ITO 8(3)(1), MUMBAI V. SHREE LAXMI INFOSOLUTINS & JEWELERY LTD, MUMBAI

ITA 6586/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8964 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Assessee Lawyers: K A VAIDYALINGAM
• Section: 143(3); 10AA; 10

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & P AWAN SINGH, JUDICIAL MEMBER /.ITA NO.6586/MUM/2014, /ASSESSMENT YEAR-2009-10 ITO-8(3)-1, ROOM NO. 201, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI-400020. VS. M/S SHREE LAXMI INFOSOLUTIONS & JEWELLERY LTD., UNIT NO. 20/24, SDF-1, SEEPZ, ANDHERI EAST, MUMBAI-400096. PAN: AABCD4084D ( / APPELLANT) ( / RESPONDENT) /.ITA NO. 6587/MUM/2014, /ASSESSMENT YEAR-2010-11 ITO-8(3)-1, ROOM NO. 201, 2 ND FLOOR, AAYAKAR BHAVAN, MUMBAI-400020. VS. M/S SHREE LAXMI INFOSOLUTIONS & JEWELLERY LTD., UNIT NO. 20/24, SDF-1, SEEPZ, ANDHERI EAST, MUMBAI-400096. PAN: AABCD4084D ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI B.B. RAJENDRA PRASAD (CIT DR) ! ! / ASSESSEE BY : SHRI K.A. VAIDYALINGAM ' ! / DATE OF HEARING : 05 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 11 -01-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THESE TWO APPEALS ARE FILED BY REVENUE U/S. 253 OF THE INCOME-TAX ACT AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-18, MUMBAI (FOR SHORT THE CIT(A) DATED 11.08.2014 FOR ASSESSMENT YEAR (AY) 2009-10 & 2010- 11. THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL IN BOTH THE AYS, THUS, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE BEING DECIDED BY A CONSOLIDATED OR DER. 2. FIRST WE SHALL TAKE THE REVENUES APPEAL FOR AY 200 9-10. THOUGH, THE REVENUE HAS RAISED A NUMBER OF GROUNDS, HOWEVER, AS PER OUR CONSIDERED O PINION, THE ONLY SUBSTANTIAL GROUND OF APPEAL IS WHETHER THE LD. CIT(A) ERRED IN DIRECTED THE AO TO GRANT DEDUCTION U/S 10AA OF THE I.T. ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE MANUFACTURING, TREADING, EXPORTING AND JOB WORK OF STUDDED JEWELLE RY. UNIT OF THE ASSESSEE-COMPANY IS SITUATED IN SEEPZ. THE ASSESSEE FILED RETURN OF I NCOME FOR RELEVANT AY ON 25.09.2009 AND CLAIMED DEDUCTION U/S 10AA OF THE ACT. THE ASSESSME NT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.03.2013. WHILE FRAMING THE ASSESSMENT, TH E AO DISALLOWED THE CLAIM OF 2 ITA NOS.6586 & 6587/M/2014 M/S SHREE LAXMI INFOSOL UTIONS & JEWELLERY LTD. DEDUCTION U/S 10AA. ON APPEAL BEFORE THE LD. CIT(A) , THE CLAIM U/S 10AA WAS ALLOWED. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REV ENUE HAS PREFERRED THE APPEAL BEFORE THIS TRIBUNAL. 4. WE HAVE HEARD THE LD. (AUTHORIZED REPRESENTATIVE (A R) OF THE ASSESSEE AND DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, LD. AR OF THE ASSESSEE ARGUED THAT THE ISSU E RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF TR IBUNAL IN ASSESSEES OWN CASE FOR AY 2007-08 AND 2008-09 IN ITA NO. 6670/MUM/2011 & 5643 /MUM/2012. THE LD. DR FOR THE REVENUE NOT DISPUTED THE DECISION OF THE TRIBUNAL. