Case Law Details

Case Name : Pembril Indl. & Engg. Co. Pvt. Ltd. Vs DCIT (ITAT Mumbai)
Appeal Number : ITA No. 8096/M/04
Date of Judgement/Order : 12/03/2009
Related Assessment Year : 2001- 2002
Courts : All ITAT (4460) ITAT Mumbai (1470)


5.6 The scheme of section 80-IB indicates that what is being aimed at is to prevent exemption to those industrial undertaking which are formed by the splitting up or by reconstruction or by transfer to a new business of plant or machinery of the old business. The transfer, in this context, must mean a transfer of plant or machinery which is essential for formation of new industrial undertaking and that must again mean a transfer to the new business of the transfer and machinery used by the transfer in his old business.

5.7 In the case under consideration the assessee company started new industrial undertaking and commenced commercial production of Auto components at Aurangabad in the previous year relevant to AY 1999-2000. For that purpose they constructed new factory building, acquired new plant & machinery and also installed new electrical installations. These are separately disclosed in the schedule of fixed assets.

5.10 In the case of CIT V Dandeli Ferro Alloys Pvt Ltd 212 ITR 1(Bomb) it has been held that since it was only subsequent to the formation of the assessee company, that the running business and the assets and liabilities of amalgamated company was to relief under section 80J and 80HH.

5.11 In Electronics Corporation Of India Limited. Vs Commissioner of Income- Tax. A. P., Hyderabad. 151 ITR 381 (AP) the Andhra Pradesh High court has held that Acquisition by assessee of Plant and Machinery previously used by a third person, does not debar the assessee from claiming relief under s. 80J.

5.12 The ITAT Mumbai in the case of Film Shoppe V Assistant Commissioner of Income Tax 95 TTJ 1056 {(2005) 4SOT 370 (MUM) held that assessee having deployed plant and machinery and equipment by hiring them, the arrangement of hire not resulting in any transfer in any form, there was no non compliance with the conditions stipulated in section 80IA.

5.13 In the light of the above discussion, we find that if an assessee formed an industrial unit by new plant and machineries and for running that new unit if some plants & machineries are taken on a hire which is not amounted to transfer a plant & machineries. The said new unit cannot be said to be formed by splitting up or reconstruction of a business already in existence or it is a case that the industrial unit is formed by the transfer of machinery & plant previously used for any purpose. The previous used machinery may be there but there is no transfer of plant & machinery. Therefore, under these circumstances the assessee cannot be disqualified for deduction u/s80IA/IB, we, therefore, allow the claim of the assessee.

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