ITO., WARD-16(1), HYDERABAD V. LANCO SOLAR (GUJARAT) PRIVATE LIMITED, HYDERABAD

MA 46/HYD/2025

AI Insights

The case involves the Income Tax Officer, Ward-16(1), Hyderabad as the applicant and Lanco Solar (Gujarat) Pvt. Ltd. as the respondent. The Revenue filed Miscellaneous Applications seeking to recall the Tribunal's order dated 27.11.2024, which had allowed the assessee's claim for deduction under section 80IA(4)(iv) of the Income Tax Act, 1961, concerning a business undertaking acquired through a slump sale. The Revenue argued that the Tribunal had not addressed the eligibility of the transferred undertaking for deduction under section 80IA(4) and other critical aspects. The assessee opposed the recall, citing that the Tribunal's earlier decision was based on a thorough examination of the merits and was not subject to recall under section 254(2). The Tribunal, referencing various judicial precedents and the CBDT Circular No.1/2013, concluded that the mere change of ownership in a slump sale does not affect the eligibility for deductions under section 80IA(4)(iv), provided the undertaking remains intact and is not formed by splitting up or reconstruction of an existing business.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 790380 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: misc
• Appeal Filed On: 22-05-2025
• Other Referred Cases: CIT vs. Reliance Telecom Ltd., CIT vs. Prisma Electronics, Dy. CIT vs. M/s. JSK Industries Pvt Ltd, CIT vs. Tata Communication Network Services Ltd, CIT vs. Heartland Delhi Transcription Services Pvt. Ltd., CIT vs. Mega Packages, CIT vs. Sonata Software Ltd., ACIT vs. IIS Infotech Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHINAV PITTA
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside
• Section: 10B; 10AA; 80IB

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘A’ Bench, Hyderabad BEFORE SHRI VIJAY PAL RAO, VICE PRESIDENT AND SHRI MANJUNATHA G, ACCOUNTANT MEMBER M.A.Nos.46 & 47/Hyd./2025 Arising out of आ.अपी.सं /ITA Nos.905 & 906/Hyd./2024 िनधाŊ रण वषŊ/Assessment Years 2017-2018 & 2018-2019 The Income Tax Officer, Ward-16(1), Hyderabad PIN – 500004. Telangana. vs. Lanco Solar (Gujarat) Pvt. Ltd., Hyderabad. PIN – 500 081. PAN AABCL1095J (Applicant) (Respondent) राज̾ व Ȫारा/Revenue by : Sri Abhinav Pitta Sr. AR िनधाŊįरती Ȫारा /Assessee by : Assessee सुनवाई की तारीख/Date of hearing: 14.11.2025 घोषणा की तारीख/Pronouncement: 26.11.2025 आदेश/ORDER PER VIJAY PAL RAO, VICE PRESIDENT : By way of these Miscellaneous Applications the Revenue is seeking for recalling of the Order dated 27.11.2024 of this Tribunal. Printed from counselvise.com 2 MA.No.46 & 47/Hyd./2025 2. Learned DR has submitted that the Tribunal while disposing of the appeals has primarily focused on the aspect of slump sale and the alleged continuation of benefits u/sec.80IA4(iv) of the Income Tax Act, 1961 [in short \"the Act\"], but, did not adjudicate the fundamental issue regarding whether the undertaking transferred was eligible in the first place u/sec.80IA(4) of the Act. He has further submitted that some of the critical aspects of the matter have not been adjudicated by the Tribunal such as no clear findings has been given by any of the authorities with respect to the eligibility of the transferred undertaking for deduction under section 80IA(4)(iv). Therefore, before allowing the deduction u/sec.80IA(4)(iv) of the Act, it has to be determined if there is an 'eligible business\". He has further pointed-out that it is also not clear from the record whether the parent company Lanco Infratech Ltd., claimed the use of assets for obtaining the deduction u/sec.80IA(iv) of the Act in the past few years and also to be verified whether the claim of deduction has been made for the same set of assets and business location as the commissioning of Printed from counselvise.com 3 MA.No.46 & 47/Hyd./2025 the said business assets was issued by the State Government on 19.11.2011 in the financial year 2011-2012. He has further submitted that the sale/transfer was effected during the fag end of the financial year 2016-2017 and, therefore, only proportionate deduction should have been claimed on the sale effected during the period after the transfer/sale whereas the assessee company has claimed full deduction. The assessee also failed to file Form-10CCB and, therefore, not entitled for deduction u/sec.80IA(4) of the Act. Thus, the learned DR has submitted