ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, TRICHY, TRICHY V. KUMARASAMY RAMAKRISHNAN, KARUR

ITA 3315/CHNY/2024

AI Insights

The case involves three appeals by the Revenue against the orders of the CIT(A) allowing deductions under Section 80IA for windmill undertakings owned by Shri Kumarasamy Ramakrishnan. The Revenue contended that the deductions were improperly allowed as the windmills were previously used, thus violating Section 80IA(3)(ii) which prohibits deductions if the undertaking is formed by transferring previously used machinery. The CIT(A) had found that the windmills were set up with new machinery and the transfer was as a going concern, which did not violate the section. The Tribunal upheld the CIT(A)'s decision, referencing several judgments and the CBDT circular supporting the view that the deduction is specific to the undertaking and not the legal entity owning it.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398110 (ITAT-CHENNAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Other Referred Cases: PCIT V. Bajargan Traders, Overseas Leathers v. DCIT, Suresh Kumar v. DCIT, CIT v. Premier Cotton Mills Ltd, Madras Machine Tool Manufacturers v. CIT, CIT v. Heartland KG Information Ltd, Super Auto Forge Ltd v. Addl. Commissioner of Income-tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A. SASIKUMAR
• Assessee Lawyers: M.V. PRASAD; K.S. RAJENDRA KUMAR; FURNISHING ADDITIONAL EVIDENCE BY WAY OF; FURNISHING ADDITIONAL EVIDENCE
• Keywords: Set aside; Business income; Additional evidence; Unexplained expenditure; Unexplained investment; Income from undisclosed sources
• Section: 142(1); 2

Judgement Text

" आयकर अपीलीय अिधकरण,‘बी’ Ɋायपीठ,चेɄई IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH, CHENNAI ŵी धुʫुŜ आर. एल रेǭी, उपाȯƗ एवं ŵी एस.आर.रघुनाथा, लेखा सद˟ क े समƗ BEFORE SHRI DUVVURU RL REDDY, VICE PRESIDENT AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपीलसं/.ITA Nos.:3315, 3316 & 3321/Chny/2024 िनधाŊरण वषŊ / Assessment Years: 2019-20, 2020-21 & 2018-19 Assistant Commissioner of Income Tax, Central Circle -1, Trichy. vs. Shri Kumarasamy Ramakrishnan, Ramakrishna Poultry Farm, No.79, Main Road, Thalavapalayam, Karur, Tamil Nadu – 639 113. (अपीलाथŎ/Appellant) [PAN:AAGPR-3421-A] (ŮȑथŎ/Respondent) अपीलाथŎकीओरसे/Appellant by : Shri A. Sasikumar, CIT ŮȑथŎकीओरसे/Respondent by : Shri.M.V.Prasad, C.A.& Shri.K.S.Rajendra Kumar, C.A. सुनवाईकीतारीख/Date of Hearing : 27.03.2025 घोषणाकीतारीख/Date of Pronouncement : 05.06.2025 आदेश/ O R D E R PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER: These three appeals filed by the revenue are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), Chennai-19, dated 07.10.2024, 04.10.2024 &04.10.2024and pertain to assessment years 2019-20, 2020-21&2018-19 respectively. Since, facts are identical and issues are common, for the sake of convenience, these appeals filed by the revenue are being heard together and disposed off, by this consolidated order. :-2-: ITA. Nos:3315, 3316 & 3321/Chny/2024 2. The Revenue has raised the following grounds of appeal: ITA No.:3315/Chny/2024 for A.Y.: 2019-20 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld.CIT(A) erred in allowing the deduction u/s.801A to the extent of Rs.3,07,91,524/-, out of the total deduction claimed u/s.80IA of Rs.3,89,66,079/-. 2.1The Ld.CIT (A) erred in observing that the four wind mill undertakings of the assessee (K-40, K-85, K-50 &K-51 and K-243) have duly complied with the condition laid down in section 80IA(3)(ii) at the time of their formation by the previous owners and the transfer of the such undertakings as going concerns to the assessee by the previous owners did not result in violation of the condition in section 801A (3)(ii). 2.2 The Ld. CIT (A) erred in not observing that the deduction u/s.80IA is specific to assessee and not undertaking specific since section 801A clearly says that\"Where the gross total income of an assessee includes any profits and gains derived by an undertaking….” 2.3 The Ld. CIT (A) erred in not appreciating the fact that the windmills in respect of which deductions u/s.80IA had been claimed were previously used whereas the condition laid down in section 801A(3)(ii) is, \"it is not formed by the transfer to a new business of machinery or plant previously used for any purpose”. 2.4 The Ld. CIT (A) erred in not observing that in order to avail the benefit of deduction u/s 801A, it is prerequisite that the assessee has not formed the new business with machinery previously used. 2.5 The Ld. CIT (A) erred in not observing that, as per Explanation 2 to subsection 3 of 80IA, if the total value of used plant, machinery in the new business is less than 20% then clause ii) of section 80IA(3) will not apply, whereas, in the case of the assessee, since the entire undertaking has been purchased second hand, it means that 100% of plant and machinery in the new business has been previously used. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order or Ld.CIT(Appeals) may be set aside and that of Assessing Officer may be restored. ITA Nos.: 3316 /Chny/2024 for A.Y.: 2020-21 :-3-: ITA. Nos:3315, 3316 & 3321/Chny/2024 1.The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2.The Ld.CIT(A) erred in allowing the deduction u/s.80IA to the extent of Rs.5,03,37,361/-, out of the total deduction claimed u/s.80IA of Rs.6,41,49,642/-. 3.1 The Ld.CIT(A) erred in observing that the four wind mill undertakings of the assessee (K-85, K-50, K-51&K-243) have duly complied with the condition laid down in section 80IA(3)(ii) at the time of their formation by the previous owners and the transfer of the such undertakings as going concerns to the assessee by the previous owners did not result in violation of the condition in section 80IA(3)(ii). 3.2 The Ld.CIT (A) erred in not observing that the deduction u/s.80IA is specific to assessee and not undertaking specific since section 80IA clearly says that \"Where the gross total income of an assessee includes any profits and gains derived by an undertaking….” 3.3 The Ld. CIT (A) erred in not appreciating the fact that the windmills in respect of which deductions u/s.80IA had been claimed were previously used whereas the condition laid down in section 80IA(3)(ii) is, \"it is not formed by the transfer to a new business of machinery or plant previously used for any purpose”. 3.4 The Ld. CIT (A) erred in not observing that in order to avail the benefit of deduction u/s 80IA, it is prerequisite that the assessee has not formed the new business with machinery previously used. 3.5 The Ld. CIT (A) erred in not observing that, as per Explanation 2 to sub-section 3 of 80IA, if the total value of used plant, machinery in the new business is less than 20% then clause ii) of section 80IA(3) will not apply, whereas, in the case of the assessee, since the entire undertaking has been purchased second hand, it means that 100% of plant and machinery in the new business has been previously used. 4. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order or Ld.CIT(Appeals) may be set aside and that of Assessing Officer may be restored. ITA Nos.: 3321/Chny/2024 for A.Y.: 2018-19 1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld. CIT (A) erred in holding that the additional income of Rs.25,27,316/- which was disclosed as business income by the assessee in the return of income towards excess physical stock of birds, cannot be brought to tax as Income from Other Sources u/s.69A r.w.s. 115BBE. 3. The Ld. CIT (A) erred in observing that no evidence by way of purchase bills/ invoices were found during the survey which reveal that the :-4-: ITA. Nos:3315, 3316 & 3321/Chny/2024 assessee made unaccounted purchased of birds which could result in such excess physical stock of birds without appreciating the fact that the onus is on the assessee to furnish evidence towards excess stock, found during the course of survey. 