Hon'ble Prakash Krishna,J.
Heard Sri Shambhu Chopra, learned counsel for the appellant and Sri Rishi Raj Kapoor, learned counsel for the respondent.
The appeal has been admitted on the following substantial questions of law:
"1. Whether on facts and circumstances of the case the ITAT was correct to allow the claim that the benefit of Sec. 80-I was attached to the undertaking which was taken over by the assessee as a running concern even through by such take over the said undertaking got diluted its identity as a separate distinct business and the assessee company did not fulfill the conditions laid down in Sec. 80-I (2)(ii) read with explanation 2 thereof.
2. Whether on facts and circumstances of the case, the ITAT was correct to allow the benefits of Sec. 80-I even though the assessee did not fulfill the conditions laid down in Sec 80-I (7) of the Act."
The dispute relates to the assessment year 1993-94. The assessee, a Company was incorporated on 10th June, 1991. It took over industrial undertaking known as M/s Goel Udyog as a going concern w.e.f. 18th September, 1991. Earlier M/s Goel Udyog was proprietorship concern.
During the course of assessment proceedings, the assessee-Company claimed benefit of Section 80-I of the Income Tax Act (hereinafter referred to as 'the Act'). The said claim was denied by the Assessing Officer on the ground that machinery acquired by the assessee was previously used by M/s Goel Udyog.
The assessment order was challenged in appeal before C.I.T.(A) who allowed the appeal on 4th April, 1995. The department carried the matter further in appeal before the Income Tax Appellate Tribunal, Delhi Bench 'D' New Delhi (hereinafter referred to as 'the Act') and the Tribunal by the order under appeal has dismissed the appeal.
Learned counsel for the appellant submits that in view of Section 80-I (2)(ii) of the Act, the assessee was not entitled to get benefit of deduction under Section 80-I of the Act. Elaborating the argument, it was submitted that the plant and machinery were already used by M/s Goel Udyog. Submission is that since there is change in the ownership of the industrial undertaking as it was earlier proprietorship and now it is a Company, benefit of Section 80-I of the Act will not be available to the assessee.
Learned counsel for the respondent, on the other hand, supports the impugned order.
Considered the respective submissions of the learned counsel for the parties and perused the record.
It may be noted that Section 80-I of the Act grants deduction in respect of profits and gains from industrial undertakings after a certain date. In this regard, it is not in dispute that the appellant took over M/s Goel Udyog as a going concern. It is also not in dispute that same business is carried on by the assessee which was being carried out by M/s Goel Udyog. Section 80-I (2)(ii) reads as follows:
" Section 80-I (2) ? This section applies to any industrial undertaking which fulfills all the following conditions, namely :-
(i) ..............................
(ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose;
(iii) .......................
(iv) ......................."
Section 80-I (2)(ii) of the Act provides that benefit of Section 80-I of the Act will not be available to such undertaking if it is formed by the transfer to a new business of machinery or plant previously used for any purpose. In our view, the said provision will not come in the way of assessee in as much as the assessee took over the undertaking as a going concern. It is not the case of the department that the assessee has started a new business. Merely because the machinery and plant were earlier used by the M/s Goel Udyog would not make its transferree disentitled to get benefit of Section 80-I of the Act. The deduction under Section 80-I of the Act is granted to the industrial undertaking specific and not to its owner. Change of ownership does not fall within the ambit and scope of clause (ii) of sub section (2) of Section 80-I of the Act. Thus, we do not find any error in the order of the Tribunal. We decide the question no. 1 in favour of the assessee and against the department.
So far as question no. 2 is concerned, it does not appear that the same was argued before the Tribunal. Therefore, the said question does not arise out of order of the Tribunal.
In the result, the appeal fails and is dismissed accordingly.
(Prakash Krishna,J) (Ashok Bhushan,J) Order Date :- 4.4.2012 MK/