that the impugned order of the Tribunal dated 27.11.2024 may be recalled for adjudication of the matter afresh by considering all these points and aspects. Alternatively, the matter may be remitted to the Assessing Officer for verifying the factual matrix and check the matter afresh in accordance with law. 3. On the other hand, Assessee as a party-in-person has submitted that the Revenue is seeking review of the order of the Tribunal dated 27.11.2024 which does not fall in the ambit of the provisions of sec.254(2) of the Act which is restricted to rectification of the apparent mistake from Printed from counselvise.com 4 MA.No.46 & 47/Hyd./2025 record. He has further submitted that the Tribunal has decided the matter on merits by giving an elaborate finding and reasoning and, therefore, the same cannot be reviewed in the proceedings u/sec.254(2) of the Act. He has relied upon the Judgment of the Hon’ble Supreme Court in the case of CIT vs., Reliance Telecom Ltd., [2022] 440 ITR 1 (SC). 4. We have considered rival submissions and carefully perused the impugned order of the Tribunal dated 27.11.2024 whereby the appeals ITA.Nos.905 & 906/Hyd.2024 of the assessee were allowed and the claim of the assessee u/sec.80IA was found to be allowable. The Tribunal has given a detailed finding in Paras-7 to 13 of the impugned order as under : “7. We have considered the rival submissions as well as the material available on record. The assessee has claimed deduction u/s 80IA(4)(iv) in respect of the income of its undertaking acquired from Lanco Infratech Ltd vide business transfer agreement dated 23/02/2017. As per clause (2) and (2.1) of the said agreement, the nature of the transfer is specified as slump sale and is an ongoing concern basis. For ready reference, clause 2 and 2.1 of the said agreement is reproduced as under: Printed from counselvise.com 5 MA.No.46 & 47/Hyd./2025 “2. TRANSACTION 2.1 Subject to the provisions of this agreement, LSGPL hereby agrees and undertakes to purchase from LITL and LITL hereby agrees and undertakes to sell to LSGPL, on the closing date, the business undertaking on a going concern basis by way of a slump sale, such that: (a) The business undertaking shall be deemed to have been transferred and vested in LSGPL; (b) LSGPL will be entitled, subject to the terms & conditions of this Agreement, to all rights, title and interest in the Business Undertaking; (c) LSGPL shall have the full ability, right, power and authority necessary for conducting and carrying on the business and operations in respect of the business undertaking; (d) LITL shall have transferred all the business assets to LSGPL (e) The business contracts and business permits and licenses shall have been assigned/novated (as the case may be) in favour of or otherwise transferred to LSGPL; (f) LITL shall have transferred all the Business Data and Records (including customer and vendor records) in relation to the business to LSGPL; and (g) LITL shall have transferred all the business liabilities and business obligations to LSGPL”. 8. Thus, the assessee has purchased the business undertaking as an ongoing concern basis by way of slump sale from its holding company. The Assessing Officer has denied the claim of deduction u/s 80IA(4)(iv) of the Act on the ground that the conditions specified in section 80IA(3) are not satisfied in Printed from counselvise.com 6 MA.No.46 & 47/Hyd./2025 case of the assessee. The concluding findings of the Assessing Officer in Para 5 to 7 are as under: 9. Thus, the Assessing Officer has given the emphasis to the maximum limit of 20% of the total value of machinery or plant as given in Explanation 2 to section 80IA(3). The Assessing Officer has not disputed the fact that the business undertaking under consideration has been acquired by the assessee as a going concern basis by way of slump sale and under the said Printed from counselvise.com 7 MA.No.46 & 47/Hyd./2025 transaction of transfer of the business liabilities and obligations as well as assets have been transferred by the seller to the assessee. Therefore, there is no change in the assets and liabilities of the business undertaking acquired by the assessee except the change of ownership that too under the slump sale. The Assessing Officer has misconceived the explanation 2 to section 80IA(3) by taking of outer limit of 20% of total value of machinery or plant in case of the assessee whereas the Explanation 2 is an