4. The Ld. CIT (A) erred in holding that the additional income of Rs.1,12,76,930/- which has been disclosed as business income by the assessee in the return of income towards the difference in valuation of the stock as per the stock register, cannot be brought to tax as \"Income from Other Sources\" invoking the provisions of section 69B r.w.s. 115BBE. 4.1. The Ld. CIT (A) erred in observing that the stock difference valued at Rs.1,12,76,930/- is merely a valuation difference in respect of the stock that is already accounted in the books of account without appreciating the fact that the assessee has not furnished any working with evidence for his valuation of stock. 4.2. The Ld. CIT (A) erred in not observing the fact that the assessee has admitted the additional income, consequent to survey only, without appreciating the fact that the investment in excess stock was made from out of unaccounted Income. 5. The Ld. CIT (A) erred in allowing the deduction u/s.801A to the extent ofRs.3,71,38,157/-, out of the total deduction claimed u/s.80IA ofRs.4,51,13,396/-. 5.1 The Ld. CIT (A) erred in observing that the four wind mill undertakings of the assessee (R-4O, K-85, K-50 &K-51 and K-243) have duly complied with the condition laid down in section 80IA(3)(ii) at the time of their formation by the previous owners and the transfer of the such undertakings as going concerns to the assessee by the previous owners did not result in violation of the condition in section 80IA (3)(i). 5.2 The Ld. CIT (A) erred in not observing that the deduction w/s. 80IA is specific to assessee and not undertaking specific since section 80IA clearly says that \"Where the gross total income of an assessee includes any profits and gains derived by an undertaking….” 5.3 The ld. CIT(A) erred in not appreciating the fact that the windmills in respect of which deductions u/s. 80IA had been claimed were previously used whereas the condition laid down in section 80IA(3)(ii) is, \"it is not formed by the transfer to a new business of machinery or plant previously used for any purpose”. 5.4 The ld.CIT(A) erred in not observing that the assessee purchased the first unit K-40 in the FY 2011-12 and this unit was previously owned and used by M//s.AmitronicsPvt Ltd, Bangalore and this machine was originally installed on 28-03-2005, as such, the assessee formed this new business or specified business with a plant that was previously used for the purpose of generation of electricity. 5.5 The Ld. CIT (A) erred in not observing that, as per Explanation 2 to subsection 3 of 80IA, if the total value of used plant, machinery in the new :-5-: ITA. Nos:3315, 3316 & 3321/Chny/2024 business is less than 20% then clause (ii) of section 80IA(3) will not apply, whereas, in the case of the assessee, since the entire undertaking has been purchased second hand, it means that 100% of plant and machinery in the new business has been previously used. 6. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order of Ld CIT (Appeals) may be set aside and that of Assessing Officer may be restored.” ITA No.3321/Chny/2024 (A.Y 2018-19): 3.The facts in brief are that a survey action u/s.133A of the Act was conducted in the case of the assessee on 13.02.2018 and several incriminating materials were found and impounded. During the course of survey, physical inventory of stock was taken, and total stock was valued at Rs.7,82,20,865/- whereas book value was found to be Rs.4,16,09,617/-. For the discrepancy in stock, the assessee agreed to admita difference of Rs.3.20 crores as additional income for AY 2018-19.The case was selected for scrutiny and notices u/s.143(2) & 142(1) were issued asking the assessee to furnish further details in respect of deduction claimed u/s.80-IA with supporting documents. During the course of assessment proceedings, the AO being not satisfied with the reply or explanation furnished by the assessee disallowed the entire claim of the assessee made certain additions. 4. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) who partly allowed the appeal of the assessee, against which the Revenue is in further appeals before us. 5. In regard to ground nos.2 to 4.2 for the AY 2018-19 raised by the Revenue, the learned DR for the Revenue submitted that the additional income of Rs.25,27,316/- disclosed as business income of the assessee :-6-: ITA. Nos:3315, 3316 & 3321/Chny/2024 in the return of income towards excess physical stock of birds was rightly brought to tax by the AO as income from other sources u/s.69A r.w.s 115BBE of the Act. The ld. DR also submitted that the Ld.CIT(A) fell in error by observing that no evidence by way of purchase bills/ invoices were found during the survey which reveal that the assessee made unaccounted purchase of birds which could result in such excess physical stock of birds without appreciating the fact that the onus was on the assessee to furnish evidence towards excess stock, found during the course of survey. The Ld.DR also submitted that additional income of Rs.1,12,76,930/- which has been disclosed as business income by the assessee in the return of income towards the difference in valuation of the stock as per the stock register, has been rightlybrought to tax by the AO as \"Income from Other Sources\" invoking the provisions of section 69B r.w.s. 115BBE. The Ld.DR also contended that the ld.CIT(A) has erred in observing that the stock difference valued at Rs.1,12,76,930/- is merely a valuation difference in respect of the stock that was already accounted in the books of account without appreciating the fact that the assessee has not furnished any working with evidence for his valuation of stock. Therefore, the ld.DR pleaded that impugned order may be set aside on this issue and order of the AO may be restored. 6. Per contra, the ld. AR for the assessee submitted that the on issue of applicability of higher rate of tax u/s.69A/69B r.w.s 115BBE in respect of business income admitted by the assessee in the return of income towards stock difference found during the survey, the revenue challenges the decision of the ld.CIT(A). He drew our attention to the findings arrived by :-7-: ITA. Nos:3315, 3316 & 3321/Chny/2024 the ld.CIT(A) in his order that the conclusion arrived by the AO that there was excess physical stock of birds at the time of survey was not substantiated by unassailable evidence. Further, the Ld.CIT(A)also observed that notwithstanding the admission of additional income of Rs.25,27,316/- towards the value of such excess physical stock under the head business income by the assessee in the return of income with a view to avoid any litigation, the very finding of excess physical stock of birds by the AO is untenable on facts and unsustainable in the eyes of law. Therefore, the ld.CIT(A) accordingly held that the provisions of section 69A cannot be invoked in the said facts of the case. Consequently, the ld.CIT(A) held that the additional income of Rs.25,27,316/-, which was disclosed as business income by the assessee in the return of income towards excess physical stock of birds, cannot be brought to tax as Income from other sources u/s.69A r.w.s115BBE and hence, the ld.CIT(A) has rightly directed the AO to tax the said income at the normal rate of tax applicable to the assessee. The ld. AR also relied upon the judgement of the Hon’ble Rajasthan High Court in the case of PCIT V. Bajargan Traders [2017] 86 taxmann.com 295 (Rajasthan) (Page No.170 to 172 of the Paper Book) and also the decisions of co-ordinate Bench of this Tribunal in the cases of Overseas Leathers v. DCIT in ITA No.962/CHNY/2022 (Page No.173 to 199 of the Paper Book) and in the case of Suresh Kumar v. DCIT in ITA No.167/CHNY/2023 (Page No.199 to 222 of the Paper Book). In view of the above reasons, the ld. AR for the assessee pleaded that the grounds raised by the Revenue on this issue required to be dismissed. :-8-: ITA. Nos:3315, 3316 & 3321/Chny/2024 7. We have heard rival submissions and perused the material on record. We find that on the issue of difference in number of birds and in valuation of birds, the assessee has offered a plausible reasons and satisfactory explanation with regard to the purported excess physical stock of