TMI Blog2019 (3) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on by the company was manufacture of computer software, which requires input of intellectual, rather than tangible resources, is also not acceptable to us to find a dominant aspect not being involved in the transfer by lease of the premises, computers and peripherals. In the light of the above discussion, we are of the view that the Tribunal was justified in holding that the assessee is not entitled to the benefit under Section 10B(2) of the Act. - Decided against assessee. - ITA. No. 32 of 2011 - - - Dated:- 17-12-2018 - MR K. VINOD CHANDRAN AND MR ASHOK MENON, JJ. For The Appellant : ADVS. SRI. E. K. NANDAKUMAR (SR. ), SRI. P. GOPINATH (SR. ), SRI. K. JOHN MATHAI AND SRI. P. BENNY THOMAS For The Respondent : ADVS. SRI. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. had inferred that the entire space utilised by the STPL for its purpose was sublet to the assessee on as is where is basis, involving only minor adjustments, as against the wholesale dislocation of plant and machinery and thus he came to the conclusion that the lease would qualify to be a transfer within the meaning of Section 10B(2)(iii) of the Income Tax Act, 1961 (for short 'the Act'), which provides that an eligible undertaking under the Section should not be formed by the transfer to a new business, of plant and machinery that stands previously used for any purpose. The A.O. was of the view that the leased machinery disqualify the assessee from being eligible for its claim under Section 10B(1) as the assessee through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of STPL, which is its sister concern. According to the assessment made by the A.O., the extent of the area and the plant and machinery would come to about 66.66%. STPL, the sub-lessor, was also doing identical business and a 100% EOU, exporting software to USA. The very same work was being continued by the assessee-company, putting to use a substantial portion of the plant and machinery, used by STPL. 9. The fact whether the 'lease' would qualify to be a 'transfer' within the meaning of Section 10B(2) (iii) cannot be disputed in view of the decision of the Hon'ble Supreme Court in CIT v. Narang Dairy Products, [1996] 219 ITR 478 (SC) , wherein, considering the assessee's claim for development rebate under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of Section 15C, intended control of any attempt or effort to abuse the benefit intended for new undertakings by change of label. The intention was not to deny benefit to genuine new industrial undertakings, but to control the mischief which might otherwise be occasioned and the exemption claimed by forming a new company using the assets of the earlier one. The Hon'ble Supreme Court was of the opinion that the restriction or denial of benefit arises not by transfer of building or material to the new company, but that the new entity should not be formed by such transfer. This is the key to interpretation. The formation should not be by such transfer. The emphasis is on formation and not on mere use of the machineries or other assets o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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