Law: Income Tax Act, 1961

Section: 80J,80-HH

Income-tax----New industrial undertaking---Special deduction--- "Transfer", meaning of--¬Assessee-company in incorporated on 30-3-1973---Manufacturing activities started on 20-6-1973---Under scheme of amalgamation, another company amalgamated with assessee-company with effect from 31-10-1973---All assets and liabilities of amalgamating company transferred to assessee-company (amalgamated company). w.e.f. 31-10-1973---Assessee-company had come into existence prior to amalgamation ---Assessee-company (amalgamated. company) not formed by splitting up or reconstruction of business already in existence ---Assessee entitled to relief under Ss.80-J & 80-HH ---Indian Income Tax Act, 1961, Ss.80 J & 80-HH. The scheme of section 80-J of the Income Tax Act, 1961, is to encourage new industrial undertakings provided they fulfil the conditions mentioned therein. In order o be entitled to the exemption an assessee must strictly come within the terms of the provision under which such exemption is being claimed, but in constructing the provisions of the section, it must be construed reasonably in the con ext of the purpose for which the section has been introduced. The expression "transfer" is used in varying senses in different statutes, depending on the context. In a broad sense, it will include acquisition of an asset by a person from whatever source. But the scheme of the section indicates that what is being aimed at is to prevent exemption to those industrial undertakings which are formed by the splitting up or by reconstruction or by transfer to a new business, of plant or machinery of the old business. "Transfer", in this context, must mean a transfer of plant or machinery which is essential for the formation of the new industrial undertaking and that must again mean a transfer to the new business of the transferee of any machinery used by the said transferee in his old business. The assessee-company incorporated on March 30, 1973, started its manufacturing and commercial activities from June 20, 1973. Under a scheme of amalgamation, company E (amalgamating company) was amalgamated with the assessee-company (amalgamated company) with effect from October.…

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