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TMI Blog2019 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... unal. On appeal to this Court, the appeal filed by the assessee was allowed and it was held that the assessee was entitled to the exemption in respect of 100% Export Oriented Unit. - Decided in favour of the assessee and against the Revenue. Revision u/s 263 - Held that:- As decided Principal Commissioner of Income Tax Vs. H.Nagarajain [2018 (6) TMI 105 - KARNATAKA HIGH COURT] the conclusion reached by the Commissioner, while exercising revisional jurisdiction, tantamount to directly interfering with the conclusions reached by the appellate Commissioner and such power of the Revisional authority cannot be conceded to enable him to interfere with the orders passed by the appellate Commissioner, in view of the doctrine of merger and therefore, it was held that the Revisional Authority acted without jurisdiction in passing the said order. We concur with the view taken by the Tribunal in holding that the Revisional Authority has exceeded in jurisdiction in invoking the provisions of Section 263 of the Act when the assessment order with regard to claim of deduction under Section 10A of the Act has merged with the order passed by the CIT(A) dated 25.10.2005. - Decided in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Vs. Additional Commissioner of Income Tax [2014] 365 ITR 318(Mad). In the said case, the assessee was engaged in the business of manufacturing of Auto parts and it has four units. One of the units was registered as Domestic Tariff Area Unit with the Central Excise Authorities during November, 1999. Subsequently, an application was submitted by the assessee therein before the Madras Export Processing Zone (MEPZ) to treat the Domestic Tariff Area unit as 100% Export Oriented Unit. Permission was granted and the Unit came into existence from 31.03.2000 as an Export Oriented Unit. For the assessment year 2001-02, the assessee showed net profit and claimed exemption under Section 10B of the Act, in respect of the 100% Export Oriented Unit. The claim was rejected by the Assessing Officer and the Tribunal. On appeal to this Court, the appeal filed by the assessee was allowed and it was held that the assessee was entitled to the exemption in respect of 100% Export Oriented Unit. The finding rendered in the said decision reads as follows: 15.On the question as to whether by the grant of EOU status, there was formation of new business by a transfer, this Court considered the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here could be no denial of exemption on the conversion of the proprietorship business into the partnership to result in the disentitlement of the benefit under Section 10A of the Income Tax Act. On a reading of Section 10A(2) , particularly clause (iii), this Court held that an undertaking would be disentitled to claim exemption, if it is formed by splitting up or reconstruction of business already in existence. 17.We find Section 10B(2) is no different from Section 10A(2) ...... 21.Going by the reasoning given under the decision reported in (2013) 359 ITR 1 ( Commissioner of Income Tax V. Heartland KG Information Ltd .), we hold that when a DTA unit is converted into 100% EOU unit, there is neither a transfer nor a creation of a new business to attract Clause (iii) to sub-section (2) of Section 10B of the Income Tax Act. As pointed out by this Court in the reported decision, there is no specific prohibition to an industrial unit formed by transfer of entire business and more so, on the facts of the case herein, strictly speaking, there is no transfer at all to a new business and what was already in existence as a DTA unit, by reason of the recognition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Doctrine of merger. 7.Mr.T.R.Senthil Kumar, learned counsel appearing for the Revenue strenuously contended that the Assessing Officer, while completing the assessment under Section 143(3) of the Act, vide order dated 31.03.2005, did not consider this aspect and in the regular appeal before the CITA, the matter was not taken into consideration. Therefore, the Commissioner of Income Tax Act (Appeals) was justified in invoking the power under Section 263 of the Act. 8.This very issue was considered by the Division Bench of the High Court of Gujarat in the case of Commissioner of Income Tax Vs. Nirma Chemicals Works (P.) Ltd., [2009] 182 Taxman 183 (Gujarat), wherein an identical contention was raised by the Revenue stating that the power under Section 263 of the Act could be exercised. The Court rejected the contention on the following lines: 22.The contention on behalf of the revenue that the assessment order does not reflect any application of mind as to eligibility or otherwise under Section 80-I of the Act requires to be noted to be rejected. An assessment order cannot incorporate reasons for making/granting a claim of deduction. If it does so, an assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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