TaxTMI 
TaxTMI 
2011 (9) TMI 1062
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....wing grounds. "2 That the ld. CIT has erred in invoking the jurisdiction u/s 263 with respect to Assessment order of Assessment Year 2005-06, as the assessment order of Assessment Year 2005-06 were neither erroneous nor prejudicial to the interest of the revenue and the said assessment orders were passed with the due application of mind by the then AO and it was further confirmed by the observation of ld. CIT(A) vide para No. 80 of his orders passed on identical issue wrt Assessment Year 2006- 07. Further only one view is possible on the eligibility deduction u/s 80IB & 80IC in case of conversion of partnership firm firm into a company as the dedc u/s 80IB & 80IC is to be allowed only to the "undertaking" and not to its "owner". Findings ....
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....o firms was taken over by the assessee company. There was a common Memorandum of Association. On incorporation, the two partners of the erstwhile partnership firms, Mr. Vivek Verma and Mr. Prateek Verma became the whole time directors of the company and were allotted equity shares in the company in the ratio of balance in their capital accounts. The partnership firm M/s Spray Engineering Devices was eligible for deduction u/s 80IC and C&C systems was eligible for deduction u/s 80IB. For Assessment Year 2005- 06, the assessee company M/s Spray Engineering Devices Limited claimed the deduction u/s 80IB and 80IC for the four months period of the financial year 2004-05. he assessee company was selected for scrutiny u/s 143(2) for Assessment Yea....
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....nd contended that the deduction u/s 80IB / 80IC of the Act is available to the undertaking and not the assessee. The AO has taken legally permissible view and the ld. CIT is not competent to substitute the same by way of invoking provisions of section 263 of the Act. He referred to Sec 80IA (12) of the Act and vehemently contended that the provisions of this section are not applicable to the assessee as the undertaking which was transferred to the assessee company, belonged to the two partnership firms and not to an India company. 6 The ld 'DR', on the other hand, justified the action of the ld. CIT taken u/s 263 of the Act. He cited various paras of the order passed by the ld. CIT in Sec 263 of the Act. He also quoted the decision of Hon&....
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.... and find that the core issue of applicability u/s 80IB / 80IC of the Act, for the unexpired period had been duly considered and adjudicated by the AO. Thus, the ld. CIT is not statutorily competent to invoke the provisions of such revisionary powers, with a view to substituting his opinion, in place of legally permissible view taken by the AO. Needless to say that the deduction u/s 80IB / 80IC is available to the undertaking and not the assessee, as envisaged in the CBDT circular No. F15/5/63-IT(A-1) dated 13.12.1963. Further, it is evident that the provisions of section 80IA(12) of the Act are not applicable to the facts of the present case. In the present case, the business of two firms has been transferred by these taxable entity, under....