birds, worked out at the time of survey and difference in valuation of stock as per stock register. The ld.CIT(A) after taking into consideration all the relevant facts and materials on record and case laws relied on by the assessee held as under: “6.2.13 In view of the above discussions, the undersigned is of the considered viewthat the conclusion arrived by the AO that there was excess physical stock of birds at the time of survey is substantiated by unassailable evidence. Notwithstanding the admission of additional income of Rs.25,27,316/- towards the value of such excess physical stock under the head business income by the appellant in the return of income with a view to avoid any litigation. The very finding of excess physical stock of birds by the AO is untenable on facts and unsustainable in the eyes of law. It is therefore held that the provisions of section 69A of the Act cannot be invoked in the said facts of the case. Consequently, it is held that the additional income of Rs.25,27,316/-, which was disclosed as business income by the appellant in the return of income towards excess physical stock of birds, cannot be brought to tax as Income from other sources u/s 69A read with section 115BBE. Therefore, the AO is directed to tax the said income at the normal rate of tax applicable to the appellant. 6.2.14 In respect of the second component of stock difference amounting Rs.1,12,76,930/-, which represents the valuation difference in respect of the stock of birds as per the stock register (numbering 3,22,198) between the valuation made at the time of survey and the valuation made by the appellant. The survey team valued the said birds at a uniform rate Rs.142/- per bird, whereas the appellant valued them at the average value of Rs.107/- per bird. The AO did not accept the contention of the appellant that the birds available in the stock consisted of birds of varying age in weeks and the cost/value of the birds also varies based on their age. The AO did not accept the contention of the appellant that some of the birds are required to be culled as they have crossed the reproductive age and they have to be valued at Rs.50/- per bird or even at zero value. The AO observed that that the value of Rs.142/- per bird may have been supplied by the assessee himself during the survey since the department does not have the relevant expertise. The AO also observed that inventory valuation prepared by the Department at the time of survey was accepted by the appellant in the statement recorded during the course of the survey. 6.2.15 During the course of appellate proceedings, the appellant pleaded that the reasons given by the AO in the assessment order for not accepting the :-9-: ITA. Nos:3315, 3316 & 3321/Chny/2024 contentions of the appellant are not justified. The appellant contended that the assertion made by the AO about the fact that the value of Rs.142/- per bird may have been supplied by the assessee himself during the course of survey is merely a presumption by the AO which is not supported by any evidence. The appellant submitted that it is not correct to state that a poultry farm does not have any old birds which have stopped laying eggs and the practical situation that a poultry farm is bound to have such old birds at any point of time cannot be lost sight of merely because the appellant did not keep separate record of the same. 6.2.16 The appellant also submitted that the observation of the AO regarding acceptance of inventory valuation by him during the survey is not factually correct since the appellant had pointed out in his reply to Q.No.5 of the statement recorded during the survey that the physical stock has been valued by the survey team at sale price though it is required to be valued at cost or market price whichever is lower. The appellant contended that the stand of the AO is not correct also the statement recorded during the survey has no evidentiary value. The appellant also submitted that this component of stock difference does not represent the value of any excess quantity of stock found during the course of survey in relation to the stock register maintained by the appellant and it is merely difference in valuation of the stock as per the stock register. 6.2.17 On a careful examination of the facts of the case and the contentions of the AO and the appellant, the undersigned is of the considered view that the appellant has offered a reasonable and satisfactory explanation with regard to the excess value of stock of birds, in respect of 3,22,198 birds appearing in the stock register at the time of survey. It is undisputed that the said quantum of birds as per the stock register are duly accounted in the financial records of the appellant. Hence, it is undeniable that this component of stock difference has arisen wholly due to the difference in the cost/value per bird adopted for arriving at the stock value. It is also undisputed that no evidence was found during the survey to show that any unaccounted expenditure/cost was incurred by the appellant towards the maintenance of the birds. Hence, this component of stock difference valued at Rs.1, 12,76,930/- is merely a valuation difference in respect of the stock that is already accounted in the books of account. Therefore, it cannot be considered that the appellant made unexplained investment towards the stock in the form of the said birds, even if there is divergence of opinion regarding the valuation of the said stock between the AO and the appellant. 6.2.18 In this regard, it is also required to be kept in view that it is the value of the closing stock as determined at the end of the financial year that has a bearing on the computation of income and the value worked out at some intervening point of time during the course of the year (i.e. at the time of survey as on 13.02.2018) does not have any relevance for the purpose of determining the income in this line of business. 6.2.19 In view of the above, it is hereby held that there exists no case for holding that any unexplained investment has been made by the appellant within the meaning of section 69B of the Act in respect of the amount of difference in valuation of the stock of birds, which are accounted in the financial records. Notwithstanding the admission of additional income of :-10-: ITA. Nos:3315, 3316 & 3321/Chny/2024 Rs.1,12,76,930/- towards such difference under the head business income by the appellant in the return of income with a view to avoid any litigation. 6.2.20 Moreover, the dispute is also with regard to the applicability of section 69A/69B r.w.s 115BBE of the Act to such income admitted in the return of income, so as to tax the same at a higher rate. In this regard, it is pertinent to advert to the case laws which support the contention of the appellant that difference in stock is required to be treated as business income and that the provisions of section 698 of the Act are not applicable with respect to the said income. 6.2.21 In the case of PCIT Vs. Bajargan Traders [2017] 86 taxmann.com 295, the Hon'ble Rajasthan High Court held that the investment in excess stock of rice found during the course of survey in the case of the assessee regularly dealing in the said commodity is to be brought to tax under the head 'business income' and not under the head 'income from other sources'. In the case of Overseas Leathers Vs DCIT in ITA No.962/Chny/2022, the Hon'ble ITAT, Chennai (jurisdictional Tribunal) held that the excess stock found during the course of survey does not have any independent identity as the asset is a mixed part of overall stock found in the business premises of the assessee and where the assessee has explained the source for acquisition of the stock to be business income, the same cannot be assessed as unexplained investment u/s 69B. In the case of Suresh Kumar Vs DCIT in ITA No.167/Chny/2023, the Hon'ble ITAT, Chennai (jurisdictional Tribunal) held that the additional income offered towards excess stock found during the course of survey is assessable under the head income from business as claimed by the assessee, but not income assessable u/s. 69B of the Act. 6.2.22 In the light of the discussion made above and the judicial precedents applicable to the facts of the case, the undersigned is of the considered view that the additional income of Rs.1, 12,76,930/-, which has been disclosed as business income by the appellant in the return of income towards the difference in valuation of the stock as per the stock register, cannot be brought to tax as \"Income from other sources\" invoking the provisions of section 69B r.w.s 115BBE of the Act. Accordingly, the AO is directed to tax the said income at the normal rates of tax. In this back drop, all the grounds raised by the appellant upon this issue are hereby treated as allowed.” 