exception to the conditions stipulated in section 80IA(3)(ii). Clause (ii) of sub-section (3) of section 80IA stipulates that an undertaking is not formed by transfer to a new business of machinery or plant previously used for any purpose. In the case in hand, it is not a transfer of a plant or machinery to new business, but it is a transfer of an existing ongoing business undertaking under slump sale and therefore, the undertaking remains intact and only the ownership got changed. Therefore, there is no transfer of any plant or machinery already used for any purpose to a new business, rather the undertaking is not a new business in the hands of the assessee because it is already existed business undertaking acquired by the assessee because it is way of slump sale as an ongoing concern basis. Thus, if the undertaking is otherwise eligible for deduction u/s 80IA(4)(iv), then the mere change of ownership would not disentitle the undertaking from benefits u/s 80IA of I.T. Act, 1961. This situation of transfer of undertaking under slump sale has been duly considered by the CBDT in Circular No.1/2013 dated 17/01/2013 and clarified this issue in para 2(iv) of its order as under: “F.No.178/84/2012-ITA.I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes New Delhi, the 17th January 2013 Printed from counselvise.com 8 MA.No.46 & 47/Hyd./2025 Circular No. 01/2013 Subject: Issues relating to export of computer software – Direct tax benefits – Clarification reg The Indian Software Industry has been the beneficiary of direct tax incentives under the provisions like sections 10A, 10AA & 10B of the Income -tax Act, 1961 in respect of their profits derived from the export of computer software. These provisions prescribe incentives to “units” or “undertakings”, established under different schemes, which are/were deriving profits from export of computer software subject to fulfilling the prescribed conditions. 2. It has been represented by the software companies that several issues arising from the above mentioned provisions are giving rise to disputes between them and the Income-tax authorities leading to denial of tax benefits and consequent litigation and, therefore, require clarification. Various issues highlighted by the Software Industry have been examined by the Board and the following clarifications are hereby issued – Xxxxxxxxxxxxx 2(i) xx 2(ii)xxxx (2(iii) xxxxxx 2 (iv) Whether tax Benefits under sections 10A, 10AA and 10B would continue to Remain available in case of a slump Sale of a Unit/Undertaking. The vital factor in determining the above issue would be facts such as how a slump-sale is made and what is its nature. It will also be important to ensure that the slump sale would not result into any splitting or reconstruction of existing business. These are factual issues requiring verification of facts. It is, however, Printed from counselvise.com 9 MA.No.46 & 47/Hyd./2025 clarified that on the sole ground of change in ownership of an undertaking, the claim of exemption cannot be denied to an otherwise eligible undertaking and the tax holiday can be availed of for the unexpired period at the rates as applicable for the remaining years, subject to fulfilment of prescribed conditions.” 10. Thus, the CBDT has clarified that, the benefit of deduction cannot be denied to an otherwise eligible undertaking, on the sole ground of change of ownership of an undertaking. Though the tax holiday can be available by the undertaking for the unexpired period, at a rate as applicable for the remaining years, subject to fulfilment of the prescribed conditions. The Hon'ble Allahabad High Court in the case of CIT vs. Prisma Electronics (Supra) has also considered an identical issue in respect of section 80IB(2) in para 10 to 14 as under: “10. Our view is fortified by another similar provision. which were earlier existing under Section Sot the Act. which was subsequently. omitted. For facility, Section 84 of the Act as it existed at the relevant moment of time is extracted hereunder: “Income of newly established industrial undertaking of hotels:- (1)Save as otherwise hereinafter provided, income tax shall not be payable by an assessee on so much of the profits and gains derived from any industrial undertaking or business of a hotel from any ship, to which this section applies, as does not exceed six per cent per annum on the capital employed in such undertaking or business or ship. computed in the prescribed manner. (2) This section applies to any industrial undertaking which fulfils all the following conditions, namely: Printed from counselvise.com 10 MA.No.46 & 47/Hyd./2025 (i) it is not formed by the splitting up, or the reconstruction of a business already in existence: (ii) it is not formed by the transfer to a new business of a building machinery or plant previously used for any purpose, (iii) it manufactures or produces articles or operates one or more cold storage plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of twenty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking.\" 11. From a perusal of the aforesaid provision, it is clear that Section 84 is more or less the same as provided in Section 80-IB of the Act. The Central Board of Direct Taxes issued a circular F. No. 15/5/63-IT(A-l) dated 13th December, 1963 indicating that the benefit of Section 84 is attached to the undertaking and not to the owner thereof and consequently, the successor would be entitled to the benefit for the unexpired period of 5 years provided the undertaking is taken over as a running concern. 12. The same principle is applicable in the instant case. Admittedly, the undertaking was in existence since 2002. The proprietorship concern changed into a partnership firm. The benefit under Section 80IB of the Act is available to the partnership firm and the conditions imposed under Section 80IB(2)(ii) does not come in the way. Printed from counselvise.com 11 MA.No.46 & 47/Hyd./2025 13. In CIT v. Bullet International. [2012] 349 ITR 267/[2014] 44 taxmann.com 354 (All.) a Division Bench of this Court held that the exemption granted to a proprietorship concern, which converted from a proprietorship into a partnership concern was still entitled for exemption under Section l0A of the Act. 14. In the light of the aforesaid. we hold that the Tribunal was justified in dismissing the appeals of the revenue holding that the assessee was entitled for deduction under Section 80-IB of the Act and was not hit by the provisions of Section 80-IB(i) of the Act. The Tribunal was also justified in holding that upon conversion of the proprietorship concern to a partnership concern there was no transfer of plant and machinery to the partnership firm, inasmuch as there was a transfer of the industrial undertaking as a whole along with its assets and liabilities.” 11. It has been observed that the formation of an undertaking should not be confused with ownership of the business if the undertaking is formed by splitting up or by reconstruction in that case the undertaking will not be qualified for exemption. However, if the undertaking was already in existence and was not formed by splitting up or reconstruction of the business, then mere change of ownership on conversion of proprietorship into partnership firm would not amount to transfer of plant and machinery to a new firm. A similar view has been taken by the Hon'ble Delhi High Court in the case of CIT vs. Tata Communication Network Services Ltd (Supra) and in para 11 to 14, held as under: “11. Be that as it may, Clause (ii) of Section 4 of Section 80IA was inserted in sub clause 3 of Section 80IA with effect from 1.4.2005 and the business of the Printed from counselvise.com 12 MA.No.46 & 47/Hyd./2025 assessee had been formed and started much prior to that. The restriction placed by Section 80IA(3) to the provisions of 80IA(4) (ii) would not bar the assessee for continuing its claim of deduction under Section 80IA. Since the provisions of 80IA(3) are not applicable to the present assessee, it having commenced its business much prior to 1.4.2005, Section 80IA(3) would not disentitle it from claiming deduction under Section 80IA on its income from internet services and internet telephony services. 12. In our view, the Tribunal was right in holding that the assessee could not be said to have been formed by splitting up or reconstruction of the business already in existence as its business had commenced after 1.4.1995 and before 31.3.2005 and the assessee had started its business of fax and email services right from the financial year 2003 and 2005 and it continued to carry on the business of internet telephony. 13. Insofar as the objection of the revenue that there had been change in the name of pattern of shareholding it does not make any difference as it is a well settled rule of law that benefit under Section 80IA of the Act is available to an undertaking and not to the assessee since the undertaking continues to carrying on its business without any reconstruction of business already in existence. 