DCIT Vs Facets Gems Polishing Works Pvt. Ltd. (ITAT Surat)
ITAT Denies Section 80IA Deduction Because Amalgamated Company Acquired Undertaking After 31 March 2007; ITAT Allows Revenue Appeal Because Amalgamation Barred Deductions Under Sections 80IA and 80JJAA; Windmill Tax Benefit Under Section 80IA Not Available Because Undertaking Was Transferred in Amalgamation; ITAT Holds Amalgamation Scheme Cannot Override Specific Restrictions Under Income Tax Act.
The Income Tax Appellate Tribunal (ITAT), Surat Bench, considered the Revenue’s appeal against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18 concerning deductions claimed by the assessee under Sections 80IA and 80JJAA of the Income-tax Act. The assessee-company was engaged in diamond processing and manufacturing on job work basis and generation of power through windmill. The Assessing Officer completed assessment under Section 143(3) by disallowing deduction of Rs.96,32,553 under Section 80IA and Rs.87,05,437 under Section 80JJAA, primarily on the ground that the assessee had undergone amalgamation in financial year 2011-12.
The Assessing Officer held that Section 80IA(12A) barred deduction under Section 80IA where an undertaking was transferred pursuant to amalgamation after 31.03.2007. The Revenue also relied upon CBDT Circular No.3/2008 dated 12.03.2008, which stated that tax benefits under Section 80IA were intended for entities undertaking initial investment and entrepreneurial risk and would not be available to undertakings transferred in amalgamation or demerger after 31.03.2007. The Assessing Officer further disallowed deduction under Section 80JJAA on the ground that the business had been reconstructed through amalgamation.