8. We find that the ld.CIT(A)has categorically held that it is an undisputed fact that no evidence by way of purchase bills/invoices were found during the survey which reveal that the assessee made unaccounted purchases of birds which could result in such excess physical stock of birds and the AO mainly relied on the statement of the assessee recorded during the course of the survey to evaluate the correctness of the excess physical stock worked out at the time of survey and reject the explanation of the :-11-: ITA. Nos:3315, 3316 & 3321/Chny/2024 assessee during the assessment proceedings. After analyzing the entire facts and circumstances of the case, the ld.CIT(A) opined that conclusion arrived by the AO that there was excess physical stock of birds at the time of survey was substantiated by unassailable evidence and notwithstanding the admission of additional income of Rs.25,27,316/- towards the value of such excess physical stock under the head business income by the assessee in the return of income with a view to avoid any litigation. Therefore, the ld.CIT(A) held that the very finding of excess physical stock of birds by the AO was untenable on facts and unsustainable in the eyes of law and hence, the provisions of section 69A of the Act cannot be invoked in the said facts of the case. Consequently, it was held by the ld.CIT(A) that the additional income of Rs.25,27,316/-, which was disclosed as business income by the assesseein the return of income towards excess physical stock of birds, cannot be brought to tax as Income from other sources u/s.69A r.w.s115BBE of the Act. The Revenue has failed to bring any contrary evidence to disprove the claim of the assessee. Therefore, we see noinfirmity in the order of the Ld.CIT(A) on these issues and accordingly, we uphold the findings of the Ld.CIT(A) and reject the ground nos.2 to 4.2 raised by the Revenue. 9. The next issue raised by the Revenueis in regard to deduction claimed by the assessee u/s.80IA(4)(iv) in respect of profits & gains of wind mills. 10. The facts in brief are that the assessee claimed deduction of Rs.4,51,13,396/- u/s.80IA(4)(iv) of the Act for the AY 2018-19 in respect of seven wind mill units owned and operated by the assessee. The said wind mill unitswere acquired by the assessee from the previous owners duringthe :-12-: ITA. Nos:3315, 3316 & 3321/Chny/2024 financial years 2011-12, 2014-15 and 2015-16 and claimed deduction u/s.80IA(4) of the Act for the first time for AY 2018-19 and the previous owners did not claim any deduction u/s.80IA during the period when the wind mill undertakings were owned and operated by themand also no deduction was claimed by the assessee in the earlier assessment years. The details of windmill units and deduction claimed by the assessee u/s.80IA(4) are as under:- S.No Windmill unit Date of commissioning & commercial generation of power Name of previous owner Date of acquisition of unit by assessee Amt. of deduction claimed u/s 80IA Rs. 1 K-40 22.03.2005 Amitronics P.Ltd 23.11.2011 69,11,995 2 K-85 28.03.2008 VSL Mining P Ltd 08.09.2014 86,53,522 3 K-109 30.09.2005 Anil H Lad 08.09.2014 79,75,239 4 K-110 5 K-50 30.09.2005 Vandana Ispate Ltd 01.01.2015 1,67,69,983 6 K-51 7 K-243 31.03.2006 Nav Bharat Intl.Ltd 28.07.2015 48,02,657 Total Rs.4,51,13,396 11. Out of the seven wind mill units, the assessee has withdrawn disputed claim in respect of Units K-109 and K-110 amounting to Rs.79,75,239/- out of total disallowance of Rs.4,51,13,396/-. The balance amount of deduction claimed by the assessee in respect of four windmill units u/s.80IA(4)(iv) of the Act is Rs.3,71,38,157/-. It is undisputed fact that seven windmill units were constituted into five wind mill undertakings. The windmill units K-40, K- 85 and K-243 were stated to constitute three separate windmill undertakings, as they were separately set up by respective previous owners as distinct units for generation of power. The windmill units K-50 & K-51 together were stated to constitute one windmill undertaking and they were set up &commissioned simultaneously by the previous owner M/s.Suzlon Energy :-13-: ITA. Nos:3315, 3316 & 3321/Chny/2024 Ltd. The assessee claimed deduction of Rs.4,51,13,396/-u/s.80IA of the Act for AY 2018-19. However, the AO was of the view that assessee is not eligible for deduction u/s.80IA(4)(iv) of the Act, since the windmill units were purchased second hand from previous owners by the assessee which were transferred to new business of the assessee which were previously used for any purpose amounted to violation of mandatory condition prescribed u/s.80IA(3)(ii) of the Act. Therefore, the AO disallowed the claim of the assessee u/s.80IA(4)(iv) of the Act. 12. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A), who partly allowed the claim of the assessee to the extent of Rs.3,71,38,157/-. Aggrieved by the ld.CIT(A) order, the Revenue is in appeals before us. 13. The ld.DR for the Revenue reiterated the grounds raised by the Revenue and supported the order of the AO and pleaded for setting aside the order of CIT(A). 14. Per contra, the ld.AR for the assessee supported order of the ld.CIT(A) and pleaded for rejection of grounds raised by the Revenue. 15. We have heard rival submissions and perused material on record. The ld. AR for the assessee submitted that the period of eligibility for claiming the deduction ended by A.Y 2019-20 for one wind mill undertaking (K-40), by A.Y. 2020-21 for three wind mill undertakings (K-50 & 51, K-109 & 110 and K-243) and by A.Y. 2022-23 for one wind mill undertaking (K-85). Accordingly, the assessee claimed deduction in respect of five wind mill undertakings for A.Y.2018-19 and A.Y.2019-20 and four wind mill :-14-: ITA. Nos:3315, 3316 & 3321/Chny/2024 undertakings for A.Y. 2020-21. According to the AO, the assessee is not eligible for the deduction claimed u/s.80IA(4)(iv) since all the wind mills undertakings were purchased second hand from the previous owners by the assessee. Therefore, the AO was of the view that consequently it has to be considered that the wind mill machinery, which were transferred to the new business of the assessee, were previously used for any purpose, which amounted to violation of the mandatory condition prescribed in section 80IA(3)(ii). We find that during the course of the appellate proceedings, the assessee submitted additional evidence under Rule 46A of I.T Rules before the ld.CIT(A) in order to substantiate the factual claims made in the grounds of appeal that the wind mill undertakings were transferred as “going concern” from the previous owners to the assessee and such wind mill undertakings were formed by the previous owners with entirely new machinery. The additional evidence was furnished in respect of 4 wind mill undertakings (i.e K-40, K-50 & K-51, K-85 and K-243) out of the five wind mill undertakings. The assessee did not file any additional evidence in respect of one wind mill undertaking consisting of two units K-109 and K-110. Hence, the assessee has withdrawn the dispute regarding the disallowance of deduction u/s.80IA(4)(iv) to the extent of the profits & gains of the said fifth wind mill undertaking for all the three assessment years. It is stated that in the remand report furnished with regard to the said additional evidence, the AO did not dispute the