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TMI Blog2019 (3) TMI 1917X X X X Extracts X X X X X X X X Extracts X X X X ..... d the material fact that similar claim was allowed to the assessee in the assessment year 2009-10 on fulfilling of all the conditions. Disallowance u/s.14A - assessee had submitted that it had not used borrowed fund for making investment and accordingly no part of interest was required to be disallowed by invoking the provision of section 14A - HELD THAT:- After consideration of above facts and detailed findings in the order of the CIT(A), we are of the view that CIT(A) has rightly held that assessee was having ample interest free fund, therefore, no disallowance in respect of interest expenditure is to be made in the case of assessee by invoking the provision of section 14A of the act. CIT(A) has restricted the disallowance out of administrative expenditure to the extent of ₹ 2 lacs after taking into consideration the claim of the assessee that no administrative expenditure has been incurred in earing the exempt income. On this issue during the course of appellate proceedings before us, the ld. counsel has also placed reliance on the decision of Pr. CIT vs. Sintex Industries Ltd. [ 2018 (3) TMI 1448 - SC ORDER ] - we observe that ld. CIT(A) has rightly restricted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company which is entitled to deduction under this section is transferred before expiry of the period specified in this section to another company then clause (b) the provisions of this section shall apply to the amalgamated company as they would have applied to the amalgamating company if the amalgamation had not taken place. He has further stated that in this case it is not clear whether the amalgamating company i.e. Shanti Processing Ltd. was eligible for claiming u/s. 80IA or not in the first place. In view of the same, the claim of the assessee was disallowed. 3. Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has allowed the appeal of the assessee stating that while deciding the appeal for assessment year 2012-13. The appeal of the assessee was allowed based on similar facts and issue. The relevant part of decision of ld. CIT(A) is as under:- I have carefully considered the assessment order and the submission filed by the appellant. The assessee company is an amalgamated company wherein Shanti Processor Ltd was merged with the assessee company wef 01/04/2005 as per the order of Hon'ble High Court of Gujarat dated 31/03/2006. The power plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions. As stated above, the plant machinery valuing ₹ 7,11,23,416/- were installed in the factory of erstwhile Shanti Processor Ltd. which was transferred to Chiripal Industries Ltd. on amalgamation by the order of Gujarat High Court. The power plant was originally installed by the erstwhile owner during financial year 2005-06. The original cost of the said plant which included coal handling system, boilers, steam turbine and electrical fittings was of ₹ 7,11,23,416/-. This value represents the cost to the previous owner mainly incurred during FY 2004-05 the installation of which was during FY 2005- 06. As per the provisions of section 80IA(12) when any undertaking of an Indian Company which is entitled to deduction under this section is transferred before the expiry of the period specified in this section to another Indian Company then as per clause (b) the provision of this section shall apply to the amalgamated Company as they would have applied to the amalgamating Company if the amalgamation had not taken place. The crucial point is that the provisions of subsection (12) would only apply if the amalgamating Company was eligible for claiming deduction u/s 80IA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessor Ltd which was already used. Therefore, new machinery ' purchased by Shanti Processors Ltd cannot be termed as old machinery since due to scheme of amalgamation; appellant is legally entitled to claim deduction. Therefore, on amalgamation, the appellant became entitled to all the benefits which were available to the amalgamating company namely Shanti Processors Ltd. It is also noted that similar claim was made by the appellant in the assessment year 2009-10, which was first year of its claim and the same was allowed meaning thereby the A.O. was satisfied that the appellant had fulfilled all the conditions. There is no change in facts and therefore, it is not proper to again revisit the eligibility of claim more so when there is no change in facts. The decision relied upon by the A.R. in the cases of Dynemic Products Ltd as well as that of Income Tax Officer v/s. Last Peak Data Pvt. Ltd. ITA no. 154 155/Kol/2013(supra), wherein it is held as under: Amalgamation of another company with assessee- Admittedly, amalgamating company LP Ltd. was enjoying STP unit status- Thus there is no question of the assessee having been formed by splitting up or reconstruction of a uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany Chiripal Petro Chemicals Ltd. was amalgamated Company under the provisions of the Companies Act, 1956. The scheme of Amalgamation was approved by Hon'ble High Court of Gujarat, vide its order dated 31/03/2006 w.e.f. 01/04/2005. It is also added that name of the company Chiripal Petro Chemicals Ltd. was changed to Chiripal Industries Ltd. as per approval of Registrar of Companies of Gujarat (A copy of both the orders are enclosed herewith for your honour's kind perusal and record purpose.) At this point, the assessee company would like to submit the definition of amalgamation , tax concessions available to amalgamated company and other provisions, for your honours kind perusal as under: A. Definition of amalgamation : According to section 2(1B) of the Income-tax Act, 1961 (hereinafter referred to as the Act), amalgamation in relation to companies means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of the merger, as the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80IA(12) when any undertaking of an Indian Company which is entitled to deduction under this section is transferred before the expiry of the period specified in this section to another Indian Company then as per clause (b) the provision of this section shall apply to the amalgamated Company as they would have applied to the amalgamating Company if the amalgamation had not taken place and the provisions of subsection (12) would only apply if the amalgamating Company was eligible for claiming deduction u/s 80IA. It is demonstrated from the above facts and circumstances that the assessing officer has disallowed the claim of the assessee on presumption basis that addition of ₹ 71,12,34,167- was old plant and machinery without bringing on record evidence to substantiate that specified machinery was purchased by Shanti processor Ltd and the assessing officer has also failed to disproved the material fact that similar claim was allowed to the assessee in the assessment year 2009-10 on fulfilling of all the conditions. In the light of the above facts, legal findings and elaborated findings of the Ld. CIT(A) as supra in this order we do not find any error in the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s investment in shares was made only at ₹ 34.26 croes. The assessee had submitted that it had not used borrowed fund for making investment and accordingly no part of interest was required to be disallowed by invoking the provision of section 14A. After consideration of above facts and detailed findings in the order of the ld. CIT(A), we are of the view that ld. CIT(A) has rightly held that assessee was having ample interest free fund, therefore, no disallowance in respect of interest expenditure is to be made in the case of assessee by invoking the provision of section 14A of the act. The ld. CIT(A) has restricted the disallowance out of administrative expenditure to the extent of ₹ 2 lacs after taking into consideration the claim of the assessee that no administrative expenditure has been incurred in earing the exempt income. On this issue during the course of appellate proceedings before us, the ld. counsel has also placed reliance on the decision of Supreme Court in the case of Pr. CIT vs. Sintex Industries Ltd. (2018) 93 taxman.com 24(SC) dated 23rd march, 2018. In the light of the above facts and findings, we observe that ld. CIT(A) has rightly restricted the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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