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TMI Blog2013 (7) TMI 515X X X X Extracts X X X X X X X X Extracts X X X X ..... essee the same was transferred in the name of the assessee. Therefore, the objection of the AO that some part of sale was affected in domestic area does not disentitle the assessee for claiming deduction u/s 10B unless the undertaking is deleted from the category of 100% EOU by the said Department. Transfer of assets which exceeded 20% of total value of plant & machinery - Held that:- As submitted that part assets were not transferred but the whole undertaking was transferred and there is no question of comparison of assets transferred with the total transfer of the assessee as it is a case of transfer of whole undertaking. All the case laws relied by DR relate to transfer of assets to an assessee and these cases do not relate to transfer of an undertaking in full. Therefore, assessee was entitled to the benefit of section u/s 10B for the years under consideration provided these years fall within 10 years from the date of availment of first deduction u/s 10B - appeals of the assessee are allowed. - I.T.A. No.6056,234,235&5233/Del/2011 - - - Dated:- 17-5-2013 - Shri R. P. Tolani And Shri T. S. Kapoor, JJ. For the Appellant : Shri Pawan Kumar, C.A. Shri Ashwani Taneja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espite having been registered as such in violation of the provisions of section 10B(1). iii) The business of the assessee is an entirely new business and the pre-used machinery received by the assessee from M/s Motherson Sumy Systems Ltd. far exceeds the allowable limit of 20% of the total value of the plant and machinery used in the business of undertaking in violation of the provisions of section 10B(2)(iii). 4. Dissatisfied with the order, the assessee carried the matter in respect of assessment year 2005-06 and 2006-07 before Ld CIT(A) but was not successful. However, in respect of assessment year 2007-08 and 2008-09 the appeals were not routed through CIT(A) as the assessment was done u/s 143(3) read with 144C. 5. Aggrieved with the order of Ld CIT(A) in respect of assessment year 2005-06 2006-07 and with order of Assessing Officer passed u/s 143(3) read with 144C in respect of assessment year 2007-08 2008- 09 the assessee filed appeal before this Tribunal. 6. At the outset, the Ld AR submitted that assessee acquired 100% EOU which was part of the existing company and the unit purchased by the assessee was enjoying benefit u/s 10B of the Act. He further argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the Hon'ble Tribunal were placed in this respect. 7. The Ld DR, on the other hand, submitted that it was a pure case of splitting of business and assessee had taken over plant machinery from old company and the whole business had not devolved on to the assessee. Therefore, the Assessing Officer had rightly made the addition and was rightly upheld by Ld CIT(A). Reliance in this respect was placed on the following case laws:- 1. CIT v. Hindustan General Industries Ltd. 137 ITR 851. 2. Kanhiyalal Rameshwar Das v. CIT 156 ITR 463 (Raj.). 3. Phagoo Mal Sant Ram v. CIT 74 ITR 734 (P H). 8. We have heard the rival submissions of both the parties and have gone through the material available on record. We find that the main objection of the Assessing Officer is regarding splitting of the business. The Assessing Officer held that assessee company has been formed and has taken over the assets of the existing business by splitting the business of M/s MSSL. While holding such a finding, the Assessing Officer has ignored the fact that it was not a case where a part of plant machinery or other assets belonging to an undertaking were transferred. The whole undertakin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income. Therefore, if there is change in ownership the benefit is not available to the new owner. In the alternative, the argument is that such deduction is not available with the assessee for assessment year 2002-03 and 2003-04 in view of the provisions contained in sub sec. (9) of sec. 10B. On prima facie perusal of these provisions, it is seen that the profits and gains derived by a 100 per cent export oriented undertaking from inter alia export of computer software for a period of 10 years shall be allowed as deduction from the total income of the assessee. Therefore, in the first instance, the profits derived by the undertaking from the export of software are to be computed and thereafter such profits are to be deducted from the total income of the assessee. The emphasis is on the undertaking, whose profits are to be computed which thereafter have to be deducted from the total income of the assessee. The words the assessee means any assessee as the article the is an indefinite article. The deduction is admissible in respect of profits and gains of an undertaking which inter alia satisfies the condition that it is not formed by the transfer to a new business of mach ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the form of organization. Formerly, it was a branch establishment of non-resident company/foreign company but later on, it was converted into a subsidiary company. But for the above change of the organizational status, the same unit continued to function throughout the time. Therefore, it is quite fruitless to argue that the organizational change has caused conversion of the existing unit to a new unit. There is no such splitting up or reconstruction of an existing business in the case of a branch establishment becoming a subsidiary establishment. The assessee's unit satisfied all the conditions stipulated in the Act and was entitled for the benefit. Therefore, as rightly held by the CIT(A), a mere organizational change is not a ground to hold that the assessee has violated the conditions stated in 10A(2)(ii). It is a case of only change in the name and style. It is clearly possible to state that there was no violation of the conditions laid down in sec. 10A(2)(iii) as well. 11. In the present case also, the undertaking existed in the same place, form and substance and did carry on the same business before and after the change in the legal character and form of the orga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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