facts which are evidenced by the additional evidence to the effect that the four wind mill undertakings were set-up/formed by the previous owners with entirely new machinery supplied by M/s.Suzlon Energy Ltd and that the said wind mill undertakings were transferred as “going concern” with :-15-: ITA. Nos:3315, 3316 & 3321/Chny/2024 all their assets and liabilities to the assessee by the previous owners. However, the AO differed with the interpretation of the assessee that provisions of section 80IA(3)(ii) based on the facts proved through the additional evidence. The AO did not agree with the legal contentions of the assesseethat no disallowance of the deduction claimed u/s.80IA(4)(iv) is attracted on the ground of violation of the condition specified in section 80IA(3)(ii) when the ‘running business’ of the ‘wind mill undertaking’ is transferred to the assessee by the previous owner and that the stipulation in the said condition that the ‘undertaking’ is not formed by the transfer of machinery or plant previously used for any purpose could not be made applicable in such cases. The AO reiterated the view adopted in the assessment order that the assessee is not eligible for the deduction claimed u/s.80IA(4)(iv) of the Act, since all the wind mills undertakings were purchased second hand from the previous owners by the assessee, which amounted to transfer of used wind mill machinery to the new business of the assessee resulting in violation of the mandatory condition prescribed in section 80IA(3)(ii) of the Act. 16. On appeal, based on a combined reading of sub-sections (1) and (4) of section 80IA, the ld.CIT(A) noted as under: a) The deduction allowed to an assessee under the said section is in respect of the profits & gains of the “undertaking” derived from the eligible business engaged in by the said undertaking, provided such profits & gains are included in the gross total income of the assessee. b) Though the deduction u/s.80IA of the Act is allowable in the hands of an assessee, the profits & gains which is eligible for the deduction is that of the ‘undertaking’ owned by the assessee, which is derived by the said ‘undertaking’ from the eligible business. c) The deduction u/s.80IA of the Act is specific to the ‘undertaking’ owned by an assessee and not specific to the assessee itself. It is the :-16-: ITA. Nos:3315, 3316 & 3321/Chny/2024 ‘undertaking’ which is required by law to be engaged in the eligible business and the profits & gains derived by the undertaking from such eligible business is eligible for the deduction in the hands of the assessee who owns the undertaking. Further, the ld.CIT(A) by relying on the judgment of the Hon’ble Madras High Court (Jurisdictional High Court) in the case of CIT v. Premier Cotton Mills Ltd [2000] 108 Taxman 2018 (Madras) opinedthat the word ‘undertaking’ is not to be equated with the “legal entity” which may own the undertaking. The ld.CIT(A) also relied on the judgment of the Hon’ble jurisdictional Madras High Courtin the case of Madras Machine Tool Manufacturers v. CIT [1975] 98 ITR 119 (Madras), wherein it was held that a company may own or run many undertakings some of which may be entitled to the benefit of section 84 and others may not be so entitled and hence, it is not possible to equate the “undertaking” with the company which owns the undertaking. It was held therein that when a company owns more than one undertaking, the application of section 84 has to be with respect to the particular undertaking and not to the company in general. The ld.CIT(A) further observed that though the said judgment was rendered while interpreting the provisions of section 84 of the Act, which dealt with the income of newly established industrial undertakings or hotels, the legal principle laid down therein is applicable wherever the tax benefits are specified in the Act with reference to profits & gains of the undertakings, including the provisions of section 80IA of the Act. Further, we note that by applying the legal principles enunciated in the judgments of the Hon’ble jurisdictional Madras High Court in the cases of Premier :-17-: ITA. Nos:3315, 3316 & 3321/Chny/2024 Cotton Mills Ltd (supra) and Madras Machine Tool Manufacturers (supra), the ld.CIT(A) held that the deduction u/s.80IA of the Act is provided with reference to the profits & gains of an “undertaking” engaged in an eligible business, regardless of the assessee/legal entity which owns and operates the concerned undertaking and consequently, the conditions to be satisfied for being eligible for the deduction have been prescribed in section 80IA(3) of the Act with reference to the concerned ‘undertaking’ only and not with reference to the ‘assessee’ who owns the ‘undertaking’. On reading of the provisions of section 80IA(3) of the Act, the ld.CIT(A) observed that the conditions laid down therein are explicitly stated to be specific to the “undertaking”, whose profits & gains are being considered for the deduction u/s.80IA(4)(ii) or 80IA(4)(iv), which is evident from the phrase “This section applies to an undertaking…..” employed at the beginning of the sub-section. The ld.CIT(A) therefore concluded that there is no scope for any doubt that the conditions prescribed in clauses (i) and (ii) of section 80IA(3) are applicable to the “undertaking”, in respect of whose profits & gains deduction is claimed u/s.80IA(ii) or (iv). The said conditions are not applicable with reference to the “assessee” who owns the undertaking but are applicable with reference to the “undertaking” itself. 17. Since the dispute in the case of the assessee is with regard to the fulfillment of the condition prescribed in clause (ii) of section 80IA(3) of the Act that the “undertaking” is not formed by the transfer to a new business of machinery or plant previously used for any purpose, the ld.CIT(A) held that the satisfaction of the said condition is required to be evaluated with :-18-: ITA. Nos:3315, 3316 & 3321/Chny/2024 reference to each wind mill ‘undertaking’ of the assesseeand not with reference to the ‘assessee’ as such. The ld.CIT(A) further observed that it is unambiguously clear from the reading of the condition prescribed in clause (ii) of section 80IA(3) of the Act that there should be no transfer of ‘used machinery or plant’ to the undertaking at the point of time when the undertaking is formed/established which implies that the undertaking should be formed with new machinery or plant as per the said condition. Accordingly, the ld.CIT(A) held that the fulfillment of the condition laid down in clause (ii) of section 80IA(3) of the Act is required to be evaluated at the time of formation/establishment of the concerned undertaking. 18. Since all the wind mill undertakings were acquired by the assessee from the previous owners as going concern, the ld.CIT(A) expressed the view that the fulfillment of the condition specified in clause (ii) of section 80IA(3) of the Act is required to be evaluated in respect of each of the four wind mill undertakings of the assesseeat the time of setting-up/formation of the said undertakings by the respective previous owners and if the undertakings are found to have been set-up/formed with entirely new machinery or plant, it has to be considered that the condition prescribed in section 80IA(3)(ii) of the Act has been fulfilled. The ld.CIT(A) was of the view that the aforesaid legal inference is supported by the decision of the Hon’ble Madras High Court in the case of CIT v. Premier Cotton Mills Ltd (supra). The said judgment was rendered with reference to the provisions of section 80-J(4) of the Act, where the condition prescribed in clause (ii) thereof is identical to the condition prescribed in :-19-: ITA. Nos:3315, 3316 & 3321/Chny/2024 section 80IA(3)(ii). The ld.CIT(A) therefore held that the ratio laid down in the said decision is squarely applicable to the interpretation of section 80IA(3)(ii) also. The Hon’ble jurisdictional High Court held in the said decision, while interpreting the condition laid down in section 80J(4)(ii) which stipulates