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2015 (3) TMI 649 - KARNATAKA HIGH COURT

2015 (3) TMI 649 - KARNATAKA HIGH COURT - TMI - Disallowance of deduction u/s 80-IA - AO held that since there was sale of going concern and formation of Private Limited Company, there was capital gain, for which tax was liable to be paid by the assessee under Section 50-B of the Act and disallowed the deduction claimed by the assessee under Section 80-IA - Tribunal allowed the claim - Whether the assessee is entitled for claiming deduction under Section 80-IA when more than 20% of old plant and .....

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ot exceed 20% of the total value of the machinery or plant used in the new business. & It should not manufacture or produce articles specified in the Eleventh Schedule.

The records placed for perusal show that the assessee has not fulfilled the above conditions and therefore, the Assessing Officer and the Appellate Authority had rightly disallowed the benefit. The Tribunal without any just and cogent reasons has reversed the orders passed by the Assessing Officer as confirmed by the A .....

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For the Appellant : Sri Y V Raviraj, Adv. For the Respondent : None ORDER 1. The revenue is in appeal challenging the order dated 17.01.2007 passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji, (for short, hereinafter referred to as 'the Tribunal') in ITA No.184/PANJ/2005 for the assessment year 1997-98, wherein the Tribunal has held that Section 50B of the Income Tax Act, 1961 (for short, hereinafter referred to as 'the Act') is not applicable with retrospective e .....

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it was converted into a Private Limited Company under the name and style "M/s.Industrial Hydraulics Pvt. Ltd." For the assessment year 1995-1996, return was filed under Section 143(1)(a) of the Act by the assessee claiming deduction under Section 80-IA. The Assessing Officer passed an order under Section 154 of the Act on 12.08.1996 rejecting the relief under Section 80-IA. The said order was challenged before the appellate authority and the appellate authority, by order dated 19.03.1 .....

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tal gain, for which tax was liable to be paid by the assessee under Section 50-B of the Act and disallowed the deduction claimed by the assessee under Section 80-IA of the Act and accordingly, passed the order of assessment on 30.03.2000. Being aggrieved by the said order, appeals were filed by the assessee before the Commissioner of Income Tax (Appeals), Belgaum. 3. The appellate authority confirmed the order passed by the Assessing Officer. Being aggrieved by the same, appeals were preferred b .....

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f the Assessment years 1995- 1996 and 1996-1997 and ITA Nos.180 and 184/PANJ/2005 in respect of the assessment year 1996-1997 and 1997-1998 before the Tribunal. 4. The Tribunal after considering the material on record came to the conclusion that the unit established in Shed No.C-54 was a 'new unit' and the assessee was manufacturing hydraulic products of higher capacity and different sizes from the assessment year 1995-96 and therefore, the assessee was entitled for deduction under Secti .....

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than 20% of old plant and machinery were used in the reconstructed unit as contemplated under Sub-section (3) of Section 80-IA? ii) Whether Section 15 C of Income Tax Act, 1922 would be applicable to the facts of the case and would it be in paramateria with Section 80-IA of Income Tax Act, 1961? iii) Whether deduction under Section 80-IA would be available to the assessee when the two units are common and the machinery/vehicles would be complementary-supplementary for use of each other? 7. Learn .....

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Tribunal by the impugned order. Thus, among other grounds, learned counsel prays for allowing the appeal. 8. Respondent though served has remained unrepresented. We have perused the order dated 12.08.2011 passed by this Court in ITA No.480/2007 and connected appeals and respectfully agree with the view taken by the Bench. 9. In order to claim deduction under Section 80-IA of the Act, assessee has to satisfy the following requirements: i) Industrial undertaking must be set up on or after 01.04.1 .....

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