TaxTMI 
TaxTMI 
2011 (3) TMI 1063
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....ng claiming the deduction remained the same. (b) The learned CIT(A) erred in ignoring the fact that the appellant is successor of the undertaking as confirmed by Development Commissioner VSEZ, Ministry of Commerce and Industry through transfer on lease basis, for claiming section 10B deduction. (c) The learned CIT(A) erred in law in not granting the tax holiday in the hands of the appellant though it was admitted by learned CIT(A) that the unit was transferred to the appellant. (d) The learned CIT(A) having come to a conclusion that the undertaking was transferred to the appellant is not justified in law in ignoring the board circular No. F. No. 15/5/63-IT(A-1) to grant tax holiday in the hands of the successor i.e., appellant company. (e) The learned CIT(A) ought to have appreciated the restructuring package approved by the lenders which resulted in transfer of undertaking on lease basis to the appellant company. 3. The learned CIT(A) ought to have allowed deduction under section 10B as claimed by the appellant 4. Any other ground that may be urged at the time of hearing with th....
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....the machinery or plant used in the business by the assessee. It is submitted that the assessee had taken the unit on licence only for operating and maintaining the unit with facilities of manufacturing. Therefore, it could not be said that the unit was formed by the transfer to a new business of machinery and plant previously used and it is only the same undertaking that continued manufacturing activity and there is no new unit. In this connection, the assessee invites the attention of the Bench to the provisions of clause (iii) of sub-section (2) of section 10B and the Explanation 2 of sub-section (2) of section 80-I of the Act which reads as under:-- "10B(2) This section applies to any undertaking which fulfils all the following conditions namely :-- (i) & (ii) ** ** ** (iii) It is not formed by the transfer to a new business of machinery or plant previously used for any purpose. Explanation-The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. 80(2) Explanation 2-....
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....ntitled to. It is contended that the learned CIT(A) ought to have appreciated the restructuring package approved by the lenders which resulted in transfer of the undertaking on a lease basis to the assessee. The learned counsel for the assessee invited our attention to the decision of Tribunal (paras 19 and 20 of the said order) in the case of ITO v. Techdrive India (P.) Ltd. [2008] 25 SOT 152, (Delhi), for the proposition that in order to claim deduction under section 10B of the Act, the assessee need not own any plant and machinery. It is further held that when the activity is not carried out in the undertaking of the assessee or where the assessee does not have its own plant and machinery in the absence of any provision in the section containing a positive requirement that the assessee shall own plant and machinery, the requirements of sub-section (2) are not applicable. It is submitted that the learned CIT(A) has observed in para 6.5 of his order that the decision given in Tech Drive India (P.) Ltd.'s case (supra) pertains to a case of manufacturing of computer software wherein human skill and expertise is required. What was held by the Tribunal was that the assessee need not o....
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....see company was incorporated and it also confirms the fact that the restrictive condition relating to 'formation' is not triggered on the instant case as there is no new undertaking that has come into existence and the word 'formed' is relevant only in the context when a new undertaking comes into existence. In support of this proposition, he relied on the decision of Apex Court in the case of Bajaj Tempo Ltd., v. CIT [1992] 196 ITR 188/62 Taxman 480. It is apparent from the fact that the same old undertaking continued without any change in its shape and capacities. It is submitted that the restrictive conditions of section 10B(2) in terms "split up and reconstruction" would apply only in a case where there exists one unit which is old and another unit which is new and in the same manner no new unit is formed by transfer of any old machinery and thereby the restrictive condition in section 10B(2)(ii) and (iii) have no application in the instant case. The intention of legislation is to deny benefit only to a new undertaking which is split up or re-constructed from an old undertaking. In the present case, there is neither split up nor reconstruction as the same old undertaking contin....
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.... Act for the unexpired period as a successor of the undertaking. The leanred counsel for the assessee filed also the paper book which contains copies of the letter issued by the Development Commissioner, VSEZ, copies of the Green card, etc., in support of his claims. 5. On the other hand, the learned departmental representative while relying on the orders of the authorities below submitted that since the EOU being operated by the assessee on transfer on lease basis was effectively formed by the transfer of the plant and machinery previously used by the SDAL and the Assessing Officer is right in denying the claim of the exemption under section 10B of the Act. 6. We have considered the submissions of the rival parties and perused the material available on record. We find from the order of the CIT(A) that, for the assessment year 2006-07, the assessee has made a meagre investment of Rs. 1,38,55,000 in machinery, whereas the same business was being carried out by M/s. Synergy Dooray Automatic Limited with the plant machinery value of Rs. 125.55 crores and therefore, it is clear that but for this premeditated arrangement, it would not have been possible for the assessee company to....
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....ttaches to the undertaking and not to the owner thereof and therefore, a successor to the business would be entitled to the benefits for the balance unexpired period. Hence, in order to get the benefit of section 10B of the Act, for the unexpired period, the assessee company must prove that it is a successor to the predecessor who was enjoying the benefit of section 10B of the Act. But, according to the facts of instant case, the assessee company is only a lessee, having a right to enjoy the plant and machinery. Owning the plant and machinery and taking plant and machinery on lease are two different things. Ownership is a bundle of rights. Lease-hold rights are a part of bundle of rights in the ownership. In the case before us, the assessee company is not a successor to the lessor. In order to decide the eligibility of the assessee company to claim under section 10B of the Act, it is required to be seen that whether the undertaking transferred to the assessee company, on lease basis, can be said to be a new undertaking. It is clear that, on reading of section 10B of the Act, the exemption is applicable only to an absolutely new undertaking started for the first time. Unless the ass....