ACIT, CHENNAI V. Neovia Logistics Services India Private Limited, CHENNAI

ITA 1945/CHNY/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6008 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 27-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS G APARNA RAO IRS
• Assessee Lawyers: GIRISH S SUNDARC A
• Keywords: Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO. 1945/MDS/2016 / ASSESSMENT YEAR : 2011-2012. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 4(2) CHENNAI 600 034 VS. M/S. NEOVIA LOGISTICS SERVICES INDIA PRIVATE LIMITED (FORMERLY KNOWN AS M/S. CATERPILLAR LOGISTICS SERVICES (INDIA) PRIVATE LIMITED, 7 TH FLOOR, INTERNATIONAL TECH. PARK, TARAMANI ROAD, TARAMANI, CHENNAI 600 113. [PAN AACCC 3949F ] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : MRS. G. APARNA RAO, IRS, CIT $%! ' # /RESPONDENT BY : SHRI. GIRISH S. SUNDAR, C.A. & ' ' () /DATE OF HEARING : 09-10-2017 *+ ' () /DATE OF PRONOUNCEMENT : 09-10-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER: IN THIS APPEAL FILED BY THE REVENUE, WHICH IS DIR ECTED AGAINST AN ORDER DATED 29.04.2016 OF THE LD. COMMISSIONER O F INCOME TAX (APPEALS)-8, CHENNAI, IT HAS RAISED THE FOLLOWING G ROUNDS. 1. THE ORDER OF THE CIT(A) IS CONTRARY TO LAW AND ITA NO.1945/MDS/2016. :- 2 -: FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF DEDUCTION UNDER SECTION 10A OF RS.10,82,70,241/-. 2.1. THE CIT(A) ERRED IN HOLDING THAT THE BENEFIT O F DEDUCTION U/S.10A OF THE ACT SHALL BE ALLOWED TO TH E TRANSFEREE COMPANY IN CASE OF A TRANSFER OF AN ELIGIBLE UNIT BY WAY OF 'SLUMP SALE '. 2.2. THE CIT(A) ERRED IN NOT CONSIDERING THE FINDIN GS OF THE AO THAT THE PLANT AND MACHINERY WHICH HAS BEEN PREVIOUSLY USED BY CATERPILLAR COMMERCIAL PVT. LTD (CCPL) HAS BEEN TRANSFERRED FOR THE FORMATION O F ASSESSEE COMPANY HENCE DEDUCTION UNDER SECTION 10A IS NOT ALLOWABLE IN VIEW OF PROVISIONS OF SUB- SECTION (2)(II) OF SECTION 10A. 2.3. THE CIT(A). ERRED IN ALLOWING DEDUCTION UJS.10 A WITHOUT APPRECIATING THE FACT THAT THE UNDERTAKING IS NOT NEWLY ESTABLISHED AND IS A CREATION BY WAY OF RECONSTRUCTION OF A BUSINESS ALREADY IN OPERATION. HENCE THE TRANSFER OF LOGISTICS DIVISION AS A GOING CONCERN TO THE ASSESSEE BY CCPL THROUGH AGREEMENT DATED 15.07.2004 WAS A COLOURABLE EXERCISE AND ITS INTENTION WAS TO EVADE TAX. 2.4. IT IS SUBMITTED THAT THE DECISION OF ITAT FOR THE AY:2005-06 RELIED UPON BY THE CIT(A) WAS NOT ACCEPTED BY THE DEPARTMENT AND THE DEPARTMENT'S APPEAL U/S.260A BEFORE THE HON'BLE HIGH COURT VIDE TCA NO.573 OF 2013 HAS BEEN WITHDRAWN ONLY ON ACCOUNT OF LOW TAX EFFECT IN VIEW OF CBOT'S CIRCULA R NO.21 OF 2015 DT.10.12.2015. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. A READING OF THE ABOVE GROUNDS SHOW THAT REVENUE IS AGGRIEVED ON THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX ITA NO.1945/MDS/2016. :- 3 -: (APPEALS) IN THAT HE FOLLOWED THE DECISION OF THI S TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-2006. 3. THE QUESTION RAISED BEFORE THE BENCH IN ASSESSMENT YEAR 2005-06 WAS WHETHER ASSESSEE WAS ELIGIBLE FOR CLA IMING DEDUCTION U/S.10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE LOGISTICS SERVICE DIVISION ACQUIRED BY IT FROM ITS GROUP COMPANY CALLED CATERPILLAR COMMERCIAL INDIA PRIVATE LIMITED. THE T RIBUNAL HAD UPHELD THE VIEW OF THE COMMISSIONER OF INCOME TAX (APPEAL S) WHICH WENT IN FAVOUR OF THE ASSESSEE OBSERVING AT PARA 6 OF ITS ORDER DATED 17.02.2012 IN ITA NO.965/MDS/2009 AS UNDER:- 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. IT IS NOT DISPUTED THAT LD. CIT(APPEALS) HAD OBTAINED A R EMAND REPORT