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RAJASTHAN HIGH COURT (JAIPUR BENCH)
K.S. Jhaveri, Inderjeet Singh, JJ.
Commissioner Of Income Tax - Appellant
Versus
M/s. Green Fire Exports - Respondent
Income Tax Appeal Nos. 285 of 2011 and 224 of 2012 and 10 of 2016
Decided On : 18-05-2017
INCOME TAX - DEDUCTION - SECTION 10AA - CONDITIONS - RECONSTRUCTION OF BUSINESS - INTERPRETATION - Whether the assessee is entitled to deduction under section 10AA despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act.
Fact of the Case:
The assessee claimed deduction under section 10AA of the Income Tax Act, 1961. The Assessing Officer disallowed the deduction on the ground that the assessee was formed by the reconstruction of a business already in existence, which is prohibited under section 10AA(4)(ii). The CIT(A) and the Tribunal allowed the deduction, holding that the assessee was a separate and independent production unit and that there was no reconstruction of the old business.
Finding of the Court:
The Court held that the Tribunal's conclusion was just and proper and that there was no reconstruction of the old business. The Court relied on the decisions of the Delhi High Court, the Madras High Court, and the Allahabad High Court, which held that the establishment of a new unit with new separate plant and machinery by investing substantial funds is essential for reconstruction of business.
Issues: Whether the assessee is entitled to deduction under section 10AA despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act.
Ratio Decidendi: The Court held that the assessee was entitled to deduction under section 10AA despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act. The Court held that the assessee was a separate and independent production unit and that there was no reconstruction of the old business.
Final Decision: The Court dismissed the appeals filed by the department.
JUDGMENT
K.S. Jhaveri, J. - By way of all these appeals, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeal of the department and confirmed the order of the CIT(A) modifying the order of the Assessing Officer.
2. This Court while admitting the appeal No. 285/2011 on 31.03.2014 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 7,38,85,415/- despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act."
2.1. This Court while admitting the appeal No.382/2011 on 31.03.2014 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 2,32,67,650/- despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act."
2.2. This Court while admitting the appeal No.224/2012 on 31.03.2014 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 12,15,247/- despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act."
2.3. This Court while admitting the appeal No.95/2014 on 23.04.2016 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 2,21,13,167/- despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act."
2.4. This Court while admitting the appeal No.96/2014 on 23.04.2016 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 3,30,87,091/- despite violation of mandatory conditions prescribed in section 10AA(4)(ii) of the Act."
2.5. This Court while admitting the appeal No.10/2016 on 03.01.2017 has framed the following substantial question of law:
"Whether on the facts and circumstances of the case and in law the Hon''ble ITAT is justified in deleting the disallowance of Rs. 20,82,95,557/- made by the Assessing Officer under Section 10-AA even though the assessee does not fulfill the conditions of Section 10AA(4)(ii) of the Income Tax Act, 1961 namely that the undertaking should not be formed by the reconstruction of business already in existence."
2.6. This Court while admitting the appeal No.132/2016 on 14.9.2016 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 2,95,41,452/- despite violation of mandatory conditions prescribed under section 10AA(4)(ii) of the Act , which provides that the assessee should not be formed by construction of a business already in existence and the assessee was formed by reconstruction of another unit which was his proprietary concerned in the same trade of business?"
2.7. This Court while admitting the appeal No.257/2016 on 23.01.2017 has framed the following substantial question of law:
"Whether the Tribunal as well as CIT(A) were justified in holding the assessee entitled for benefit under section 10AA of the Act and thereby granting deduction of Rs. 2,17,55,743/- despite violation of mandatory conditions prescribed under section 10AA(4)(ii) of the Act , which provides that the assessee should not be formed by construction of a business already in existence and the assessee was formed by reconstruction of another unit which was his proprietary concerned i
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