm which has been incorporated on March 20, 2007 through an agreement of assignment of business dated March 24, 2007 entered into with M/s. Anjali Exports through its partner Shri Babu Lal Gurnard. It is submitted that both the submissions mentioned above are contradictory to each other and, therefore, there is no question of allowing 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 ....
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.... in the case of M/s. Anjali Exports which is placed on record and found that the Assessing Officer concerned has allowed deduction under section 10B in the case of M/s. Anjali Exports, for the assessment year 2007-08 there is no return of income filed by M/s. Anjali Exports as the same has been taken over by the assessee-firm with effect from April 1, 2006. The contention in this respect, therefore, does not hold good. Accordingly, we hold that there 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. Anja....
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....ore, in our considered view the learned Commissioner of Income-tax (Appeals) has rightly held that the assessee is eligible for deduction under section 10B on the profits of both the concerns, i.e., of the assessee and M/s. Anjali Exports. The other objection of the Assessing Officer is that an agreement of assignment of business was also entered by M/s. Anjali Exports and M/s. Veto Electropower P. Ltd., therefore, there was a contradiction in memorandum 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....
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....s only on technical issues that two memorandum of understandings are entered into, that the business of a concern was taken over with retrospective effect. The hon'ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471, while disposing of the appeal though on account of condonation of delay in filing appeal have held (headnote):- "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." Therefore, in view of the decision of the hon'ble apex court, technicality should not come into substantial justice of the assessee which otherwise is eligible for deduction under section 10B. In view of these facts and circumstances and in view of detailed reasons given by the learned Commissioner of Income-tax (Appeals), we confirm the order of the learned Commissioner of Income-tax (Appeals) on the merits also. For the sake of clarification, we have gone through each and every document in which the attention of the Benc....