FROM ASSESSING OFFICER. THE REMAND REPORT OF THE ASSESSI NG OFFICER IS SUMMARIZED BY LD. CIT(APPEALS) AT PARA 3.2 OF HIS O RDER, WHICH IS REPRODUCED HEREUNDER: 3.2 THE REMAND REPORT DATED 15.01.2009 IS SUMMARIZ ED AS UNDER:- (I) THE RECORDS PROVE THE CONTENTION OF THE COMPANY THAT IT IS NOT A MERE TRANSFER OF PLANT AND MACHINERY BUT THE LOGISTICS DIVISION OF M/S. CATERPILLAR COMMERCIAL P. LTD., HAS BEEN ACQUIRED BY THE ASSESSEE. (II) THIS IS EVIDENCED BY AGREEMENT DATED 26.07.2004 BETWEEN THE TWO PARTIES. (III) THE ASSESSEE COMPANY ACQUIRED THE LOGISTICS DIVISION ON A GOING CONCERN WITH EFFECT FROM 01.08.2004. ITA NO.1945/MDS/2016. :- 4 -: (IV) THE NOTE NO.3 IN SCHEDULE 11 IN NOTES ON ACCOUNTS OF THE ASSESSEE COMPANY, GIVES TOTAL CONSIDERATION, DETAILS OF ASSETS AND LIABILITIES TAKEN OVER BY THE COMPANY. (V) IT IS A SLUMP SALE AS PER PARA 2.1 AT PAGE 4 OF TH E BUSINESS TRANSFER AGREEMENT. (VI) THE TRANSFEROR CCPL HAS ADMITTED CAPITAL GAINS ARISING FROM THE TRANSFER. THROUGH ABOVE REMAND REPORT, ASSESSING OFFICER HAS CLEARLY MADE A COMPLETE TURNAROUND FROM THE CONCLUSIONS THAT HE HA D REACHED IN HIS ASSESSMENT ORDER. HE AGREES THAT IT WAS NOT A TRANS FER OF MERE PLANT AND MACHINERY, BUT ON THE OTHER HAND, THE WHOLE OF THE LOGISTICS DIVISION WAS ACQUIRED BY THE ASSESSEE. HE ALSO AGRE ES THAT THE LOGISTICS DIVISION WAS ACQUIRED BY THE ASSESSEE AS A GOING CONCERN. HE FURTHER AGREES THAT IT WAS A SLUMP SALE AND NOT ITEM-WISE SALE. ONCE IT IS ACCEPTED THAT IT WAS ONLY A SLUMP SALE, THEN BASED ON THE DEFINITION OF SLUMP SALE AS GIVEN IN SECTION 2(42C) OF THE ACT, WE CANNOT SAY THAT THERE WAS ANY SPLITTING UP OF M/S C CPL. THE QUESTION WHETHER IT WAS A COLOURABLE EXERCISE, IN OUR OPINIO N, WOULD NOT ARISE SINCE THE A.O. HAD COME TO HIS CONCLUSIONS IN THE R EMAND REPORT BASED ON THE AGREEMENT DATED 26.7.2004 BETWEEN THE TWO PA RTIES. AS LAID DOWN BY HONBLE APEX COURT IN ITS RECENT DECISION O F VODAFONE INTERNATIONAL HOLDINGS B.V. V. UNION OF INDIA AND A NOTHER (341 ITR 1) WHAT IS REQUIRED IS TO LOOK AT THE AGREEMENT AND NOT LOOK THROUGH THE AGREEMENT. SUFFICIENT EVIDENCE HAS NOT BEEN BRO UGHT ON RECORD BY THE REVENUE TO SHOW THAT THE TRANSFER OF LOGISTICS DIVISION AS A GOING CONCERN TO THE ASSESSEE BY M/S CCPL THROUGH THE AGR EEMENT DATED 15.7.2004 WAS A COLOURABLE EXERCISE AND ITS SOLE IN TENTION WAS TO EVADE TAX. AS FOR THE COMMENTS OF ADDITIONAL COMMIS SIONER OF INCOME TAX ON THE REMAND REPORT GIVEN BY THE ASSESSING OFF ICER, WE ARE OF THE OPINION THAT LD. CIT(APPEALS) WAS ABSOLUTELY JUSTIF IED IN NOT CONSIDERING SUCH COMMENTS BECAUSE THE ASSESSING OFF ICER ALONE IS THE AUTHORIZED OFFICER TO GIVE A REMAND REPORT. LD. CIT (APPEALS) WAS PERFECTLY JUSTIFIED IN GIVING DIRECTIONS TO THE A.O . TO GRANT THE ASSESSEE DEDUCTION UNDER SECTION 10A OF THE ACT. WE DO NOT F IND ANY REASON TO INTERFERE. FOR SUBSEQUENT ASSESSMENT YEARS 2007-08, 2008-2009 AND 2010-2011 ALSO THE TRIBUNAL HAD HELD THE ASSESSEE AS ELIGIBLE FOR CLAIMING ITA NO.1945/MDS/2016. :- 5 -: DEDUCTION U/S. 10A OF THE ACT ON ITS LOGISTICS SERV ICE DIVISION. FACT SITUATION BEING SAME FOR THE IMPUGNED ASSESSMENT YEAR ALSO, WE ARE OF THE OPINION THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED ON MONDAY, THE 9 TH DAY OF OCTOBER, 2017, AT CHENNAI. SD/- SD/- ( ) (GEORGE MATHAN) / JUDICIAL MEMBER ( . '#'$ ) (ABRAHAM P. GEORGE) % &' / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED: 9TH OCTOBER, 2017. KV / ' $(0 1 2 1 ( / COPY TO: 1 . ! / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 $(8 / DR 2. $%! / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF