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TMI Blog2023 (3) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... sections 801A/801AB/801AC/IB/IC/IBA/ 80ID/80IE/10A/10AA and the assessment was completed vide order under section 143 (3) read with section 143 (3A) & 143 (3B) of the Act dated 09.03.2021 accepting the income returned by the assessee. 3. Subsequently, the ld. PCIT has issued show-cause notice dated 29.09.2022 stating that on verification of the return of income, the assessee has claimed deduction of Rs..3,99,87,883/- under section 80IA of Act in respect of income of the following wind. mills: HTSCNo.1182 - Rs..1,09,67,821/-; HTSC No.1313 - Rs..26,58,959/-; HTSC No.2193 - Rs..1,34,03,091/- and HTSC No.2221 Rs..1,29,58,012/-. In response to the notice u/s 142(1) regarding the difference in name of the company entered in the installation certificate as M/s. Graha Industries Pvt. Ltd, Coimbatore in respect of the wind mill HTSC No.1313, the assessee company enclosed a copy of 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 amalgamat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order and placed it to suit its convenience, which is not the correct proposition to interpret a case law. In the instant assessee's case, the Faceless Assessing Officer had issued the requisite notice u/s 143(2) of the Act, subsequent notices u/s 142(1) and questionnaires all pointing out to the issue on which the case was selected for scrutiny and has not made any finding or discussed in the order as to how a successor company is eligible for claiming the deduction u/s 801A of the Act of the previous owner (viz.) M/s.Graha Industries P. Ltd. Whether the provisions laid down u/s 80IA(12) & (12A) of the Act are applicable to the assessee's case or not, has not been a subject matter of discussion in the assessment order. When there is no discussion in the assessment order and when the PCIT in his revisionary powers has examined the issue and found that the assessment 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of certain errors in asmuchas wrong claim of deduction u/s 801A of the Act amounting to Rs.26,58,959 requires to be withdrawn while framing the assessment order supra, which the FAO failed to do so.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.8,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 143 (3A) & 143 (3B) of the Income Tax Act,1961 dated 09/03/2021 is made without verification of the facts. The order so made, suffers in as much as it is erroneous and prejudicial to the interest of revenue, requiring an intervention to cure the order made erroneous and prejudicial to the interest of revenue. 8. In order to remedy the said error in the order of assessment in the instant case made on 09/03/2021 for the assessment year 2018-19, the recourse would be to resort to provisions of sec.263 of the Act. Accordingly, the order of the AO dated 09/03/2021 for the assessment year 2018-19 in the case of the captioned assessee is, set aside to examine the above particular issue alone, in exercise of the powers vested in me u/s.263 of the Act. 9. The Assessing Officer, is hereby, directed to re-do the assessment afresh with regard to the above issue 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 shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & 2 para 3.7 and also para 6, wherein, the Assessing Officer has asked specific question to substantiate the claim made under section 80IA of the Act and also to submit computation of deduction under section 80-I/80-IA/80-IB/80-IC of the Act. The Assessing Officer again issued notice under section 142(1) of the Act dated 03.02.2021, wherein, he has specifically asked in para 5 and the same is extracted as under: 5) As per the Form 1OCCB for each HTSC no., the year in which the undertaking has started generating power is mentioned as 2006-07 for HTSC no 1313, 2193 and 2221 while 2004-05 for HTSC no 1182. However as per the provisions of Section 80IA (4) the period of tax holiday/concession to claim deduction is for 10 consecutive assessment years out of 15 years beginning from the year in which the undertaking or the enterprise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has approved the amalgamation and filed copy of the judgement before the Assessing Officer. Thereafter, after examining the details produced by the assessee, the Assessing Officer 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. Further, the Assessing Officer, 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. The ld. 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. 6.1 So far as merits of the case is concerned, the Mumbai Benches of the Tribunal in the case of UltraTech Cemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose who had made initial investment and taken entrepreneurial risk. He accordingly submitted that the amendment was brought in by introducing sub-section (12A) to disallow such benefit in the hands of someone who has not taken these risks and had only acquired the eligible undertaking much later when the risk had reduced. 86. The CBDT in this circular has tried to clarify something which is nowhere stated either in the language of newly inserted sub-section (12A) or in the Notes to Clause or explanatory memorandum to Finance Bill 2007. Subsection (12A) simply prescribes that from a particular date the provisions of sub-section (12) shall not apply to the undertaking which are transferred under a scheme of amalgamation or demerger. Further, as we have already held, sub-section (12) of section 80IA 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat till such time as a clarification or amendment by the Legislature or by Ordinance is not incorporated in the statute, no notification or circular of the Department can override the statutory provisions of the Act. It would not be permissible to read words into the statute, which prima facie is very plain and straight. 91. Even if one has to assume that the real intent of insertion of subsection 12(A) was to accord incentive to those who had made initial investment and taken entrepreneurial risk, then also deduction under section 80IA cannot be denied to the successor taxpayer entities since successor entities would pay due and fair consideration for the value of the undertakings taken over, which includes the price for assumption of full risk of investment and operations. In 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 cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred upon the assessee, being the amalgamated company, a right to claim deduction under section 80-IA in respect of the eligible undertakings for the residual period. The relevant extract of the scheme is reproduced below for reference: "... all the rights and benefits that have accrued or which may accrue to the Transferor Company, whether on, before or after the Appointed Date, including income-tax benefits and exemptions including the right to deduction under Section 80-IA of the Income-tax Act, 1961 (or any statutory modification or re-enactment thereof for the time being in force), shall, under the provisions of section 391 to 394 of Act and all other applicable provisions, if any, without any further act, instrument or deed, cost or charge be and stand 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 ..... 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