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TMI Blog2022 (8) TMI 1180X X X X Extracts X X X X X X X X Extracts X X X X ..... n. It is also a fact noted from Form 10CCB placed on record that the claim of deduction u/s 80IA has been made for the first time in A.Y. 2015-16 in respect of these two eligible Power Undertakings situated at Rajasthan. We are inclined to find favour with the submissions made assessee to take into consideration the appointed date of 01.10.2011 for the purpose of transfer of assets and liabilities under the Approved Scheme of Amalgamation and, therefore, we are of the considered view that the said Windmill Undertakings situated at Rajasthan were not transferred from the erstwhile IPCL into the assessee under the Scheme of Amalgamation. Accordingly we hold that the provisions of section 80IA(12A) are not attracted in the present set of facts and circumstances. Having so held, the very foundation on which the present proceedings were initiated under section 263 by the ld. Pr. CIT falls apart. We find that in the present facts and circumstances, the legal maxim sublato fundamento cadit opus is applicable, meaning thereby a foundation being removed, the superstructure falls . Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. Thus, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) That on the facts and in the circumstances of the case, the impugned order passed u/s 263 is grossly arbitrary and bad in law in relation to the issues raised and adjudicated therein and needs to be summarily deleted since the order passed by A.O. was neither erroneous nor prejudicial to the interest of the revenue. (3) That on the facts and in the circumstances of the case, the ld. Pr. CIT was not justified in initiating proceedings u/s 263 of the Act alleging lack of enquiry/inadequate verification without appreciating the fact that the AO has made sufficient enquiry during the course of assessment proceedings. (4) That on the facts and in the circumstances of the case, the impugned order passed u/s 263 is gr4ossly arbitrary and bad in law in relation to the issues raised and adjudicated therein and needs to be summarily deleted. (5) That on the facts and in the circumstances of the case and without prejudice to Ground No. 1 to 4 taken hereinabove, the ld. Pr. CIT was not justified and grossly erred in invoking provisions of sec. 80IA(12) without considering the fact that eligible undertaking had commissioned after the date of amalgamation. 2. At the out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Audit Report and Form No. 10CCB were placed on record. 3.2 Subsequently, ld. Pr. CIT called for and examined the records of the assessee wherefrom he observed that pursuant to the scheme of arrangement of amalgamation with Dishergarh Power Supply Co. Limited (DPSC Ltd.) of PSU incorporated in 1919, India Power Corporation Limited (IPCL) was amalgamated with the Company w.e.f. 01.10.2011. Ld. Pr. CIT noted that owing to this amalgamation, the deduction claimed by the assessee under section 80IA should not be allowed in terms of section 80IA(12A) of the Act as the company is formed by the consequence of amalgamation. 3.3 Based on formation of this opinion, ld. Pr. CIT issued a show-cause notice under section 263(1) of the Act dated 03.01.2020 giving an opportunity to the assessee to make its representation on the issue raised therein. The relevant extract from the show cause notice on the issue raised by the ld. Pr. CIT is reproduced as under:- In the instant case it was seen from assessment record that pursuance to the scheme of arrangement and amalgamation with Dishergarh Power Supply Co. Ltd (DPSC Ltd.), a PSU incorporated in 1919, India Power Corporation Ltd.(IPCL) was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention in providing benefit to someone who had not taken these risks and had only acquired the eligible undertaking much latter when the risk had reduced. CBDT circular No, 03/2008 dated 12.03.2008 wherein it has been specifically mentioned that the benefit of deduction u/s 80IA will not be available to the amalgamated or demerged undertaking or enterprise which is transferred in the scheme of amalgamation/demerger after 31.03.2007 - 5. Ld. Pr. CIT further noted that pursuant to the Scheme of Amalgamation sanctioned by the Hon ble High Court of Calcutta vide its order dated 17.04.2013, the erstwhile Indian Power Corporation Limited has been amalgamated with the assessee-company. He noted that the main intention under section 80IA had been to provide incentive to those, who had taken initial investment and entrepreneur risk. Since in the present case, the initial risk has been taken by the erstwhile Company, which has been amalgamated with the assessee-company, therefore, there is no justification for passing on the benefit to someone, who had not taken these risks and had only acquired the eligible undertaking much later when the risks had reduced. He thus concluded that ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g company undertakes to carry on and shall be deemed to have been carried on, all its business activities and stand possessed of its properties and assets, for and on account of interest for the amalgamated company. 