that the undertaking is not formed by the transfer to the new business of machinery or plant previously used for any purpose, that the said condition clearly indicates that the use of plant and machinery which was already in use, but in a different unit, will not be sufficient to comply with the said condition and what is more important is that the plant and machinery which forms part of the industrial undertaking is installed for the first time in that undertaking. Further, on examination of the facts of the case, the ld.CIT(A) observed that all the four wind mill undertakings owned by the assessee were formed/set-up entirely with new machinery or plant by the previous owners, as established by the assessee by furnishing additional evidence during the course of the appellate proceedings. In view of this, the ld.CIT(A) held that the condition laid down in clause (ii) of Section 80IA(3)(ii) of the Act is duly fulfilled by all the four wind mill undertakings of the assessee and as a consequence, it has to be considered that the said wind mill undertakings are eligible for the deduction u/s.80IA(4)(iv) of the Act in respect of their profits and gains. Further, the ld.CIT(A) held that once the undertaking is found to satisfy the condition in section 80IA(3)(ii) of the Act at the time it was formed/established, it becomes eligible for the deduction u/s.80IA(4)(iv) of the Act and remains so for the balance eligibility period as specified in the section. Accordingly, the ld.CIT(A) held that the four wind mill :-20-: ITA. Nos:3315, 3316 & 3321/Chny/2024 undertakings of the assessee, which fulfilled the condition in section 80IA(3)(ii) of the Act at the time of their formation, are eligible for deduction u/s.80IA(4)(iv) of the Act in respect of their profits and gains in all the assessment years falling within the specified period of eligibility. 19. The ld.CIT(A) observed that another issue which requires examination is whether the eligibility of an undertaking for the deduction u/s.80IA(4)(iv) for the specified number of assessment years from the initial assessment year is affected by the change in the ownership of the undertaking, when the undertaking is transferred from one legal entity to another legal entity as a ‘going concern’ with all its assets and liabilities and rights and obligations. The ld.CIT(A) observed that when the entire ‘undertaking’ is transferred from one legal entity to another as a going concern, the identity of the ‘undertaking’ does not undergo any change and it remains unaltered. Since the deduction u/s.80IA(4)(iv) is specific to an ‘undertaking’ and not to the legal entity which owns the undertaking, the benefit of deduction u/s.80IA of the Act is attached to the undertaking which fulfils the conditions laid down in the section. The ld.CIT(A) accordingly held that the ‘undertaking’ which is found to be eligible for the deduction u/s.80IA(4)(iv) of the Act at the time of its formation on account of its compliance with the conditions stipulated in section 80IA(3) of the Act at that time, continues to be eligible for the said deduction despite the subsequent transfer of the ownership of the undertaking from one assessee to another. 20. Since the AO was of the view that the transfer of the wind mills from the previous owners to the assessee resulted in violation of the :-21-: ITA. Nos:3315, 3316 & 3321/Chny/2024 condition prescribed in section 80IA(3)(ii) of the Act on the reasoning that the said transfer represented transfer of previously used machinery or plant to the new business of the assessee, the ld.CIT(A) examined the issue of whether the transfer of an ‘undertaking’ from one legal entity to another as a going concern can be construed as “transfer of previously used machinery or plant to the new business” of the transferee legal entity within the meaning of section 80IA(3)(ii) of the Act. The ld.CIT(A) observed that the condition prescribed in section 80IA(3)(ii) of the Act is applicable only at the time of formation/setting-up of the undertaking as clearly evident from the language employed therein and the same has no relevance when the undertaking is subsequently transferred from one legal entity to another. The ld.CIT(A) observed that when an undertaking as a whole is transferred as a going concern, there is transfer of the entire business of the undertaking including its assets, liabilities, rights and obligations and such transfer cannot be viewed as transfer of machinery or plant in a narrow sense. In view of these reasons, the ld.CIT(A) held that the transfer of an ‘undertaking’ as a going concern from one assessee to another does not fall under the scope of the negative condition prescribed in section 80IA(3)(ii) of the Act, so as to attract disallowance of the deduction u/s 80IA(4)(iv) of the Act. 21. In this regard, the ld.CIT(A) drew strong support from the judgment of the Hon’ble Madras High Courtin the case of CIT v. Heartland KG Information Ltd [2013] 39 taxmann.com 132 (Madras), wherein the Hon’ble High Court held while interpreting the analogous provision of :-22-: ITA. Nos:3315, 3316 & 3321/Chny/2024 section 10A(2)(iii) of the Act that the assessee would not be disentitled to the relief under section 10A when the transfer is not that of plant and machinery alone but of sale of whole of the business unit. The Hon’ble High Court observed that what is prohibited in section 10(A)(2)(iii) is the transfer of used machinery and plant to a new business undertaking and that there is no specific prohibition or even by inference to an industrial unit formed by transfer of entire business. The ld.CIT(A) observed that though the said decision was rendered with reference to the provisions of section 10A(2)(iii) of the Act, it applies with equal force to the provisions of section 80IA(3)(ii) of the Act also, since the provisions of 10A(2)(iii) and 80IA(3)(ii) are identically worded. The condition prescribed in section 10A(2)(iii) reads as “It is not formed by the transfer to a new business of machinery or plant previously used for any purpose” in relation to an undertaking and the same is identical to the condition prescribed in section 80IA(3)(ii) of the Act in relation to an undertaking. 22. Further, the ld.CIT(A) observed that the said decision in the case of Heartland KG Information Ltd (supra) was followed subsequently in the case of Super Auto Forge Ltd v. Addl. Commissioner of Income-tax in Tax Case (Appeal) Nos.207 and 208 of 2008 by the Hon’ble Madras High Court, while rendering the judgment with reference to the condition prescribed in section 10B(2)(iii), which is also identical to the condition prescribed in section 80IA(3)(ii) of the Act. The ld.CIT(A) placed reliance on the said decision of the Hon’ble Jurisdictional High Court also. :-23-: ITA. Nos:3315, 3316 & 3321/Chny/2024 23. The ld.CIT(A) also relied on the judgment of the Hon’ble Bombay High Court in the case of CIT Vs. Sonata Software Ltd [2012] 21 taxmann.com 23 (Bombay). Wherein the Hon’ble High Court upheld the decision of the Tribunal that where a running business is transferred lock, stock and barrel by one assessee to another assessee, the principle of transfer of plant and machinery cannot be applied and that the benefit of section 10A attaches to the undertaking and not to the assessee which owns the undertaking. 