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Order u/s.254(1)of the Income-tax Act,1961(Act) Per Pawan Singh, J.M. �या�यक सद�य iou iou iou �संह के अनुसार: iou 1. These two appeals are filed by Revenue u/s. 253 of the Income-tax Act against the order of ld. Commissioner of Income-tax (Appeals)-18, Mumbai (for short the CIT(A) dated 11.08.2014 for Assessment Year (AY) 2009-10 & 2010-11. The Revenue has raised identical grounds of appeal
in both the AYs, thus, both the appeals were clubbed, heard together and are being decided by a consolidated order.
2. First we shall take the Revenue’s appeal for AY 2009-10. Though, the Revenue has raised a number of grounds, however, as per our considered opinion, the only substantial ground of appeal is “Whether the ld. CIT(A) erred in directed the AO to grant deduction u/s 10AA of the I.T. Act”.
3. Brief facts of the case are that the assessee-company is engaged in the manufacturing, treading, exporting and job work of studded jewellery. Unit of the assessee-company is situated in SEEPZ. The assessee filed return of income for relevant AY on 25.09.2009 and claimed deduction u/s 10AA of the Act. The assessment was completed u/s 143(3) of the Act on 31.03.2013. While framing the assessment, the AO disallowed the claim of 2 & 6587/M/2014 M/s Shree Laxmi Infosolutions & Jewellery Ltd. deduction u/s 10AA. On appeal before the ld. CIT(A), the claim u/s 10AA was allowed. Thus, aggrieved by the order of ld. CIT(A), the Revenue has preferred the appeal before this Tribunal.
We have heard the Ld. (Authorized Representative (AR) of the assessee and Departmental Representative (DR) for the Revenue and perused the material available on record. At the outset, ld. AR of the assessee argued that the issue raised in the present appeal is squarely covered in favour of assessee by the decision of Tribunal in assessee’s own case for AY 2007-08 and 2008-09 in ITA No. 6670/Mum/2011 & 5643/Mum/2012. The ld. DR for the Revenue not disputed the decision of the Tribunal.
We have considered the rival contentions of the parties and seen that the similar relief was disallowed to assessee for AY 2007-08 and 2008-09 and on appeal ld. CIT(A) allowed the relief to the assessee. The Revenue filed appeal before the Tribunal and the appeal for both the AY were dismissed by this Tribunal vide order dated 29.01.2016 in ITA No. 6770/Mum/2011 for AY 2007-08 and ITA No.5643/Mum/2012 for AY 2008-09 holding as under: “7. We have considered the rival submissions and perused the record. Learned Departmental Representative supported the order passed by the Assessing Officer whereas learned A.R appearing on behalf of the assessee supported the order passed by learned CIT(A), We find that learned CIT(A) allowed the claim of the assessee for deductions u/s 10AA by giving following findings:- 2.1 I have considered the submissions of the Ld. Counsel and in my opinion the appellant is entitled to claim the deduction u/s 10AA because of the following reasons: (i) The decisions of Hon’ble Supreme Court in the case of Textile Machinery Corporation 107 ITR 195 and jurisdictional Hon’ble Bombay High Court decision in CIT vs. Gaekwar Foam & Rubber Co. (35 ITR 662) are clearly in appellant's favour as to what constitutes reconstruction of a business or not. Further, the decision’s of Hon'ble Kerala High Court in the case of CIT vs. Trauancore Rayons Ltd. & Ant. (164 ITR 134) and the Hon 'ble Patna High Court in the case of Hindustan Malleables & Forgings Ltd. vs. ITO and another (1978) 112 ITR 389 also clearly lay down that - When there is change of ownership. - previous identity was completely lost. - original undertaking acquired a new status, - There was no alternation in the original undertaking but it was an entirely new undertaking with a change in name. - Then it was not a case of reconstruction of the same business. (ii) Also, the above view is again reiterated in the following judicial a) ITO vs. Heartland K.G. Information Ltd. 31 DTR (Chennai)(Trib) 98. b) ACIT vs. IIS Infotech Ltd. (2004) 82 TTJ (Del) 174 c) Ito vs. DSM Soft (P) Ltd. (2008) 115 ITD 1 ( Chennai) d) Kumaran Systems (P) Ltd. vs. ACIT (2007) 106 TTJ (Channai) 484 e) CIT vs. Excel Softech Ltd. (2008 2019 CTR (P&H) 405.
3 & 6587/M/2014 M/s Shree Laxmi Infosolutions & Jewellery Ltd. 2.2. Thus, the above decisions clearly hold such cases to be not of reconstruction of business and thus, assessee’s case is held to be not of reconstruction of business. Further, the following facts deserve special mention:- (i) Benefit of deduction is attached to unit irrespective of the fact who owns it 82 TTI (Del) 174 (ii) Question whether undertaking is formed as new or is reconstruction of business already in existence is to be tested in year of formation of unit and not in every subsequent year – 13 DTR 201 (P&H) (iii) (iii) Reconstruction of business already in existence require that either some assets of existing business are transferred to new business or that two businesses are same and the new unit is an integral part of earlier one – 115 ITD 1 (Chennai) 3. Also, it is important to note that the A.O. on page-6 of the assessment order – in my opinion- has erred in reaching the conclusion that merely because M/s. Datamatics Infosolutions Ltd. already had permission for software production as well as jewellery production before the agreement for sale of shares and which proves that M/s. Shree Laxmi Infosolutions & Jewellery Ltd. is nothing but reconstruction of an old unit with a new name because this is against the ratio of the following decisions cited and relied upon by learned counsel:- Textile Machinery Corporation Ltd. vs. CIT 107 ITR 195 (SC) (i) CIT vs. Gaekwar Foam & Rubber Co. 35 ITR 662 (Born) (ii) CIT vs. Travancore Rayons Ltd. & Anr. (164 ITR 134) [Ker] (iii) CIT vs. Excel Softech ltd. 13 DTR 201 (P&H) (iv) ITO vs. DSM Soft(P) Ltd. (2008) 115 ITD 1 (Chennai) Also the fact that the exemption goes with the undertaking and a change of name of the assessee does not have any bearing on the claim for benefit u/s 10AA.
4. Therefore, for the reasons given above and case laws cited above- the claim of the appellant u/s 10AA is allowed and the ground of appeal is allowed.
We have carefully gone through the order passed by learned CIT(A). We find that learned CIT(A) has followed the order of his Predecessor in earlier years and granted the relief u/s 10AA. The revenue challenged the order of ld CIT(A) for earlier years which has already been upheld by the Tribunal vide order dated29.01.2016 in for AY 2007-08 and ITA No.5643/Mum/2012 for AY 2008-09. Thus the ground of appeal raised in this appeal is covered against the Revenue. Hence, we do not find any infirmity in his order. In view of the above, we uphold the order of learned CIT(A) in both the years and dismiss the appeals filed by the Revenue.
for AY-2010-11 6. The Revenue has raised identical grounds of appeal as raised in AY 2009-10. As we have dismissed the appeal of the Revenue on identical grounds, thus, the present appeal is also dismissed on the same ground.