7.2 In respect of the details of assets transferred under the Scheme of Amalgamation, ld. Counsel referred to Schedule B forming part of Scheme of Amalgamation placed at pages 76 to 78 of the paper book. By referring to the said Schedule B , ld. Counsel contended that there has been no transfer of Rajasthan Windmills under the Scheme of Amalgamation and thus the allegation raised by the ld. Pr. CIT by issuing the show-cause notice under section 263(1) suffers from factual error. 7.3 To corroborate the submissions made by him, ld. Counsel referred to the Certificate of Commissioning of Windmills situated at Rajasthan, placed in the paper book at pages no. 56 to 58, to demonstrate that the said Windmill commenced its operation on 31.03.2012 (Rajasthan Windmill Unit No. I) and on 05.01.2013 (Rajasthan Windmill Unit No. II), which is after the appointed date of 01.10.2011 when the scheme of amalgamation became effective. Accordingly ld. Counsel submitted that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder:- (12) Where any undertaking of an Indian company which is entitled to the deduction under this section is transferred, before the expiry of the period specified in this section, to another Indian company in a scheme of amalgamation or demerger- (a) no deduction shall be admissible under this section to the amalgamating or the demerged company for the previous year in which the amalgamation or the demerger takes place; and (b) the provisions of this section shall, as far as may be, apply to the amalgamated or the resulting company as they would have applied to the amalgamating or the demerged company if the amalgamation or demerger had not taken place. (12A) Nothing contained in sub-section (12) shall apply to any enterprise or undertaking which is transferred in a scheme of amalgamation or demerger on or after the 1st day of April, 2007 . [emphasis supplied by us by underline] 9.1 From the perusal of the section above, before expiry of the period specified therein, means that the eligible units should start claiming deduction under section 80IA and, in between if units are transferred to other Company under the Scheme of Amalgamation/demerger, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of India Power Corporation Limited (the transferor-amalgamating company) to be transferred and vested in DPSC Limited (the transferee amalgamated company) as on October 01, 2011 (the appointed date-II) . 10.3 The relevant extracts from the order of Hon ble High Court of Calcutta sanctioning the Scheme of Amalgamation in respect of the appointed date as applicable for the transfer of assets and liabilities from the amalgamating company to the amalgamated company is reproduced hereunder:- This Hon ble Court doth hereby sanction the proposed Scheme of Amalgamation set forth in Annexure A of the petition herein subject to amendment of clause 1.3.2 of part 1 as 1.3.2 Appointed Date I with reference to Part III of the Scheme means First day of October in the year two thousand eleven, being the date with effect from which the scheme shall, upon sanction of the same by the court, be deemed to be effective in respect of Part III of this Scheme instead of existing clause 1.3.2 and alteration of Schedule 2 of the said scheme reflecting the assets and liabilities of the Investment Division of the said Amalgamating Company as on First day of October in the year two thousand elev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable, meaning thereby a foundation being removed, the superstructure falls . Once the basis of a proceeding is gone, the action taken thereon would fall to the ground. Thus, in the absence of such foundation, exercise of a suomotu power is impermissible. It should not be presumed that initiation of power under suomotu revision is merely an administrative act. It is an act of a quasi-judicial authority and based on formation of an opinion with regard to existence of adequate material to satisfy that the decision taken by the Assessing Officer is erroneous as well as prejudicial to the interests of the revenue. 11.2 We find that it is an issue, purely on facts which is verifiable from the records of the assessee relating to the approved scheme of amalgamation which contained specifics about the effective date of scheme becoming applicable and the assets and liabilities which existed under the said approved scheme for transfer from the amalgamating company to the amalgamated company. Furthermore, examination and verification of certificate of commissioning of the two windmills undertakings also revealed the correct state of their coming into operations for the purpose of get ..... X X X X Extracts X X X X X X X X Extracts X X X X
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