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND SEEN THAT THE SIMILAR RELIEF WAS DISALLOWED TO ASSESSEE FOR AY 2007-08 AND 2008-09 A ND ON APPEAL LD. CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE. THE REVENUE FILED APPEAL BE FORE THE TRIBUNAL AND THE APPEAL FOR BOTH THE AY WERE DISMISSED BY THIS TRIBUNAL VIDE ORDER D ATED 29.01.2016 IN ITA NO. 6770/MUM/2011 FOR AY 2007-08 AND ITA NO.5643/MUM/20 12 FOR AY 2008-09 HOLDING AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE RECORD. LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER PAS SED BY THE ASSESSING OFFICER WHEREAS LEARNED A.R APPEARING ON BEHALF OF THE ASSE SSEE SUPPORTED THE ORDER PASSED BY LEARNED CIT(A), WE FIND THAT LEARNED CIT(A) ALLO WED THE CLAIM OF THE ASSESSEE FOR DEDUCTIONS U/S 10AA BY GIVING FOLLOWING FINDINGS:- 2.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE LD. CO UNSEL AND IN MY OPINION THE APPELLANT IS ENTITLED TO CLAIM THE DEDUCTION U/S 10 AA BECAUSE OF THE FOLLOWING REASONS: (I) THE DECISIONS OF HONBLE SUPREME COURT IN THE C ASE OF TEXTILE MACHINERY CORPORATION 107 ITR 195 AND JURISDICTIONAL HONBLE BOMBAY HIGH COURT DECISION IN CIT VS. GAEKWAR FOAM & RUBBER CO. (35 I TR 662) ARE CLEARLY IN APPELLANT'S FAVOUR AS TO WHAT CONSTITUTES RECONSTRU CTION OF A BUSINESS OR NOT. FURTHER, THE DECISIONS OF HON'BLE KERALA HIGH COUR T IN THE CASE OF CIT VS. TRAUANCORE RAYONS LTD. & ANT. (164 ITR 134) AND THE HON 'BLE PATNA HIGH COURT IN THE CASE OF HINDUSTAN MALLEABLES & FORGING S LTD. VS. ITO AND ANOTHER (1978) 112 ITR 389 ALSO CLEARLY LAY DOWN TH AT - WHEN THERE IS CHANGE OF OWNERSHIP. - PREVIOUS IDENTITY WAS COMPLETELY LOST. - ORIGINAL UNDERTAKING ACQUIRED A NEW STATUS, - THERE WAS NO ALTERNATION IN THE ORIGINAL UNDERTAK ING BUT IT WAS AN ENTIRELY NEW UNDERTAKING WITH A CHANGE IN NAME. - THEN IT WAS NOT A CASE OF RECONSTRUCTION OF THE S AME BUSINESS. (II) ALSO, THE ABOVE VIEW IS AGAIN REITERATED IN TH E FOLLOWING JUDICIAL A) ITO VS. HEARTLAND K.G. INFORMATION LTD. 31 DTR (CHE NNAI)(TRIB) 98. B) ACIT VS. IIS INFOTECH LTD. (2004) 82 TTJ (DEL) 174 C) ITO VS. DSM SOFT (P) LTD. (2008) 115 ITD 1 ( CHENNA I) D) KUMARAN SYSTEMS (P) LTD. VS. ACIT (2007) 106 TTJ (C HANNAI) 484 E) CIT VS. EXCEL SOFTECH LTD. (2008 2019 CTR (P&H) 40 5. 3 ITA NOS.6586 & 6587/M/2014 M/S SHREE LAXMI INFOSOL UTIONS & JEWELLERY LTD. 2.2. THUS, THE ABOVE DECISIONS CLEARLY HOLD SUCH CA SES TO BE NOT OF RECONSTRUCTION OF BUSINESS AND THUS, ASSESSEES CAS E IS HELD TO BE NOT OF RECONSTRUCTION OF BUSINESS. FURTHER, THE FOLLOWING FACTS DESERVE SPECIAL MENTIO N:- (I) BENEFIT OF DEDUCTION IS ATTACHED TO UNIT IRRESPECTI VE OF THE FACT WHO OWNS IT 82 TTI (DEL) 174 (II) QUESTION WHETHER UNDERTAKING IS FORMED AS NEW OR I S RECONSTRUCTION OF BUSINESS ALREADY IN EXISTENCE IS TO BE TESTED IN YE AR OF FORMATION OF UNIT AND NOT IN EVERY SUBSEQUENT YEAR 13 DTR 201 (P&H) (III) (III) RECONSTRUCTION OF BUSINESS ALREADY IN EXISTEN CE REQUIRE THAT EITHER SOME ASSETS OF EXISTING BUSINESS ARE TRANSFERRED TO NEW BUSINESS OR THAT TWO BUSINESSES ARE SAME AND THE NEW UNIT IS AN INTE GRAL PART OF EARLIER ONE 115 ITD 1 (CHENNAI) 3. ALSO, IT IS IMPORTANT TO NOTE THAT THE A.O. ON P AGE-6 OF THE ASSESSMENT ORDER IN MY OPINION- HAS ERRED IN REACHING THE CONCLUSI ON THAT MERELY BECAUSE M/S. DATAMATICS INFOSOLUTIONS LTD. ALREADY HAD PERMISSIO N FOR SOFTWARE PRODUCTION AS WELL AS JEWELLERY PRODUCTION BEFORE THE AGREEMEN T FOR SALE OF SHARES AND WHICH PROVES THAT M/S. SHREE LAXMI INFOSOLUTIONS & JEWELLERY LTD. IS NOTHING BUT RECONSTRUCTION OF AN OLD UNIT WITH A NEW NAME B ECAUSE THIS IS AGAINST THE RATIO OF THE FOLLOWING DECISIONS CITED AND RELIED U PON BY LEARNED COUNSEL:- TEXTILE MACHINERY CORPORATION LTD. VS. CIT 107 ITR 195 (SC) (I) CIT VS. GAEKWAR FOAM & RUBBER CO. 35 ITR 662 (B ORN) (II) CIT VS. TRAVANCORE RAYONS LTD. & ANR. (164 ITR 134) [KER] (III) CIT VS. EXCEL SOFTECH LTD. 13 DTR 201 (P&H) (IV) ITO VS. DSM SOFT(P) LTD. (2008) 115 ITD 1 (CHE NNAI) ALSO THE FACT THAT THE EXEMPTION GOES WITH THE UNDE RTAKING AND A CHANGE OF NAME OF THE ASSESSEE DOES NOT HAVE ANY BEARING ON T HE CLAIM FOR BENEFIT U/S 10AA. 4. THEREFORE, FOR THE REASONS GIVEN ABOVE AND CASE LAWS CITED ABOVE- THE CLAIM OF THE APPELLANT U/S 10AA IS ALLOWED AND THE GROUND OF APPEAL IS ALLOWED. 8. WE HAVE CAREFULLY GONE THROUGH THE ORDER PASSED BY LEARNED CIT(A). WE FIND THAT LEARNED CIT(A) HAS FOLLOWED THE ORDER OF HIS PREDEC ESSOR IN EARLIER YEARS AND GRANTED THE RELIEF U/S 10AA. THE REVENUE CHALLENGED THE ORDER O F LD CIT(A) FOR EARLIER YEARS WHICH HAS ALREADY BEEN UPHELD BY THE TRIBUNAL VIDE ORDER DATE D29.01.2016 IN ITA NO. 6770/MUM/2011 FOR AY 2007-08 AND ITA NO.5643/MUM/20 12 FOR AY 2008-09. THUS THE GROUND OF APPEAL RAISED IN THIS APPEAL IS COVERED A GAINST THE REVENUE. HENCE, WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. IN VIEW OF THE ABO VE, WE UPHOLD THE ORDER OF LEARNED CIT(A) IN BOTH THE YEARS AND DISMISS THE APPEALS FI LED BY THE REVENUE. ITA NO. 6587/MUM/2014 FOR AY-2010-11 6. THE REVENUE HAS RAISED IDENTICAL GROUNDS OF APPEAL AS RAISED IN ITA NO. 6586/MUM/2014 FOR AY 2009-10. AS WE HAVE DISMISSED THE APPEAL OF THE REVENUE ON IDENTICAL GROUNDS, THUS, THE PRESENT APPEAL IS ALSO DISMISSED ON THE S AME GROUND. 4 ITA NOS.6586 & 6587/M/2014 M/S SHREE LAXMI INFOSOL UTIONS & JEWELLERY LTD. 7. AS A RESULT, BOTH THE APPEAL OF THE REVENUE STAND D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY 2017. + ! , - 11 ( , 201 7 ! 12 3 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER 2 /MUMBAI, - /DATE: 11.01.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 45 ( 6' , 4. THE CONCERNED CIT / 45 6' 5. DR E BENCH, ITAT, MUMBAI / 781 '95 B BB B , . . . 2 6. GUARD FILE/ 1 2 7' /TRUE COPY// + / BY ORDER, / DY./ASST. REGISTRAR ( 95 , 2 /ITAT, MUMBAI