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2014 (7) TMI 810 - HC - Income TaxInterpretation of section 10B - Transfer or sale of undertaking - Whether there is any prohibition in Section 10B on transfer or sale of the undertaking by the assessee, who has formed or established the same, to another assessee and whether the purchaser/acquirer assessee can be denied benefit u/s 10B of the Act – Held that:- The undertaking was formed or created by HICS and there is no allegation or finding by the AO that on the date of formation of the undertaking, there was violation of clause (ii) and (iii) to Section 10B(2) - relying upon Commissioner of Income Tax-I, Coimbatore Vs. Heartland KG Information Ltd. [2013 (9) TMI 375 - MADRAS HIGH COURT]. In case, the Legislature wanted to retain the prohibition contained in sub-section (9), it would have retained the said sub-section clear and categorical, and not omitted it - Sub-section (7A) would then have been a proviso and explanation to the prohibition in sub-section (9) like ‘(9A)’ - Sub-section (9) would have then continued to apply to all other transfers by any mode other than the modes specified in sub-section (9A) or (7A) - This was not the intention of the Legislature because sub-section (9) and (9A) to Section 10B were deleted/omitted by Finance Act, 2003 with effect from 1st April, 2004 - Sub-section (9A) applied to different factual matrix and situations, which may not be covered by sub-section (7A) – it is not a case of transfer by way of amalgamation or demerger. The assessee is well recognised and too apparent to be ignored and, therefore, when the Legislature in sub-section (1) and other sub-sections used the term “undertaking” as distinct from its owner/proprietor, the assessee, the effect thereof must be given full play - Way back in 1963, Circular F.No. 15/15/63-IT(A1) was issued with reference to Section 84 of the Act stating that the Board, i.e., the Central Board of Direct Taxes had agreed that benefit of the Section attaches itself to the undertaking and not to the owner - The successor would be entitled to benefit of the unexpired period of five years provided the undertaking was taken over as a running concern - It is pursuant to the circular that for the AY 2005-06, the AO in the case of assessee did not file any appeal before the tribunal after the first appellate authority had allowed the deduction to the assesse u/s 10A - for the AY 2006-07, AO wanted to deny the deduction, but DRP issued directions to allow the deduction - For AY 2007-08, the position is similar to AY 2005-06 and the AO has not filed any appeal against the decision in favour of the assessee by the first appellate authority – Decided against Revenue.
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