24. The ld.CIT(A) also observed that the ratio laid down in the above mentioned judgments, including the binding decisions of the Hon’ble Madras High Court, is squarely applicable to the facts of the assessee’s case, since the wind mill undertakings were acquired by the assessee as ‘going concern’ from the previous owners who had established the said undertakings, with all their assets, liabilities, rights and obligations, as established by the assesseeby furnishing additional evidence by way of confirmation letters of the previous owners of the said four wind mill undertakings and which remains undisputed by the AO in the remand report. Since the negative condition prescribed in section 80IA(3)(ii) of the Act is inapplicable to the transfer of the entire undertaking as a going concern as per the said ratio, it was held by the ld.CIT(A) by following the said binding judgments that the assessee is not disentitled to claim the deduction u/s.80IA(4)(iv) of the Act in respect of the profits & gains of the four wind mill undertakings (K-40, K-85, K-50 & K-51 and K-243) on the legally erroneous ground cited by the AO that the transfer of the wind mill :-24-: ITA. Nos:3315, 3316 & 3321/Chny/2024 undertakings to the assesseefrom the previous owners has resulted in transfer of previously used machinery or plant in violation of the condition prescribed in section 80IA(3)(ii) of the Act. It was accordingly held by the ld.CIT(A) that the assessee is eligible for the deduction u/s.80IA(4)(iv) in respect of the profits and gains of the concerned four wind mill undertakings. 25. In this regard, it is submitted that the assessee places strong reliance on the orders of the ld.CIT(A) on this issue for A.Ys 2018-19, 2019-20 and 2020-21. Further, the assessee submits that the issue under dispute is a covered matter and the following judgments relied on by the ld.CIT(A), including judgments of the Hon’ble jurisdictional High Court, are squarely applicable to the facts of the assessee’s case: (i)Judgment of Hon’ble Madras High Court (jurisdictional High Court) in the case of CIT Vs. Premier Cotton Mills Ltd [2000] 108 Taxman 2018 (Madras) (Page 130 to 134 of the Paper Book). (ii)Judgment of Hon’ble Madras High Court (jurisdictional High Court) in the case of Madras Machine Tool Manufacturers Vs. CIT [1975] 98 ITR 119 (Madras) (Page 116 to 121 of the Paper Book) (iii)Judgment of Hon’ble Madras High Court (jurisdictional High Court) in the case of CIT Vs. Heartland KG Information Ltd [2013] 39 taxmann.com 132 (Madras) (Page 146 to 152 of the Paper Book). (iv)Judgment of Hon’ble Madras High Court (jurisdictional High Court) in the case of Super Auto Forge Ltd Vs Addl. Commissioner of Income- tax in Tax Case (Appeal) Nos.207 and 208 of 2008 (Page 153 to 161 of the Paper Book). (v) Judgment of Hon’ble Bombay High Court in the case of CIT Vs. Heartland KG Information Ltd CIT Vs. Sonata Software Ltd [2012] 21 taxmann.com 23 (Bombay) (Page 162 to 169 of the Paper Book) :-25-: ITA. Nos:3315, 3316 & 3321/Chny/2024 26. Further, with regard to the contention of the revenue in the grounds of appeal that the ld.CIT(A) erred in observing that the deduction u/s.80IA of the Act is specific to the assessee and not to the undertaking, the assessee submits that the said observation of the ld.CIT(A) was based on the clear and explicit wording in section 80IA(3) of the Act that the conditions laid down therein apply to the “undertaking” and the ratio laid down by the Hon’ble Jurisdictional High Court in the cases of Premier Cotton Mills Ltd (supra) and Madras Machine Tool Manufacturers (supra) that “undertaking” is not to be equated with the “legal entity” which owns the undertaking. In view of such distinction between the undertaking and the legal entity that owns the undertaking (assessee) as per the binding judgments of the Hon’ble Jurisdictional High Court, the condition prescribed in section 80IA(3)(ii) of the Act that “the undertaking is not formed by transfer to the new business of machinery or plant previously used for any purpose” has to be necessarily construed as the condition specific to the undertaking and not a condition specific to the assessee. Hence, it is submitted that the above contention of the revenue in the grounds of appeal is not sustainable in law being contrary to the binding judgments of the Hon’ble Jurisdictional High Court. 27. With regard to another contention of the revenue in the grounds of appeal that the ld.CIT(A) erred in not observing that the assessee formed the new business (specified business of generation of power) with a plant that was previously used for the purpose of generation of electricity by the previous owner, it is submitted that since the condition laid down in section 80IA(3)(ii) is applicable to the “undertaking” and not to :-26-: ITA. Nos:3315, 3316 & 3321/Chny/2024 the “assessee” as submitted in the preceding paragraph having regard to the binding judgments of the Hon’ble Jurisdictional High Court, it has to be construed that the transfer of previously used machinery or plant to the new business which is prohibited in the condition laid down in section 80IA(3)(ii) of the Act is in relation to the new business of the “undertaking” at the time of “formation” of such undertaking and not in relation to the new business of the assessee as sought to be contended by the revenue. Since it is an undisputed fact that the wind mill undertakings of the assessee were “formed” with new machinery or plant by the previous owners, the condition in section 80IA(3)(ii) of the Act is duly fulfilled. Hence, it is submitted that the above contention of the revenue in the grounds of appeal is untenable in law, being contrary to the provisions of section 80IA(3)(ii) of the Act and the binding judgments of the Hon’ble Jurisdictional High Court. 28. With regard to the contention of the revenue in the grounds of appeal that the ld.CIT(A) erred in not appreciating that the condition laid down in section 80IA(3)(ii) is violated in the case of the assesseesince the wind mills were previously used by the previous owners, it is submitted that the subject matter of prohibition in the condition prescribed in section 80IA(3)(ii) is the transfer of previously used machinery or plant to a new undertaking and it does not apply to the transfer of the “undertaking” itself as a “going concern” to from one legal owner to another legal owner. This legal principle has been laid down by the Hon’ble Jurisdictional High Court in the cases of CIT Vs. Heartland KG Information Ltd (supra) and Super Auto Forge Ltd Vs Addl. Commissioner of Income-tax (supra), as :-27-: ITA. Nos:3315, 3316 & 3321/Chny/2024 discussed in detail in the order of the ld.CIT(A). The said decisions of Hon’ble Jurisdictional High Court are binding on the revenue. 29. Further, the assessee submits that the legal position that the deduction is attached to the undertaking and not to the legal owner of the undertaking and the successor is entitled to the benefit of deduction when the undertaking is taken over as a going concern has also been laid down by the CBDT in the Circular issued in F.No.15/5/63-IT(A-1) dated 13.12.1963 which reads as under: “The Board agree that the benefit of section 84 of the I.T Act, 1961, attaches to the undertaking and not to the owner thereof. The successor will be entitled to the benefit for the unexpired period of five years provided the undertaking is taken over as a running concern” 30. The above-mentioned Circular of the CBDT has been referred to in the judgment of Hon’ble High Court of Punjab and Haryana in the case of CIT v. Mega Packages [2011] 15 taxmann.com 80 (Punjab & Haryana) at Paras 11 and 12 of the judgment. The Hon’ble High Court observed therein that the said circular was issued with reference to Section 84 of the Act, which has been replaced by Section 80J w.e.f 01.04.1968. Section 80J has been omitted by Finance Act No.2 of 1996 w.e.f 01.04.1989. The Hon’ble High Court observed that the provisions of section 84/80J and 80IC are similar in the context of benefit of deduction to be allowed to an undertaking. The Hon’ble High Court held that the benefit of deduction u/s.80IC has to be allowed to the successor to whom the undertaking was transferred as a going concern. :-28-: ITA. Nos:3315, 3316 & 3321/Chny/2024 31. The legal position stated in the said circular of the CBDT would also be applicable to the provisions of section 80IA of the Act since the negative condition laid down in section 80IA(3)(ii) of the Act is identical to the negative condition laid down in section 80IC(4)(ii) of the Act and the negative condition laid down in the earlier sections 84 and 80J of the Act. Since the Circular issued by the CBDT is binding on the revenue, the contention raised by the revenue in the grounds of