TMI Blog2017 (9) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of business already in existence. Nonetheless, it amounts to constituting a new industrial undertaking by the transfer of used plant and machinery. The purpose behind the deduction u/s 80-IB of the Act is to promote setting up of a new industrial undertaking by purchasing new plant and machinery , but in present case of assessee setting up of an industrial unit by purchase of old/used plant and machinery defeat the entire purpose of allowing deductions u/s 80-IB of the Act The conclusion is therefore is assessee does not fulfil the conditions for claiming decduction u/s 80-IB - Decided in favour of revenue. - Income Tax Appeal No. 36 of 2006 - - - Dated:- 29-8-2017 - Hon'ble Pankaj Mithal And Hon'ble Umesh Chandra T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filled by an industrial undertaking for the purpose of claiming deduction under Section 80-IB of the Act. The Assessing Authority declined the above deduction as claimed by the Assessee vide its order of February 2006 but the deductions were permitted by the Commissioner of Income Tax (Appeals) vide its order dated 10.6.2003. The tribunal by the impugned order has modified the order of the CIT (Appeals) and has restored that of the Assessing Authority in respect of the above deductions. Aggrieved, the assessee has preferred this Appeal. We have heard Sri Suyash Agrawal and Sri Ashish Agrawal, learned counsel for the parties and are of the opinion that the only substantial question which is proposed to be raised in this appeal notwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is a company which is a separate legal entity. It had purchased one of the units of the other company M/s. M.C. Roller Flour Mills Limited and had allotted 40,000 shares to it against the plant and machinery so purchased. The purchase of the aforesaid unit resulted in transfer of plant and machinery from one company to another company ie., from M.C. Roller Flour Mills Ltd., to the assessee. Therefore, on the face of it the industrial undertaking of the assessee was formed by transfer of plant and machinery which was previously used by one of the units of M/s. M.C. Roller Flour Mills Limited. The assessee is thus an industrial undertaking established by the purchase of not a new plant and machinery rather by purchase/transfer of us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness already in existence. The aforesaid authority falls short in stating that such a transfer does not even amount to transfer of plant and machinery used for any purpose. In view of the aforesaid authority clause (i) of Sub-section 2 of Section 80-IB of the Act may not be attracted but the condition of clause (ii) thereof remains open. The Division Bench of the Madras High Court in Commissioner of Income Tax Vs. Heartland KG Information Limited (2013) 359 ITR 1 (Mad) states that the transfer of used plant and machinery to a new business undertaking and forming of an industrial undertaking by splitting or reconstruction of the existing industrial undertaking is prohibited under Section 10 A (2) of the Act. Thus, it held that the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the assessee. The purpose behind permitting the deduction under Section 80-IB of the Act is to promote setting up of a new industrial undertaking by purchasing new plant and machinery. In the event, setting up of an industrial unit by purchase of old/used plant and machinery is permitted, it would defeat the entire purpose of allowing deductions under Section 80-IB of the Act. In the case at hand the fact remains as has been recorded by the tribunal that there is transfer of plant and machinery of the unit Shri Ram Flour Mills of M/s. M.C. Roller Flour Mills Limited to the assessee company. The plant and machinery of the said unit was in use by the previous company. Therefore, the assessee company is not an industrial undertaking fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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