2012 (8) TMI 1133 - HC - Income Tax

Summary

Issues Involved:
The judgment involves the disallowance of deduction under Section 10-A of the Income Tax Act by the Assessing Officer, the subsequent allowance of the exemption by the Commissioner of Income Tax (Appeals), and the dismissal of the appeal by the Income Tax Appellate Tribunal.

Issue 1: Disallowance of Deduction under Section 10-A by Assessing Officer

The respondent, engaged in the manufacturing and export of gems and silver jewelries, claimed a deduction under Section 10-A of the Income Tax Act, which was initially disallowed by the Assessing Officer. The Commissioner of Income Tax (Appeals) allowed the exemption, stating that the funds were not diverted but invested in the new company. The Tribunal concurred with this finding, emphasizing that the new company was not a reconstruction of the old business, and upheld the exemption under Section 10-A.

Issue 2: Legality of Orders by Commissioner of Income Tax (Appeals) and Tribunal

The appellant argued that both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal erred in setting aside the Assessing Officer's order. However, the Commissioner of Income Tax (Appeals) considered all factual aspects, concluding that the exemption under Section 10-A was correctly claimed by the assessee. The Tribunal also found no infirmity in the Commissioner's decision, stating that the assessee was entitled to the deduction under Section 10-A. The Tribunal emphasized that the company was an independent unit, not a restructured entity, and confirmed the Commissioner's order.

Conclusion:
The High Court dismissed the appeal, stating that no substantial questions of law were involved, and they could not interfere with the concurrent findings of fact recorded by the lower courts. The judgment highlights the importance of factual considerations in tax appeals and the limitations of the High Court in reviewing such matters.