TaxTMI 
TaxTMI 
2024 (12) TMI 900
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....ot eligible to claim the deduction due to conditions prescribed under the section was not complied by the assessee, without considering the facts and circumstances of the case. 2. The appellant craves leave to add, amend, alter or delete the said ground of appeal". 3. The solitary common issue arises in these appeals is, as to whether in the facts and circumstances of the case, the learned CIT (A) has erred in confirming the disallowance of claim of deduction u/s 80IA of the I.T. Act, 1961. Since common issues has been raised in both these appeals arises from the same facts and circumstances, therefore, for the sake of convenience, these two appeals are consolidated for the purpose of hearing and are being disposed of by this composite order. 4. The brief facts leading to the controversies are that the assessee company is engaged in the business of generation and distribution of power. During the financial year 2016-17, the assessee purchased a solar division from its holding company i.e. M/s. Lanco Infratech Ltd under slump sale transfer vide business transfer agreement dated 23/02/2017. The assessee filed its return of income for the A.Y 2017-18 on 17/10/2017 decla....
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....rescribed conditions. Thus, the learned AR has submitted that when there is no change in the undertaking in the process of slump sale except the change of ownership, then the claim of deduction u/s 80IA cannot be denied merely on the ground of change of ownership. He has relied upon the decision of the Hon'ble Allahabad High Court in the case of CIT vs. Prisma Electronics reported in (2014) 51 Taxmann.com 77 (Allahabad) and submitted that the Hon'ble High Court has considered an identical issue as to whether transfer of undertaking under slump sale would amount to formation of undertaking by splitting or reconstruction of existing business and held that the change of ownership of business from proprietorship concern to a partnership firm is not a case of forming undertaking by spilling up of or reconstruction of existing business. Only transfer of industrial undertaking as a whole along with assets and liabilities would not constitute formation of undertaking by splitting up or reconstruction of existing business. He has also relied upon the decision of the Hon'ble Madras High Court in the case of CIT vs. Heartland KV Information Ltd, reported in 359 ITR 1 (Mad.) as wel....
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....red the rival submissions as well as the material available on record. The assessee has claimed deduction u/s 80IA(4)(iv) in respect of the income of its undertaking acquired from Lanco Infratech Ltd vide business transfer agreement dated 23/02/2017. As per clause (2) and (2.1) of the said agreement, the nature of the transfer is specified as slump sale and is an ongoing concern basis. For ready reference, clause 2 and 2.1 of the said agreement is reproduced as under: "2. TRANSACTION 2.1 Subject to the provisions of this agreement, LSGPL hereby agrees and undertakes to purchase from LITL and LITL hereby agrees and undertakes to sell to LSGPL, on the closing date, the business undertaking on a going concern basis by way of a slump sale, such that: (a) The business undertaking shall be deemed to have been transferred and vested in LSGPL; (b) LSGPL will be entitled, subject to the terms & conditions of this Agreement, to all rights, title and interest in the Business Undertaking; (c) LSGPL shall have the full ability, right, power and authority necessary for conducting and carrying on the business and operations in respect of the business u....
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....lanation-2 were dealt in these orders and also no question was raised about its applicability or rationality. The assessee itself expressed the possibility of disallowance on account of sub- section (3) of Section 80-IA of the act in its reply dated 16.12.2019. At this juncture, it is very appropriate to refer the orders of Hon'ble ITAT, Chennai in ITA No.113/Mds/2012 dated 04.01.2013 in the case of M/s.Armstrong Knitting Mills Private Limited Vs. DCIT wherein the Hon'ble ITAT dismissed the appeal of the assessee and the facts of which similar to the present case. 7. In view of the above discussion, the deduction of Rs. 1,10,28,713 claimed by the assessee under section 80-IA(4)(iv) of the Act for the assessment year 2017- 18 is not allowable and accordingly the same is added to the total income of the assessee. (Addition: Rs. 1,10,28,713) 9. Thus, the Assessing Officer has given the emphasis to the maximum limit of 20% of the total value of machinery or plant as given in Explanation 2 to section 80IA(3). The Assessing Officer has not disputed the fact that the business undertaking under consideration has been acquired by the assessee as a going concern basis ....