appeal is contrary to the legal position laid down in the said circular, apart from being contrary to the binding judgments of the Hon’ble Jurisdictional High Court in the cases of CIT Vs. Heartland KG Information Ltd (supra) and Super Auto Forge Ltd Vs Addl. Commissioner of Income-tax (supra). Hence, it is submitted that the contention raised by the revenue in the grounds of appeal that the ld.CIT(A) erred in not appreciating that the condition laid down in section 80IA(3)(ii) of the Act is violated in the case of the assessee since the windmills were previously used by the previous owners is not sustainable in law. 32. Further, in this connection, it was contended by the Ld. CIT(DR) during the course of the hearing that the aforementioned judgments of the Hon’ble Jurisdictional High Court in the cases of CIT Vs. Heartland KG Information Ltd (supra) and Super Auto Forge Ltd Vs Addl. Commissioner of Income-tax (supra) which were rendered while interpreting the provisions of section 10A(2) and section 10B(2) are not applicable to the interpretation of section 80IA(3), on the ground that there are no Explanations to section 10A(2) and section 10B(2) similar to the Explanation 1 and Explanation 2 to section 80IA(3) and in the absence of :-29-: ITA. Nos:3315, 3316 & 3321/Chny/2024 such Explanations, the decisions rendered in the context of the condition laid down in 10A(2)(iii) and 10B(2)(iii) cannot be applied to the interpretation of the condition laid down in section 80IA(3)(ii). 33. In this regard, in our considered view the said contention of the Ld. CIT(DR) is factually incorrect. It is very clear from Explanation to section 10A(2) which states that “The provisions of Explanation 1 and Explanation 2 to sub-section (2) of section 80-I shall apply for the purposes of clause (iii) of this sub-section as they apply for the purposes of clause (ii) of that sub-section”. As per the said Explanation, the Explanation 1 and Explanation 2 to section 80-I(2) are made applicable to section 10A(2)(iii) of the Act. On perusal of section 80-I of the Act, it could be seen that the Explanation 1 and Explanation 2 to section 80-I(2) are identical to the Explanation 1 and Explanation 2 to section 80IA(3) of the Act. It is seen that the same is the case in respect of section 10B(2) also. It is therefore very clear that Explanation 1 and Explanation 2 applicable to section 80IA(3)(ii) of the Act are also applicable sections10A(2) and 10B(2) of the Act. Consequently, the decisions rendered by the Hon’ble Jurisdictional High Court in the context of the condition laid down in 10A(2)(iii) and 10B(2)(iii) in the cases of CIT Vs. Heartland KG Information Ltd (supra) and Super Auto Forge Ltd Vs Addl. Commissioner of Income-tax (supra) respectively apply with equal force to the interpretation of the condition laid down in section 80IA(3)(ii) in the case of the assessee. 34. The ratio laid down in the said binding judgments of the Hon’ble Jurisdictional High Court is squarely applicable to the case of the :-30-: ITA. Nos:3315, 3316 & 3321/Chny/2024 assessee, where the windmill undertakings were transferred as “going concern” from the previous owner to the assessee and consequently, such transfer cannot be construed as violation of the negative condition prescribed in section 80IA(3)(ii) of the Act. Accordingly, we affirm the order of the Ld.CIT(A) that the assessee is eligible for the deduction u/s.80IA(4)(iv) of the Act in respect of the profits and gains of the said windmill undertakings. 35. The other contention of the revenue in the grounds of appeal that the ld.CIT(A) erred in observing that the deduction u/s.80IA of the Act is specific to the assessee and not to the undertaking. We note that the explicit wording in section 80IA(3) of the Act that the conditions laid down therein apply to the “undertaking” and the ratio laid down by the Hon’ble Jurisdictional High Court in the cases of Premier Cotton Mills Ltd (supra) and Madras Machine Tool Manufacturers (supra) that “undertaking” is not to be equated with the “legal entity” which owns the undertaking. In view of such distinction between the undertaking and the legal entity that owns the undertaking (assessee) as per the binding judgments of the Hon’ble Jurisdictional High Court, the condition prescribed in section 80IA(3)(ii) of the Act that “the undertaking is not formed by transfer to the new business of machinery or plant previously used for any purpose” has to be necessarily construed as the condition specific to the undertaking and not a condition specific to the assessee. Therefore, the said observation of the ld.CIT(A) was based on the clear understanding of the provisions of the Act and also supported by the decision of the Hon’ble Jurisdictional :-31-: ITA. Nos:3315, 3316 & 3321/Chny/2024 High Court and hence, we do not find merit in the contention of the revenue. 36. We find that the windmill undertakings were acquired by the assessee from the previous owners as going concern, the fulfillment of the condition specified in clause (ii) of section 80IA(3) of the Act is required to be evaluated in respect of each of the four windmill undertakings of the assessee at the time of setting-up/formation of the said undertakings by the respective previous owners and if the undertakings are found to have been set-up/formed with entirely new machinery or plant, it has to be considered that the condition prescribed in section 80IA(3)(ii) of the Act has been fulfilled. This view is also supported by the decision of the Hon’ble Madras High Court in the case of CIT v. Premier Cotton Mills Ltd (supra). The said judgment was rendered with reference to the provisions of section 80-J(4) of the Act, where the condition prescribed in clause (ii) thereof is identical to the condition prescribed in section 80IA(3)(ii). Therefore, the ratio laid down in the said decision is squarely applicable to the interpretation of section 80IA(3)(ii) also. We find that the ld.CIT(A) was convinced that the wind mill undertakings owned by the assessee were formed/set-up entirely with new machinery or plant by the previous owners, as established by the assessee by furnishing additional evidence during the course of the appellate proceedings. In the present facts of the case, we are of the considered view that the condition laid down in clause (ii) of Section 80IA(3)(ii) of the Act is duly fulfilled by all the four wind mill undertakings of the assessee and as a consequence, it has to be considered that the said wind mill undertakings are eligible for the :-32-: ITA. Nos:3315, 3316 & 3321/Chny/2024 deduction u/s.80IA(4)(iv) of the Act in respect of their profits and gains. Therefore, we do not find any infirmity in the order of the ld.CIT(A) in holding that the four wind mill undertakings of the assessee, which fulfilled the condition in section 80IA(3)(ii) of the Act at the time of their formation, are eligible for deduction u/s.80IA(4)(iv) of the Act in respect of their profits and gains in all the assessment years falling within the specified period of eligibility. Thus, we dismiss the grounds of the appeal filed by the revenue. 37. Similar issue of deduction claimed by the assessee u/s.80IA of the Act has been raised by the Revenue in ITA Nos.3315 & 3316/Chny/2024 for AYs 2019-20 and 2020-21 also. It is an admitted position that facts in AY 2018-19 are quite identical. This being so, our adjudication as for AY 2018-19 hereinabove on the issue of deduction claimed u/s.80IA shall mutatis mutandis apply to the AYs 2019-20 and 2020-21 also. 38. In the result, all the three appeals filed by the Revenue are dismissed. Order pronounced in the court on 05th June , 2025 at Chennai. Sd/- Sd/- (ŵीधुʫुŜआर. एलरेǭी) (DUVVURU RL REDDY) उपाȯƗ/Vice President (एस.आर.रघुनाथा) (S. R. RAGHUNATHA) लेखासद˟/Accountant Member चेɄई/Chennai, िदनांक/Dated, the 05th June, 2025 SP :-33-: ITA. Nos:3315, 3316 & 3321/Chny/2024 आदेशकीŮितिलिपअŤेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3.आयकरआयुƅ/CIT– Chennai/Coimbatore/Madurai/Salem 4. िवभागीयᮧितिनिध/DR 5. गाडᭅफाईल/GF "