14. Even otherwise, on merits the conditions under Section 80IA(3) of the Act are seen to be fully met by the assessee and on this ground also the assessee is entitled for deduction under Section 80IA of the Act. The first contention is that section Printed from counselvise.com 13 MA.No.46 & 47/Hyd./2025 80IA(3) of the Act provides that the eligible business is not formed by splitting up or reconstruction of the business already in existence. Based on the facts discussed above, it may be noticed that the assessee started its new business in the existing company and the said business could not be said to have been formed either by splitting up or reconstruction of the existing business. It is to be noted herein that the business of providing internet services was awarded by the government to the assessee in the year 1999. The second contention of applicability of section 80IA (3) regarding use of old plants and machinery is also not relevant in the case of the present assessee as the business of assessee had not come into existence or formed by transfer of any old plants and machinery. The license was granted to the assessee on 5.1.1999 and it purchased new plants and machinery worth Rs.5.65 crore during the financial year 2000-01 for this telecommunication business.” 12. The Hon'ble High Court has observed that, change in the name of pattern of shareholding, does not make any difference to avail the benefit u/s 80IA of the Act, already available to an undertaking, since it will continue to carry on its business without any reconstruction of the business already in existence. Following the judgement of the Hon'ble Delhi High Court as well as other judicial precedents, the Mumbai Bench of the Tribunal in the case of Dy. CIT vs. M/s. JSK Industries Pvt Ltd (Supra) has considered this issue in para 8 to 14 as under: “8. For second/other objection regarding non- applicability of the benefit of deduction on account of slump sale, we find that the assessee has acquired the entire undertaking of M/s Hiren Aluminum Ltd. which was declared eligible for deduction Printed from counselvise.com 14 MA.No.46 & 47/Hyd./2025 under section 80IB. In our view, when the entire undertaking is transferred, merely because the ownership of undertaking changes the hand, the deduction under section 80IB is connected with the undertaking and is still available to the assessee. The ld. AR of the assessee during his course of submission relied upon the Circular No. 1/2013 issued by CBDT on 17.01.2013. The perusal of Clause-(iv) of paragraph 2 of said Circular provides that the benefit under section 10A/10AA and 10B would continue to remain available in case of slump sale of undertaking. The Clause (iv) of Circular is extracted below: \"(iv) WHETHER TAX BENEFITS UNDER SECTIONS 10A, 10AA AND 10B WOULD CONTINUE TO REMAIN AVAILABLE IN CASE OF A SLUMPP-SALE OF A UNIT/UNDERTAKING, The vital factor in determining the above issue would be facts such as how a slump-sale is made and what is its nature. It will also be important to ensure that the slump sale would not result into any splitting or reconstruction of existing business. These are factual issues requiring verification of facts. It is, however, clarified that on the sole ground of change in ownership of an undertaking, the claim of exemption cannot be denied to an otherwise eligible undertaking and the tax holiday can be availed of for the unexpired period at the rates as applicable for the remaining years, subject to fulfilment of prescribed conditions.\" 9. The Hon'ble Delhi High Court in case of CIT vs. Heartland Delhi Transcription Services Pvt. Ltd. (supra) while examining the scope of exemption Printed from counselvise.com 15 MA.No.46 & 47/Hyd./2025 under section 10B held that formation of undertaking, when it was formed satisfied and duly fulfilled the requirement of the Clauses of section 10B(2) or Clause (2) & (3) as it was not formed by splitting up of reconstruction of business already in existence and there was no factual finding that at the time of establishment of formation of undertaking business already in existence was split or reconstructed. There was no bar in section 10B on transfer or sale of undertaking by assessee which has formed sister concerned. 