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2021 (8) TMI 1050 - HC - Income TaxDeduction u/s 80-IA - claim denied as assessee does not fulfil the conditions stipulated in sub-section (3) of Section 80-IA - HELD THAT:- Undertaking should not be formed by splitting up or the reconstruction of a business already in existence. There is no such allegation against the assessee. Thus, the assessee has fulfilled Condition No.1 as mentioned above. Whether entering into a lease transaction would amount to transfer? - The second condition is that the undertaking is not formed by the transfer to a new business of machinery or plant previously used for any purpose. It is not in dispute that the windmills have been leased out by the assessee-company. As decided in BAJAJ TEMPO LIMITED [1992 (4) TMI 4 - SUPREME COURT] lease cannot tantamount to transfer. One more condition, which is required to be fulfilled by the assessee, is that the undertaking is not a new business with plant or machinery previously used for any purpose. The question is as to how the words “previously used” have to be interpreted in the case on hand - the correct way to interpret the words “previously used” would mean actual physical use of the asset. There was nothing brought on record by the Assessing Officer that the asset was put to actual physical use for any purpose before the lease transaction and the inference drawn by the Assessing Officer is solely based upon the claim for depreciation made by the lessor. This, in our considered view, cannot be the correct way of interpretation of a beneficial provision, which provides for deduction in certain cases, where conditions are fulfilled and the object of granting such deduction was to promote industrial growth. Therefore, the CIT(A) is right in its observation that a lease transaction would not amount to a transfer and merely because the lessor had claimed 100% depreciation on the said asset cannot make the asset as 'previously used' to disqualify the asset from claiming deduction - we find that the Tribunal committed an error in reversing the order passed by the CIT(A). - Decided in favour of assessee.
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