Record v. Mega Packages, (2011) 203 Taxman 236 (P&H), Wherein It Was Heldas Under

IN THE HIGH COURT OF PUNJAB AND HARYANAAT |CHANDIGARH ITA No.497 of 2006Date of decision: 31.3.201 Chief Commissioner of Income Tax (OSD), Faridabad ..-Appella Vs, M/s Talbros Engineering Limited, 74-75, Sector 6, Faridabad Ajay Kumar Mittal, J 1]This appeal has been preferred by the revenue under Section260A of the Income Tax Act, 1961 (in short, “‘the Act’) against the ordedated 18.11.2005, Annexure A.III passed by the Income Tax AppellateTribunal, Delhi Bench °A’ New Delhi in ITA No.3013/Del/1999 for theassessment year 1996-97. It was admitted on 9.1.2007 to consider thefollowing substantial questions of law:- a) Whether on the facts and in the circumstances of the casethe Income Tax Appellate Tribunal ((TAT) was correct inholding that the assessee company was entitled to deductionunder section 80-I of the Income Tax Act, 1961, despite the fact that it had been formed by de-merger of erstwhile company M/sTACL and, thus, was a case of splitting up or reconstruction ofa business already 1n existence?b) Whether on the facts and in the circumstances of the case theIncome Tax Appellate Tribunal (TAT) was correct in holdingthat the condition prescribed in Section 80-I (2) (1) and (11) ofthe Income Tax Act, 1961 were fulfilled by the assesseecompany for availing benefits under section 80-I of the IncomeTax Act, 1961?” ? A tew facts relevant for the decision of the controversy; involved, as narrated in the appeal, may be noticed. The assessee filed itsreturn of income declaring an income ofL21,63,875/- on 29.11.1996. Theassessee company was engaged in the manutacture and sale of Rear Axlesand kingpins for Ambassador cars, Mahindra Jeeps and Tractors etc. Theassessee claimed deduction under Section 80-I of the Act in respect ofprofits earned in Plant II of the company. Its industrial undertaking namedas Plant I] was transferred from Talbros Automotive Components Limited(TACL), pursuant to the order of the Delhi High Court. On the said plant,deduction under Section 80-I of the Act was claimed by TACL uptoAssessment year 1995-96. Since the deduction was attached to the industrialundertaking and not to the assessee, it was claimed in respect of the saidplant. However, the Assessing Officer did not allow the deduction underSection SO-I of the Act at.<a33,33,/04/- as the requisite conditions for theclaim of deduction under section SO-I of the Act were not fulfilled.Assessment under section 143(3) of the Act was completed by the Assessingofficer on 16.12.1988, Annexure A.1 atL93,03,380/- after disallowing theclaim of the assessee and making certain other additions. Aggrieved by theorder, the assessee filed appeal before the Commissioner of Income Tax (Appeals) |CIT(A)]. Vide order dated 21.4.1999, Annexure A.II, the CIT(A)partly allowed the appeal, deleting the additions made by the Assessingofficer and allowing deduction under Section 80-I of the Act. Not satisfiedwith the order, the revenue filed appeal before the Tribunal. Vide orderdated 18.11.2005, Annexure A.III, the Tribunal dismissed the appeal of therevenue. Hence the present appeal by the revenue. 3]We have heard learned counsel for the parties and perused the record. 4Learned counsel for the respondent-assessee states that theissue involved stands concluded against the revenue and in favour of theassessee 1n view of the judgment of this Court 1nCommissioner ofIncomeTax v. Mega Packages, (2011) 203 Taxman 236 (P&H), wherein it was heldas under:- (Appeals) |CIT(A)]. Vide order dated 21.4.1999, Annexure A.II, the CIT(A)partly allowed the appeal, deleting the additions made by the Assessingofficer and allowing deduction under Section 80-I of the Act. Not satisfiedwith the order, the revenue filed appeal before the Tribunal. Vide orderdated 18.11.2005, Annexure A.III, the Tribunal dismissed the appeal of therevenue. Hence the present appeal by the revenue. 3]We have heard learned counsel for the parties and perused the record. 4Learned counsel for the respondent-assessee states that theissue involved stands concluded against the revenue and in favour of theassessee 1n view of the judgment of this Court 1nCommissioner ofIncomeTax v. Mega Packages, (2011) 203 Taxman 236 (P&H), wherein it was heldas under:- “Benefit being admissible to an undertaking, the same couldnot be denied to the assessee for the remaining period only onthe ground that sub section (12) of section 80-IA embraces onlycases of amalgamation or demerger of Indian Company and,therefore, such benefit would not be available in case of changefrom proprietorship to partnership firm. Adverting to thealternate reason adopted by the AO to deny the benefit ofsection 80-IC of the Act for the remaining period, suffice it tonotice that the formation of the partnership from proprietorshipbusiness could not be held to be as a result of splitting orreconstruction of a business already in existence which couldjustify denying benefit by virtue of section 80-IC (4) (1). Theinterpretation placed by the tribunal on the provisions ofsection 80-IC(4) (1) being in consonance with law, no faultarises in the view taken by the Tribunal. No ground to interferewith the order of the Tribunal has been made out.” Learned counsel for the appellant-revenue was unable to dispute theapplicability of the said judgment to the facts of the present case. 4 In view of the above, the substantial questions of law areanswered against the revenue and in favour of the assessee. Consequently,finding no merit in the appeal, the same stands dismissed. (Ajay Kumar Mittal)Judge| March 31, 2014?6": (Jaspal Singh)Judge