TMI Blog2013 (12) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2007-08, in proceedings under section 143(3) of the Income Tax Act, 1961 [in short the "Act"]. 2. The assessee has raised following substantive grounds in the instant appeal: "1 2. Xxxxxx xxxxxxxxxxxx 3. The learned Assessing Officer has erred in not considering the fact that the sub section 3(ii) of section 80IA of the Income Tax Act, 1961 states that the new industrial undertaking should not be formed by the transfer to a new business of machinery or plant previously used for any purpose. In the order passed by him, Assessing Officer himself has mentioned the assets were originally purchased by the industrial undertaking and hence the subsection 3(ii) of Section 80IA will not apply to the assessee. 4, 5 6. xxxxxxxxx xxxxxxxxxxxxx 7. The learned Commissioner of Income Tax (Appeals) has erred in not considering the fact that, only the rate at which amount is credited by the Tamilnadu Electricity Board in the assessee's electricity bill towards the windmill generation of the assessee has been adopted by the assessee as the income of windmill and the assessing officer cannot adopt a notional rate in arriving the total receipts of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the "Act" since the undertaking in question had been formed by transfer to a new business of machinery, plant previously used "for any purpose". On merits also, the Assessing Officer opined that since there was no profit after setting up of unabsorbed business loss and depreciation under section 80B(5) read with sections 72(2) and 32(2) of the "Act", the assessee's case was also not eligible for deduction. He also opined that per section 80IA(8) of the "Act", profit had to be computed at the sale price per unit charged by the assessee instead of that charged by the TNEB from its consumers. Accordingly, the Assessing Officer computed assessee's income as Rs. 29,72,938/-. 7. Aggrieved, the assessee carried the matter in appeal. The CIT(A) has also affirmed the findings of the Assessing Officer on maintainability of the claim of deduction in assessee's case by relying on section 80IA(3) clauses (i) (ii) of the "Act". It is in this backdrop that the assessee is in appeal before us. 8. After perusing the findings of the Assessing Officer and the CIT(A), it is evident to us that the assessee had earlier purchased the windmill in question, generated wind energy, sold the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 2003 (supra). Therefore, as per sub-clause (ii) of section 80IA(3), once the machinery or plant previously used for 'any purpose' is transferred to a new business, the concerned undertaking is not entitled for deduction. In the instant case and in view of the circumstances involved herein, we hold that since the plant previously used for generating power stood transferred to a new business of its sister concern, the condition above said would come to play in these circumstances. The legislature in its wisdom has deliberately laid emphasis in using the word "any purpose", which is of widest possible amplitude being inclusive in nature covering the facts of the instant case. So far as case law (supra) cited by the assessee is concerned, we are of the view that the same is not applicable qua the peculiar facts and circumstances of the case. In the said case, the assessee's claim of deduction had satisfied the condition enshrined in section 80IA(3) of the "Act". In view of the said factual position, their Lordships have upheld the concerned assessee's claim. We also deem it appropriate to reproduce the relevant portion herein below: "10. There is no dispute with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) of Section 4 of Section 80IA was inserted in sub clause 3 of Section 80IA with effect from 1.4.2005 and the business of the assessee had been formed and started much prior to that. The restriction placed by Section 80IA(3) to the provisions of 80IA(4)(ii) would not bar the assessee for continuing its claim of deduction under Section 80IA. Since the provisions of 80IA(3) are not applicable to the present assessee, it having commenced its business much prior to 1.4.2005, Section 80IA(3) would not disentitle it from claiming deduction under Section 80IA on its income from internet services and internet telephony services. 12. In our view, the Tribunal was right in holding that the assessee could not be said to have been formed by splitting up or reconstruction of the business already in existence as its business had commenced after 1.4.1995 and before 31.3.2005 and the assessee had started its business of fax and email services right from the financial year 2003 and 2005 and it continued to carry on the business of internet telephony. 13. Insofar as the objection of the revenue that there had been change in the name of pattern of shareholding it does not make any d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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