10. The Hon'ble Punjab & Haryana High Court in case of CIT vs. Mega Packages (supra) held that the benefit admissible to an undertaking could not be denied to the assessee for remaining period on the ground that sub- section (12) of section 80IA empresses only in case of amalgamation or demerger of an Indian company and therefore, such benefit would not be available in case of change from proprietorship to partnership. 11. The Hon'ble Bombay High Court in case of CIT vs. Sonata Software Ltd. [343 ITR 397] while discussing the condition precedent for exemption under section 10A held that there are two condition cast in negative term; (i) Industrial undertaking is not firmed by splitting up reconstruction of business already in existence (ii) Industrial undertaking is not firmed by transfer to a new business machinery or plant previously used for any purpose. 12. Further, the Hon'ble Delhi High Court in ACIT vs. IIS Infotech Ltd. [82 TTJ 174] while discussing the Printed from counselvise.com 16 MA.No.46 & 47/Hyd./2025 scope of exemption under section 10B held that benefit under section 10 is always attached to the industrial undertaking irrespective of the fact who owns it 100% export oriented unit and enjoying tax exemption under section 10B merged with assessee, would be entitled to same benefit with respect to said unit even after merger of unit being of an independent unit. 13. The careful reading of sub-section (2) of section 80IB make it clear that there are two conditions are provided in negative term i.e. (i) Industrial undertaking is not formed by splitting up reconstruction of business already in existence, (ii) is not formed by transfer of new business of machinery or plant previously used for any purpose. The Assessing Officer has not disputed about the manufacturing or produce product of any article or things not being any article or things specified in XI Schedule or operate one or more Cold-Storage or plant in any part of India. Further, there is no dispute that industrial undertaking manufactures or produce articles or things undertaking employed 10 or more workers in a manufacturing process carried out with the aid of power, or employed 20 or more workers in manufacturing process carried on without the aid of power. The AO has not disputed anyone of two negative terms. Even otherwise, the assessee has placed on record the sufficient evidence to substantiate the requirement of fulfilment of condition laid down under section 80IB consisting of evidence related with the challan of Provident Fund of more than 21 employees with the undertaking during the relevant period. Moreover, there is no dispute that the Printed from counselvise.com 17 MA.No.46 & 47/Hyd./2025 industrial undertaking is situated in industrial backward state. 14. In our view, there is no bar or prohibition in section 80IB on sale (slump- sale) of eligible undertaking to another assessee and the benefit attached with eligible undertaking cannot be denied to another assessee. There are only two negative terms prescribed under sub-section (2) of section 80IB, which we have referred above. Thus, we have no hesitation in accepting the submissions of learned AR for the assessee that he benefits of section 80IB are travelled (Transferred) with the undertaking and the fact of change of ownership does not affect the deduction. Sub-section (1) & (2) of section 80IB categorically refers to the business carried out by industrial undertaking. Thus, mere change of ownership would not affect the claim of deductions. With the above factual and legal discussion, we confirmed the order of ld. CIT(A) and dismissed the appeal of Revenue.” 13. Thus, it is now a settled proposition that, mere change of ownership cannot be a ground to deny the benefit of section 80IA(4) so long as the undertaking under consideration remains intact and same without any change in the Plant & Machinery or business already in existence. The conditions, as stipulated u/s 80 IA(3)(iii) of the Act contemplate a situation of forming an undertaking by splitting up or reconstruction of existing business as well as transfer of Plant & Machinery already used to a new business but, none of those transaction/incidents are part of the acquisition of the business undertaking by the assessee under consideration. Accordingly, in view of the facts and circumstances as discussed above, we are of the considered opinion that, the disallowance of deduction u/s 80IA(4) to the Printed from counselvise.com 18 MA.No.46 & 47/Hyd./2025 assessee by the Assessing Officer and confirmed by the learned CIT (A) is highly unjustified and not sustainable. Hence we allow the claim of the assessee u/s 80IA(4)(iv) of the I.T. Act, 1961. The issue is common in both the A.Ys, therefore, this finding is also applicable for both the A.Ys i.e. 2017-18 and 2018-19.” 