THE JCIT (ASSTT), CIRCLE-5 AHMEDABAD V. M/S. SHAKUN POLYMERS LTD.

TAXAP/327/2007

AI Insights

The case revolves around the eligibility of M/s. Shakun Polymers Ltd. for deductions under Section 80IA of the Income Tax Act, 1961, following its amalgamation on April 3, 1995. The Income Tax Department challenged the Tribunal's decision, which had allowed the deductions, arguing that the company, being newly formed through amalgamation, should not qualify for such benefits. The Tribunal and the CIT(A) had previously ruled in favor of the assessee, leading to this appeal. The High Court, after reviewing the arguments and the legal provisions, sided with the Tribunal and CIT(A), affirming the assessee's eligibility for the deductions claimed.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 687815 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 09-12-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SWATI SOPARKAR
• Assessee Lawyers: K M PARIKH
• Keywords: Amalgamation; Deduction; Income Tax; Manufacturing Units; Section 80IA
• Section: 143(1)(a); 80-IA; 80-IA

Judgement Text

"O/TAXAP/327/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 327 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI Sd/- and HONOURABLE MR.JUSTICE K.J.THAKER Sd/- ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? No 2 To be referred to the Reporter or not ? No 3 Whether their Lordships wish to see the fair copy of the judgment ? No 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? No 5 Whether it is to be circulated to the civil judge ? No ================================================================ THE JCIT (ASSTT), CIRCLE-5 AHMEDABAD....Appellant(s) Versus M/S. SHAKUN POLYMERS LTD.....Opponent(s) ================================================================ Appearance: MR KM PARIKH, ADVOCATE for the Appellant(s) No. 1 MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and Page 1 of 5 O/TAXAP/327/2007 JUDGMENT HONOURABLE MR.JUSTICE K.J.THAKER Date : 09/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE K.J.THAKER) 1. By way of this Appeal, the Department has challenged the judgment and order dated 21.07.2006 of the Income Tax Appellate Tribunal, Ahmedabad Bench 'D' in ITA No.284/Ahd/2001 for the Assessment Year : 1996 – 1997. 2. While admitting the matter on 11.12.2007, the following substantial question of law was framed by this Court for consideration :- “Whether on facts and in circumstances of the case and in law, ITAT was right in holding that the assessee was entitled for the claim of deduction u/S.80-IA of the Income Tax Act, 1961, when the assessee company came into existence by way of amalgamation on 03.04.1995?” 3. The facts of the case are that the assessee being manufacturer of plastic components has two manufacturing units, Page 2 of 5 O/TAXAP/327/2007 JUDGMENT one situated at Halol and another one at Daman. The deduction u/s. 80IA was claimed at 30% for Halol Units and 100% for the Daman Unit. The assessee company came into existence on 03.04.1995 in consequence of amalgamation between partnership firm from M/s. Hitesh Polymers Co. and M/s. Shakun Polymers Products Pvt. Ltd. The assessing officer while processing return u/s. 143(1)(a) disallowed the deduction u/s. 143(1)(a) disallowed the deduction u/s.80IA on the ground that the business of the assessee was constructed by incorporating the assessee company. When the matter went before the CITA(A), the CIT(A) deleted prima facie adjustment including that the disallowance on debatable issue cannot be made u/s.143(1)(a). In the second appeal this Tribunal vide its order in ITA No.612 dated 11/5/2000 allowed the deduction to the assessee u/s.80IA on merit as well as on the issue that no prima-facie adjustment is possible u/s.143(1)(a). 4. The factual background under which the litigation started relates back to the Page 3 of 5 O/TAXAP/327/2007 JUDGMENT amalgamation of the Assessee Company as it came into existence on 03.04.1995. The Assessing Officer held against the Assessee Company as the Company was manufacturing plastic components and it was not entitled to deduction under Section 80I of the Income Tax Act. However, the CIT (Appeals) before whom the Assessee approached against the order of the Assessing Officer in 1999 while discussing all the issues held that ITAT, Ahmedabad Bench has allowed the present respondent's Appeal as far as claim of deduction under Section 80-I(A) of the Act and profits derived from the Units in Halol and Daman. The CIT(A) while considering the factual scenario has allowed the depreciation and held that deduction was allowable to the Assessee. The Appeal came to be allowed by giving elaborate reasons and therefore, the matter was carried out before the ITAT. However, the ITAT by which its well reasoned order has considered this aspect and held that provisions of Section 80IA of the Act was available in favour of the Assessee. Page 4 of 5 O/TAXAP/327/2007 JUDGMENT 5. Hence, we do not find any reason to persuade ourselves to take a different view than that of the Tribunal or the CIT(A) who have given elaborate reasons for allowing deduction under Chapter VI of the Income Tax Act to the Assessee Company. Therefore, in final analysis of this Appeal, the question of law posed for our consideration is answered in the affirmative, i.e. the ITAT was right in holding that the Assessee was entitled for claim of deduction under Section 80IA of the Income Tax Act on the date that the Assessee Company came into existence, i.e. on 03.04.1994. 6. In view of the aforesaid, the question of law raised in this Appeal is answered in favour the Assessee and against the Revenue. Sd/- (K.S. JHAVERI, J.) Sd/- (K.J. THAKER, J.) CAROLINE Page 5 of 5 "