TMI Blog2011 (8) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... fit for the unexpired period. - IT Appeal No. 145 of 2011 - - - Dated:- 24-8-2011 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. Ms. Urvashi Dhugga for the Appellant. JUDGMENT Ajay Kumar Mittal, J. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 31.5.2010 passed by the Income Tax Appellate Tribunal, Chandigarh, Bench "A" (hereinafter referred to as "the Tribunal") in ITA No. 1136/CHD/2009, relating to the assessment year 2006-07, claiming the following substantial question of law:- "Whether on the facts and circumstances of the case, the Ld. ITAT was right in law in confirming the order of the CIT(A) who had deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imed was assessment year 2004-05. The Assessing Officer issued a show cause notice to the assessee to explain as to why the deduction under Section 80-IC should be allowed when the partnership firm had been formed during the year whereas earlier deduction was claimed as a proprietary concern by invoking the provisions of Section 80-IA(12), and without prejudice to the provisions of Section 80-IA(12) also under Section 80-IC(4)(i) of the Act. The assessee submitted its reply pleading that it was a proprietorship and during the relevant previous year, the same was converted from proprietorship to partnership firm. The Assessing Officer vide order dated 29.12.2008 held that a new person came into existence this year and invoking the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not formed by splitting up or by reconstruction of a business already in existence alone can derive benefit thereunder. 5. The point for consideration in this appeal is whether the assessee was entitled to benefit of deduction under Section 80-IC of the Act for the remaining period after the proprietorship concern was converted into a partnership concern. 6. The Assessing Officer had denied the benefit of Section 80-IC of the Act on two counts, namely, (i) The assessee had converted proprietorship concern into partnership and, therefore, was not entitled to take benefit of Section 80-IC for the remaining period in view of Sections 80-IC(7) and 80-IA(12) of the Act. (ii) Section 80-IC(4)(i) of the Act disentitled the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. 18. Now coming to the second plea of the Assessing Officer regarding the application of the provisions of Section 80-IC(7) r.w.s. 80-IA(12) of the Act. The provisions of Section 80-IA(12) of the Act talks about an undertaking, which is entitled to the benefit of deduction, under that section, is transferred before the expiry of the specified period to another company, in a scheme of amalgamation or demerger, the conditions of allowing the deduction to the amalgamating/demerged company and amalgamated resulting company are provided. The said section is silent about the conditions in respect of the transfer of business from the sole proprietor concern to a partnership concern. Even otherwise, the provisions of section 80-IA(12) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctures or produces any article or thing, not being any article or thing specified in 13 Schedule, as per section 80IC(2)(a) of the Act. The quantification of deduction is provided in section 80IC(3) of the Act. The conditions to be fulfilled are enlisted in section 80IC(4) of the Act, which reads as under:- (4) This section applies to any undertaking or enterprise which fulfils all the following conditions, namely:- (i) it is not formed by splitting up, or the reconstruction of a business already in existence: Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the assessee of the business of any such undertaking as is ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h reference to Section 84 which was replaced by section 80J w.e.f. 1.4.1968. The said section 80J has been omitted by Finance Act No.2 of 1996 w.e.f. 1.4.1989. However, the provisions of section 84/80J and 80IC are similar in the context of benefit of deduction to be allowed to an undertaking. Reading the provisions of section 84, 80J and 80IC of the Income Tax Act, we find that the provisions of the aforesaid sections are similar and applying the circular issued in respect of section 84 to the provisions of section 80IC, we hold that the benefit of deduction u/s 80IC, which has not withdrawn till date, as a going concern, is to be allowed to an undertaking. The said undertaking being succeeded by a partnership firm, would not disentitle th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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