5. Thus, it is clear that the Tribunal has given the findings based on the facts and particularly, by considering the business transfer agreement dated 23.02.2017, under which, the assessee has purchased the business undertaking as an on-going concern basis by way of slump sale from it’s holding company. The Assessing Officer denied the claim of deduction on the ground that the conditions specified in sec.80IA(3) are not satisfied. Thus, the Assessing Officer was of the view that due to splitting or re- construction of the existing business and acquisition of business entity, the assessee has violated the conditions provided u/sec.80IA(3) read with Explanation-2 whereby the maximum limit of 20% of total value of machinery or plant is provided as a condition for using of plant and machinery previously used for any purpose. The Tribunal has noted the undisputed fact that in the case of the assessee it was an acquisition of undertaking as on-going undertaking and, Printed from counselvise.com 19 MA.No.46 & 47/Hyd./2025 therefore, it is not a case of splitting-up of an undertaking by splitting-up or reconstruction of a business. The Tribunal further noted that mere change of ownership cannot be a ground to deny the benefit of deduction u/sec.80IA(4) so long the undertaking remains in-tact and is without any change in the plant and machinery or business already in existence. All these aspects were duly considered by the Tribunal in the impugned order and particularly, in Paras-11 to 13. Therefore, the points raised by the Department in the Miscellaneous Applications are in the nature of review of the order and not seeking a rectification of the mistake apparent from record. The Revenue cannot set-up a new case for denial of deduction u/sec.80IA at this stage of second appeal when the Assessing Officer has not disputed the other facts while denying the claim of deduction, except raising the objection that it is in violation of sec.80IA(3) read with Explanation-2 as the plant and machinery used in the undertaking is exceeding 20% of total value. Once the disallowance made by the Assessing Officer is only on this ground and the Printed from counselvise.com 20 MA.No.46 & 47/Hyd./2025 Assessing Officer has not found any other defect or deficiency in the claim of the assessee, then, in the proceedings u/sec.254(2) of the Act the parties are not allowed to set-up a new case. Even otherwise, the Assessing Officer cannot be allowed a second round to find fault in the claim of the assessee which is not found during the first round of assessment. Hence, in the facts and circumstances of the case, the Miscellaneous Applications of the Revenue are nothing, but, seeking review and put-up a new case which is completely beyond the scope of the proceedings u/sec.254(2) of the Act. The scope and jurisdiction u/sec.254(2) of the Act is very limited and circumscribed to rectify the mistake apparent from record and not to review the Order passed on merits. The Hon’ble Supreme Court in the case of CIT vs., Reliance Telecom Ltd., [2022] 440 ITR 1 (SC) has considered an identical and held in Paras-3 to 8 as under : “3. We have heard Shri Balbir Singh, learned Additional Solicitor General of India appearing on behalf of the Revenue and Shri Anuj Berry, learned Advocate appearing on behalf of the Resolution Professional of the respondent- company. At this stage, it is required to be noted that the respondent - company / companies – respective assessees currently are undergoing Printed from counselvise.com 21 MA.No.46 & 47/Hyd./2025 corporate insolvency resolution process and the Resolution Professional is appointed. We have heard learned counsel for the Resolution Professional of the respondent-assessee. 3.1. We have considered the order dated 18-11-2016 passed by the ITAT allowing the miscellaneous application in exercise of powers under section 254(2) of the Act and recalling its earlier order dated 6-9-2013 as well as the original order passed by the ITAT dated 6-9-2013. 