Change in constitution – status of exemption u/s 80 IC

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anil kalia (Querist)
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30 August 2009 A manufacturing firm is situated in area eligible for deduction u/s 80 IC and is claiming deduction accordingly. The present constitution of the firm is proprietorship.

If the constitution of the firm is changed to partnership, whether it will have any impact on the eligibility of the unit, to claim deduction u/s 80 IC for the balance period.

Please advice with reference to the specific provision / proviso or case.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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30 August 2009 Reconstruction - Illustrations

Take-over of firm by company is not reconstruction - Where under an agreement a company took over the business of a partnership firm by allotting shares to its partner, the take-over did not amount to â€˜reconstructionâ€™ - CIT v. Gaekwar Foam & Rubber Co. Ltd. [1959] 35 ITR 662 (Bom.).

Succession or sale does not amount to reconstruction - If a new business has come into existence by virtue of succession or sale, the question of reconstruction does not arise at all - CIT v. Devson Ltd./CIT v. Kashmir Fruit and Chemical Industries [1975] 98 ITR 311 (J&K).

YOU SHOULD READ THE ABOVE JUDGMENTS TO FIND FURTHER ARGUMENTS IN YOUR FAVOUR

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