TaxTMI 
TaxTMI 
2020 (11) TMI 95
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....,36,38,391/- merely based on the appellate order in the case of the assessee for A.Y 2003-04 without considering the diverse circumstances prevailed in the assessee's own case for A.Y.2005-06 where the facts were different from the facts for A.Y. 2003-04. 2. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee's case is the case of transfer of undertaking and not of restructuring of existing business without considering the details such as date of license, the subsequent transfer of license, the unabsorbed depreciation as on 31.03.2003 and the opening WDV of Plant & Machinery during A.Y.2003-04 etc. 3. Briefly stated, the facts of the case are that during the AY 2005-06, the assessee-company filed a return of income of Rs. Nil after claiming deduction of Rs. 4,36,38,691/- u/s 80IB of the Act. The Assessing Officer (AO) disputed the said claim on the ground that (i) that the actual production started during AY 2002-03 is not established by the assessee as it was not in possession of licenses to start a factory, (ii) the business of assessee was formed by reconstruction of business already in existence and hence the as....
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....y on any manufacturing activity and it had merely obtained the license to run the factory. The AR has filed the Balance sheet of the appellant company soon after takeover of the running business, i.e. for FY 2000-01. On perusal of the said Balance Sheet, it is noticed that there are no fixed assets. Also no manufacturing activity was carried on in the said business undertaking. The appellant acquired machineries and also started manufacturing activity during A.Y. 2002-03. It is thus, noticed that there is no change in the form of business. It is merely a case of change of ownership of business. In the present case, the evidences on record prove that there was no activity carried on in the hands of the proprietary concern. The activity started only in the hands of the appellant company. 2.9 In my view, there cannot be reconstruction of business when there was no business carried on in the hands of M/s. Konkan Plastics, proprietary concern. The AO has proceeded to disallow the deduction on the incorrect factual matrix and without noticing that there was no business carried on the hands of M/s. Konkan Plastics so as to call it a re-construction. In my view therefore the disallowance....
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....ed by the Government of Goa to M/s Konkan Plastics included the manufacturing of blow and injection moulded articles ; the same activity has also been carried out by the assessee-company and there is absolutely no difference between the manufacturing activity carried out by M/s Konkan Plastics and the assessee-company, (iv) it is improbable that even though same type of plant & machinery and manpower was required for manufacturing of blow and injection moulded articles, the assessee-company purchased new plant & machinery and employed new work force for carrying out the same activity, which it was carrying out as a proprietary concern in the name of M/s Konkan Plastics. Thus the Ld. DR submits that the order passed by the AO be restored. 6. On the other hand, the Ld. counsel for the assessee submits that it was already explained before the AO as well as CIT(A) that prior to the electric connection from Reliance Energy, the assessee was availing the electricity connection from the Government of Goa; although the certificate for license to work has been issued to the assessee on 21.03.2003, the date of issue of such license has no bearing on whether manufacturing had commenced and ....
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.... ever ; the said entity was later taken over by the assessee along with its pre-existing lease hold rights of the plot of land assigned by MIDC Goa ; thereafter, fresh application for SSI Registration was made by the assessee ; pursuant to the said takeover, the assessee had also requested for change of name in the electricity meter from M/s Mystic Plast Moulds to the assessee; this only establishes that the earlier entity was taken over by the assessee with its pre-existing land rights ; however, the said fact cannot result into disallowance of deduction u/s 80IB of the Act, as there is no re-structuring of any business in existence. Thus the Ld. counsel submits that the deduction claimed by the assessee was rightly allowed by the Ld. CIT(A) and that no interference is required in respect of the same. 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. We have examined the documents filed before the AO as well as CIT(A) namely (i) copies of the electricity bills of Electricity Department, Government of Goa, (ii) letter dated 30.03.2000 from Asst. Electrical Engineer certifying the change in name of ....