3.2. Having gone through both the orders passed by the ITAT, we are of the opinion that the order passed by the ITAT dated 18- 11-2016 recalling its earlier order dated 6-9-2013 is beyond the scope and ambit of the powers under section 254(2) of the Act. While allowing the application under section 254(2) of the Act and recalling its earlier order dated 6-9-2013, it appears that the ITAT has re-heard the entire appeal on merits as if the ITAT was deciding the appeal against the order passed by the C.I.T. In exercise of powers under section 254(2) of the Act, the Appellate Tribunal may amend any order passed by it under sub-section (1) of section 254 of the Act with a view to rectifying any mistake apparent from the record only. Therefore, the powers under section 254(2) of the Act are akin to Order XLVII Rule 1 CPC. While considering the application under section 254(2) of the Act, the Appellate Tribunal is not required to re-visit its earlier order and to go into detail on merits. The powers under section 254(2) of the Act are only to rectify/correct any mistake apparent from the record. 4. In the present case, a detailed order was passed by the ITAT when it passed an order on 6-9-2013, by which the ITAT held in favour of the Revenue. Therefore, the said order could not have been recalled by the Appellate Tribunal in exercise of Printed from counselvise.com 22 MA.No.46 & 47/Hyd./2025 powers under section 254(2) of the Act. If the Assessee was of the opinion that the order passed by the ITAT was erroneous, either on facts or in law, in that case, the only remedy available to the Assessee was to prefer the appeal before the High Court, which as such was already filed by the Assessee before the High Court, which the Assessee withdrew after the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013. Therefore, as such, the order passed by the ITAT recalling its earlier order dated 6-9-2013 which has been passed in exercise of powers under section 254(2) of the Act is beyond the scope and ambit of the powers of the Appellate Tribunal conferred under section 254(2) of the Act. Therefore, the order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013 is unsustainable, which ought to have been set aside by the High Court. 5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of Printed from counselvise.com 23 MA.No.46 & 47/Hyd./2025 the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors section 254(2) of the Act. As observed hereinabove, the powers under section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case. 7. In view of the above and for the reasons stated above, the impugned common judgment and order passed by the High Court as well as the common order passed by the ITAT dated 18-11- 2016 recalling its earlier order dated 6-9-2013 deserve to be quashed and set aside and are accordingly quashed and set aside. The original orders passed by the ITAT dated 6-9-2013 passed in the respective appeals preferred by the Revenue are hereby restored. 8. Considering the fact that the Assessee had earlier preferred appeal/s before the High Court challenging the original order passed by the ITAT dated 6-9-2013, which the Assessee withdrew in view of the subsequent order passed by the ITAT dated 18-11-2016 recalling its earlier order dated 6-9-2013, we observe that if the Assessee/s prefers/prefer appeal/s before the High Court against the original order dated 6-9-2013 within a Printed from counselvise.com 24 MA.No.46 & 47/Hyd./2025 period of six weeks from today, the same may be decided and disposed of in accordance with law and on its/their own merits and without raising any objection with respect to limitation.” 6. Accordingly, the Miscellaneous Applications of the Revenue are devoid of any merits or substance and liable to be dismissed. We Order accordingly. 7. In the result, Miscellaneous Application Nos.46 & 47/Hyd./2025 of the Revenue are dismissed. A copy of this common order be placed in the respective case files. Order pronounced in the open Court on 26.11.2025. Sd/- Sd/- [MANJUNATHA G.] [VIJAY PAL RAO] ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 26th November, 2025 VBP Copy to : 1. The Income Tax Officer, Ward-16(1), IT Tower, AC Guards, Masab Tank, Hyderabad – 500004. Telangana. 2. Lanco Solar (Gujarat) Pvt. Ltd., Plot No.4, Software Units Layout, Hitech City, Madhapur, Hyderabad. PIN – 500 081. 3. The Pr. CIT, Hyderabad 4. DR, ITAT “A” Bench, Hyderabad. 5. Guard file. BY ORDER, //True copy// Printed from counselvise.com "