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2025 Supreme(Online)(ITAT) 5323
INCOME TAX APPELLATE TRIBUNAL (CHENNAI BENCH)
DUVVURU RL REDDY, VP, S. R. RAGHUNATHA, AM
ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1 TRICHY TRICHY – Appellant
Versus
KUMARASAMY RAMAKRISHNAN KARUR – Respondent
Income Tax Appeal/ITA Nos.:3315, 3316 & 3321/Chny/2024
For the Appellants/Petitioners: Shri A. Sasikumar
For the Respondents: Shri.M.V.Prasad, C.A., Shri.K.S.Rajendra Kumar, C.A.
The eligibility for tax deductions under Section 80IA applies to the undertaking itself and not the entity claiming the deduction; transfers of entire undertakings as going concerns do not violate conditions regarding previously used machinery.
Headnote:(A) Income Tax Act, 1961 - Section 80IA - Appeal against orders of CIT(A) allowing deductions on wind mill undertakings - Revenue argues eligibility under section 80IA is specific to the assessee's operations - CIT(A) established that conditions apply to the undertaking itself, as clarified in multiple precedents. (Paras 3-38)
(B) Appeals - Scope of review - The Tribunal affirmed that the transfer of undertakings as going concerns is not a violation of the deduction criteria, based on judicial interpretations relevant to ownership changes. (Paras 20-38)
| Table of Content |
|---|
| 1. overview of appeals and identical issues. (Para 1) |
| 2. contentions on deduction eligibility concerning used machinery. (Para 2 , 5 , 10 , 17) |
| 3. procedural overview and details of assessments. (Para 3 , 9 , 37) |
| 4. interpretation of legal conditions for deductions. (Para 19 , 20 , 21 , 23 , 24) |
| 5. final ruling on deductions and dismissal of appeals. (Para 36) |
आदेश/ORDER
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
These three appeals filed by the revenue are directed against separate orders passed by the learned Commissioner of Income Tax (Appeals), Chennai-19, dated 07.10.2024, 04.10.2024 &04.10.2024and pertain to assessment years 2019-20, 2020-21&2018-19 respectively. Since, facts are identical and issues are common, for the sake of convenience, these appeals filed by the revenue are being heard together and disposed off, by this consolidated order.
2. The Revenue has raised the following grounds of appeal:
ITA No.:3315/Chny/2024 for A.Y.: 2019-20
1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.
2. The Ld.CIT(A) erred in allowing the deduction u/s.801A to the extent of Rs.3,07,91,524/-, out of the total deduction claimed u/s.80IA of Rs.3,89,66,079/-.
2.1The Ld.CIT (A) erred in observing that the four wind mill undertakings of the assessee (K-40, K-85, K-50 &K-51 and K-243) have duly complied with the condition laid down in section 80IA(3)(ii) at the time of their formation by the previous owners and the transfer of the such undertakings as going concerns to the assessee by the previous owners did not result in violation of the condition in section 801A (3)(ii).
2.2 The Ld. CIT (A) erred in not observing that the deduction u/s.80IA is specific to assessee and not undertaking specific since section 801A clearly says that"Where the gross total income of an assessee includes any profits and gains derived by an undertaking….”
2.3 The Ld. CIT (A) erred in not appreciating the fact that the windmills in respect of which deductions u/s.80IA had been claimed were previously used whereas the condition laid down in section 801A(3)(ii) is, "it is not formed by the transfer to a new business of machinery or plant previously used for any purpose”.
2.4 The Ld. CIT (A) erred in not observing that in order to avail the benefit of deduction u/s 801A, it is prerequisite that the assessee has not formed the new business with machinery previously used.
2.5 The Ld. CIT (A) erred in not observing that, as per Explanation 2 to subsection 3 of 80IA, if the total value of used plant, machinery in the new business is less than 20% then clause ii) of section 80IA(3) will not apply, whereas, in the case of the assessee, since the entire undertaking has been purchased second hand, it means that 100% of plant and machinery in the new business has been previously used.
3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the Order or Ld.CIT(Appeals) may be set aside and that of Assessing Officer may be restored.
ITA Nos.: 3316 /Chny/2024 for A.Y.: 2020-21
1.The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law.
2.The Ld.CIT(A) erred in allowing the deduction u/s.80IA to the extent of Rs.5,03,37,361/-, out of the total deduction claimed u/s.80IA of Rs.6,41,49,642/-.
3.1 The Ld.CIT(A) erred in observing that the four wind mill undertakings of the assessee (K-85, K-50, K-51&K-243) have duly complied with the condition laid down in section 80IA(3)(ii) at the time of their formation by the previous owners and the transfer of the such undertakings as going concerns to the assessee by the previous owners did not result in violation of the condition in section 80IA(3)(ii).
3.2 The Ld.CIT (A) erred in not observing that the deduction u/s.80IA is specific to assessee and not undertaking specific since section 80IA clearly says that "Where the gross total income of an assessee in
