TMI Blog2011 (3) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act for the balance unexpired period - Decided against the assessee. - 864 AND 1364 (HYD.) OF 2010 - - - Dated:- 18-3-2011 - G.C. GUPTA, AKBER BASHA, JJ. Sri Prasad for the Appellant. Sri Gnana Prakash for the Respondent. ORDER Akber Basha, Accountant Member. These appeals filed by the assessee are directed against the separate orders of CIT(A)-IV, Hyderabad, passed on 31-3-2010 and 3-8-2010 for the assessment years 2006-07 and 2007-08 respectively. Since common issues are involved in these two appeals, these are clubbed together and disposed off by this combined order for the sake of convenience. 2. In these two appeals, common grounds are raised by the assessee and the same are extracted hereunder:- 1. The learned CIT(A) is erroneous in law and on the facts of the case. 2. (a) The learned CIT(A) is not justified in denying the deduction of Rs. 1,00,06,615 under section 10B of the Income-tax Act when the eligible undertaking claiming the deduction remained the same. (b) The learned CIT(A) erred in ignoring the fact that the appellant is successor of the undertaking as confirmed by Development Commissioner VSEZ, Ministry of Commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aborate discussion in his order held that the Assessing Officer is right in denying the claim of exemption under section 10B of the Act and by upholding the decision of the Assessing Officer, all other grounds raised are decided against the assessee. Further aggrieved, the assessee is in appeal before us. 4. The learned counsel for the assessee submitted that in terms of clause (iii) of sub-section (2) of section 10B and Explanation (2) of sub-section (2) of section 80-I for the purpose of claiming deduction under section 10B of the Act, the undertaking is not to be formed by the transfer, to a new business of machinery and plant previously used for any other purpose. Further, as per Explanation (2) of sub-section (2) of section 80-I of the Act if there is any transfer to a new business of machinery or plant previously used, the total value should not exceed 20 per cent of the total value of the machinery or plant used in the business by the assessee. It is submitted that the assessee had taken the unit on licence only for operating and maintaining the unit with facilities of manufacturing. Therefore, it could not be said that the unit was formed by the transfer to a new business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircular states that the Board agree that the benefit of section 84(80J) attaches to the undertaking and not to the owner thereof. The successor will be entitled to the benefit for the expired period of five years provided the undertaking is taken over as a running concern. It is submitted that the assessee company is a successor undertaking which fact has been confirmed by the Ministry of Commerce Industry, Govt. of India vide its letter dated 30-6-2005 which is placed at pages 9 and 10 of the assessee's paper book. The letter states very clearly that "all concessions/benefits entitled/accrued to M/s. Synergies Dooray Automotive Limited under EOU scheme will be continued and extended to M/s. Synergies Castings Limited being the same EOU. From the said letter, it is evident that the assessee company is entitled to all the benefits which M/s. Synergy Dooray Automotives Limited was entitled to. It is contended that the learned CIT(A) ought to have appreciated the restructuring package approved by the lenders which resulted in transfer of the undertaking on a lease basis to the assessee. The learned counsel for the assessee invited our attention to the decision of Tribunal (paras 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere a word of doubtful meaning has received clear judicial interpretation the subsequent statute which incorporates the same word or phrase in a similar context must be construed so that the word or phrase is interpreted according to the meaning that has been previously assigned to it. Therefore under section 10B of the Act, it is not necessary that the manufacturing activity has to be carried on by the assessee himself by using his own plant and machinery. The assessee is not formed by the transfer to a new business of machinery or plant previously used for any purpose. It is further submitted that even the Ministry of Commerce vide its letter dated 30-6-2005 has given the same benefits to the assessee company which were earlier enjoyed by M/s. Synergies Dooray Automotive Limited. This endorses the fact that succession happened from 1-5-2005 and not in February, 2005 when the assessee company was incorporated and it also confirms the fact that the restrictive condition relating to 'formation' is not triggered on the instant case as there is no new undertaking that has come into existence and the word 'formed' is relevant only in the context when a new undertaking comes into existe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. It is further submitted that there is no abuse of tax holiday provisions as the claim is made only by such assessee who is carrying out manufacturing activity. In other words, the predecessor and successor have claimed tax holiday benefit in legally acceptable manner for the period before succession by the predecessor and post succession by the successor, the claim being restricted to the overall period of 10 years and therefore, there is neither double claim nor claim for an excessive period other than what is prescribed by the law. It is submitted that the import of Textile Machinery case ruled out by the Apex Court has no relevance to the facts of the case as no new undertaking has come into existence. In view of the above submissions, the learned counsel for the assessee submitted that the assessee company is legally entitled to claim tax holiday under section 10B of the Act for the unexpired period as a successor of the undertaking. The leanred counsel for the assessee filed also the paper book which contains copies of the letter issued by the Development Commissioner, VSEZ, copies of the Green card, etc., in support of his claims. 5. On the other hand, the learned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned in the case under consideration is assessment years 2006-07 and 2007-08. In the previous years relevant to the assessment years under consideration, the assessee company taken the unit on lease or license for operating and maintaining the unit with facilities of manufacturing of aluminium alloy wheels from SDAL and carried on manufacturing. The assessee company claimed continuation of relief under section 10B of the Act for the balance unexpired period. In other words, the assessee company claimed benefit under section 10B of the Act not on the basis of the establishment of new industrial undertaking, but on the basis of the lease arrangement between the assessee company with SDAL. We agree that the Circular issued by the CBDT vide No. F. No. 15/5/63-IT[A1], is with the view that the benefit under section 10B [in circular it was for section 80J of the Act] of the Act attaches to the undertaking and not to the owner thereof and therefore, a successor to the business would be entitled to the benefits for the balance unexpired period. Hence, in order to get the benefit of section 10B of the Act, for the unexpired period, the assessee company must prove that it is a successo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puters, for doing the integration of the component programmes developed by the other company. In the case of ITO v. Heartland K.G. (IT Appeal No. 1884 (Mad.) of 2006, dated 21-11-2008] relied on by the learned counsel for the assessee, in that case, the assessee acquired assets from another company and there were no lease arrangements. In the case of Narang Dairy Products (supra) relied on by the learned counsel for the assessee, in that case, the assessee claimed development rebate and the Apex Court held that withdrawal of development rebate by the Assessing Officer relying on section 34(3)(b) of the Act is justified by interpreting the crucial words 'otherwise transferred' occurring in section 34(3)(b) of the Act. All the decisions relied on by the assessee learned counsel for the assessee are distinguishable on facts. After considering the totality of facts and the circumstances of the case and going through the orders of the authorities below, we find that the CIT(A) is perfectly justified in upholding the findings of the Assessing Officer in denying the claim of exemption under section 10B of the Act for the assessment years under consideration. Therefore, no interference is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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