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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’, NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
ORDER PER O.P. KANT, AM:
This appeal by the Revenue is directed against the order dated 31.03.2017 passed by the learned Commissioner of Income-tax (Appeals)-6, Delhi [in short ‘learned CIT(A)’] for assessment year 2008-09, raising following grounds: 1. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in deleting the disallowance of Rs. 6,16,41,506/- u/s 80IC of the Income Tax Act, 1961 (the Act) by ignoring the fact that the transaction was sham in nature and the purpose of following the circuitous route of first merging M/s Mahle Filter Systems (India) Ltd., with M/s Purolator India Ltd.
And then changing the name of the company to M/s Mahle Filter Systems (India) Ltd., was to get the benefit of deduction u/s 801C of the Act? 2. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in allowing deduction u/s 80IC of the Act to the assessee by ignoring a fact that use of substantial assets and manpower of amalgamating undertaking (Poona Unit) by the amalgamated (Parwanoo Unit) constituted reconstruction of the business u/s 80 IC (4) of the Act ? 3. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) is justified in allowing deduction u/s 80IC of the Act to the assessee by ignoring ratio decidendi of Apex Court in case M/s Textile Machinery Corporation Limited vs CIT (1997) 107 ITR 195 wherein it was held that transfer and use of substantial assets and manpower will amount to reconstruction of the business? 4. Whether on facts and in circumstances of the case, the Ld. CIT(A) is legally justified in allowing relief to the assessee on the basis of its earlier order in the assessee’s own case despite the fact that principle of res-judicata is not applicable to Income Tax proceedings as each assessment year is separate year? 5. That the appellant craves to add, alter, amend or forego any ground(s) of appeal either before or at the time of hearing of appeal.
Briefly stated facts of the case are that the assessee filed its 2. return of income on 30.09.2008 declaring total income Rs.3,78,48,953/-, after claiming deduction of Rs.6,16,41,506/- under Chapter VIA of the Income-tax Act, 1961 (for short ‘the Act’). The case was selected for scrutiny and assessment under Section 143(3) of the Act was completed at total income of Rs.10,13,65,643/- vide order dated 13.12.2019. Subsequently, the case was re-opened under Section 147 of the Act after recording reasons by the Assessing Officer that in view of the deduction disallowed under 80IC in assessment year 2009-10, deduction in current year was also not allowed. In the reassessment proceedings order dated 14.03.2014, the Assessing Officer declined the claim of deduction under Section 80IC of the Act. On further appeal the ld. CIT(A) vide impugned order, allowed the claim of the assessee following the finding of the First Appellate Authority in assessment year 2009-10. Being aggrieved, the Revenue is in appeal before the Tribunal.
Before us, the ld. DR submitted that entity M/s. Mahle Filters Systems (India) Ltd. has merged with M/s. Purolator India Ltd. and thereafter name of the merged entity was changed to M/s. Mahle Filters Systems (India) Ltd. to get the benefit of deduction under Sectin 80IC of the Act against the intention of law.
On the other hand, learned counsel of the assessee submitted that the Tribunal in for assessment year 2009-10 has upheld the finding of the learned CIT(A) and allowed the deduction under Section 80IC of the Act to the assessee. Learned counsel further submitted that the issue in dispute is squarely covered in favour of the assessee and the order of the learned CIT(A) might be upheld.
We have heard the rival submissions of the parties and perused the relevant material on record. The learned CIT(A) has deleted the additions by observing as under: “………Since, the action u/s 147/143(3) for AY 2008-09 was taken on the basis of rejection of the appellant’s claim by the AO for AY 2009-10, consequent to its subsequent deletion by the CIT(A) and restoration of said exemption, the addition made for AY 2008-09 is hereby, deleted. These grounds of appeal are therefore, allowed.”
6. Thus, there is no dispute that the learned CIT(A) has followed the finding of the Learned First Appellate Authority in assessment year 2009-10. The Tribunal in ITA No. 314/Del./2015 for assessment year 2009-10, dismissed the appeal of the Revenue observing as under: “21. First ground raised
by the assessee relates to the deletion of disallowance of Rs.2.96 crores u/s 80IC of the Act.
22. Elements of Groud no. 1 and Ground no. 4 have the same issue.
23. We are of the considered opinion that the Assessing Officer has not appreciated the underlying facts in issue in true perspective. Correct facts are that the manufacturing unit at Parwanoo, Himachal Pradesh was eligible for deduction u/s 80IC of the Act. The said undertaking belongs to M/s Purolotor India Ltd. The Assessing Officer proceeded by wrong assumption of facts that M/s Purolator India Ltd got amalgamated with M/s Mahle Filter Systems [India] Ltd whereas the fact of the matter is that Mahle Filter systems [India] Ltd was the transferor company and amalgamated with M/s Purolator India Ltd which was the transferee company by order of the Hon'ble High Court of Delhi in the matter of Scheme of Amalgamation of Company Petition No. 53/2008 connected with Company Application No. 172/2007. Subsequently, the name of M/s Purolator India Ltd was changed to M/s Mahle Filter Systems [India] Ltd.
24. According to the Id. DR, this is nothing but a sham transaction to take the benefit of section 80IC of the Act. We do not find any force in this contention of the Id. DR. The Scheme of Amalgamation has been approved by the Hon'ble High Court of Delhi and, therefore, by no stretch of imagination, the transaction of amalgamation can be considered as a colourable device or a sham transaction. There is no dispute that the manufacturing unit at Parwanoo was eligible for deduction u/s 80IC of the Act the same always belonged to the assessee, previously known as M/s Purolator India Ltd.]
25. Provisions of section 80IA(12) of the Act have been wrongly applied by the Assessing Officer because the said provision is applicable where any undertaking which is entitled to the deduction u/s 80IA is transferred before expiry of the period specified therein to another India company in a scheme of amalgamation or demerger, whereas the facts of the case in hand show that the manufacturing unit at Parwanoo, HP continued to belong to the assessee and it is only M/s Mahle Filter systems [India] Ltd which amalgamated with the assessee M/s Purolator India Ltd and only the name has been changed to M/s Mahle Filter systems [India] Ltd. Accordingly, even consequent to the amalgamation, the unit at Parwanoo was still owned and managed by the assessee in the same manner as it was managed prior to amalgamation. Considering the correct facts in true perspective, we do not find any error or infirmity in the findings of the CIT(A). Ground Nos. 1 and 4 raised by the revenue stand dismissed.”
7. Since the coordinate Bench of the Tribunal has already dismissed the appeal of the Revenue on identical issue in AY 2009-10, following the same, we allow the claim of deduction under Section 80IC to the assessee in the year under consideration and uphold the finding of the ld. CIT(A) on the issue in dispute. The grounds raised
by the Revenue are accordingly dismissed.
8. In the result, the appeal of the Revenue is dismissed. Order is pronounced in the open court on 15th January, 2020.