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Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
In this appeal filed by the Revenue, which is directed against an order dated 29.04.2016 of the ld. Commissioner of Income Tax (Appeals)-8, Chennai, it has raised the following grounds.
‘’1. The order of the CIT(A) is contrary to law and ITA No.1945/Mds/2016. :- 2 -: facts and circumstances of the case.
The CIT(A) erred in deleting the Disallowance of deduction under section 10A of Rs.10,82,70,241/-. 2.1. The CIT(A) erred in holding that the benefit of deduction u/s.10A of the Act shall be allowed to the transferee company in case of a transfer of an eligible unit by way of 'slump sale '. 2.2. The CIT(A) erred in not considering the findings of the AO that the Plant and Machinery which has been previously used by Caterpillar Commercial Pvt. Ltd (CCPL) has been transferred for the formation of assessee company hence deduction under section 10A is not allowable in view of provisions of sub- section (2)(ii) of section 10A. 2.3. The CIT(A). erred in allowing deduction ujs.10A without appreciating the fact that the undertaking is not newly established and is a creation by way of reconstruction of a business already in operation. Hence the transfer of Logistics Division as a going concern to the assessee by CCPL through agreement dated 15.07.2004 was a colourable exercise and its intention was to evade tax.
2.4. It is submitted that the decision of ITAT for the AY:2005-06 relied upon by the CIT(A) was not accepted by the Department and the Department's appeal u/s.260A before the Hon'ble High Court vide TCA NO.573 of 2013 has been withdrawn only on account of low tax effect in view of CBOT's Circular NO.21 of 2015 dt.10.12.2015.
For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored.
A reading of the above grounds show that Revenue is 2. aggrieved on the order of the ld. Commissioner of Income Tax
ITA No.1945/Mds/2016. :- 3 -:
(Appeals) in that he followed the decision of this Tribunal in assessee’s own case for assessment year 2005-2006.
The question raised before the Bench in assessment year 3.
2005-06 was whether assessee was eligible for claiming deduction u/s.10A of the Income Tax Act, 1961 (in short ‘’the Act’’) for the logistics service division acquired by it from its group company called Caterpillar Commercial India Private Limited. The Tribunal had upheld the view of the Commissioner of Income Tax (Appeals) which went in favour of the assessee observing at para 6 of its order dated 17.02.2012 in as under:-
‘’6. We have perused the orders and heard the rival submissions. It is not disputed that ld. CIT(Appeals) had obtained a remand report from Assessing Officer. The remand report of the Assessing Officer is summarized by ld. CIT(Appeals) at para 3.2 of his order, which is reproduced hereunder: “3.2 The remand report dated 15.01.2009 is summarized as under:- (i) The records prove the contention of the company that it is not a mere transfer of plant and machinery but the Logistics division of M/s. Caterpillar Commercial P. Ltd., has been acquired by the assessee.
(ii) This is evidenced by agreement dated 26.07.2004 between the two parties.
(iii) The assessee company acquired the Logistics division on a going concern with effect from 01.08.2004.
ITA No.1945/Mds/2016. :- 4 -:
(iv) The Note No.3 in Schedule 11 in Notes on Accounts of the assessee company, gives total consideration, details of assets and liabilities taken over by the company.
(v) It is a slump sale as per para 2.1 at page 4 of the Business Transfer Agreement.
(vi) The transferor CCPL has admitted Capital Gains arising from the transfer.”
Through above remand report, Assessing Officer has clearly made a complete turnaround from the conclusions that he had reached in his assessment order. He agrees that it was not a transfer of mere plant and machinery, but on the other hand, the whole of the Logistics division was acquired by the assessee. He also agrees that the Logistics division was acquired by the assessee as a going concern. He further agrees that it was a slump sale and not item-wise sale. Once it is accepted that it was only a slump sale, then based on the definition of slump sale as given in Section 2(42C) of the Act, we cannot say that there was any splitting up of M/s CCPL. The question whether it was a colourable exercise, in our opinion, would not arise since the A.O. had come to his conclusions in the remand report based on the agreement dated 26.7.2004 between the two parties. As laid down by Hon’ble Apex Court in its recent decision of Vodafone International Holdings B.V. v. Union of India And Another (341 ITR 1) what is required is to look at the agreement and not look through the agreement. Sufficient evidence has not been brought on record by the Revenue to show that the transfer of Logistics division as a going concern to the assessee by M/s CCPL through the agreement dated 15.7.2004 was a colourable exercise and its sole intention was to evade tax. As for the comments of Additional Commissioner of Income Tax on the remand report given by the Assessing Officer, we are of the opinion that ld. CIT(Appeals) was absolutely justified in not considering such comments because the Assessing Officer alone is the authorized officer to give a remand report. Ld. CIT(Appeals) was perfectly justified in giving directions to the A.O. to grant the assessee deduction under Section 10A of the Act. We do not find any reason to interfere. For subsequent assessment years 2007-08, 2008-2009 and 2010-2011 also the Tribunal had held the assessee as eligible for claiming
ITA No.1945/Mds/2016. :- 5 -: deduction u/s. 10A of the Act on its logistics service division. Fact situation being same for the impugned assessment year also, we are of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in allowing the claim of the assessee. We do not find any reason to interfere with the order of the ld. Commissioner of Income Tax (Appeals).
In the result, the appeal of the Revenue is dismissed. 4.
Order pronounced on Monday, the 9th day of October, 2017, at Chennai.