TMI Blog2023 (3) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... roved the amalgamation and filed copy of the judgement before the AO. Thereafter, after examining the details produced by the assessee, AO has completed the assessment under section 143(3) of the Act dated 09.03.2021. Under these facts and circumstances of the case, we are of the opinion that it cannot be said that the Assessing officer has not examined the issue AO, after making enquiry about allowability of deduction claimed by the assessee and after receiving the information relating to that, the Assessing Officer has completed the assessment order. PCIT was of the opinion that the Assessing officer has not discussed anything in respect of the issue in the assessment order and therefore, the assessment order is erroneous. In our opinion, the Assessing Officer, examining all the details, came to a conclusion that the assessee is eligible for claiming deduction and no discussion is required. Therefore, the order passed by the Assessing Officer cannot be said that it is an erroneous order. So far as merits of the case is concerned, the Mumbai Benches of the Tribunal in the case of UltraTech Cement Ltd [ 2022 (1) TMI 923 - ITAT MUMBAI] has considered similar issue and also co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of High Court of Madras evidencing' the merger' of M/s Graha Industries with the assessee company. In the Court order, it was mentioned that M/s. Graha Industries has merged with the assessee company w.e.f. 01.04.2007 through the scheme of amalgamation. Further scrutiny of the approved amalgamation revealed that the Appointed Date was defined as 01.04.2007 and Effective Date was defined as the last of the dates on which certified copies of the orders of the Madras High Court sanctioning the scheme are filed with the Registrar of Companies. Since the order of High Court of Madras is 18.12.2007, the Effective Date would be on or after the date of HC order. As per Subsection 12A of section 80IA, if the amalgamation or demerger is taken place on or after 01.04.2007, the deduction is not applicable to both amalgamating and amalgamated companies. Since the scheme of amalgamation was taken place on 01.04.2007 in the assessee company, the allowance of deduction under section 80IA of ₹.26,58,959/- in respect of the wind mill HTSC No.1313 requires withdrawal. Since the above issue was not considered in the assessment order passed u/s 143(3) read with section 143 (3A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order passed so consists of certain errors in asmuchas wrong claim of deduction u/s 801A of the Act amounting to Rs.26,58,959 requires to be withdrawn while framing the assessment order supra, which the FAO failed to do so. This erroneous allowance of deduction u/s 80IA of the Act has a potential revenue loss of Rs.8,79,132 thereby rendering the assessment order prejudicial to the interest of revenue. Therefore, it is held that respectfully following the decision of the Hon ble Apex Court in the case of Malabar Industrial Co. Ltd., PCIT is well within his powers to invoke the revisionary powers u/s 263 of the Act as the assessment order passed supra is erroneous and prejudicial to the interest of revenue. Coming to the interpretation of the AR that 80IA(12) and 801A(12A) of the Act goes against the spirit of the legislature, it is held that these are farfetched interpretation by the AR and do not come to the rescue of the assessee. As per sub-section 12A of section 80IA of the Act, if the amalgamation or demerger has taken place on or after 1.4.2007, the deduction u/s 80IA is not applicable to both amalgamating and amalgamated companies. The AO ought to have examined the allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue alone after verification of the facts discussed above. The AO may satisfy himself in accordance with law and come to a logical conclusion in respect of the above issue and after due satisfaction in accordance with law, shall proceed with the assessment and pass appropriate orders in the assessee s case. The Assessing Officer shall give adequate opportunity of being heard to the assessee n this regard before passing the fresh assessment order. The Assessee is also given yet another opportunity to present its case and the assessee shall provide the relevant details with material evidence, so as to facilitate the Assessing Officer to arrive at a logical conclusion. 4. On being aggrieved, the assessee is in appeal before the Tribunal questioning the revision order passed under section 263 of the Act dated 22.11.2022. The assessee has raised following grounds: 1. The impugned order u/s.263 of the Act of the Principal Commissioner of Income Tax is illegal, erroneous, contrary to provisions of law and the facts of the case. 2.1 The PCIT grossly erred in assuming jurisdiction u/s.263 of the Act and revising the order of assessment dated 09.03.2021. 