Micromation Pvt Ltd Vs CIT (Punjab and Haryana High Court)
Punjab and Haryana High Court held that the benefit of Section 80-I upon the conversion of a proprietorship concern or the partnership firm to a Private Limited Company, is answered in favour of the assessee. Accordingly, deduction u/s. 80-I allowed on conversion of partnership to private limited company.
Facts- The appellant company filed the return declaring income of Rs.1,88,100/- on 31.12.1990, which was selected for scrutiny and the respondents disallowed the deduction claimed by the appellant u/s. 80(I) of the Income Tax Act, 1961 on the ground that out of the total plant and machinery worth Rs. 2,41,922/-, the machinery taken over by M/s Micromation company was of the value of Rs. 1,03,163/-and the explanation to sub-section 80(I)(2) of the Income Tax Act and the proviso thereto provided that the total value of plant and machinery transferred should not exceed 20% of its value used for machinery or plant for business.
The appeal preferred by the appellant against the order by the Assessing Officer was rejected holding that benefit of Section 80(I) of the Income Tax Act was to be given only if the undertaking was not found by splitting up or reconstruction of business already in existence or by transfer to new business machinery or plant previously used for any purpose. ITAT also dismissed the appeal.