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....d under different schemes, which are/were deriving profits from export of computer software subject to fulfilling the prescribed conditions. 2. It has been represented by the software companies that several issues arising from the above mentioned provisions are giving rise to disputes between them and the Income-tax authorities leading to denial of tax benefits and consequent litigation and, therefore, require clarification. Various issues highlighted by the Software Industry have been examined by the Board and the following clarifications are hereby issued - xxxxxxxxxxxxx 2(i) xx 2(ii)xxxx (2(iii) xxxxxx 2 (iv) Whether tax Benefits under sections 10A, 10AA and 10B would continue to Remain available in case of a slump Sale of a Unit/Undertaking. The vital factor in determining the above issue would be facts such as how a slump-sale is made and what is its nature. It will also be important to ensure that the slump sale would not result into any splitting or reconstruction of existing business. These are factual issues requiring verification of facts. It is, however, clarified that on the sole ground of change in ownership of an undertakin....
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....that Section 84 is more or less the same as provided in Section 80-IB of the Act. The Central Board of Direct Taxes issued a circular F. No. 15/5/63-IT(A-l) dated 13th December, 1963 indicating that the benefit of Section 84 is attached to the undertaking and not to the owner thereof and consequently, the successor would be entitled to the benefit for the unexpired period of 5 years provided the undertaking is taken over as a running concern. 12. The same principle is applicable in the instant case. Admittedly, the undertaking was in existence since 2002. The proprietorship concern changed into a partnership firm. The benefit under Section 80IB of the Act is available to the partnership firm and the conditions imposed under Section 80IB(2)(ii) does not come in the way. 13. In CIT v. Bullet International. [2012| 349 |TR 267/2014|44 taxmann.com 354 (All.) a Division Bench of this Court held that the exemption granted to a proprietorship concern, which converted from a proprietorship into a partnership concern was still entitled for exemption under Section l0A of the Act. 14. In the light of the aforesaid. we hold that the Tribunal was justified in dismissin....
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....ng it does not make any difference as it is a well settled rule of law that benefit under Section 80IA of the Act is available to an undertaking and not to the assessee since the undertaking continues to carrying on its business without any reconstruction of business already in existence. 14. Even otherwise, on merits the conditions under Section 80IA(3) of the Act are seen to be fully met by the assessee and on this ground also the assessee is entitled for deduction under Section 80IA of the Act. The first contention is that section 80IA(3) of the Act provides that the eligible business is not formed by splitting up or reconstruction of the business already in existence. Based on the facts discussed above, it may be noticed that the assessee started its new business in the existing company and the said business could not be said to have been formed either by splitting up or reconstruction of the existing business. It is to be noted herein that the business of providing internet services was awarded by the government to the assessee in the year 1999. The second contention of applicability of section 80IA (3) regarding use of old plants and machinery is also not relevant in....
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....and the tax holiday can be availed of for the unexpired period at the rates as applicable for the remaining years, subject to fulfilment of prescribed conditions." 9. The Hon'ble Delhi High Court in case of CIT vs. Heartland Delhi Transcription Services Pvt. Ltd. (supra) while examining the scope of exemption under section 10B held that formation of undertaking, when it was formed satisfied and duly fulfilled the requirement of the Clauses of section 10B(2) or Clause (2) & (3) as it was not formed by splitting up of reconstruction of business already in existence and there was no factual finding that at the time of establishment of formation of undertaking business already in existence was split or reconstructed. There was no bar in section 10B on transfer or sale of undertaking by assessee which has formed sister concerned. 10. The Hon'ble Punjab & Haryana High Court in case of CIT vs. Mega Packages (supra) held that the benefit admissible to an undertaking could not be denied to the assessee for remaining period on the ground that sub- section (12) of section 80IA empresses only in case of amalgamation or demerger of an Indian company and therefore, such....