TMI Blog2018 (3) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... of condition laid down under section 80IB consisting of evidence related with the challan of Provident Fund of more than 21 employees with the undertaking during the relevant period. Moreover, there is no dispute that the industrial undertaking is situated in industrial backward state. There is no bar or prohibition in section 80IB on sale (slumpsale) of eligible undertaking to another assessee and the benefit attached with eligible undertaking cannot be denied to another assessee. There are only two negative terms prescribed under sub-section (2) of section 80IB, which we have referred above. No hesitation in accepting the submissions of assessee that he benefits of section 80IB are travelled (Transferred) with the undertaking and the fact of change of ownership does not affect the deduction. Sub-section (1) & (2) of section 80IB categorically refers to the business carried out by industrial undertaking. Thus, mere change of ownership would not affect the claim of deductions. With the above factual and legal discussion, we confirmed the order of ld. CIT(A) and dismissed the appeal of Revenue. - ITA No.2639/Mum/2014 - - - Dated:- 23-2-2018 - SHRI R.C. SHARMA, ACCOUNTANT MEM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he eligible unit under a scheme under slump sale and is not eligible for deductions under section 80IB. The other reason for disallowance of deduction under section 80IB was that the unit which was purchased by assessee under slump sale was denied deduction under ownership of M/s Hiren Aluminium Ltd for assessment year 2004-05 to 2009-10. 4. On the other hand, the ld. AR of the assessee submits that assessee claimed deduction under section 80IB in respect of Unit-2 situated in village Rakholi, Silvasa Union Territory of Dadar and Nagar Haveli. The said unit was acquired by assessee from M/s Hiren Aluminium Ltd. on slump sale basis vide agreement dated 30.11.2007. The AO disallowed the deduction for two reasons. First reason was that previous owner namely M/s Hiren Aluminium Ltd. was denied deduction under section 80IB from Assessment Year 2004-05 to 2009-10 for the reason for non-fulfilment of certain condition laid down under section 80IB. The other reasons taken by assessing officer that the undertaking was acquired by assessee by way of slump sale and not through amalgamation of merger as provided under section 80IB(12). The ld. AR of the assessee further submits that on disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no violation of condition prescribed under section 80IB(2). The director of the assessee company also deposed that the eligible unit is not formed by Splitting up or re-construction of the business already in existence, not formed by transfer of new business or machinery of plant previously used for that purpose, manufactures goods which are not listed in XI Schedule and employed more than 10 workers. The acquired undertaking is located in Industrial Backward Union Territory as specified in H Schedule of Income-tax Act. 6. We have considered the rival submission of the parties and have gone through the orders of authorities below. The AO denied the deduction under section 80IB holding that the benefit is not available in case of slump sale and that provisions of section 80IB does not permit the deduction unless transfer of undertaking pursuant to the scheme of amalgamation or demerger. The other reason was that the previous owner of the undertaking i.e. M/s Hiren Aluminium Ltd. in the assessment order for AY 2005-06 onward denied the deduction claimed under section 80IB. We have noted that against the disallowance of deduction under section 80IB, the previous owner of eligible u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Departmental Representative reiterates that assessee's form 3CD does not reveal any plant and machinery. Page 121 onwards in case record however speak otherwise demonstrating a detailed list of relevant fixed assets as well as various additions made therein pertaining specifically to unit-II in dispute. 15. Mr. Madhusudan's next argument is that the CIT(A) has erred in admitting assessee's additional evidence violating necessary conditions enumerated in Rule 46A of the Income Tax Rules. He seeks to raise an additional substantive ground at Revenue's behest in this regard that the CIT(A)'s action under challenge is not as per law since not covered in clauses (a) to (c) therein. We however find that the assessee's case in its additional evidence pleaded for placing relevant documents on record under Rule 46A(4) by stating that the same were very much relevant and vital to decide the instant issue of Section 80IB deduction. This is not Revenue's case that the corresponding additional evidence is not germane to Section 80IB deduction claim. The CIT(A) has admittedly granted sufficient time and opportunity to the Assessing Officer for submitting reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory bodies. We therefore reject all of its legal as well as factual arguments in support of the instant substantive ground seeking to reverse CIT(A)'s conclusion in holding assessee's latter unit-II eligible for Section 80IB deduction. 7. In view of the above factual and legal discussion, the objection of AO/Revenue that the earlier owner was not allowed the deduction under section 80IB has become meritless. 8. For second /other objection regarding non-applicability of the benefit of deduction on account of slump sale, we find that the assessee has acquired the entire undertaking of M/s Hiren Aluminium Ltd. which was declared ligible for deduction under section 80IB. In our view, when the entire undertaking is transferred, merely because the ownership of undertaking changes the hand, the deduction under section 80IB is connected with the undertaking and is still available to the assessee. The ld. AR of the assessee during his course of submission relied upon the Circular No. 1/2013 issued by CBDT on 17.01.2013. The perusal of Clause-(iv) of paragraph 2 of said Circular provides that the benefit under section 10A/10AA and 10B would continue to remain available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y or plant previously used for any purpose. 12. Further, the Hon ble Delhi High Court in ACIT vs. IIS Infotech Ltd. [82 TTJ 174] while discussing the scope of exemption under section 10B held that benefit under section 10 is always attached to the industrial undertaking irrespective of the fact who owns it 100% export oriented unit and enjoying tax exemption under section 10B merged with assessee, would be entitled to same benefit with respect to said unit even after merger of unit being of an independent unit. 13. The careful reading of sub-section (2) of section 80IB make it clear that there are two conditions are provided in negative term i.e. (i) Industrial undertaking is not formed by splitting up reconstruction of business already in existence, (ii) is not formed by transfer of new business of machinery or plant previously used for any purpose. The Assessing Officer has not disputed about the manufacturing or produce product of any article or things not being any article or things specified in XI Schedule or operate one or more Cold-Storage or plant in any part of India. Further, there is no dispute that industrial undertaking manufactures or produce articles or things ..... X X X X Extracts X X X X X X X X Extracts X X X X
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