2.2 The issue of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rprise develops or begins to operate generates power or commences transmission or distribution of power or undertakes substantial renovation and modernization of the existing transmission or distribution lines. In view of the same please justify the period in respect of which deduction is claimed. Also as per the certificates provided in respect of commencement of business certificate for HTSC No 1313 is granted to the undertaking M/s Graha Industries Pvt Ltd. Please explain the mismatch in name of the undertaking: The ld. Counsel for the assessee has submitted that the Assessing Officer, after examining all the details, completed the assessment order under section 143(3) of the Act and therefore, the assessment order passed by the Assessing Officer is not erroneous and prejudicial to the interest of Revenue. He further submitted that the issue involved in this appeal i.e., deduction claimed by the assessee under section 80IA(12A) of the Act is eligible as per the decision of the Coordinate Benches of the Mumbai ITAT in the case of UltraTech Cement Ltd. v. DCIT [2022] 139 taxmann.com 151 (Mum) and thus, the assessment order is not erroneous and prejudicial to the interest of Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion, the Assessing Officer, examining all the details, came to a conclusion that the assessee is eligible for claiming deduction and no discussion is required. Therefore, the order passed by the Assessing Officer cannot be said that it is an erroneous order. 6.1 So far as merits of the case is concerned, the Mumbai Benches of the Tribunal in the case of UltraTech Cement Ltd. v. DCIT (supra) has considered similar issue and also considered the Circular No. 3 of 2008 dated 12.03.2008 issued by the CBDT and the relevant findings of the Tribunal are reproduced as under: 84. We now refer to the contention of the DR where he has relied on the contents of the Circular No. 3 of 2008 dated 12 March 2008 issued by CBDT to explain the provisions of newly inserted section 80IA(12A). The circular provided as under: 35. Tax benefit u/s 80IA not available to undertaking / enterprise of Indian companies undergoing amalgamation or demerger after 31.03.2007 35.1 Sub-section (12) of section 80-IA provides that where any undertaking of an Indian company which is entitled to the deduction under the said section is transferred before the expiry of the period specified therein, to ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A did not confer any new rights to the tax payer and hence its non-applicability cannot be construed to mean withdrawal of a right which is conferred under separate provisions of Section 80IA i.e. sub-section (1) r.w.s. (4) of section 80IA of the IT Act. 87. If the intention of tax holiday under section 80IA was to provide incentive to only original investor, the legislature would have never inserted sub-section (12) in the statute. At least, the memorandum explaining the provisions of Finance Bill 2007, regarding insertion of sub- section (12) in Section 80IA should have clarified why the legislature thought fit to deviate from the its basic intent of providing incentive to the original investor and provide benefit to the successor. We have seen earlier, the memorandum explaining the provisions of Finance Bill 2007 has no such reference. It is, therefore, difficult to accept the contention of the Revenue and accept the contents of Circular no. 3 of 2008 to be depicting correct intention. 88. In our view, therefore, the clarification provided in the circular for insertion of sub-section (12A) cannot be extended beyond what is unambiguously stated in the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, the entrepreneurial risk of the undertaking would also travel with the undertaking and the new owner of the undertaking would also bear the same risk as the original investor. The original investor will recover the price from the new investor in respect of the higher risk which he would have assumed at the initial stage. 92. Further, even if this intention is considered as relevant, such claim cannot be denied in case of amalgamation and demerger since: i. In case of demerger, there may not be any change in ownership of the entity. The same shareholders or atleast three fourth in the value of shares of the demerged company become the shareholders of the resulting company. ii. Similarly, in the case of amalgamation, the shareholders of the amalgamating company or atleast three fourth in the value of shares, become shareholders of the successor/amalgamated company along with the existing shareholders of the predecessor company. Thus, in both the situations, there is no change in the risk bearing entities or at least the majority of initial investor continue to bear the risk as they become shareholder of the successor entity. Thus, even on this count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and transferred to and vest in and/ or deemed to be transferred to and vested in and be available to the Transferee Company so as to become licenses, permits, entitlements, quotas, approvals, permissions, registrations, incentives, sales tax deferrals, exemptions and benefits, subsidies, concessions, grants, rights, claims, leases, mining leases, prospecting licenses, tenancy rights, liberties, special status and other benefits or privileges of the Transferee Company and shall remain valid, effective and enforceable on the same terms and conditions. 95. We would be sitting on the judgment and wisdom of the Hon'ble Courts if we were to deny the benefit especially sanctioned by the Hon'ble High Courts. 96. The Kolkata Bench of the Tribunal in case of Electrocast Sales India Ltd. vs. DCIT [2018] 170 ITD 507, has held that merger scheme approved by the Hon'ble High Court having in mind the larger public interest, cannot be disturbed by the revenue. We concur with the view taken by the coordinate Bench to hold that since the scheme of amalgamation was approved by the Hon'ble High Court only after ensuring that the same is not prejudicial to the interests of it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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