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2015 (12) TMI 358 - ITAT AHMEDABAD

2015 (12) TMI 358 - ITAT AHMEDABAD - TMI - Deduction u/s.10B disallowed - CIT(A) confirmed disallowance - Held that:- The assessee would be entitled to claim for deduction u/s.10B of the Act, for a period of 10 consecutive years from the date of commencement of its manufacture as envisaged in the section. In the case in hand, the assessee has not demonstrated the actual date of commencement of the commercial production. However, the AO and the ld.CIT(A) have given finding that the commercial pro .....

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Raveendran Pillai, (2010 (9) TMI 434 - Kerala High Court), the Hon'ble High Court has also held that the goodwill is certainly comparable with trade mark, franchisee, copy right, etc., hence, entitled for the depreciation.- Decided in favour of assessee. - I.T.A. No.987/Ahd/2012 - Dated:- 15-10-2015 - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER And SHRI KUL BHARAT, JUDICIAL MEMBER For The Appellant : Shri Sunil H. Talati For The Respondent : Shri Dinesh Singh, Sr.DR PER SHRI KUL BHARAT, JUDICIAL MEM .....

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law and be quashed. It be held so now. 2. The Hon'ble CIT(A)-III, Baroda has erred in confirming the action of AO for not granting the exemption amounting to ₹ 60,01,695/- claimed u/s 10B of the Act despite the fact that the appellant filed Form 56G certified by Chartered Accountant as prescribed as per provisions of section 10B of the Act and further complied with all the conditions as prescribed. It is therefore submitted that the Hon'ble CIT(A)-III has erred in not granting the .....

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ed facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 21/12/2010; thereby the Assessing Officer (AO in short) disallowed the claim of deduction u/s.10B of the Act on the basis that the assessee has claimed deduction u/s.10B for the first time in AY 2008-09. The assessee has not formed by splitting up, or the construction, of a business already in e .....

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ore us. 3. First ground of this appeal is general in nature needs no independent adjudication. 4. Second ground of appeal is against disallowing the claim of the assessee for exemption of ₹ 60,01,6795/- claimed u/s.10B of the Act. The ld.counsel for the assessee submitted that the authorities below were not justified in not granting the exemption. He submitted that the exemption u/s.10B of the Act is available for 10 years from the initial years in which the undertaking beings manufacturin .....

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e assessee fulfilled all the conditions as envisaged u/s.10B(2) of the Act, since the undertaking manufactures Choline Dichloride and Pyridynyloxy Octyl acetate for export since February-1999. The undertaking was not formed by the splitting up, or the reconstruction, of a business already in existence. The undertaking was not formed by the transfer to a new business of machinery or plant previously used for any purpose. 4.1. On the contrary, ld.Sr.DR opposed the submissions of the ld.counsel for .....

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ions of the assessee is misplaced. The undertaking had, in fact, commenced the commercial production even prior to its conversion into private limited company. 5. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The only issue to be examined is whether the assessee is entitled for exemption u/s.10B of the Act for the year under appeal or not. For the sake of clarity, section 10B of the Act is reproduced hereunder: .....

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icles or things or computer software, as the case may be, shall be allowed from the total income of the assessee: [Provided that where in computing the total income of the undertaking for any assessment year, its profits and gains had not been included by application of the provisions of this section as it stood immediately before its substitution by the Finance Act, 2000, the undertaking shall be entitled to the deduction referred to in this sub-section only for the unexpired period of aforesai .....

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hat no deduction under this section shall be allowed to an assessee who does not furnish a return of his income on or before the due date specified under sub-section (1) of section 139.] (2) This section applies to any undertaking which fulfils all the following conditions, namely :- (i) it manufactures or produces any articles or things or computer software; (ii) it is not formed by the splitting up, or the reconstruction, of a business already in existence : Provided that this condition shall .....

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y for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section. 5.1. As per this provision, the exemption would be available for a period of ten consecutive assessment years beginning with the assessment year relevant to the previous year in which the undertaking begins to manufacture or produce articles or things or computer software, as the case may be. As per section 10B(2)(iii), the exemption would not be available if there is a trans .....

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mmencement of its manufacture as envisaged in the section. In the case in hand, the assessee has not demonstrated the actual date of commencement of the commercial production. However, the AO and the ld.CIT(A) have given finding that the commercial production was commenced even prior to the period claimed by the assessee. Under these facts, we do not see any reason to interfere with the order of the ld.CIT(A) as the first requirement is the commencement of manufacturing or production of undertak .....

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) in assessee s own case in ITA No.2497/Ahd/2011 for AY 2006-07, order dated 12/06/2015 and the copy of the order placed at page Nos.47 to 49 of the paper-book. 7. The ld.Sr.DR fairly conceded that the issue is covered in favour of assessee by the decision of Tribunal passed in ITA No.2497/Ahd/2011 for AY 2006-09. 8. After hearing both the parties, we find that the Coordinate Bench of this Tribunal in ITA No.2497/Ahd/2011 for AY 2006-07 vide its order dated 12/06/2015 the issue has decided by ob .....

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f copy right, licences, know how etc. He has raised two arguments. The first argument was that "goodwill" is not In the nature of the assets as defined u/s. 32(1)(ii) of the IT Act. His second objection was that the asset in question, i.e., goodwill was not in existences when the assessee company had taken over the erstwhile firm. He has also placed reliance on Vyomit Shares, Stocks & Investments P. Ltd. Vs. DCI7, 106, ITD 408 (Mum). 7. On the other hand, from the side of the respo .....

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ill was acquired by the assessee in the Assessment Year 1999-2000 when the firm, as a going concern, was taken over by the company/ appellant along with all the assets. At the time of acquisition, the goodwill as an asset was purchased from the firm for a consideration of ₹ 24,67,926/-. Thereafter for A.Y. 1999-00, 2000-01 and 2001-02, the assessee company had claimed depreciation @ 25% as informed by learned AR, Mr. Sunil Talati. The WDV for the year under consideration is ₹ 10,47,1 .....

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as under: "The Assessing Officer held that goodwill was not an asset falling under Explanation 3 to Section 32(1) of the Income Tax, Act, 1961 ("the Act", for short). We quote hereinbelow Explanation 3 to section 32(1) of the Act: "Explanation 3- For the purposes of this sub-section, the expressions 'assets' and 'block of assets' shall mean - (a) tangible assets, being buildings, machinery, plant or furniture; (b)intangible assets, being know-how, patents, co .....

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