COMMISSIONER OF INCOME TAX Vs. WEP PERIPHERALS LTD.

JUDGEMENT

(1.) This Income Tax Appeal is directed against the order of the Income Tax Appellate Tribunal, Bangalore Bench-A (for short 'the Tribunal'), in ITA No.421/2005 pertaining to the assessment year 2001-02, whereby, the Tribunal allowed the appeal filed by the respondentassessee. The appeal before the Tribunal, filed by the assessee was against the order dated 03.02.2005 passed by the Commissioner of Income Tax (Appeals)- III, (for short 'CIT(A)') in ITA No.77/AC12(3)/CIT (A)III/2004-05. The appeal before the CIT(A) was directed against the assessment order under Section 143(3) of the Income Tax Act, 1961 (for short 'the Act') dated 11.10.2004 passed by the Assistant Commissioner of Income Tax (for short 'the Assessing Officer').

(2.) The revenue has raised the following substantial questions of law:-

(3.) The factual matrix that is necessary for deciding this appeal is that, the assessee purchased the building, plant and machinery from one M/s.Wipro Ltd., by an agreement to sale dated 30.08.2000. When the assessee purchased the building, plant and machinery, it was a running unit/industrial undertaking. The transferor-Wipro, after taking the plot of land on lease from Karnataka Industrial Areas Development Board (for short "KIADB) constructed the building and started the unit/industrial undertaking sometime in 1992-93. They started claiming and were getting deduction under Section 80IB of the Act from 01.04.1993. As provided for under sub-section (3) of Section 80IB, they were entitled to seek deduction for a period of 10 years i.e., the period between 01.04.1993 and 31.03.2003. Before expiry of the period of ten years, the unit/industrial undertaking was transferred, as afore-mentioned, to the assessee, vide agreement to sale dated 30.08.2000. After the transfer, assessee also claimed deduction, since the period of ten years had not expired as contemplated under Section 80IB. Admittedly, the transferor-Wipro had enjoyed the deduction till 31.03.2001. The Assessing officer, however, disallowed the deduction on the ground that the transfer of business by Wipro to the assessee was not through Amalgamation as contemplated by sub-section (12) of Section 80IB. In other words, the Assessing officer held that unless there is transfer of business through Amalgamation, the transferee, such as the assessee in the present case, is not entitled for deduction under Section 80IB. The order of the Assessing officer was carried in appeal by the assessee. The assessee relied upon the Board circular which says that deduction is relatable to the unit. Since the Board circular was issued in the context of old provision namely, section 84 of the Act, the CIT(A) did not give benefit to the assessee. The Tribunal, however, granted that benefit to the assessee and consequently, allowed the deduction for the assessment year 2001-02. It is in this backdrop, we have perused the relevant part of Section 80IB, which reads thus:-